Empire Life Third Quarter 2021 Results Show Strong Earnings, Strong Sales

CEO Marc Sylvie team credits resilience and commitment

Highlights of Q3 2021 (compared to Q3 2020)

Highlights of the third quarter of the year 2021 (compared to the current year in 2020)

  • Net income of ordinary shareholders of $ 222 million compared to $ 67 million

  • Earnings per share (basic and diluted) of $ 225.70 compared to $ 68.28

  • Return on equity (“ROE”) of 16.4% vs. 8.9%

KINGSTON, ON, 28 October 2021 / CNW / – The Empire Life Insurance Company (“Empire Life”) today reported net income from common shareholders of $ 33 million for the third quarter of 2021, compared to $ 51 million in 2020. The net profit of ordinary shareholders since the beginning of the fiscal year was $ 222 million compared to $ 67 million in 2020.

Empire Life Logo (CNW Group / The Empire Life Insurance Company)

The decrease in profit for the third quarter is mainly attributable to lower net profit from the individual insurance business and unrealized and realized losses on assets in the Capital segment and excess over gains for the same period in 2020. revenues increased, mainly due to the release of segregated fund guarantee reserves in the first quarter of 2021.

“Sales in our three lines of business are strong and we had a very successful debt issuance at the end of the quarter which allowed us to continue to grow and invest in our business,” said Marc Sylvie, President and CEO. “We are satisfied with our overall results and the continued trend of growth in our premium and fee income. As we meet the challenges of the pandemic, we continue to adjust our business and workforce models. Our employees have demonstrated incredible resilience and commitment to our customers, distribution partners, shareholders and to each other. It is their support and dedication that enables us to achieve such positive results. “

Financial Highlights

Third quarter

Year to date

(in millions of dollars except per share amounts)

2021

2020

2021

2020

Net income of ordinary shareholders

$

33

$

51

$

222

$

67

Earnings (loss) per share – basic and diluted

$

33.78

$

51.91

$

225.70

$

68.28

Sep 30

June 30th

March, 31st

Sep 30

Other financial highlights

2021

2021

2021

2020

Return on common shareholders’ equity (next four quarters) ¹

16.4%

18.5%

20.3%

8.9%

Total LICAT ratio

150%

143%

148%

132%

Sources of income¹

Third quarter

Year to date

(in millions of dollars)

2021

2020

2021

2020

Expected profit on in-force business

$

50

$

53

$

148

$

159

Impact of new business

(9)

(3)

(16)

(14)

Experience gains (losses)

(2)

(15)

144

(148)

Management actions and changes in assumptions

2

16

17

40

Operating profit before taxes

41

50

293

37

Profit on surplus

4

23

7

62

Income before income tax

45

73

300

99

Income taxes

ten

19

72

21

Shareholders’ net profit

35

55

228

77

Dividends on preferred shares

(1)

(3)

(6)

(ten)

Net income of ordinary shareholders

$

33

$

51

$

222

$

67

Expected profit on in-force business decreased 6% for the third quarter and 7% for the year to date, mainly due to the Wealth Management line.

The impact of new business increased in the third quarter of 2021, mainly due to increased pressure from the individual insurance line. Over the year to date, the impact of new business has increased compared to the same period in 2020, mainly due to an increase in tension in the Wealth Management and Employee Benefits lines partially offset by the result in cause in the Individual Insurance line. The impact of new business on the individual insurance line is positive, creating a profit on issue, when the present value of future profits from new business exceeds the sum of the margins of the initial policy liabilities for that business plus expenses. incurred at the time of sale.

The decrease in experience losses in the third quarter of 2021 is mainly explained by experience gains in the Wealth Management line, partially offset by experience losses in the Individual Insurance and Social Benefits lines. For the year to date, experience gains are mainly attributable to a reduction in policy liabilities for segregated fund benefit guarantees, compared to an experience loss resulting from a strengthening of these guarantee liabilities in the year to date. first semester of 2020.

Management actions and changes in assumptions were driven by management’s continued activities to improve the asset and liability matching, contributing to positive net gains in the individual insurance business.

Profit on surplus decreased for the third quarter and year-to-date mainly due to losses realized on assets assessed as available for sale (AFS) in this segment compared to gains realized for the periods comparable in 2020. The capital adequacy test of the company’s life insurance (LICAT) The total ratio was 150% at September 30, 2021 against 136% at December 31, 2020, well above the requirements set by the Office of the Superintendent of Financial Institutions Canada (OSFI) as well as Empire Life’s minimum internal targets.

At October 26, 2021, the Company announced its intention to repurchase, the December 16, 2021, all its exceptional $ 200 million 3.383% Unsecured Subordinated Debentures, Series 2016-1 due December 26, 2026, at a redemption price of 100% of the principal amount, plus any accrued and unpaid interest up to the Redemption Date, but to the exclusion.

The buyout was approved by the Office of the Superintendent of Financial Institutions. After giving effect to the repurchase, the Total LICAT Ratio at September 30, 2021 would have been 142%.

Non-IFRS measures
Empire Life uses non-IFRS measures including return on common shareholders’ equity, source of earnings, assets under management, annualized premium sales, gross and net mutual fund sales, segregated funds and fixed annuities to provide investors with additional measures of its operating performance and to highlight trends in its core business that might otherwise not be apparent based solely on financial measures in International Standards of financial information. Empire Life also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the valuation of issuers.

Additional information
All amounts are in Canadian dollars and are based on the unaudited consolidated financial results of Empire Life for the period ended September 30, 2021. Additional information on Empire Life can be found in Empire Life’s latest MD&A and Annual Information Form. These documents are filed on the Empire Life profile available at www.sedar.com.

About Empire Life
Founded in 1923 and a subsidiary of EL Financial Corporation Limited, Empire Life offers individual and group life and health insurance, investment and retirement products. The company’s mission is to make it simple, fast and easy for Canadians to get the products and services they need to build wealth, generate income and achieve financial security. From September 30, 2021, Empire Life had total assets under management of $ 19 billion. Follow us on social media @EmpireLife or visit empire.ca for more information.

SOURCE The Empire Life Insurance Company

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