Empire Life reports third quarter results
Canada NewsWire
KINGSTON, ON, Oct. 30, 2024
Q3 2024 highlights (compared to Q3 2023)
- Common shareholders' net income of $177 million (compared to net loss of $5 million)
- Earnings per share (basic and diluted) of $179.88 (compared to negative $5.25)
KINGSTON, ON, Oct. 30, 2024 /CNW/ - Empire Life reported third quarter common shareholders' net income of $177 million for 2024, compared to a net loss of $5 million for the third quarter of 2023. The increase compared to the prior year is due to net investment and insurance finance result gains, driven by improvements in the interest rate environment and the impacts of management assumption updates in the third quarter.
"The declining interest rate environment contributed to our favourable earnings in the period, and bolstered our already strong capital position," said Mark Sylvia, President and Chief Executive Officer. "We launched several new segregated fund products in the quarter and are pleased with the market response. We will continue to invest in the development of our product portfolio and operational capabilities. Our core objectives are to support our independent financial advisors and provide our customers with solutions to their financial protection and investment needs."
Financial highlights
Third Quarter | Year to date | |||
(in millions of dollars except per share amounts) | 2024 | 2023 | 2024 | 2023 |
Common shareholders' net income (loss) | $ 177 | $ (5) | $ 265 | $ 46 |
Earnings per share - basic and diluted | $ 179.88 | $ (5.25) | $ 268.68 | $ 46.55 |
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | |
Other Financial Highlights | 2024 | 2024 | 2024 | 2023 | 2023 |
Return on common shareholders' equity(1) | 24.0 % | 12.7 % | 10.4 % | 10.5 % | 3.9 % |
LICAT total ratio | 154 % | 152 % | 157 % | 155 % | 152 % |
(1) | See Non-GAAP Measures section. |
The following table provides a summary of Empire Life results for the third quarter and year to date ended September 30, 2024 and 2023.
Third Quarter | Year to date | |||
(in millions of dollars) | September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 |
Insurance service result | ||||
Insurance revenue | $ 357 | $ 337 | $ 1,048 | $ 991 |
Insurance service expenses | (271) | (258) | (852) | (806) |
Insurance service result | 86 | 79 | 196 | 185 |
Net recovery (expense) from reinsurance contracts held | (24) | (19) | (53) | (51) |
Net insurance service result | 62 | 60 | 143 | 134 |
Investment and insurance finance result | ||||
Investment income (loss), excluding segregated fund account balances | ||||
Investment income | 502 | (547) | 481 | (147) |
Change in investment contracts | (19) | — | (25) | (9) |
Net investment result, excluding segregated fund account balances | 483 | (547) | 456 | (156) |
Insurance finance income (expense), excluding segregated fund account balances | ||||
Insurance contracts | (289) | 479 | (184) | 139 |
Reinsurance contracts held | 25 | 22 | 30 | 11 |
Net insurance finance income (expense), excluding segregated fund account balances | (264) | 501 | (154) | 150 |
Segregated fund account balances net investment and insurance finance result | ||||
Investment income (loss) on investments for segregated fund account balances | 609 | (156) | 1,068 | 197 |
Insurance finance income (expenses) segregated fund account balances | (609) | 156 | (1,068) | (197) |
Segregated fund account balances net investment and insurance finance result | — | — | — | — |
Net investment and insurance finance result | 219 | (46) | 302 | (6) |
Other income and expenses | ||||
Fee and other income | 8 | 8 | 31 | 21 |
Non-insurance expenses | (27) | (27) | (81) | (68) |
Interest expenses(1) | (4) | (4) | (12) | (13) |
Total other income and expenses | (23) | (23) | (62) | (60) |
Net income (loss) before taxes | 258 | (9) | 383 | 68 |
Income taxes(1) | (72) | 4 | (100) | (12) |
Net income (loss) after taxes | 186 | (5) | 283 | 56 |
Less: net income (loss) attributable to the participating account | 6 | (3) | 10 | 2 |
Shareholders' net income (loss) | 180 | (2) | 273 | 54 |
Less: preferred share dividends declared and distributions on other equity instruments(1) | (3) | (3) | (8) | (8) |
Common shareholders' net income (loss) | $ 177 | $ (5) | $ 265 | $ 46 |
(1) Prior year amounts have been revised from those previously presented. |
Common shareholders' net income in the third quarter increased $182 million relative to the third quarter of 2023, driven by gains in the Company's net investment and insurance finance result. These gains are due to favourable interest rate movements in the quarter compared to the less favourable interest rate movements from the same period in 2023, as well as the impact of insurance contract liability assumption updates. In 2024, management conducted the annual assumption update in the third quarter, in contrast to the fourth quarter in 2023.
Net insurance service result increased $2 million in the third quarter, compared to the same period in 2023. Contributing factors include higher net insurance service results in the Group Solutions product line, driven by favourable assumption updates on life and long-term disability products, which were offset by unfavourable mortality experience in the Individual Insurance product line.
Net investment and insurance finance result increased $265 million in the third quarter compared to the same period in 2023. This was mainly due to favourable interest rate movements compared to less favourable interest rate movements in the same period in 2023, as well as the impact of insurance contract liability assumption updates. Net investment gains from non-fixed income assets also supported the favourable third quarter result, driven by favourable market movements.
Total other income and expenses for the third quarter was a net expense of $23 million, consistent with the same period in 2023.
The company's Life Insurance Capital Adequacy Test (LICAT) Total ratio was 154% at September 30, 2024, 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.
Non-GAAP measures
Empire Life uses non-generally accepted accounting principles (non-GAAP) measures (including return on common shareholders' equity, assets under management, annualized premium sales, and gross and net sales for segregated funds and fixed annuities) to provide investors with supplemental measures of its operating performance and to highlight trends in its core business that may not otherwise be apparent when relying solely on measures prescribed by International Financial Reporting Standards (IFRS Accounting Standards). Empire Life also believes that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Further information on these non-GAAP measures can be found in Empire Life's latest Management's Discussion & Analysis (MD&A), filed on Empire Life's profile available at www.sedarplus.ca.
Additional information
All amounts are in Canadian dollars and are based on the consolidated financial results of Empire Life for the period ended September 30, 2024. Additional information about Empire Life can be found in Empire Life's latest Management's Discussion & Analysis and Annual Information Form. These documents are filed on Empire Life's profile available at www.sedarplus.ca.
About Empire Life
Established in 1923 and a subsidiary of E-L Financial Corporation Limited, Empire Life provides 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. As of September 30, 2024, Empire Life had total assets under management of $19.6 billion. Follow us on social media @EmpireLife or visit www.empire.ca for more information.
SOURCE The Empire Life Insurance Company
