Lower claims boost Q2 earnings for Empire Life
Empire Life Insurance Company has reported common shareholders' net income of $48 million for the second quarter of 2020, compared to $20 million in 2019. Year-to-date common shareholders' net income was $16 million compared to $63 million in 2019.
The increase in second-quarter earnings was primarily a result of lower claims expenses in the Employee Benefits line and favourable asset liability trading gains in the Individual Insurance line. The decrease in year-to-date earnings was primarily a result of significant strengthening of policy liabilities supporting segregated fund benefit guarantees.
Low interest rates cause challenges for industry
"The low interest rate environment is a significant challenge for the life insurance industry,” said Mark Sylvia, president and Chief Executive Officer. “We rely on fixed-income investments to build our reserves. Despite the impact we have seen on our investment income we are satisfied with our net income results in the second quarter.”
Sylvia said Empire’s investments in technology enabled the insurer to quickly pivot its business during the COVID-19 pandemic to ensure the continued safety of its employees and provide service to its customers. “We are continuing to invest in the development of our digital platform in order to make it simple, fast, and easy for our customers to access our products and services."
Expected profit on in-force business rises
The expected profit on in-force business increased by 11% for the second quarter and by 10% on a year-to-date basis.
The impact of new business declined in the second quarter of 2020 primarily due to lower new business strain in the Employee Benefits line. Strain from the Individual Insurance line was nil in the second quarter and negative on a year-to-date basis compared to a positive amount in the comparative periods in 2019 primarily due to lower sales in 2020.
Experience losses decreased for the second quarter and increased for the year to date in 2020 compared to the same periods in 2019, primarily due to significant strengthening of policy liabilities supporting segregated fund benefit guarantees. This was partially offset by improved asset liability trading gains, improved gains from increased yields on inforce assets backing the life insurance and annuity products and favourable claims experience in the Employee Benefits line.