Empire Life reports decline in net income
Empire Life has reported common shareholders' net income of $72 million for the fourth quarter of 2020, compared to $76 million in 2019. For the year, common shareholders' net income was $140 million compared to $174 million in 2019.
Part of the decrease in earnings from 2019 was due to a large one-time gain recognized in 2019 related to a reinsurance recapture initiative. In 2020, earnings from the Wealth Management line were lower due to reserve strengthening and assumption updates in the line as a result of poor market returns early in the year. This was partially offset by increased earnings from the Individual Insurance line, primarily as a result of asset trading gains from continued improvements in the company's matching of assets and liabilities.
Maintained capital strength and ended year in strong position
"We entered 2020 in a strong capital position," said Mark Sylvia, president and Chief Executive Officer. "Despite equity market declines early in the year and sustained low interest rates, we were able to maintain our capital strength and end the year in a strong position."
"The impacts of the coronavirus pandemic have been, and continue to be, far-reaching," said Sylvia. “During these difficult times, we focused on providing continued service to our customers while protecting the health and safety of our employees, essential service providers and the general public. We were pleased to be able to introduce a number of relief measures for individual customers who have life insurance or critical illness policies with us and for small businesses and plan members who have group benefits coverage with us."
Higher levels of business inforce help all lines of business
The expected profit on in-force business for the fourth quarter and for the year increased by 18% and 13% respectively, due to higher levels of business inforce at the start of the year for all three lines of business.
The improvement in impact of new business for the fourth quarter and the year was primarily driven by favourable new business profits at issue in the Individual Insurance line, combined with lower strain in the Employee Benefits line. For the year, the impact of new business improved over 2019, partially due to the Employee Benefits line where several new specialty partners were added in 2019, causing significant new business strain in that period.
The Individual Insurance line also contributed to improved impact of new business as sales of term products, which generally contribute a positive impact of new business value, were strong in the fourth quarter.