Kingston, Ontario-based Empire Life Insurance Company reported mixed earnings results for the second quarter.
On the positive side, Empire Life reported common shareholder net income of $48 million in the second quarter compared to $20 million in the second quarter of 2019. However, year-to-date common shareholder net income was $16 million, a sharp decline from $63 million in 2019
“The low interest rate environment poses a significant challenge to the life insurance industry,” Mark Sylvia, president and CEO of Empire Life, said in the release. “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 profit results in the second quarter.”
Second-quarter earnings increased year-over-year, primarily due to lower compensation costs in the company’s employee benefits line, as well as favorable asset and liability trading gains in its individual insurance line.
The significant decline in year-to-date earnings was primarily due to a significant increase in liabilities under insurance policies supporting benefit guarantees from segregated funds, the insurer said.
The company’s expected profit from its operations increased by 11% in the second quarter and by 10% annually.
The impact of new business declined in the second quarter, primarily due to lower new business burden on the employee benefits line. (New business charge is the charge incurred by a company due to inadequate premium rates in the early years.) Lower sales in 2020 meant that in Q2 the new business charge for individual insurance lines was zero and was negative year-over-year as compared to 2019.
Sylvia also noted that Empire’s recent investments in technology have helped the company weather the Covid-19 crisis.
“Our investments in technology have enabled us to rapidly transform our business during the pandemic to keep our employees safe and continue to provide excellent service to our clients and their advisors,” said Sylvia.
