All numbers expressed in millions of dollars, except per share amounts and as otherwise indicated.
Q4 2020 highlights (compared to Q4 2019)
- Decrease in common shareholders' net income to
$72 compared to$76 - Earnings per share (basic and diluted) of
$73.53 compared to$77.25 - Return on common shareholders' equity1 ("ROE") of 17.8% compared to 18.7%
2020 full year highlights (compared to full year 2019)
- Decrease in common shareholders' net income to
$140 compared to$174 - Earnings per share (basic and diluted) of
$141.80 compared to$176.58 - Return on common shareholders' equity1 ("ROE") of 8.5% compared to 11.1%
- Assets under management1 increased 4.1% to
$18.8 billion
The decrease in earnings from 2019 was due, in part, 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
"We entered 2020 in a strong capital position," said
"The impacts of the coronavirus pandemic have been, and continue to be, far-reaching," he continued. "Lives have been lost and the health and well-being of individuals and families have been profoundly changed. Small businesses have been devastated and those that have survived continue to struggle to stay afloat. 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."
Financial highlights
Fourth quarter | Year to Date | |||||||
(in millions of dollars except per share amounts) | 2020 | 2019 | 2020 | 2019 | ||||
Common shareholders' net income | $ | 72 | $ | 76 | $ | 140 | $ | 174 |
Earnings (loss) per share - basic and diluted | $ | 73.53 | $ | 77.25 | $ | 141.80 | $ | 176.58 |
Return on common shareholders' equity (quarterly annualized)¹ | 17.8 % | 18.7 % | 8.5 % | 11.1 % |
Sources of Earnings¹ | Fourth quarter | Year to Date | ||||||
(in millions of dollars) | 2020 | 2019 | 2020 | 2019 | ||||
Expected profit on in-force business | $ | 55 | $ | 47 | $ | 215 | $ | 190 |
Impact of new business | (1) | (7) | (16) | (28) | ||||
Experience gains (losses) | 61 | 5 | (81) | (6) | ||||
Management actions and changes in assumptions | (22) | 48 | 13 | 37 | ||||
Earnings on operations before income taxes | 92 | 94 | 130 | 194 | ||||
Earnings on surplus | 8 | 16 | 70 | 54 | ||||
Income before income tax | $ | 101 | $ | 110 | $ | 200 | $ | 247 |
Income taxes | 25 | 30 | 47 | 60 | ||||
Shareholders' net income | $ | 76 | $ | 79 | $ | 153 | $ | 187 |
Dividends on preferred shares | (3) | (3) | (13) | (13) | ||||
Common shareholders' net income | $ | 72 | $ | 76 | $ | 140 | $ | 174 |
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 business lines.
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
The improvement in experience gains for the fourth quarter of 2020 is primarily attributable to the Wealth Management line, as strong equity returns contributed to a partial reversal of provisions recorded for segregated fund benefit guarantees earlier in 2020. For the year, the increase in experience losses was primarily driven by the overall strengthening of policy liabilities supporting segregated fund benefit guarantees.
The effect of management actions and changes in assumptions in the fourth quarter of 2020 was lower than 2019, primarily due to unfavourable assumption updates in the Wealth Management line in 2020 and the favourable impact of a reinsurance recapture initiative in 2019. This was partially offset by favourable assumption updates in the
Earnings on surplus were lower in the fourth quarter of 2020, primarily due to lower realized gains on Available for Sale (AFS) assets. For the year, earnings on surplus were higher primarily due to realized gains on AFS bonds recorded earlier in the year and lower realized and unrealized losses on Fair Value through Profit and Loss (FVTPL) assets in this segment.
Empire Life's Insurance Capital Adequacy Test (LICAT) total ratio was 136% at
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 sales for mutual funds, 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 International Financial Reporting Standards financial measures. Empire Life also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.
Additional information
All amounts are in Canadian dollars and are based on the audited consolidated financial results of Empire Life for the period ended
About Empire Life
Established in 1923 and a subsidiary of
SOURCE
© Canada Newswire, source