Q2 2024 highlights (compared to Q2 2023)
- Common shareholders' net income of $35 million (compared to net loss of $1 million)
- Earnings per share (basic and diluted) of $35.94 (compared to negative $0.86)
KINGSTON, ON, July 31, 2024 /CNW/ - Empire Life reported second quarter common shareholders' net income of $35 million for 2024, compared to a net loss of $1 million for the second quarter of 2023. This was due to improved Net insurance service result over the prior year related to the Wealth Management product line, along with net investment gains from non-fixed income assets in 2024 relative to the first half of 2023.
"Our diverse product portfolio targeted to middle-income Canadians continues to create shareholder value," said Mark Sylvia, President and Chief Executive Officer. "We are pleased to be recognized by Morningstar DBRS with an improved trend on our credit rating this quarter, while paying an additional dividend to common shareholders and maintaining our strong capital and liquidity position."
Financial highlights
Second quarter |
Year to date |
|||
(in millions of dollars except per share amounts) |
2024 |
2023 |
2024 |
2023 |
Common shareholders' net income (loss) |
$ 35 |
$ (1) |
$ 87 |
$ 51 |
Earnings per share - basic and diluted |
$ 35.94 |
$ (0.86) |
$ 88.80 |
$ 51.80 |
Jun 30 |
Mar 31 |
Dec 31 |
Sep 30 |
Jun 30 |
|
Other Financial Highlights |
2024 |
2024 |
2023 |
2023 |
2023 |
Return on common shareholders' equity(1) |
12.7 % |
10.4 % |
10.5 % |
3.9 % |
6.6 % |
LICAT total ratio |
152 % |
157 % |
155 % |
152 % |
151 % |
(1) |
See Non-GAAP Measures section. |
The following table provides a summary of Empire Life results for the second quarter and year to date ended June 30, 2024 and 2023.
Second quarter |
Year to date |
|||
(in millions of dollars) |
June 30, 2024 |
June 30, 2023 |
June 30, 2024 |
June 30, 2023 |
Insurance service result |
||||
Insurance revenue |
$ 351 |
$ 328 |
$ 690 |
$ 653 |
Insurance service expenses |
(299) |
(280) |
(581) |
(548) |
Insurance service result |
52 |
48 |
109 |
105 |
Net recovery (expense) from reinsurance contracts held |
(9) |
(18) |
(28) |
(31) |
Net insurance service result |
43 |
30 |
81 |
74 |
Investment and insurance finance result |
||||
Investment income (loss), excluding segregated fund account balances |
||||
Investment income |
75 |
81 |
(21) |
400 |
Change in investment contracts(1) |
(5) |
1 |
(7) |
(9) |
Net investment result, excluding segregated fund account balances |
70 |
82 |
(28) |
391 |
Insurance finance income (expense), excluding segregated fund account balances |
||||
Insurance contracts |
(44) |
(85) |
105 |
(339) |
Reinsurance contracts held |
2 |
(3) |
6 |
(12) |
Net insurance finance income (expense), excluding segregated fund account balances |
(42) |
(88) |
111 |
(351) |
Segregated fund account balances net investment and insurance finance result |
||||
Investment income (loss) on investments for segregated fund account balances |
17 |
72 |
459 |
353 |
Insurance finance income (expenses) segregated fund account balances |
(17) |
(72) |
(459) |
(353) |
Segregated fund account balances net investment and insurance finance result |
— |
— |
— |
— |
Net investment and insurance finance result |
28 |
(6) |
83 |
40 |
Other income and expenses |
||||
Fee and other income(1) |
15 |
6 |
23 |
13 |
Non-insurance expenses |
(32) |
(18) |
(54) |
(41) |
Interest expenses(1) |
(4) |
(4) |
(8) |
(9) |
Total other income and expenses |
(21) |
(16) |
(39) |
(37) |
Net income (loss) before taxes |
50 |
8 |
125 |
77 |
Income taxes(1) |
(10) |
(3) |
(27) |
(15) |
Net income (loss) after taxes |
40 |
5 |
98 |
62 |
Less: net income (loss) attributable to the participating account |
2 |
3 |
5 |
5 |
Shareholders' net income (loss) |
38 |
2 |
93 |
57 |
Less: preferred share dividends declared and distributions on other equity instruments(1) |
(3) |
(3) |
(6) |
(6) |
Common shareholders' net income (loss) |
$ 35 |
$ (1) |
$ 87 |
$ 51 |
(1) Prior year amounts have been revised from those previously presented. |
Common shareholders' net income in the second quarter increased $36 million compared to the second quarter of 2023, driven by gains in the Company's Net investment and insurance finance results, and positive Net insurance service result.
Net insurance service result increased $13 million in the second quarter, compared to the same period in 2023. Contributing factors include higher insurance service revenue in the Wealth Management product line and improved mortality experience in the Individual Insurance product line relative to the prior period. These gains were slightly offset by unfavourable long-term disability claims experience in the Group Solutions product line.
Net investment and insurance finance result increased $34 million in the second quarter compared to the same period in 2023. This was mainly due to net investment gains from non-fixed income assets and interest rate movements in 2024 relative to the second quarter in 2023.
Total other income and expenses was a net expense of $21 million in the second quarter, a $5 million increase compared to $16 the same period in 2023. The change is due to higher Non-insurance operating expenses which were partially offset by gains in Fee and other income due to disposal of Property and equipment.
The company's Life Insurance Capital Adequacy Test (LICAT) Total ratio was 152% at June 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 June 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 June 30, 2024, Empire Life had total assets under management of $18.6 billion. Follow us on social media @EmpireLife or visit www.empire.ca for more information.
SOURCE The Empire Life Insurance Company
Karen Smith, Director, Communication Services, 613 548-1890, ext. 3387, [email protected], www.empire.ca
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