Empire Life has announced common shareholders’ net income of $50.2 million for the first quarter of 2017, up from $37.2 million for the same period last year. Return on equity for the first quarter stood at 15.7 per cent, up from 13.4 per cent a year ago.
The improved net income and ROE in Q12017, compared to a year ago, is due to higher profit from Empire Life’s wealth management and employee benefits product lines, explained the company in a statement issued April 26. Additionally, assets under management and fee income increased by 12 per cent since the first quarter of 2016, because of strong stock market performance, as well as positive net sales.
Improved claims experience
Employee benefits income grew as a result of improved claims experience in the long term disability product line.
“We continue to make progress in increasing our earnings while enhancing our capital position and maintaining a strong balance sheet,” said Mark Sylvia, president and CEO, Empire Life. “The asset/liability matching initiated in 2016 continued in the first quarter of 2017 to reduce interest rate exposure. Empire Life’s Wealth Management product lines also benefited from fairly robust capital markets in 2016 which continued in 2017. These factors and laser focus on expenses contributed to Empire Life’s earnings in the first quarter.”
Positive trend in long-term interest rates
“We are also encouraged by the stability of the Canadian economy and a positive trend in long-term interest rates during late 2016, which helps our Individual Insurance business but we remain cautious due to weakness in many world economies and political uncertainty in the United States,” Sylvia said.
During the first quarter, Empire Life saw its first quarter individual insurance annualized premium sales decrease by 10.8 per cent compared to a year earlier, primarily due to decreased sales of participating products, said the company. “Management believes this is due in part to the January 1, 2017 effective date of less favourable tax rules that deal with the exemption status of certain life insurance policies.