Empire Life has just released its financial results for the second quarter of 2016 and reports net income of $24.8 million, down 44% compared to the same period of 2015 ($44.6 million). Year to date, common shareholders’ net income is $62.1 million, compared to $70.2 million in 2015 (-11.5%).

The company says the lower results are "primarily due to higher net losses on hedging instruments, lower profit from the employee benefits product line and the payment of preferred share dividends in 2016".

Profits up for the individual insurance division

This decline, however, was partially offset by higher profits in the company’s individual insurance product line, which is mainly attributable to management's efforts to improve the matching of assets and liabilities in 2016.

“We continued to make progress on improving our asset/liability matching in the second quarter of 2016 which helped offset headwinds we are facing from continuing volatility of market interest rates,” says Empire Life's president and CEO Mark Sylvia.

Premium sales up in group insurance

Gross sales of segregated funds decreased by 22% in the second quarter of 2016, primarily due to lower sales of products with a 75% maturity guarantee.

Annualized premium sales for individual insurance also decreased by 31% in the second quarter 2016. This decline is mainly explained by lower sales of universal life products.

In contrast, annualized premium sales for Empire's group insurance business increased by 14% in the second quarter of 2016, despite weak economic conditions in Canada.

Finally, the insurer's Minimum Continuing Capital and Surplus Ratio (MCCSR) was 213% as of June 30 2016, compared to 219% at March 31, 2016 and 201% at 31 December 2015.