6 August 2018 11:30
Photo : Freepik
Empire Life increased its net profit attributable to shareholders of extraordinary of 71 % in the second quarter of 2018, compared to the same quarter last year. It amounted to 57.3 million dollars ($M) in the second quarter of 2018.
Measures taken by the management, higher yields and operational efficiency in all its products largely explain the increase in earnings in the second quarter, reports the insurer. This growth has offset the decline of 23 % in net income in the first quarter of 2018. Thus, the net profit of the first six months of 2018 is an increase of 15 % compared to the first half of 2017.
“Our three product lines performed well, with a return on equity of 15.6 % in the second quarter, and by 13.2 % since the beginning of the year. In the first quarter, we implemented the regulatory framework of TSAV (test of solvency of life insurance companies), and we continue to present a very strong capital position at the end of the second quarter, ” points out the CEO of Empire Life, Mark Sylvia. In terms of solvency, the insurer had a solvency ratio of 161 % as at 30 June 2018.
Reduction of costs
The decrease in costs of new business of individual insurance has had a positive impact on the results for the second quarter of 2018. This decrease was partially offset by the mix of sales in terms of segregated fund business in the sector of wealth management compared to 2017.
Empire Life has also carried out actuarial gains in the second quarter of 2018, thanks to investment gains in individual insurance and wealth management.
Better matching asset and liability
In addition, management has taken several steps to improve its matching of assets and liabilities in the area of individual life insurance. The earnings on surplus increased primarily due to lower loads of the hedging program of Empire Life and the increase of the assets in the account of the surplus in 2018.
Cost of coverage
The earnings on surplus decreased to Empire Life, in the second quarter of 2018, because of the higher costs of its hedging program. The increase in the cost of coverage is primarily attributable to the increase in the stock price in 2018, and increased charges of interest related to the subordinated debt. An effect, in part, negated by the increase of the assets in the account of the surplus.