WATERLOO, ON, Feb. 16, 2012 /CNW/ - Amid an economic environment that challenged the entire insurance industry, Equitable Life of Canada achieved earnings of $8.5 million in 2011, down from record earnings of $32.0 million in 2010.
Low interest rates, volatile financial markets and poor lapse experience in a segment of the Individual line of business contributed to the earnings decline. Reflecting these conditions resulted in a net strengthening of the reserves by $33.1 million. Offsetting the impact of the difficult environment were a focus on expense management, excellent results in the Group line of business and good returns on surplus.
Despite a decline in earnings, Equitable Life's participating policyholders' equity, one of the key measures of a life insurer's financial stability, increased 2.8% to $307.4 million in 2011. And the Company's Minimum Continuing Capital and Surplus Requirement (MCCSR) ratio finished the year at 190%, well above the minimum level of 150% set out by the Office of the Superintendent of Financial Institutions Canada (OSFI).
In a tough environment, all lines of business finished the year with sales at or slightly below 2010 levels. Total premiums and segregated funds deposits increased 5.1% to $580.4 million, and total assets under administration climbed to $2.8 billion, up 7.4% from the previous year. In addition, total dividend payments to policyholders increased 12.3% to $11.0 million from $9.8 million in 2010.
Equitable Life has continued to maintain a sound investment portfolio that has delivered consistent returns. With the debt crisis continuing to unfold in Europe, the Company has no direct exposure to sovereign debt issues and only limited exposure to foreign debt. As well, Equitable Life took steps to ensure its ongoing stability by strengthening the Company's risk framework.
"The year 2011 was very challenging for all Canadian life insurance companies," said Ronald Beettam, Equitable Life's President and Chief Executive Officer. "While we were disappointed with the results, we continue to be in a strong position during these volatile times."
"Equitable Life's ability to remain strong in the midst of difficult market conditions reflects the benefits of our commitment to mutuality," added Beettam. "Our mutual status provides continuity and stability, and allows us to focus on meeting the long-term interests of our policyholders."
2011 Financial Highlights
- Net income decreased to $8.5 million, for a return on policyholders' equity of 2.8%.
- Participating policyholders' equity increased 2.8% to $307.4 million.
- Capital strength, as measured by the MCCSR ratio, ended the year at 190%.
- Premiums and deposits increased by 5.1% to $580.4 million.
- Assets under administration climbed by 7.4% to $2.8 billion.
About Equitable Life of Canada
As one of Canada's largest mutual life insurance companies, Equitable Life is dedicated solely to its policyholders. The Company is focused on providing them with high-quality service, security and well-being.
Since 1920, Canadians have been depending on Equitable Life for financial protection. The Company offers a wide selection of competitive Individual Life and Health, Group Life and Health, and Individual Savings and Retirement products to meet the needs of its large and growing base of participating policyholders.
For further information:
Media relations contact
Director, Corporate Communications
1.800.722.6615 ext. 8017