It’world
s our .
It’ws
Co-operators Life Insurance Company
2016 SOURCES OF EARNINGS
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CO-OPERATORS LIFE INSURANCE COMPANY - SOURCES OF EARNINGS
This is an alternative presentation of life insurance net income, in a different format from the traditional GAAP income statement presentation. It
is an analysis of the difference between actual income and the income that would have been reported had all the actuarial assumptions at the
start of the year been realized during the year.
The terminologies used in the sources of earnings analysis are described below.
Expected Profit on In-force Business – The expected income based on business in force at the beginning of the year and on the achievement
of the best estimate assumptions.
Impact of New Business – The impact on income at the time of sale from new business written during the year.
Experience Gains and Losses – The impact on income from differences between our actual experience during the year compared to the
assumptions made for our actuarial liabilities at the start of the year. It includes the impact of foreign currency rate changes.
Management Actions and Changes in Assumptions – The impact on income from management’s actions, changes in actuarial assumptions,
changes to margin levels in actuarial liabilities, changes to actuarial methodologies and error corrections made during the year.
Other – Any other variance from expected profit on in-force business not included in the above categories. Sources of Earnings analysis is not
designed for property and casualty (P&C) insurance so it is reported in this category in its entirety.
Earnings on Surplus – Surplus income is the result of investment gains on the assets backing the surplus account less certain corporate
expenses not attributable to any single line of business.
SOURCES OF EARNINGS ANALYSIS
2016
$ millions
Expected profit on in-force business
Impact of new business
Experience gains and losses
Management actions and
changes in assumptions
Other
Earnings on Surplus
Operating income (loss) before income taxes
Income tax expense (recovery)
Net operating income (loss)
Net transfer to shareholders
Net income (loss)
Individual
Insurance
25.1
0.5
26.2
6.6
(0.1)
58.3
13.0
45.3
(1.3)
44.0
Group
Wealth
Insurance Management
16.5
9.3
(2.8)
(26.8)
3.1
8.1
0.5
(1.7)
(0.5)
(1.2)
(1.2)
Travel
Insurance
2.0
(4.9)
(3.4)
0.1
6.3
1.7
4.6
(0.1)
4.5
3.9
1.0
(1.3)
2.3
2.3
Credit
Insurance
6.2
6.9
(2.9)
2.1
0.8
13.1
3.6
9.5
9.5
P&C
Insurance Life Surplus
6.6
6.6
6.6
6.6
Total
59.1
4.6
(5.3)
(10.1)
41.8
31.7
6.9
24.8
1.4
26.2
13.4
1.7
41.8
115.3
23.4
91.9
91.9
58.2
Net income by account
Participating account net income
Non-controlling interest net income (loss)
Shareholder account net income (loss)
28.8
0.3
0.7
-
-
-
28.4
1.0
(0.2)
0.2
0.5
2.5
1.8
1.3
7.1
14.2
(1.3)
3.6
1.8
7.0
4.8
(3.5)
26.6
Experience losses consist mainly of expenses in group insurance, surrenders in credit insurance, and unfavourable morbidity experience in
travel. The losses are partially offset by gains in individual insurance and wealth management. Net experience gains in individual insurance
consist of gains from mortality, morbidity related to disability insurance, expenses, and equities, and are partially offset by losses from lapses.
Wealth management experience gains are mainly a result of favourable expense experience.
Management actions and assumption changes are due to gains from changing the asset mix backing policy liabilities, experience refund
calculations in group insurance, lower mortality and expenses, and other valuation model changes. These gains are partially offset by strategic
project expenses in wealth management and the strengthening of individual insurance lapse assumptions.
1 CO-OPERATORS LIFE INSURANCE COMPANY | 2016 SOURCE OF EARNINGS
SOURCES OF EARNINGS ANALYSIS
2015
$ millions
Expected profit on in-force business
Impact of new business
Experience gains and losses
Management actions and
changes in assumptions
Other
Earnings on Surplus
Operating income (loss) before income taxes
Income tax expense (recovery)
Net operating income (loss)
Net transfer to shareholders
Net income (loss)
Individual
Insurance
23.6
0.1
8.8
3.5
1.1
37.1
8.0
29.1
(0.5)
28.6
Group
Wealth
Insurance Management
14.8
8.5
(0.2)
(41.2)
3.2
(0.2)
0.9
(25.7)
(6.0)
(19.7)
(19.7)
0.2
0.1
11.8
3.1
8.7
(0.1)
8.6
8.6
0.7
2.6
1.1
18.9
(0.9)
(19.5)
0.5
5.5
Travel
Insurance
(1.2)
(9.3)
Credit
Insurance
10.2
7.4
(3.1)
2.0
(8.5)
(2.3)
(6.2)
(6.2)
4.7
(2.0)
17.2
4.0
13.2
13.2
P&C
Insurance
8.4
8.4
8.4
8.4
Life
Surplus
-
Total
55.9
7.3
(41.6)
(11.5)
25.9
14.4
2.5
11.9
0.6
12.5
8.2
(1.0)
25.9
54.7
9.3
45.4
45.4
17.3
29.2
(0.2)
(4.6)
5.8
10.4
Net income by account
Participating account net income
Non-controlling interest net income (loss)
Shareholder account net income (loss)
(0.5)
(5.7)
-
-
3.6
9.6
2.2
6.2
Experience losses are mainly due to expenses in group and creditor insurance, equity investments and unfavourable morbidity experience in
travel and group insurance. The losses are partially offset by gains in individual insurance and wealth management. Net experience gains in
individual insurance consist of gains from mortality, morbidity related to disability insurance, and expenses, partially offset by investment income
losses in equities. Wealth management experience gains are mainly a result of favourable mortality and expense experience.
Management actions and changes in assumptions consist of gains from the purchase of additional equities to back policy liabilities, higher
historical average risk spreads used in the valuation, lower maintenance expenses, and other valuation model changes. These gains are partially
offset by losses resulting from changes to individual insurance lapse assumptions.
CO-OPERATORS LIFE INSURANCE COMPANY | 2016 SOURCE OF EARNINGS 2