The Empire Life Insurance Company has reported a drop in Q4 2025 profit as higher non-insurance expenses offset stronger insurance and investment performance.
Common shareholders’ net income for the quarter was $5 million, down $11 million from $16 million in the fourth quarter of 2024. For the full year, common shareholders’ net income was $201 million, a decrease of $80 million from $281 million in 2024.
President and CEO Mark Sylvia said revenue, sales and core operational results remain solid, pointing to product initiatives, such as Empire Life’s Registered Disability Savings Plan (RDSP), the national expansion of its group retirement savings programme and the addition of new segregated funds as strategic drivers of longer‑term growth.
The company said the main contributors to its earnings are the net insurance service result, the net investment and insurance finance result, and total other income and expenses.
The net insurance service result increased to $47 million in Q4 2025 from $33 million a year earlier, an improvement of $14 million. For the full year, the net insurance service result rose to $198 million from $176 million. Management said both the quarterly and annual improvements were driven primarily by more favourable mortality experience in the Individual Insurance segment.
Net investment and insurance finance result also strengthened in the quarter, rising to $18 million from $4 million in Q4 2024, largely reflecting better performance from non‑fixed income assets. On a full‑year basis, however, this line declined to $232 million from $306 million in 2024. The company attributed the year‑over‑year decrease of $74 million mainly to the absence of impacts seen in 2024 from insurance contract liability assumption updates, which had significantly boosted results in the prior year and did not recur in 2025.
Insurance revenue for the quarter increased to $392 million from $358 million, with insurance service expenses rising to $344 million from $335 million. For 2025 as a whole, insurance revenue reached $1.53 billion, up from $1.405 billion, while insurance service expenses were $1.286 billion versus $1.187 billion in 2024.
The main drag on quarterly and annual earnings came from higher non‑insurance expenses. Total other income and expenses moved from a loss of $18 million in Q4 2024 to a loss of $48 million in Q4 2025. For the full year, total other income and expenses widened to a loss of $135 million from a loss of $79 million in 2024.
Non‑insurance expenses almost doubled in the quarter, to $58 million from $28 million, and increased to $159 million for the full year from $109 million. Empire Life said the $30 million quarterly increase and the $50 million annual increase largely reflected strategic investments in information systems and its workforce to strengthen technological capabilities and competitiveness, together with higher ongoing operating costs. The company also noted that 2024 benefited from one‑off gains in fee and other income from the sale of property and equipment, which did not recur in 2025.
Fee and other income was flat at $14 million in the quarter and declined to $41 million for the year, from $45 million in 2024. Interest expenses were stable in the quarter at $4 million and rose to $17 million for the full year, from $15 million.
Earnings per share for common shareholders were $5.31 in Q4 2025, down from a revised $16.09 in the same quarter of the prior year. Full‑year EPS was $203.67, compared with $284.77 in 2024. Prior‑year amounts have been revised from those previously presented.
Despite the profit decline, Empire Life’s regulatory capital position remains solid. The Life Insurance Capital Adequacy Test (LICAT) total ratio stood at 153% as of Dec. 31, 2025, up from 151% a year earlier and above both Office of the Superintendent of Financial Institutions (OSFI) requirements and the company’s internal targets.
The LICAT ratio has remained in a band between 140% and 153% over the past five quarters, suggesting that capital management and market movements have not materially eroded the company’s solvency buffer despite earnings volatility and higher spending.
Empire Life’s 2025 performance sits against a mixed backdrop for Canadian life insurers, with large peers generally reporting solid underlying earnings and strong capital, but also dealing with IFRS 17 transition effects, interest‑rate volatility and higher investment in technology and distribution.
Manulife Financial, Sun Life Financial and Great‑West Lifeco all posted growth in core or underlying earnings for 2025, supported by fee income from asset management, group benefits and international operations, even where reported net income was affected by market‑related items and assumption changes. Their core returns on equity typically remained in the mid‑teens or higher, above Empire Life’s 11.5% common shareholders’ ROE, reflecting greater diversification and scale in fee‑based and non‑Canadian businesses.
Industrial Alliance (iA Financial Group) also delivered year‑over‑year growth in core earnings, particularly from individual insurance and wealth, while maintaining a LICAT ratio comfortably above OSFI minimums. Across the peer set, LICAT totals in the low‑ to mid‑140s up into the 150s suggest Empire Life’s 153% ratio is broadly in line with, and in some cases slightly above, larger competitors on a regulatory capital basis.
Where Empire Life differs is in sensitivity to investment results and assumption updates. Its $201 million in 2025 common shareholders’ net income and lower ROE mark a more pronounced step down from 2024 than at some larger peers, largely because 2024 benefited from favourable liability assumption updates and strong investment gains that did not repeat. Bigger groups were generally able to offset similar headwinds with growth in global asset management, Asia and group businesses.
