(April 17 – 12:40 ET) – Net income for London Life increased 10% in 1999, to $171 million. “This performance reflects the company’s success in reducing operating expenses through the continued integration of administrative operations with Great-West Life. As well, fee income increased significantly, and we had favourable mortality experience. That was offset somewhat by unfavourable reinsurance margins associated with accident and health lines of business,” says London Life president and CEO Raymond L. McFeetors at the company’s annual meeting today at the corporate headquarters in London.
Revenue premiums and fee income of $5.9 billion was down 14% over 1998. The major influence here was a decline in reinsurance premiums, which were down 24%. “The decision of whether reinsurance premiums will reside on our books or those of our reinsurance customers is solely that of the customer. In either case, it has not impacted on our profit margins. Meanwhile we had a slight increase in individual premiums and a 19% increase in fee income. This increase in fee income is part of a larger trend that sees consumers continuing to show a preference for segregated funds,” says McFeetors.
Net income for participating policyowners after policyholder dividends was up 4% to $47 million, McFeetors says. Dividends to participating policyholders decreased slightly from 1998 to $441 million. Dividends reflect market experience as well as mortality experience and expense performance. “We’ve experienced a gradual reduction in portfolio yield for the participating account, that stems from reinvesting maturing assets at lower market interest rates,” he said. “Because of this, we reduced the dividend scale in 1999. “
By combining the product development, administration, information systems and service operations of London Life with Great-West, we’ve significantly decreased operating
expenses. Operating expenses for 1999 were down 15% or $71 million over 1998. Total expenses, including investment expenses, were down 17% or $83 million from 1998 levels and down 27% or $155 million from comparable 1997 levels. London Life has been one of the two lowest net cost providers of participating insurance for more than 25 years. Great-West Life has been the other.”
Total assets under administration grew by 4% during the year, to $30 billion. This reflects strong growth in segregated fund assets, again the result of consumer preference. Segregated funds assets grew 24% to $7.4 billion. Over the last two years, segregated fund assets have grown by 60%. London Life now offers 75 segregated funds, including funds managed by London Life’s own subsidiary, London Life Investment Management Ltd., as well as GWL Investment Management Ltd. and 12 outside fund managers.
McFeetors said the integration of London Life and Great-West Life’s product development, administration and service operations is now complete. London Life’s individual sales force remains separate and distinct. “Our focus now is on enhancing customer service processes and productivity. The integration has allowed us to significantly decrease operating expenses at both London Life and Great-West. London Life has been one of the lowest net cost providers of participating insurance for more than 25 years. Integrating the two companies’ operations allows us to strengthen this position.”
In 1999, London Life completed the final steps in centralizing customer service and administration, he said. Through ServiceLink, London Life customers can perform routine transactions and initiate changes to their personal information.
-IE Staff