Royal Bank of Canada (RBC) reported robust financial results for 2024, with net income reaching $16.2 billion, an 11% increase from the previous year. Diluted earnings per share rose 9% to $11.25, reflecting growth across all business segments. Against this backdrop of overall success, the bank’s insurance division stood out with notable achievements.
The insurance segment delivered a remarkable 33% earnings growth, significantly contributing to the bank’s strong financial performance. This success comes amid a strategic transition to IFRS 17 Insurance Contracts, which has enabled more transparent financial reporting and portfolio management, according to a news release.
In the fourth quarter, the insurance division reported net income of $162 million, a 67% increase from the previous year. The substantial growth was driven by improved insurance investment results and expanded business across multiple product lines. RBC noted the segment benefited from lower capital funding costs, favourable investment-related experiences, and robust service results.
Dave McKay, RBC’s president and CEO, highlighted the bank’s commitment to meeting evolving client expectations and creating value. “In 2024, RBC relentlessly pursued our ambition to stay ahead of evolving client expectations and create unparalleled value,” he said.
“As our results exemplify, our premium franchises delivered diversified revenue growth, underpinned by a strong balance sheet and prudent risk management. We also elevated a new generation of leaders across the bank to continue delivering trusted advice and experiences to rival the best in any industry.
“As we enter 2025 from a position of strength, I’m fully confident in Team RBC's ability to continue going above-and-beyond to support those we serve, each and every day.”
The earnings growth was primarily attributed to two factors. RBC said the insurance investment result saw significant improvement, largely due to lower capital funding costs and favourable investment-related experiences. Simultaneously, the insurance service result benefited from robust business growth across most product lines.
However, the results were not without challenges. The bank noted less favourable claims experience, particularly in disability products, which partially tempered the overall positive performance. The transition to IFRS 17 also means that direct comparisons with previous periods require careful interpretation.
The fourth quarter showed nuanced performance. While net income increased substantially compared to the previous year, there was a slight 5% decline from the previous quarter. This quarter-to-quarter variation was primarily attributed to adjustments in deferred acquisition expenses and annual actuarial assumption updates.
The implementation of IFRS 17 represents a significant shift in insurance contract accounting, providing more transparency and consistency in financial reporting. For RBC, this has meant a comprehensive review and repositioning of its insurance portfolio, which has contributed to its impressive growth.
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