Royal Bank estimates $160 million hit to insurance unit

Canaccord reports record revenues, drops proposal to acquire RF Capital The bank said the charge is based on current estimates and is subject to change and will be reflected in the results of the fourth quarter ending October 31. Under Canadian International Financial Reporting Standards (IFRS), the present value of the expected profit for a life policy is recognized at the time of sale of the policy. Subsequent to initial recognition, changes in assumptions as a result of updated experience or new regulations impacting life insurance policies are recognized in net income when they occur. The bank said these policies were primarily sold through third-party brokers and it is working with them to ensure affected clients understand their choices in light of this proposed legislation. The bank said clients will be offered revised options and itexpects a substantial portion of existing affected clients to select one of these options. “As a result of the proposed legislation and the introduction of new options for these clients, the expected profit on these amended policies is lower than the expected profits under the old policies, resulting in an increase to policyholder benefits, claims and acquisition expense,” the bank said. The bank will release its fourth quarter and fiscal 2013 results on December 5. IE Staff Related news Royal Bank of Canada (TSX:RY) said Wednesday that it expects to record $160 million before-tax charge in its insurance segment as a result of proposed federal legislation, which would affect the policyholders’ tax treatment of certain individual life insurance policies. The proposed legislation was tabled in the House of Commons for first reading on October 22, as part of the government’s budget bill. Canadian banks to focus on growth, spending and buybacks after strong second quarter Keywords EarningsCompanies Royal Bank of Canada Share this article and your comments with peers on social media Laurentian Bank reports $53.1M profit in Q2, beats expectations Facebook LinkedIn Twitter

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