TORONTO, Nov. 7, 2019
/CNW/ - E-L Financial Corporation Limited ("E-L Financial" or
the "Company") (TSX: ELF) (TSX: ELF.PR.F) (TSX: ELF.PR.G) (TSX:
ELF.PR.H) today reported a net equity value per common share of
$1,421.57 as at September 30,
2019, an increase of 10% from $1,295.65 as at December 31, 2018.
For the third quarter ended September 30,
2019, E-L Financial earned consolidated
shareholders' net income of $101
million or $24.61 per common
share, compared with $95 million or
$23.33 per common share in 2018. For
the nine months ended September 30, 2019, E-L Financial earned
consolidated shareholders' net income of $451 million or $111.99 per common share, compared with
$269 million or $65.58 per common share in 2018.
E-L Corporate
E-L Corporate reported net income of $66
million for the third quarter ended September 30, 2019, compared to $60 million for the comparable period in 2018.
The pre-tax total return on investments was 2% for the third
quarters of 2019 and 2018.
For the nine months ended September
30, E-L Corporate earned net income of $354 million in 2019 compared to $139 million in 2018. The increase in net income
is primarily due to higher net gains on investments of $376 million compared to $118 million in 2018. E-L Corporate's global
investment portfolio had a pre-tax total return of 10% for the nine
months ended September 30, 2019 compared to a pre-tax total
return of 5% in the prior year. The portfolio earned investment
returns of 13% in Canada and the
U.S., 10% in Europe and 5% in
other geographic regions for the nine months ended
September 30, 2019.
Empire Life
The Empire Life operating segment reported net income of
$35 million for the third quarters of
2019 and 2018.
For the nine months ended September 30,
2019, the Empire Life operating segment reported net income
of $97 million compared to
$130 million in 2018. The decrease in
year to date earnings was primarily a result of a decrease in bond
yields, which contributed to an increase in insurance contract
liabilities that more than offset the impact of fair value gains on
fixed income investments in the Individual Insurance line. The
Employee Benefits product line experienced lower earnings year to
date, primarily driven by less favourable expense and claims
experience relative to the third quarter of 2018.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 149% at September 30, 2019 compared to 149% at
December 31, 2018, well above the
requirements set by the Office of the Superintendent of Financial
Institutions Canada as well as Empire Life's minimum internal
targets.
CONSOLIDATED SUMMARY OF NET INCOME (UNAUDITED)
|
E-L Financial
Consolidated
|
Third
quarter
|
|
|
Year to
date
|
|
(millions of
dollars)
|
2019
|
2018
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
Contribution to
net income
|
|
|
|
|
|
|
E-L
Corporate1
|
$
|
66
|
$
|
60
|
|
$
|
354
|
$
|
139
|
|
Empire
Life2
|
35
|
35
|
|
97
|
130
|
|
Net
income
|
$
|
101
|
$
|
95
|
|
$
|
451
|
$
|
269
|
|
E-L
Corporate
|
Third
quarter
|
Year to
date
|
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Net gain on
investments3
|
$
|
54
|
$
|
54
|
|
$
|
376
|
$
|
118
|
|
Investment and other
income
|
37
|
33
|
|
118
|
108
|
|
Share of associates
income
|
4
|
10
|
|
14
|
14
|
|
95
|
97
|
|
508
|
240
|
|
|
|
|
|
|
|
Operating
expenses
|
9
|
9
|
|
28
|
25
|
|
Income
taxes
|
12
|
14
|
|
67
|
36
|
|
Non-controlling
interests
|
8
|
14
|
|
59
|
40
|
|
29
|
37
|
|
154
|
101
|
|
Net
income
|
$
|
66
|
$
|
60
|
|
$
|
354
|
$
|
139
|
|
Empire
Life
|
Third
quarter
|
|
Year to
date
|
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Net
premiums
|
$
|
218
|
$
|
221
|
|
$
|
681
|
$
|
637
|
|
Net gain (loss) on
investments3
|
109
|
(166)
|
|
749
|
(213)
|
|
Investment and other
income
|
84
|
75
|
|
241
|
226
|
|
Fee income
|
65
|
67
|
|
195
|
199
|
|
476
|
197
|
|
1,866
|
849
|
|
|
|
|
|
|
|
Benefits and
expenses
|
427
|
145
|
|
1,725
|
660
|
|
Income and other
taxes
|
12
|
13
|
|
38
|
52
|
|
Non-controlling and
participating policyholders' interests
|
2
|
4
|
|
6
|
7
|
|
441
|
162
|
|
1,769
|
719
|
|
Net
income
|
$
|
35
|
$
|
35
|
|
$
|
97
|
$
|
130
|
|
1 Net of non-controlling
interests
|
|
2 Net
of non-controlling interests and participating
policyholders' net income (loss)
|
|
3 Includes fair value change on FVTPL
investments and realized gains on AFS investments
|
|
Empire Life's
Sources of Earnings
|
Third
quarter
|
|
Year to
date
|
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
Expected profit on
in-force business
|
$
|
46
|
$
|
41
|
|
$
|
143
|
$
|
143
|
|
Impact of new
business
|
(13)
|
(1)
|
|
(21)
|
(5)
|
|
Experience (losses)
gains
|
(1)
|
12
|
|
(11)
|
22
|
|
Management actions
and changes in assumptions
|
(1)
|
(9)
|
|
(11)
|
2
|
|
Earnings on
operations before income taxes
|
30
|
43
|
|
100
|
162
|
|
Earnings on
surplus
|
18
|
7
|
|
38
|
22
|
|
Income
taxes
|
(11)
|
(11)
|
|
(30)
|
(43)
|
|
Non-controlling
interests(1)
|
(2)
|
(4)
|
|
(11)
|
(11)
|
|
Net
income
|
$
|
35
|
$
|
35
|
|
$
|
97
|
$
|
130
|
|
(1) Including preference share
dividends
|
Non-GAAP Measures
The Company uses non-GAAP measures including net equity value
per common share to provide investors with supplemental measures of
its operating performance that may not otherwise be apparent when
relying solely on International Financial Reporting Standards
("IFRS") financial measures. Net equity value per common share
provides an indication of the accumulated shareholder value,
adjusting shareholders' equity to reflect investments in associates
at fair value, net of tax, as opposed to their carrying value.
The Company also uses sources of earnings and assets under
management to provide investors with supplemental measures of
Empire Life's performance and to highlight trends in its core
business that may not otherwise be apparent when relying solely on
IFRS financial measures. The Company also believes that securities
analysts, investors and other interested parties frequently use
non-GAAP measures in the evaluation of issuers.
About E-L Financial
E-L Financial operates as an investment and insurance holding
company. In managing its operations, E-L Financial
distinguishes between two operating segments, E-L Corporate and
Empire Life.
E-L Corporate represents investments in stocks and fixed income
securities held directly and indirectly through pooled funds,
closed-end investment companies and other investment companies. The
investment strategy is to accumulate shareholder value through
long-term capital appreciation and dividend and interest income
from its investments.
Empire Life is a subsidiary of E-L Financial. Since 1923, Empire
Life has provided individual and group life and health insurance,
investment and retirement products to Canadians. Empire Life's
mission is to make it simple, fast and easy for Canadians to get
the investment, insurance and group benefits coverage they need to
build wealth, generate income, and achieve financial security. As
of September 30, 2019 Empire Life had total assets under
management of $18 billion.
SOURCE E-L Financial Corporation Limited