TORONTO, March 3, 2020 /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 $1,486.19 as at December 31, 2019, an
increase of 15% from $1,295.65
as at December 31, 2018.
For the year ended December 31, 2019, E-L Financial earned
consolidated shareholders' net income of $745 million or $185.67 per common share compared with
$31 million or $3.96 per common share in 2018. For the fourth
quarter ended December 31, 2019, E-L
Financial earned consolidated shareholders' net income of
$293 million or $73.68 per common share, compared with a loss of
$238 million or $61.62 per common share in 2018.
"2019 was a remarkable year for E-L Financial. Despite the stock
market declines in the later part of 2018, our global investment
portfolio more than recovered and had a strong performance through
2019. I am pleased with the results of Empire Life which has
reported a record shareholder net income for 2019. Despite the
challenging low interest rate environment the life insurance
industry is facing, Empire Life continues to perform well within a
challenging market. Finally, I am happy to report to you, that our
Board of Directors today approved a special additional cash
dividend of $25.00 per Common Share
which is in addition to the $1.25
quarterly Common Shareholder dividends," said Duncan N.R. Jackman, Chairman, President and CEO
of E-L Financial.
E-L Corporate
For the year ended December 31,
2019, E-L Corporate earned a net income of $572 million compared to a net loss of
$105 million in 2018. The increase in
net income is primarily due to a higher net gain on investments of
$646 million in 2019 compared to a
loss of $206 million in 2018. E-L
Corporate's global investment portfolio had a pre-tax total return
of 17% in 2019 compared to a pre-tax total return of negative 2% in
the prior year.
E-L Corporate reported net income of $217
million for the fourth quarter of 2019 compared to a loss of
$244 million for the comparable
period in 2018. For the fourth quarter of 2019, E-L Corporate
reported a net gain on investments of $271
million compared to a net loss of $324 million in 2018. The pre-tax total return on
investments was 7% for the fourth quarter of 2019 compared to a
pre-tax total return of negative 6% in 2018.
Empire Life
The Empire Life segment reported net income of $173 million in 2019 compared to $136 million in 2018. In the fourth quarter of
2019, Empire Life enacted significant changes to its reinsurance
program, which included a significant increase in Empire Life's
individual life insurance retention level, along with a recapture
of a significant amount of reinsured business. The net income
impact of this reinsurance recapture initiative was $78 million. The increase in earnings for the
year was primarily a result of the recapture initiative, partly
offset by unfavourable assumption updates in the Wealth Management
and Individual Insurance lines and a deterioration of long term
disability experience in the Employee Benefits line.
Empire Life reported net income of $76
million for the fourth quarter of 2019 compared to
$6 million for the comparable period
in 2018. The increase in earnings for the quarter was primarily a
result of the recapture initiative noted above.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 155% at December 31, 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
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
Contribution to
net income (loss)
|
|
|
|
|
|
E-L
Corporate1
|
$
|
217
|
$
|
(244)
|
|
$
|
572
|
$
|
(105)
|
Empire
Life2
|
76
|
6
|
|
173
|
136
|
Net income
(loss)
|
$
|
293
|
$
|
(238)
|
|
$
|
745
|
$
|
31
|
E-L
Corporate
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net gain (loss) on
investments3
|
$
|
271
|
$
|
(324)
|
|
$
|
646
|
$
|
(206)
|
Investment and other
income
|
27
|
27
|
|
145
|
134
|
Share of associates
income (loss)
|
10
|
(5)
|
|
24
|
10
|
|
308
|
(302)
|
|
815
|
(62)
|
|
|
|
|
|
|
Operating
expenses
|
10
|
9
|
|
37
|
34
|
Income
taxes
|
40
|
(41)
|
|
107
|
(6)
|
Non-controlling
interests
|
41
|
(26)
|
|
99
|
15
|
|
91
|
(58)
|
|
243
|
43
|
Net income
(loss)
|
$
|
217
|
$
|
(244)
|
|
$
|
572
|
$
|
(105)
|
Empire
Life
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net
premiums
|
$
|
229
|
$
|
237
|
|
$
|
910
|
$
|
874
|
Net (loss) gain on
investments3
|
(131)
|
(95)
|
|
618
|
(308)
|
Investment and other
income
|
85
|
82
|
|
325
|
308
|
Fee income
|
66
|
65
|
|
262
|
264
|
|
249
|
289
|
|
2,115
|
1,138
|
|
|
|
|
|
|
Benefits and
expenses
|
122
|
274
|
|
1,847
|
935
|
Income and other
taxes
|
39
|
4
|
|
77
|
56
|
Non-controlling and
participating policyholders' interests
|
12
|
5
|
|
18
|
11
|
|
173
|
283
|
|
1,942
|
1,002
|
Net
income
|
$
|
76
|
$
|
6
|
|
$
|
173
|
$
|
136
|
1
|
Net of
non-controlling interests
|
2
|
Net of
non-controlling interests and participating
policyholders' amounts
|
3
|
Includes fair value
change in fair value through profit or loss investments and
realized gain on available for sale investments
|
Empire Life's
Sources of Earnings
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
Expected profit on
in-force business
|
$
|
47
|
$
|
51
|
|
$
|
190
|
$
|
194
|
Impact of new
business
|
(7)
|
(12)
|
|
(28)
|
(16)
|
Experience gains
(losses)
|
5
|
(26)
|
|
(6)
|
(3)
|
Management actions
and changes in assumptions
|
48
|
(22)
|
|
37
|
(20)
|
Earnings (loss) on
operations before income taxes
|
94
|
(9)
|
|
194
|
154
|
Earnings on
surplus
|
16
|
15
|
|
54
|
37
|
Income
taxes
|
(30)
|
3
|
|
(60)
|
(40)
|
Non-controlling
interests(1)
|
(4)
|
(3)
|
|
(15)
|
(15)
|
Net
income
|
$
|
76
|
$
|
6
|
|
$
|
173
|
$
|
136
|
(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 December 31, 2019 Empire Life had total assets under
management of $18 billion.
SOURCE E-L Financial Corporation