TORONTO, Nov. 13, 2018
/CNW/ - E-L Financial Corporation Limited ("E-L Financial") (TSX:
ELF) (TSX: ELF.PR.F) (TSX: ELF.PR.G) (TSX: ELF.PR.H) today reported
for the quarter ended September 30, 2018, consolidated
shareholders' net income of $95.5
million, or $23.33 per common
share, compared with $49.4 million,
or $11.60 per common share in 2017.
For the nine months ended September 30, 2018, E-L Financial
earned consolidated shareholders' net income of $269.2 million, or $65.58 per common share, compared with
$411.0 million, or $101.70 per common share in 2017.
E-L Financial's net equity value per common share was
$1,361.06 as at September 30,
2018, an increase of 3.4% from $1,316.64 as at December 31, 2017.
E-L Corporate
E-L Corporate reported net income of $60.5 million in the third quarter of 2018
compared to $10.6 million for the
comparable period in 2017. The increase in net income for the third
quarter of 2018 was mainly due to a higher net gain on investments
of $54.1 million compared to a loss
of $25.0 million for the same period
in 2017, resulting in a positive pre-tax total return on
investments of approximately 2% in 2018 compared to nil in the
prior year.
For the nine months ended September
30, E-L Corporate earned net income of $138.9 million in 2018 compared to $289.3 million in 2017. The decrease in net
income is primarily due to lower net gains on investments of
$118.1 million in 2018 compared to
$287.1 million in 2017 within the E-L
Corporate segment. E-L Corporate's global investment portfolio
yielded a pre-tax total return of 5% in the first nine months of
2018 compared to 8% in the prior year.
Empire Life
For the quarter ended September 30, 2018, Empire Life's net
income attributable to E-L Financial was $35.0 million compared to $38.8 million for the comparable period in 2017.
The decrease in earnings at Empire Life for the third quarter of
2018 was primarily due to changes in policy liability assumptions
in the Individual Insurance product line, partially offset by
higher gains realized from management actions in the Individual
Insurance product line and improved operating results from the
Wealth Management and Employee Benefits product lines.
The Empire Life segment reported net income of
$130.3 million for the nine months
ended September 30, 2018 compared to $121.7 million in 2017. The increase in net
income was primarily due to improved operating performance across
all product lines and higher experience gains in the Individual
Insurance and Employee Benefits product lines, partially offset by
changes in policy liability assumptions in the Individual Insurance
product line.
Effective January 1, 2018, MCCSR
has been replaced by the Life Insurance Capital Adequacy Test
("LICAT"). The LICAT is intended to improve the quality of
available capital and provide a better alignment of the risk
measures with the long-term economics of the life insurance
business. The LICAT will behave differently under various economic
scenarios when compared to MCCSR. As a result, LICAT ratios are not
comparable to the MCCSR ratio. Empire Life's LICAT total ratio was
164% at September 30, 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)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Contribution to
net income
|
|
|
|
|
|
E-L
Corporate1
|
$
|
60.5
|
$
|
10.6
|
|
$
|
138.9
|
$
|
289.3
|
Empire
Life2
|
35.0
|
38.8
|
|
130.3
|
121.7
|
Net
income
|
$
|
95.5
|
$
|
49.4
|
|
$
|
269.2
|
$
|
411.0
|
E-L
Corporate
|
Third
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net gain (loss) on
investments3
|
$
|
54.1
|
$
|
(25.0)
|
|
$
|
118.1
|
$
|
287.1
|
Investment and other
income
|
32.7
|
25.4
|
|
107.8
|
91.6
|
Share of associates
income
|
9.7
|
9.4
|
|
14.5
|
22.2
|
|
96.5
|
9.8
|
|
240.4
|
400.9
|
|
|
|
|
|
|
Operating
|
8.0
|
6.4
|
|
25.3
|
20.0
|
Income
taxes
|
13.6
|
1.2
|
|
35.8
|
54.7
|
Non-controlling
interests
|
14.4
|
(8.4)
|
|
40.4
|
36.9
|
|
36.0
|
(0.8)
|
|
101.5
|
111.6
|
Net
income
|
$
|
60.5
|
$
|
10.6
|
|
$
|
138.9
|
$
|
289.3
|
Empire
Life
|
Third
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net
premiums
|
$
|
220.6
|
$
|
217.4
|
|
$
|
636.8
|
$
|
624.2
|
Net (loss) gain on
investments3
|
(166.2)
|
(214.9)
|
|
(213.0)
|
32.9
|
Investment and other
income
|
75.4
|
69.8
|
|
225.9
|
204.0
|
Fee income
|
67.5
|
62.2
|
|
199.2
|
186.7
|
|
197.3
|
134.5
|
|
848.9
|
1,047.8
|
|
|
|
|
|
|
Benefits and
expenses
|
144.7
|
78.0
|
|
659.6
|
875.6
|
Income and other
taxes
|
13.7
|
17.0
|
|
52.4
|
50.0
|
Non-controlling and
participating policyholders' interests
|
3.9
|
0.7
|
|
6.6
|
0.5
|
|
162.3
|
95.7
|
|
718.6
|
926.1
|
Net
income
|
$
|
35.0
|
$
|
38.8
|
|
$
|
130.3
|
$
|
121.7
|
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)
|
2018
|
2017
|
|
2018
|
2017
|
Expected profit on
in-force business
|
$
|
40.9
|
$
|
43.6
|
|
$
|
142.5
|
$
|
129.6
|
Impact of new
business
|
(0.6)
|
(3.7)
|
|
(4.6)
|
(14.1)
|
Experience
gains
|
12.3
|
14.6
|
|
22.4
|
7.7
|
Management actions
and changes in assumptions
|
(9.4)
|
(2.7)
|
|
1.8
|
27.8
|
Earnings on
operations before income taxes
|
43.2
|
51.8
|
|
162.1
|
150.9
|
Earnings on
surplus
|
6.7
|
3.4
|
|
21.8
|
19.0
|
Income
taxes
|
11.3
|
13.7
|
|
42.7
|
40.7
|
Non-controlling
interests
|
3.6
|
2.7
|
|
10.9
|
7.5
|
Net
income
|
$
|
35.0
|
$
|
38.8
|
|
$
|
130.3
|
$
|
121.7
|
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 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, 2018 Empire Life had total assets under
management of $17.2 billion.
SOURCE E-L Financial Corporation