TORONTO, May 10, 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 March 31, 2018, consolidated
shareholders' net income of $65.5
million or $15.69 per common
share compared with $264.1 million or
$66.26 per common share in 2017.
E-L Financial's net equity value per common share was
$1,324.26 as at March 31, 2018,
compared to $1,217.64 as at
March 31, 2017.
E-L Corporate
For the quarter ended March 31, 2018, E-L Corporate earned
net income of $27.1 million compared
to $214.3 million in 2017. The
decrease in net income is primarily due to a lower net gain on
investments of $22.3 million in 2018
compared to $269.7 million in 2017.
E-L Corporate's global investment portfolio yielded a pre-tax total
return of 1% in the first quarter of 2018 compared to 6% in the
prior year. The higher investment returns for the first quarter of
2017 were attributed to the strong performance of global equities
whereas positive foreign currency movements offset negative
investments returns for the first quarter of 2018.
Empire Life
For the quarter ended March 31, 2018, Empire Life's net
income attributable to E-L Financial was $38.4 million compared to $49.8 million for the comparable period in 2017.
The earnings for the first quarter of 2018 included growth from
expected profit on in-force business in the Individual Insurance
product line and higher experience gains in Individual Insurance
and Employee Benefits product lines. The first quarter of 2017
included gains realized from management actions in the Individual
Insurance product line. These gains were not realized in the first
quarter of 2018.
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has been replaced by the Life Insurance Capital Adequacy Test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. The LICAT total ratio was 177.5% at
March 31, 2018 well above the
requirements set by the Office of the Superintendent of Financial
Institutions Canada ("OSFI") as well as Empire Life's minimum
internal targets.
On April 26, 2018, Empire Life
announced its intention to redeem all of the outstanding
$300 million 2.870% unsecured
subordinated debentures on May 31,
2018 at a redemption price equal to the principal amount
together with accrued and unpaid interest to that date. The
pro-forma LICAT ratio reflecting this redemption would be 162% as
of March 31, 2018.
CONSOLIDATED SUMMARY OF NET INCOME (UNAUDITED)
E-L Financial
Consolidated
|
First
quarter
|
(millions of
dollars)
|
2018
|
|
2017
|
|
|
|
Contribution to
net income
|
|
|
E-L
Corporate1
|
$
|
27.1
|
|
$
|
214.3
|
Empire
Life2
|
38.4
|
|
49.8
|
Net
income
|
$
|
65.5
|
|
$
|
264.1
|
|
|
E-L
Corporate
|
First
quarter
|
(millions of
dollars)
|
2018
|
|
2017
|
|
|
|
Revenue
|
|
|
Net gain on
investments3
|
$
|
22.3
|
|
$
|
269.7
|
Investment and other
income
|
25.2
|
|
24.3
|
Share of associates
(loss) income
|
(2.6)
|
|
0.7
|
|
44.9
|
|
294.7
|
Expenses
|
|
|
Operating
|
8.8
|
|
6.6
|
Income
taxes
|
4.9
|
|
38.8
|
Non-controlling
interests
|
4.1
|
|
35.0
|
|
17.8
|
|
80.4
|
Net
income
|
$
|
27.1
|
|
$
|
214.3
|
|
|
Empire
Life
|
First
quarter
|
(millions of
dollars)
|
2018
|
|
2017
|
|
|
|
Revenue
|
|
|
Net
premiums
|
$
|
211.0
|
|
$
|
202.4
|
Net (loss) gain on
investments3
|
(80.0)
|
|
81.6
|
Investment and other
income
|
67.3
|
|
64.6
|
Fee income
|
65.5
|
|
61.3
|
|
263.8
|
|
409.9
|
Expenses
|
|
|
Benefits and
expenses
|
207.1
|
|
338.9
|
Income and other
taxes
|
16.1
|
|
20.1
|
Non-controlling and
participating policyholders'
|
|
|
|
|
interests
|
2.2
|
|
1.1
|
|
225.4
|
|
360.1
|
Net
income
|
$
|
38.4
|
|
$
|
49.8
|
1
|
Net of
non-controlling interests
|
2
|
Net of
non-controlling interests and participating policyholders' income
(loss)
|
3
|
Includes fair value
change on FVTPL investments and realized gains on AFS
investments
|
Empire Life's
Sources of Earnings
|
First
quarter
|
(millions of
dollars)
|
2018
|
|
2017
|
Expected profit on
in-force business
|
$
|
49.0
|
|
$
|
43.3
|
Impact of new
business
|
(3.6)
|
|
(4.8)
|
Experience gains
(losses)
|
4.4
|
|
(0.4)
|
Management actions
and changes in assumptions
|
—
|
|
29.6
|
Earnings on
operations before income taxes
|
49.8
|
|
67.7
|
Earnings on
surplus
|
4.5
|
|
1.8
|
Income
taxes
|
(12.3)
|
|
(17.2)
|
Non-controlling
interests
|
(3.6)
|
|
(2.5)
|
Net
income
|
$
|
38.4
|
|
$
|
49.8
|
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 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 March 31, 2018 Empire Life had total assets under
management of $17.3 billion.
SOURCE E-L Financial Corporation Limited