TORONTO, Aug. 8, 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 $1,397.35 as at June 30, 2019, an increase
of 8% from $1,295.65 as at
December 31, 2018.
For the second quarter ended June 30,
2019, E-L Financial earned a consolidated
shareholders' net income of $42
million, or $9.70 per common
share, compared with $108 million, or
$26.56 per common share in 2018. For
the six months ended June 30, 2019, E-L Financial earned
consolidated shareholders' net income of $351 million, or $87.38 per common share, compared with
$174 million, or $42.26 per common share in 2018.
E-L Corporate
E-L Corporate reported a net income of $22 million for the second quarter ended
June 30, 2019, compared to
$51 million for the comparable period
in 2018. The decrease in net income is primarily due to a net loss
on investments of $19 million in the
second quarter of 2019 compared to a net gain of $42 million in 2018. The pre-tax total return on
investments for the second quarter of 2019 was 0% compared to 2% in
the prior year. During the second quarter of 2019, foreign currency
negatively impacted investment returns due to an appreciation of
the Canadian dollar relative to most major currencies.
For the six months ended June 30,
E-L Corporate earned net income of $288
million in 2019 compared to $78
million in 2018. The increase in net income is primarily due
to higher net gains on investments of $322
million in 2019 compared to $64
million in 2018. E-L Corporate's global investment portfolio
had a pre-tax total return of 8% for the six months ended June
30, 2019 compared to a pre-tax total return of 3% in the prior
year. Investments in Canada, U.S.
and Europe were the largest
contributors to the 2019 investment performance with a positive
pre-tax total return of approximately 11%.
Empire Life
For the second quarter ended June 30,
2019, the Empire Life segment reported net income of
$20 million compared to $57 million in 2018. The net income for 2019
decreased primarily due to unfavourable changes 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 product line. Lower
earnings in the Wealth Management and Employee Benefits product
lines were primarily driven by less favourable expense and claims
experience relative to the second quarter of 2018.
The Empire Life segment reported net income of $63 million for the six months ended
June 30, 2019 compared to $96
million in 2018. The net income for 2019 decreased primarily
due to the above mentioned items.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 149% at June 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
|
|
Second
quarter
|
|
Year to
date
|
(millions of
dollars)
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Contribution to
net income
|
|
|
|
|
|
|
E-L
Corporate1
|
|
$
|
22
|
$
|
51
|
|
$
|
288
|
$
|
78
|
Empire
Life2
|
|
20
|
57
|
|
63
|
96
|
Net
income
|
|
$
|
42
|
$
|
108
|
|
$
|
351
|
$
|
174
|
E-L
Corporate
|
|
Second
quarter
|
|
Year to
date
|
(millions of
dollars)
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Net (loss) gain on
investments3
|
|
$
|
(19)
|
$
|
42
|
|
$
|
322
|
$
|
64
|
Investment and other
income
|
|
51
|
50
|
|
81
|
75
|
Share of associates
income
|
|
7
|
7
|
|
9
|
5
|
|
|
39
|
99
|
|
412
|
144
|
|
|
|
|
|
|
|
Operating
expenses
|
|
9
|
9
|
|
18
|
18
|
Income
taxes
|
|
7
|
17
|
|
55
|
22
|
Non-controlling
interests
|
|
1
|
22
|
|
51
|
26
|
|
|
17
|
48
|
|
124
|
66
|
Net
income
|
|
$
|
22
|
$
|
51
|
|
$
|
288
|
$
|
78
|
Empire
Life
|
Second
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net
premiums
|
$
|
225
|
$
|
205
|
|
$
|
463
|
$
|
416
|
Net gain (loss) on
investments3
|
229
|
33
|
|
640
|
(47)
|
Investment and other
income
|
83
|
83
|
|
158
|
151
|
Fee income
|
66
|
67
|
|
130
|
132
|
|
603
|
388
|
|
1,391
|
652
|
|
|
|
|
|
|
Benefits and
expenses
|
569
|
308
|
|
1,297
|
514
|
Income and other
taxes
|
10
|
22
|
|
27
|
39
|
Non-controlling and
participating policyholders' interests
|
4
|
1
|
|
4
|
3
|
|
583
|
331
|
|
1,328
|
556
|
Net
income
|
$
|
20
|
$
|
57
|
|
$
|
63
|
$
|
96
|
|
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
|
Second
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2019
|
2018
|
|
2019
|
2018
|
Expected profit on
in-force business
|
$
|
46
|
$
|
52
|
|
$
|
97
|
$
|
102
|
Impact of new
business
|
(6)
|
(1)
|
|
(8)
|
(4)
|
Experience (losses)
gains
|
(13)
|
8
|
|
(10)
|
10
|
Management actions
and changes in assumptions
|
(9)
|
10
|
|
(10)
|
11
|
Earnings on
operations before income taxes
|
17
|
69
|
|
70
|
119
|
Earnings on
surplus
|
12
|
11
|
|
20
|
15
|
Income
taxes
|
(5)
|
(19)
|
|
(19)
|
(31)
|
Non-controlling
interests
|
(4)
|
(4)
|
|
(8)
|
(7)
|
Net
income
|
$
|
20
|
$
|
57
|
|
$
|
63
|
$
|
96
|
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 June 30, 2019 Empire Life had total assets under management
of $18 billion.
SOURCE E-L Financial Corporation Limited