TORONTO, Nov. 9, 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 $1,508.40 as at September 30, 2020, an
increase of 1% from $1,486.19 as at
December 31, 2019.
For the third quarter ended September 30, 2020, E-L
Financial reported consolidated shareholders' net income of
$201 million or $52.88 per common share compared to $101 million or $24.61 per common share in 2019. For the nine
months ended September 30, 2020, E-L Financial reported a
consolidated shareholder's net loss of $10
million or $5.70 per common
share compared to net income of $451
million or $111.99 per common
share in 2019.
The Company was impacted by the declines in equity markets which
occurred toward the end of the first quarter of 2020 and were
mainly related to the international emergence and spread of the
novel coronavirus (or COVID-19). Although equity markets have
substantially recovered during the second and third quarters of
2020, E-L Financial and Empire Life continue to monitor the
developments in equity and fixed income markets.
E-L Corporate
E-L Corporate reported net income of $150
million in the third quarter of 2020 compared to
$66 million for the second quarter of
2019. The increase in net income for the third quarter of 2020 is
primarily due to a net gain on investments of $184 million compared to $54 million in 2019 reflecting the continued
recovery of global equity market losses experienced during the
first quarter of 2020. The pre-tax total return on E-L Corporate's
global investment portfolio for the third quarter of 2020 was 4%
compared to 2% in the prior year.
E-L Corporate reported a net loss of $77
million for the first nine months of 2020 compared to net
income of $354 million for the
comparable period in 2019. The decrease in earnings was primarily
due to a net loss on investments of $74
million for the first nine months of 2020 compared to a net
gain of $376 million in 2019. E-L
Corporate's global investment portfolio had a pre-tax total return
including dividend income of approximately nil for the first nine
months of 2020 compared to a pre-tax total return of 10% in
2019.
Empire Life
The Empire Life segment reported net income of $51 million in the third quarter of 2020 compared
to $35 million for the third
quarter of 2019. The increase in third quarter earnings was
primarily a result of the favourable impact from changes in the
investments supporting the Individual Insurance line, partially
offset by increases in policy liabilities for segregated fund
guarantees.
The Empire Life segment reported net income of $67 million for the first nine months of 2020
compared to $97 million for the
comparable period of 2019. The decrease in year to date earnings
was primarily a result of significant strengthening of policy
liabilities supporting segregated fund guarantees.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 132% at September 30, 2020 compared to 155% at
December 31, 2019, 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 (LOSS)
(UNAUDITED)
E-L Financial
Consolidated
|
Third
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Contribution to
net income (loss)
|
|
|
|
|
|
|
|
E-L
Corporate1
|
$
|
150
|
|
$
|
66
|
|
$
|
(77)
|
|
$
|
354
|
Empire
Life2
|
51
|
|
35
|
|
67
|
|
97
|
Net income
(loss)
|
$
|
201
|
|
$
|
101
|
|
$
|
(10)
|
|
$
|
451
|
|
|
|
|
|
|
|
|
E-L
Corporate
|
Third
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
Net gain (loss) on
investments3
|
$
|
184
|
|
$
|
54
|
|
$
|
(74)
|
|
$
|
376
|
Investment and other
income
|
30
|
|
37
|
|
96
|
|
118
|
Share of associates
income (loss)
|
6
|
|
4
|
|
(56)
|
|
14
|
|
220
|
|
95
|
|
(34)
|
|
508
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
10
|
|
9
|
|
29
|
|
28
|
Income
taxes
|
29
|
|
12
|
|
(5)
|
|
67
|
Non-controlling
interests
|
31
|
|
8
|
|
19
|
|
59
|
|
70
|
|
29
|
|
43
|
|
154
|
Net income
(loss)
|
$
|
150
|
|
$
|
66
|
|
$
|
(77)
|
|
$
|
354
|
|
|
|
|
|
|
|
|
Empire
Life
|
Third
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
Net
premiums
|
$
|
221
|
|
$
|
218
|
|
$
|
639
|
|
$
|
681
|
Net gain on
investments3
|
37
|
|
109
|
|
439
|
|
749
|
Investment
income
|
82
|
|
84
|
|
244
|
|
241
|
Fee income
|
61
|
|
65
|
|
185
|
|
195
|
|
401
|
|
476
|
|
1,507
|
|
1,866
|
|
|
|
|
|
|
|
|
Benefits and
expenses
|
324
|
|
427
|
|
1,398
|
|
1,725
|
Income and other
taxes
|
22
|
|
12
|
|
32
|
|
38
|
Non-controlling and
participating policyholders' interests
|
4
|
|
2
|
|
10
|
|
6
|
|
350
|
|
441
|
|
1,440
|
|
1,769
|
Net
income
|
$
|
51
|
|
$
|
35
|
|
$
|
67
|
|
$
|
97
|
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
|
|
|
|
(Unaudited)
|
Third
quarter
|
|
Year to
date
|
(millions of
dollars)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Expected profit on
in-force business
|
$
|
53
|
|
$
|
46
|
|
$
|
159
|
|
$
|
143
|
Impact of new
business
|
(3)
|
|
(13)
|
|
(14)
|
|
(21)
|
Experience
losses
|
(15)
|
|
(1)
|
|
(148)
|
|
(11)
|
Management actions
and changes in assumptions
|
16
|
|
(1)
|
|
40
|
|
(11)
|
Earnings on
operations before income taxes
|
50
|
|
30
|
|
37
|
|
100
|
Earnings on
surplus
|
23
|
|
18
|
|
62
|
|
38
|
Income
taxes
|
(19)
|
|
(11)
|
|
(21)
|
|
(30)
|
Non-controlling
interests(1)
|
(3)
|
|
(2)
|
|
(11)
|
|
(11)
|
Net
income
|
$
|
51
|
|
$
|
35
|
|
$
|
67
|
|
$
|
97
|
(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, 2020 Empire Life had total assets under
management of $18 billion.
SOURCE E-L Financial Corporation