TORONTO, ONTARIO–(Marketwired – May 10, 2017) – 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, 2017, consolidated shareholders’ net income of $264.1 million or $66.26 per share compared with a loss of $61.4 million or $16.62 per share in 2016.
E-L Financial’s net equity value per Common Share was $1,217.64 at March 31, 2017, an increase of 5% from $1,159.26 as at December 31, 2016.
E-L Corporate
For the quarter ended March 31, E-L Corporate earned net income of $214.3 million in 2017 compared to a net loss of $98.3 million in 2016. The increase in net income is due to E-L Corporate’s net gain on investments of $269.7 million compared to a net loss of $153.9 million in 2016. E-L Corporate’s investments for the first quarter of 2017 yielded a pre-tax total return of 6% mainly due to positive investment returns on global equities. At March 31, 2017, 84.1% (December 31, 2016 – 85%) of E-L Corporate’s investments were denominated in foreign currencies with 45% (December 31, 2016 – 48%) and 11% (December 31, 2016 – 14%) exposed to U.S. and European equities respectively.
Empire Life
For the quarter ended March 31, 2017, The Empire Life Insurance Company’s (“Empire Life”) net income attributable to E-L Financial was $49.8 million compared to $36.9 million for the comparable period in 2016. The increase in net income was due primarily to higher Wealth Management profits, resulting from strong stock market performance in 2017 and favourable Employee Benefits claims experience. Empire Life continues to improve its matching of assets and liabilities in the Individual Insurance product line by increasing its investment in real estate partnership units and by making changes to its bond and equity investments. The improved matching position resulted in strong performance in that product line for the quarter.
Empire Life’s assets under management (including segregated fund and mutual fund assets) increased 10% over March 31, 2016 levels to reach $16.4 billion.
Empire Life’s Minimum Continuing Capital and Surplus Requirements ratio increased to 258% at March 31, 2017 compared to 248% at December 31, 2016 primarily resulting from increased available capital from Empire Life’s first quarter net income and lower capital required as a result of change in asset mix.
| CONSOLIDATED SUMMARY OF NET INCOME (UNAUDITED) | |||||
| E-L Financial Consolidated | First quarter | ||||
| (thousands of dollars) | 2017 | 2016 | |||
| Contribution to net income (loss) | |||||
| E-L Corporate1 | $ | 214,344 | $ | (98,306 | ) |
| Empire Life2 | 49,752 | 36,933 | |||
| Net income (loss) | $ | 264,096 | $ | (61,373 | ) |
| E-L Corporate | First quarter | ||||
| (thousands of dollars) | 2017 | 2016 | |||
| Revenue | |||||
| Net gain (loss) on investments3 | $ | 269,702 | $ | (153,859 | ) |
| Investment and other income | 24,269 | 25,466 | |||
| Share of associates income (loss) | 736 | (6,328 | ) | ||
| 294,707 | (134,721 | ) | |||
| Expenses | |||||
| Operating | 6,643 | 6,108 | |||
| Income taxes | 38,758 | (15,228 | ) | ||
| Non-controlling interests | 34,962 | (27,295 | ) | ||
| 80,363 | (36,415 | ) | |||
| Net income (loss) | $ | 214,344 | $ | (98,306 | ) |
| Empire Life | First quarter | ||||
| (thousands of dollars) | 2017 | 2016 | |||
| Revenue | |||||
| Net premiums | $ | 202,394 | $ | 229,775 | |
| Net gain on investments3 | 81,574 | 70,663 | |||
| Investment and other income | 64,557 | 60,785 | |||
| Fee income | 61,276 | 54,763 | |||
| 409,801 | 415,986 | ||||
| Expenses | |||||
| Benefits and expenses | 338,841 | 361,685 | |||
| Income and other taxes | 20,093 | 16,568 | |||
| Non-controlling and participating policyholders’ interests | 1,115 | 800 | |||
| 360,049 | 379,053 | ||||
| Net income | $ | 49,752 | $ | 36,933 | |
| 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 |
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 assets under management to provide investors with a supplemental measure 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 Corporation Limited. Since 1923, Empire Life has provided competitive 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.
Vice President and Chief Financial Officer
E-L Financial Corporation Limited
(416) 947-2578
(416) 362-0792 (FAX)
