TORONTO, ONTARIO–(Marketwired – Nov. 8, 2016) – 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, 2016, consolidated shareholders’ net income of $191.3 million or $47.72 per share compared with $28.2 million or $6.20 per share in 2015. For the nine months ended September 30, 2016, E-L Financial earned consolidated shareholders’ net income of $233.1 million or $56.38 per share compared with $326.9 million or $80.28 per share in 2015.
E-L Financial’s net equity value per Common Share was $1,132.28 at September 30, 2016, an increase from $1,089.23 as at December 31, 2015.
E-L Corporate
For the quarter ended September 30, 2016, E-L Corporate earned net income of $153.5 million compared to $10.4 million for the comparable period in 2015. E-L Corporate’s net income for the third quarter is primarily attributable to net investment gains on the global investment portfolio. For the third quarter of 2016, E-L Corporate had a net gain on investments of $177.4 million versus a net loss on investments of $4.1 million for the same period in 2015. During the quarter E-L Corporate investments had a pre-tax total return of 4% compared to a nominal return in the third quarter of 2015.
For the nine months ended September 30, 2016, E-L Corporate earned net income of $133.7 million compared to $252.5 million for the comparable period in 2015. The decrease in year to date net income is mostly attributable to E-L Corporate’s net gain on investments of $89.9 million compared to $298.8 million in 2015. During 2016 E-L Corporate’s investments had a pre-tax total return of 3% mainly due to positive investment returns on global equities which was partly offset by the strengthening of the Canadian dollar against foreign currencies. At September 30, 2016, 84.5% of E-L Corporate’s investments were denominated in foreign currencies with 47.8% exposed to U.S. equities. The net gain on investments in 2015 was attributed to the favourable impact of a lower Canadian dollar.
Empire Life
For the quarter ended September 30, 2016, The Empire Life Insurance Company’s (“Empire Life”) net income attributable to E-L Financial was $37.8 million compared to $17.8 million for the comparable period in 2015. The increase in net income was primarily due to higher profit from the Individual Insurance product line resulting from improved stock market conditions in 2016 and improved asset/liability matching in 2016.
For the nine months ended September 30, 2016 Empire Life’s net income attributable to E-L Financial was $99.3 million compared to $74.4 million for the comparable period in 2015. The increase in net income was primarily due to the same reasons noted above for the third quarter.
Empire Life’s assets under management (including segregated fund and mutual fund assets) increased 6% over December 31, 2015 levels to reach $15.9 billion.
Empire Life’s Minimum Continuing Capital and Surplus Requirements ratio increased to 213% at September 30, 2016 compared to 201% at December 31, 2015 mainly due to Empire Life’s issuance of $149.5 million of Non-Cumulative Rate Reset Preferred Shares during the first quarter of 2016.
CONSOLIDATED SUMMARY OF NET INCOME (UNAUDITED)
| E-L Financial Consolidated | Third quarter | Year to date | |||||||||
| (thousands of dollars) | 2016 | 2015 | 2016 | 2015 | |||||||
| Contribution to net income | |||||||||||
| E-L Corporate1 | $ | 153,498 | $ | 10,384 | $ | 133,748 | $ | 252,535 | |||
| Empire Life2 | 37,771 | 17,835 | 99,326 | 74,377 | |||||||
| Net income | $ | 191,269 | $ | 28,219 | $ | 233,074 | $ | 326,912 | |||
| E-L Corporate | Third quarter | Year to date | ||||||||||
| (thousands of dollars) | 2016 | 2015 | 2016 | 2015 | ||||||||
| Revenue | ||||||||||||
| Net gain (loss) on investments3 | $ | 177,394 | $ | (4,076 | ) | $ | 89,859 | $ | 298,791 | |||
| Investment and other income | 22,091 | 23,863 | 84,666 | 83,305 | ||||||||
| Share of associates income | 16,885 | 7,423 | 19,165 | 17,513 | ||||||||
| 216,370 | 27,210 | 193,690 | 399,609 | |||||||||
| Expenses | ||||||||||||
| Operating | 5,940 | 5,632 | 18,100 | 17,314 | ||||||||
| Income taxes | 28,305 | 1,195 | 23,923 | 54,886 | ||||||||
| Non-controlling interests | 28,627 | 9,999 | 17,919 | 74,874 | ||||||||
| 62,872 | 16,826 | 59,942 | 147,074 | |||||||||
| Net income | $ | 153,498 | $ | 10,384 | $ | 133,748 | $ | 252,535 | ||||
| Empire Life | Third quarter | Year to date | |||||||||||
| (thousands of dollars) | 2016 | 2015 | 2016 | 2015 | |||||||||
| Revenue | |||||||||||||
| Net premiums | $ | 218,651 | $ | 208,414 | $ | 659,007 | $ | 628,963 | |||||
| Net gain (loss) on investments3 | 115,124 | (114,925 | ) | 418,123 | (86,010 | ) | |||||||
| Investment income | 60,050 | 64,641 | 186,178 | 192,339 | |||||||||
| Fee income | 59,050 | 54,221 | 170,143 | 160,781 | |||||||||
| 452,875 | 212,351 | 1,433,451 | 896,073 | ||||||||||
| Expenses | |||||||||||||
| Benefits and expenses | 392,202 | 184,114 | 1,280,806 | 774,414 | |||||||||
| Income and other taxes | 18,415 | 8,622 | 47,315 | 34,157 | |||||||||
| Non-controlling and participating policyholders’ interests | 4,487 | 1,780 | 6,004 | 13,125 | |||||||||
| 415,104 | 194,516 | 1,334,125 | 821,696 | ||||||||||
| Net income | $ | 37,771 | $ | 17,835 | $ | 99,326 | $ | 74,377 | |||||
| 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 Report 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. 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.
Scott F. Ewert
Vice President and Chief Financial Officer
(416) 947-2578
(416) 362-0792 (FAX)
