E-L Financial Corporation Limited
TSX : ELF
TSX : ELF.PR.F
TSX : ELF.PR.G
TSX : ELF.PR.H

E-L Financial Corporation Limited

August 05, 2016 14:33 ET

E-L Financial Corporation Limited Announces June 30, 2016 Interim Financial Results

TORONTO, ONTARIO--(Marketwired - Aug. 5, 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 June 30, 2016, consolidated shareholders' net income of $103.2 million or $25.28 per share compared with net $36.6 million or $8.33 per share in 2015. For the six months ended June 30, 2016, E-L Financial earned consolidated shareholders' net income of $41.8 million or $8.67 per share compared with $298.7 million or $74.08 per share in 2015.

E-L Financial's net equity value per Common Share was $1,085.92 at June 30, 2016, a decline from $1,089.23 as at December 31, 2015.

E-L Corporate

For the quarter ended June 30, 2016, E-L Corporate earned net income of $78.6 million compared to $0.6 million for the comparable period in 2015. E-L Corporate's net income for the second quarter is primarily attributable to net investment gains on the global investment portfolio. For the second quarter of 2016, E-L Corporate had a net gain on investments of $66.3 million compared to a net loss on investments of $43.0 million for the same period in 2015. The second quarter loss for 2015 was primarily impacted by foreign currencies.

For the six months ended June 30, 2016, E-L Corporate incurred a net loss of $19.8 million compared to $242.2 million in net income for the comparable period in 2015. E-L Corporate's net loss in 2016 is primarily attributable to the impact of the strengthening of the Canadian dollar on the global investment portfolio during the first quarter of 2016. With 84.7% of E-L Corporate's investments in common shares and units denominated in foreign currencies, the 2016 year to date net loss on investments was primarily impacted by the strengthening of the Canadian dollar. The net gain on investments in 2015 was attributed to stronger equity markets and the favourable impact of a strengthening U.S. dollar.

Empire Life

For the quarter ended June 30, 2016, Empire Life's net income attributable to E-L Financial was $24.6 million compared to $36.0 million for the comparable period in 2015. The $11.4 million decrease in net income was primarily due to higher net losses on hedging instruments, lower profit from the Employee Benefits product line and the payment of preferred share dividends in 2016.

For the six months ended June 30, 2016 Empire Life's net income attributable to E-L Financial was $61.6 million compared to $56.5 million for the comparable period in 2015. Increased profit from Empire Life's Individual Insurance product line from improved asset/liability matching in 2016, contributed to the higher year to date net income.

Assets under management (including segregated fund and mutual fund assets) increased 6% over December 31, 2015 levels to reach $15.3 billion.

Empire Life's Minimum Continuing Capital and Surplus Requirements ratio increased to 213% at June 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.

CONSOLIDATED SUMMARY OF NET INCOME (UNAUDITED)

E-L Financial Consolidated Second quarter Year to date
(thousands of dollars) 2016 2015 2016 2015
Contribution to net income
E-L Corporate1 $ 78,556 $ 641 $ (19,750 ) $ 242,151
Empire Life2 24,622 35,951 61,555 56,542
Net income $ 103,178 $ 36,592 $ 41,805 $ 298,693
E-L Corporate Second quarter Year to date
(thousands of dollars) 2016 2015 2016 2015
Revenue
Net gain (loss) on investments3 $ 66,324 $ (42,984 ) $ (87,535 ) $ 302,867
Investment and other income 37,109 36,596 62,575 59,442
Share of associates income 8,608 8,375 2,280 10,090
112,041 1,987 (22,680 ) 372,399
Expenses
Operating 6,052 5,648 12,160 11,682
Income taxes 10,846 3,698 (4,382 ) 53,691
Non-controlling interests 16,587 (8,000 ) (10,708 ) 64,875
33,485 1,346 (2,930 ) 130,248
Net income (loss) $ 78,556 $ 641 $ (19,750 ) $ 242,151
Empire Life Second quarter Year to date
(thousands of dollars) 2016 2015 2016 2015
Revenue
Net premiums $ 210,581 $ 202,975 $ 440,356 $ 420,549
Net gain (loss) on investments3 232,336 (283,907 ) 302,999 28,915
Investment and other income 65,343 67,145 126,128 127,698
Fee income 56,330 54,432 111,093 106,560
564,590 40,645 980,576 683,722
Expenses
Benefits and expenses 526,919 (20,401 ) 888,604 590,300
Income and other taxes 12,332 15,961 28,900 25,535
Non-controlling and participating policyholders' interests 717 9,134 1,517 11,345
539,968 4,694 919,021 627,180
Net income $ 24,622 $ 35,951 $ 61,555 $ 56,542
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 The Empire Life Insurance Company ("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.

Contact Information

  • E-L Financial Corporation Limited
    Scott F. Ewert
    Vice President and Chief Financial Officer
    (416) 947-2578
    (416) 362-0792 (FAX)