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:
Scott F. Ewert
Vice President and Chief Financial Officer
(416) 947-2578
(416) 362-0792 (FAX)