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

E-L Financial Corporation Limited

November 06, 2013 16:06 ET

E-L Financial Corporation Limited Announces September 30, 2013 Interim Financial Results

TORONTO, ONTARIO--(Marketwired - Nov. 6, 2013) - 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, 2013, consolidated net operating income1 of $4.0 million or $0.03 per share2 compared with $11.9 million or $2.05 per share in 2012. The $7.9 million decrease in net operating income in 2013 versus 2012 is attributable to a decrease in the general insurance operation's ("The Dominion's") net operating income which mainly reflects large personal property losses during the third quarter of 2013, in contrast with favourable prior year claims development recorded in 2012. Partially offsetting the decrease, the life insurance operation's ("Empire Life's") net operating income increased $11.9 million due primarily to the favourable impact of stock market movements in 2013 and long-term interest rate movements relating to the Individual Insurance product line.

Consolidated net operating income for the first nine months of 2013 was $66.0 million or $13.84 per share compared with $106.3 million or $24.39 per share for the same period in 2012. The $40.3 million decrease in net operating income was due mainly to The Dominion's poor underwriting results for the current year as noted above.

Net income

E-L Financial earned consolidated net income of $63.3 million or $15.13 per share for the third quarter of 2013 compared with $47.6 million or $11.14 per share in 2012. The $15.7 million increase in net income is mainly due to a $46.6 million increase in E-L Corporate's fair value through profit or loss ("FVTPL") investments compared to $17.0 million increase in 2012 reflecting an increase of $21.6 million from United Corporations Limited's ("United") investments, as income from United is now reported on a consolidated basis as opposed to income from associates in 2012.

Consolidated net income for the first nine months of 2013 was $400.2 million or $98.95 per share compared with $232.1 million or $56.40 per share in 2012. The $168.1 million increase in net income for the period is mainly due to a $210.7 million increase in E-L Corporate's FVTPL investments compared to $59.4 million in 2012, reflecting an increase of $78.3 million from United's investments and the favourable impact of stock market movement during 2013. In addition, The Dominion's liquidation of its common share portfolio in June 2013 resulted in an $83.1 million realized gain on available for sale investments.

Comprehensive income

E-L Financial earned consolidated comprehensive income of $68.5 million or $16.45 per share for the third quarter of 2013 compared with $62.5 million or $14.92 per share in 2012. Consolidated other comprehensive income ("OCI") was $5.2 million for the third quarter of 2013 compared to $14.9 million in 2012. The $9.7 million decrease in other comprehensive income for the quarter reflected a decrease in unrealized gains during the period.

Consolidated comprehensive income for the first nine months of 2013 was $337.0 million or $82.85 per share compared with $236.1 million or $57.41 per share in 2012. Consolidated other comprehensive loss ("OCL") was $63.2 million for the first nine months of 2013 compared to OCI of $4.0 million in 2012. The decrease in OCI reflected the reclassification of significant gains relating to The Dominion's liquidation of its common share portfolio.

E-L Financial's net equity value per Common Share1 at September 30, 2013 was $824.49.

"Recently, we marked a historic moment for our company as we completed the sale of The Dominion on November 1st. We are proud of all the hard work and commitment shown by employees of The Dominion over the years and wish them all the best in the future. The transaction generated cash proceeds of $1.07 billion resulting in an estimated after-tax gain of $245 million. In addition, today we announced a special cash dividend of $75.00 per Common Share to be paid in the fourth quarter. E-L Financial is strongly positioned financially and we look forward to continuing to build shareholder value over the long-term" said Duncan Jackman, Chairman, President and CEO of E-L Financial.

CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME (LOSS)

Three months ended September 30, 2013
Continuing Operations Discontinued Total
(thousands of dollars) E-L
Corporate
Empire
Life
Total The
Dominion
Net operating income (loss) $ 5,226 $ 27,468 $ 32,694 $ (28,681) $ 4,013
Realized gain (loss) on available for sale investments including impairment write downs 2,591 (1,592) 999 (692) 307
Share of income of associates 12,439 - 12,439 - 12,439
E-L Corporate's fair value change in fair value through profit or loss investments 46,557 46,557 46,557
Net income (loss) 66,813 25,876 92,689 (29,373) 63,316
Other comprehensive income (loss) 4,335 3,335 7,670 (2,496) 5,174
Comprehensive income (loss) $ 71,148 $ 29,211 $ 100,359 $ (31,869) $ 68,490
Three months ended September 30, 2012
Restated (3) Continuing Operations Discontinued Total
(thousands of dollars) E-L
Corporate
Empire
Life
Total The
Dominion
Net operating income (loss) $ 5,092 $ 15,589 $ 20,681 $ (8,761) $ 11,920
Realized gain on available for sale investments including impairment write downs 1,272 536 1,808 5,231 7,039
Share of income of associates 11,715 - 11,715 - 11,715
E-L Corporate's fair value change in fair value through profit or loss investments 16,972 16,972 16,972
Net income (loss) 35,051 16,125 51,176 (3,530) 47,646
Other comprehensive income 637 2,912 3,549 11,306 14,855
Comprehensive income $ 35,688 $ 19,037 $ 54,725 $ 7,776 $ 62,501
Nine months ended September 30, 2013
Continuing Operations Discontinued Total
(thousands of dollars) E-L
Corporate
Empire
Life
Total The
Dominion
Net operating income (loss) $ 18,582 $ 67,139 $ 85,721 $ (19,723) $ 65,998
Realized gain (loss) on available for sale investments including impairment write downs 6,778 (745) 6,033 88,092 94,125
Share of income of associates 29,464 - 29,464 - 29,464
E-L Corporate's fair value change in fair value through profit or loss investments 210,654 210,654 210,654
Net income 265,478 66,394 331,872 68,369 400,241
Other comprehensive income (loss) 18,165 (6,025) 12,140 (75,381) (63,241)
Comprehensive income (loss) $ 283,643 $ 60,369 $ 344,012 $ (7,012) $ 337,000
Nine months ended September 30, 2012
Restated (3) Continuing Operations Discontinued Total
(thousands of dollars) E-L
Corporate
Empire
Life
Total The
Dominion
Net operating income $ 15,810 $ 40,618 $ 56,428 $ 49,912 $ 106,340
Realized gain on available for sale investments including impairment write downs 3,747 3,229 6,976 20,851 27,827
Share of income of associates 38,601 - 38,601 - 38,601
E-L Corporate's fair value change in fair value through profit or loss investments 59,352 59,352 59,352
Net income 117,510 43,847 161,357 70,763 232,120
Other comprehensive income (loss) 2,651 (3,840) (1,189) 5,175 3,986
Comprehensive income $ 120,161 $ 40,007 $ 160,168 $ 75,938 $ 236,106

1Use of non-GAAP measures:
"net operating income" is net income excluding realized gain on available for sale investments including impairment write downs, the Company's share of income from associates and the fair value change in fair value through profit or loss investments in the E-L Corporate portfolio, all net of tax. The term net operating income does not have any standardized meaning according to GAAP and therefore may not be comparable to similar measures presented by other companies.

"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.

2 All earnings per share figures are net of dividends paid on First Preference shares.

3 Net operating income and other comprehensive income (loss) for September 30, 2012 have been restated to reflect the impact of the prior period adjustment related to the remeasurement of defined benefit plans resulting in a $393 increase in net operating income and a $12,990 decrease in other comprehensive income for the nine months ended September 30, 2012.

Contact Information

  • E-L Financial Corporation Limited
    Mark M. Taylor
    Executive Vice-President and Chief Financial Officer
    (416) 947-2578
    (416) 362-2592 (FAX)