TORONTO, ONTARIO--(Marketwired - Nov. 10, 2014) - 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, 2014, consolidated net operating income1 of $26.5 million or $5.75 per share2 compared with $32.7 million or $7.33 per share in 2013. The $6.2 million decrease in net operating income in 2014 versus 2013 is mainly due to a $9.3 million decline in The Empire Life Insurance Company's ("Empire Life") net operating income, resulting primarily from the unfavourable impact of long-term interest rate movements relating to the Individual Insurance product line in 2014 compared to favourable movements in 2013. The decline was partially offset with a $3.0 million increase in E-L Corporate's3 operating income, reflecting the impact of the purchase of $650 million in equities from the sale of The Dominion of Canada General Insurance Company ("The Dominion").
Consolidated net operating income for the first nine months of 2014 was $96.0 million or $21.46 per share compared with $85.7 million or $18.85 per share for the same period in 2013. The $10.3 million increase in net operating income was due mainly to an increase of $16.2 million in E-L Corporate's net operating income, resulting from increased investment income as previously noted. Empire Life net operating income decreased $6.0 million due to the unfavourable impact of long-term interest rate movements noted above.
Net income
E-L Financial earned consolidated net income of $70.6 million or $17.00 per share for the third quarter of 2014 compared with $63.3 million or $15.13 per share in 2013. The $7.3 million increase in net income is mainly due to discontinued operations that reported a $29.4 million loss during the third quarter of 2013. The overall increase was partially offset by a decline in E-L Corporate's fair value through profit or loss ("FVTPL") investments income from $46.6 million in 2013 to $29.3 million in 2014.
Consolidated net income for the first nine months of 2014 was $252.6 million or $61.34 per share compared with $400.2 million or $98.95 per share in 2013. The $147.6 million decrease in net income for the period is mainly due to the liquidation of The Dominion's common share portfolio in June 2013 which resulted in an $83.1 million realized gain on available for sale ("AFS") investments. In addition, E-L Corporate's income from FVTPL investments decreased from $210.7 million in 2013 to $135.1 million in 2014, reflecting the more favourable impact of global stock market movements in the prior year.
Comprehensive income
E-L Financial earned consolidated comprehensive income of $66.2 million or $15.87 per share for the third quarter of 2014 compared with $68.5 million or $16.45 per share in 2013. Consolidated other comprehensive loss ("OCL") was $4.4 million for the third quarter of 2014 compared to other comprehensive income ("OCI") in $5.2 million in 2013. The $9.6 million decrease in OCI is due to the remeasurement of defined benefit plans combined with a decrease in the unrealized gains on AFS investments.
Consolidated comprehensive income for the first nine months of 2014 was $265.7 million or $64.68 per share compared with $337.0 million or $82.85 per share in 2013. Consolidated OCI was $13.1 million for the first nine months of 2014 compared to OCL of $63.2 million in 2013. The 2013 OCL resulted from the reclassification in 2013 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, 2014 was $933.42.
| CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME |
| |
| |
Three months ended September 30, 2014 |
| (thousands of dollars) |
E-L Corporate |
|
Empire Life |
|
Total |
| Net operating income |
$ |
8,275 |
|
|
$ |
18,213 |
|
|
$ |
26,488 |
|
| Realized gain on available for sale investments including impairment write downs |
|
5,013 |
|
|
|
1,001 |
|
|
|
6,014 |
|
| Share of income of associates |
|
8,837 |
|
|
|
- |
|
|
|
8,837 |
|
| E-L Corporate's fair value change in fair value through profit or loss investments |
|
29,289 |
|
|
|
|
|
|
|
29,289 |
|
| Net income |
|
51,414 |
|
|
|
19,214 |
|
|
|
70,628 |
|
| Other comprehensive loss ("OCL") |
|
(2,731 |
) |
|
|
(1,689 |
) |
|
|
(4,420 |
) |
| Comprehensive income |
$ |
48,683 |
|
|
$ |
17,525 |
|
|
$ |
66,208 |
|
| |
|
| |
Three months ended September 30, 2013 |
| (thousands of dollars) |
E-L Corporate |
|
Empire Life |
|
Total |
| Net operating income |
$ |
5,226 |
|
$ |
27,468 |
|
|
$ |
32,694 |
|
| Realized gain (loss) on available for sale investments including impairment write downs |
|
2,591 |
|
|
(1,592 |
) |
|
|
999 |
|
| Share of income of associates |
|
12,439 |
|
|
- |
|
|
|
12,439 |
|
| E-L Corporate's fair value change in fair value through profit or loss investments |
|
46,557 |
|
|
|
|
|
|
46,557 |
|
| Net income from continuing operations |
|
66,813 |
|
|
25,876 |
|
|
|
92,689 |
|
| Net loss from discontinued operations |
|
- |
|
|
- |
|
|
|
(29,373 |
) |
| Net income |
|
66,813 |
|
|
25,876 |
|
|
|
63,316 |
|
| Other comprehensive income ("OCI") from continuing operations |
|
4,335 |
|
|
3,335 |
|
|
|
7,670 |
|
| OCL from discontinued operations |
|
- |
|
|
- |
|
|
|
(2,496 |
) |
| Total OCI |
|
4,335 |
|
|
3,335 |
|
|
|
5,174 |
|
| Comprehensive income |
$ |
71,148 |
|
$ |
29,211 |
|
|
$ |
68,490 |
|
| |
|
| |
Nine months ended September 30, 2014 |
| (thousands of dollars) |
E-L Corporate |
|
Empire Life |
|
Total |
| Net operating income |
$ |
34,774 |
|
$ |
61,180 |
|
$ |
95,954 |
| Realized gain on available for sale investments including impairment write downs |
|
8,778 |
|
|
2,965 |
|
|
11,743 |
| Share of income of associates |
|
9,789 |
|
|
- |
|
|
9,789 |
| E-L Corporate's fair value change in fair value through profit or loss investments |
|
135,064 |
|
|
|
|
|
135,064 |
| Net income |
|
188,405 |
|
|
64,145 |
|
|
252,550 |
| OCI |
|
2,788 |
|
|
10,347 |
|
|
13,135 |
| Comprehensive income |
$ |
191,193 |
|
$ |
74,492 |
|
$ |
265,685 |
| |
|
| |
Nine months ended September 30, 2013 |
| (thousands of dollars) |
E-L Corporate |
|
Empire Life |
|
Total |
| Net operating income |
$ |
18,582 |
|
$ |
67,139 |
|
|
$ |
85,721 |
|
| Realized gain (loss) on available for sale investments including impairment write downs |
|
6,778 |
|
|
(745 |
) |
|
|
6,033 |
|
| Share of income of associates |
|
29,464 |
|
|
- |
|
|
|
29,464 |
|
| E-L Corporate's fair value change in fair value through profit or loss investments |
|
210,654 |
|
|
|
|
|
|
210,654 |
|
| Net income from continuing operations |
|
265,478 |
|
|
66,394 |
|
|
|
331,872 |
|
| Net income from discontinued operations |
|
- |
|
|
- |
|
|
|
68,369 |
|
| Net income |
|
265,478 |
|
|
66,394 |
|
|
|
400,241 |
|
| OCI (OCL) from continuing operations |
|
18,165 |
|
|
(6,025 |
) |
|
|
12,140 |
|
| OCL from discontinued operations |
|
- |
|
|
- |
|
|
|
(75,381 |
) |
| Total OCI (OCL) |
|
18,165 |
|
|
(6,025 |
) |
|
|
(63,241 |
) |
| Comprehensive income |
$ |
283,643 |
|
$ |
60,369 |
|
|
$ |
337,000 |
|
| |
|
| 1 |
Use of non-GAAP measures: |
|
"net operating income" is net income from continuing operations 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 |
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. |