TORONTO, ONTARIO--(Marketwired - Nov. 10, 2015) - 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, 2015, consolidated shareholder net income of $28.2 million or $6.20 per share compared with $70.6 million or $17.00 per share in 2014. The $42.4 million decrease in net income is mainly due to E-L Corporate's net loss on investments for the third quarter of 2015 compared to net gain on investments for the third quarter of 2014. E-L Corporate's net income decreased $41.0 million during the third quarter of 2015 mainly due to a net loss on investments of $4.1 million compared to net gains on investments of $46.3 million in the prior year. Empire Life's net income decreased $1.4 million compared to the prior year primarily due to experience losses in the Individual Insurance product line including a $5.7 million loss from strengthening asset default reserves due to a ratings agency downgrade of Province of Ontario issued debt.
Consolidated net income for the first nine months of 2015 was $326.9 million or $80.28 per share compared with $252.6 million or $61.34 per share in 2014. The $74.3 million increase in net income for the period is mainly due to a $64.1 million increase in E-L Corporate's net income resulting from the positive impact of global equities during the nine month period compared to the same period in 2014, which was largely driven by movements in currency. Empire Life's net income increased $10.2 million during the nine month period of 2015 primarily due growth in fees related to segregated fund products within the Wealth Management business and increased earnings on surplus, partially offset by lower earnings in the Individual Insurance business.
E-L Financial's net equity value per Common Share increased to $1,042.42 at September 30, 2015 from $970.65 as of December 31, 2014.
Comprehensive income
E-L Financial earned consolidated comprehensive income of $16.2 million or $3.13 per share for the third quarter of 2015 compared with $66.2 million or $15.87 per share in 2014. The decrease in comprehensive income is due to E-L Corporate's net loss on investments of $4.1 million compared to net gains on investments of $46.3 million and a fair value loss for Empire Life's available for sale ("AFS") bonds.
Consolidated other comprehensive loss ("OCL") was $12.0 million for the third quarter of 2015 compared to $4.4 million in 2014. The $7.6 million increase in OCL is mainly due to a fair value loss for Empire Life's AFS bonds.
Consolidated comprehensive income for the first nine months of 2015 was $312.7 million or $76.67 per share compared with $265.7 million or $64.68 per share in 2014. The $47.0 million increase in comprehensive income is mainly due to E-L Corporate's higher fair value gains on investments resulting from growth in the investment portfolio including the strengthening of the U.S. dollar during the first and third quarter of 2015.
Consolidated OCL was $14.2 million for the first nine months of 2015 compared to other comprehensive income ("OCI") of $13.1 million in 2014. The $27.3 million decrease in OCI is mainly due to realized gains reclassified to net income in 2015 combined with lower unrealized investment gains on AFS investments.
| CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME |
| |
| E-L Financial Consolidated |
Third quarter |
|
|
Year to date |
|
| (thousands of dollars) |
|
2015 |
|
|
2014 |
|
|
|
2015 |
|
|
2014 |
|
| Contribution to net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| E-L Corporate1 |
$ |
10,384 |
|
$ |
51,414 |
|
|
$ |
252,535 |
|
$ |
188,405 |
|
| Empire Life2 |
|
17,835 |
|
|
19,214 |
|
|
|
74,377 |
|
|
64,145 |
|
| Net income |
|
28,219 |
|
|
70,628 |
|
|
|
326,912 |
|
|
252,550 |
|
| Other comprehensive (loss) income2 |
|
(12,036 |
) |
|
(4,420 |
) |
|
|
(14,188 |
) |
|
13,135 |
|
| Comprehensive income |
$ |
16,183 |
|
$ |
66,208 |
|
|
$ |
312,724 |
|
$ |
265,685 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| E-L Corporate |
Third quarter |
|
|
Year to date |
|
| (thousands of dollars) |
|
2015 |
|
|
2014 |
|
|
|
2015 |
|
|
2014 |
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net (loss) gains on investments3 |
$ |
(4,076 |
) |
$ |
46,346 |
|
|
$ |
298,791 |
|
$ |
196,621 |
|
| Investment and other income |
|
23,863 |
|
|
19,143 |
|
|
|
83,305 |
|
|
70,917 |
|
| Share of associates income |
|
7,423 |
|
|
10,187 |
|
|
|
17,513 |
|
|
11,284 |
|
| |
|
27,210 |
|
|
75,676 |
|
|
|
399,609 |
|
|
278,822 |
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating |
|
5,632 |
|
|
5,299 |
|
|
|
17,314 |
|
|
15,358 |
|
| Income taxes |
|
1,195 |
|
|
11,274 |
|
|
|
54,886 |
|
|
39,616 |
|
| Non-controlling interests |
|
9,999 |
|
|
7,689 |
|
|
|
74,874 |
|
|
35,443 |
|
| |
|
16,826 |
|
|
24,262 |
|
|
|
147,074 |
|
|
90,417 |
|
| Net income |
|
10,384 |
|
|
51,414 |
|
|
|
252,535 |
|
|
188,405 |
|
| Other comprehensive (loss) income, net of taxes2 |
|
(2,359 |
) |
|
(2,731 |
) |
|
|
(2,589 |
) |
|
2,788 |
|
| Comprehensive income |
$ |
8,025 |
|
$ |
48,683 |
|
|
$ |
249,946 |
|
$ |
191,193 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Empire Life |
Third quarter |
|
|
Year to date |
|
| (thousands of dollars) |
|
2015 |
|
|
2014 |
|
|
|
2015 |
|
|
2014 |
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net premiums |
$ |
208,414 |
|
$ |
208,363 |
|
|
$ |
628,963 |
|
$ |
651,569 |
|
| Net (loss) gains on investments3 |
|
(114,925 |
) |
|
63,180 |
|
|
|
(86,010 |
) |
|
412,239 |
|
| Investment and other income |
|
64,641 |
|
|
60,517 |
|
|
|
353,120 |
|
|
183,002 |
|
| |
|
212,351 |
|
|
379,915 |
|
|
|
896,073 |
|
|
1,384,423 |
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Benefits and expenses |
|
184,114 |
|
|
345,749 |
|
|
|
774,414 |
|
|
1,271,019 |
|
| Income and other taxes |
|
8,622 |
|
|
10,490 |
|
|
|
34,157 |
|
|
33,598 |
|
| Non-controlling and participating policyholders' interests |
|
1,780 |
|
|
4,462 |
|
|
|
13,125 |
|
|
15,661 |
|
| |
|
194,516 |
|
|
360,701 |
|
|
|
821,696 |
|
|
1,320,278 |
|
| Net income |
|
17,835 |
|
|
19,214 |
|
|
|
74,377 |
|
|
64,145 |
|
| Other comprehensive (loss) income, net of taxes2 |
|
(9,677 |
) |
|
(1,689 |
) |
|
|
(11,599 |
) |
|
10,347 |
|
| Comprehensive income |
$ |
8,158 |
|
$ |
17,525 |
|
|
$ |
62,778 |
|
$ |
74,492 |
|
| 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 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.
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 and has been in business since 1923. Empire Life helps Canadians build wealth and protect their financial security with competitive individual and group life and health insurance, investment and retirement products. Empire Life's vision is to become Canada's most convenient life insurance and investment company by being simple, fast and easy to do business with.