TORONTO, May 7, 2020 /CNW/
- E-L Financial Corporation Limited ("E-L Financial" or the
"Company") (TSX: ELF) (TSX: ELF.PR.F) (TSX: ELF.PR.G) (TSX:
ELF.PR.H) today reported a net equity value per common share of
$1,317.07 as at March 31, 2020,
a decrease of 11% from $1,486.19 as
at December 31, 2019.
For the first quarter ended March 31, 2020, E-L Financial
reported a consolidated shareholders' net loss of $663 million or $170.26 per common share compared to net income
of $309 million or $77.68 per common share for the first quarter of
2019. The Company was impacted by the declines in equity markets
which occurred toward the end of the first quarter of 2020. The
international emergence and spread of the novel coronavirus (or
COVID-19) in the first quarter of 2020 negatively impacted global
stock markets and the Company's investment portfolio.
On March 9, 2020, the Company
obtained approval from the TSX to commence a normal course issuer
bid ("NCIB") to purchase up to 200,970 common shares between
March 9, 2020 and March 8, 2021. For the three month period ended
March 31, 2020, 140,732 shares were
purchased under the NCIB at an average price of $573.37 per share for total consideration of
$81 million.
E-L Corporate
E-L Corporate reported a net loss of $632
million in the first quarter of 2020 compared to net income
of $266 million for the first quarter
of 2019. The first quarter loss was due to a net loss on
investments of $769 million in the
first quarter of 2020 compared to a net gain of $341 million for the first quarter of 2019. E-L
Corporate's global investment portfolio had a pre-tax total return
of negative 14% in the first quarter of 2020 compared to a pre-tax
total return of 8% for the first quarter of 2019.
Empire Life
Empire Life reported a net loss of $31
million in the first quarter of 2020 compared to net income
$43 million for the first quarter of
2019. The decrease in first quarter earnings was primarily a result
of significant strengthening of policy liabilities for segregated
fund benefit guarantees related to the general decline in equity
markets. This was partially offset by the impact of improved asset
liability management and improved gains from increased yields on
inforce assets and liabilities backing the life insurance and
annuity product lines.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 132% at March 31, 2020 compared to 155% at
December 31, 2019, well above the
requirements set by the Office of the Superintendent of Financial
Institutions Canada as well as Empire Life's minimum internal
targets.
CONSOLIDATED SUMMARY OF NET (LOSS) INCOME
(UNAUDITED)
|
E-L Financial
Consolidated
|
|
First
quarter
|
|
(millions of
dollars)
|
|
2020
|
2019
|
|
Contribution to
net (loss) income
|
|
|
|
|
E-L
Corporate1
|
|
$
|
(632)
|
$
|
266
|
|
Empire
Life2
|
|
(31)
|
43
|
|
Net (loss)
income
|
|
$
|
(663)
|
$
|
309
|
|
E-L
Corporate
|
|
First
quarter
|
|
(millions of
dollars)
|
|
2020
|
2019
|
|
Revenue
|
|
|
|
|
Net (loss) gain on
investments3
|
|
$
|
(769)
|
$
|
341
|
|
Investment and other
income
|
|
29
|
30
|
|
Share of associates
(loss) income
|
|
(92)
|
3
|
|
|
(832)
|
374
|
|
|
|
|
|
Operating
expenses
|
|
7
|
9
|
|
Income
taxes
|
|
(111)
|
49
|
|
Non-controlling
interests
|
|
(96)
|
50
|
|
|
(200)
|
108
|
|
Net (loss)
income
|
|
$
|
(632)
|
$
|
266
|
|
Empire
Life
|
|
First
quarter
|
|
(millions of
dollars)
|
|
2020
|
2019
|
|
Revenue
|
|
|
|
|
Net
premiums
|
|
$
|
216
|
$
|
238
|
|
Net (loss) gain on
investments3
|
|
(360)
|
411
|
|
Investment and other
income
|
|
81
|
75
|
|
Fee income
|
|
65
|
64
|
|
|
2
|
788
|
|
|
|
|
|
Benefits and
expenses
|
|
45
|
727
|
|
Income and other
taxes
|
|
(10)
|
17
|
|
Non-controlling and
participating policyholders' interests
|
|
(2)
|
1
|
|
|
33
|
745
|
|
Net (loss)
income
|
|
$
|
(31)
|
$
|
43
|
|
1 Net of non-controlling
interests
|
|
2 Net
of non-controlling interests and participating
policyholders' amounts
|
|
3 Includes fair value change in fair
value through profit or loss investments and realized gain on
available for sale investments
|
|
Empire Life's
Sources of Earnings
|
|
|
|
(Unaudited)
|
|
First
quarter
|
|
(millions of
dollars)
|
|
2020
|
2019
|
|
Expected profit on
in-force business
|
|
$
|
55
|
$
|
51
|
|
Impact of new
business
|
|
(6)
|
(2)
|
|
Experience (losses)
gains
|
|
(128)
|
4
|
|
Management actions
and changes in assumptions
|
|
22
|
(1)
|
|
(Loss) earnings on
operations before income taxes
|
|
(57)
|
52
|
|
Earnings on
surplus
|
|
18
|
8
|
|
Income
taxes
|
|
11
|
(14)
|
|
Non-controlling
interests(1)
|
|
(3)
|
(3)
|
|
Net
income
|
|
$
|
(31)
|
$
|
43
|
|
(1) Including preference share
dividends
|
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 Reporting 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 sources of earnings and assets under
management to provide investors with supplemental measures 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 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 and interest income
from its investments.
Empire Life is a subsidiary of E-L Financial. Since 1923, Empire
Life has provided 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. As
of March 31, 2020 Empire Life had total assets under
management of $16 billion.
SOURCE E-L Financial Corporation