TORONTO, Aug. 6, 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 $1,459.32 as at June 30, 2020, a decrease of
2% from $1,486.19 as at
December 31, 2019 and an increase of 11% from $1,317.07 as at March 31,
2020.
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 six month period ended
June 30, 2020, 200,970 shares were
purchased under the NCIB at an average price of $599.18 per share for total consideration of
$120 million.
In the second quarter of 2020, the Company issued $200 million principal amount of 4.0% senior
unsecured notes. The notes mature on June
22, 2050 and bear interest at an annual rate of 4.0%
calculated and payable semi-annually in arrears on June 22 and December
22 of each year commencing December
22, 2020 and ending June 22,
2050.
"The second quarter of 2020 was eventful for E-L Financial",
said Duncan N.R. Jackman, Chairman,
President and CEO of E-L Financial. "During this time the Company
achieved its maximum permitted purchases under a normal course
issuer bid which were acquired at very attractive prices relative
to net equity value. Further, during June we saw an excellent
opportunity to raise longer term capital with the issuance of 30
year senior unsecured notes. We continue to evaluate a variety of
opportunities for the use of these funds. COVID-19 has primarily
had an indirect impact on our business with effects of volatile
equity markets and lower interest rates. Empire Life continues to
perform well in this environment and is seeing the benefits of its
investment in technology with higher usage of its online
platforms."
For the second quarter ended June 30, 2020, E-L Financial
reported consolidated shareholders' net income of
$452 million or $119.36 per common share compared to $42 million or $9.70 per common share in 2019. For the six
months ended June 30, 2020, E-L
Financial reported a consolidated shareholder's net loss of
$211 million or $57.00 per common share compared to net income of
$351 million or $87.38 per common share in 2019.
The Company was impacted by the declines in equity markets which
occurred toward the end of the first quarter of 2020 which were
mainly related to the international emergence and spread of the
novel coronavirus (or COVID-19). Although the equity markets
partially recovered during the second quarter of 2020, on a year to
date basis the Company's investment portfolio has been negatively
impacted.
E-L Corporate
E-L Corporate reported net income of $405
million in the second quarter of 2020 compared to
$22 million for the second quarter of
2019. The increase in net income for the second quarter of 2020 is
primarily due to a net gain on investments of $510 million compared to a net loss of
$19 million in 2019 reflecting the
partial recovery of global equity market losses experienced during
the first quarter of 2020. The pre-tax total return on E-L
Corporate's global investment portfolio for the second quarter of
2020 was 12% compared to 0% in the prior year.
E-L Corporate reported a net loss of $227
million for the first six months of 2020 compared to net
income of $288 million for the
comparable period in 2019. The decrease in earnings was primarily
due to a net loss on investments of $258
million for the first six months of 2020 compared to a net
gain of $322 million in 2019. E-L
Corporate's global investment portfolio had a pre-tax total return
of negative 4% in the first six months of 2020 compared to a
pre-tax total return of positive 8% in 2019.
Empire Life
The Empire Life segment reported net income of $47 million in the second quarter of 2020
compared to $20 million for the
second quarter of 2019. The increase in second quarter earnings was
primarily a result of lower claims expenses in the Employee
Benefits line and favourable asset liability trading gains in the
Individual Insurance line.
The Empire Life segment reported net income of $16 million for the first six months of 2020
compared to $63 million for the
comparable period of 2019. The decrease in year to date earnings
was primarily a result of significant strengthening of policy
liabilities supporting segregated fund benefit guarantees.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 133% at June 30, 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 INCOME (LOSS)
(UNAUDITED)
E-L Financial
Consolidated
|
Second
quarter
|
|
|
Year to
date
|
|
(millions of
dollars)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Contribution to
net income (loss)
|
|
|
|
|
|
E-L
Corporate1
|
$
|
405
|
|
$
|
22
|
|
|
$
|
(227)
|
|
$
|
288
|
|
Empire
Life2
|
47
|
|
20
|
|
|
16
|
|
63
|
|
Net income
(loss)
|
$
|
452
|
|
$
|
42
|
|
|
$
|
(211)
|
|
$
|
351
|
|
E-L
Corporate
|
Second
quarter
|
|
|
Year to
date
|
|
(millions of
dollars)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net gain (loss) on
investments3
|
$
|
510
|
|
$
|
(19)
|
|
|
$
|
(258)
|
|
$
|
322
|
|
Investment and other
income
|
37
|
|
51
|
|
|
66
|
|
81
|
|
Share of associates
income (loss)
|
29
|
|
7
|
|
|
(62)
|
|
9
|
|
|
576
|
|
39
|
|
|
(254)
|
|
412
|
|
|
|
|
|
|
|
Operating
expenses
|
10
|
|
9
|
|
|
19
|
|
18
|
|
Income
taxes
|
77
|
|
7
|
|
|
(34)
|
|
55
|
|
Non-controlling
interests
|
84
|
|
1
|
|
|
(12)
|
|
51
|
|
|
171
|
|
17
|
|
|
(27)
|
|
124
|
|
Net income
(loss)
|
$
|
405
|
|
$
|
22
|
|
|
$
|
(227)
|
|
$
|
288
|
|
Empire
Life
|
Second
quarter
|
|
|
Year to
date
|
|
(millions of
dollars)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net
premiums
|
$
|
202
|
|
$
|
225
|
|
|
$
|
417
|
|
$
|
463
|
|
Net gain on
investments3
|
763
|
|
229
|
|
|
402
|
|
640
|
|
Investment
income
|
82
|
|
83
|
|
|
163
|
|
158
|
|
Fee income
|
58
|
|
66
|
|
|
123
|
|
130
|
|
|
1,105
|
|
603
|
|
|
1,105
|
|
1,391
|
|
|
|
|
|
|
|
Benefits and
expenses
|
1,031
|
|
569
|
|
|
1,074
|
|
1,297
|
|
Income and other
taxes
|
20
|
|
10
|
|
|
10
|
|
27
|
|
Non-controlling and
participating policyholders' interests
|
7
|
|
4
|
|
|
5
|
|
4
|
|
|
1,058
|
|
583
|
|
|
1,089
|
|
1,328
|
|
Net
income
|
$
|
47
|
|
$
|
20
|
|
|
$
|
16
|
|
$
|
63
|
|
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)
|
Second
quarter
|
|
|
Year to
date
|
|
(millions of
dollars)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
Expected profit on
in-force business
|
$
|
51
|
|
$
|
46
|
|
|
$
|
107
|
|
$
|
97
|
|
Impact of new
business
|
(4)
|
|
(6)
|
|
|
(11)
|
|
(8)
|
|
Experience (losses)
gains
|
(5)
|
|
(13)
|
|
|
(133)
|
|
(10)
|
|
Management actions
and changes in assumptions
|
2
|
|
(9)
|
|
|
25
|
|
(10)
|
|
Earnings (loss) on
operations before income taxes
|
44
|
|
17
|
|
|
(13)
|
|
70
|
|
Earnings on
surplus
|
21
|
|
12
|
|
|
39
|
|
20
|
|
Income
taxes
|
(14)
|
|
(5)
|
|
|
(3)
|
|
(19)
|
|
Non-controlling
interests(1)
|
(4)
|
|
(4)
|
|
|
(7)
|
|
(8)
|
|
Net
income
|
$
|
47
|
|
$
|
20
|
|
|
$
|
16
|
|
$
|
63
|
|
(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 June 30, 2020 Empire Life had total assets under management
of $18 billion.
SOURCE E-L Financial Corporation Limited