CST: 06/12/2016 15:50:36   

E-L Financial Corporation Limited Announces December 31, 2015 Year End Financial Results

279 Days ago

TORONTO, ONTARIO--(Marketwired - Mar 2, 2016) - 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 year ended December 31, 2015, consolidated shareholders' net income of $534.6 million or $132.18 per share in 2015 compared with $394.5 million or $96.51 per share in 2014. For the fourth quarter of 2015, E-L Financial had consolidated net income of $207.7 million or $51.90 per share compared with $142.0 million or $35.16 per share in 2014.

E-L Financial's net equity value per Common Share increased to $1,089.23 at December 31, 2015 from $970.65 as of December 31, 2014.

"On December 17, 2015 E-L Financial acquired Guardian Assurance Limited's interest in The Empire Life Insurance Company at approximately book value. We believe this was a fair price for a great asset. We thank our long standing partners for their contributions to Empire Life's success over the past years. In addition, during 2015 our corporate investment portfolio reported strong investment returns at 17%, driven primarily by foreign currency movements. Finally, I am happy to announce that our Board of Directors has increased E-L Financial's quarterly common share dividend to $1.25 per share. We believe this is sustainable over the long term, given the strong financial position of E-L Financial," said Duncan Jackman, Chairman, President and CEO of E-L Financial.

E-L Corporate

For the year ended December 31, 2015 E-L Corporate's net income was $447.2 million compared to $315.1 million in 2014. During 2015, E-L Corporate earned net gains on investments of $568.9 million compared with net gains of $345.3 million for the comparable period in 2014. The $223.6 million increase in net gains on investments was primarily due to the strengthening of foreign currencies against the Canadian dollar. U.S. equities were the primary contributors to the net gain on investments with a return of approximately 26%. Investments and other income increased $14.7 million for the year. The majority of the increase is attributed to higher dividend income due to growth in investments and currency movements.

E-L Corporate's 2015 fourth quarter net income was $194.7 million, an increase of $68.0 million compared to 2014. The return on investments for the fourth quarter increased from the prior quarter primarily due to stronger investment returns.

Empire Life

For the year ended December 31, 2015 Empire Life's net income attributable to E-L Financial was $87.4 million compared to $79.5 million in 2014. Growing profit on in-force Wealth Management business and increased earnings on surplus, due to gains on the sale of bonds, contributed to the year over year increase.

Empire Life's 2015 fourth quarter net income attributable to E-L Financial was $13.0 million compared to $15.3 million in 2014. The decrease relates primarily to lower profit from the Employee Benefits product line primarily due to favourable policy liability assumptions in 2014, which did not recur in 2015.

Assets under management (including segregated fund and mutual fund assets) increased 5% over December 31, 2014 levels to reach $14.5 billion.

Empire Life's Minimum Continuing Capital and Surplus Requirements ratio was 201% at December 31, 2015 compared to 197% at December 31, 2014.

On January 28, 2016 Empire Life announced a $130 million Canadian public offering of Non-Cumulative Rate Reset Preferred Shares. Empire Life intends to use the net proceeds from the offering for regulatory capital and general corporate purposes. The offering closed on February 16, 2016 and commenced trading on the Toronto Stock Exchange under the ticker symbol EML.PR.A. On a pro forma basis, after giving effect to the preferred share issue (but assuming no exercise of the over-allotment option), the Company estimates that, as at December 31, 2015, its MCCSR would have increased by 17 points from 201% to 218%.

CONSOLIDATED SUMMARY OF NET INCOME (UNAUDITED)

E-L Financial Consolidated Fourth quarter Year
(thousands of dollars) 2015 2014 2015 2014
Contribution to net income
E-L Corporate(1) $ 194,670 $ 126,667 $ 447,205 $ 315,072
Empire Life(2) 13,027 15,313 87,404 79,458
Net income $ 207,697 $ 141,980 $ 534,609 $ 394,530
E-L Corporate Fourth quarter Year
(thousands of dollars) 2015 2014 2015 2014
Revenue
Net gains on investments(3) $ 270,126 $ 148,728 $ 568,917 $ 345,349
Investment and other income 25,785 23,436 109,090 94,353
Share of associates income 7,316 14,235 24,829 25,519
303,227 186,399 702,836 465,221
Expenses
Operating 6,842 5,622 24,156 20,980
Income taxes 41,165 21,149 96,051 60,765
Non-controlling interests 60,550 32,961 135,424 68,404
108,557 59,732 255,631 150,149
Net income $ 194,670 $ 126,667 $ 447,205 $ 315,072
Empire Life Fourth quarter Year
(thousands of dollars) 2015 2014 2015 2014
Revenue
Net premiums $ 206,253 $ 215,924 $ 835,216 $ 867,493
Net gains (loss) on investments(3) 61,694 212,887 (24,316) 625,126
Investment and other income 122,908 112,782 476,028 433,397
390,855 541,593 1,286,928 1,926,016
Expenses
Benefits and expenses 368,338 503,061 1,142,752 1,774,080
Income and other taxes 7,561 10,962 41,718 44,560
Non-controlling and participating policyholders' interests 1,929 12,257 15,054 27,918
377,828 526,280 1,199,524 1,846,558
Net income $ 13,027 $ 15,313 $ 87,404 $ 79,458
(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 International Financial Report 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 assets under management to provide investors with a supplemental measure 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 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. Since 1923, Empire Life has provided competitive individual and group life and health insurance, investment and retirement products to Canadians. Empire Life's vision is to make it simple, fast and easy for Canadians to build wealth, generate income and get the insurance and group benefits coverage they need.

E-L Financial Corporation Limited
Scott F. Ewert
Vice President and Chief Financial Officer
(416) 947-2578
(416) 362-0792