TORONTO, March 3, 2021
/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
$1,684.93 as at December 31,
2020, an increase of 13% from $1,486.19 as at December 31, 2019.
For the year ended December 31, 2020, E-L Financial
reported consolidated shareholder's net income of $500 million or $128.21 per common share compared to $745 million or $185.67 per common share in 2019. For the fourth
quarter ended December 31, 2020, E-L Financial reported
consolidated shareholders' net income of $510 million or $136.42 per common share compared to $293 million or $73.68 per common share in 2019. Despite the
international emergence and spread of COVID-19 and the associated
declines in global stock markets in the earlier part of 2020, the
Company reported strong results in the business segments for the
year.
"I am very pleased to report that E-L and its subsidiaries each
had a very satisfactory 2020. Despite the challenges we faced at
the beginning of the year with the volatility in equity markets,
our operations and investment portfolios have fared well. For E-L
Financial, 2020 was quite eventful, with the completion of a
successful Normal Course Issuer Bid which acquired 5% of the
outstanding Common Shares at an average price of $599 per share. This was followed by a
Substantial Issuer Bid, whereby the Company had taken up an
additional 109,863 Common Shares at a price of $750. Further to this, we successfully raised
$200 million of 30-year unsecured
notes and continued to make adjustments to our investment
portfolios. Our employees at E-L Financial and Empire Life have
embraced the challenges arising from the COVID-19 pandemic. I would
like to express our gratitude for their efforts and dedication to
our businesses and customers," said Duncan
N.R. Jackman, Chairman, President and CEO of E-L
Financial.
E-L Corporate
For the year ended December 31, 2020, E-L Corporate
reported net income of $361 million
compared to net income of $572
million in 2019. The decrease in earnings was primarily due
to lower net gains on investments of $453
million in 2020 compared to $646
million in 2019. E-L Corporate's global investment portfolio
had a pre-tax total return, including dividend income, of 10% in
2020 compared to a pre-tax total return of 17% in the prior
year.
E-L Corporate reported net income of $438
million for the fourth quarter of 2020 compared to
$217 million for the comparable
period in 2019. The increase in net income for the fourth quarter
of 2020 is primarily due to a net gain on investments within the
E-L Corporate segment of $527 million
compared to $271 million in 2019
reflecting the strong global equity market experience during the
fourth quarter of 2020. The pre-tax total return on E-L Corporate's
global investment portfolio for the fourth quarter of 2020 was 10%
compared to 7% in the prior year.
Empire Life
Empire Life reported net income of $139
million in 2020 compared to $173
million in 2019. The decrease in earnings from 2019 was due,
in part, to a large one-time gain recognized in 2019 related to a
reinsurance recapture initiative. In 2020, earnings from the Wealth
Management line were lower due to reserve strengthening and
assumption updates in the Wealth Management line, resulting from
poor market returns early in the year. This was partially offset by
increased earnings from the Individual Insurance line primarily as
a result of asset trading gains from continued improvements in the
Company's matching of assets and liabilities.
Empire Life reported net income of $72
million in the fourth quarter of 2020 compared to
$76 million for the comparable period
in 2019.
Empire Life's Life Insurance Capital Adequacy Test ("LICAT")
total ratio was 136% at December 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 INCOME
(UNAUDITED)
E-L Financial
Consolidated
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
|
|
|
Contribution to
net income
|
|
|
|
|
|
E-L
Corporate1
|
$
|
438
|
$
|
217
|
|
$
|
361
|
$
|
572
|
Empire
Life2
|
72
|
76
|
|
139
|
173
|
Net
income
|
$
|
510
|
$
|
293
|
|
$
|
500
|
$
|
745
|
E-L
Corporate
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net gain on
investments3
|
$
|
527
|
$
|
271
|
|
$
|
453
|
$
|
646
|
Investment and other
income
|
34
|
27
|
|
130
|
145
|
Share of associates
income (loss)
|
27
|
10
|
|
(29)
|
24
|
|
588
|
308
|
|
554
|
815
|
|
|
|
|
|
|
Operating
expenses
|
12
|
10
|
|
42
|
37
|
Income
taxes
|
71
|
40
|
|
66
|
107
|
Non-controlling
interests
|
67
|
41
|
|
85
|
99
|
|
150
|
91
|
|
193
|
243
|
Net
income
|
$
|
438
|
$
|
217
|
|
$
|
361
|
$
|
572
|
Empire
Life
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net
premiums
|
$
|
221
|
$
|
229
|
|
$
|
860
|
$
|
910
|
Net gain (loss) on
investments3
|
102
|
(131)
|
|
541
|
618
|
Investment
income
|
86
|
85
|
|
330
|
325
|
Fee income
|
66
|
66
|
|
251
|
262
|
|
475
|
249
|
|
1,982
|
2,115
|
|
|
|
|
|
|
Benefits and
expenses
|
363
|
122
|
|
1,762
|
1,847
|
Income and other
taxes
|
31
|
39
|
|
63
|
77
|
Non-controlling and
participating policyholders' interests
|
9
|
12
|
|
18
|
18
|
|
403
|
173
|
|
1,843
|
1,942
|
Net
income
|
$
|
72
|
$
|
76
|
|
$
|
139
|
$
|
173
|
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)
|
Fourth
quarter
|
|
Year
|
(millions of
dollars)
|
2020
|
2019
|
|
2020
|
2019
|
Expected profit on
in-force business
|
$
|
55
|
$
|
47
|
|
$
|
215
|
$
|
190
|
Impact of new
business
|
(1)
|
(7)
|
|
(16)
|
(28)
|
Experience gains
(losses)
|
61
|
5
|
|
(81)
|
(6)
|
Management actions
and changes in assumptions
|
(22)
|
48
|
|
13
|
37
|
Earnings on
operations before income taxes
|
92
|
94
|
|
130
|
194
|
Earnings on
surplus
|
8
|
16
|
|
70
|
54
|
Income
taxes
|
(25)
|
(30)
|
|
(47)
|
(60)
|
Non-controlling
interests(1)
|
(3)
|
(4)
|
|
(14)
|
(15)
|
Net
income
|
$
|
72
|
$
|
76
|
|
$
|
139
|
$
|
173
|
(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 December 31, 2020 Empire Life had total assets under
management of $19 billion.
SOURCE E-L Financial Corporation