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, 2013, consolidated net operating income(1) of $4.0
million or $0.03 per share(2) compared with $11.9 million or $2.05 per share in
2012. The $7.9 million decrease in net operating income in 2013 versus 2012 is
attributable to a decrease in the general insurance operation's ("The
Dominion's") net operating income which mainly reflects large personal property
losses during the third quarter of 2013, in contrast with favourable prior year
claims development recorded in 2012. Partially offsetting the decrease, the life
insurance operation's ("Empire Life's") net operating income increased $11.9
million due primarily to the favourable impact of stock market movements in 2013
and long-term interest rate movements relating to the Individual Insurance
product line.
Consolidated net operating income for the first nine months of 2013 was $66.0
million or $13.84 per share compared with $106.3 million or $24.39 per share for
the same period in 2012. The $40.3 million decrease in net operating income was
due mainly to The Dominion's poor underwriting results for the current year as
noted above.
Net income
E-L Financial earned consolidated net income of $63.3 million or $15.13 per
share for the third quarter of 2013 compared with $47.6 million or $11.14 per
share in 2012. The $15.7 million increase in net income is mainly due to a $46.6
million increase in E-L Corporate's fair value through profit or loss ("FVTPL")
investments compared to $17.0 million increase in 2012 reflecting an increase of
$21.6 million from United Corporations Limited's ("United") investments, as
income from United is now reported on a consolidated basis as opposed to income
from associates in 2012.
Consolidated net income for the first nine months of 2013 was $400.2 million or
$98.95 per share compared with $232.1 million or $56.40 per share in 2012. The
$168.1 million increase in net income for the period is mainly due to a $210.7
million increase in E-L Corporate's FVTPL investments compared to $59.4 million
in 2012, reflecting an increase of $78.3 million from United's investments and
the favourable impact of stock market movement during 2013. In addition, The
Dominion's liquidation of its common share portfolio in June 2013 resulted in an
$83.1 million realized gain on available for sale investments.
Comprehensive income
E-L Financial earned consolidated comprehensive income of $68.5 million or
$16.45 per share for the third quarter of 2013 compared with $62.5 million or
$14.92 per share in 2012. Consolidated other comprehensive income ("OCI") was
$5.2 million for the third quarter of 2013 compared to $14.9 million in 2012.
The $9.7 million decrease in other comprehensive income for the quarter
reflected a decrease in unrealized gains during the period.
Consolidated comprehensive income for the first nine months of 2013 was $337.0
million or $82.85 per share compared with $236.1 million or $57.41 per share in
2012. Consolidated other comprehensive loss ("OCL") was $63.2 million for the
first nine months of 2013 compared to OCI of $4.0 million in 2012. The decrease
in OCI reflected the reclassification of significant gains relating to The
Dominion's liquidation of its common share portfolio.
E-L Financial's net equity value per Common Share(1) at September 30, 2013 was
$824.49.
"Recently, we marked a historic moment for our company as we completed the sale
of The Dominion on November 1st. We are proud of all the hard work and
commitment shown by employees of The Dominion over the years and wish them all
the best in the future. The transaction generated cash proceeds of $1.07 billion
resulting in an estimated after-tax gain of $245 million. In addition, today we
announced a special cash dividend of $75.00 per Common Share to be paid in the
fourth quarter. E-L Financial is strongly positioned financially and we look
forward to continuing to build shareholder value over the long-term" said Duncan
Jackman, Chairman, President and CEO of E-L Financial.
CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME (LOSS)
---------------------------------------------------------------------------
Three months ended September 30, 2013
-------------------------------------------------------
Continuing Operations Discontinued Total
----------------------------------------------
(thousands of E-L Empire The
dollars) Corporate Life Total Dominion
---------------------------------------------------------------------------
Net operating income
(loss) $ 5,226 $ 27,468 $ 32,694 $ (28,681) $ 4,013
Realized gain (loss)
on available for
sale investments
including
impairment write
downs 2,591 (1,592) 999 (692) 307
Share of income of
associates 12,439 - 12,439 - 12,439
E-L Corporate's fair
value change in
fair value through
profit or loss
investments 46,557 46,557 46,557
---------------------------------------------------------------------------
Net income (loss) 66,813 25,876 92,689 (29,373) 63,316
Other comprehensive
income (loss) 4,335 3,335 7,670 (2,496) 5,174
---------------------------------------------------------------------------
Comprehensive income
(loss) $ 71,148 $ 29,211 $100,359 $ (31,869) $ 68,490
-------------------------------------------------------
---------------------------------------------------------------------------
Three months ended September 30, 2012
-------------------------------------------------------
Restated (3) Continuing Operations Discontinued Total
----------------------------------------------
(thousands of E-L Empire The
dollars) Corporate Life Total Dominion
---------------------------------------------------------------------------
Net operating income
(loss) $ 5,092 $ 15,589 $ 20,681 $ (8,761) $ 11,920
Realized gain on
available for sale
investments
including
impairment write
downs 1,272 536 1,808 5,231 7,039
Share of income of
associates 11,715 - 11,715 - 11,715
E-L Corporate's fair
value change in
fair value through
profit or loss
investments 16,972 16,972 16,972
---------------------------------------------------------------------------
Net income (loss) 35,051 16,125 51,176 (3,530) 47,646
Other comprehensive
income 637 2,912 3,549 11,306 14,855
---------------------------------------------------------------------------
Comprehensive income $ 35,688 $ 19,037 $ 54,725 $ 7,776 $ 62,501
-------------------------------------------------------
---------------------------------------------------------------------------
Nine months ended September 30, 2013
-------------------------------------------------------
Continuing Operations Discontinued Total
----------------------------------------------
(thousands of E-L Empire The
dollars) Corporate Life Total Dominion
---------------------------------------------------------------------------
Net operating income
(loss) $ 18,582 $ 67,139 $ 85,721 $ (19,723) $ 65,998
Realized gain (loss)
on available for
sale investments
including
impairment write
downs 6,778 (745) 6,033 88,092 94,125
Share of income of
associates 29,464 - 29,464 - 29,464
E-L Corporate's fair
value change in
fair value through
profit or loss
investments 210,654 210,654 210,654
---------------------------------------------------------------------------
Net income 265,478 66,394 331,872 68,369 400,241
Other comprehensive (63,241
income (loss) 18,165 (6,025) 12,140 (75,381) )
---------------------------------------------------------------------------
Comprehensive income
(loss) $ 283,643 $ 60,369 $344,012 $ (7,012) $337,000
-------------------------------------------------------
---------------------------------------------------------------------------
Nine months ended September 30, 2012
-------------------------------------------------------
Restated (3) Continuing Operations Discontinued Total
----------------------------------------------
(thousands of E-L Empire The
dollars) Corporate Life Total Dominion
---------------------------------------------------------------------------
Net operating income $ 15,810 $ 40,618 $ 56,428 $ 49,912 $106,340
Realized gain on
available for sale
investments
including
impairment write
downs 3,747 3,229 6,976 20,851 27,827
Share of income of
associates 38,601 - 38,601 - 38,601
E-L Corporate's fair
value change in
fair value through
profit or loss
investments 59,352 59,352 59,352
---------------------------------------------------------------------------
Net income 117,510 43,847 161,357 70,763 232,120
Other comprehensive
income (loss) 2,651 (3,840) (1,189) 5,175 3,986
---------------------------------------------------------------------------
Comprehensive income $ 120,161 $ 40,007 $160,168 $ 75,938 $236,106
-------------------------------------------------------
---------------------------------------------------------------------------
( 1)Use of non-GAAP measures:
"net operating income" is net income excluding realized gain on available for
sale investments including impairment write downs, the Company's share of income
from associates and the fair value change in fair value through profit or loss
investments in the E-L Corporate portfolio, all net of tax. The term net
operating income does not have any standardized meaning according to GAAP and
therefore may not be comparable to similar measures presented by other
companies.
"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.
(2) All earnings per share figures are net of dividends paid on First Preference
shares.
(3) Net operating income and other comprehensive income (loss) for September 30,
2012 have been restated to reflect the impact of the prior period adjustment
related to the remeasurement of defined benefit plans resulting in a $393
increase in net operating income and a $12,990 decrease in other comprehensive
income for the nine months ended September 30, 2012.
FOR FURTHER INFORMATION PLEASE CONTACT:
E-L Financial Corporation Limited
Mark M. Taylor
Executive Vice-President and Chief Financial Officer
(416) 947-2578
(416) 362-2592 (FAX)
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