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E-L Financial Corporation Limited Announces June 30, 2014 Interim Financial Results

T.ELF

TORONTO, ONTARIO--(Marketwired - Aug. 8, 2014) - 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 June 30, 2014, consolidated net operating income(1) of $45.7 million or $10.65 per share(2) for the second quarter of 2014 compared with $39.7 million or $9.34 per share in 2013. The $6.0 million increase in net operating income in 2014 versus 2013 is due to an increase in E-L Corporate's investment income resulting from investing $650 million from the sale of The Dominion of Canada General Insurance Company ("The Dominion").

Consolidated net operating income for the first six months of 2014 was $69.5 million or $15.71 per share compared with $53.0 million or $13.80 per share for the same period in 2013. The $16.5 million increase in net operating income was due mainly an increase of $13.1 million in E-L Corporate's net operating income, resulting from increased investment income as previously noted. The Empire Life Insurance Company's ("Empire Life") net operating income increased $3.3 million due primarily to growth in segregated fund fees resulting from the positive impact of favourable stock market conditions, strong sales and price increases.

Net income

E-L Financial earned consolidated net income of $77.2 million or $18.66 per share for the second quarter of 2014 compared with $190.9 million or $47.62 per share in 2013. The $113.7 million decrease in net income is mainly due to the liquidation of The Dominion's common share portfolio in June 2013 which resulted in an $83.1 million realized gain on available for sale ("AFS") investments. In addition there was a decline in E-L Corporate's fair value through profit or loss ("FVTPL") investments from $50.5 million in 2013 to $22.2 million in 2014.

Consolidated net income for the first six months of 2014 was $181.9 million or $44.35 per share compared with $336.9 million or $83.82 per share in 2013. The $155.0 million decrease in net income for the period is mainly due to The Dominion's $83.1 million realized gain on AFS investments in 2013, as previously discussed, combined with a decline in E-L Corporate's income from FVTPL investments from $164.1 million in 2013 to a $105.8 million in 2014.

Comprehensive income

E-L Financial earned consolidated comprehensive income of $76.2 million or $18.42 per share for the second quarter of 2014 compared with $71.0 million or $17.10 per share in 2013. Consolidated other comprehensive loss ("OCL") was $0.9 million for the second quarter of 2014 compared to $119.9 million in 2013. The 2013 OCL of $119.9 million resulted from the reclassification in 2013 of significant gains relating to The Dominion's liquidation of its common share portfolio.

Consolidated comprehensive income for the first six months of 2014 was $199.5 million or $48.82 per share compared with $268.5 million or $66.40 per share in 2013. Consolidated other comprehensive income ("OCI") was $17.6 million for the first six months of 2014 compared to OCL of $68.4 million in 2013. As previously mentioned, the 2013 OCL of $68.4 million was mainly a result of the liquidation of The Dominion's common share portfolio, compared to an OCI of $17.6 million in 2014 resulting from unrealized fair value increases relating to AFS bonds and stocks.

Chief Financial Officer retirement

Mr. Mark Taylor, long serving Chief Financial Officer ("CFO") of the Company, has decided to step away from the CFO role following the completion of the 2014 year end. Mr. Scott Ewert, currently a partner with PricewaterhouseCoopers LLP, will become CFO following Mr. Taylor's departure in March of 2015.

"On behalf of the Board, I would like to express our gratitude to Mark for his many contributions to the Company over the years," said Mr. Duncan Jackman, Chairman, President and CEO of E-L Financial.

CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME

  Three months ended June 30, 2014  
(thousands of dollars) E-L
Corporate
  Empire
Life
Total  
Net operating income $ 15,686   $ 30,028 $ 45,714  
Realized gain on available for sale investments including impairment write downs   2,625     741   3,366  
Share of income of associates   5,893     -   5,893  
E-L Corporate's fair value change in fair value through profit or loss investments   22,188     -   22,188  
Net income   46,392     30,769   77,161  
Other comprehensive (loss) ("OCL") income ("OCI")   (3,982 )   3,051   (931 )
Comprehensive income $ 42,410   $ 33,820 $ 76,230  
                 
     
  Three months ended June 30, 2013  
(thousands of dollars) E-L
Corporate
Empire
Life
  Total  
Net operating income $ 7,930 $ 31,723   $ 39,653  
Realized gain on available for sale investments including impairment write downs   1,901   628     2,529  
Share of income of associates   14,222   -     14,222  
E-L Corporate's fair value change in fair value through profit or loss investments   50,486   -     50,486  
Net income from continuing operations   74,539   32,351     106,890  
Net income from discontinued operations   -   -     83,997  
Net income   74,539   32,351     190,887  
OCI ("OCL") from continuing operations   693   (14,033 )   (13,340 )
OCL from discontinued operations   -   -     (106,513 )
Total OCI (OCL)   693   (14,033 )   (119,853 )
Comprehensive income $ 75,232 $ 18,318   $ 71,034  
                 

CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME (continued)

  Six months ended June 30, 2014
(thousands of dollars) E-L
Corporate
Empire
Life
Total
Net operating income $ 26,499 $ 42,967 $ 69,466
Realized gain on available for sale investments including impairment write downs   3,765   1,964   5,729
Share of income of associates   952   -   952
E-L Corporate's fair value change in fair value through profit or loss investments   105,775   -   105,775
Net income   136,991   44,931   181,922
OCI   5,519   12,036   17,555
Comprehensive income $ 142,510 $ 56,967 $ 199,477
             
     
  Six months ended June 30, 2013  
(thousands of dollars) E-L
Corporate
Empire
Life
  Total  
Net operating income $ 13,356 $ 39,671   $ 53,027  
Realized gain on available for sale investments including impairment write downs   4,187   847     5,034  
Share of income of associates   17,025   -     17,025  
E-L Corporate's fair value change in fair value through profit or loss investments   164,097   -     164,097  
Net income from continuing operations   198,665   40,518     239,183  
Net income from discontinued operations   -   -     97,742  
Net income   198,665   40,518     336,925  
OCI (OCL) from continuing operations   13,830   (9,360 )   4,470  
OCL from discontinued operations   -   -     (72,885 )
Total OCI (OCL)   13,830   (9,360 )   (68,415 )
Comprehensive income $ 212,495 $ 31,158   $ 268,510  
                 

(1) Use of non-GAAP measures:

"net operating income" is net income from continuing operations 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.

E-L Financial Corporation Limited
Mark M. Taylor
Executive Vice-President and Chief Financial Officer
(416) 362-2592
(416) 947-2578


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