TORONTO, ONTARIO -- (Marketwire) -- 11/07/12 -- E-L Financial Corporation Limited ("E-L Financial") (TSX:ELF)(TSX:ELF.PR.F)(TSX:ELF.PR.G)(TSX:ELF.PR.H) today reported that for the quarter ended September 30, 2012, consolidated net operating income(1) of $11.8 million or $2.01 per share(2) for the third quarter of 2012 compared with $2.5 million or $nil per share in 2011.
The $9.3 million increase in net operating income for the third quarter of 2012 versus 2011 is due to a $16.6 million increase in the life insurance operation ("Empire Life") and a $5.7 million increase in E-L Corporate. Empire Life's increase resulted from primarily improved individual insurance product line results as long-term interest rate volatility and stock market conditions during the quarter improved from last year's unfavourable conditions. These increases were partially offset by the general insurance operation's ("The Dominion") $13.1 million decrease in operating income resulting from an increase in the automobile loss ratio mainly for increases for prior year claims ceded to the Facility Association's Risk Share Pools and for bodily injury claims, higher weather-related claims and higher commission and operating expenses, partly offset by favourable claims development recorded in the third quarter of 2012 versus unfavourable claims development recorded in the third quarter of 2011.
Consolidated net operating income for the first nine months of 2012 was $105.9 million or $24.29 per share compared with $50.7 million or $10.98 per share in 2011. The $55.2 million increase in net operating income was due to improvements in both The Dominion and Empire Life. The $22.8 million increase in The Dominion's year to date net operating income reflects favourable prior year claims development recorded in 2012 mainly for Ontario automobile accident benefits claims, in contrast to unfavourable development recorded in the same period in the prior year (mainly for Ontario bodily injury claims) and lower claims expense for weather-related property losses, partly offset by higher commission and operating expenses. Empire Life's year to date net operating income increased $23.4 million primarily due to the above mentioned long-term interest rate and stock market conditions.
Net income (loss)
E-L Financial earned consolidated net income of $47.5 million or $11.11 per share for the third quarter of 2012 compared with a loss of $94.7 million or $24.71 per share in 2011. The $142.2 million increase in net income for the period reflects a $91.0 million increase in E-L Corporate's fair value through profit or loss ("FVTPL") investments resulting from favourable market returns and a $28.4 million increase in the Company's share of income from associates.
Consolidated net income for the first nine months of 2012 was $231.7 million or $56.30 per share compared with a loss of $55.9 million or $16.12 per share in 2011. The $287.6 million increase in net income for the period reflects primarily a $149.3 million increase in E-L Corporate's fair value change in FVTPL investments, a $72.3 million increase in the Company's share of income from associates and a $55.2 million improvement in net operating income.
Comprehensive income (loss)
E-L Financial earned consolidated comprehensive income of $68.4 million or $16.42 per share for the third quarter of 2012 compared with a loss of $108.4 million or $28.19 per share in 2011. Consolidated other comprehensive income ("OCI") was $20.9 million for the third quarter of 2012 compared with other comprehensive loss ("OCL") of $13.7 million in 2011. The $34.6 million increase in OCI for the quarter reflected an increase in the unrealized fair value of available for sale investments compared to a loss in the third quarter of 2011.
Consolidated comprehensive income for the first nine months of 2012 was $248.7 million or $60.62 per share compared with a loss of $73.4 million or $20.56 per share in 2011. Consolidated OCI was $17.0 million for the first nine months of 2012 compared with OCL of $17.5 million in 2011.
"Our third quarter results showed improvement over the prior year, primarily driven by favourable market conditions that had a positive impact at the corporate level and on our insurance operations," said Duncan Jackman, Chairman, President and CEO of E-L Financial.
CONSOLIDATED SUMMARY OF COMPREHENSIVE INCOME (LOSS)
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Three months ended September 30, 2012
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(thousands of E-L The Empire
dollars) Corporate Dominion Life Total
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Net operating income
(loss) $ 5,079 $ (8,928) $ 15,640 $ 11,791
Realized gain on
available for sale
investments
including
impairment write
downs 1,272 5,231 536 7,039
Share of income of
associates 11,715 - - 11,715
E-L Corporate's fair
value change in
fair value through
profit or loss
investments
16,972 16,972
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Net income (loss) 35,038 (3,697) 16,176 47,517
Other comprehensive
income 743 14,130 5,994 20,867
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Comprehensive income $ 35,781 $ 10,433 $ 22,170 $ 68,384
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Three months ended September 30, 2011
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(thousands of E-L The Empire
dollars) Corporate Dominion Life Total
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Net operating (loss)
income $ (650) $ 4,134 $ (952) $ 2,532
Realized loss on
available for sale
investments
including
impairment write
downs (309) (1,867) (4,269) (6,445)
Share of loss of
associates (16,693) - - (16,693)
E-L Corporate's fair
value change in
fair value through
profit or loss
investments (74,067) (74,067)
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Net (loss) income (91,719) 2,267 (5,221) (94,673)
Other comprehensive
loss (377) (6,872) (6,452) (13,701)
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Comprehensive loss $ (92,096) $ (4,605) $ (11,673) $ (108,374)
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Nine months ended September 30, 2012
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(thousands of E-L The Empire
dollars) Corporate Dominion Life Total
-----------------------------------------------------
Net operating income $ 15,769 $ 49,407 $ 40,771 $ 105,947
Realized gain on
available for sale
investments
including
impairment write
downs 3,747 20,851 3,229 27,827
Share of income of
associates 38,601 - - 38,601
E-L Corporate's fair
value change in
fair value through
profit or loss
investments 59,352 59,352
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Net income 117,469 70,258 44,000 231,727
Other comprehensive
income 3,229 10,267 3,480 16,976
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Comprehensive income $ 120,698 $ 80,525 $ 47,480 $ 248,703
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Nine months ended September 30, 2011
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(thousands of E-L The Empire
dollars) Corporate Dominion Life Total
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Net operating income $ 6,694 $ 26,613 $ 17,405 $ 50,712
Realized gain on
available for sale
investments
including
impairment write
downs 3,996 11,273 1,792 17,061
Share of loss of
associates (33,721) - - (33,721)
E-L Corporate's fair
value change in
fair value through
profit or loss
investments (89,925) (89,925)
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Net (loss) income (112,956) 37,886 19,197 (55,873)
Other comprehensive
loss (2,984) (5,045) (9,450) (17,479)
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Comprehensive (loss)
income $ (115,940) $ 32,841 $ 9,747 $ (73,352)
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(1) U se 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.
(2) All earnings per share figures are net of dividends paid on First
Preference shares.
