E-L Financial Corporation Limited (ELF) 2024年年度報告「TSX」.pdf

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1、Financial Corporation LimitedANNUAL REPORT2024Financial Highlights(Millions of dollars,except per share amounts)Years ended December 3120242023Net Equity Value per Common Share(1)$2,336.43$1,968.17 Net Income per Common Share$459.74$265.60 Contribution to Shareholders Net Income:E-L Corporate$1,284$

2、778 Empire Life 279 155 Shareholders Net Income 1,563 933 Preferred Shareholder Dividends 15 15 Net Income attributable to Common Shareholders$1,548$918 E-L CorporateShareholders Net Income$1,284$778 Investments-Corporate$7,821$6,593 Investments in Associates$466$394 Empire LifeCommon Shareholders N

3、et Income$279$155 Net Insurance Service Result$176$181 Life Insurance Capital Adequacy Test Total Ratio(“LICAT”)(%)151 155(1)See Non-GAAP measures within the Managements Discussion and Analysis.ANNUAL MEETING OF SHAREHOLDERSThe Annual and Special Meeting of Shareholders(“AGM”)will be held Wednesday

4、May 7,2025 at 11:30 a.m.(Toronto time).The AGM will be held as a virtual-only meeting.All shareholders are invited to attend.56th ANNUAL REPORTE-L Financial Corporation Limited 1Board of DirectorsDuncan N.R.JackmanChairman,President and Chief Executive Officer,E-L Financial Corporation LimitedM.Vict

5、oria D.JackmanExecutive Director,Hal Jackman FoundationPeter J.LevittCorporate DirectorElizabeth M.LoachHead,Private Markets,Pension Investment Management,Canada Imperial Bank of CommerceClive P.RoweCorporate DirectorStephen J.R.SmithCo-Founder and Executive Chairman,First National Financial LPMark

6、M.TaylorTreasurer,Canadian Northern Prairie Lands Company Inc.Honorary DirectorsThe Hon.Henry N.R.JackmanWilliam J.CorcoranOfficersDuncan N.R.JackmanChairman,President and Chief Executive OfficerRichard B.CartyVice-President,General Counsel and Corporate SecretarySusan C.CliffordTreasurerScott F.Ewe

7、rtVice-President and Chief Financial OfficerFahad KhanVice-President and Chief Investment Officer2 E-L Financial Corporation LimitedREPORT ON E-L FINANCIAL CORPORATION LIMITEDThis document has been prepared for the purpose of providing Managements Discussion and Analysis(“MD&A”)of the financial cond

8、ition and results of operations for the years ended December 31,2024 and 2023 for E-L Financial Corporation Limited(“E-L Financial”or the“Company”).This MD&A should be read in conjunction with the December 31,2024 year end consolidated financial statements and the notes,which form part of the E-L Fi

9、nancial Corporation Limited 2024 Annual Report dated March 6,2025.The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board(“IFRS Accounting Standards”).Unless otherwise noted,both

10、 the consolidated financial statements and this MD&A are expressed in Canadian dollars.Figures in this MD&A may differ or not sum due to rounding.This MD&A is dated March 6,2025.This MD&A contains certain forward-looking statements that are subject to risks and uncertainties that may cause the resul

11、ts or events mentioned in this discussion to differ materially from actual results or events.No assurance can be given that results,performance or achievement expressed in,or implied by,any forward-looking statements within this discussion will occur,or if they do,that any benefits may be derived fr

12、om them.Unless otherwise stated,all per share amounts are based on the weighted average number of common shares and Series A Convertible Preference Shares outstanding for the period,adjusted for the Companys proportionate interest in its own common shares held indirectly through investments in assoc

13、iates.Additional information relating to the Company,including its Annual Information Form,may be found at www.sedarplus.ca.Forward-looking statements and informationCertain statements in this MD&A about the Companys current and future plans,expectations and intentions,results,market share growth an

14、d profitability,strategic objectives or any other future events or developments constitute forward-looking statements and information within the meaning of applicable securities laws.The words“may”,“will”,“would”,“should”,“could”,“expects”,“plans”,“intends”,“trends”,“indications”,“anticipates”,“beli

15、eves”,“estimates”,“predicts”,“likely”or“potential”or the negative or other variations of these words or other comparable words or phrases,are intended to identify forward-looking statements and information.Although management anticipates that the expectations and assumptions on which such forward-lo

16、oking statements and information are based are reasonable,undue reliance should not be placed on the forward-looking statements and information because there can be no assurance that they will prove to be correct.By their nature,such forward-looking statements and information are subject to various

17、risks and uncertainties,which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed.These risks and uncertainties include,but are not limited to,market risk including equity risk,hedging risk,interest rate risk,foreign exchange ra

18、te risk;liquidity risk;credit risk including counterparty risk;product risk including mortality risk,policyholder behaviour risk,expense risk,morbidity risk,product design and pricing risk,underwriting and claims risk,reinsurance risk;operational risk,including legal and regulatory compliance risk,m

19、odel risk,human resources risk,third party risk,technology,information security and business continuity risk;and business and strategic risk,including environmental and social risk,risk with respect to risk with respect to financial strength,capital adequacy risk,risk to competition,risk with respec

20、t to distribution channels,risk with respect to changes to applicable income tax legislation,risk with respect to brand,risk with respect to intellectual property and risk with respect to significant ownership of common shares.Please see the section titled“Description of the Business”in E-L Financia

21、ls Annual Information Form available at www.sedarplus.ca for more details on these risks.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 3Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements and inf

22、ormation include that the general economy remains stable;assumptions on interest rates,mortality rates and insurance contract liabilities;and capital markets continue to provide access to capital.These factors are not intended to represent a complete list of the factors that could affect the Company

23、;however,these factors should be considered carefully,and readers should not place undue reliance on forward-looking statements made herein or in the documents reproduced herein.To the extent any forward-looking information in this MD&A constitutes future-oriented financial information or financial

24、outlooks within the meaning of securities laws,such information is being provided to demonstrate potential benefits and readers are cautioned that this information may not be appropriate for any other purpose.Future-oriented financial information and financial outlooks are,without limitation,based o

25、n the assumptions and subject to the risks set out above.The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.When relying on the Companys forward-looking statements and information to make decisions,investors and others should carefull

26、y consider the foregoing factors,assumptions and other uncertainties and potential events.Readers are cautioned not to place undue reliance on this forward-looking information,which is given as of the date hereof or the date indicated,and to not use such forward-looking information for anything othe

27、r than its intended purpose.The Company undertakes no obligation to update publicly or revise any forward-looking statements and information,whether as a result of new information,future events or otherwise after the date of this document,except as required by law.Non-GAAP measuresThe MD&A contains

28、information using non-GAAP measures.Current Canadian GAAP is the IFRS Accounting Standards for the Companys consolidated financial statements.The Company believes that these measures provide useful information to its shareholders in evaluating the Companys financial results.Where non-GAAP measures a

29、re used,descriptions have been provided as to the nature of the adjustments made.The MD&A contains reference to net equity value,net equity value per common share and growth in net equity value per common share.Net equity value per common share is described and reconciled to shareholders equity on p

30、age 7.These terms do not have any standardized meaning according to IFRS Accounting Standards and therefore may not be comparable to similar measures presented by other companies.Other non-GAAP measures are also used in The Empire Life Insurance Company(“Empire”or“Empire Life”)section of the MD&A.Th

31、ese include references to assets under management,annualized premium sales,gross and net sales for segregated funds and fixed annuities to provide investors with supplemental measures of its operating performance and to highlight trends in its core business that may not otherwise be apparent when re

32、lying solely on IFRS Accounting Standards financial measures.Empire Life also believes that securities analysts,investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers.Empire Lifes management also uses non-GAAP measures to facilitate operating performance

33、 comparisons from period to period,to prepare annual operating budgets and to determine components of management compensation.Empire Life believes that these measures provide information useful to its shareholders and policyholders in evaluating the Empires underlying financial results.Annualized pr

34、emium sales is used as a method of measuring sales volume.It is equal to the premium expected to be received in the first 12 months for all new individual insurance and employee benefit policies sold during the period.For segregated funds and annuity contracts,sales include new and renewal deposits

35、to policy contracts.Net sales in the Wealth Management line reflect the gross sales(deposits)less the effect of redemptions and surrenders.MANAGEMENTS DISCUSSION&ANALYSIS4 E-L Financial Corporation LimitedAssets under management is a non-GAAP measure of the assets managed by Empire Life,which includ

36、es general fund assets assets and segregated fund assets.It represents the total assets of Empire Life and the assets its customers invest in.The following table provides a reconciliation of assets under management to total assets in Empire Lifes financial statements:(in millions of dollars)20242023

37、General fund assets$10,273$9,852 Segregated fund assets 9,394 8,813 Total Empire Life assets under management$19,667$18,665 The CompanyE-L Financial operates as an investment and insurance holding company.In managing its operations,the Company distinguishes between two operating segments,E-L Corpora

38、te and Empire Life.E-L Corporates operations include the oversight of investments in global equities held through direct and indirect holdings of common shares,investment funds,closed-end investment companies and other private companies.E-L Financial holds a 56.6%(December 31,2023-56.6%)interest in

39、a closed-end investment corporation,United Corporations Limited(“United”)which is listed on the Toronto Stock Exchange.United is an investment vehicle for long-term growth through investments in common equities.The invested assets and operations of United are consolidated and included in the E-L Cor

40、porate segment.In addition,E-L Corporate has two significant investments in associates which includes a 34.9%(December 31,2023-36.6%)interest in Algoma Central Corporation(“Algoma”)and a 24.9%(December 31,2023-24.9%)interest in Economic Investment Trust Limited(“Economic”).Algoma and Economic are ac

41、counted for using the equity method.The Companys investment in Empire Life(99.5%interest)is consolidated by E-L Financial.The Empire Life operating segment underwrites life and health insurance policies and provides segregated funds and annuity products.The Companys strategy is to accumulate shareho

42、lder value through long-term capital appreciation and dividend and interest income from its investments.E-L Financial oversees its investments through representation on the Boards of Directors of the subsidiaries and the other companies in which the Company has significant shareholdings.Overview of

43、results attributable to shareholders of E-L FinancialE-L Financial consolidatedFourth quarterYear(millions of dollars)2024202320242023Contribution to net income E-L Corporate(1)$271$391$1,284$778 Empire Life(1)16 110 279 155 Net income 287 501 1,563 933 Other comprehensive income(loss)(1)5 7 14 (1)C

44、omprehensive income$292$508$1,577$932(1)Net of non-controlling interests and net income attributable to the participating accountMANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 5The following tables summarize the results of the Companys business segments:E-L CorporateFourth quarterY

45、ear(millions of dollars)2024202320242023Net gain on investments$301$516$1,470$948 Investment and other income 31 32 157 143 Share of associates income(loss)20 (31)85 (9)352 517 1,712 1,082 Expenses 13 12 46 43 Income taxes 36 59 214 134 Non-controlling interests 32 55 168 127 81 126 428 304 Net inco

46、me 271 391 1,284 778 Other comprehensive income(loss),net of taxes(1)6 (3)9 (1)Comprehensive income$277$388$1,293$777 Empire LifeFourth quarterYear(millions of dollars)2024202320242023Net insurance service result$33$47$176$181 Net investment and insurance finance result 4 142 306 136 Fee and other i

47、ncome(2)14 9 45 31 51 198 527 348 Expenses 32 25 125 113 Income and other taxes 3 35 103 46 Non-controlling interests and net income attributable to the participating account 28 20 34 35 88 248 193 Net income 16 110 279 155 Other comprehensive(loss)income,net of taxes(1)(1)10 5 Comprehensive income$

48、15$120$284$155(1)Net of non-controlling interests and net income attributable to the participating account(2)Included in non-insurance investment resultsE-L Financial reported a consolidated 2024 shareholders net income of$1,563 million or$459.74 per common share compared to$933 million or$265.60 pe

49、r common share in 2023.E-L Corporate reported net income of$1,284 million for the year ended December 31,2024 compared to$778 million in 2023.The increase in earnings was due to a higher net gain on investments of$1,470 million in 2024 compared to$948 million in 2023.E-L Corporates global investment

50、 portfolio had a pre-tax total return,including dividend income,of 26%in 2024 compared to a pre-tax total return of 19%in the prior year.Empire Life reported a net income of$279 million for the year ended December 31,2024 compared to$155 million in 2023.The increase in earnings was primarily due to

51、more favourable interest rate movements in 2024 and the impacts of insurance contract liability assumption updates.Consolidated comprehensive income for the year ended December 31,2024 was$1,577 million compared to$932 million for 2023.Other comprehensive income(“OCI”)was$14 million in 2024 compared

52、 to other comprehensive loss(“OCL”)of$1 million in 2023.The income in 2024 was primarily due to the Companys share of OCI of associates and a gain on the remeasurement of the post-employment defined benefit plans.MANAGEMENTS DISCUSSION&ANALYSIS6 E-L Financial Corporation LimitedNormal course issuer

53、bidOn March 7,2024,the Company obtained approval from the TSX to renew its normal course issuer bid(“NCIB”)to purchase up to 173,086 common shares between March 12,2024 and March 11,2025.Daily purchases(other than pursuant to a block purchase exemption)on the TSX under the NCIB are limited to 1,000

54、common shares.The price that the Company pays for the common shares is the prevailing market price at the time of acquisition.No shares were purchased under the NCIB for the year ended December 31,2024.For the year ended December 31,2023,4,700 shares were purchased under the NCIB at an average price

55、 of$900.78 for a total consideration of$4 million.Substantial issuer bidsOn November 7,2023 the Company announced its intention to commence a substantial issuer bid(“SIB”)pursuant to which the Company offered to purchase up to$100 million of its outstanding common shares for cash.As of December 31,2

56、023 the Company had taken up and paid for 90,668 common shares at a price of$1,050.00 per common share.The Common Shares acquired under the SIB represent an aggregate purchase price of$95 million.As required by security legislation,the Company suspended any purchases of common shares under the NCIB

57、during the SIB.During the fourth quarter of 2023,United completed a SIB,which resulted in United taking up 338,983 of its outstanding common shares.Combined with the shares repurchased year to date under Uniteds normal course issuer bid,E-L Financials effective ownership increased to 56.6%at Decembe

58、r 31,2023 from 54.9%at December 31,2022.Net equity value per common shareE-L Corporates investments in Algoma and Economic are accounted for using the equity method and are not carried at fair value.Therefore,to provide an indication of the accumulated shareholder value,the following table adjusts s

59、hareholders equity to reflect investments in associates at fair value:(millions of dollars,except per share amounts)20242023E-L Financial shareholders equity$8,416$7,114 Less:First preference shares(300)(300)8,116 6,814 Adjustments for E-L Corporates investments in associates not carried at fair val

60、ue:Carrying value(466)(394)Fair value(1)430 394 (36)Non-controlling interest and deferred tax 8 (28)Net equity value$8,088$6,814 Common shares(2)outstanding at year end 3,461,980 3,461,980 Net equity value per common share(2)(3)$2,336.43$1,968.17(1)Based on quoted market prices(2)Common shares inclu

61、des Series A Convertible Preference Shares(3)See non-GAAP measuresMANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 7Growth in net equity value per common share The Companys objective is to build long-term shareholder value by compounding growth in net equity value per common share ov

62、er the long term.Set out below is a table that shows the net equity value per common share and growth for the respective fiscal periods.The growth in net equity value per common share and compounded annual growth in net equity value per common share is calculated as the change in net equity value pe

63、r share for the respective period and includes dividends paid to common shareholders.AnnualNet equity value per common share*Growth*$%20151,089.23 12.3 2016 1,159.26 6.8 2017 1,316.64 14.0 2018 1,295.65 (1.2)2019 1,486.19 15.1 2020 1,684.93 15.4 2021 1,884.08 17.1 2022 1,785.66 (3.4)2023 1,968.17 11

64、.1 2024 2,336.43 22.5 Compounded annual growth in net equity value per common share*2015-2024-10 years 10.4 1969-2024-Since inception 12.3*This chart was drawn from the individual annual reports and has not been restated for any subsequent changes in accounting policies.Net equity value amounts are

65、reduced by deferred income tax liabilities on net unrealized investment gains.See non-GAAP measures.Summary of quarterly resultsThe following table summarizes the quarterly results:(millions of dollars,except per share amounts)20242023Q4Q3Q2Q1Q4Q3Q2Q1Insurance service revenue$358$357$351$339$335$337

66、$328$326 Net investment and insurance finance result 4 219 28 55 142 (46)(7)$47 Fair value change in fair value through profit or loss investments 301 325 214 629 516 (103)211 323 Non-insurance investment and other income 47 56 62 41 40 37 50 46 Share of income(loss)of associates 19 43 14 6 (30)4 9

67、10 Total revenue$729$1,000$669$1,070$1,003$229$591$752 Net income(loss)(1)$287$497$232$547$501$(57)$184$305 Earnings(loss)per common share-basic$84.03$146.56$67.66$161.41$144.61$(17.73)$52.07$86.96-diluted$77.93$135.13$62.96$148.72$132.30$(17.73)$48.31$80.00(1)Attributable to shareholdersMANAGEMENTS

68、 DISCUSSION&ANALYSIS8 E-L Financial Corporation LimitedQuarterly trend analysisThe consolidated revenue and consolidated net income of the Company are expected to fluctuate on a quarterly basis given its two segments.In particular,equity market movements,changes in interest rates,underwriting result

69、s,insurance contract liability discount rates and reserve adjustments are likely to cause fluctuations.Investment income includes dividend income earned by the Company.In general,dividends earned on investments outside North America peak in the second and fourth quarters of the year.Revenue for the

70、fourth quarter of 2024 decreased compared to the fourth quarter of 2023,with fluctuations mainly due to decreases in net investment and insurance finance result and the fair value change in fair value through profit and loss investments.Net investment and insurance finance result decreased by$138 mi

71、llion in the fourth quarter compared to the same period in 2023 due to the impacts of interest rate declines in the fourth quarter of 2023 that did not reoccur in the same period in 2024.The decrease in the fair value change in fair value through profit and loss investments in the fourth quarter of

72、2024,reflects stronger investment performance during the fourth quarter of 2023.Fourth quarter resultsE-L Financial reported a consolidated shareholders net income of$287 million or$84.03 per common share for the fourth quarter of 2024 compared to$501 million or$144.61 per common share in 2023.E-L C

73、orporate reported net income of$271 million for the fourth quarter of 2024 compared to$391 million in 2023,with a net gain on investments of$301 million in 2024 compared to$516 million for the fourth quarter of 2023.E-L Corporates global investment portfolio had a pre-tax total return,including divi

74、dend income,of 4%for the fourth quarter of 2024 compared to a pre-tax total return of 9%for the same period in the prior year.Empire Life reported a net income of$16 million for the fourth quarter of 2024 compared to$110 million in 2023.The higher earnings in the fourth quarter of 2023 compared to 2

75、024 was mainly due to modest interest rate movements in the fourth quarter of 2024 relative to the more significant interest rate decrease in the fourth quarter in 2023.In addition there were favourable net investment gains from non-fixed income assets in the fourth quarter of 2023.Consolidated comp

76、rehensive income was$292 million in the fourth quarter of 2024 compared to$508 million for the fourth quarter of 2023.OCI was$5 million in the fourth quarter of 2024 compared to$7 million in 2023.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 9Liquidity and cash flowsThe cash flow

77、information,noted below,provides supplemental information that is considered useful in understanding the components within the cash flow statement on both a consolidated and non-consolidated basis.Consolidated cash flowsThe condensed cash flows of United and Empire Life,as well as E-L Financial non-

78、consolidated and consolidated are presented below:Year ended December 31(millions of dollars)E-L Financial(non-consolidated)UnitedEmpire LifeConsolidation adjustmentsE-L Financial Consolidated20242023Cash flows from:Operating activities$227$11$370$(149)$459$736 Financing activities(380)(59)(157)146

79、(450)(212)Investing activities 206 56 (342)3 (77)(386)Increase(decrease)in cash and cash equivalents 53 8 (129)(68)138 Cash and cash equivalents,beginning of the year 59 34 348 441 303 Cash and cash equivalents,end of the year$112$42$219$373$441 The decrease in cash provided from operating activitie

80、s in 2024 relative to 2023 reflects the decrease in cash earnings during 2024 compared to the prior year primarily resulting from a larger impact from changes in insurance contract liability assumptions and interest rate movements.For Empire Life,cash flows from operating activities include premiums

81、,net investment income and fee income.These funds are primarily used to pay policy benefit payments,commissions,operating expenses and policyholder dividends.Cash used for financing activities increased during 2024 primarily due to the Companys payment of a special cash dividend of$60.00 per common

82、share in the second quarter of 2024 and a repayment of$135 million in borrowings.During 2024,United repaid$40 million of its operating credit facility and E-L Financial repaid$95 million of its margin loan.Cash flows used for investing activities in 2024 decreased compared to the prior year.Empire L

83、ifes cash used for investment activities decreased by$16 million compared to the same period in 2023,driven by lower net purchases on their portfolio investments relative to the prior period,partly offset by higher investments in associates and joint venture.Empire Lifes net outflow was substantiall

84、y offset by the proceeds from higher net sales of investments by E-L Financial(non-consolidated).MANAGEMENTS DISCUSSION&ANALYSIS10 E-L Financial Corporation LimitedNon-consolidated cash flows of E-L FinancialE-L Financials corporate cash flows from operating activities,before payment of dividends,ar

85、e primarily comprised of dividends and interest received,less operating expenses and income taxes.The following table details the non-consolidated cash flows of the Company on a direct basis,excluding the cash flows of the subsidiaries.This table has been prepared to assist the reader in isolating t

86、he cash flows of E-L Financial(non-consolidated).(millions of dollars)20242023Cash flows from:Operating activitiesDividends from subsidiaries$140$84 Dividends and interest 107 101 Expenses and taxes,net of other income(20)(13)227 172 Financing activitiesCash dividends(275)(64)(Decrease)increase in m

87、argin loan(95)40 Interest paid on borrowings(10)(9)Common share purchases (99)Purchases of subsidiary shares (1)(380)(133)Investing activitiesPurchases of investments(474)(684)Proceeds from sales of investments 657 604 Dividends from associates 23 30 206 (50)Increase(decrease)in cash and cash equiva

88、lents 53 (11)Cash and cash equivalents,beginning of the year 59 70 Cash and cash equivalents,end of the year$112$59 During 2024,the non-consolidated cash and cash equivalents of E-L Financial increased by$53 million.Operating cash flows for 2024 increased compared with the prior year mainly due to h

89、igher dividends received from Empire Life.Cash flows used for financing activities for 2024 were impacted by the items previously discussed in the consolidated cash flows narrative above.Cash flows from investing activities in 2024 increased compared to the same period in 2023 as E-L Financial used

90、proceeds from sales of investments to fund the repayment of the margin loan and the special common share dividend paid during the second quarter of 2024.Dividends from associates included a special dividend paid by Algoma during the first quarter of 2023.E-L Financial maintains sufficient liquidity

91、through holding cash equivalents and a sufficient amount of marketable investments that may be sold,if necessary,to fund new investment opportunities and to meet any operating cash flow requirements.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 11Capital resourcesThe Companys capi

92、tal management process is designed to protect capital and build shareholder value over the long-term.Effective capital management includes maintaining sufficient liquidity to be able to pay dividends to the Companys preferred shareholders,satisfy issuer credit ratings requirements,as well as providi

93、ng flexibility to pursue strategic opportunities.Total capital on a consolidated basis at December 31,2024,consisted of the Companys shareholders equity of$8,416 million,non-controlling interests in subsidiaries of$1,270 million and participating account surplus of$53 million.In the normal course of

94、 business,the Company is obligated to fund investment commitments which are not recognized in the consolidated financial statements.As of December 31,2024,E-L Corporate has$337 million(2023-$254 million)in unfunded commitments for units in limited partnerships.Selected annual information(millions of

95、 dollars,except per share amounts)202420232022RevenueInsurance service revenue$1,405$1,326$1,255 Net investment and insurance finance result 306 136 (86)Non-insurance investment income 1,757 1,112 (556)Total$3,468$2,574$613 Shareholder net income(loss)E-L Corporate$1,284$778$(381)Empire Life 279 155

96、 55 Total$1,563$933$(326)Earnings(loss)per share-basic$459.74$265.60$(96.03)-diluted$424.80$245.24$(96.03)AssetsE-L Corporate$8,452$7,095$6,189 Empire Life 19,667 18,665 17,558 Total assets$28,119$25,760$23,747 Non-current financial liabilitiesE-L Corporate-Senior unsecured notes$200$199$198 Empire

97、Life-Subordinated debt 399 399 399 Total non-current financial liabilities$599$598$597 Cash dividends declared per shareFirst Preference Shares,Series 1$1.3250$1.3250$1.3250 First Preference Shares,Series 2$1.1875$1.1875$1.1875 First Preference Shares,Series 3$1.3750$1.3750$1.3750 Common Shares$75.0

98、0$15.00$35.00 Revenues and net income over the period have been significantly impacted by movements over the past year resulting from volatility in both the bond and equity markets and movements in interest rates.In 2024 E-L Corporate reported a net gain on investments of$1,470 million compared to$9

99、48 million in 2023.E-L Corporates global investment portfolio had a pre-tax total return,including dividend income,of 26%in 2024 compared to a pre-tax total return of 19%in 2023.In 2022 E-L Corporate reported a net loss on investments of$767 million,with a pre-tax total return,including dividend inc

100、ome,of negative 11%.The MANAGEMENTS DISCUSSION&ANALYSIS12 E-L Financial Corporation Limitedfluctuation in Empire Lifes revenue for the three year period is primarily driven by the impact of market interest rate movements.Assets have changed over the past three years primarily due to the impact of eq

101、uity markets movements and changes in interest rates on the investment portfolios.In 2024 common share dividends were$75.00 per common share,representing a quarterly dividend of$3.75 per common share and an additional special cash dividend of$60.00 per common share declared in the second quarter of

102、2024.In 2023 common share dividends were$15.00 per common share,representing a quarterly dividend of$3.75 per common share.In 2022 common share dividends were$35.00 per common share,representing a quarterly dividend of$2.50 per common share and an additional special cash dividend of$25.00 per common

103、 share declared in the first quarter of 2022.On January 15,2025,the Board of Directors declared a special dividend of$150.00 per common share payable March 14,2025 to shareholders of record on March 3,2025.Outstanding share dataThe following summarizes the issued and outstanding shares of the Compan

104、y:Issued and outstandingPreferred sharesSeries A Preference Shares 258 First Preference Shares,Series 1 4,000,000 First Preference Shares,Series 2 4,000,000 First Preference Shares,Series 3 4,000,000 Common Shares 3,461,722 The Series A Preference Shares are convertible,at the shareholders option,in

105、to common shares on a share for share basis.The Series A Preference Shares and common shares are each entitled to one vote per share.The First Preference Shares are convertible at the option of the Company,into that number of common shares determined by dividing by the then applicable redemption pri

106、ce,together with all declared and unpaid dividends to the date of conversion,by the greater of$1.00 and 95%of the weighted average trading price of the common shares on the Toronto Stock Exchange for the 20 consecutive trading days ending on the fourth day prior to the conversion date.Disclosure con

107、trols and proceduresThe Companys disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company under Canadian securities laws is recorded,processed,summarized and reported within the specified time periods,and include control

108、s and procedures that are designed to ensure that information is accumulated and communicated to management on a timely basis to allow appropriate decisions regarding public disclosure.Under the supervision of management,an evaluation was carried out on the effectiveness of the Companys disclosure c

109、ontrols and procedures as of December 31,2024.Based on that evaluation,management concluded that the Companys disclosure controls and procedures were effective as at December 31,2024.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 13Internal control over financial reportingManagemen

110、t is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS Accounting Stan

111、dards.Under the supervision of management,an evaluation of the Companys internal control over financial reporting was carried out as at December 31,2024.Based on that evaluation,management concluded that the Companys internal control over financial reporting was effective as at December 31,2024.No c

112、hanges were made in the Companys internal control over financial reporting during the year ended December 31,2024,that have materially affected,or are reasonably likely to materially affect,the Companys internal control over financial reporting.Critical accounting estimatesThe consolidated financial

113、 statements are prepared in accordance with generally accepted accounting principles in Canada which require estimates and assumptions in determining amounts reported in the financial statements.Note 2 to the consolidated financial statements describes the significant accounting policies.The Company

114、 considers the following items to be particularly susceptible to changes in estimates and judgments:Impairment-Investments in associatesInvestments in associates are reviewed at each quarter-end reporting period to identify and evaluate investments that show indications of possible impairment.Judgme

115、nt is required in determining if there is objective evidence of impairment.Investments in associates recognize an impairment loss if the investment in associates recoverable amount is determined to be lower than the investments carrying amount at the reporting date.Recoverable amount is equal to the

116、 higher of the investments fair value less costs of disposal and value in use.Impairment losses are recognized in the consolidated statements of income.Previously recognized impairment losses are reversed if the investments recoverable amount subsequently increases and there is a significant indicat

117、ion that the circumstances that led to the initial recognition of the impairment loss have improved or recovered completely.ConsolidationThere could be judgment involved in assessing control or significant influence of certain of the Companys interests in other entities.The Company has applied judgm

118、ent to assess which party has power or influence over the relevant activities of these entities.When assessing decision making power,the Company has considered voting rights,contractual agreements,relative share holdings,and other facts and circumstances.The initial assessment of control or influenc

119、e is reassessed when there are changes in facts and circumstances.Fair value estimatesIn measuring the fair value of financial instruments,management exercises judgment in the selection of fair value inputs and in determining their significance to the fair value estimate.Judgment is also required in

120、 the classification of fair value measurements within the levels of the fair value hierarchy,in particular those items categorized within Level 3 of the hierarchy.Insurance and reinsurance contracts heldKey assumptions and sources of estimation can result in a material adjustment to the carrying amo

121、unts of assets and liabilities.Empire Life bases assumptions and estimates on parameters available when the insurance and reinsurance contracts held are measured.Actuarial assumptions relate to events that are anticipated to occur,however,these may not be realized due to market changes,developing ex

122、perience or circumstances arising that are unpredictable.Management applied judgment in determining the level of MANAGEMENTS DISCUSSION&ANALYSIS14 E-L Financial Corporation Limitedaggregation of information in which the disclosures are presented in Note 15 of the consolidated financial statements.Th

123、e methods used to measure insurance contractsEmpire Life uses the probability weighted average of cash flows to estimate the present value of expected future cash flows.Product guarantees for universal life,participating products and segregated funds are valued using stochastic models.Assumptions re

124、lating to mortality rates,morbidity rates,longevity,expenses,and policyholder behavior are discussed further in Note 2 of the consolidated financial statements.Discount rates Observable periodTop-down approachFor Empire Life products measured under the General Measurement Model(“GMM”)or the Premium

125、Allocation Approach(“PAA”),cash flows are discounted using the interest rates implied by a reference portfolio of assets that reflects the characteristics of the insurance contracts,adjusted to remove the credit risk premium of the assets and to reflect the illiquidity premium of the insurance contr

126、acts.For the observable period(30 years),the interest rates implied by the reference portfolio are based on a weighted average of a subset of Empire Lifes fixed income investments.The credit risk adjustment is determined based on historical experience and current market conditions,and varies by asse

127、t class,credit rating,and term.Prior to 2024,these cash flows were discounted using interest rates determined by applying the bottom-up approach,described in further detail below.This change in estimate did not have a material impact on Empire Lifes financial statements.Bottom-up approachSegregated

128、funds,which are measured under the Variable Fee Approach(“VFA”),are discounted using risk-free interest rates,plus an illiquidity premium.For the observable period,risk-free interest rates were determined by reference to the yields of highly liquid AAA-rated Canadian sovereign securities.Unobservabl

129、e periodUnder both the top-down and bottom-up approach,the ultimate(year 70)interest rate is based on an ultimate risk-free interest rate of 3.65%(2023-3.15%).The discount rates between the observable and the ultimate periods are derived using linear interpolation.Illiquidity premiumUnder both appro

130、aches,the illiquidity premium references observable market interest rates for corporate debt.Empire Life applies the same illiquidity premium to all groups of insurance contracts where the GMM or PAA applies.It was determined that these insurance contracts were very illiquid,which is reflected in th

131、e illiquidity premium used.A lower illiquidity premium is applied to segregated fund guarantees.During the year,Empire Life made changes to the illiquidity premium used in discounting segregated fund cash flows resulting in a contractual service margin(“CSM”)decrease of$33 million.Risk adjustment fo

132、r non-financial riskThe risk adjustment for non-financial risk represents the compensation that Empire Life requires for bearing the uncertainty about the amount and timing of the cash flows that arise from non-financial risk as the entity fulfills insurance contracts.The risk adjustment for non-fin

133、ancial risk reflects an amount that an insurer would rationally pay to remove the uncertainty that future cash flows will exceed the current estimated amount.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 15Empire Life derives risk adjustment for non-financial risk using a margin f

134、or adverse deviation approach.The approach adds a margin(conservatism)to each non-financial risk(mortality,morbidity,longevity,expenses,policyholder behaviour)assumption.Amortization of the CSMCSM is a component of the carrying amount of the asset or liability for a group of insurance contracts repr

135、esenting the expected future profits Empire Life will recognize as it provides insurance contract services under the insurance contracts in the group.An amount of the CSM for a given group of insurance contracts is amortized into insurance service revenue in each period based on coverage units,which

136、 reflect the insurance services provided.For universal life contracts,the coverage units are defined as the total current death benefit.Empire Lifes position is that universal life products contain investment return services,whereas products with fixed Cash Surrender Values(“CSVs”)do not contain inv

137、estment return services.Hence,the coverage units for individual non-participating contracts with fixed or no CSVs,are the sum insured less the CSVs.Coverage units for fixed life contingent payout annuities(immediate annuities)are the expected annualized payment amounts.For contracts measured using t

138、he GMM,coverage units are discounted at locked-in rates in order to determine the CSM amortization.For participating products,coverage units are the total face amount which approximates the benefits provided under the insurance and investment service.Amortization of the segregated funds CSMs use fun

139、d values as the coverage units and incorporates adjustments that reflect the impact of economic returns.The total coverage units of each group of insurance contracts are reassessed at the end of each reporting period to adjust for the reduction of remaining coverage for claims paid,expectations of l

140、apses and cancellation of contracts in the period.For reinsurance contracts held,the CSM amortization reflects the expected pattern of underwriting of the underlying contracts because the level of service provided depends on the number of underlying contracts in-force.Accounting model eligibilityIFR

141、S 17 Insurance Contracts(“IFRS 17”)requires the application of one of three models to groups of insurance contracts:General Measurement Model;Variable Fee Approach;orPremium Allocation Approach.For further details on the application of each model,refer to Note 2 of the consolidated financial stateme

142、nts.Changes in accounting policies In the year ended December 31,2024 the Company has not adopted any new or amended accounting standards that would have resulted in a material impact on the consolidated financial statements.The Company is currently evaluating the following upcoming accounting polic

143、y changes:IAS 21 Amendments Lack of exchangeabilityIn August 2023,the IASB issued narrow-scope amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates,which address determination of the exchange rate when there is a long-term lack of exchangeability,and introduce additional disclosure

144、requirements when a currency is not exchangeable.MANAGEMENTS DISCUSSION&ANALYSIS16 E-L Financial Corporation LimitedThe amendments are effective for annual reporting periods beginning on or after January 1,2025,to be recognized as an adjustment to opening retained earnings on the date of initial ado

145、ption.IFRS 18 Presentation and Disclosures in Financial StatementsIn April 2024,the IASB issued IFRS 18 Presentation and Disclosures in Financial Statements(IFRS 18),which will replace IAS 1.IFRS 18 introduces changes to the structure of the statement of operations,and provides enhanced principles f

146、or aggregation and disaggregation.The standard also requires disclosures in the financial statements for certain performance measures reported outside of an entitys financial statements(Management-defined Performance Measures).IFRS 18 is effective for annual reporting periods beginning on or after J

147、anuary 1,2027,and must be applied retrospectively.IFRS 9 and IFRS 7 Amendments Classification and measurement of financial instrumentsIn May 2024,the IASB issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:Disclosures relating to classification and measurement of fina

148、ncial instruments.The amendments clarify certain concepts relating to classification of financial assets,and introduce the option for entities to derecognize financial liabilities settled using an electronic payment system before the settlement date when certain criteria are met.These amendments are

149、 effective for annual reporting periods beginning on or after January 1,2026,and must be applied retrospectively.The Company is currently evaluating the impact that these amendments and the new standard will have on its consolidated financial statements.Analysis of business segments The remainder of

150、 this MD&A discusses the individual results of operations and financial condition of the Companys business segments:E-L Corporate and Empire Life.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 17E-L CORPORATEE-L Corporates operations includes the oversight of investments in global

151、equities held through direct and indirect holdings of common shares,investment funds,closed-end investment companies,a limited partnership and other private companies.Investments in Economic and Algoma are reported as investments in associates and are discussed below.Investments in equities and fixe

152、d income securities held directly by E-L Financial and through United are combined to form“Investments corporate”.Investments-corporateInvestments-corporate includes investments in equities and short-term fixed-income investments.At December 31,2024,investments-corporate had aggregate investments of

153、$7.8 billion,comprised primarily of common shares and units of investment funds,compared to aggregate investments at December 31,2023 of$6.6 billion.The fair value of investments-corporate is summarized in the table below:(millions of dollars)20242023Preferred shares$2$1 Common shares and unitsCanad

154、a 1,130 973 U.S.4,621 3,743 Europe and United Kingdom 1,274 1,148 Other 794 728 Total 7,819 6,592 Total invested assets$7,821$6,593 In the normal course of business,investment commitments are outstanding which are not reflected in the consolidated financial statements.As of December 31,2024,E-L Corp

155、orate has$337 million(2023-$254 million)in unfunded commitments in limited partnerships.The following table provides a summary of E-L Corporates results:Fourth quarterYear(millions of dollars)2024202320242023Net gain on investments$301$516$1,470$948 Investment and other income 31 32 157 143 Share of

156、 associates income(loss)20 (31)85 (9)352 517 1,712 1,082 Expenses 13 12 46 43 Income taxes 36 59 214 134 Non-controlling interests 32 55 168 127 81 126 428 304 Net income 271 391 1,284 778 OCI(OCL),net of taxes 6 (3)9 (1)Comprehensive income$277$388$1,293$777 E-L Corporate reported net income of$271

157、 million in the fourth quarter of 2024 compared to$391 million for the comparative period in 2023.For the fourth quarter of 2024 there was a net gain on investments of$301 million compared to$516 million for the fourth quarter of 2023.E-L Corporates global investment portfolio had a pre-tax total re

158、turn,including dividend income of 4%for the fourth quarter of 2024 compared to 9%for the fourth quarter of 2023.MANAGEMENTS DISCUSSION&ANALYSIS18 E-L Financial Corporation LimitedDuring the year ended December 31,2024,E-L Corporate reported net income of$1,284 million compared to$778 million in 2023

159、.The Companys pre-tax total return on investments,including dividend income was 26%in 2024 compared to 19%in 2023.Investment and other income was higher on a year to date compared to 2023.Investment and other income consists primarily of dividend income received from E-L Corporates investment portfo

160、lio.In general,dividend income is impacted by the composition of the investment portfolio and foreign exchange rates.Operating expenses increased 7%on a year to date basis and have remained consistent on a quarterly basis compared to 2023.Share of associates income(loss)The details of E-L Corporates

161、 share of income(loss)of associates are as follows:Fourth quarterYear(millions of dollars)2024202320242023Algoma$18$(46)$32$(25)Economic 2 15 53 16$20$(31)$85$(9)Share of associates income(loss)includes impairment provisions for Algoma of$nil million(2023-$59 million)and an impairment reversal for E

162、conomic of$8 million(2023-a$6 million impairment provision)for the year ended December 31,2024.Algomas net loss in 2023 was due to a$59 million impairment provision recorded in the fourth quarter of 2023,which was due to a decline in the companys stock price.Excluding the impairment provision,Algoma

163、s net income for the fourth quarter of 2024 increased compared to the fourth quarter of 2023,with 2024 year remaining consistent with 2023.Economic owns,directly and indirectly,long-term investments in the common shares of some publicly-traded Canadian companies,and a managed global investment portf

164、olio of common shares of publicly-traded global companies.Economics global investment portfolio had a pre-tax total return,gross of fees,of 2%for the fourth quarter of 2024 compared to 7%in 2023.Economics global investment portfolio in 2024 had a pre-tax total return,gross of fees,of 25%in 2024 comp

165、ared to 16%in 2023.The ownership interests,carrying value and fair value of E-L Corporates investment in associates is summarized in the table below:December 31,2024December 31,2023OwnershipCarrying valueFair valueOwnershipCarrying valueFair valueAlgoma 34.9%$245$209 36.6%$211$211 Economic 24.9%221

166、221 24.9%183 183 Total$466$430$394$394 Ownership of Algoma decreased during the year due to common shares issued from the conversion of Algomas debentures into common shares.Algoma and Economic are Canadian public companies for which further information is publicly available.Risk managementThe objec

167、tive of the Companys risk management process is to ensure that the operations of the Company encompassing risk are consistent with the Companys objectives and risk tolerance,while maintaining an appropriate risk/reward balance.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 19Market

168、 riskMarket risk is the most significant risk impacting E-L Corporate as its investing activities are influenced by market price,foreign currency and interest rate risk.As the Companys investment portfolio is represented by Canadian and global equities,the value of its investments will vary from day

169、 to day depending on a number of market factors including economic conditions,global events,market sentiment,and on the performance of the issuers of the securities in which the Company invests.Changes in foreign currency exchange rates will also affect the value of investments of non-Canadian dolla

170、r securities.As of December 31,2024,63%(2023-59%)of the investment-corporate including cash and cash equivalents was denominated in U.S.dollars,9%(2023-9%)in Euros and 4%(2023-5%)in the Japanese Yen representing the largest foreign currency exposures.The Company also holds investments within emergin

171、g markets.Investments in emerging markets are more likely to experience political,economic and social instability,which may result in higher levels of market value volatility.Credit riskIn addition to the discussion of risks included in this MD&A,a comprehensive discussion of the material risks that

172、 impact the Company is included in the Annual Information Form which is available at www.sedarplus.ca.Disclosures regarding E-L Corporates financial instruments,including financial risk management,are included in Notes 4 and 22 to the consolidated financial statements.Significant DevelopmentThe 2024

173、 Canadian Federal Budget proposed to increase the inclusion rate on capital gains for income tax purposes from 1/2 to 2/3 on gains realized on or after June 25,2024.The Company records income taxes payable on realized and unrealized net investment gains.On January 31,2025,the Department of Finance o

174、f Canada announced the deferral of this proposed change to January 1,2026.If this becomes substantively enacted,the impact of these changes will reduce the shareholders equity of the Company.OutlookThe Companys future earning prospects are dependent on the successful management of its E-L Corporate

175、portfolio and on the continued profitability of its insurance company subsidiary.The performance of the E-L Corporate portfolio is impacted by global equity markets and the selection of equity and fixed income investments.The Company continues to maintain its strategy of accumulating shareholder val

176、ue through long-term capital appreciation and dividend and interest income.MANAGEMENTS DISCUSSION&ANALYSIS20 E-L Financial Corporation LimitedREPORT ON EMPIRE LIFEEmpire Life provides a broad range of life insurance and wealth management products,employee benefit plans and financial services to meet

177、 the needs of individuals,professionals and businesses through a network of Independent Financial Advisors(“IFA”),Managing General Agents(“MGA”),National Account firms and Group Solutions brokers and representatives.Empire Lifes net income attributable to the owners of E-L Financial,after adjustment

178、 for non-controlling interests,is shown in the following table:Financial analysis overviewFourth quarterYear to date(millions of dollars)2024202320242023Empire Life common shareholders net income(loss)$16$111$281$156 Non-Controlling interests 1 1 1 Net income(loss)contribution to E-L Financial$16$11

179、0$280$155 Dec 312024Sep 302024Jun 302024Mar 312024Dec 312023LICAT total ratio 151%154%152%157%155%Empire Life reported fourth quarter common shareholders net income of$16 million,a$95 million decrease compared to the fourth quarter of 2023,driven by substantial investment income in the fourth quarte

180、r of 2023 that did not reoccur in the same period in 2024.Common shareholders net income of$281 million for the full year of 2024 represents an increase of$125 million over the prior year.The increase was driven by favourable net investment and insurance finance results due to more favourable intere

181、st rate movements and the impacts of insurance contract liability assumption updates.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 21Results by Major Product LineThe following tables provide a summary of Empire Life results segmented by product line for the periods ended December

182、31,2024 and December 31,2023.A discussion of results is provided in the Product Line Results section of the MD&A.For the three months ended December 31,2024(in millions of dollars)WealthManagementGroup SolutionsIndividualInsuranceCapital&SurplusTotalInsurance revenue$52$177$129$358 Insurance service

183、 expenses(27)(181)(127)(335)Insurance service result 25 (4)2 23 Net expense from reinsurance contracts held 3 7 10 Net insurance service result 25 (1)9 33 Investment income(loss),excluding segregated fund account balancesInvestment income 15 3 11 9 38 Change in investment contracts(4)(4)Net investme

184、nt result,excluding segregated fund account balances 11 3 11 9 34 Insurance finance(expense)income,excluding segregated fund account balancesInsurance contracts (4)(4)(24)(32)Reinsurance contracts held 2 2 Net insurance finance expense,excluding segregated fund account balances(4)(2)(24)(30)Segregat

185、ed fund account balances net investment and insurance finance resultInvestment income on investments for segregated fund account balances 52 52 Insurance finance expenses for segregated fund account balances(52)(52)Segregated funds account balances net investment and insurance finance result Net inv

186、estment and insurance finance result 7 1 (13)9 4 Other income and expensesFee and other income 2 12 14 Non-insurance expenses(4)(6)(7)(11)(28)Interest expenses (4)(4)Total other income and expenses(4)(4)(7)(3)(18)Net income(loss)before taxes$28$(4)$(11)$6$19 Income taxes(3)Net income after taxes 16

187、Less:net loss attributable to the participating account(3)Less:preferred share dividends declared and distributions on other equity instruments 3 Empire Lifes common shareholders net income 16 Non-controlling interests in net income Net income attributable to owners of E-L Financial$16 MANAGEMENTS D

188、ISCUSSION&ANALYSIS22 E-L Financial Corporation LimitedFor the three months ended December 31,2023(in millions of dollars)WealthManagementGroup SolutionsIndividualInsuranceCapital&SurplusTotalInsurance revenue$58$163$114$335 Insurance service expenses(38)(149)(78)(265)Insurance service result 20 14 3

189、6 70 Net expense from reinsurance contracts held (5)(17)(22)Net insurance service result 20 9 19 48 Investment income(loss),excluding segregated fund account balancesInvestment income 67 17 721 158 963 Change in investment contracts(19)(19)Net investment result,excluding segregated fund account bala

190、nces 48 17 721 158 944 Insurance finance(expense)income,excluding segregated fund account balancesInsurance contracts(33)(20)(699)(752)Reinsurance contracts held 1 10 (61)(50)Net insurance finance expense,excluding segregated fund account balances(32)(10)(760)(802)Segregated fund account balances ne

191、t investment and insurance finance resultInvestment income on investments for segregated fund account balances 538 1 539 Insurance finance expenses for segregated fund account balances(538)(1)(539)Segregated funds account balances net finance and investment result Net investment and insurance financ

192、e result 16 7 (39)158 142 Other income and expensesFee and other income 2 7 9 Non-insurance expenses(8)(4)(5)(11)(28)Interest expenses 2 2 Total other income and expenses(8)(2)(5)(2)(17)Net income(loss)before taxes$28$14$(25)$156$173 Income taxes(35)Net income after taxes 138 Less:net income attribu

193、table to the participating account 20 Less:preferred share dividends declared and distributions on other equity instruments 7 Empire Lifes common shareholders net income 111 Non-controlling interests in net income 1 Net income attributable to owners of E-L Financial$110 MANAGEMENTS DISCUSSION&ANALYS

194、ISE-L Financial Corporation Limited 23For the year ended December 31,2024(in millions of dollars)WealthManagementGroup SolutionsIndividualInsuranceCapital&SurplusTotalInsurance revenue$238$677$490$1,405 Insurance service expenses(133)(647)(407)(1,187)Insurance service result 105 30 83 218 Net expens

195、e from reinsurance contracts held(1)(15)(26)(42)Net insurance service result 104 15 57 176 Investment income(loss),excluding segregated fund account balancesInvestment income 94 14 315 95 518 Change in investment contracts(29)(29)Net investment result,excluding segregated fund account balances 65 14

196、 315 95 489 Insurance finance(expense)income,excluding segregated fund account balancesInsurance contracts (20)(26)(170)(216)Reinsurance contracts held 1 12 20 33 Net insurance finance expense,excluding segregated fund account balances(19)(14)(150)(183)Segregated fund account balances net investment

197、 and insurance finance resultInvestment income on investments for segregated fund account balances 1,117 3 1,120 Insurance finance expenses for segregated fund account balances(1,117)(3)(1,120)Segregated funds account balances net investment and insurance finance result Net investment and insurance

198、finance result 46 165 95 306 Other income and expensesFee and other income 1 9 35 45 Non-insurance expenses(30)(22)(27)(30)(109)Interest expenses (15)(15)Total other income and expenses(29)(13)(27)(10)(79)Net income before taxes$121$2$195$85$403 Income taxes(103)Net income after taxes 300 Less:net i

199、ncome attributable to the participating account 7 Less:preferred share dividends declared and distributions on other equity instruments 12 Empire Lifes common shareholders net income 281 Non-controlling interests in net income 1 Net income attributable to owners of E-L Financial$280 MANAGEMENTS DISC

200、USSION&ANALYSIS24 E-L Financial Corporation LimitedFor the year ended December 31,2023(in millions of dollars)WealthManagementGroup SolutionsIndividualInsuranceCapital&SurplusTotalInsurance revenue$235$639$452$1,326 Insurance service expenses(147)(598)(327)(1,072)Insurance service result 88 41 125 2

201、54 Net expense from reinsurance contracts held (17)(56)(73)Net insurance service result 88 24 69 181 Investment income(loss),excluding segregated fund account balancesInvestment income 72 16 598 131 817 Change in investment contracts(28)(28)Net investment result,excluding segregated fund account bal

202、ances 44 16 598 131 789 Insurance finance(expense)income,excluding segregated fund account balancesInsurance contracts(34)(22)(557)(613)Reinsurance contracts held 1 10 (51)(40)Net insurance finance expense,excluding segregated fund account balances(33)(12)(608)(653)Segregated fund account balances n

203、et investment and insurance finance resultInvestment income on investments for segregated fund account balances 734 2 736 Insurance finance expenses for segregated fund account balances(734)(2)(736)Segregated funds account balances net investment and insurance finance result Net investment and insur

204、ance finance result 11 4 (10)131 136 Other income and expensesFee and other income 1 8 22 31 Non-insurance expenses(30)(16)(19)(30)(95)Interest expenses (17)(17)Total other income and expenses(29)(8)(19)(25)(81)Net income before taxes$70$20$40$106$236 Income taxes(46)Net income after taxes 190 Less:

205、net income attributable to the participating account 22 Less:preferred share dividends declared and distributions on other equity instruments 12 Empire Lifes common shareholders net income 156 Non-controlling interests in net income 1 Net income attributable to owners of E-L Financial$155 Total Empi

206、re Life Results-Quarter over QuarterEmpire Life reported common shareholders net income(loss)of$16 million in the fourth quarter of 2024,a$95 million decrease compared to the fourth quarter of 2023.The period over period decrease was driven by large gains in Empire Lifes net investment and insurance

207、 finance results due to interest rate decreases in the fourth quarter of 2023 that did not reoccur in the same period in 2024.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 25Net insurance service result decreased by$15 million in the fourth quarter,compared to the same period in 2

208、023.Contributing factors include adverse mortality experience in the Individual Insurance product line relative to the prior period,and unfavourable long-term disability(“LTD”)claims experience in the Group Solutions product line.Net investment and insurance finance result decreased by$138 million i

209、n the fourth quarter compared to the same period in 2023.This was mainly due to modest interest rate movements in the fourth quarter of 2024 relative to the more significant interest rate decrease in the fourth quarter in 2023.In addition there were favourable net investment gains from non-fixed inc

210、ome assets in the fourth quarter in 2023 that did not reoccur in the fourth quarter in 2024.Total other income and expenses was a net expense of$18 million in the fourth quarter,a$1 million increase compared to the same period in 2023.The change is due to higher non-insurance operating expenses rela

211、ted to investments in information systems and process efficiency which were offset by gains in Fee and other income due to strategic acquisitions during the quarter.Total Empire Life Results-Year over YearFull year common shareholders net income(loss)of$281 million was a$125 million increase compare

212、d to 2023.The increase over prior year was primarily due to higher net investment and insurance finance result driven by increases in net insurance finance income,related to impacts from insurance contract liability assumption updates,and interest rate movements in 2024.Net insurance service result

213、decreased by$5 million in 2024 compared to the prior year,primarily due to adverse claims experience in our Individual Insurance and Group Solutions product lines,partially offset by improved expense experience in our Wealth Management product line.Net investment and insurance finance result increas

214、ed by$170 million in 2024 compared to 2023.This was mainly due to more favourable impacts from interest rate movements and updates to the discount rate assumption applied in the measurement of insurance contract liabilities.Total other income and expenses was a net expense of$79 million in 2024,a$2

215、million favourable decrease compared with the net expense of$81 million in 2023.Gains in fee and other income in the Capital and Surplus segment related to disposal of property and equipment were offset by increased non-insurance operating expenses across Empire Life during the year.MANAGEMENTS DISC

216、USSION&ANALYSIS26 E-L Financial Corporation LimitedProduct Line Results-Wealth ManagementFourth quarterYear to date(in millions of dollars)2024202320242023Fixed annuitiesAssets under management(1)$996$918$996$918 Gross sales(1)34 79 195 242 Net sales(1)5 51 74 140 Segregated fundsAssets under manage

217、ment(1)(2)$9,375$8,795$9,375$8,795 Gross sales(1)311 189 953 751 Net sales(1)(10)(99)(394)(305)(1)See Non-GAAP measures section.(2)Prior year amounts have been revised from those previously presented.Fourth quarterYear to date(in millions of dollars)2024202320242023Net insurance service result$25$20

218、 1$104$88 Net investment and insurance finance result 7 16 46 11 Fee and other income 1 1 Non-insurance operating expenses(4)(8)(30)(30)Net income before taxes$28$28$121$70 Fixed annuities assets under management were 8%higher relative to the same period in 2023,reflecting market gains on deposits p

219、laced during a period of strong sales growth in 2022 and 2023.Gross sales in the fourth quarter were 57%lower than the same period in 2023,due to the change in the interest rate environments leading to a shift in customer demand towards segregated fund products.Segregated fund assets under managemen

220、t were 7%higher relative to the same period in 2023,reflecting favourable market movements and improvements in net sales in the latter half of 2024.For the fourth quarter of 2024,gross sales of segregated funds were 65%higher than the same period in 2023.New fund launches in 2024 contributed to the

221、positive variance,along with increased customer demand due to an improvement in the interest rate environment.Net income(loss)before taxes for the fourth quarter remained consistent with the same period in 2023.The Net insurance service result increase of$5 million was due to project expense spend i

222、n 2023 that did not reoccur in 2024.The net investment and insurance finance result of$7 million in the fourth quarter is a$9 million decrease relative to the same period in the prior year,due to modest interest rate movements in the period,as well as the strong performance of non-fixed income asset

223、s in the fourth quarter of 2023 that did not repeat in 2024.Net income(loss)before taxes of$121 million for the full year of 2024 is a$51 million increase compared to the full year of 2023.Project expense spend in 2023 that did not reoccur in 2024 drove the increase to the Net insurance service resu

224、lt.The net investment and insurance finance result also contributed to the positive net income variance due to gains on Empire Lifes non-fixed income assets and favourable interest rate movements in the full year of 2024 relative to more modest interest rate movements over the course of 2023.MANAGEM

225、ENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 27Product line results-Group SolutionsFourth quarterYear to date(in millions of dollars)2024202320242023Annualized premium salesCore$24$12$76$49 Other 8 6 38 25 Total annualized premium sales(1)$32$18$114$74(1)See Non-GAAP measures section.Fo

226、urth quarterYear to date(in millions of dollars)2024202320242023Insurance revenue$171$163$677$639 Net insurance service result$(1)$9$15$24 Net investment and insurance finance result 1 7 4 Fee and other income 2 2 9 8 Non-insurance operating expenses(6)(4)(22)(16)Net(loss)income before taxes$(4)$14$

227、2$20 Total annualized premium sales increased 78%in the fourth quarter and increased 54%year to date,compared to the same periods in 2023.This increase is primarily due to strong sales of Group Solutions core product offerings.Insurance revenue increased 9%in the fourth quarter and year to date,comp

228、ared to the same periods in 2023,primarily due to organic growth in specialty partnerships.For the quarter,net income(loss)before taxes decreased$18 million compared to the same period in 2023,due to a decrease in both the net insurance service result and the net investment and insurance finance res

229、ult due to favourable interest rate movements in the fourth quarter of 2023 that were not repeated.The decrease in net insurance service result was primarily due to unfavourable experience on LTD claims due to longer claim duration,as well as a change in the timing of annual insurance contract liabi

230、lity assumption updates.Further details on the impacts of assumption updates are provided in the Results-Impact of Insurance Contract Liability Assumption Updates section of this MD&A.For the year,net income(loss)before taxes decreased by$18 million,compared to the same period in 2023.This was prima

231、rily due to unfavourable experience on LTD claims and life claims,partially offset by improvements in extended health and dental claims experience.Increased non-insurance operating expenses also contributed to the decrease over the prior year,related to investments in new product lines and increased

232、 overhead costs.MANAGEMENTS DISCUSSION&ANALYSIS28 E-L Financial Corporation LimitedProduct line results-Individual InsuranceFourth quarterYear to date(in millions of dollars)2024202320242023ShareholdersShareholders annualized premium sales(1)$10$10$41$40 Net income before taxes(9)(29)188 35 Policyho

233、ldersPolicyholders annualized premium sales(1)$4$3$15$14 Net(loss)income before taxes(2)4 7 5(1)See Non-GAAP measures section.Fourth quarterYear to date(in millions of dollars)2024202320242023Net insurance service result$9$19$57$69 Net investment and insurance finance result(13)(39)165 (10)Non-insur

234、ance operating expenses(7)(5)(27)(19)Net(loss)income before taxes$(11)$(25)$195$40 Shareholders annualized premium sales were consistent in the fourth quarter compared to the same period in 2023.The launch of two new products supported robust sales for the whole life portfolio in both the fourth qua

235、rter and the full year of 2024.Sales momentum was offset by the competitive price landscape in the term insurance sector.Shareholders net income(loss)before taxes for the fourth quarter of 2024 increased$20 million compared to 2023.Net investment and insurance finance result improved by$26 million i

236、n the quarter due to modest interest rate movements in the fourth quarter of 2024 relative to unfavourable interest rate movements in the same period in 2023.The favourable net investment and insurance finance result was partially offset by adverse mortality experience in the fourth quarter compared

237、 to the same period in 2023.Shareholders net income(loss)before taxes increased$153 million in 2024 compared to 2023.Net investment and insurance finance results improved by$175 million in 2024 compared to 2023 due to more favourable interest rate movements and the impacts of discount rate assumptio

238、n updates.These gains were slightly offset by a year over year decline in net insurance service result related to the adverse mortality experience in 2024.Results-Capital and SurplusFourth quarterYear to date(in millions of dollars)2024202320242023Net investment results$9$158$95$131 Other income and

239、 expenses(3)(2)(10)(25)Net income before taxes$6$156$85$106 Compared to the prior period,fourth quarter net income(loss)before taxes decreased$150 million in the Capital and Surplus segment driven by modest interest rate movements in the fourth quarter of 2024 relative to those in the fourth quarter

240、 of 2023.The year to date decrease in net income(loss)before taxes of$21 million compared to prior year is primarily due to less favourable interest rate movements in 2024 compared to 2023.Empire Life also realized some modest gains in other income and expenses related to disposal of property and eq

241、uipment,which offset increased non-insurance operating expenses related to information systems,process improvement,and compliance costs.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 29Results-Net Contractual Service Margin(Amounts are net of reinsurance contracts held,in millions

242、of dollars)Fourth quarterYear to date2024202320242023Net contractual service margin,beginning of period$1,426$1,567$1,415$1,544 Impact of new insurance business 18 15 63 62 Interest accretion 6 6 24 25 Insurance experience(1)6 10 5 3 Economic experience(1)21 (17)170 71 Assumption updates(1)(26)(125)

243、(103)(126)CSM recognized for services provided(41)(41)(164)(164)Net contractual service margin,end of period$1,410$1,415$1,410$1,415(1)Insurance experience,economic experience and assumption updates are components of changes in estimates that adjust the CSM.Insurance experience represents the curren

244、t period impacts of insurance experience,resulting in a change in future cash flows that adjust CSM.Economic experience represents the changes in the effect of time value of money and financial risk relating to contracts measured using the Variable Fee Approach(“VFA”)for the Wealth Management and In

245、dividual Insurance product lines.Assumption updates represent the future period impacts of changes in fulfilment cash flows that adjust CSM.The Net Contractual Service Margin(“CSM”)for the fourth quarter of 2024 was$1,410 million,a decrease of$16 million in the quarter,and a decrease of$5 million fr

246、om December 31,2023,driven by:New insurance business:Higher new business CSM from our segregated funds led to the overall increase in CSM for the quarter compared to 2023.New business CSM for the full year was consistent with prior year.Economic experience:The positive impact of interest rate moveme

247、nts and equity markets on our segregated fund products were the drivers behind the economic experience for both the quarter and the full year.Assumption updates:Insurance contract liability assumption updates for universal life completed in the fourth quarter of 2024 drove the majority of the$26 mil

248、lion decrease in the CSM balance during the quarter.Further details on the impacts of assumption updates for the full year are provided in the Results-Impact of Insurance Contract Liability Assumption Updates section of this MD&A.CSM amortization:The recognition of CSM remains relatively consistent

249、quarter to quarter,and for the full year.Results-Impact of Insurance Contract Liability Assumption UpdatesImpacts from the update of insurance contract liability assumptions for the quarter ended December 31,2024Net income(loss)before taxesNet CSM(Amounts are net of reinsurance contracts held,in mil

250、lions of dollars)Components of insurance contract liability assumption updatesDiscount rates$68$(20)Mortality(2)(7)Expense(1)(38)Lapse 10 (34)Other 11 (4)Total change from the update of insurance contract liability assumptions$86$(103)During the year management updated several assumptions that affec

251、t the measurement of insurance contract liabilities and reinsurance contracts held.These updates are primarily related to discount rates,mortality rates,policy lapse,and expenses.The impacts of these updates were favourable to net income(loss)before tax,and unfavourable to the net CSM balance for th

252、e year.In 2023 management conducted the annual assumption updates in the fourth quarter.MANAGEMENTS DISCUSSION&ANALYSIS30 E-L Financial Corporation LimitedA summary of the main assumption updates is as follows:Updates to future mortality assumptions result in a CSM decrease of$14 million for the Ind

253、ividual Insurance product line,and increase of$7 million for the Wealth Management product line(2023 decrease of$80 million for Individual Insurance and Wealth Management product lines);Updates to future attributable maintenance expenses result in a CSM decrease of$29 million for the Wealth Manageme

254、nt product line and$9 million for Individual Insurance(2023$7 million decrease across Individual Insurance and Wealth Management product lines);Updates to lapse assumptions result in a CSM decrease of$34 million for the Individual Insurance product line(2023 decrease of$38 million for Individual Ins

255、urance and Wealth Management product lines);andUpdates to discount rate assumptions result in a CSM decrease of$33 million for the Wealth Management product line,primarily due to changes to the illiquidity premium,and a$13 million increase for Individual Insurance.In addition,updates were made to th

256、e discount rates used for business measured under the General Measurement Model(“GMM”).These updates result in a gain of$68 million in Net income before taxes,primarily impacting the Individual Insurance product line.The largest driver of this change is an update to the ultimate risk-free interest r

257、ate from 3.15%to 3.65%.Financial InstrumentsEmpire Life holds an investment portfolio that is actively managed to optimize yield,quality and liquidity while ensuring diversification and duration-matched to our future obligations.Cash flows arising from these financial instruments are intended to mat

258、ch the liquidity requirements of Empire Lifes insurance and investment contract liabilities,within the limits prescribed by Empire Life.Empire Life is subject to credit and market risk on these financial instruments.Credit risk on these financial instruments could result in a financial loss should t

259、he other party fail to discharge an obligation.This credit risk is derived primarily from investments in bonds,debentures,preferred shares,short-term investments,loans and mortgages.Empire Life manages credit risk by applying its investment guidelines as established by management and approved by the

260、 Investment Committee of the Board of Directors.The investment guidelines establish minimum credit ratings for issuers of bonds,debentures and preferred share investments,and provide for concentration limits by issuer of such debt instruments.The investment guidelines also establish minimum underwri

261、ting requirements and limits for debt financing of an advisor company or managing general agent.Management reviews credit quality relative to investment purchases and monitors the credit quality of invested assets over time.Management reports regularly to the Investment Committee of Empire Lifes Boa

262、rd on the credit risk to which the portfolio is exposed.Empire Life manages market risk exposure mainly through investment limits and oversight of its in-house investment managers and external investment firms by the Chief Investment Officer,Asset Management Committee and Investment Committee of the

263、 Board.The Investment Committee actively monitors the portfolio and asset mix.Empire Life has hedging programs in place as part of its approach to managing this risk.Empire Life manages credit risk with respect to derivatives by applying limits and credit rating restrictions established by the Inves

264、tment Committee in its investment guidelines,which set out permitted derivatives and permitted uses for derivatives,as well as limits to the use of these instruments.In particular,no leverage is permitted in the use of derivatives and strict counterparty credit restrictions are imposed.For additiona

265、l information on our financial instruments,refer to Note 5 Investments-insurance in the consolidated financial statements for the year ended December 31,2024.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 31Sources of capitalEmpire Life has issued private and public securities to s

266、trengthen its capital position and fund new business growth.The securities outstanding are summarized in the following table:As at(in millions of dollars)December 312024December 312023Subordinated debentures$399$399 EquityPreferred shares and other equity instruments$297$297 Common shares 1 1 Total

267、Equity$298$298 Details of Empire Lifes outstanding subordinated debentures are as follows:As at(in millions of dollars)Date IssuedEarliestRedemption DateYieldDecember 312024December 312023Series 2021-1(1)September 2021September 24,20262.024%$200$199 Series 2023-1(2)January 2023January 13,20285.503%$

268、200$199(1)Series 2021-1 Subordinated 2.024%unsecured debentures due 2031.From September 24,2026,interest is payable at 0.67%over CORRA plus 0.32138%credit adjustment spread.(2)Series 2023-1 Subordinated 5.503%unsecured debentures due 2033.From January 13,2028,interest is payable at 2.26%over CORRA.D

269、etails of Empire Lifes outstanding preferred shares and other equity instruments are as follows:As at(in millions of dollars)Date IssuedEarliestRedemption DateYieldDecember 312024December 312023Preferred shares,Series 3November 2017January 17,2028 6.187%$100$100 Limited Recourse Capital Notes,Series

270、 1February 2021April 17,2026 3.625%$197$197 Security ratingThe securities issued by Empire Life are rated by DBRS Limited(“Morningstar DBRS”).Morningstar DBRS completed its annual rating review of Empire Life in the second quarter of 2024.Morningstar DBRS confirmed all credit ratings and updated Emp

271、ire Lifes trend to Positive from Stable.Evaluation typeRatingTrendDate of last rating actionFinancial strength ratingAPositiveMay 24,2024Issuer ratingAPositiveMay 24,2024Subordinated debtA(low)PositiveMay 24,2024Preferred sharesPfd-2PositiveMay 24,2024Limited Recourse Capital NotesBBB(high)PositiveM

272、ay 24,2024Regulatory capitalThe Life Insurance Capital Adequacy Test(LICAT)measures the capital adequacy of an insurer and is one of several indicators used by the Office of the Superintendent of Financial Institutions,Canada(OSFI)to assess an insurers financial condition(1).Empire Life continues to

273、 have a strong capital position under the LICAT framework.Empire Life is required to maintain a minimum Core Ratio of 55%and a Total Ratio of 90%.OSFI has established supervisory target levels of 70%for Core and 100%for Total ratio.(1)Available from OSFI at:https:/www.osfi-bsif.gc.ca/en/guidance/gui

274、dance-library/life-insurance-capital-adequacy-test-guideline-2024MANAGEMENTS DISCUSSION&ANALYSIS32 E-L Financial Corporation LimitedLICATDec 31Sep 30Jun 30Mar 31Dec 31(in millions of dollars)20242024202420242023Available capitalTier 1$2,195$2,206$2,091$2,222$2,135 Tier 2 726 737 705 683 714 Total$2,

275、921$2,943$2,796$2,905$2,849 Surplus allowance and eligible deposits$677$654$645$638$651 Base solvency buffer$2,383$2,334$2,261$2,254$2,252 LICAT total ratio 151%154%152%157%155%LICAT core ratio 112%114%112%118%115%Empire Life maintained a strong LICAT position that is well above target levels over t

276、he course of 2024.Empire Lifes Total and Core LICAT ratios decreased slightly in the fourth quarter compared to the previous quarter,primarily driven by organic increases in required capital and modest earnings in the period.The reduction in the Total and Core LICAT ratios in 2024 was mainly driven

277、by acquisition activity and the payment of an additional dividend to common shareholders.Industry Dynamics and Managements StrategyEmpire Lifes operations are organized by product line with each line of business having responsibility for product development,product pricing,marketing,distribution and

278、 customer service within their particular markets.This structure recognizes that there are distinct marketplace dynamics in each of the three major product lines.Management believes this structure enables each line of business to develop strategies to achieve the enterprise-wide objectives of busine

279、ss growth and expense management while recognizing the unique business environment in which each operates.The lines of business are supported by corporate units that provide administrative and technology services to the lines of business,manage invested assets and oversee enterprise risk management

280、policies.Based on Total assets,Empire Life is among the 10 largest life insurance companies in Canada(1).Empire Life has approximately 6%market share of segregated funds(2),6%market share for group benefits(3),and 3%market share for new life insurance premiums(4).Empire Life focuses exclusively on t

281、he Canadian marketplace and,within it,on particular market segments where management feels there are opportunities to build solid,long-term relationships with its distribution partners.The Company offers competitively priced products and more personal service,while also providing long-term value to

282、our shareholders.Empire Life,as a mid-sized company,must continue to be cost competitive with the larger companies that may have the advantage of economies of scale.By focusing on particular market segments and providing competitive product offerings for our independent advisors,management believes

283、these solid relationships will enable profitable growth.Across all business lines,Empire Life is focused on growth and diversification of distribution as well digital enablement and adoption,all while maintaining personalized service.Empire Life has invested in distribution companies,such as TruSton

284、e Financial(an MGA subsidiary),whose leadership teams are respected in the industry and have a proven track record of generating business growth.These investments support Empire Lifes commitment to facilitating access to independent financial advice for Canadians.1 Source:Detailed historical OSFI da

285、ta,available online at:https:/ Source:Insurance Advisory Service Canada:Assets in Segregated Funds by Complex,Investor Economics(Jan 2025)as of December 20243 Source:2023 Group Universe Report,Fraser Group(July 2024)4 Source:LIMRA Canadian Individual Life Insurance Sales Survey,LIMRA(Sep 2024).Criti

286、cal illness premiums were excluded.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 33The Wealth Management product line at Empire Life consists of segregated fund products and guaranteed interest products.These products compete against products offered by a variety of financial inst

287、itutions.A key element of any competitive strategy in this market is providing a competitive rate of return to customers.Empire Life has focused on developing long-term investment performance through the diversification of the investment styles and strategies of its segregated funds.Management will

288、continue to improve competitiveness by focusing on delivering consistent long-term performance,providing new and differentiated products to customers along with broadening distribution reach.Empire Life continues to achieve strong growth in assets under management from its segregated fund business a

289、s a result of net new sales and equity market appreciation.Empire Life is continuing to monitor and manage guaranteed minimum withdrawal benefit(“GMWB”)risk exposure and the competitive landscape for this product.Within the broader group benefits marketplace in Canada,Empire Life continues to focus

290、on the small and medium-sized group employer market,representing the majority of Canadian companies.This niche strategy,coupled with an ongoing focus on balancing growth and profit,has enabled Empire Life to be cost competitive within this market segment and is expected to enable this product line t

291、o grow its market share while generating acceptable returns.Empire Life offers both traditional non-participating and participating individual insurance products,with a range of terms to suit the needs of Canadians.Long-term mortality trends continue to be favourable for life insurance products.Beca

292、use of the reasonable long-term returns of this product line,management continues to focus on steady growth,technology development and process improvement to continue to have a cost structure that allows Empire Life to compete while generating an acceptable long-term financial contribution.Individua

293、l Insurance products are very long-term in nature and consequently are subject to long-term reserve and capital requirements.Empire Life is continuously reviewing its Individual Insurance product mix to improve profitability,reduce interest rate risk,and reduce required regulatory capital.Risk Manag

294、ementEmpire Life is a financial institution offering wealth management,group solutions and individual insurance products.Empire Life is exposed to a number of risks as a result of its business activities.Effective risk management is critical to the overall profitability,competitive market positionin

295、g and long-term financial viability of Empire Life.While all risks cannot necessarily be eliminated or known with certainty,the goal of Empire Lifes risk management program is to ensure that risk-taking activities are aligned with its strategy,in order to achieve business goals and deliver acceptabl

296、e shareholder returns,without compromising Empire Lifes ability to pay claims and fulfil policyholder commitments.When making decisions about risk taking and risk management,Empire Life considers:The need to meet the expectations of its customers,employees,shareholders and creditors and to protect t

297、he commitments that have been made to them;The needs of its customers,embedding fair treatment throughout the product life cycle,from the design and promotion of its products to satisfying its obligations to its customer;The need to be adequately compensated for the capital it deploys to support bus

298、iness activities and strategic objectives;The need to protect its brand,which includes building and maintaining trust,consideration of corporate social responsibility,and embedding sustainability into its strategic plans;andThe need to maintain(or improve)its external financial strength rating.Empir

299、e Lifes risk appetite defines the aggregate level of risk Empire Life accepts to achieve its business strategies.The risk appetite supports the pursuit of sustainable shareholder value but does not compromise Empire Lifes ability to pay claims and fulfil policyholder commitments.MANAGEMENTS DISCUSSI

300、ON&ANALYSIS34 E-L Financial Corporation LimitedEmpire Lifes risk management framework is structured based on a number of guiding principles:Due to the long-term nature of the majority of its commitments,Empire Life accepts capital market risk provided it is managed within specific risk tolerances an

301、d limits.Empire Life takes a diversified approach to managing its investments-it accepts credit and alternative asset risk provided it is rewarded through appropriately enhanced returns;Empire Life manages liquidity across the business to provide a high level of confidence that all obligations(to cu

302、stomers,employees,creditors and shareholders)will be met when they fall due;Empire Life accepts risks related to its products provided they are properly designed,priced and managed in order to achieve fair treatment,and add value to its customers and shareholders;Empire Life is forward-looking in it

303、s business planning and takes a prudent approach to capital management.It strives to have a high level of confidence that capital is sufficient to support planned future activities;Management is active in industry committees and,through a network of oversight functions,monitors the landscape so that

304、 Empire Life is appropriately positioned to manage regulatory,tax,accounting and actuarial changes;Empire Life accepts that operational risks are a part of doing business and knows that risk management is a key part of decision-making.It protects its business and customers assets by engaging in miti

305、gation strategies that contribute to its financial stability and the security of data,both its and its customers;andEmpire Life expects ethical conduct by all of its employees,and it acts with integrity at all times.The Board of Directors oversees and monitors Empire Lifes risk management framework,

306、processes and practices,and reviews and approves Empire Lifes Enterprise Risk Management Framework and overall risk appetite.Empire Lifes risk appetite is the primary mechanism to operationalize the guiding principles outlined above and includes a wide array of qualitative and quantitative standards

307、.Senior management shares responsibility and accountability for risk management across the organization.This enables a cross-functional perspective on risk management,enhanced by the frequency of contact across the management team.Empire Life has an Asset Management Committee with responsibility for

308、 overseeing the management of corporate policies established by both the Investment Committee and Risk and Capital Committee of the Board,with specific focus on market,credit and liquidity risk including asset/liability management as well as capital management.The Product Management Review Committee

309、 is responsible for overseeing management of corporate policy established by the Risk and Capital Committee of the Board,with specific focus on product risk.Activities not delegated to one of these two committees remain under the oversight of senior management.More information related to governance

310、can be found under the Corporate Governance over Risk Management section of Empire Lifes 2024 Annual Report.The Chief Risk Officer is a member of the Asset Management Committee and Product Management Review Committee and has Board reporting responsibility with respect to risk and capital management,

311、the latter of which is shared with the Chief Actuary.All risk management policies and procedures are regularly reviewed for relevance and changes in the risk environment.Accountability,application,day-to-day management and procedural elements are the responsibility of area management,supported by bu

312、siness unit compliance officers,security champions and the risk management department.There is senior management representation and oversight on various interdisciplinary risk committees.Empire Life formally establishes and documents its values and risk tolerances through several company-wide polici

313、es including a code of business conduct,corporate disclosure principles,enterprise risk management,capital management and whistleblower policies.Empire Lifes strategic risk management policies(including those related to product design and pricing,investment and capital management)are also approved b

314、y its Board,or a Board committee.Subsidiaries have adopted practices for risks to which they are exposed,appropriate to their business plan,strategy and risk appetite.MANAGEMENTS DISCUSSION&ANALYSISE-L Financial Corporation Limited 35Caution Related to SensitivitiesIn the sections that follow,Empire

315、 Life provides sensitivities and risk exposure measures for certain risks.These include sensitivities due to specific changes in market prices and interest rates,based on the market prices,interest rates,assets,liabilities and business mix in place as at the respective calculation dates.The sensitiv

316、ities are calculated independently for each risk variable,generally assuming that all other risk variables remain constant.The sensitivities do not take into account indirect effects such as potential impacts on goodwill impairments or valuation allowances on deferred tax assets.The sensitivities ar

317、e provided for the consolidated entity.Actual results can differ materially from these estimates for a variety of reasons,including differences in the pattern or distribution of market shocks,the interaction between these risk factors,model errors,or changes in other assumptions such as business mix

318、,effective tax rates,policyholder behaviour and other market variables relative to those underlying the calculation of the sensitivities.Changes due to new sales or maturities,asset purchases/sales,or other management actions could also result in material changes to these reported sensitivities.For

319、these reasons,the sensitivities should only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the assumptions outlined and should not be viewed as predictors for Empire Lifes future net income,CSM,equity and capital sensitivities.Given the nature

320、of these calculations,Empire Life cannot provide assurance that the actual impact will be consistent with the estimates provided.Changes in risk variables in excess of the ranges illustrated may result in other than proportionate impacts.Market RiskEmpire Life has equity market risk related to its s

321、egregated fund products and from equity assets backing life insurance contract liabilities and surplus.Empire Life maintains a semi-static hedging program.The objective of the hedging program is to partially protect Empire Life from regulatory capital(LICAT)ratio declines that might result from adve

322、rse stock market price changes.The hedging program may employ derivatives positions including put options and futures.The extent of derivatives used is monitored and managed on an ongoing basis,giving consideration to equity market risk and the level of available capital.There is income statement vo

323、latility from this hedging program.Based on current equity market levels,Empire Life has required capital for LICAT purposes as well as liabilities on the consolidated statements of financial position related to segregated fund guarantees.Some net income volatility can result from the hedging instru

324、ments,as gains or losses are not directly offset by changes in the value of other assets and liabilities exposed to equity risk.For the year ended December 31,2024,Empire Life experienced a loss of$8 million pre-tax on the hedging program,compared to a hedge loss of$14 million pre-tax over the same

325、period in 2023.The improved outcome over the prior year is due to gains in market movement in the year,compared to losses from market movement in 2023.Empire Lifes LICAT ratio is also sensitive to stock market volatility,primarily due to liability and capital requirements related to segregated fund

326、guarantees.As of December 31,2024,Empire Life had$9.4 billion of segregated fund assets and liabilities.Of this amount,approximately$9.1 billion have guarantees.The following table provides a percentage breakdown by type of guarantee.December 312024December 312023Percentage of segregated fund liabil

327、ities with:75%maturity guarantee and a 75%death benefit guarantee 12%9%75%maturity guarantee and a 100%death benefit guarantee 44%43%100%maturity and death benefit guarantee(with a minimum of 15 years between deposit and maturity date)6%7%Guaranteed minimum withdrawal benefit(“GMWB”)38%41%Total 100%

328、100%MANAGEMENTS DISCUSSION&ANALYSIS36 E-L Financial Corporation LimitedAll Empire Life segregated fund guarantees are policy-based(not deposit-based),thereby generally lowering Empire Lifes stock market sensitivity relative to products with deposit-based guarantees.Policy-based guarantees consider a

329、ll the deposits in the customers policy(whether the fund value is below or above the guaranteed amount)to arrive at an overall net guarantee payment,whereas deposit-based guarantees consider only the deposits where the fund value is below the guaranteed amount and ignore all the deposits in the cust

330、omers policy where the fund value is above the guaranteed amount.Therefore,policy-based guarantees generally pay less than deposit-based guarantees.For segregated fund guarantee insurance contract liabilities,the level of sensitivity is highly dependent on the level of the stock market at the time o

331、f performing the sensitivity test.If period-end stock markets are high relative to market levels at the time that segregated fund policies are issued,the sensitivity is reduced.If period-end stock markets are low relative to market levels at the time that segregated fund policies are issued,the sens

332、itivity is increased.The segregated fund regulatory capital framework includes the use of various constraints that provide a partial cushion against impacts.As a result,the sensitivity impacts are often non-linear or asymmetric.In addition,the CSM provides a significant offset to potential impacts i

333、n the segregated fund guarantee liability.This significantly reduces the net income impacts from changes in interest rates or stock market levels.Empire Life also has equity market risk related to its equity assets backing life insurance contract liabilities and surplus.In the first quarter of 2024,we updated our asset mix,reducing exposure to equity risk.As at December 31,2024 and December 31,202