Page 14 - Newcom

14 | INVESTMENT EXECUTIVE NEWS
Large life insurers are among the most vulnerable
CONTINUED FROM PAGE 12
First National Financial Corp.
BANKS
Bank of Montreal (Jan. 31)1
Bank of Nova Scotia (Jan. 31)1 CIBC (Jan. 31)1
Canadian Western Bank (Jan. 31) Equitable Group
FINANCIAL SERVICES PROFIT SURVEY
FINANCIAL RESULTS FOR THE THREE MONTHS ENDED DEC. 31, 2019, UNLESS OTHERWISE NOTED
April 2020
ROE (%)5 2018 2019 15.2 14.0 14.2 13.5 26.6 15.1 11.0 10.9 14.2 15.5
7.7 8.4 14.2 11.5 9.0 7.0 18.2 17.3 17.5 17.0 16.3 15.3 8.8 8.8 17.0 15.0
ROE (%)5 2018 2019 NP NP N/A 1.2 N/A 10.5 37.1 38.7 11.5 15.2 7.8 7.5 N/A 11.3
ROE (%)5 2018 2019 0.4 13.2 14.6 12.3 12.0 12.6 12.3 12.4 12.5 12.7 12.9 12.5
ROE (%)5 2018 2019
N/A 12.4 1.6 N/A 2.7 15.8 10.6 28.9 11.4 10.8 6.0 18.5
ROE (%)5 2018 2019 7.5 5.8 13.8 9.3 37.1 38.6 1.4 0.7 N/A 19.2 17.2 17.1 8.8 3.7 NA NA 13.5 11.3
7.5 7.2
CF/share2
and MCAN reported increased earnings. Timbercreek Financial Corp. reported a 7.6% decline in net income, and Accord Financial Corp. and ECN reported losses, although Accord’s was small.
ECN’s loss came from discon- tinued business. The firm’s con- tinuing operations generated $16.3 million in net income compared with $10 million a year earlier.
■■ life insurers. Four of the five lifecos had improved earn- ings, with only GWL reporting a decline, the result of a downward revaluation of a deferred tax asset. Without that, net income would have been up by 3.2%.
E-L Financial has two busi- nesses: life and health insurance through Empire Life Insurance Co.; and corporate investments. The firm’s investments’ revenue and earnings swing as the fair value of securities changes. In this quarter, there was a gain of $271 million in the fair value vs a loss of $324 million a year earlier. ■■ p&c and mortgage in- surers. The quarter was good for this sector year-over-year, with Intact and Genworth MI report- ing earnings gains; Co-operators and Fairfax reporting a return to positive net income from a loss; and Echelon Financial Holdings Inc. reporting a smaller loss.
Fairfax is the biggest com- pany in the sector and, like E-L, its earnings jump around because of a focus on investments. Fairfax utilizes sophisticated investment techniques, including derivatives. The firm reported a gain in fair value of investments of US$604.4 million in the quarter vs a loss of US$664.3 million a year earlier. ■■ mutual fund and investment-management cos. Six of the eight compan- ies reported improved earnings (including two reporting a gain vs a loss year-over-year). But BAM, by far the largest firm, reported a 45.9% drop, pulling the sector’s earnings down by 38.1%. BAM’s decline was partly due to smaller increases in fair market values — only US$4 million vs US$257 million year-over-year — but also reflected higher interest expenses, depreciation and amortization.
Sprott Inc. reported an 80.6% earnings drop, which was due to a drop of $1.7 billion in fair value vs a $6.9 million gain year-over-year.
Despite higher earnings, the three big independent fund com- panies — AGF Management Ltd., CI Financial Corp. and IGM — reported net redemptions in the quarter.
■■ brokerages. GMP Capital Inc. sold its capital markets busi- ness on Dec. 6, 2019, and will focus on wealth management through Richardson Financial Group Ltd., which GMP is in the process of acquiring.
Canaccord Genuity Group Inc.’s investment banking con- tinues to struggle, generating $51.6 million vs $99 million year-over-year. In contrast, Oppenheimer’s investment bank reported US$44.4 million in revenue vs US$30.9 million year-over-year.
■■ exchanges. TMX Group
Assets
($bil.) % Chg. ($mil)
880 9.1 6,825 1,154 11.6 7,879 672 9.4 4,904 31 7.1 220 28 13.4 303 19 5.6 125 107 3.1 561 44 -1.9 239 289 9.8 2,010 1,476 8.1 12,964 1,457 10.2 10,647
Net income % Chg.
EPS ($)2
Efficiency ratio (%)3
2018
61.8 53.8 55.9 44.4 16.4 51.3 56.5 74.9 52.3 55.6 56.2
51.7
56.0
Cash flow4 ($mil.) % Chg. 10,816 69.6
17,213 N/A 675 -88.4 110 N/A 262 N/A -18 N/A -2,012 N/A 51 6.6 -2 N/A 19,944 77.6 10,667 N/A -13 N/A 57,694 612.2
CF/share2
Revenue
% Chg. ($mil.)
2018
2.28 1.73 2.96 0.75 2.33 0.46 0.29 0.91 1.50 2.15 1.53 0.21
2019
2.38 1.63 3.19 0.82 3.21 0.72 0.29 0.73 1.70 2.40 1.63 0.22
2019
59.1 53.5 55.6 45.5 18.0 51.0 54.7 77.5 50.9 55.4 55.1 49.4 55.1
Home Capital Group1
HSBC Bank Canada
Laurentian Bank of Canada (Jan. 31)1
National Bank of Canada (Jan. 31)1
Royal Bank of Canada (Jan. 31)
TD Bank (Jan. 31)1
VersaBank (Jan. 31)
Subtotal 6,160 FINANCE COMPANIES
3.7 1,594 3.6 2,051 6.5 1,462 3.5 78
26.4 56 15.0 41 -0.7 157 -1.5 34
7.9 620 10.8 3,509 6.3 3,013 0.9 5 6.7 12,620
5.3 -9.4 8.9 10.4 39.2 14.9 0.0 -18.1 12.3 10.6 4.4 4.2 4.5
2
6.2 14
9.4 46,690
($bil.) Accord Financial NP ECN Capital (US$)1 1.7 Element Fleet Management 17.4 First National Financial6 37.7 MCAN Mortgage 2.2 Timbercreek Financial6 1.8 Subtotal 60.8
LIFE INSURERS
% Chg.
NP -5.3 -8.1 4.6 1.8 -7.6 -31.7
($mil.)
14.3 66.0 256.5 342.1 15.5 25.6 720.0
% Chg.
10.4 -2.0 15.8
9.6 72.6 0.4 11.1
($mil.)
-0.7 -4.7 117.0 49.0 10.6 14.1 185.3
% Chg.
N/A
N/A 184.3 52.1 197.4 -7.6 N/A
2018
0.50 -0.32 0.07 0.53 0.15 0.18
2019
-0.08 -0.03 -0.29
0.80 0.44 0.17
($mil.)
NP 71.0 342.3 162.3 -11.8 31.2 595.1
% Chg.
NP -39.5 N/A -57.0 N/A 60.2 224.9
2018
NP 0.39 -0.86 6.29 0.90 0.22
2019
NP 0.29 0.76 2.69 -0.49 0.36
Assets
Revenue
Net income
EPS ($)2
Cash flow4
Assets
Revenue
Net income
EPS ($)2
Cash flow4
CF/share2
($bil.)
% Chg. ($mil.)
% Chg.
N/A -8.6 -1.7 31.2 4.2 8.1
($mil.)
346 546 166 1,136 856 3,049
% Chg.
N/A -24.4 26.2 199.7 24.6 83.7
2018
-58.30 0.72 1.36 0.31 1.00
2019
73.68 0.58 1.59 0.61 1.29
($mil.)
91 1,291 192 5,658 1,680 8,912
% Chg.
-12.8
-17.5 772.7 19.5 -38.1 -2.5
2018
32.94 1.57 0.12 2.51 4.35
2019
10.78 1.38 1.84 2.92 0.33
E-L Financial
Great-West Lifeco1,7
iA Financial Group1
Manulife Financial1
Sun Life Financial1
Subtotal 2,202.2 PROPERTY & CASUALTY AND MORTGAGE INSURERS
Assets
8.6 551.6 58.0 664.9 919.1
8.4 555.68 11.6 10,689.00 17.5 2,543.90 9.8 11,172.00 17.5 8,525.00
13.6 33,485.58
($bil.)
% Chg.
($mil.)
943.1 9.7 5,533.0 2,995.0 221.0 9,701.8
% Chg.
26.2 21.6 32.4 9.6 -14.3 22.4
($mil.)
60.7
-0.5 502.7 262.0 108.1 932.9
% Chg.
N/A N/A N/A
3.1 34.9 N/A
2018
-0.81 -0.63 -17.89 1.75 0.88
2019
2.30 -0.03 24.62
1.79 1.25
2018
102.2 76.4 99.3 91.7
37.1
2019 ($mil.)
97.3 161.4 109.4 242.9 96.2 630.8 91.5 187.0 40.5 152.9 1,375.1
% Chg.
91.3 2,932.8 N/A -11.4 17.9 N/A
Revenue
Net income
EPS ($)2
Combined ratio8
Cash flow4
Co-operators General Insurance
Echelon Financial Holdings
Fairfax Financial Holdings (US$)
Intact1 32.3
Genworth MI Canada 6.8
Subtotal 117.3
MUTUAL FUND AND INVESTMENT-MANAGEMENT COMPANIES
Assets ($bil.) % Chg.
308.0 36.8 295.9 Subtotal 640.7
Canaccord Genuity Group1 GMP Capital
Oppenheimer Holdings (US$)
7.5 0.1 70.5
11.8 -78.4 9.5 13.5 -1.0 9.5
0.2 53.6 6.2 24.1 15.5 11.9 14.2 0.3 30.3
Revenue
($mil.)
114.5 17,819.0 534.7 204.5 49.9 823.5 22.1 2.8 19,571.0
% Chg. ($mil.)
5.5 18.0 11.3 1,638.0 1.0 147.3 30.3 10.0 12.6 31.8 4.1 200.8 -27.5 1.9 15.2 0.2 10.8 2,047.9
% Chg.
32.4 -45.9 4.9 233.3 N/A 10.2 -80.6 N/A -38.1
2018
0.17
1.87 0.57 0.03
-2.63 0.75 0.04 -0.01
2019
0.23 0.74 0.65 0.08 1.20 0.84 0.01 0.01
($mil.)
26.3 -108.0 157.0 75.5 12.4 183.3 5.6 1.5 353.7
% Chg.
10.7 N/A -11.9 20.1 -29.2 -10.3 -77.9 98.5 -84.2
2018
0.30 0.54 0.72 0.65 0.63 0.84 0.10 0.03
2019
0.33 -0.95 0.70 0.73 0.45 0.77 0.02 0.05
% Chg.
-7.1 427.9 21.6 10.1
Revenue ($mil.) % Chg.
202.8 -4.0
Assets
($mil.)
24.0 -8.5 25.4 41.0
% Chg.
-27.3 N/A 207.9 12.8
2019
0.18 -0.13 1.84
2019 0.83
9.7 N/A 9.3 5.4
Revenue
Net income
EPS ($)2
Cash flow4
CF/share2
37.8 544.9 132.1 169.7 31.1 166.8 Sprott 12.1 Stone Investment Group 0.5 Subtotal 1,095.0
AGF Management (Aug. 31)1 Brookfield Asset Management (US$) CI Financial
Fiera Capital1
Guardian Capital Group
IGM Financial1,7
BROKERAGES
($mil.)
Net income
EPS ($)2 2018
0.25 -0.09 0.59
EPS ($)2 2018
1.15
ROE (%)5 2019
Cash flow4 ($mil.) % Chg. 142.2 N/A 67.2 N/A 56.2 11.8 265.6 N/A
Cash flow4 ($mil.) % Chg. 83.1 21.5
EPS ($)2
CF/share2
2018 2019 2018
0.60 -1.51 13.6 0.44 0.92 3.6 3.56 4.06 5.4
9.0
STOCK EXCHANGES
TMX Group1
HOLDING COMPANIES
Desjardins Group1 Power Financial1 TOTAL
Ltd. reported an $18-million charge related to subsidiary Shorcan Energy Brokers Inc.
■■ holding companies. All of Desjardins’ business div- isions reported an increase in net income. Power Financial Corp.’s results reflect GWL’s earnings decline, partially offset by the increase in IGM’s earnings. IE
Net income ($mil.) % Chg.
46.9 -27.4
Revenue
CF/share2 2018 2019 1.22 1.46
Cash flow4
ROE (%)5 2018 2019
($bil.)
313.0
471.4
% Chg.
5.9
5.4
($mil.)
4,860.0
11,485.0
% Chg.
9.3 -7.7 -3.2
($mil.)
626.0 701.0 1,327.0
% Chg.
8.3 -12.2 -3.6
2018
NC 0.64
2019
NC 0.69
($mil.)
1,964.0 1,410.0 3,374.0
% Chg.
979.1 -18.4 76.6
2018
NC 2.00
2019
NC 1.76
Net income
ROE (%)5 2018 2019 8.2 7.8 12.7 12.8 10.1 9.9
784.4 16,345.0
N/A = not applicable; NA = not available 3 because the company has negative share- holders’ equity; NP = not provided; NC =
not calculable because Desjardins Group
does not have common shares
1 Unusual, non-recurring items have been excluded where possible. In some cases, these figures have been estimated
2 Per-share data are fully diluted except 4 when there is a loss or negative oper-
ating cash flow in either this quarter 5 or the corresponding quarter a year
earlier, in which case the number of basic shares are used in the calculation
Calculated as non-interest expenses excluding amortization as % of revenue (excluding insurance revenue). Unusual expenses (such as for legal settlements) and unusually high revenue items (such as writedowns or large gains or losses from financial instruments) are excluded from the calculation
Operating cash flow after change in non-cash working balances
6 First National Financial Corp.’s and Timbercreek Financial Corp.’s net income includes comprehensive income
7 Great-West Lifeco Inc.’s and IGM Finan- cial Inc.’s results are consolidated with Power Financial Corp.’s results
8 Calculated as losses and operating expenses as % of net earned premiums
Sources: Company reports IE
Calculated using net income (excluding unusual, non-recurring items) for the past 12 months as % of average of beginning and ending shareholders’ equity