E-L Financial Corp. Ltd. reported on Tuesday that for the quarter ended June 30, it earned net operating income of $40.8 million compared with $23.9 million for the comparable period last year, a 71% increase.

On a year-to-date basis, E-L Financial earned net operating income of $73 million compared with $56.8 million in 2005, a 29% increase. Net operating income is before investment gains and income from the equity method investment.

Total net income, including investment gains and income from the equity method investment, for the quarter was $20.9 million compared with $67.4 million for the comparable period last year. On a year-to-date basis, E-L Financial earned net income of $109.2 million compared with $126.8 million in 2005.

The company owns an investment portfolio and has two operating insurance subsidiaries, the Dominion of Canada General Insurance Co. and the Empire Life Insurance Co. The results of the corporate investments in the second quarter of fiscal 2006 reflected the poor performance of equity markets on a global basis as change in unrealized appreciation of portfolio investments decreased by $32.8 million (2005 — increase of $33.6 million) and the Loss from the equity method investment, United Corporations Ltd., was $10.0 million (2005 — Income of $18.6 million). On a year-to-date basis, change in unrealized appreciation increased by $14.7 million (2005 – $53.9 million) and the Income from the equity method investment was $6.4 million (2005 – $28.4 million). The year-to-date results reflect the positive performance of the equity markets in the first quarter of 2006.

Dominion’s net income for the second quarter of 2006 was $36.2 million (2005 – $22.2 million) and for the first six months of 2006 was $68.6 million (2005 – $50.1 million). These results reflect a combined ratio for the second quarter of 89.2% (2005 – 96.4%) and for the first six months of 2006 of 91.3% (2005 – 94.3%) . Despite a decline in revenue reflecting a decrease in premiums, net income was higher for the quarter and year to date due to improved underwriting income, higher investment income and higher realized gains. The improved second quarter and current year underwriting income mainly reflects a lower level of storm losses and improved loss experience from Facility Association business.

Empire’s net contribution to E-L Financial’s earnings for the second quarter was $8.4 million (2005 – $8.4 million) and for the first half was $18.4 million (2005 – $15.2 million). The quarterly contribution was unchanged from last year despite a net reduction of $2.8 million resulting from the substantive enactment of Bill C-13, which introduced lower future federal income tax rates. Quarterly and year-to-date combined net income from Empire’s three major product lines (Wealth Management, Employee Benefits and Individual Insurance) increased relative to the corresponding periods last year. The improvements in earnings were primarily a consequence of the higher profits that resulted from the larger in force base in all three product lines as well as improved claims experience in the Individual Insurance line of business.