“The financial strength and results of operations for E-L Financial were favourable for the first nine months of 2005, reflecting higher investment earnings related to the large corporate investment portfolio as well as good results from the two insurance subsidiaries, The Empire Life Insurance Co. and The Dominion of Canada General Insurance Co.,” DBRS said.

The performance was in line with DBRS’s expectations given current insurance industry conditions. For the nine months ended September 30, 2005, including investment gains and income from equity method investments, consolidated net income rose sharply to $204 million from $131 million.

The general insurance operation’s profitability for the period was strong, with net income increasing to $80 million from $55 million and a return on equity of 20% annualized. Given that the industry is at the “top of the insurance cycle’’ DBRS expects future gains in general insurance to be marginal as industry claims frequencies return to more normal levels.

The life and health insurance operation’s (Empire Life) contribution for the first nine months of 2005 was also favourable at $29 million, although as a mid-sized player in an industry dominated by three much larger competitors, there will be challenges as a niche player, DBRS said.

“E-L Financial has consistently executed on its strategy to accumulate wealth in each of the investee companies, based on a conservative investment philosophy with a long-term view. DBRS expects the strategy and philosophy to remain unchanged in the near term,” it concluded.