Toronto-based E-L Financial Corp. Ltd. reports that for the quarter ended March 31, it earned net operating income of $32.3 million, or $9.31 per share, compared with $32.9 million, or $9.48 per share, for the comparable period last year — a drop of almost 2%. (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 $88.3 million or $26.15 per share compared with $59.3 million or $17.43 per share for the comparable period last year.

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 corporate investments performed well in the first quarter due to the strong performance of the equity markets, which resulted in a change in unrealized appreciation of portfolio investments of $47.5 million compared to $20.2 million in 2005. Income from the equity method investment, United Corporations Ltd., was $16.4 million, compared to $9.7 million in 2005, for the quarter.

Dominion’s net income for the first quarter of 2006 was $32.4 million compared to $27.9 million in 2005. The increase in net income compared to the prior year first quarter is due to higher investment income and realized investment gains, partly offset by a reduction in underwriting income from a higher expense ratio. The combined ratio was 93.3% for the quarter compared to 92.2% for the prior year first quarter. As expected, underwriting margins remain strong but are declining from the level of the last quarter of 2005.

Empire’s net income contribution to E-L Financial’s earnings for the quarter was $10.1 million compared with $6.8 million in 2005. The increase was primarily due to the continued improvement in domestic stock markets. Overall, Empire’s three major product lines (wealth management, employee benefits and individual insurance) showed an improvement over the first quarter of 2005. This improvement was primarily attributable to the higher profits that resulted from the larger in-force base in all three product lines and to higher investment returns in the Individual Insurance line.

In related news, the company’s board of directors declared cash dividends of $0.33125 for its first preference shares, series 1; $0.125 for Series A convertible and preference shares; and $0.125 for its common shares.