You’ve probably never heard of E-L Financial Corp unless you spend your weekends digging through the deep value corners of the Toronto Stock Exchange. It doesn't make headlines. It doesn't have a flashy CEO doing rounds on CNBC. Honestly, the company feels like a relic from a different era of finance, yet it sits on a mountain of assets that would make most fund managers blush.
It's a holding company. That sounds boring, right? But think of it more like a Canadian version of Berkshire Hathaway, just way more under the radar and controlled by one of the country's wealthiest families—the Jackmans.
What E-L Financial Corp Actually Is
Basically, when you buy a share of this company, you're buying a weird, eclectic mix of insurance operations and a massive investment portfolio. It’s a two-headed beast. On one side, you have the operating insurance business, primarily Empire Life. On the other side, you have a massive "closed-end" investment fund style portfolio that owns everything from global equities to private equity and bonds.
It’s complex. That complexity is exactly why the market often ignores it.
The company operates out of Toronto, and the Jackman family has been at the helm for generations. Henry N.R. "Hal" Jackman, the former Lieutenant Governor of Ontario, is the patriarch often associated with its rise. Today, Duncan Jackman leads the ship. They don't care about quarterly guidance. They don't care about "beating the street." They care about compounding book value over decades.
The Empire Life Engine
Empire Life is the crown jewel of the operating side. Founded back in 1923, it’s one of the top life insurance companies in Canada. But it’s not just about life insurance policies. They do employee benefits, individual savings, and segregated funds.
Why does this matter for the stock?
Insurance companies are "float" machines. They take in premiums today and pay out claims much later. In the meantime, they get to invest that money. While many insurers struggled during the decade of ultra-low interest rates, the recent shift in the macro environment has changed the math for companies like Empire Life. Higher rates generally mean better returns on the fixed-income portfolios that back those insurance liabilities.
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Empire Life consistently contributes a massive chunk to E-L Financial’s net equity. In recent filings, the insurance operations have shown resilience even when the broader stock market gets choppy. It’s the steady heartbeat of the organization.
The Investment Portfolio: A Secret Wealth Fund
This is where things get interesting—and a little confusing for the average retail investor. E-L Financial owns significant stakes in other investment entities.
- Economic Investment Trust Limited: They own a huge piece of this.
- United Corporations Limited: Another closed-end fund they control.
- Algoma Central Corporation: They have a major interest in this shipping company that dominates the Great Lakes.
If you try to value E-L Financial by just looking at its P/E ratio, you’re doing it wrong. You have to look at the Net Asset Value (NAV).
Historically, E-L Financial Corp has traded at a massive discount to its NAV. We’re talking 30% to 40% sometimes. Imagine walking into a bank, handing them 60 cents, and they give you a dollar back. That’s the "E-L Discount."
Why does the discount exist?
Control. The Jackman family owns the lion's share of the voting rights. Because they aren't going to sell the company or break it up anytime soon, the market "penalizes" the stock. Investors know they can't force a liquidation to unlock that hidden value. You are essentially a passenger in the Jackman family's private jet. They decide the destination and the speed.
The Algoma Connection
You can't talk about E-L Financial without mentioning Algoma Central. It's a shipping company. They own tankers and dry bulk carriers that move salt, grain, and iron ore across the Great Lakes and St. Lawrence Waterway.
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It feels random. Why does an insurance holding company own a shipping fleet?
It's about diversification. The Jackmans like "hard assets" and businesses with "moats." It’s hard to start a new shipping company on the Great Lakes. There are only so many docks and so much infrastructure. This investment provides a hedge against inflation and a different cash flow profile than the insurance business. It’s a classic old-school merchant bank move.
Why the Market Gets it Wrong
Most analysts want "pure plays." They want a life insurance company or a tech fund. They don't want a life insurance company that also owns a shipping fleet and a bunch of closed-end funds that own bank stocks.
It's "messy" for spreadsheets.
Also, the liquidity is low. On some days, only a few hundred shares of E-L Financial (ELF.TO) change hands. Big institutional funds can't buy it because they'd move the price too much just trying to get a position. This leaves a vacuum where the price often drifts away from the actual value of the underlying assets.
The Risk Factor: What to Watch Out For
It’s not all sunshine and compounding. There are real risks here that people overlook.
- Interest Rate Volatility: While higher rates help the "float," sudden swings can wreak havoc on the valuation of the bond portfolios held by Empire Life.
- The "Key Person" Risk: The Jackman family is the vision. If the leadership transition ever becomes messy, the strategy could falter.
- Market Correlation: Since such a huge portion of the company's value is tied to its equity portfolio (which includes a lot of Canadian bank stocks), if the TSX tanks, E-L Financial will tank with it, regardless of how well the insurance business is doing.
- The Permanent Discount: There is no guarantee the gap between the stock price and the NAV will ever close. You could buy it at a 30% discount today and sell it at a 35% discount in ten years.
Real Expert Nuance: The IFRS 17 Shift
In 2023, the accounting world changed for insurers with the implementation of IFRS 17. This changed how insurance contracts are reported on the balance sheet. For a company like E-L Financial, this created a lot of "noise" in the earnings reports.
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If you're looking at historical data, you have to be careful. Comparisons between 2022 and 2024 aren't "apples to apples" because of these accounting shifts. Expert investors in this space look at the "Contractual Service Margin" (CSM), which represents the unearned profit the company expects to realize as it provides services. It’s a better indicator of future health than the raw net income figure that often gets distorted by market swings.
How to Analyze the Stock Yourself
Don't trust the headlines. Go to the company’s website and look for their quarterly "Summary of Net Asset Value." They actually provide this. They calculate what the company would be worth if they sold everything and paid off the debts.
Compare that NAV per share to the current stock price.
If the NAV is $1,600 and the stock is trading at $1,100, you have to ask yourself: Is the Jackman management style worth the $500 "tax" the market is charging? For long-term holders, the answer has historically been yes, because that $1,600 keeps growing over time.
Strategy and Actionable Insights
If you’re considering E-L Financial, you need a different mindset. This isn't a "get rich quick" play. It's a "stay rich" play.
- Check the Discount: Only buy when the discount to NAV is at the higher end of its historical range. If the discount narrows to 15%, it might be overvalued relative to its history.
- Dividend Reinvestment: The dividend isn't huge in terms of yield, but it is consistent. Reinvesting those payouts is the only way to truly benefit from the compounding nature of the holding company.
- Watch the Banks: Since the investment portfolio is heavy on Canadian financials (Royal Bank, TD, etc.), monitor the health of the Canadian banking sector. When banks are hated, E-L Financial usually gets punished too.
- Patience is Mandatory: This stock can go months without doing anything. Then it will jump 5% in a day on no news. It’s a low-volatility tortoise in a world of high-volatility hares.
E-L Financial Corp remains one of the last true "blue blood" Canadian holding companies. It’s a window into how old money preserves and grows wealth—slowly, quietly, and with a very long-term view. It’s not for everyone. But for those who value assets over hype, it's a fascinating study in corporate structure and patience.
Next Steps for Investors:
Review the most recent Management’s Discussion and Analysis (MD&A) specifically looking for the Empire Life capital adequacy ratio (LICAT). A strong LICAT ratio (usually well above 100%) indicates the insurance arm is over-capitalized and healthy. Then, calculate the current price-to-book ratio. If it’s trading significantly below 0.7x book value, historical trends suggest it’s entering deep-value territory. Finally, verify the current holdings of United Corporations (UNC.TO), as this often acts as a leading indicator for E-L Financial's own portfolio performance.