LBS.PR.A Annual Report 2018

Brompton Life & Banc Split Corp. has released its Annual Report to December 31, 2018.

LBS / LBS.PR.A Performance
Instrument One
Whole Unit -13.1% +6.1% +5.2% +11.4
LBS -32.1% +6.6% +5.0% +20.2
LBS.PR.A +4.9% +4.9% +4.9% +5.1%
S&P/TSX Capped Financial Index -9.2% +8.5% +6.9% +12.2%

Note that according to the implementation by iShares, the capped financial index is about 69% banks, 19.7% insurance and 10.4% diversified financials, so the fund is by design overweight insurers relative to this benchmark – and insurers have underperformed.

Figures of interest are:

MER: “The MER per unit, excluding Preferred share distributions (which were covered by the portfolio’s dividend income), was 0.91% for 2018”

Average Net Assets: We need this to calculate portfolio yield. The Total Assets of the fund at year end was $412.0-million, compared to $445.2-million a year prior (there was an increase in shares outstanding due to a warrant offering), so call it an average of $428.6-million. This can be checked by examining distributions on preferred shares of $11.728-million, which at $0.545 / share implies an average of 21.5-million units outstanding, which at an average value of $17.98 implies average net assets of 386.6-million. Since shares were issued in July and December, 2018, the latter figure seems more appropriate.

Underlying Portfolio Yield: Investment income of $17.354-million received divided by average net assets of $386.6-million is 4.5%.

Income Coverage: Net investment income after expenses of $10.845-million received plus $2.468-million issuance costs added back is $13.313-million, to cover preferred dividends of 11.728-million is about 114%.

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