Canadian Life Companies Split Corp. has released its Annual Report to November 30, 2012.
| LFE / LFE.PR.B* Performance | ||||
| Instrument | One Year |
Three Years |
Five Years |
Since Inception |
| Whole Unit | +16.82% | -1.11% | -9.39% | -2.29% |
| LFE.PR.B* | +5.82% | +5.83% | +5.47% | +5.43% |
| LFE | +110.82% | -25.04% | -32.07% | -17.87% |
| S&P/TSX Financial Index | +17.82% | +8.12% | +1.69% | +6.26% |
| * LFE.PR.B performance includes pre-reorganization LFE.PR.A. It is not clear whether there is an allowance for value of the warrants received on reorganization | ||||
It will be noted that LFE invests in insurance companies, which have had performance far worse than indicated by the S&P/TSX Financial Index, which is dominated by banks.
Figures of interest are:
MER: Calculation of the MER is complicated by the reorganization. Management reports a base figure of 1.59% “excluding any one time secondary offering expenses”, but significant expenses were incurred due to the reorganization which are included in this figure. As an approximation, I have assumed expenses going forward will be the same as in 2012 except that “Shareholder Reporting Costs” will be equal to the 2011 figure of $48,952, not the 2012 figure of $504,603. This results in total adjusted expenses of $1,323,904, divided by average net assets (see below) of $109.9-million = 1.20%. This figure is nicely in the range defined by the MER for the years 2008 – 2011, inclusive.
Average Net Assets: We need this to calculate portfolio yield. Use the Average of the beginning and end of year figures: $103.7-million + $116.1-million = $109.9-million. Note that warrant exercise and retractions will make this figure a nightmare calculation for the next two years.
Underlying Portfolio Yield: Dividends received of 4,536,584 divided by average net assets of 109.9-million is 4.13%
Income Coverage: Net Investment Income of 2,757,029, adjusted for excess reporting costs (see MER, above) of 455,651 is $3,212,680 divided by Preferred Share Distributions of 5,195,633 is 62%.
The reorganization of LFE was discussed on PrefBlog.