E-L Financial Corporation Limited ("E-L Financial" or the "Company") operates as an investment and insurance holding company. In managing its operations, the Company distinguishes between two operating segments, E-L Corporate and Empire Life Insurance Company ("Empire Life").

E-L Corporate’s operations include the oversight of investments in global equities held through direct and indirect holdings of common shares, investment funds, closed-end investment companies, and other private companies. E-L Financial holds a 52.7% interest in a closed-end investment corporation, United Corporations Limited (“United”) which is listed on the Toronto Stock Exchange. United is an investment vehicle for long- term growth through investments in common equities. The invested assets and operations of United are consolidated and included in the E-L Corporate segment. In addition, E-L Corporate has two significant investments in associates including a 37.4% interest in Algoma Central Corporation and a 24.1% interest in Economic Investment Trust Limited.

The Company’s investment in Empire Life (99.4% interest) is consolidated by E-L Financial. The Empire Life operating segment underwrites life and health insurance policies and provides segregated funds, mutual funds, and annuity products.

The Company’s strategy is to accumulate shareholder value through long-term capital appreciation and dividend and interest income from its investments. E-L Financial oversees its investments through representation on the boards of directors of the subsidiaries and the other companies in which the Company has significant shareholdings.

As the economy recovered from the lockdowns in 2020 and early 2021, the annual unemployment in Canada returned to near-normal levels from a peak of 13.7% in May of 2020. The lingering effects of the pandemic will continue to weigh on 2022 and potentially beyond.

The recovery of the Canadian and global economy will depend on the effectiveness of vaccine rollouts and the ongoing management of inflation pressures. MANAGEMENT’S DISCUSSION & ANALYSIS E-L Financial Corporation Limited 37 The Canadian Federal Bond yield curve shifted up with the 5-year rate increasing from 0.39% to 1.25% in 2021 and the 30-year rate increasing from 1.21% to 1.68% in 2021. While corporate and provincial bond spreads were relatively stable on shorter durations, spreads widened in 2021 on longer-duration bonds.

Interest rates have generally been lower than historic averages for several years. After an uneven quarterly performance in 2020, global equity markets performed well in 2021 with the MSCI up over 18.5% for the year. The S&P 500 stock index was up 26.9% and the S&P/TSX composite index was up 21.7% for the year.

The ability of economies to recover and grow in line with projections is highly dependent on the ability of governments to manage the lingering effects of the COVID-19 pandemic on their economies. Other threats to economic growth include the impact of the inflationary pressures across the country and energy policy on the regional economies of the western provinces. Short-term interest rates may continue to stay at their historic low levels in the near term. Overall, the Canadian economy is well- positioned to support the continued growth of all Empire Life’s product lines.

The industry is also improving the oversight of MGAs and their advisors. Life insurance companies, including Empire Life, commonly contract with MGAs as a key component of the distribution chain for insurance and wealth management products. In 2013, the Canadian Life and Health Insurance Association (“CLHIA”) developed a new Insurer- MGA Relationship guideline (effective January 1, 2015). The Guideline describes desired outcomes and related practices in five general areas, including, performing due diligence before entering into a contract with an MGA, clearly setting out roles and responsibilities in the contract, committing to a culture of treating customers fairly, monitoring the performance of the MGA and retain ultimate responsibility.