Canadian life insurer, Sun Life Financial Inc.
(SLF - Analyst Report
) announced second-quarter 2013 net operating earnings $441 million (C$431 million), improving 74.7% year over year.
Sun Life Financial’s reported net income came in at $400 million (C$391 million), up 62.3% year over year.
The improved numbers were driven by strong sales, and continued product and pricing improvements. Rising interest rates and favorable credit experience also aided the results.
Adjusted revenues of Sun Life Financial were $5.65 billion (C$5.5 billion), up 17.5% year over year. The increase was higher premium and deposits, primarily driven by higher investment income and increased fee income from Mutual Fund Segment (MFS).
Total benefits and expenses of Sun Life Financial were $ 705 million (C$690 million), down from $4.9 billion (C$4.9 billion) in the year-ago quarter.
Wealth sales and insurance sales each recorded increases of 32%. Sun Life's Assets under management increased 23% year over year to $621 billion (C$590 billion).
During the quarter, SLF Canada reported operating income of $215 million (C$210 million), up 14.4% year over year. The upside was driven by strong performance in its Group Benefits, Group Retirement Services, Individual Insurance and Global Investment line of business.
SLF U.S. recorded operating income of $122 million (C$126) during the reported quarter compared with $8 million (C$6 million). The segment continues to grow its group insurance and voluntary benefits businesses.
MFS Investment Management reported operating net income of $101 million (C$104), up 50.7% year over year.
SLF Asia reported operating income was $47.1 million (C$46 million), up two-fold relative to the year-ago quarter. The company is growing strongly in the Asian market and has an attractive market position in Philippines, Hong Kong, and Indonesia.
Sun Life Financial reported operating return on equity of 12.8%, compared with 2.9% in the year-ago quarter.
Sun Life Assurance's MCCSR ratio was 217% as of Jun 30, 2013, compared with 209% as of Dec 31, 2012.
Highlights of the Quarter
During the quarter, Sun Life Financial completed its acquisition of 49% of each of CIMB Aviva Assurance Berhad and CIMB Aviva Takaful Berhad in Malaysia.
Last week, Sun Life completed the sale of some its U.S. Life Insurance business and U.S. annuities business to Delaware Life Holdings, LLC. The sale is expected to result in a decline in shareholders' equity of approximately $1.1 billion. Third quarter results will bear loss on disposition. The transaction has reduced the company’s equity market and interest rate exposure, thereby limiting earnings volatility to involuntary forces.