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Sun Life Financial (SLF) Q3 Earnings Increase Year Over Year

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Sun Life Financial (SLF - Free Report) reported third-quarter 2021 underlying net income of $765 million (C$902 million), up 21% year over year. This improvement was driven by business growth, favorable credit experience, and higher tax-exempt investment income. These were partially offset by morbidity and expense experience and the unfavorable impacts of foreign exchange translation.

Insurance sales increased 4.2% year over year to $532.6 million (C$628 million) on the back of higher sales in SLF Canada. Wealth sales were up 8.9% year over year to $43 billion (C$50.7 billion) in the quarter on higher sales in Asia.

Value of new business increased 25.4% year over year to $245.9 million (C$290 million).

Sun Life Financial Inc. Price, Consensus and EPS Surprise

Sun Life Financial Inc. Price, Consensus and EPS Surprise

Sun Life Financial Inc. price-consensus-eps-surprise-chart | Sun Life Financial Inc. Quote

Segmental Results

SLF Canada’s underlying net income increased 11.8% year over year to $246 million (C$290 million) driven by business growth, higher tax-exempt investment income and favorable credit experience, partly offset by unfavorable Group Benefits morbidity experience and higher expenses. Insurance sales increased 24%, driven by higher individual participating whole life insurance sales and higher large case sales in GB. Wealth sales decreased 13% due to lower defined contribution sales in Group Retirement Services (GRS), partly offset by higher individual wealth mutual fund sales.

SLF U.S.’ underlying net income was $93.3 million (C$110 million), down 8.5% from the prior-year quarter due to an increase in COVID-related claims impacting employee benefits mortality and morbidity experience, and the unfavorable impacts of foreign exchange translation. This was partially offset by morbidity experience in medical stop-loss and mortality claims experience in In-Force Management. Sales decreased 13% year over year due to lower employee benefits and medical stop loss sales.

SLF Asset Management’s underlying net income of $307 million (C$362 million) increased 39.5% year over year, driven by MFS and SLC Management, partially offset by the unfavorable impacts of foreign exchange translation.

SLF Asia reported an underlying income of $122 million (C$145 million), down 0.8% year over year, due to an unfavorable mortality experience in Indonesia and the Philippines related to COVID-19, higher digital investments and the unfavorable impacts of foreign exchange translation. These were partly offset by business growth. Insurance sales decreased 19% year over year due to lower Hong Kong and International sales, partially offset by higher sales in the Philippines and India. Wealth sales increased 48%, driven by mutual fund sales in India, money market sales in the Philippines and the pension business in Hong Kong.

Financial Update

Global assets under management were $1,089.96 billion (C$1,386 billion).
Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 124% as of Sep 30, 2021 versus 127% as of Sep 30, 2020.

The LICAT ratio for Sun Life was 143% as of Sep 30, 2021 versus 144% as of Sep 30, 2020.

Sun Life’s reported return on equity of 17.6% in the third quarter expanded 410 basis points (bps) year over year. Underlying ROE of 15.6% expanded 50 bps year over year.

Leverage ratio of 22.2% at quarter-end deteriorated 70 basis points year over year.

Zacks Rank

Sun Life currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported third-quarter results so far, American Financial Group (AFG - Free Report) , Arch Capital Group Ltd. (ACGL - Free Report) and Athene Holding Ltd. beat the respective Zacks Consensus Estimate for earnings.


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