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Sun Life (SLF) Q4 Earnings Rise Y/Y on Solid Asset Management
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Sun Life Financial (SLF - Free Report) reported fourth-quarter 2021 underlying net income of $712 million (C$898 million), up 4.2% year over year. This improvement was driven by broad-based business growth across four pillars, with particular strength in asset management and wealth and a lower effective tax rate. However, unfavorable COVID-related mortality and morbidity experience and forex weighed on the upside.
Insurance sales more than doubled year over year to $1.3 billion (C$1.6 billion) on the back of higher sales in SLF Canada. Wealth sales were up 12% year over year to $45 billion (C$56.7 billion) in the quarter on higher sales in Asia and Canada.
Sun Life Financial Inc. Price, Consensus and EPS Surprise
The value of new business increased 70.3% year over year to $391.8 million (C$494 million).
Segmental Results
SLF Canada’s underlying net income increased 9% year over year to $211 million (C$266 million) driven by experience-related items and business growth, partially offset by a $20 million investment impairment in earnings on surplus. Insurance sales increased 30%, driven by higher individual participating life insurance sales, and higher large case group benefits sales in Sun Life Health. Wealth sales increased 20%, driven by higher defined benefit solutions sales in Group Retirement Services.
SLF U.S.’ underlying net income was $57.1 million (C$72 million), down 51% from the prior-year quarter, primarily due to COVID-related experience, as working-age population mortality continued to be elevated in the fourth quarter. Sales increased 22% year over year driven by higher medical stop-loss sales.
SLF Asset Management’s underlying net income of $303 million (C$382 million) increased 15% year over year, driven by a 14% increase in MFS and an 18% increase in SLC Management.
SLF Asia reported an underlying income of $103 million (C$130 million), down 12% year over year, driven by business growth and an investment impairment from the prior year, partially offset by experience-related items and foreign exchange translation. Insurance sales decreased 14% year over year due to lower sales in Hong Kong and International, partially offset by higher sales in most of its other markets. Wealth sales increased 33%, driven by higher sales in the Philippines and India.
Financial Update
Global assets under management were $1.1 trillion (C$1.4 trillion), up 15% from 2020 end.
Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 124% as of Dec 31, 2021 versus 127% as of Sep 30, 2020.
The LICAT ratio for Sun Life was 145% as of Dec 31, 2021 versus 147% as of Dec 31, 2020.
Sun Life’s reported return on equity of 17.1% in 2021, up 630 basis points (bps) year over year. Underlying ROE of 15.4% expanded 100 bps year over year.
Leverage ratio of 25.5% at 2021-end deteriorated 200 basis points year over year.
Of the life insurance industry players that have reported fourth-quarter results so far, Voya Financial, Inc (VOYA - Free Report) beat the Zacks Consensus Estimate for earnings while Lincoln National Corporation (LNC - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) missed expectations.
Voya Financial reported fourth-quarter 2021 adjusted operating earnings of $1.90 per share, which surpassed the Zacks Consensus Estimate by 28.4%. The bottom line remained flat year over year. Total revenues amounted to $1.7 billion, which declined 19.2% year over year in the fourth quarter.
As of Dec 31, 2021, VOYA’s assets under management and assets under administration & advisement totaled $739 billion.
Lincoln National’s fourth-quarter 2021 adjusted earnings of $1.56 per share missed the Zacks Consensus Estimate of $1.98 and declined from the prior-year figure of $1.78 per share. Adjusted operating revenues increased 2.4% year over year to $4.8 billion and beat the consensus mark of $4.7 billion.
Even though the ongoing pandemic is likely to continue hurting results, Lincoln National is expected to witness rising earnings per share on the back of its Spark Initiative.
Reinsurance Group reported fourth-quarter 2021 adjusted operating loss of 56 cents per share against the Zacks Consensus Estimate of earnings of 83 cents per share. RGA had reported an operating income of $1.19 per share in the prior-year quarter. Higher COVID-19 mortality claims weighed on the performance. Operating revenues of $4.3 billion increased 5.8% year over year. The top line beat the Zacks Consensus Estimate by 2.1%.
RGA’s net premiums of $3.4 billion rose 4.5% year over year. Investment income increased 18%, reflecting a 5% higher average asset balance and strong variable investment income. Average investment yield increased 50 bps to 4.7% primarily due to higher variable investment income.
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Sun Life (SLF) Q4 Earnings Rise Y/Y on Solid Asset Management
Sun Life Financial (SLF - Free Report) reported fourth-quarter 2021 underlying net income of $712 million (C$898 million), up 4.2% year over year. This improvement was driven by broad-based business growth across four pillars, with particular strength in asset management and wealth and a lower effective tax rate. However, unfavorable COVID-related mortality and morbidity experience and forex weighed on the upside.
Insurance sales more than doubled year over year to $1.3 billion (C$1.6 billion) on the back of higher sales in SLF Canada. Wealth sales were up 12% year over year to $45 billion (C$56.7 billion) in the quarter on higher sales in Asia and Canada.
Sun Life Financial Inc. Price, Consensus and EPS Surprise
Sun Life Financial Inc. price-consensus-eps-surprise-chart | Sun Life Financial Inc. Quote
The value of new business increased 70.3% year over year to $391.8 million (C$494 million).
Segmental Results
SLF Canada’s underlying net income increased 9% year over year to $211 million (C$266 million) driven by experience-related items and business growth, partially offset by a $20 million investment impairment in earnings on surplus. Insurance sales increased 30%, driven by higher individual participating life insurance sales, and higher large case group benefits sales in Sun Life Health. Wealth sales increased 20%, driven by higher defined benefit solutions sales in Group Retirement Services.
SLF U.S.’ underlying net income was $57.1 million (C$72 million), down 51% from the prior-year quarter, primarily due to COVID-related experience, as working-age population mortality continued to be elevated in the fourth quarter. Sales increased 22% year over year driven by higher medical stop-loss sales.
SLF Asset Management’s underlying net income of $303 million (C$382 million) increased 15% year over year, driven by a 14% increase in MFS and an 18% increase in SLC Management.
SLF Asia reported an underlying income of $103 million (C$130 million), down 12% year over year, driven by business growth and an investment impairment from the prior year, partially offset by experience-related items and foreign exchange translation. Insurance sales decreased 14% year over year due to lower sales in Hong Kong and International, partially offset by higher sales in most of its other markets. Wealth sales increased 33%, driven by higher sales in the Philippines and India.
Financial Update
Global assets under management were $1.1 trillion (C$1.4 trillion), up 15% from 2020 end.
Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 124% as of Dec 31, 2021 versus 127% as of Sep 30, 2020.
The LICAT ratio for Sun Life was 145% as of Dec 31, 2021 versus 147% as of Dec 31, 2020.
Sun Life’s reported return on equity of 17.1% in 2021, up 630 basis points (bps) year over year. Underlying ROE of 15.4% expanded 100 bps year over year.
Leverage ratio of 25.5% at 2021-end deteriorated 200 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 Life Insurers
Of the life insurance industry players that have reported fourth-quarter results so far, Voya Financial, Inc (VOYA - Free Report) beat the Zacks Consensus Estimate for earnings while Lincoln National Corporation (LNC - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) missed expectations.
Voya Financial reported fourth-quarter 2021 adjusted operating earnings of $1.90 per share, which surpassed the Zacks Consensus Estimate by 28.4%. The bottom line remained flat year over year. Total revenues amounted to $1.7 billion, which declined 19.2% year over year in the fourth quarter.
As of Dec 31, 2021, VOYA’s assets under management and assets under administration & advisement totaled $739 billion.
Lincoln National’s fourth-quarter 2021 adjusted earnings of $1.56 per share missed the Zacks Consensus Estimate of $1.98 and declined from the prior-year figure of $1.78 per share. Adjusted operating revenues increased 2.4% year over year to $4.8 billion and beat the consensus mark of $4.7 billion.
Even though the ongoing pandemic is likely to continue hurting results, Lincoln National is expected to witness rising earnings per share on the back of its Spark Initiative.
Reinsurance Group reported fourth-quarter 2021 adjusted operating loss of 56 cents per share against the Zacks Consensus Estimate of earnings of 83 cents per share. RGA had reported an operating income of $1.19 per share in the prior-year quarter. Higher COVID-19 mortality claims weighed on the performance. Operating revenues of $4.3 billion increased 5.8% year over year. The top line beat the Zacks Consensus Estimate by 2.1%.
RGA’s net premiums of $3.4 billion rose 4.5% year over year. Investment income increased 18%, reflecting a 5% higher average asset balance and strong variable investment income. Average investment yield increased 50 bps to 4.7% primarily due to higher variable investment income.