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Sun Life Financial Eyes Growth Despite Low Interest Rates


Trades from $3

On Oct 14, 2016, we issued an updated research report on Sun Life Financial Inc. (SLF - Analyst Report) .

Sun Life has been making efforts to expand its international business. The life insurer has been focusing on emerging economies, particularly in Asia, which are anticipated to provide higher return and growth than the North American markets. Thus, a well-diversified business profile positions the company well for the long run.

Moreover, the company remains committed to growing its Global Asset Management business that has been witnessing an improvement in asset base over the past many quarters. This apart, Sun Life targets Sun Life Investment Management asset-under-management of $100 billion over the next five years.

Further, Sun Life Financial remains focused on accelerating growth through strategic acquisitions. Such buyouts not only help the company expand its business and but also enhance its services. To that end, the life insurer acquired FWD’s Mandatory Provident Fund business in Hong Kong on Aug 3, 2016 and also entered into an exclusive 15-year distribution agreement with the same. The transaction should expand the Sun Life’s wealth business in Hong Kong as well as leverage its global expertise in pensions.

The life insurer’s robust capital and liquidity position, coupled with effective capital deployment in growth initiatives, will fuel earnings and return on equity alongside enhancing shareholders’ value.

Riding on operational strength, the company envisions growing its bottom line between 8% and 10% and return on equity (ROE) between 12% and 14% over the medium term.

Over the last 60 days, the Zacks Consensus Estimate moved up by 2.9% and 2.7% for 2016 and 2017, respectively.

However, exposure to a soft interest rate environment will continue to weigh on Sun Life’s operational performance. In addition, escalating expenses will likely hurt the company’s bottom line and restrict its growth.

Currently, Sun Life Financial carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the insurance industry include Everest Re Group Ltd. (RE - Analyst Report) , NMIH Holdings, Inc. (NMIH - Snapshot Report) and Health Insurance Innovations, Inc. (HIIQ - Snapshot Report) . Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Everest Re Group, a writer of property and casualty (P&C), reinsurance and insurance in the U.S, Bermuda and international markets, saw the Zacks Consensus Estimate increase 3.3% and 1.1% for 2016 and 2017, respectively, over the last 60 days.

NMIH Holdings, a provider of private mortgage guaranty insurance services in the United States, did not witness any revisions in its Zacks Consensus Estimate for both 2016 and 2017, over the last 60 days.

Health Insurance Innovations, dealing in cloud-based individual health and family insurance plans, and supplemental products in the United States, saw the Zacks Consensus Estimate rise 1.6% and 10.9% for 2016 and 2017, respectively, over the last 60 days.

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