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Sun Life's (SLF) Q1 Earnings Suffer Due to Weak Premiums

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Sun Life Financial Inc. (SLF - Free Report) reported first-quarter 2019 underlying net income of $539.2 million (C$717 million), down 11.5% year over year due to lower premiums.

Insurance sales improved 11.5% year over year to $586.6 billion (C$780 million) on the back of higher sales in both SLF Asia and SLF Canada. Wealth sales were down 14% year over year to $27 million (C$36 billion) in the quarter.

Premiums and deposits were $32.2 billion (C$42.8 billion), down 11.8% year over year due to lower net premium revenues.

Net premiums of the company declined 8.3% year over year to $3.3 billion (C$4.3 billion).

Sun Life Financial Inc. Price, Consensus and EPS Surprise

Sun Life Financial Inc. Price, Consensus and EPS Surprise | Sun Life Financial Inc. Quote

Segmental Results

SLF Canada’s underlying net income decreased 23.5% year over year to $178.2 million (C$237 million) due to interest on par seed capital in the first three months of 2018 and an unfavorable credit experience. The reported quarter witnessed a rise in insurance sales. Wealth sales decreased primarily due to GRS sales.

SLF U.S.’s underlying net income was $150 million, up 16.3% from the prior-year quarter. This upside is attributable to a favorable morbidity and mortality experience and improvements in lapse as well as other policyholder behavior experience.

SLF Asset Management’s underlying net income of $227 million slid 1.7% year over year.

SLF Asia reported an underlying income of $91.7 million (C$122 million), down nearly 8.3% year over year, reflecting an unfavorable credit and mortality experience. Insurance sales improved in the quarter under review. 
 
Financial Update


Global assets under management were $760 billion (C$1011 billion), inching up 0.1% year over year.

Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 132% as of Mar 31, 2019. The LICAT ratio for Sun Life was 145%.

Sun Life reported return on equity of 11.5% in the first quarter, having contracted 160 basis points (bps) year over year. Underlying ROE of 13.3% contracted 180 bps year over year.

Leverage ratio of 22.1% at the quarter end improved 10 basis points year over year.

Dividend Update

The board of directors of Sun Life approved a hike in its dividend from 50 cents per share to 52.5 cents.

Zacks Rank

Sun Life 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

Among other players from the insurance industry having reported first-quarter earnings so far, the bottom-line figures of The Travelers Companies, Inc. (TRV - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.

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