Sunlife’s underlying net income rose 9% to $1.15 billion in the third quarter, led by growth in Canada, Asia and its US stop-loss business. However, reported net income fell 29% to $785 million on interest rate impacts and acquisition charges.
Underlying earnings per share rose 10% to $2.05, and underlying return on equity was 19.0%. The insurer raised its quarterly dividend to $1.00 a share from $0.96.
“Our diversified global strategy delivered robust continued momentum in insurance and wealth led by Canada and Asia, and new sources of growth in asset management,” said Kevin Strain, president and CEO.
Underlying net income in Canada rose 6% to $422 million, helped by higher fee income in Group Wealth and higher premiums at Sun Life Health. That was partly offset by less favourable insurance experience compared with last year’s strong morbidity results.
Sun Life Health sales rose 26% to $123 million, driven by large-case wins. Asset management gross flows and wealth sales rose 21% to about $5 billion. Individual insurance sales fell 18% to $107 million because of lower participating life sales.
During the quarter, Sunlife added online counselling through Dialogue to its health offering.
The company’s LICAT ratio fell to 142% from 154% a year earlier, and its financial leverage ratio rose to 24.1% from 21.6%. Higher financing costs for buying out the remaining interests in its GreenOak subsidiaries weighed on corporate results.
Sunlife also announced a commitment to invest $5 billion over five years in Canadian economic growth and resilience, including $1.5 billion in Canadian infrastructure equity managed through GreenOak and InfraRed Capital Partners. That part of the plan depends on changes to the Insurance Companies Act that would let insurers make equity investments in infrastructure.
For group benefits advisors, the 26% jump in Sun Life Health sales shows Sunlife competing aggressively for large employer accounts. For individual life advisors, the 18% fall in individual insurance sales, driven by lower participating life sales, is worth watching after several strong years for par products. The lower LICAT ratio remains well above regulatory requirements, but it reflects the capital Sunlife has committed to building out its asset management business.
