Sun Life Financial has reported net income of US$758 million in the second quarter (Q2) of 2022, down 13% from the US$900 million reported in the same period last year. Year-to-date, the group’s reported net income is US$1,643 million, down from US$1,837 in the prior year period.
The life insurance giant’s underlying net income increased by 1% from Q2 2021 to US$892 million in the three months ended June 30, 2022. Year-to-date, the group’s underlying net income was US$1,735 million, up from US$1,733 in the prior year period.
In the second quarter, Sun Life’s reported return on equity (ROE) was 13.1%, down from 16.3% in Q2 of 2021. The insurer’s underlying ROE was 14.9%, versus 16.0% last year. Year-to-date, the group’s reported ROE was 13.7%, down from 16.5% last year, and its underlying ROE was 14.5%, down from 15.5%.
The group’s total insurance sales in the quarter were US$736 million, up from US$710 million in the prior year quarter. Year-to-date, insurance sales were US$1,525 million, up from US$1,440 in 2021.
In Canada, Sun Life’s reported net income of US$160 million in Q2, marked a 60% or US$244 million from the prior year quarter. The giant attributed this significant drop to lower equity markets and rising interest rates, partially offset by an increase in underlying net income of US$54 million. Underlying net income in the quarter increased by 19% to US$344 million, driven by business growth, higher new business gains and experience-related items. Canada insurance sales jumped 11% year-over-year to US$218 million, driven by large case group benefits sales in Sun Life Health.
Sun Life’s US business reported net income of US$213 million, up by 36% or US$56 million from the prior year period, driven by a gain on the sale-leaseback of its Wellesley office and favorable market-related impacts. However, this was partially offset by costs related to Sun Life’s acquisition of DentaQuest, the second-largest dental benefits provider in the US – a deal that is expected to generate more than US$7 billion in total annual benefits revenues for the firm.
The US arm’s underlying net income decreased by 7% or US$11 million in the quarter to US$154 million, reflecting experience-related items and lower AFS gains. Experience in the quarter included favorable medical stop-loss margins, investment gains and favorable credit, partially offset by long-term disability claims. Total US insurance sales in the quarter were US$213 million, up 12% year-over-year, driven by higher dental and medical stop-loss sales.
Sun Life in Asia reported net income of US$131 million in the three months ended June 30, 2022, down 8% or US$12 million from the prior year. The underlying net income also reduced by 3% from the prior year to US$148 million, reflecting policyholder behavior experience primarily in Vietnam, and new business strain in Hong Kong as COVID-19 restrictions drove lower sales, partially offset by new business gains in International. Asia insurance sales were US$305 million, a 6% year-over-year drop, reflecting lower sales in International and Hong Kong, partially offset by sales growth in all other markets.
Despite some dips in performance, Sun Life president and CEO Kevin Strain said the group’s Q2 results reflect the “strength and resilience” of Sun Life’s diversified business mix “in the face of market volatility and a challenging external environment”.
He said: “We're helping our clients achieve lifetime financial security and live healthier lives through several strategic initiatives. In the US, we completed our acquisition of DentaQuest, a values-driven industry leader. In Canada and Malaysia, we announced new Shariah-based products that provide our clients with more choice when it comes to their wealth-solution needs. We also renewed our bancassurance partnership with RCBC in the Philippines for an additional 10 years. And capital raising of US$5.7 billion at SLC Management during the quarter reflects strong demand for our alternative investment capabilities."