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Sun Life Posts Strong Q4 Earnings

Zacks Equity Research

Canadian life insurer, Sun Life Financial Inc. ( SLF) reported fourth-quarter 2013 operating net income from continuing operations of $673.5 million (C$642 million), significantly higher than $330.0 million (C$333 million) recorded in the year-ago quarter.


Results reflect business growth, a favorable capital market and the positive effects of restructuring initiatives.


Sun Life Financial’s reported net income came in at $599 million (C$571 million), compared with $281 million (C$284 million) in the year-ago quarter.


Adjusted revenues of Sun Life Financial were $6.4 billion (C$6.1 billion), up 17.4% year over year. The increase was owing to higher premium and deposits, as well as higher fee income. 


Total benefits and expenses of Sun Life Financial were $4.3 million (C$4.1 billion), down from $3.9 billion (C$3.9 billion) in the year-ago quarter.


On a total company basis, sales of insurance increased 14%, wealth sales were up 15% and the value of new business grew 30%. 


Segment Results


During the quarter, SLF Canada reported operating income of $144.0 million (C$137 million), down 2.7% year over year. The downside was due to decline in contribution from Group Benefits, partly offset by growth in Group Retirement Services, Individual Insurance and Global Investment lines of business.  


SLF U.S. recorded operating income of $326 million compared with $93 million in the year-ago quarter. The segment continues to grow its group insurance and voluntary benefits businesses.


MFS Investment Management reported operating net income of $148 million, up a substantial 74.1% year over year.


SLF Asia reported operating income was $44.0 million (C$42.0 million), down 11.8% year over year. Results suffered from lower sales in China and India.   


Sun Life Financial reported operating return on equity of 17.7%, compared with 13.1% in the year-ago quarter.


The company’s assets under management ended 2013 at a new high of $680 billion (C$640 billion), up from $527 billion (C$532.0 billion) as of the end of Dec 31, 2012.


Sun Life Assurance's capital ratio was 219% as of Dec 31, 2013, compared with 209% as of Dec 31, 2012.


The Board of directors of Sun Life Financial also declared a quarterly dividend of 36 cents per share.


On the day of its earnings announcement, the company announced its decision to redeem $500 million of subordinated debt at the end of the first quarter of 2014, which will reduce its financial leverage ratio to 25.6%, close to the company’s long-term target of 25%.


Sun Life’s 2013 results reflect broad-based growth across all its business segments. The investments being made by the company in new businesses, in building out distribution and for reaching out to customers are likely to drive long-term earnings growth.


Sun Life carries a Zacks Rank #3 (Hold). Other life insurers like Protective Life Corp. ( PL) and MetLife, Inc. ( MET) reported fourth-quarter earnings which beat the Zacks Consensus Estimate while Torchmark Corp.’s ( TMK) earnings for the same quarter were in line with the consensus estimate.

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