Sun Life (SLF) Q3 Earnings Surpass Estimates, Decrease Y/Y
Sun Life Financial Inc. SLF delivered a third-quarter 2023 underlying net income of $1.19 per share, which beat the Zacks Consensus Estimate by 3.4%. However, the bottom line decreased 4% year over year.
The underlying net income was reported at $693.2 million (C$930 million), which decreased 4.7% year over year.
Wealth sales decreased 11.2% year over year to $29.30 billion (C$39.32 billion) in the quarter under review.
The new business contractual service margin was $275.79 million (C$370 million).
Sun Life Financial Inc. Price, Consensus and EPS Surprise
Sun Life Financial Inc. price-consensus-eps-surprise-chart | Sun Life Financial Inc. Quote
Segment Results
SLF Canada’s underlying net income increased 9.5% year over year to $251.9 million (C$338 million). Canada witnessed higher net investment income, driven by increased volume and yields, and improved disability experience, reflecting higher margins and shorter claims duration.
SLF U.S.’ underlying net income was $140 million, which decreased 19% year over year, reflecting lower dental results.
SLF Asset Management reported an underlying net income of $245.9 million (C$330 million), which grew 8.7% year over year. Asset Management witnessed higher average net assets, higher net investment income, favorable foreign exchange translation, higher fee-related earnings and favorable tax rate.
SLF Asia reported an underlying net income of $123.7 million (C$166 million). Asia witnessed good sales momentum and favorable mortality from lower claims volumes, offset by higher incentive compensation and expense experience.
Financial Update
Global assets under management were $970.47 billion (C$1,340 billion), up 4.2% year over year.
Sun Life Assurance’s Life Insurance Capital Adequacy Test (LICAT) ratio was 138% as of Sep 30, 2023, down 100 basis points (bps) from Jan 1, 2023.
The LICAT ratio for Sun Life (including cash and other liquid assets) was 147%, which expanded 500 bps from Jan 1, 2023.
Sun Life’s return on equity was 16.6% in the third quarter, which expanded 1,430 bps year over year. The underlying return on equity of 17.7% contracted 170 bps year over year.
The leverage ratio of 21.8% contracted 190 bps from Jan 1, 2023.
Dividend Update
In the reported quarter, the company’s board of directors increased its dividend by 4% to 78 cents per share. The amount will be paid out on Dec 29, 2023, to shareholders of record at the close of business on Nov 29.
Zacks Rank
Sun Life currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Voya Financial VOYA reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income. Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Lincoln National Corporation LNC reported third-quarter 2023 adjusted earnings of 23 cents per share, which missed the Zacks Consensus Estimate by 86.9%. However, the bottom line significantly improved from a loss of $11.49 a year ago. Adjusted operating revenues grew 5.7% year over year to $4.7 billion. The top line missed the consensus mark by 1.6%.
The Annuities segment recorded an operating income of $248 million, which decreased 9.8% year over year and missed the estimate by 9%. The metric suffered from increased expenses. Operating income in the Retirement Plan Services segment came in at $43 million, which fell 9% year over year and missed our estimate of $47.1 million due to an elevated expense level. The Life Insurance segment reported an operating income of $173 million in the quarter under review, improving 92% year over year, as the year-ago income included massive unfavorable notable items. The Group Protection segment recorded an operating income of $68 million in the quarter under review, which rose from $12 million a year ago but remained lower than our estimate. This significant jump can be attributed to better disability underwriting results.
American Equity Investment Life Holding Company AEL reported third-quarter 2023 adjusted net earnings of $2.45 per share, which beat the Zacks Consensus Estimate by 45.8%. The bottom line rebounded from the year-ago loss of 10 cents per share. Operating total revenues were $694.3 million, up 1.4% year over year due to higher annuity product charges and other revenues.
Premiums and other considerations decreased 6.4% year over year to $2.6 million. The figure was lower than our estimate of $3.2 million. Net investment income decreased 3.8% on a year-over-year basis to $586.6 million. The figure was higher than our estimate of $549.7 million. The investment spread was 2.73%, which remained unchanged from the year-ago quarter.
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