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Sun Life (SLF) Q4 Earnings Rise on Strong Business Growth

Zacks Equity Research

Sun Life Financial Inc. SLF delivered fourth-quarter 2018 underlying net income of $543.3 million (C$718 million), up 34.5% year over year. This improvement was fueled by strong segmental performances.

Insurance sales increased 14.1% year over year to $994.2 million (C$1.3 billion). Wealth sales dipped 1.4% year over year to $27.4 billion (C$36.2 billion) in the quarter under review.

Premiums and deposits were $31.4 billion (C$41.5 billion), down 2.5% year over year.

Net premiums increased 28.1% year over year to $4.1 billion (C$5.3 billion).

Sun Life Financial Inc. Price, Consensus and EPS Surprise


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

Segment Results

SLF Canada’s underlying net income inched up 1.3% year over year to $185.4 million (C$245 million) owing to a favorable expense experience, resulting from the ongoing expense management along with reduction in incentive compensation costs and policy administration updates. However, weak investment results partially offset this upside. Insurance sales deteriorated due to lower individual insurance sales, partially offset by a modest increase in Group Benefits sales. Wealth sales improved on the back of large case Defined Benefit Solutions (DBS) sales in Group Retirement Services (GRS) during 2018.

SLF U.S.’s underlying net income was $121 million, up 27.4% from the prior-year quarter owing to a favorable currency impact from the change in the Canadian dollar.

SLF Asset Management’s underlying net income of $227 million inched up 0.4% year over year.

SLF Asia reported an underlying net income of $105.9 million (C$140 million), which soared 68.1% year over year.

Financial Update

Global assets under management were $719.7 billion (C$951.1 billion), down 7.4% year over year.

Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 131% as of Dec 31, 2018, having expanded 100 bps from the level as of Sep 30, 2018. While the LICAT ratio for Sun Life (including cash and other liquid assets) was 144%, down 100 bps from the level on Sep 30, 2018.

Sun Life’s return on equity of 5.5% in the fourth quarter contracted 350 basis points year over year. Underlying ROE of 14.1% grew 190 basis points year over year.

Leverage ratio of 21.2% at fourth-quarter end improved 240 basis points year over year.

Dividend Update

On Feb 13, 2019, the company’s board of directors approved a dividend of 50 cents per share for first-quarter 2019. The amount is payable Mar 29, 2019 to shareholders of record at the close of business on Mar 1, 2019.

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 Life Insurers

Among other players from the life insurance industry having reported fourth-quarter earnings so far, the bottom-line figures of Lincoln National Corporation LNC and Reinsurance Group of America, Incorporated. RGA beat the respective Zacks Consensus Estimate while Genworth Financial Inc.’s GNW earnings fell short of the same.

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Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Genworth Financial, Inc. (GNW) : Free Stock Analysis Report
Lincoln National Corporation (LNC) : Free Stock Analysis Report
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