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Sun Life (SLF) Q4 Earnings Increase Y/Y on Business Growth

Zacks Equity Research

Sun Life Financial Inc. SLF delivered fourth-quarter 2019 underlying net income of $600 million (C$792 million), up 10.4% year over year. This improvement was fueled by strong segmental performances.

Insurance sales increased 6.8% year over year to $1062 million (C$1.4 billion). Wealth sales increased 24.1% year over year to $34 billion (C$44.9 billion) in the quarter under review.

Premiums and deposits were $38.9 billion (C$51.4 billion), up 23.9% year over year.

Net premiums increased 19.5% year over year to $4.9 billion (C$6.6 billion).

Sun Life Financial Inc. Price, Consensus and EPS Surprise

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 inched up 8% year over year to $200 million (C$264 million) owing to business growth, higher investing activity, favorable credit experience, higher available-for-sale ("AFS") gains and favorable mortality experience, partially offset by unfavorable morbidity experience in Group Benefits ("GB") and mortgage impairment.

SLF U.S.’ underlying net income was $137 million, up 13.2% from the prior-year quarter owing to a favorable morbidity experience and higher AFS gains, partially offset by unfavorable mortality experience in In-force Management.

SLF Asset Management’s underlying net income of $281 million increased 23.8% year over year, driven by higher average net assets in MFS Investment Management (MFS) and higher income in SLC Management due to the BGO acquisition closed in 2019.

SLF Asia reported underlying net income of $108.3 million (C$143 million), which rose 2.3% year over year driven by business growth, favorable lapse and other policyholder behavior experience and lower new business strain. It was partially offset by unfavorable joint venture experience and other investment-related experience.

Financial Update

Global assets under management were $832.8 billion (C$1099.3 billion), up 15.7% year over year.

Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 130% as of Dec 31, 2019, having contracted 100 bps from the level as of Dec 31, 2018. While the LICAT ratio for Sun Life (including cash and other liquid assets) was 143%, down 100 bps from the level on Dec 31, 2018.

Sun Life’s return on equity of 13.6% in the fourth quarter expanded 270 basis points year over year. Underlying ROE of 15% grew 140 basis points year over year.

Leverage ratio of 21.2% at fourth-quarter end remained flat year over year.

Dividend Update

On Feb 12, 2020, the company’s board of directors approved a dividend of 55 cents per share for first-quarter 2020. The amount will be paid out on Mar 31, 2020 to shareholders of record at the close of business on Mar 1, 2020.

Zacks Rank

Sun Life currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of Brown & Brown, Inc. BRO and RLI Corp. RLI beat the respective Zacks Consensus Estimate while that of Principal Financial PFG matched the same.

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