Sun Life Financial (SLF) Q1 Earnings Improve, Dividend Up

Sun Life Financial Inc. (TO:SLF) reported first-quarter 2016 operating net income of $409 million (C$531 million), up 19.1% year over year.

The life insurer’s U.S. and Asian business witnessed solid performance. Its asset management business also continued to perform well. Favorable forex also added to the upside.

Total premium and deposits were $29.5 billion (C$38.2 billion), up 4.1% year over year. The improvement stemmed from favorable forex, the acquisitions in Sun Life Investment Management, the partial unwinding of a reinsurance agreement in SLF Canada, increased segregated fund deposits in SLF Canada, and higher net premium revenue in SLF Asia, SLF U.S. and SLF Canada. However, adjusted premium and deposits decreased 5.3% year over year.

Total revenues came in at $6.9 billion (C$8.8 billion), up 20.5% year over year on higher premiums, investment income and fee income.

Total company wealth sales were $376.3 million (C$488 million), up 8.9% year over year.

Total company life and health sales were $25.9 billion (C$33.6 billion), up 1.2% year over year.

Segment Results

SLF Canada reported operating net income of $140 million (C$182 million), down 7.6% year over year. The improvement was backed by a strong performing Group Benefits and Individual Insurance & Wealth business.

SLF U.S. operating net income of $84.8 million (C$110 million) was 10% higher year over year on favorable forex. The segment witnessed favorable morbidity experience in Group Benefits and favorable mortality experience in In-force Management and International.

MFS Investment Management reported operating net income of $131 million (C$170 million), up 17.2% year over year on favorable forex and contributions from strategic acquisitions made in the past.

SLF Asia reported operating income of $46.2 million (C$60 million), up 62.2% year over year. This was the twelfth successive quarter of growth.

Financial Update

Assets under management increased 5.9% year over year to $660.6 billion (C$860.5 billion) as of Mar 31, 2016.

Sun Life Assurance's Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio was 216% as of Mar 31, 2016 compared with 240% as of Dec 31, 2015.

Sun Life Financial’s operating return on equity improved to 11.3% from 10.4% in the year-ago quarter. Underlying ROE of 12.4% improved from 12.1% in the year-ago quarter.

Cash, cash equivalents and short-term securities at Mar 31, 2016 were $5.7 billion (C$7.4 billion), up 12% year over year.

Dividend Update

The board of directors of Sun Life Financial approved a 4% hike in its dividend. The increased dividend of 40.5 cents per share will be paid on Jun 30 to the shareholders of Jun 1.

Zacks Rank

Sun Life carries a Zacks Rank #3 (Hold).

Performance of Other Life Insurers

Earnings at Torchmark Corp. (NYSE:TMK) and Genworth Financial Inc. (NYSE:GNW) beat their Zacks Consensus Estimate in the first quarter while and Reinsurance Group of America Inc. (NYSE:RGA) missed the same.

TORCHMARK CORP (TMK): Free Stock Analysis Report

REINSURANCE GRP (RGA): Free Stock Analysis Report

SUN LIFE FINL (SLF): Free Stock Analysis Report

GENWORTH FINL (GNW): Free Stock Analysis Report

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