Sun Life Financial (SLF) Q2 Earnings, Revenues Rise Y/Y

Sun Life Financial Inc. (TO:SLF) reported second-quarter 2017 underlying net income of $512 million (C$689 million), up 24% year over year.

Sun Life witnessed strong performance across its four segments.

Sun Life Financial Inc. Price, Consensus and EPS Surprise

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

In the quarter, the company also witnessed strong revenue growth with wealth sales rising 12%.

Adjusted premiums and deposits were $30 billion (C$40.6 billion), up 5% year over year, fueled by higher managed and mutual fund sales and increased net premium revenue.

Adjusted revenues came in at $5.5 billion (C$7.4 billion), up 5.7% year over year. Net premiums increased to $2.9 billion (C$3.9 billion).

Segment Results

SLF Canada’s underlying net income increased 33% year over year to $198 million (C$266 million). The company witnessed business growth and strong new business gains in Group Retirement Services and individual insurance, as well as a favorable morbidity experience in Group Benefits, plus a positive credit experience. However, higher expenses, including investment in wealth businesses, partially offset this improvement.

SLF U.S.’s underlying net income was $106 million, up 17.8% from the year-ago quarter. The company witnessed gains from investing activities on insurance contract liabilities, favorable credit experience and a favorable mortality experience in In-force Management and International as well as a favorable morbidity experience in disability. However, an unfavorable morbidity experience in stop-loss related to business written in 2016 was partial offset.

SLF Asset Management’s underlying operating net income of $144 million, increased 26.3% year over year, driven by higher average net assets and lower taxes.

SLF Asia reported underlying income of $60.2 million (C$81 million), up 4.7% year over year. Business growth, partially offset by higher new business strain, favored the quarterly performance.

Financial Update

Global assets under management were $710 billion (C$944 billion), up 4.5% from the level at 2016-end.

Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio was 248% as of Jun 30, 2017 compared with 249% as of Mar 31, 2017.

Sun Life reported operating return on equity of 11.4% in the second quarter of 2017, thus expanding 110 basis points year over year. Underlying ROE of 13.7% improved 180 basis points year over year.

Dividend Update

The board of directors of Sun Life approved of a dividend of 43.5 cents per share.

Zacks Rank

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

Performance of Other Insurers

Among other players from the insurance industry, having reported second-quarter earnings so far, both Brown & Brown, Inc. (NYSE:BRO) and Fidelity National Financial, Inc’s. (NYSE:FNF) bottom lines beat their respective Zacks Consensus Estimate while The Progressive Corporation (NYSE:PGR) missed the same.

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