TORONTO (Reuters) - Sun Life Financial (NYSE:SLF) Inc CEO Kevin Strain said on Tuesday the company's U.S. dental insurance business was improving after losing money in the latest quarter, and was on track to hit its goal for $100 million in earnings in that segment in 2025.
The Canadian insurer's shares were up about 5% in mid-day trading in Toronto after its second quarter earnings topped expectations.
The dental segment posted a loss for the second quarter hit by Medicaid redeterminations that pressure Medicaid and Medicare Advantage sales leading to a 5% fall in the US segment's core earnings.
As more Medicaid contracts are repriced along with broader expense reductions, the segment is expected to see improvements.
About 90% of Medicaid contracts are expected to be repriced this year, the company said.
"We still think that the U.S. is a good long term growth market for us in both the group benefit side (and) in the asset management side under both MFS and SLC," Strain said in an interview.
Sun Life acquired dental benefits provider DentaQuest as part of its strategy to grow its presence in the U.S., which now accounts for roughly a fifth of its overall undelying income.
"We would look at expanding growth there (U.S.), as well as in Asia," he said, adding that US is a growing segment with potential in both insurance and asset management.
Jefferies analyst John Aiken noted that while the U.S. dental business faced challenges, it provides "upside potential that should be easily recognized with the management actions taken to date."
Sun Life's Tuesday gains took its year-to-date performance to positive territory. Rival Manulife's shares have gained 18.8% so far this year.