Sun Life sees growth in benefits business; shares up on earnings beat
2:51 pm Thursday, November 03rd, 2022
By Divya Rajagopal
TORONTO (Reuters) – Sun Life Financial Inc believes rising wages, driven by inflation and a tight labor market, will help its benefits business, company executives said on Thursday.
Shares in Canada’s No.2 insurer rose as much 4% in response to better-than-expected third quarter profits reported late Wednesday. Strong growth in its insurance business in the United States and COVID recovery in Asia bolstered results.
“Inflation, at least in the U.S. benefits business, actually tends to give a boost to results,” Daniel Richard Fishbein, president of Sun Life U.S, told an earnings call. Many of the benefits products Sun Life offers are based on wages, he said.
“Also in a very tight job environment, we are finding that employers are very interested in providing very attractive and competitive benefits,” Fishbein added.
The benefits business, part of the insurance segment, provides employer sponsored health benefits at work places. In the United States, segment sales grew 84% to C$366 million in the third quarter, driven by higher dental and employee benefit sales.
Besides strategic acquisitions, COVID recovery across Asia reduced mortality and contributed to a 21% year-on-year increase in net income from the region. However, high inflation and a sharp drop in stock and bond markets hurt the company’s asset management business.
Sun Life has expanded its asset management business through acquisitions. In September it bought Advisors Asset Management in the United States to cater to high net worth individuals.
When asked if the company would be interested in bidding for other asset management businesses, such as that of HSBC Canada, Chief Executive Kevin Strain said Sun Life’s focus is on building its business in the alternatives and institutional asset management space. He said the company is “pretty happy with the mix we have.”
(Reporting by Divya Rajagopal; Editing by Cynthia Osterman)
