Sun Life Q2 Earnings Beat, Revenues Miss Estimates

Sun Life Financial Inc. SLF delivered second-quarter 2024 underlying net income of $1.25 per share, which beat the Zacks Consensus Estimate by 5.9%. The bottom line increased 6.8% year over year. Underlying net income was $730.8 million (C$1 billion), which increased 9% year over year.

Results reflected continued solid growth in Canada and Asia. The U.S. also saw favorable experience in Group Benefits, partially offset by residual headwinds in dental.

Revenues of $6.5 billion increased 14.2% year over year but missed the Zacks Consensus Estimate by 3%.

Wealth sales & asset management gross flows of $33.8 billion (C$46.3 billion) increased 9.1% year over year. Group - Health & Protection sales of $362.5 million (C$496 million) decreased 17.7% year over year. Individual - Protection sales of $550.3 million (C$753 million) jumped 24.7% year over year.

New business contractual service margin was $319.4 million (C$437 million), up 61.9% year over year.

Segment Results

SLF Canada's underlying net income increased 8% year over year to $294 million (C$402 million). Canada witnessed solid results at Wealth & Asset Management and Individual - Protection.

Wealth sales & asset management gross flows of $3.6 billion ($5 billion) climbed 72% year over year. Group - Health & Protection increased year over year but Individual - Protection sales declined.

SLF U.S.' underlying net income was $149 million, which decreased 5% year over year, reflecting soft results at Individual – Protection and Group - Health & Protection.

U.S. group sales of $243 million decreased 22%, reflecting lower Medicare and Medicaid sales in Dental due to large institutional sales in the prior year, partially offset by higher medical stop-loss sales.

SLF Asset Management reported underlying net income of $224.3 million (C$307 million), which increased 4% year over year, attributable to stable results in MFS. Asset Management exited the reported quarter with $0.8 trillion (C$1.072 trillion) of AUM, comprising $618 billion in MFS and $165.9 billion (C$227 billion) in SLC Management.

SLF Asia reported underlying net income of $130.8 million (C$179 million), which grew 19% year over year, driven by solid results at Wealth & asset management and Individual - Protection.

Individual sales of $428 million (C$586 million) jumped 30% year over year. Wealth sales & asset management gross flows of $1.5 billion ($2 billion) increased 24% year over year. New busines

New business CSM of $160.8 million (C$220 million) increased 86.4% year over year, primarily driven by sales in Hong Kong.

Financial Update  

Global assets under management were $1.1 billion (C$1.465 trillion), up 7% year over year.

Sun Life Assurance's Life Insurance Capital Adequacy Test (LICAT) ratio was 142% as of Jun 30, 2024, up 300 basis points (bps) from Jun 30, 2023, level.

The LICAT ratio for Sun Life (including cash and other liquid assets) was 150%, which expanded 20 bps year over year.

Sun Life's return on equity was 11.7% in the second quarter of 2024, which contracted 100 bps year over year. The underlying return on equity of 18.1% expanded 40 bps year over year. The leverage ratio of 22.61% improved 70 bps from Jun 30, 2023, level.

Dividend Update

The company's board of directors approved a quarterly dividend of 81 cents per share. The amount will be paid out on Sep 27, 2024, to shareholders of record at the close of business on Aug 28.

Zacks Rank

Sun Life currently carries a Zacks Rank #4 (Sell).

Performance of Other Insurers

Voya Financial, Inc. VOYA reported second-quarter 2024 adjusted operating earnings of $2.27 per share, which beat the Zacks Consensus Estimate by 3.6%. The bottom line, however, decreased 1.7% year over year. Adjusted operating revenues amounted to $324 million, down 6.6% year over year. The top line missed the Zacks Consensus Estimate by 0.4%.

Net investment income declined 5% year over year to $518 million. Premiums totaled $790 million, up 16.7% from the year-ago quarter. As of Jun 30, 2024, VOYA's assets under management, assets under administration and advisement totaled $861.3 billion.

Reinsurance Group of America, Incorporated RGA reported second-quarter 2024 adjusted operating earnings of $5.48 per share, which beat the Zacks Consensus Estimate by 10.9%. The bottom line increased 24.5% from the year-ago quarter. RGA's operating revenues of $5.1 billion improved 20.3% year over year, driven by higher net premiums, investment income, net of related expenses and other revenues. It beat the consensus estimate by 4.7%.

Net premiums of $3.9 billion jumped 17.5% year over year. RGA deployed $307 million for in-force transactions. Investment income and net of related expenses increased 26.3% from the prior-year quarter to $1.1 billion. The average investment yield increased 23 basis points to 4.65%, primarily due to higher new money rates.

Lincoln National Corporation's LNC second-quarter 2024 adjusted earnings of $1.84 per share beat the Zacks Consensus Estimate by 3.4%. However, the bottom line declined 8.9% year over year. Adjusted operating revenues of $4.5 billion dropped 4.3% year over year in the quarter under review. The top line lagged the consensus mark by 2.7%.

Fee income declined 1.9% year over year to $1.3 billion, which missed the Zacks Consensus Estimate by 2.1%. Insurance premiums of $1.6 billion rose 0.8% year over year. The metric beat the consensus mark by 0.7%. LNC's net investment income of $1.3 billion declined 11.7% year over year and missed the consensus mark by 1.7%. Meanwhile, other revenues fell 5.9% year over year.

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