Both Sun Life and its clients need to reposition their views of the company as not just an insurance business, but also an investment management company that delivers on many fronts, says the company’s president and CEO. 

“That concept of 50-50 is a good place to land because insurance can benefit from asset management and asset management can benefit from insurance and we can drive better returns for both parts of the organization,” Kevin Strain told the recent virtual Scotiabank Financials Summit Sept. 9. 

Strain said his predecessor, Dean Connor, left a legacy that he would like to build on to help positively change the view some have of Sun Life.

He said Connor, who retired on August 6, was very deliberate in how Sun Life wanted to allocate its capital and take advantage of mega-trends like the emergence of the middle class in Asia, the importance of the alternative asset space, the increase of health insurance in the U.S., as well as shifting its business to less risk, more capital and more fees. 

He also ensured that the focus was no longer on “customers,” but rather on “clients.” On top of that, Connor concentrated on people, execution and delivery of services, said Strain. 

Alternative asset management 

Now, Strain said it’s important for the company to make the insurance-asset management connection to deal with issues like long-term liabilities and growth in the alternative asset management space.

The company has seen growth in many areas, including life insurance sales in Asia and Canada and the U.S. benefit business, he said. Sun Life has also invested heavily into digital tools, particularly its tech stack, determining how its information technology and the rest of its businesses operate more closely, as well as giving clients the experience they expect. Maintaining these three buckets will go far in adding to the company’s sustainability as well as understanding clients by getting more feedback from them on how they make their decisions, said Strain.

Sun Life reported net income attributed to common shareholders of $900 million for the second quarter of this year, an increase of 73.4 per cent from the same period in 2020, making a return on equity value of 16.3 per cent. Insurance sales rose 29.8 per cent in Canada and 34.6 per cent in Asia. 

There are also other challenges ahead, said Strain, mainly stemming from the COVID-19 pandemic.

Governments have run up large deficits to keep the economy moving during the different waves of the illness. These deficits will require funding over the longer term and chances are interest rates will continue to be low and tax rates will rise to help pay for them, said Strain.

Stronger global footprint 

“We think we’re well aligned for that because MFS [Investment Management] obviously benefits from low interest rates, equity rates and a stronger global footprint, great performance; they’re investing with capability and … the alternative asset management business is built for a low-interest rate environment,” said Strain. “So we think we’re well-placed for that new economic reality coming out of COVID.”

A positive aspect of the illness has been a growing acceptance of digital in the business. While clients will want to meet face-to-face with advisors in the future, they will also want a significantly larger digital experience. One of the biggest changes in the industry as a whole has been the acceptance of e-signatures, he noted. 

Another progressive stance taken by clients has been asking their advisors more about products that are environmentally sustainable and include diversity and inclusion as part of their package, said Strain.