Sun Life Financial posted net income of $519 million for the second quarter, down from $595 million for the same quarter last year.
The insurer’s underlying net income was $739 million in Q2 2020, the same as in Q2 2019. The company reported return of equity of 9.4% for the second quarter of 2020 compared to 11% for the same quarter a year earlier.
Higher death claims
"While the pandemic increased death claims in the second quarter, and resulted in elevated credit charges, our underlying growth and well-balanced business mix delivered underlying net income level with prior year,” said Dean Connor, President and CEO, Sun Life in an Aug. 6 statement. “The declines in our reported net income reflect lower interest rates and credit spreads. We saw declines in our insurance sales compared to the second quarter of 2019 reflecting pandemic lockdowns. Wealth and asset management sales grew significantly over the prior year. Sun Life's capital position remained strong and cash flows, liquidity and leverage are healthy."
Connor added that the company’s prior digital investments served the company well during the early stages of the pandemic, enabling clients and advisors to virtually access advice and solutions. “We will continue to accelerate our digital investments to drive greater ease of doing business for clients and to build on our business momentum," he added.
The company’s Canada business reported net income of $117 million, a decline of $31 million or 21% in Q2 2020 compared to Q2 2019. This decrease reflected “unfavourable market-related impacts,” such as interest rate impacts and changes in the fair value of investment properties. This was partially offset by the rise in equity markets, said the insurer.
Underlying net income for Sun Life’s Canada business was $281 million, an increase of $38 million or 16% compared to the same period in 2019.
Canada insurance sales were $151 million in the second quarter of 2020, a decrease of $43 million or 22% compared to the same period in 2019, reflecting lower large case sales in the insurer’s group business, and lower sales in individual insurance as a result of the impact of COVID-19, stated Sun Life. Wealth sales were $2.6 billion, a decrease of $640 million or 20%, reflecting the timing of large case sales in group retirement services business and lower sales in individual wealth.
Sun Life said that during the second quarter, it has continued “to maximize the value we provide our clients by transforming the way we do business, with over 61,000 virtual Advisor-Client meetings in the second quarter and doubling the use of electronic signature options to complete retail wealth transactions.”