After nearing the $1 billion mark in the previous two quarters, Sun Life Financial’s reported net income finally passed this milestone. In the third quarter ended Sept. 30, 2021, net income reached $1.02 billion, equal to a 36 per cent increase from the same quarter in 2020.
President and CEO Kevin Strain explains the strong results: “We continue to see positive momentum, enabled by digital tools and solutions, at a time when several of our markets are impacted by COVID-19.” He points out that last quarter’s performance was driven by “strong wealth and asset management results.”
He also highlights the impact of the shift to fee-based, capital-light businesses. As a result, the company is raising its medium-term financial objective for underlying ROE to at least 16 per cent. The current target is between 12 and 14 per cent.
The underlying return on equity was 15.6 per cent in Q3, an improvement from 2020 (when it was 15.1 per cent). ROE was 17.6 per cent in Q3 2021, compared with 13.5 per cent in the same period of 2020.
In the same release where it presented its quarterly results, issued on Nov. 3, Sun Life announced that it appointed its first Chief Sustainability Officer. As part of the ongoing COP26 in Glasgow, the company stated that it intends to achieve carbon neutrality by 2050.
In Canada, reported net income was $393 million, up 2 per cent over 2020. The company attributes this earnings stability “to the favourable market-related impacts from changes in the fair value of investment properties, partially offset by a par allocation adjustment.”
In the U.S., net income was $46 million, versus a loss of $113 million in Q3 2020. Net income in Asia was $288 million, up 22 per cent from Q3 2020.
Asset Management posted net income of $301 million in the third quarter of 2021, or growth of 20 per cent over the same period in 2020.
The impact of foreign exchange eroded net income by $41 million.
Sales slump
Insurance sales were $628 million in the third quarter, down from $681 million reported in Q3 2020.
Incidentally, insurance sales have increased in Canada but declined elsewhere. Insurance written in Q3 2021 in Canada totalled $182 million, up 24 per cent from the same period in 2020.
In the United States, insurance sales fell to $199 million (-13 per cent) in the third quarter. In Asia, insurance sales were $247 million (-19 per cent). Sales were down in Hong Kong, but up in the Philippines and India.
Wealth management
Sales of wealth management products totalled $50.7 billion in the third quarter. This represents a 4 per cent decrease from $52.7 billion in the same quarter last year.
In Canada, sales of wealth management products were $5.9 billion, down 13 per cent compared with the same quarter in 2020. The company attributes this result to lower defined contribution sales in Group Retirement Services.
Asia fared better: Sales of wealth management products surged by 48 per cent year over year to $4.1 billion. The company links this performance to mutual fund sales in India, money market sales in the Philippines and the pension business in Hong Kong.
For the Asset Management segment, sales of wealth management products were also down from the previous year, at $40.7 billion (-6 per cent).
Documentation provided by the company indicates that 42,100 employees and 140,900 advisors work in offices in the 27 markets where Sun Life Financial and its subsidiaries operate. Total assets under management are $1.39 trillion.
