Bullboard - Stock Discussion Forum Sun Life Financial Inc T.SLF.P.H

Primary Symbol: T.SLF Alternate Symbol(s): T.SLF.P.C | T.SLF.P.D | T.SLF.P.E | T.SLF.P.G | T.SLF.P.J | T.SLF.P.K | SNLFF | SLFIF | SUNFF | SLF | SNLIF

Financial Services Insurance - Diversified

Sun Life Financial Inc. is a Canada-based international financial services company, which offers asset management, wealth, insurance and health solutions to individual and institutional clients. Its segments include Canada, United States (U.S.), Asset Management, Asia, and Corporate. The Canada segment provides protection, health, asset management and wealth solutions. It also offers a premier... see more

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TSX:SLF - Post Discussion

Sun Life Financial Inc > TD

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Post by retiredcf on Feb 10, 2022 7:34am

TD

This analyst has never been a big fan (see last line) and has a $78.00 target. GLTA

Sun Life Financial Inc.

(SLF-T, SLF-N) C$73.81 | US$58.25

Q4/21: Weak Quarter; Lowering Estimates on Higher P/H Losses Event

SLF reported underlying Q4/21 EPS of $1.53, up 4% y/y vs. our estimate of $1.53 and consensus of $1.52, reflecting strong WM results and tax gains. The lower-than- expected tax rate added $0.20-$0.22/share relative to our forecast. Pretax earnings (excluding MFS) were down 20% y/y and much lower than expected, reflecting significant P/H experience losses associated with COVID-19. Underlying ROE was 15.0% (estimate: 15.0%; target 16%) and BV/share was up 8% y/y. Our 2022E underlying EPS reflects growth of 5% y/y reflecting the DentaQuest deal offset by elevated P/H experience losses.

Impact: NEGATIVE

Key takeaways:

P/H experience losses of $163mm reflected ongoing COVID-19-related mortality and morbidity losses. At $87mm and $45mm in the quarter, mortality and morbidity losses were the highest for which we have records and primarily affected U.S. working-age mortality (US$65mm in Q4/21). Similar to last quarter, yield-enhancement gains were also lower than forecast, while credit experience remains very strong. We now expect experience losses to remain elevated in H1/22E at $80mm-$95mm quarterly vs. gains in H1/21 of $20mm-$44mm.
Asset management underlying earnings were up 15% y/y, reflecting strong market performance, strong net flows in alternative asset management, and positive operating-leverage. However, MFS reported net outflows of US$1.2bln (forecast: outflows US$2bln), reflecting material managed fund outflows and modest mutual fund inflows.
Total company insurance sales were up 13%, reflecting strong Canadian group benefit sales and growth in U.S. medical stop-loss sales, offset by a 14% decline in Asia reflecting lower sales in H.K. and International (COVID-19-related). Our estimates reflect another quarter of weak Asian sales momentum, with a recovery in Q2/22E.

TD Investment Conclusion

The premium valuation that we assign to SLF in setting our target price reflects: 1) lower interest-rate sensitivity (e.g., MFS and Group businesses); 2) industry-leading, very solid capital levels; 3) strong track-record of earnings stability; and 4) two of the company’s more important growth drivers — Asia and the U.S. Group Insurance — support strong growth and higher ROEs. However, the reduction in our estimates and a lower target P/E results in a reduction to our target price. Effective with this report, we are downgrading SLF to HOLD from Buy. We continue to favour MFC over SLF.