Sun Life Financial Inc T.SLF

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

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 health and wellness virtual care platform. The U.S. segment provides employee and government benefits in the United States. Its business units include group benefits, dental and in-force management. The Asset Management business group includes MFS and SLC Management. MFS is an asset manager offering a comprehensive selection of financial products and services. The Asia segment consists of two business units: Local Markets and International Hubs. It has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, India and others.

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Sun Life Financial Inc

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Post by retiredcfon Aug 07, 2020 8:27am

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Post# 31377632

TD

Maintain their $58.00 target. GLTA

Sun Life Financial Inc.

(SLF-T, SLF-N) C$53.98 | US$40.54

Q2/20: Solid Result Including MFS Flows & Investment Experience Event

SLF reported underlying Q2/20 EPS of $1.26, up 2% y/y reflecting business growth, yield enhancement gains, and morbidity experience, offset by higher credit charges, higher expenses, and an unfavorable tax settlement ($0.09/share). Reported EPS of $0.88 was lower than underlying mostly reflecting the impact of lower credit spreads and interest rates generally.

Impact: POSITIVE

Insurance sales in Canada were down 22% y/y, reflecting materially lower activity in individual and group businesses. U.S. insurance sales were flat y/y; a solid result in the context of COVID-19. We believe that, the stable result, in part, reflects SLF's highly digitized processes (including virtual enrollment options) as well as temporary fee waivers. Insurance sales in July were running approximately 5% lower than the previous year and wealth sales were 10% higher. While this suggests that conditions improved, we continue to model for modest declines in insurance sales in H2/20.
Similar to MFC, SLF experienced private equity losses and negative marks against the value of investment properties. However, SLF's charges were more than offset by the equity market gains in the quarter. Credit experience was a loss of $58mm comprised of $60mm in downgrades and $24mm in impairments, offset by release of best estimate reserves of $26mm. While we continue to believe that the insurers will report net investment losses (including impairment charges) in 2020, we expect the charges to be manageable.
Management did not provide guidance on the Q3/20 assumption review. This has been the company's pattern for several years. SLF's track record suggests the assumption review will not result in a material gain or loss in Q3/20.

TD Investment Conclusion

The premium valuation that we assign to SLF in setting our target price reflects: a) lower interest rate sensitivity (e.g. MFS and Group businesses); b) industry-leading, very solid capital levels; c) strong track-record of earnings stability; and d) two of the company’s more important growth drivers—Asia and U.S. Group Insurance—should support higher ROEs once conditions stabilize. BV/share was up 4% q/q and the underlying ROE was a strong 13.4%. We continue to rate SLF BUY.