Two Upgrades Desjardins Securities analyst Doug Young is maintaining a “constructive” outlook on the Canadian insurance sector heading into third-quarter earnings season.
However, he warns investors “the ride could be bumpy in light of various political and macro risks in the short term.”
“With all four lifecos reporting results within a 24-hour period, and given we expect there could be lots to dig through, this will be an interesting reporting season,” he said. “For instance, we suspect weather events likely impacted MFC’s and GWO’s P&C retrocession businesses, a steepening yield curve may adversely impact MFC’s results, 3Q is when SLF and MFC do deeper dives on actuarial assumptions and IAG typically provides guidance on its 4Q actuarial review. But excluding all of this, we expect decent core results.”
Mr. Young is projecting a 6-per-cent year-over-year increase in core earnings per share on average, but he thinks headline numbers will likely be “negatively impacted by equity market movements, URR assumption changes and recent catastrophe (CAT) weather impacts on reinsurance businesses (for MFC and GWO).”
After adjusting his forecast and releasing his 2023 estimates, Mr. Young raised his target for Sun Life Financial Inc. to $76 from $72 with a “buy” rating. The average is $73.29.
Elsewhere, TD Securities analyst Mario Mendonca raised his Sun Life target to $77 from $73 with a “buy” recommendation.