Market MoversOn the Rise Sun Life Financial Inc. rose in the wake of reporting better-than-expected quarterly profits after the bell on Monday, helped by growth at its wealth and asset management unit and higher fees.
The insurer, however, reported a fall in underlying earnings hurt by weakness in the United States and fewer sales of personal health insurance.
Sunlife has been diversifying its business across the globe and expanded its U.S. footprint with the US$2.5-billion acquisition of DentaQuest last year.
Sales of dental insurance in the U.S. fell 75 per cent in the reported quarter hurt by the impact of Medicaid renewal following the end of the public health emergency and investments in the Advantage Dental+ business, Sun Life said.
“The dental business reported middling results this quarter... short-term volatility is a part of this business, from a long-term perspective, the investment should be positive,” Morningstar analyst Suryansh Sharma said.
The company said it had extended its Teledentistry.com partnership to DentaQuest in the U.S. and expects about 3.5 million people across 20 states access to oral and dental care.
The results follow those of bigger rival Manulife , which also beat earnings estimates, boosted by insurance sales in Asia and higher returns on investment amid rising interest rates.
Sun Life said underlying earnings from its U.S. segment were down 19 per cent. Underlying net income from wealth and asset management rose 9 per cent to $457-million.
The insurer posted underlying net income of $930-million, or $1.59 per share, for the three months ended Sept. 30, compared with $949-million, or $1.62 per share, a year earlier.
Analysts were expecting $1.57 per share, according to LSEG estimates.
In a research note released before the bell, Scotia Capital analyst Meny Grauman said: “After a wave of adjusted EPS beats across peers in Q3, SLF’s in-line quarter seems like an underwhelming way to close out insurance reporting season. That said, there were notable positives here including only a modestly lower reported EPS number, as well as a very strong performance in Asia driven by big sales in Hong Kong and the lifeco’s high net worth business. When combined with the fact that SLF shares have materially lagged the group heading into reporting season, we see upside here especially when considering that core ROE came in at a peer-high of 17.7 per cent this past quarter. More importantly, it is set to climb above 18 per cent next year thanks in part to an ongoing 3 per cent NCIB. We acknowledge that SLF’s U.S. unit missed expectations this quarter and adjusted earnings there are down not just sequentially but year-over-year as well. However, much of the pressure on earnings here is temporary and includes Medicaid redeterminations and elevated investments in Advantage Dental+.”