Sun Life Financial Inc.’s fourth quarter and full year earnings climbed as stronger sales, improved market conditions and a restructuring move buoyed results.
The Toronto-based insurer’s net profit on continuing operations, which excludes the volatile U.S. annuities business it sold last year, was $571-million or 93 cents a share, compared with $284-million or 47 cents in the same period last year.
Sun Life’s operating profit from continuing operations, which measures results without some accounting adjustments and other considerations, rose to $642-million from $333-million at the same point in 2013. This amounted to $1.05 cents a share in the quarter, up from 56 cents, exceeding analysts’ estimates of 68 cents.
Sun Life’s fourth quarter was also aided significantly by a reduction in financing costs for a closed block of life insurance in the U.S. This included a $290-million gain as the insurer restructured a reinsurance arrangement. The company expects to see further financial gains in future quarters.
For the full year, Sun Life’s net profit from continuing operations of $1.7-million, compared to $1.4-million it posted 2012. The insurer benefited from rising equity markets gains on both sides of the border.
“Taken together, the significant changes in the mix of new business, disciplined product action and strong demand across the four pillars, are all contributing to business momentum,” said Sun Life’s chief executive officer Dean Connor of the year’s results.
Assets under management reached $640-billion at the end of the year, up by $107-billion in the 12-month period.
MFS Investment Management, the insurer’s Boston-based asset manager, set a new record for its assets under management, up to $413-billion (U.S.) and grew its market share in the fiercely competitive U.S. asset management industry. The company attributed these gains to market appreciation, solid investment performance and strong sales.
The insurer’s Asian operations are a big focal point for investors and insurance and wealth sales climbed in the fourth quarter in many of the countries in which Sun Life operates. But profits for the region were down to $42-million (Canadian) in the period, from $50-million last year.
Sun Life expanded into Malaysia and Vietnam last year and “both operations are off to a strong start,” Mr. Connor said.
In Canada, Sun Life’s sales of individual insurance policies reached $87-million, a 34-per-cent increase over the forth quarter of 2012. The insurer’s individual wealth sales, which include mutual funds, were up 31 per cent to $1.1-billion in the quarter.
Sun Life’s stock climbed by more than 40 per cent in 2013, but has not made gains so far this year. The stock closed at $37.53 on Wednesday, up 37 cents.
Canada’s other two largest life insurers, Manulife Financial Corp. and Great-West Lifeco Inc. will report their quarterly results on Thursday.