The insurer, which along with Manulife Financial reported first-quarter earnings on Wednesday, is in the midst of downsizing about 15 per cent of its office space throughout North America as it prepares for employees to return to work.
As part of its quarterly earnings, Sun Life reported a $57-million restructuring charge related to “redefining the role of the office.”
Sun Life president Kevin Strain told The Globe and Mail that the company had already been working on an “agile basis” pre-COVID-19, and had been in the process of tracking floor usage throughout multiple offices in both Canada and the United States.
“We were probably already running with too much floor space before COVID hit, and having lived through the last 15 months of a very agile and virtual working [environment], we already know we can give up that space,” said Mr. Strain, who will be taking over as CEO in August.
In addition to terminating lease space, the restructuring charge includes redesigning current office buildings for when employees return, said Mr. Strain. For example, the company is installing more virtual meeting capabilities to integrate people who are working from home with team members sitting together in the office.
As vaccinations begin to accelerate across Canada, the exact timing of when employees will come back to Sun Life’s Toronto headquarters has not been determined. But the company has begun to plan return-to-work strategies geared toward local market conditions, CEO Dean Connor said in an interview.
Already the company has seen employees return to offices in both Vietnam and Hong Kong and will see employees return to offices in Britain “shortly.”
In North America – where COVID-19 cases have continued to rise in recent months – Mr. Connor says smaller groups of employees could begin to return later this summer, with Canada not returning any sooner than September depending on case numbers in local regions.
Sun Life will begin its rapid COVID-19 testing project with essential workers at its office in Waterloo, Ont. The initiative is being done through a partnership with Toronto-based Creative Destruction Lab, a co-operative, not-for-profit organization which has begun pilot projects for COVID-19 screening at 12 workplaces across Canada.
During analyst calls on Thursday, both Mr. Connor and Manulife CEO Roy Gori expressed their support for colleagues in India, as well as the Philippines, countries that continue to see severe case numbers. But the two CEOs said it was too early to tell whether there would be any material impact on the company’s operations.
Sun Life Financial reported first-quarter “underlying” income of $850-million or $1.45 a share, up from $770-million or $1.31 a share in 2020′s first quarter.
Manulife Financial reported first-quarter “core earnings” of $1.6-billion or 82 cents a share, compared with $1.03-billion or 51 cents in 2020′s first quarter. At the same time it reported a net income – a measure that excludes some costs associated with their performance – of $783-million, down from $1.2-billion, a year prior.
“While the overall impact of higher interest rates is positive over the long term for our company, higher risk-free rates and a steepening yield curve within North America impacted net income in the quarter,” Mr. Gori said.
Manulife saw strong investment flows into its asset-management business, recording net inflows, or sales, in its Canadian division of $4.5-billion in the first quarter, compared with sales of $2.8-billion for the same quarter last year. In the United States, net inflows were $4.2-billion compared with redemptions of $200-million in the first quarter of 2020.
“The biggest trend that we saw, which you also see more broadly across the industry, is our retail flows were really very solid,” Mr. Gori said in an interview. “What’s driving that is that we see folks looking again to diversify and balance their portfolios and they’re also looking to see how they can use any of their idle cash that may have been sitting on the sidelines to ensure that they get the best return possible.”
The company also reported a $115-million restructuring charge, but did not disclose the reason.