Sun Life Financial Inc. SLF-T chief executive officer Kevin Strain is optimistic the insurer’s Asian operations will bounce back even further in 2023 as Hong Kong’s border with mainland China reopens and its new bancassurance deal in the city takes hold.
“The border crossing is such an important part of the Hong Kong economy, so as it reopens, we expect to see a lift in those sales over time,” Mr. Strain said in an interview with The Globe and Mail. “Now, that will take some time to see those results as we meet with clients and see the sales come through, but eventually we do expect to see it reigniting the Hong Kong economy.”
The boost in insurance and banking sales will also come from a new 15-year bancassurance partnership in Hong Kong with Dah Sing Bank DHSBF, as well as an extension to an existing bancassurance partnership in Indonesia, he said.
The Hong Kong deal, which was a result of a 10-year search for a bank partner in the area, is expected to close later this year and will allow Sun Life to exclusively sell life insurance services to Dah Sing Bank’s 570,000 retail banking customers.
Canada’s second-largest insurer reported net income of $951-million or $1.62 a share in 2022′s fourth quarter. That is a 12-per-cent drop from $1.07-billion or $1.83 a year earlier.
However, underlying net income, which strips out investment losses and makes other accounting adjustments, was up 10 per cent to $990-million from $898-million in 2021.
Sun Life’s Asian operations had underlying net income of $152-million, a 17-per-cent increase from the year prior.
Mr. Strain said part of that growth was because of fewer mortality claims in Asia in the quarter, compared to the year prior, which had a surge in COVID-related claims. The region’s overall insurance sales increased by $376-million (not including China and Hong Kong), up 9 per cent year-over-year.
The insurer’s overall decline in net income was partly because of unfavourable equity markets throughout 2022, particularly in its U.S. asset manager, MFS Investment Management, which had about $16.1-billion in money withdrawn by clients from investment funds.
Sun Life’s alternative asset manager, SLC Management, which recently acquired a majority stake in U.S.-based Adviser Assert Management, had $3.5-billion in fund sales as investors looked for opportunities outside traditional stock indices. Mr. Strain said investors were drawn to real assets – such as real estate and infrastructure, as well as private fixed income.
Offsetting market declines was Sun Life’s DentaQuest purchase last year, which has continued to expand into the U.S. dental market. The company, which is one of the largest providers of Medicaid dental benefits, added four new dental offices in Florida during the fourth quarter.
Overall, the U.S. market reported underlying net income of $240-million for the fourth quarter, a major jump from $72-million in the year prior.
In addition to the DentaQuest deal, the region improved in its group benefits business that, similar to Asia, has had an improvement in mortality numbers with lower COVID-related claims.
Clare O’Hara