Sun Life Financial Inc. has paid out more $140-million in life insurance claims due to COVID-19 deaths, as pandemic-related lockdowns in some international markets continue to hamper face-to-face sales.
The insurer, which reported third-quarter results on Wednesday evening, reported total net income of $750-million, or 1.28 a share, up from $681-million, or $1.15, in 2019′s third quarter.
In a statement, chief executive Dean Connor announced the company has delivered more than $140-million to the families of clients who have succumbed to the coronavirus, and has “paid millions” in additional pandemic-related health claims.
The boost in income was driven by higher-than-expected profit and the impact of new business for the company, including an almost 20-per-cent increase in Sun Life’s Asia division.
Insurers use customized profit measures that strip out certain investment losses and make other accounting adjustments, and the equity analysts who follow the companies tend to use these for their forecasts. Sun Life calls its adjusted measure “underlying earnings.”
Sun Life reported underlying earnings in the quarter of $1.44 a share, which beat an average of analyst estimate of $1.28, according to Refinitiv. The company’s stock rose 2.6 per cent on Thursday to close at $56.40.
Sun Life operates in seven markets in Asia and reported “underlying net income” for those markets of $164-million in the third quarter, up from $138-million in the third quarter of 2019, driven by new business in the company’s international hubs.
Mr. Connor told The Globe in an interview that employees have physically returned to office buildings in a number of markets including China, Hong Kong, Malaysia and Vietnam.
“These countries have done a good job managing COVID-19 in their communities and as a result our advisers have been able to sell face-to-face, which has helped our sales significantly in the third quarter,” he said.
Other Asian countries such as the Philippines, India and Indonesia have not seen similar results as they continue to go through different forms of lockdowns, Mr. Connor said, and as a result are much "further behind.”
While the Philippines remained on lockdown for much of the quarter, sales more than doubled from the second quarter as advisers pivoted to digital tools.
“[The Philippines] is probably one of the worst health crises in Asia and also one of the strictest movement-restriction environments in Asia as well," Leo Michel Grepin, president of Sun Life Asia, said on an analyst call. "That’s had a material impact on sales, especially in a market where, if you look at our model and the culture, it’s very much based on relationships and human interactions.”
Mr. Grepin told analysts he doesn’t anticipate the Philippines’ economic situation to get much better over the next couple of quarters. In addition to the country remaining in lockdown, it is also seeing lower policy sizes in its life insurance sales.
“You’ve got significant unemployment,” Mr. Grepin said. “You’ve got a lot of people across the Philippines who have lost their jobs or have reduced discretionary spend capabilities. And so, while we expect to see a continued rebound of our activities in the Philippines, we do expect significant headwind from the economic situation – and then also [there is] just the uncertainty with regard to future waves COVID-19.”
Over all, total insurance sales for the company were $681-million in the third quarter, slightly down from the $685-million in 2019. In Canada, use of digital applications has been accelerating with 91 per cent of retail insurance applications being processed digitally in the quarter.
“Well before the pandemic, we made it a priority to invest in digital data and analytics ... and that has accelerated over the past year,” Mr. Connor said.
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