Skip to main content

Sun Life Financial Inc. has warned of a potential slowdown in sales in its mainland China and Hong Kong businesses as it implements daily health monitoring of its employees in the region and extends grace periods on payments for customers affected by the coronavirus.

Sun Life chief executive officer Dean Connor told analysts on a conference call Thursday that the company “did not see a material impact” on Hong Kong and Chinese sales in January owing to the virus outbreak, but expects to see “some slower sales and modestly higher claims.”

Employees and advisers from both Sun Life Hong Kong and Sun Life Everbright in China are following “prescribed regimes” that include working from home and reporting their health status on a daily basis to the company. The company has also imposed a ban on business travel.

As well, the insurer announced a number of changes in January for clients who are diagnosed with the coronavirus- now officially known as COVID-19 – such as accelerating claim payments for patients and extending the grace period for premium payments for those who have contracted the virus. The coronavirus has killed more than 1,300 people in China.

While the number of claims the insurer expects to see depends on “the scale of the epidemic," Leo Grepin, the newly appointed president of Sun Life Asia, said he doesn’t expect to see a “significant impact on health-insurance claims.”

“A lot of the expenses that are flowing through the system in the economies in Asia are getting captured by the public system,” Mr. Grepin said during the call with analysts. “If you look at Hong Kong and China, the patients are getting sent to public hospitals. … Obviously, if things deteriorate rapidly, you could see mortality claims increased in a material way, but I think it’s much too early to tell where this is going to end.”

Both Sun Life and competitor Manulife Financial Corp. have offices in the Wuhan region, the epicentre of the COVID-19 outbreak. Anil Wadhwani, CEO of Manulife Asia, said Thursday that the company has temporarily shut that office, which contributes “a very small proportion of the China sales.”

“Our pre-eminent focus has been the safety of our people, as well as our agents,” Mr. Wadhwani said. “We have taken enhanced steps to ensure we are able to service customers during these times. In the short term, it will cause a bit of disruption in terms of people flow.”

Manulife’s CEO Roy Gori said it is “too early” to say what impact the coronavirus will have on the company’s overall businesses in Asia.

“We are watching the situation very closely, as is everyone else that has a business in that part of the world,” Mr. Gori said in an interview. “From a forecast perspective … it’s way too early to make any predictions on how that will pan out. "

Over the past year, the two Canadian insurers – which both reported fourth-quarter earnings Wednesday evening – have seen strong momentum in their Asian markets. At Manulife, profits from Asian operations made up more than one-third of overall earnings in the quarter, and were 70 per cent greater than the profit from Canadian operations.

Manulife’s core earnings in Asia were $494-million in the 2019 fourth quarter, up 7 per cent from the prior year, although the rate of growth was lower than what the company was targeting. The shortfall was largely attributed to a decline in Japanese sales owing to a change in tax regulations for corporate-owned life-insurance products.

Sun Life isn’t as reliant on Asia, but the region accounted for nearly 20 per cent of Sun Life’s fourth-quarter profits and contributed more to its bottom line than U.S. operations did.

Over all, Sun Life Financial reported fourth-quarter net income of $719-million, or 1.22 cents a share, up from $580-million, or 96 cents, in 2018’s fourth quarter.

Manulife Financial reported fourth-quarter net income of $1.2-billion, or 61 cents a share, compared with $593-million, or 28 cents, in 2018’s fourth quarter.

Report an error

Editorial code of conduct

Tickers mentioned in this story