Skip to main content

Sun Life Financial CEO Dean Connor speaks at the annual meeting May 10 in Toronto.

MARK BLINCH/REUTERS

Sun Life Financial Inc. reported second-quarter profit of $51-million, down from $408-million a year earlier, as lower stock markets and interest rates continue to chip away at the life insurance sector's profitability.

The company's profits amounted to 9 cents per share, down from 68 cents a year earlier. Analysts had been expecting it to earn roughly 8 cents per share.

Exposure to the stock market cost Sun Life $131-million this quarter, while interest rates shaved a further $196-million off the bottom line.

Story continues below advertisement

U.S. long-term Treasury rates declined 56 to 58 basis points during this latest quarter, according to RBC analyst Andre-Philippe Hardy. The S&P/TSX fell by 6 per cent and the S&P 500 by 3 per cent.

Sun Life warned that if current interest rates persist it could take a further hit of $50-million in each of the next two quarters, due to declines in fixed income reinvestment rates. In addition, it expects that its profits for the period from 2013 to 2015 would be hurt by about $500-million.

Manulife Financial Corp. will report its second-quarter results Thursday morning and analysts are expecting it to post a quarterly loss. The insurer has already signalled that it will be taking a charge relating to its stock exposure and reinvestment rate, and CIBC analyst Rob Sedran expects that the hit will amount to about $750-million.

Sun Life's profits were helped by the fact that it reported an $84-million income tax recovery this quarter, compared to an income tax expense of $63-million a year ago.

The results also received a little lift of $7-million from gains in the value of Sun Life's real estate holdings. The company has a $13.3-billion mortgage portfolio, primarily commercial mortgages (including office, industry, retail and multi-family properties) in Canada and the U.S.

"A prolonged increase in real estate demand will be dependent upon job creation, which continues to lag," the company said.

Sun Life's Canadian operations reported profits of $181-million for the quarter, down from $227-million a year ago, due to equity markets and interest rates. The U.S. business posted a $189-million loss, reversing a year-ago profit of $110-million, while the Asian operations brought in $15-million, half the level of profits they contributed a year ago.

Story continues below advertisement

Sun Life's money manager, MFS Investment Management, earned $67-million, up from $44-million a year ago.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter