Sun Life reports Q1 net income of $400M; down from $513M last year

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TORONTO – Sun Life Financial Inc. (TSX:SLF) has reported a drop in first-quarter net income as increases in claims and insurance contract liabilities offset a big increase in revenue from premiums, fees and investment income.

The insurance and wealth management company reported after markets closed Tuesday that it had net income of $400 million or 65 cents per diluted share in the three months ended March 31, down from $513 million or 85 cents per share in the same year-earlier period.

Revenue from premiums, fees and investment income totalled $6.46 billion, compared with $3.79 billion in the year-earlier period.

However, the company said gross claims and benefits paid rose to $3.2 billion from $2.9 billion,while insurance contract liabilities rose to $2.23 billion from $222 million.

Operating net income from continuing operations, which excluded the sale of its U.S. annuities business and some U.S. life insurance business, was $454 million or 74 cents per share, compared with $448 million or 75 cents per share in the first quarter of 2013.

“Sun Life reported strong underlying results in the first quarter, with a 14 per cent increase in underlying net income to $440 million compared to the same period last year reflecting growth across our four strategic pillars,” president and CEO Dean Connor said in the company’s earnings release.

“Our investments in organic growth across all four pillars are delivering results, with double-digit growth in insurance and wealth sales and record levels of assets under management.”

In a note issued shortly after the earnings were released, Barclays Capital analyst John Aiken said he estimated Sun Life’s core earnings at 72 cents per share, well above consensus estimates of 66 cents.

“Sun’s earnings were quite solid and far exceeded the market’s expectations, showing both top line growth and strong contributions from each of the segments,” Aiken wrote.

“We have very few complaints and we would anticipate that the results will be richly rewarded by the market tomorrow.”

Sun Life Financial offers a diverse range of protection and wealth products and services to individuals and corporate customers in the Canada and the United States, as well as in the United Kingdom and Ireland and throughout Asia, including China, Hong Kong, the Philippines, Japan, Indonesia, India and Australia.

As of March 31, 2014, it had total assets under management of $671 billion, up 18 per cent from a year ago.