Sun Life Profits Rise Despite Paying Over $ 140 Million in Pandemic Death Benefits

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The Sun Life Financial logo can be seen at the head office on One York Street in Toronto on February 11, 2019.

CHRIS HELGREN / Reuters

Sun Life Financial Inc. has paid over $ 140 million in life insurance claims due to deaths from COVID-19 as pandemic lockdowns in some international markets continue to hamper in-person sales .

The insurer, which released third-quarter results Wednesday night, said total net income of $ 750 million, or 1.28 per share, compared with $ 681 million, or $ 1.15, in the third quarter of 2019.

In a statement, chief executive Dean Connor said the company has paid more than $ 140 million to families of customers who have succumbed to the coronavirus and has “paid millions” in additional health claims related to the pandemic.

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The increase in revenue was attributable to higher than expected profits and the impact of new business for the company, including an increase of almost 20% from Sun Life’s Asia division.

Insurers use custom profit metrics that remove some investment losses and make other accounting adjustments, and stock analysts who follow companies tend to use them for their forecasting. Sun Life calls its adjusted measure “underlying earnings”.

According to Refinitiv, Sun Life reported underlying earnings of $ 1.44 per share for the quarter, which is above the average analyst estimate of $ 1.28. Shares of the company rose 2.6% 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 international centers of society.

Mr Connor told The Globe in an interview that employees were physically returned to office buildings in a number of markets, including China, Hong Kong, Malaysia and Vietnam.

“These countries have done a good job dealing with COVID-19 in their communities, so our advisers were able to sell face to face, which significantly helped our sales 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 experience different forms of foreclosure, Connor said, and as a result are much further behind.

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While the Philippines was stranded for much of the quarter, sales more than doubled from the second quarter as advisers shifted 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, ”said Leo Michel Grepin, president of Sun Life Asia, on an analyst call. “It had a big impact on sales. , especially in a market where, if you look at our model and the culture, it’s very much based on human relationships and interactions. “

Mr Grepin told analysts he does not expect the Philippines’ economic situation to improve much in the next two quarters. Aside from the country remaining in lockdown, it is also seeing a decline in policy sizes in its life insurance sales.

“You have significant unemployment,” Mr. Grepin said. “There are a lot of people in the Philippines who have lost their jobs or have reduced their discretionary spending capabilities. And so, while we expect to see a continued rebound in our business in the Philippines, we expect a significant headwind in the economic situation – and then also [there is] just the uncertainty about future COVID-19 waves. “

Overall, the company’s total insurance sales were $ 681 million in the third quarter, down slightly from $ 685 million in 2019. In Canada, the use of digital applications has increased. is accelerated, with 91% of retail insurance claims being processed digitally in the neighborhood.

“Long before the pandemic, we made it a priority to invest in digital data and analytics… and this has accelerated over the past year,” said Mr. Connor.

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