Mr. Dean Connor reports
SUN LIFE FINANCIAL REPORTS FIRST QUARTER 2012 RESULTS
Sun Life Financial Inc. recorded operating net income of $727-million
for the first quarter of 2012, compared with operating net income of
$472-million in the first quarter of 2011. The company's operating earnings per share were $1.22
in the first quarter of 2012, compared with operating earnings per share of 82 cents in the
first quarter of 2011. Reported net income was $686-million or $1.15
per share in the first quarter of 2012, compared with net income of $438-million or 73 cents per share in the same period last year.
Net income in the first quarter benefited from improvements in capital
markets and continued growth in the company's in-force business. Strong equity
market performance and increased interest rates, particularly in the
United States, contributed $348-million to net income during the first
three months of 2012. Premiums and deposits were a record $25.3-billion, helping to drive assets under management to $494.2-billion as
at March 31, 2012.
"Our results for the first quarter of 2012 reflect both solid underlying
business performance and the impact of favourable equity markets and
higher interest rates as we continue to execute on our refocused
strategy," said Dean Connor, president and chief executive officer.
"As outlined in our March 8 presentation to investors, we continue to
work towards reducing the risks in our business, expanding in Canada,
investing in U.S. growth, building our asset management businesses
worldwide, and expanding distribution and sales of insurance and wealth
products in Asia."
The board of directors of Sun Life Financial today declared a
quarterly shareholder dividend of 36 cents per common share, maintaining
the current quarterly dividend.
While market performance was favourable in the first quarter, the company's
financial results this quarter continue to highlight the impact of
interest rate and equity market volatility on its net income. In order
to assist shareholders in better understanding the company's underlying net
income, it has introduced an additional operating net income measure
to remove certain market-related factors that create volatility in its
results from quarter to quarter under international financial reporting
standards. Operating net income excluding the net impact of market
factors adjusts for the net income impact of changes in interest rates,
equity markets, fair value of real estate properties and actuarial
assumptions driven by capital market movements. The following
sets out the company's operating net income measures for the first quarter of
2012 (after tax):
Operating net income (loss): $727-million
Net equity market impact:
$253-million
Net interest rate impact (including credit spreads and swap spreads):
$95-million
Net gains from increases in the fair value of real estate:
$22-million
Operating net income (loss) excluding the net impact of market factors: $357-million
"In our Canadian operations, sales in individual insurance and wealth
reflect a more profitable sales mix, including Sun Life Global
Investments winning a larger share of business among our advisers. Our group retirement services business reported robust sales of our defined
benefit plan derisking solution, a new and expanding line of
business," Mr. Connor said.
"Our U.S. operations are executing on schedule in expanding our
voluntary benefits platform, with advances in recruiting, product
development and back-office support. Sales in our employee benefits
group grew by 15 per cent over the prior year.
"MFS Investment Management had a strong quarter and continues to expand
its distribution. MFS set a new sales record this quarter with gross
sales of almost $20-billion (U.S.) and asset appreciation from improved
markets driving a 12-per-cent increase in assets under management to $285-billion (U.S.). MFS also announced plans to establish its own sales and
service staff in Australia alongside its local investment team to
expand sales and to deepen customer relationships in the region.
"We are also pleased with progress in our Asian operations, where
individual life sales grew 27 per cent, with growth in all five markets on a
local currency basis. During the quarter, we introduced several
initiatives to expand distribution and grow our asset management
capabilities."
Operational highlights
Investor day 2012 and executive appointments
During the first quarter of 2012, the company held an investor day event to
provide investors with an update on its performance, strategic goals,
financial objectives and plans to grow the business. The company outlined its 2015 objectives to
increase annual operating net income to $2-billion and achieve an
operating ROE (return on equity) of 12 per cent to 13 per cent.
During the first quarter, Mr. Connor also announced several appointments
to the Sun Life Financial executive team:
-
Kevin Strain, president, SLF Asia;
- Mary De Paoli, executive vice-president, chief marketing officer, and
public and corporate affairs;
-
Carolyn Blair, executive vice-president, human resources.
Expanding asset management capabilities in Asia
Sun Life Everbright Insurance Asset Management Co. Ltd. commenced
operations during the first quarter, enabling the company to further strengthen
its position in the asset management market in the region.
Sun Life Global Investments reports strong sales momentum and broader
product shelf
Sun Life Global Investments had a strong RRSP season and improved its
share of total mutual fund sales by Sun Life Financial's career sales
force. As of March 31, 2012, 10 of 11 long-term funds included in the
initial launch in the fall of 2010 were in the first quartile for
performance for the one-year period.
Notable awards
For the third consecutive year, Reader's Digest Trusted Brand consumer
survey voted Sun Life Financial the Most Trusted Insurance Company in
Canada, ranking above 18 other insurance providers based on product
quality, value and understanding customer needs.
Sun Life Hong Kong was named Mandatory Provident Fund Provider
of the Year for 2011 by Benchmark Magazine. Mandatory provident funds are group retirement plans required by the Hong Kong government
to ensure adequate pension coverage.
In India, Birla Sun Life Asset Management was recognized as Best Fund
House by several publications.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions of dollars except for per share amounts)
For the three months
ended March 31,
2012 2011
Revenue
Premiums
Gross $3,391 $3,681
Less ceded 1,317 1,247
Net 2,074 2,434
Net investment income (loss)
Interest and other investment income 1,183 1,115
Changes in fair value
through profit or loss assets and liabilities (1,009) (208)
Net gains (losses) on available-for-sale assets 23 43
Net investment income (loss) 197 950
Fee income 869 819
Total revenue 3,140 4,203
Benefits and expenses
Gross claims and benefits paid 3,283 3,420
Increase (decrease) in insurance contract liabilities (1,163) (177)
Decrease (increase) in reinsurance assets (200) (57)
Increase (decrease) in investment contract liabilities 17 (31)
Reinsurance expenses (recoveries) (1,215) (1,147)
Commissions 347 414
Net transfers to (from) segregated funds 120 208
Operating expenses 871 882
Premium taxes 64 58
Interest expense 89 106
Total benefits and expenses 2,213 3,676
Income (loss) before income taxes 927 527
Less income tax expense (benefit) 208 58
Total net income (loss) 719 469
Less net income (loss)
attributable to participating policyholders 2 4
Less net income (loss)
attributable to non-controlling interests - 3
Shareholders' net income (loss) 717 462
Less preferred shareholders' dividends 31 24
Common shareholders' net income (loss) 686 438
Earnings (loss) per share
Basic 1.17 0.76
Diluted 1.15 0.73
We seek Safe Harbor.
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