Sun Life shares sink after profit disappoints, warns of US challenges (updated)

Sun Life Financial

13/02/2025 17:53

(Adds details from CEO interview in paragraphs 4,5,6,9)
    By Nivedita Balu
       TORONTO, Feb 13 (Reuters) - Sun Life Financial's
 SLF.TO  shares fell about 9% on Thursday after the Canadian
insurer reported quarterly profit below analysts' estimates and
warned its U.S. business could face challenges in 2025.
    The company said its U.S. business faced industry-related
difficulties, resulting in higher claims related to cancer
treatment or other severe conditions in its medical stop-loss
business. 
    The medical stop-loss insurance protects employers from
large claims that may exceed a set limit.
    "What we saw was about the same number of claims that we
would normally see, but we had a few really high claims," CEO
Kevin Strain said in an interview. 
        "It could be coming out of COVID and the public health
emergency where people weren't doing as many checkups as normal,
and the conditions got more severe." 
  
        Strain said Sun Life would boost insurance prices in the
range of about a 2% increase to combat the higher number and
severity of incoming claims.
  
        Executives told analysts they expect some financial
impact on insurance claims could persist for a longer period. 
  
    The U.S. business, which contributes one-fifth of Sun Life's
earnings, recorded a 39% decline in underlying net income in the
fourth quarter. 
    Strain said he was optimistic about the US business and sees
opportunities to grow as its dental business, which it built
through the acquisition of DentaQuest for $2.5 billion in 2022,
is primarily related to kids, an area the Trump administration
has not targeted in the sweep of recent regulatory changes. 
        Sun Life, Canada's second-largest life insurer, earned
C$1.68 ($1.17) per share, falling short of the average estimate
of C$1.78 per share, according to data compiled by LSEG.
  
    "One quarter certainly does not make a trend, but weaker
results out of the U.S. in particular will feed into concerns,"
Scotiabank analyst Meny Grauman said in a note.
    The earnings miss is the second for Sun Life in fiscal 2024,
which was marked by a challenging time for its dental business
in the United States. 
        Its shares were last down 8.5% at C$77.39 in Toronto.  
  
    

 (Reporting by Nivedita Balu in Toronto and Prakhar Srivastava
in Bengaluru; Editing by Rod Nickel and Chris Reese)
 ((Nivedita.Balu@thomsonreuters.com; X: @niveditabalu;))