Mixed earnings for insurance giants Sun Life and IA

by David Keelaghan17 Feb 2017
Two more of Canada’s insurance giants have reported earnings for Q4 and 2016, with mixed results.

For Sun Life Financial, the final quarter of the year was somewhat underwhelming, although annual returns improved slightly.

Although reported net income rose from $536 billion in 2015 to $728 billion in 2016, underlying net income fell to C$560 million or 91 cents per share in the fourth quarter, down from $646 million, or $1.05 per share, a year earlier.

On a yearly basis, underlying net income increased to $2.335 billion for 2016, compared to $2.305 billion for 2015.

Industrial Alliance Insurance and Financial Services meanwhile saw a significant spike in reported net income for 2016 of $553.7 million, up from $386.4 million in 2015.

Net income for the fourth quarter was $155.0 million and diluted earnings per common share stood at $1.48. This compares with Q4 2015 net income of $4.2 million and EPS of $0.04.

Sun Life’s below-expectation earnings could in large part be explained by its US business where net income plunged by 45%. This drop was offset by gains in its Asian business, which is becoming a key focus for the firm.

"In 2016, we achieved underlying net income of $2.3 billion, raised our common share dividend twice, and generated 12.2% underlying return on equity," said Dean Connor, president and CEO, Sun Life Financial. "We also generated strong topline growth, increasing insurance sales by 27% and wealth sales by 14% for the year compared to 2015. Total shareholder return was 24% for the year."

IA head Yvon Charest was hugely satisfied with the company’s results as it celebrates its 125th anniversary in 2017.

"2016 was clearly an excellent year for Industrial Alliance and for our shareholders,” he said. "I want to highlight the outstanding results of our retail insurance operations both in Canada and the US, the industry-leading growth of our segregated fund business, and the successful turnaround in gross and net sales by our mutual fund business.”

The company also announced an increase of $0.03 in its quarterly dividend per common share, raising it to $0.35.

Sun Life’s quarterly dividend to be distributed in March will be $0.42 per common share.

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