Sun Life Financial (TSX:SLF)(NYSE:SLF) is Canada’s second largest life insurance company. The company delivered solid financial results in 2020. Underlying net income grew 5% to over $3.2 billion, and underlying return on equity (ROE) increased to 14.4%. Reported net income declined to $2.4 billion, and reported ROE was 10.8%, reflecting market volatility due to the COVID-19.
Assets under management (AUM) at Sun Life have reached a milestone of $1.25 trillion. The company’s insurance sales were on par with 2019, while wealth sales grew 39% compared to the previous year. The company’s underlying net income grew through the pandemic for two reasons illustrated below.
Balanced and diversified earnings growth
First, Sun Life maintained tight execution of the company’s strategy that provides balanced and diversified earnings growth, but with lighter capital needs than many competitors.
Second, the extraordinary fiscal and monetary support provided by governments around the world has helped bridge individuals and businesses across the valley of economic decline caused by the pandemic. These two factors helped it report higher profits despite the pandemic.
Further, Sun Life continues to hit the mark on the company’s medium-term objectives on a five-year basis. The company’s capital and cash positions remain healthy and, along with a low leverage ratio, provides flexibility and opportunities for future capital deployment.
Sun Life’s five-year total shareholder return (TSR) of 9.6% compound annually puts it in the top quartile among global industry peers.
Leader in wealth solutions
In addition, the company is a leader in insurance and wealth solutions in Canada. In 2020, the company extended access to virtual consultations with physicians and nurses to over half a million Canadians through the company’s Lumino health platform.
Sun Life also provided clients with direct booking access to other health practitioners through the company’s GOrendezvous scheduling software.
In asset management, Sun Life’s investment arm celebrated a 10-year milestone as a trusted asset management firm, growing AUM to $33 billion. In the company’s group retirement services segment, the company launched a new tool to help clients evaluate investment choices through an environmental, social, and governance (ESG) lens.
Virtual enrollment tools
In a year when most people worked remotely, Sun Life’s group benefits clients benefited from the company’s suite of virtual enrollment tools as well as the rollout of the company’s new state-of-the-art global claim system, a key part of Sun Life’s new disability and absence management offering. In the company’s medical stop-loss business, Sun Life helped clients save millions in health costs with the company’s tools.
SLC Management, a subsidiary of Sun Life’s asset management division, recently completed two key acquisitions that extended the company’s platform of alternative investment solutions for clients. In July 2021, Sun Life acquired 80% of InfraRed Capital Partners, a London-based global infrastructure investment manager.
Alternative credit investment manager
In October 2021, Sun Life announced the acquisition of a majority stake in Crescent Capital Group, a Los Angeles-based global alternative credit investment manager, which closed in early January 2021.
This addition brings SLC Management’s AUM to $145 billion on a pro forma basis and provides clients with an attractive range of alternative investment solutions in a lower interest rate environment.