Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
Key Morningstar Metrics for Sun Life Financial
What We Thought of Sun Life Financial’s Earnings
Sun Life Financial SLF reported strong all-around numbers in the first quarter as underlying net income came in at C$1.05 billion, or C$1.82 per share, during the quarter, which was 21% higher compared with the previous year. The firm reported an adjusted return on equity of 17.7% for the first quarter.
Why it matters: All major product segments of the company had solid performance during the quarter, including asset management, group insurance, and individual insurance.
Assets under management expanded by around 6% year over year to C$1.55 trillion during the quarter. Profitability in wealth and asset management operations was 19% higher due to higher fee income and operating leverage in the business.Profits grew by 18% year over year in the group insurance segment, due to business growth and favorable experience in Canada and the US dental business. Individual protection profits expanded by 20% year over year, driven by business growth and improved mortality experience in Canada.
The bottom line: We are maintaining our C$72 per share fair value estimate for no-moat-rated Sun Life. We continue to believe the shares are slightly overvalued.
Higher interest rates and buoyant capital markets have been a tailwind for the company in recent quarters, resulting in higher investment earnings and AUM. We would note, though, that a correction in capital markets or lower interest rates would be a net negative for the company.
Key stats: Sun Life increased its quarterly dividend by 5% to C$0.88 per share from C$0.84 per share. The increased dividend represents a 4% dividend yield relative to the current stock price.
The company remains robust from a financial standpoint, with its LICAT ratio at 149% and its financial leverage ratio at a comfortable 20.1% as of the end of the first quarter of 2025.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.