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1. Company Snapshot

1.a. Company Description

Sun Life Financial Inc., a financial services company, provides insurance, wealth, and asset management solutions to individuals and corporate clients worldwide.It offers term and permanent life, as well as personal health, dental, critical illness, long-term care, and disability insurance products.The company also provides reinsurance products; investment counselling and portfolio management services; mutual funds and segregated funds; trust and banking services; real estate property brokerage and appraisal services; and merchant banking services.


It distributes its products through direct sales agents, managing and independent general agents, financial intermediaries, broker-dealers, banks, pension and benefits consultants, and other third-party marketing organizations.The company was founded in 1871 and is headquartered in Toronto, Canada.

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1.b. Last Insights on SLF

Sun Life Financial Inc.'s recent performance was driven by strong Q3 earnings, surpassing estimates with a 3.20% earnings surprise and 5.19% revenue surprise. The company's results reflect robust business growth, increased net investment results, higher fee income, and in-force business growth, offset by escalated expenses. Additionally, Sun Life reported record assets under management (AUM) and robust earnings per share (EPS) growth, with a 52-week high reached in November 2024. The company's focus on Asia operations, growing asset management businesses, and scaling up and integrating U.S. operations are key drivers of its growth.

1.c. Company Highlights

2. Sun Life's Q3 2025 Earnings: A Mixed Bag

Sun Life reported a decent Q3 2025, with underlying EPS coming in at $1.89, beating analyst estimates of $1.85. The company's underlying ROE was 18.3%, and book value per share grew 3% quarter-over-quarter. Revenue growth was driven by strong performance in Asia and Canada, with the Asia business posting record underlying net income of $226 million, up 32% year-over-year. However, the U.S. business continued to face challenges, with underlying net income down 34% from the prior year due to unfavorable insurance experience in group and dental.

Publication Date: Nov -07

📋 Highlights
  • Strong Global Earnings Growth: Sun Life reported underlying EPS of $1.86, up 6% YoY, with underlying ROE at 18.3% and book value per share rising 3% QoQ.
  • Asia Outperforms with Record Net Income: Asia generated $226M underlying net income, up 32% YoY, driven by 20% new business CSM growth and strong protection sales in six markets.
  • U.S. Business Challenges: Sun Life U.S. incurred $107M underlying net income, down 34% YoY, due to unfavorable insurance experience in health & dental (50% earnings decline) and structural healthcare shifts.
  • Capital Strength and Shareholder Returns: Maintained a 154% LICAT ratio, announced a $0.92/share dividend (up $0.04), and repurchased $400M in shares during Q3.
  • Asset Management Stabilization: MFS saw net outflows of $0.9B (lowest since 2021) and $12.9B institutional gross sales, offset by 15% growth in SLC Management underlying net income ($54M).

Segment Performance

The Asia business was a standout, with double-digit growth in protection sales in six markets and new business CSM growing 20% year-over-year. In Canada, individual protection sales were strong, driven by solid demand for participating life policies. The U.S. business, however, was impacted by structural changes in the healthcare system, leading to higher claims frequency and cost. As Kevin Strain noted, "We continue to navigate the industry challenges in our U.S. business, which performed below our expectations this quarter."

Asset Management

Sun Life's asset management businesses, SLC and MFS, performed well, with fee-earning assets under management growing 9% year-over-year. MFS saw net outflows of $0.9 billion, the lowest since 2021, and underlying net income was down 1% year-over-year. SLC Management generated underlying net income of $54 million, up 15% year-over-year.

Valuation

At the current price, Sun Life trades at a P/B Ratio of 1.88, which is reasonable given the company's strong capital position and dividend yield of 4.12%. The ROE of 12.77% is also respectable. Analysts estimate revenue growth of 7.6% next year, which could support the current valuation multiple.

Outlook

The company's guidance for 2026 is uncertain, particularly in the U.S. business, where the impact of structural changes in the healthcare system is still being felt. However, the company's diversified business model and strong capital position provide a foundation for long-term growth. As David Healy noted, "We're confident in our plans and positioning, with a great platform, distribution network, and customer relationships."

3. NewsRoom

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Sun Life U.S. named a Top Place to Work by the Boston Globe for eighth consecutive year

Dec -04

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Joshua Williams receives Health Access Hero Award from Sun Life and DentaQuest for addressing food insecurity across South Florida

Dec -04

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How Investors May Respond To Sun Life Financial (TSX:SLF) CA$1 Billion Tier 2 Debenture Offering

Dec -04

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Is Sun Life Still Attractive After Recent Asset Management Expansion and Price Pullback?

Dec -03

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Boston Celtics deliver on dunks in November to raise $125,000 for #SunLifeDunk4Diabetes

Dec -03

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Sun Life Financial (TSX:SLF): Assessing Valuation After Recent Share Price Pullback

Dec -03

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Posthaste: The hidden secret to retirement savings

Dec -03

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Sun Life Global Investments' Oricia Smith Celebrated Among Canada's Top 50 Trailblazing Women in Wealth

Dec -02

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.20%)

6. Segments

United States (U.S.)

Expected Growth: 4.0%

The U.S. segment is expected to grow slightly below the global average due to intense competition and potential regulatory changes. However, the demand for health and wellness programs is increasing, supporting a stable growth rate.

Canada

Expected Growth: 4.2%

The Canadian segment is expected to grow in line with the global average. The demand for insurance and wealth management products remains steady, and Sun Life's established market position supports this growth.

Asia

Expected Growth: 6.0%

The Asia segment is expected to outperform the global average due to the region's strong economic growth, increasing middle-class population, and rising demand for insurance and wealth management products.

Corporate

Expected Growth: None%

None

Asset Management

Expected Growth: 3.8%

The Asset Management segment is expected to grow slightly below the global average. While the industry is subject to market fluctuations, Sun Life's diversified asset management offerings and strong distribution channels support a relatively stable growth rate.

Consolidation Adjustments

Expected Growth: None%

None

7. Detailed Products

Life Insurance

Provides a financial safety net for loved ones in the event of death, with options for term life, permanent life, and universal life insurance.

Health Insurance

Offers coverage for medical expenses, including hospital stays, surgeries, and prescription medications.

Investments

Provides a range of investment products, including mutual funds, exchange-traded funds (ETFs), and segregated funds.

Retirement Savings

Helps individuals save for retirement through registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs).

Group Benefits

Offers employee benefits, including life insurance, health insurance, and disability insurance, for businesses and organizations.

Wealth Management

Provides comprehensive wealth management services, including financial planning, investment management, and estate planning.

Disability Insurance

Provides income replacement benefits in the event of illness or injury, helping individuals maintain their standard of living.

Critical Illness Insurance

Offers a lump-sum payment in the event of a critical illness diagnosis, helping individuals cover medical expenses and maintain their lifestyle.

8. Sun Life Financial Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Sun Life Financial Inc. operates in a highly competitive industry, and customers have various alternatives to choose from. However, the company's strong brand reputation and diversified product offerings mitigate the threat of substitutes to some extent.

Bargaining Power Of Customers

Sun Life Financial Inc. has a large customer base, and individual customers have significant bargaining power due to the availability of alternative products and services. This forces the company to maintain competitive pricing and high-quality services.

Bargaining Power Of Suppliers

Sun Life Financial Inc. has a diversified supplier base, and no single supplier has significant bargaining power. The company's large scale of operations also gives it negotiating power over its suppliers.

Threat Of New Entrants

The financial services industry has high barriers to entry, including regulatory hurdles and significant capital requirements. This limits the threat of new entrants and allows Sun Life Financial Inc. to maintain its market position.

Intensity Of Rivalry

The financial services industry is highly competitive, with many established players competing for market share. Sun Life Financial Inc. must continually innovate and improve its products and services to maintain its competitive edge.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 36.02%
Debt Cost 4.71%
Equity Weight 63.98%
Equity Cost 8.75%
WACC 7.29%
Leverage 56.30%

11. Quality Control: Sun Life Financial Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Arch Capital

A-Score: 7.5/10

Value: 6.9

Growth: 8.9

Quality: 8.9

Yield: 8.0

Momentum: 2.5

Volatility: 10.0

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Manulife

A-Score: 7.0/10

Value: 6.9

Growth: 3.9

Quality: 6.7

Yield: 9.0

Momentum: 6.0

Volatility: 9.7

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Hartford Financial Services

A-Score: 6.9/10

Value: 6.3

Growth: 7.3

Quality: 6.4

Yield: 4.0

Momentum: 7.0

Volatility: 10.0

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Sun Life Financial

A-Score: 6.8/10

Value: 6.0

Growth: 4.3

Quality: 6.2

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

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Truist

A-Score: 5.8/10

Value: 4.8

Growth: 2.8

Quality: 5.5

Yield: 8.0

Momentum: 6.0

Volatility: 8.0

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AIG

A-Score: 5.8/10

Value: 6.1

Growth: 2.6

Quality: 6.9

Yield: 4.0

Momentum: 6.0

Volatility: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

81.12$

Current Price

81.12$

Potential

-0.00%

Expected Cash-Flows