Insurer Sun Life Financial reports Q3 loss on sale of U.S. annuity business

TORONTO – Sun Life Financial Inc. (TSX:SLF) reported a loss Wednesday totalling $520 million in its latest quarter as it wrote down and closed the sale of its U.S. annuity business.

The insurer said the loss amounted to 84 cents per diluted share and compared with a profit of $383 million, or 64 cents per share, a year ago.

Included in the results was a $674-million loss on the sale of the U.S. annuity business and another $230 million due to assumption changes and management actions related to the deal.

Excluding that business, the insurer said it earned an operating net profit from continuing operations of $422 million or 69 cents per diluted share for the quarter, compared with $459 million or 77 cents per share a year ago.

The average analyst estimate compiled by Thomson Reuters had been for an adjusted profit of 64 cents per share.

“Sun Life’s results were driven by strong underlying performance across our four strategic growth pillars,” president and chief executive Dean Connor said in a statement.

“We generated another strong quarter of sales growth, with wealth sales up 25 per cent, insurance sales up six per cent and continued growth in value of new business. We also benefited from favourable market conditions.”

The gains were offset by the impact of Sun Life’s annual review of actuarial assumptions and management actions.

In Canada, Sun Life earned $229 million for the quarter compared with $237 million a year ago.

Sun Life U.S. lost $765 million for the quarter compared with a profit of $18 million due the sale of the annuity business. Excluding the sale, the U.S. operations reported a profit from continuing operations of $79 million, the same as a year ago.

MFS Investment management, Sun Life’s wealth management business, earned $61 million, up from $46 million a year ago, while Sun Life Asia earned $11 million compared with $35 million in the third quarter of 2012.

Sun Life sold its volatile variable annuity life insurance unit for US$1.35 billion to Delaware Life Holdings earlier this year.

The U.S. annuity business has faced challenges in recent years due to low interest rates, volatile stock markets and an increase in the capital required by regulators.