Sun Life profit surges, but insurer cuts target

Wed Aug 7, 2013 6:19pm EDT
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TORONTO (Reuters) - Sun Life Financial said on Wednesday (SLF.TO: Quote) its second-quarter net profit more than quadrupled due to a stronger contribution from financial markets, but the insurer cuts its 2015 earnings target on the sale of its U.S. annuities business.

Sun Life earned C$399 million ($382.75 million), or 65 Canadian cents a share, in the quarter, up from C$90 million, or 15 Canadian cents a share, in the year-before period.

Equity and bond market movements added C$62 million to the company's bottom line, a sharp contrast to the C$320 million earnings hit the insurer took from weak markets in the year-before period.

Sun Life has spent the last several quarters working to reduce its market exposure and just last week closed the sale of its U.S. annuities business, which carries sizable market exposures, for C$1.35 billion.

Excluding the impact of financial markets as well as the U.S. annuities business, operating profit from continuing operations was C$431 million, or 71 Canadian cents a share, up from C$250 million, or 42 Canadian cents a share.

Analysts had expected, on average, a profit of 67 Canadian cents per share, according to Thomson Reuters I/B/E/S.

"It looks to be a small beat on the headline," said Robert Sedran, an analyst at CIBC World Markets.

While the U.S. annuities sale is expected to reduce earnings volatility for the company, it also has a negative earnings impact in the medium term.

Due largely to the deal, Sun Life said it is reducing its 2015 operating profit target to C$1.85 billion from C$2 billion.   Continued...