Sun Life falls to steep loss on weak markets
TORONTO (Reuters) - Sun Life Financial SLF.TO fell to a steep loss in the third quarter due to falling bond yields and stock prices, Canada's No. 3 insurer said on Wednesday.
The company lost C$621 million, or C$1.07 a share, in the quarter ended September 30. That compared with a year-before profit of C$416 million, or 73 Canadian cents a share.
On an operating basis, the insurer lost C$572 million, or 99 Canadian cents a share.
Sun Life warned two weeks ago that it would take the loss - which caught analysts and investors alike by surprise, as forecasts had called for a modest profit.
The stock dropped 9 percent after the warning.
"Our financial results reflect the severe volatility experienced during the third quarter," Chief Executive Don Stewart said in a statement.
Life insurers hold stocks and bonds to guarantee they'll be able to pay future investment and insurance policy obligations. When the value of their portfolios falls on a quarterly basis, they use profits to bulk up reserves.
Sun Life said it increased its reserves by C$684 million during the quarter due to the market declines. It took additional charges of C$203 million to update actuarial assumptions, which it typically does in the third quarter.
The Toronto Stock Exchange's benchmark S&P/TSX composite index .GSPTSE fell 12.6 percent in the third quarter, while bond yields retreated due to economic uncertainty in Europe and the U.S. Federal Reserve's purchases of long-term bonds.. Continued...