This article first appeared on GuruFocus.
Underlying Net Income: $1.12 billion, up from $1.02 billion in the prior year.
Underlying EPS: $2.02, up 13% year-over-year.
Underlying Return on Equity: 19.1%.
Reported Net Income: $1.01 billion, compared with $716 million a year ago.
Insurance Sales: Increased 20%.
Asset Management Net Flows and Net Wealth Sales: Improved by $16.3 billion.
LICAT Ratio: 145%, up 2 percentage points from the prior quarter.
Holding Company Cash: $2.3 billion.
Book Value Per Share: $42.49, up 3%.
Financial Leverage Ratio: 23.8%.
Total CSM: $15.3 billion, up 12% year-over-year.
Dividend Ratio: 48%, within the 40% to 50% target range.
Canada Underlying Net Income: $427 million, a new record, up 23% from the prior year.
U.S. Underlying Net Income: Increased 15%.
Asia Underlying Net Income: Increased 21%.
Sun Life Asset Management Underlying Net Income: US $262 million, up 4% year-over-year.
Asia Individual Insurance Sales: $875 million, up 20%.
Hong Kong Insurance Sales: Increased 20%.
Indonesia Sales: Increased 69%.
Medical Stop-Loss Sales: Increased 86% year-over-year.
Capital Raising: US $4.7 billion, up 8%.
Deployment Activity: US $6.2 billion, up 42%.
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Sun Life Financial Inc (NYSE:SLF) delivered strong second-quarter results with underlying EPS growth of 13%, exceeding its medium-term target of 10%.
The company reported record results in Canada, with underlying net income up 23% year-over-year, driven by strong business growth and favorable insurance experience.
Asia continued its momentum with a 21% increase in underlying net income, supported by broad-based sales growth across Hong Kong, Indonesia, and other markets.
Sun Life Financial Inc (NYSE:SLF) strengthened its capital position, ending the quarter with a LICAT ratio of 145% and holding company cash of $2.3 billion, providing flexibility for investments and shareholder returns.
Asset management showed improved momentum, with SLC Management earnings up year-over-year, strong private credit fundraising, and a large mandate win in India that doubled assets under management.
Negative Points
MFS continued to experience elevated outflows, reflecting industry-wide pressure on active U.S. equity managers, which could weigh on future earnings.
The U.S. dental business remains under pressure, with Medicaid membership down 9% and ongoing volume headwinds expected to suppress earnings for the next one to two years.
New business CSM in Asia declined year-over-year due to a competitive environment in Hong Kong, with margins expected to remain at lower levels in the near term.
The U.S. employee benefits business saw lower earnings compared to a record quarter in Q2 2025, due to a reversion to more normal disability trends and non-recurring one-time items.
Sun Life Financial Inc (NYSE:SLF) faces ongoing challenges in its government dental business, which is expected to remain a struggle for several years as the company shifts focus to commercial growth.
Q & A Highlights
Q: Can you discuss the sustainability of the strength in Asia, particularly regarding the focus on the MCV business in Hong Kong by China?A: Manjit Singh, President – Sun Life, Asia, stated that the Hong Kong business has delivered exceptional performance over the last few years, outperforming peers and gaining market share, supported by deliberate investments in distribution, brand, talent, and IT. The business is diversified across Banca, broker, and agency channels, serving local Hong Kong clients, those from Southeast Asia, and MCV clients, which make up roughly 30% of the overall client base. The focus for MCV clients is on higher rates of return, diversification of investments, and legacy planning, rather than tax elements. Singh expressed confidence in the business’s strong fundamentals and momentum.
Q: Can you talk about the favorable experience in Canada this quarter and the sustainability of the division’s strong ROE, which is a big part of the Sun Life story?A: Jessica Tan, President – Sun Life, Canada, explained that the significant experience gains were about one-third from mortality and two-thirds from morbidity, benefiting from sustained investments in people, processes, and capabilities, such as integrated case management teams and digital tools. Over the past eight quarters, positive insurance experience has averaged about $57 million pre-tax per quarter, which is considered sustainable. Zooming out, Canada’s earnings improved by 15% in the first half, with only 5% from insurance experience and the remaining 10% from strong growth across insurance, health, and wealth businesses. The wealth platform reached $286 billion in AUMA, with earnings up 26%, driven by favorable markets and positive inflows.
Q: Regarding the U.S. stop-loss business, premiums are up 25% year-over-year, but why isn’t there more of an earnings lift if margins are in line with expectations?A: David Healy, President – Sun Life, US, clarified that while the stop-loss business is benefiting from momentum in sales and persistency, the overall health and benefits results also include the employee benefits business, which was down from a record quarter in Q2 2025 due to very favorable disability experience that reverted to more normal trends. He noted that the 2025 cohort is 97% complete and in line with expectations, and the company continues to get the pricing on its 2026 business, with the market hardening later in the year and into 2026.
Q: Can you provide more detail on the U.S. dental business, specifically how much more business there is to shed and the timeline for the Medicaid business?A: David Healy, President – Sun Life, US, stated that dental results were pressured by lower membership, down 9% year-over-year, but progress is being made through pricing discipline and exiting unprofitable business, which is improving loss ratios. However, ongoing significant volume headwinds in the Medicaid dental business will suppress earnings this year. The company expects these actions to shift the business mix to a more stable, higher-quality earnings space over the next one to two years. Kevin Strain, CEO, added that the state business will be a struggle for a number of years, with focus shifting to building out the commercial side, and he wouldn’t have high expectations for the state business in the near term.
Q: Can you discuss the stop-loss sales result, which was super strong, and characterize the competitive environment and confidence in margins on new and renewal business?A: David Healy, President – Sun Life, US, said the company remains diligent and disciplined in pricing and underwriting, benefiting from scale, advanced analytics, and differentiated health capabilities that resonate with employers focused on managing medical cost increases. The company is benefiting from a continued hard market, and while remaining focused on margins, the 2025 cohort is 97% complete and in line with expectations. He noted that sales in the first half of 2025 were lower due to competitive pressures, but the market has been hardening later in the year and into 2026.
Q: With strong APE sales in Asia, why was new business CSM down year-over-year, and is this a pricing issue or something else?A: Manjit Singh, President – Sun Life, Asia, explained that over the last two years, Asia delivered over $2 billion in new business CSM, with exceptional performance last year partly due to tailwinds from proposed regulation changes that pulled in volumes and increased margins. With those tailwinds behind, margins have evened out, leading to a relative evening out of new business CSM. The company still generated $277 million in new business CSM, which will support ongoing earnings growth. Kevin Strain, CEO, added that Hong Kong is a very competitive market, and the company has to do what it takes to continue growing profitably, with pricing being part of that, as long as margins remain acceptable.
Q: Can you provide confidence that SLC Management will reach its 20% medium-term underlying earnings growth outlook, given fee-related earnings are flat year-over-year?A: Steve Peacher, Executive Chair – SLC Management, stated that the business is driven by strong performance in strategies the market wants, which manifests in growing positive net flows and AUM. Core categories like real estate debt, private credit, and infrastructure have tailwinds, and the wealth space is a big priority for future flows. Now that the platform is unified, the company can pursue expense efficiencies and present itself as a platform like Blackstone or Apollo, which should be an accelerant to growth. Peacher expects margins to expand significantly, with an operating margin target of over 30% over the coming years, potentially in the mid-30% range or higher over the next five years.
Q: Regarding the high net worth business in Asia, what proportion of sales would be from China, and would offshore trust implications impact momentum?A: Manjit Singh, President – Sun Life, Asia, clarified that for the high net worth business, the MCV proportion is lower than the 30% referenced for Hong Kong overall, at only about 10% of that business. The high net worth business includes clients from Southeast Asia, the Middle East, and other parts of Asia, so he does not expect offshore trust implications from China to have a material impact on contributions from this business.
Q: Can you clarify the details of the Bell acquisition, including the share settlement and timing?A: Tim Deacon, CFO, confirmed that the Bell acquisition was completed at the beginning of July, with almost 80% of the purchase price made in shares based on the 20-day average share price
For the complete transcript of the earnings call, please refer to the full earnings call transcript.