By Josh Recamara
Sun Life Financial reported a 3% year-over-year increase in underlying net income to CA$1.05 billion in Q3, supported by stronger results in its individual protection and asset management segments.
The gains helped offset weakness in US group benefits, which faced unfavorable claims experience.
The insurer’s underlying return on equity stood at 18.3%, while reported net income fell 18% to CA$1.1 billion, reflecting market-related impacts and the absence of one-off gains booked in the prior year. Total assets under management rose 7% to CA$1.62 trillion, underscoring the group’s continued expansion in wealth and investment services.
Sun Life increased its quarterly dividend by 4.5% to CA$0.92 per share, supported by a healthy Life Insurance Capital Adequacy Test (LICAT) ratio of 154%, up from 152% a year earlier.
“Our Q3 results reflect the strength of our balanced and diversified business strategy,” said CEO Kevin Strain, noting that Canada and Asia posted robust income growth while US operations were affected by higher medical stop-loss and dental claims.
In Canada, underlying net income climbed 13% to CA$422 million, driven by favourable insurance experience and strong growth in individual protection and group benefits. Sun Life’s domestic life business maintained its market leadership position, supported by growth in critical illness and non-participating life products.
In the US, underlying profit declined 33% to CA$147 million amid elevated claims in medical stop-loss and group disability lines. The company said dental benefits also saw higher utilization rates, a trend that has pressured underwriting margins across several North American carriers this year.
Asia remained a bright spot, with underlying net income up 33% to CA$226 million, boosted by strong sales in Hong Kong, the Philippines, and India, as well as favourable mortality experience.
Asset management and wealth operations generated CA$500 million in underlying income, a 5% increase from the prior year, with strong net inflows at SLC Management and higher fee income at MFS. Total AUM in this segment reached CA$1.18 trillion, up from CA$1.10 trillion a year earlier.
Sun Life has also formalized asset management as a dedicated business pillar under new leadership to accelerate cross-segment collaboration between its investment, wealth, and insurance units.
Sun Life’s performance contrasts with that of fellow Canadian life insurance giant Manulife Financial, which posted a 4% increase in core earnings in Q3, and Great-West Lifeco, whose profits declined 2% as elevated health and disability claims weighed on results. Across the sector, Canadian life insurers continue to face mixed experience in protection lines, with stronger asset management flows partially offsetting margin pressure from higher claims costs.
Analysts expect Canadian insurers to maintain solid capital buffers but face ongoing profitability challenges in health and protection segments. Severe weather events and rising healthcare utilisation in North America are expected to continue driving claims volatility into 2026.
Despite these headwinds, higher interest rates and continued global demand for private credit and alternative assets are seen as key earnings tailwinds for diversified insurers like Sun Life.