Sun Life (SLF) Poised for Growth in Different Segments

On Jan 5, 2015, we issued an updated research report on Sun Life Financial Inc. (SLF).

Sun Life is a leading Canadian life insurance company, with an active presence in the U.S. The company is seeking to grow internationally. It is specifically focusing on the emerging economies of Asia that are expected to provide higher returns and growth compared to other developed markets.

In its U.S. segment, the company is transforming its group benefits by improving distribution effectiveness, and enhancing customer experience. The segment is also growing its voluntary benefits business by expanding its product portfolio and taking advantage of opportunities created through the Affordable Care Act.

At the same time, Sun Life is aggressively seeking to grow its Global Asset Management Business, the asset base of which has been growing for the past many quarters. This business provides higher return on equity with lower capital and lower volatility. It has the potential to lead to an earnings upside.

In its Asia segment, which contributes 7% to total revenue, Sun Life is expanding its agency force via alternative channels, particularly bancassurance and improving productivity. The company is also expanding its presence in different areas such as Vietnam and Malaysia by forming new ventures. The company also broadened its product portfolio by expanding accident and health insurance.

Nevertheless, these positives are partially offset by the low interest rate environment that is expected to continue hurting the company’s operations significantly.

Sun Life carries a Zacks Rank #3 (Hold). Better-ranked stocks include China Life Insurance Co. Ltd. (LFC), Lincoln National Corp. (LNC) and StanCorp Financial Group Inc. (SFG). All these stocks carry a Zacks Rank #2 (Buy).