12 November 2018 11:30
Photo : Freepik
Expenses related to the obligations towards the policyholders of Sun Life Financial , have reduced his net income of 250 million dollars (M$) between the third quarter of 2017 and 2018. Indeed, the reported net income for the period ended on the 30th of September last is$ 567 Million, compared to 817 M$ in 2017. On the other hand, its net income underlying has increased for the same comparative period, from $ 643 Million to$ 730 Million during the third quarter of 2018.
These obligations represent$ 166 Million of the decrease of$ 250 Million of its reported net income, while in the third quarter of 2017, they had added$ 103 Million. The other hand, the increase in the income underlying net has been conducted by the growth of the business, a lower tax rate in the United States, and experience in, investment climate, points to the insurer.
The first and second quarter of 2018, Sun Life were, respectively, deducted$ 3 Million and collected$ 1 Million from changes to assumptions and actions of the management of its income underlying net.
Obligations to policyholders
“Because of the long-term nature of our business, we make judgments involving assumptions and estimates in order to assess our obligations to policyholders. The evaluation of these obligations is recognized in our financial statements as liabilities relating to insurance contracts and liabilities related to investment contracts […] “, written by Sun Life, in its financial statements.
The assumptions are made ” on the performance of the equity markets, interest rates, the failure rates of assets, rates of mortality and morbidity, lapse and other behaviors, and inflation and other factors throughout the life of our products.”
The insurer claims to review the assumptions each year, generally in the third quarter “. The company says reflect its actual experience of times past and present in relation to its assumptions, in its annual review.
A similar scenario in Canada
A similar scenario presents itself in the results of Sun Life of Canada, although the impact of the loads is less important. For the third quarter of 2018, reported net income of$ 335 Million, compared to$ 340 Million in the corresponding period of the previous year. Sun Life attributes this decrease of$ 5 Million to the negative effects of the market, including the effects of interest rates and the value of the investments.
The income underlying net is, however, increased from$ 222 Million in the third quarter of 2017 to 251 M$ this year, thanks to a good investment experience and business growth in the area of group pensions. However, growth has been limited by a decline in gains in new business.
Sales of individual insurance is to maintain
In Canada, sales of individual insurance are all maintained, amounting to$ 90 Million for the quarter, compared to$ 87 Million in 2017.
By contrast, in group insurance, these have declined as a result of a significant sales completed in 2017. Sales have reached$ 113 Million in the third quarter of 2018, a reduction of 13 % compared to the third quarter of last year.