Sun Life Earnings: Favorable Individual Underwriting Results in Canada and Asia Mark a Good Quarter

No-moat-rated Sun Life Financials’ second-quarter results were good, partly because of favorable underwriting experience in individual protection products in Canada and Asia. The company reported underlying net income of CAD 1 billion or CAD 1.72 per share in the second quarter, up 9% versus CAD 920 million or CAD 1.57 per share in the second quarter of the previous year. The second-quarter results equated to an annualized underlying return on equity of 18.1%, which is in line with management’s medium-term guidance of 18%. The company paid a quarterly dividend of CAD 0.81 per share in the second quarter, which represents a 4.8% dividend yield as per the current stock price. We are maintaining our CAD 66 per share fair value estimate for Sun Life after incorporating the second-quarter results.