Sun Life Financial Stays Neutral - Analyst Blog

By
A A A

We are reiterating our Neutral recommendation on Sun Life Financial Inc. ( SLF ). Though we believe the company will be able to generate superior returns for its investors given a proactive approach to managing and mitigating fundamental issues, concerns such as ongoing macro and regulatory uncertainties and low interest rates keep us on the sidelines. Sun Life carries a Zacks Rank #3 (Hold).

Why reiterate?

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, which are expected to provide higher return and growth compared to other developed markets. 

Sun Life is also making business mix changes in its U.S. segment to reduce the equity market exposure and limit its interest rate exposure. This is being effected through penetration in business lines that can generate higher return on equity. 

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

Along with doing away with high equity/interest rate risk products, Sun Life has implemented hedging to reduce earnings and capital sensitivity to interest rates and equity markets. The company stands better than its peers in terms of hedging management of these risks.

Nevertheless, these positives are partially offset by the low interest rate environment that is expected to continue to have a significant negative impact on Sun Life's operations.  The leverage ratio has also increased due to requirement for additional regulatory capital. 

Other Stocks 

Other life insurers StanCorp Financial Group Inc. ( SFG ), China Life Insurance Co.  ( LFC ) and Lincoln National Corp. ( LNC ) all with Zacks Rank # 2 (Buy) are worth considering.  

Sun Life

Sun Life



CHINA LIFE INS (LFC): Free Stock Analysis Report

LINCOLN NATL-IN (LNC): Free Stock Analysis Report


STANCORP FNL CP (SFG): Free Stock Analysis Report

SUN LIFE FINL (SLF): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Stocks

Referenced Stocks: LFC , LNC , SFG , SLF

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

17,046,919
  • $15.45 ▼ 0.45%
16,355,260
  • $125.56 ▼ 0.64%
11,439,378
  • $7.62 ▼ 1.42%
10,956,399
  • $8.709 ▼ 0.58%
10,412,792
  • $40.72 ▼ 0.59%
10,401,271
  • $31.635 ▲ 0.56%
10,053,748
  • $8.25 ▲ 5.36%
9,932,229
  • $8.87 ▲ 0.80%
As of 3/31/2015, 11:27 AM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com