TORONTO — Market declines triggered by COVID-19 have rattled Sun Life Financial Inc., whose net income plunged by 37 per cent to $391 million in its first quarter.
The Toronto-based insurer said it earned 67 cents per share for the three months ended March 31, down from $1.04 per share or $623 million a year earlier.
“We didn’t know when the markets would turn or what would cause them to turn,” president and chief executive Dean Connor said on the company’s Wednesday earnings call.
The pandemic pushed Sun Life — and every other insurer — to quickly adapt to a population with very different demands and one that has suffered mass layoffs and pay cuts.
With Canadians asked to physical distance and stay home as much as possible, doctors offered virtual appointments and patients put off seeking care for non-emergency ailments. Dentists, chiropractors, physiotherapists and other medical professionals closed their offices.
“Our clients need us more than ever,” said Connor.
Sun Life responded by doling out payment grace periods and offering credits against dental and non-drug-related extended health care premiums in hopes of reducing invoices for Canadian businesses, who are already struggling with low cash flow.
It offered 50 per cent credit per month against paid dental premiums and a 20 per cent credit for non-drug-related, extended health care premiums.
COVID-19 has proven to have a mixed impact on the company. Individual insurance and wealth sales in April totalled about 80 per cent and 90 per cent of the prior year, and were aided by re-pricing strategies and virtual health care programs that Sun Life said have been popular.
“There is often a rush to judgment about how the world will be permanently changed. Amid all the speculation, there’s one thing we believe to be absolutely true,” said Connor. “The acceleration of everything digital from how we advise clients, to how we sell, to how we provide solutions, pay claims and provide service will be a permanent benefit coming out of the crisis.”
Sun Life’s underlying earnings grew by seven per cent in the quarter to $770 million or $1.31 per share. That compared with $717 million or $1.20 per share in the first quarter of 2019.
But there were “significant” declines too. Second quarter sales are uncertain because of strict quarantine protocols impacting face-to-face sales and the inability to predict when offices will be allowed to reopen and the economy to rebound.
“Realistically, this will be a challenging year for financial institutions and there will likely be reductions to sales, premiums and assets under management levels, credit impacts,” Connor said.
For now, the company is focused on helping its workers in China and Vietnam return to offices on a gradual basis.
About 95 per cent of its employees are still working from home — a transition that was speedy because it was aided by 1,200 laptop computers Connor has said the company had stowed away “for a rainy day.”
Sun Life’s shares gained $2.76 or 6.2 per cent at $47.55 in late morning trading on the Toronto Stock Exchange.
This report by The Canadian Press was first published May 6, 2020.
Companies in this story: (TSX:SLF)
Tara Deschamps, The Canadian Press