Bloomberg News

Sun Life CEO Says Investors Will Get ‘Sharper Focus’ Next Month

February 17, 2012

Feb. 16 (Bloomberg) -- Sun Life Financial Inc., Canada’s third-largest insurer, will give details next month on its goals for return on equity, Chief Executive Officer Dean Connor said.

“People will leave March 8 with a more detailed sense of our medium-term financial objectives and how we plan to achieve those,” Connor, referring to the date of the company’s annual investor day, said today in a telephone interview. The firm’s strategy will “come into sharper focus,” he said.

Sun Life tumbled 38 percent in the past year through yesterday amid costs tied to interest-rate volatility and investor concern that Sun Life will cut its dividend. The stock decline was bigger than that of domestic competitors, including Manulife Financial Corp., Industrial Alliance Insurance and Financial Services Inc., and Great-West Lifeco Inc.

The fourth-quarter net loss of C$525 million ($527 million), or 90 cents a share, was tied to C$635 million in costs for variable annuity and segregated fund contracts, Toronto-based Sun Life said yesterday. Robert Sedran, an analyst at CIBC World Markets, predicted a loss of 69 cents a share.

“The messy quarter is a difficult one from which to glean much information regarding underlying trends,” Sedran said in a note to clients today.

Sun Life’s quarterly dividend, which the company held at 36 cents a share yesterday for the 17th straight quarter, is tied to core earnings and absolute capital levels, said Connor, 55, who succeeded Donald Stewart as CEO on Dec. 1.

“It is possible that something could happen in capital markets and interest rates that begin to reduce our capital position, to a point where we feel we have to take action to shore up the capital,” he said.

Sun Life will stop selling variable annuities and individual life insurance products in the U.S., part of a plan to cut equity-market risk, the company said in December.

The insurer may expand in Asia and Canada, and bolster the asset management business, including its Boston-based MFS Investment Management subsidiary.

--Editors: Peter Eichenbaum, Dan Reichl

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Dan Kraut at dkraut2@bloomberg.net.


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