Sun Life Financial Inc. reported underlying net income of C$1.02 billion for the second quarter ended June 30, 2025, a 2% increase from the same period last year.
Reported net income climbed 11% to C$716 million. The underlying return on equity (ROE) was 17.6%, while reported ROE stood at 12.4%. Assets under management rose 5% year-over-year to C$1.54 trillion.
The 2% increase in underlying net income was supported by a US$21 million gain in Group – Health & Protection, which reached US$326 million. This was attributed to improved US dental results from Medicaid repricing, higher fee income, and favourable mortality experience in Canada.
The Corporate segment also reported a US$27 million reduction in net loss, bringing it to US$65 million, primarily due to the timing of strategic investment spending and lower incentive compensation.
Asset Management & Wealth delivered US$455 million in underlying net income, unchanged from the previous year. Increased fee-related earnings in SLC Management and higher fee income in Asia were offset by lower average net assets in MFS and reduced investment contributions due to lower yields.
Individual – Protection recorded a US$33 million drop in underlying net income to US$299 million. This decline was linked to higher expenses in Asia and unfavourable mortality experience in Canada and the US, though Asia saw some offsetting growth.
The increase in reported net income was driven by the year-ago restructuring charge of US$108 million in Corporate and the growth in underlying earnings. These were partially offset by a US$61 million impairment charge related to the early termination of a US group dental contract and adverse market-related impacts in Asia and Canada.
In the prior quarter, Sun Life reported stronger results. Underlying net income was C$1.045 billion, up 19% year-over-year, and reported net income rose 13% to C$928 million. That quarter's performance was driven by consistent contributions across asset management, health and protection, and individual protection segments.
According to CEO Kevin Strain (pictured above), the quarter’s results reflected underlying net income growth in Asia, bancassurance sales growth of 15% in markets including Hong Kong, India, and the Philippines, and continued momentum in SLC Management flows.
"Driving business and Client outcomes through digital initiatives remains one of our strategic priorities. Innovative GenAI tools are accelerating progress across all of our four pillars, enhancing Client experience and interactions, decreasing processing times for claims, and driving productivity savings,” Strain said.
Asset Management, composed of MFS and SLC Management, posted US$300 million in underlying net income, down 2%. Reported net income dropped 7% to US$254 million, largely due to market-related impacts at SLC Management.
In Canada, underlying net income fell 6% to US$379 million. Individual – Protection saw a US$19 million decline from unfavourable mortality experience. Asset Management & Wealth was down US$5 million due to lower investment contributions, while Group – Health & Protection was up US$1 million. Reported net income rose 13% to US$330 million, bolstered by market-related gains.
In the US, underlying net income declined 4% to US$143 million, or C$195 million. Group – Health & Protection improved by US$11 million due to better dental performance, though claims and utilization increased. Individual – Protection fell by US$17 million, affected by mortality and credit experience.
Reported net income decreased 19% to US$74 million, or C$103 million, impacted by the intangible asset impairment tied to the group dental contract termination.
Asia saw a 15% rise in underlying net income to US$206 million, led by a US$12 million gain in Asset Management & Wealth from higher AUM, and a US$15 million gain in Individual – Protection due to business growth and investment income, offset by higher expenses.
Reported net income dropped 35% to US$98 million, weighed by unfavourable market and equity impacts, despite the higher underlying earnings and the absence of the prior year’s Pillar Two global minimum tax adjustment.
The Corporate segment’s underlying net loss narrowed to US$65 million from US$92 million last year, while the reported net loss declined to US$69 million from US$198 million.
The company’s capital and credit positions also continue to receive stable external validation. In April, AM Best affirmed Sun Life’s Financial Strength Rating of A+ (Superior) and Long-Term Issuer Credit Ratings of “aa.”
The ratings agency cited Sun Life’s robust balance sheet, favourable operating performance, diversified business profile, and strong enterprise risk management as supporting factors for its stable outlook.
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