Sun Life looking forward to lower U.S. tax rates
TORONTO It’s too soon to say whether corporate tax rates will fall in the United States, but if Donald Trump’s election promise of tax reform comes to fruition during his administration, it will be good news for Toronto-based insurer Sun Life Financial Inc.
“We do pay a lot of corporate tax in the U.S. … If those rates move down, there’ll be a real benefit,” Sun Life chief executive Dean Connor said in an interview Thursday as the company released its fourth quarter financial results.
Higher interest rates and a more buoyant economy would also help the life insurer, as low rates put pressure on meeting long-term obligations and can depress profitability. Connor’s comments came after Sun Life reported results that fell short of analyst expectations. Sun Life’s shares fell more than five per cent in Toronto trading, closing at $49.94.
“A miss against expectations is a bit of a surprise for Sun Life as investors have become accustomed to strong results in recent quarters,” John Aiken, an analyst at Barclays Capital, said in a note to clients.
He noted that Sun Life’s asset management operations, particularly global asset manager MFS, continued to struggle with redemptions in a trend facing the broader industry.
“Admittedly, expectations were high heading into the quarter based on Sun’s recent track record and exceptional third quarter results,” Aiken wrote, noting sales levels and the value of new business were some positives.
Sun Life, which has insurance and wealth management operations in Canada, the U.S., and Asia, posted core earnings of $560 million (91 cent a share) in the fourth quarter, which ended Dec. 31. This was below the consensus analyst estimate of 97 cents a share, according to Aiken.
Sun Life reported core earnings of $646 million ($1.05) in the corresponding period a year ago. Connor said investments Sun Life has made should pay off in the coming months and years.