Sun Life CEO revels in lifeco’s rosy outlook
TORON TO • Dean Connor might be one of the few people in the country who would actually welcome an increase in interest rates. That’s because the chief executive of Sun Life Financial Inc. knows all too well that higher rates are a potential boon to life insurance companies such as his.
But for all of the broader market’s hand-wringing about the U.S. Federal Reserve’s next moves, Connor really doesn’t seem all that concerned whether rates climb later this year as expected.
“We wish interest rates would go up because it would help, but we’re not assuming they’re going up,” he said in a recent interview.
“We’ve organized our affairs to thrive in this kind of low-rate environment and like our position relative to other insurance companies.”
Since taking the helm of the country’s third-largest lifeco by market capitalization in December 2011, Connor has made it a priority to reduce Sun Life’s exposure to singular risks like interest rates and has tilted the company’s business model away from its life insurance roots and more toward wealth management over the past four and a half years.
As a result, Sun Life now derives 45 per cent of earnings from life insurance products and services and 55 per cent from wealth management, prompting some analysts to suggest the company is more an asset manager than it is a life insurer.
“It’s probably too blunt a statement,” Connor said. “We have certainly shifted towards wealth and asset management more than most of our competitors but, you know, we sell a lot of insurance and we still like that business.”
No matter how you characterize it, Connor’s approach seems to be paying off. Sun Life’s second-quarter earnings easily beat estimates and the company also announced its first dividend increase since before the financial crisis.
Connor is pleased with Sun Life’s performance and confident that momentum across all segments of the business will continue to build.
In Canada, he expects the company’s digital strategy to help increase market share in the maturing individual retail and group benefits and pension businesses.
He is also encouraged by the growth prospects of Sun Life Global Investments (Canada) Inc., the mutual fund company that has grown to over $10 billion in assets under management since being launched in 2010.
“That business is still an adolescent,” he said. “It is growing up really well, and it’s going to be an amazing adult when it’s fully grown.”
The launch last year of Sun life Investment Management Inc. for institutional clients and the related acquisition of New York-based Ryan Labs Inc. in January represents another important new growth engine for the company, as does MFS, the company’s big global asset manager in Boston.
But Connor is equally excited about Sun Life’s potential in Asia, where it continues to grow its presence by recently setting up shop in Malaysia and Vietnam, and about prospects for its U.S. group benefits business.
He expects the former to represent a much larger chunk of the overall business and said the latter is going through a major transformation because of ongoing health-care reforms south of the border.
“It’s not performing to its fullest potential, but it’s one part of our growth story that is under-appreciated by investors,” he said. “There is a lot of runway there.”
All in all, Connor is pleased with Sun Life’s well-balanced and diversified business model and is confident that it will continue to pay big dividends — literally — for investors.
“We have 24 business units around the world, and all cylinders don’t always fire at the same time, but I’m glad we have 24 cylinders and not four,” he said. “It’s one heck of a machine.”