Sun Life Financial(SLF) - 2025 Q3 - Quarterly Report

Financial Performance - Underlying net income for Q3'25 was $1,047 million, an increase of $31 million or 3% from Q3'24; reported net income was $1,106 million, a decrease of $242 million or 18% from Q3'24[7] - U.S. underlying net income decreased by $54 million or 34% to $107 million, while reported net income fell by $178 million or 71% to $72 million[24] - Asia's underlying net income rose by $56 million or 33% to $226 million, with reported net income increasing to $373 million[28] - The corporate segment reported an underlying net loss of $98 million, compared to a loss of $92 million in the prior year[34] - Year-to-date underlying net income increased by 7% to $3,107 million compared to the same period last year[63] - Reported net income decreased by 18% to $1,106 million compared to Q3'24, primarily due to market-related impacts and assumption changes[55] - Year-to-date underlying net income for 2025 was $401 million, down $50 million or 11% from 2024, with reported net income at $275 million, a decrease of $137 million or 33%[115] Assets Under Management - Assets under management (AUM) reached $1,623 billion, an increase of $108 billion or 7% from Q3'24[11] - Total assets under management (AUM) as of September 30, 2025, were $1.62 trillion[39] - Total assets under management reached $1,623.5 billion, up from $1,515.2 billion in Q3'24, reflecting strong growth in asset management gross flows[52] - Total assets under management (AUM) reached $1.623 trillion, an increase of $80.8 billion or 5% from December 31, 2024[76] - Assets under management (AUM) for Asset Management increased by C$54.4 billion or 5% from December 31, 2024, totaling C$1,175.8 billion[103] Revenue and Income Sources - Total revenue for Q3 2025 was $12.421 billion, a decrease of $2.9 billion compared to Q3 2024, primarily due to lower net investment income[202] - Insurance revenue for Q3 2025 was $6.001 billion, an increase from $5.651 billion in Q3 2024, driven by higher contributions from life and health insurance[202] - Net investment income for Q3 2025 was $4.161 billion, significantly lower than $7.540 billion in Q3 2024, reflecting fair value changes of invested assets[202] - The company reported a total revenue increase of $1.8 billion for the first nine months of 2025 compared to the same period in 2024, primarily due to higher insurance revenue[203] Sales Performance - Individual Protection sales increased to $987 million, a rise of 35% compared to Q3'24[12] - Group Health & Protection sales were $498 million, reflecting a 12% increase year-over-year[12] - U.S. group sales increased by 25% to $273 million, primarily due to higher large case sales in employee benefits[26] - Total individual protection sales increased by $257 million or 35% year-over-year, totaling $2.724 billion[73] - Asset management gross flows and wealth sales totaled $62,117 million, up 48% year-over-year from Q3'24[12] Capital and Ratios - The Life Insurance Capital Adequacy Test (LICAT) ratio was 154% at the end of Q3'25, compared to 152% in Q3'24[10] - The financial leverage ratio stood at 21.6% in Q3'25, indicating a slight increase from 20.4% in Q2'25[52] - The effective income tax rate on reported net income was 18.0%, influenced by various tax items and foreign exchange translation[59] - The effective income tax rate for underlying net income was 18.8%, while reported net income was at 19.1%[70] - The company expects a four percentage point decrease in the LICAT ratio impact over the next five quarters, assuming no further scenario switches[190] Investments and Acquisitions - The company acquired an additional interest in Bowtie Life Insurance Company Limited for $55 million, increasing its ownership to 55.8%[13] - The company invested $55 million in Bowtie Life Insurance Company, increasing its ownership interest to 55.8% and recognizing a gain of $176 million in reported net income[129] - Total general fund invested assets reached $197.3 billion as of September 30, 2025, an increase of $7.5 billion from December 31, 2024[136] Market Risks and Sensitivities - Significant changes in interest rates or spreads could negatively impact sales of protection and wealth products, affecting redemption patterns on existing policies[163] - A sustained low interest rate environment may adversely impact net income, capital, and the ability to implement business strategies, leading to lower sales and less profitable new business[165] - The company utilizes various methods to quantify market risk exposures, including scenario testing and sensitivity testing of earnings and regulatory capital ratios[173] - Inflation risk is managed within the asset-liability management program by investing in inflation-linked assets to match liability exposures[172] Other Financial Metrics - The company reported a significant increase in individual protection sales, which rose to $987 million, up 35% from Q3'24[52] - The company issued $1 billion in subordinated unsecured debentures on September 11, 2025, to support various corporate purposes[92] - The total loss allowance was $91 million as of September 30, 2025, reflecting an increase from $88 million as of December 31, 2024[154]