Sun Life Financial Eyes Growth Despite Low Interest Rates
Zacks Investment Research | Oct 13, 2016 10:46PM ET
On Oct 14, 2016, we issued an updated research report on Sun Life Financial Inc. (TO:SLF) .
Sun Life has been making efforts to expand its international business. The life insurer has been focusing on emerging economies, particularly in Asia, which are anticipated to provide higher return and growth than the North American markets. Thus, a well-diversified business profile positions the company well for the long run.
Moreover, the company remains committed to growing its Global Asset Management business that has been witnessing an improvement in asset base over the past many quarters. This apart, Sun Life targets Sun Life Investment Management asset-under-management of $100 billion over the next five years.
Further, Sun Life Financial remains focused on accelerating growth through strategic acquisitions. Such buyouts not only help the company expand its business and but also enhance its services. To that end, the life insurer acquired FWD’s Mandatory Provident Fund business in Hong Kong on Aug 3, 2016 and also entered into an exclusive 15-year distribution agreement with the same. The transaction should expand the Sun Life’s wealth business in Hong Kong as well as leverage its global expertise in pensions.
The life insurer’s robust capital and liquidity position, coupled with effective capital deployment in growth initiatives, will fuel earnings and return on equity alongside enhancing shareholders’ value.
Riding on operational strength, the company envisions growing its bottom line between 8% and 10% and return on equity (ROE) between 12% and 14% over the medium term.
Over the last 60 days, the Zacks Consensus Estimate moved up by 2.9% and 2.7% for 2016 and 2017, respectively.
However, exposure to a soft interest rate environment will continue to weigh on Sun Life’s operational performance. In addition, escalating expenses will likely hurt the company’s bottom line and restrict its growth.
Currently, Sun Life Financial carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks from the insurance industry include Everest Re Group Ltd. (NYSE:RE) , NMIH Holdings, Inc. (NASDAQ:NMIH) and Health Insurance Innovations, Inc. (NASDAQ:HIIQ) . Each of these stocks holds a Zacks Rank #2 (Buy). You can see Original post
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