Newspaper article The Canadian Press

Sun Life Financial Loses $525 Million in Q4 on Big One Time Charge: Sun Life Posts Big Fourth-Quarter Loss

Newspaper article The Canadian Press

Sun Life Financial Loses $525 Million in Q4 on Big One Time Charge: Sun Life Posts Big Fourth-Quarter Loss

Article excerpt

TORONTO - Insurance giant Sun Life Financial Inc.(TSX:SLF) lost $525 million in the latest quarter as the company took some big charges on its books, including the cost of shuttering its individual products business in the U.S.

Canada's No. 3 insurer said late Wednesday it lost 90 cents a share in the fourth quarter ended Dec. 31, reversing a net profit of $504 million or 84 cents a year earlier.

The loss was in line with projections the company made in the fall for red ink ranging of between $550 million and $650 million for the fourth quarter. That came after a review and streamlining of Sun Life's businesses to focus on growth and reducing volatility.

"I am confident our strategy is the right response to the challenges faced by our industry and positions Sun Life well for improving economic conditions," president and CEO Dean Connor said in a release after markets closed.

Revenue in the quarter rose to $5.7 billion from $4.3 billion.

The company's operating loss, which excludes the impact of hedges, fair value adjustments and one-time items like restructuring costs, was $221 million or 38 cents per share. That compared with an operating profit of $485 million, or 85 cents per share a year earlier.

Analysts, on average, had expected a loss of 59 cents per share on revenues of $5.59 billion, according to Thomson Reuters.

Toronto-based Sun Life said it was affected by a $635 million charge on the value of its variable annuity and segregated fund insurance contracts.

The charge was partially due to the insurers decision to exit from individual insurance products in the United States, which had caused it to suffer a deep financial loss. It cut 800 jobs, mostly in the U.S. in relation to the move.

One of the attractions of variable annuity products to investors is that they offer a minimum rate of return guaranteed, which can cost the insurer when markets are underperforming.

The combination of a market downturn with a substantial increase in the amount of capital required by regulators, has made variable annuities less attractive.

In its Canadian business, the company booked goodwill impairment charges related to the impact of persistently low interest rates, increased capital requirements and market volatility. …

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