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TORONTO (Reuters) - Sun Life Financial shares jumped on Thursday after reporting a better-than-expected second-quarter profit and announcing the sale of its U.K. business and an asset management partnership with the buyer, Phoenix Group Holdings.
Earlier on Thursday, Canada’s second-largest life insurer Sun Life agreed to sell its business in the United Kingdom to Phoenix Group for 248 million pounds ($301 million), and become its strategic asset management partner, managing about C$9 billion ($7 billion) of Sun Life UK’s general account.
Sun Life expects to get a “good chunk” of the $25 billion Phoenix plans to deploy in North American fixed income and alternative investments over the next five years, CEO Kevin Strain said on an analyst call on Thursday. He added it will make up for some lost revenue and support earnings.
Sun Life shares rose 2.9% to C$60.87 in early afternoon trading in Toronto on Thursday, on track for its highest close in nearly eight weeks. The Toronto stock benchmark rose 0.14%.
Late on Wednesday, Sun Life reported core earnings per share of C$1.52, beating analysts’ estimates of C$1.39, helped by improvement in its U.S. business and a better-than-expected performance in Canada that offset underwhelming results from its asset management and Asian units.
Sun Life executives said the acquisition of U.S. benefits provider DentaQuest, which closed on June 1, would help drive its goal of 10% organic growth in its U.S. group benefits business.
“DentaQuest has been a growth engine over its history,” Dan Fishbein, president of its U.S. unit, said on the call. “We think there’s a lot of potential in the DentaQuest business on multiple fronts to continue to win new government contracts.”
He cautioned that the business is “very lumpy” with small but very large contracts that could lead to sporadic growth in earnings.
($1 = 0.8243 pounds)
($1 = 1.2862 Canadian dollars)
Reporting By Nichola Saminather; Editing by Josie Kao