Sun Life's Q1 2025 Results: A Resilient Start to the Year Amid Global Challenges

Rhys NorthwoodThursday, May 8, 2025 6:07 pm ET
16min read

Sun Life Financial (SLF) delivered a robust set of first-quarter 2025 results, showcasing strong growth across its global operations despite headwinds from volatile equity markets and macroeconomic uncertainty. The insurer’s underlying net income surged 19% to CAD 1.045 billion, while its reported net income rose 13% to CAD 928 million. With assets under management (AUM) expanding 6% year-over-year to CAD 1.551 trillion and a shareholder-friendly 5% dividend hike, Sun Life’s performance underscores its strategic agility and capital discipline.

Segment Highlights: Diversified Growth Drives Performance
Sun Life’s three core segments all contributed to its strong results:
- Asset Management & Wealth: Underlying net income jumped 19% to CAD 487 million, fueled by SLC Management’s net inflows of CAD 2.9 billion and BentallGreenOak’s (BGO) real estate appreciation. The segment’s AUM grew 6%, with BGO’s Asia Value Add Series securing CAD 1.6 billion in capital.
- Group Health & Protection: Net income rose 18% to CAD 330 million, driven by strong demand in Canada and improved dental claims in the U.S.
- Individual Protection: The standout performer, with a 20% increase to CAD 325 million, reflecting heightened demand for life and protection products globally.

SLF Trend
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Regional Strengths and Strategic Partnerships
Sun Life’s geographic diversification shone through in Q1:
- Canada: Underlying net income rose 21% to CAD 376 million, supported by fee growth in asset management and strong protection claims experience. The launch of Sun Life Choices Flex and a partnership with Empathy (a bereavement support platform) highlight its focus on digital innovation and client-centric solutions.
- U.S.: Despite a 13% dip in group sales due to lower Medicaid demand, the U.S. segment grew 7% to CAD 151 million, driven by dental benefits and Family Leave Insurance (FLI) expansion to four new states.
- Asia: Net income increased 11% to CAD 197 million, with Indonesia’s sales surging 54% following a 15-year partnership with CIMB Niaga. BGO’s logistics and student housing ventures in the UK and Asia also bolstered returns.

Challenges and Risks
Not all areas were smooth. MFS, Sun Life’s retail asset manager, faced net outflows of CAD 11.6 billion due to market volatility, though SLC Management’s inflows offset this. In the U.S., medical stop-loss loss ratios worsened, and Asia’s reported net income fell 29% due to prior-year gains from asset sales. Management noted that equity market declines and interest rate uncertainty could pressure future results.

Financial Health and Capital Discipline
Sun Life’s capital position remains a key strength. Its LICAT ratio, a regulatory capital adequacy metric, stood at 149%—well above the 100% minimum requirement—providing flexibility for strategic investments. The company also raised its dividend by 5% to CAD 0.88 per share, signaling confidence in its financial stability. Underlying return on equity (ROE) improved to 17.7%, while reported ROE rose to 15.7%, reflecting operational efficiency.

Outlook and Strategic Priorities
Looking ahead, Sun Life is doubling down on digital innovation and global expansion. Initiatives include:
- Scaling MFS’s ETF offerings, which generated CAD 1.2 billion in inflows in Q1.
- Expanding BGO’s real estate platform through partnerships like the £200 million joint ventures in the UK.
- Pursuing share buybacks under its renewed normal course issuer bid to enhance shareholder returns.

Conclusion: A Resilient Insurer Poised for Growth
Sun Life’s Q1 2025 results demonstrate its ability to navigate a challenging environment through diversification, capital strength, and strategic execution. With AUM growth, segmental resilience, and a LICAT ratio above 140%, the insurer is well-positioned to capitalize on opportunities in its core markets. While risks such as equity volatility and regional underperformance persist, Sun Life’s robust financial metrics and 5% dividend increase reinforce its status as a defensive play in the insurance sector. Investors should monitor its progress in scaling digital tools and managing MFS’s outflows, but the fundamentals suggest a positive trajectory.

As the company continues to execute its Client Impact Strategy, its Q1 performance serves as a strong foundation for sustained growth in 2025 and beyond.