SUN LIFE FINANCIAL INC. earnings calls

U.S. stop-loss reserves and dental

Q (Gabriel Dechaine · National Bank): He asked why the stop-loss line was described as “unfavorable due to seasonal reserve build” and whether that was truly unexpected. He also asked how much Medicaid dental business Sun Life plans to shed and on what timeline.

A: Management said the Q2 unfavorable line reflects a known seasonal IBNR reserve build and was expected. They said loss ratios remain stable in the mid-70s. On dental they said membership is down 9% and they will shift mix toward commercial over the next one to two years, with membership expected to stay lower this year.

Stop-loss sales and competition

Q (Mike Ward · UBS): He asked why stop-loss sales were so strong and whether the firm is confident in margins on new and renewal business. He also asked about Asia, specifically sustainability in Hong Kong and the MCV client focus.

A: They said they remain disciplined on pricing and underwriting and are benefiting from advanced analytics and underwriting work. They said their differentiated health capabilities and cost-containment focus help in the hard market. On Hong Kong, management said the fundamentals are strong, distribution is diversified, and the MCV client base is about 30% and supports continued momentum.

Canada insurance gains; Bell deal payment

Q (Doug Young · Desjardins): He asked whether Canada’s favorable insurance experience is sustainable and if the division can keep outperforming. He also asked whether the Bell purchase price paid in shares used a fixed price and how that will show up in Q3.

A: Jessica said the quarter’s insurance gains came from mortality and morbidity and from sustained investments in case management and capabilities, and that average pre-tax experience over eight quarters is about CAD 57 million. Tim confirmed almost 80% of the Bell purchase price was paid in shares based on the 20-day average before closing, that it was about CAD 400 million and 3.6 million shares, and that the amount is fixed and will show up in Q3.

"That was just shy of CAD 400 million overall for the total purchase, and it was about 3.6 million shares." — Tim Deacon (CFO)

Canada experience and long-term disability

Q (David Andrich · Jefferies): He asked if the positive insurance experience will continue and whether Sun Life sees long-term disability headwinds others have reported.

A: They expect the insurance experience line to remain positive, though quarter-to-quarter fluctuations can occur. On long-term disability they said mental-health related claims have been a known trend since COVID and they are addressing it with pricing discipline, sustained investments in people, processes, and expanded programs like the Ontario pilot now rolling out nationally.

"We do expect that I think the insurance experience line to continue to be positive." — Jessica Tan

Hong Kong MCV share; stop-loss outlook

Q (Nick Lu · Evercore): He asked whether MCV represents about 30% of Hong Kong sales and how bank partners are reacting to regulatory updates. He also asked if they have an early view on rate changes for the 1-1-27 stop-loss cohort.

A: Manjit confirmed MCV is roughly 30% of Hong Kong clients and said banks are exercising more diligence on account openings, noting a strong partnership with Dah Sing. David said the 1-1-26 cohort is still early (about 15% complete) but their technical analysis and emerging experience are giving confidence in their pricing approach and they will continue to monitor.

Stop-loss earnings and Asia CSM drop

Q (Paul Holden · CIBC): He asked why strong stop-loss premium growth did not show bigger earnings gains and whether IBNR conservatism is masking earnings. He also asked why Asia APE sales rose while new business CSM fell year-over-year.

A: David said stop-loss momentum is strong but overall benefits results were reduced by the employee benefits business reverting from a record Q2 2025, which included one-time items that did not recur. Manjit said Asia had unusually high margins last year from regulatory-driven volume tailwinds; margins have since evened out, but new business CSM still totaled CAD 277 million and supports earnings growth.

High-net-worth mix and SLC growth

Q (Tom MacKinnon · BMO Capital): He asked what share of high-net-worth sales come from China and whether offshore trust changes could affect momentum. He also asked what to watch at SLC to drive the stated medium-term 20% growth and margin recovery.

A: Manjit said MCV is about 10% of the high-net-worth business and he does not expect material impact from offshore trust implications. Steve said SLC growth depends on strong strategy performance, positive net flows, and expense management; unifying acquired businesses into a platform should enable expense efficiencies and drive asset growth. He added they expect operating margins to expand and be over 30% in the coming years.

"We expect operating margin to be over 30% over the coming years." — Steve Peacher

Hong Kong pricing, stop-loss strategy, Medicaid dental

Q (Mario Mendonca · TD): He asked again what share of Hong Kong sales are MCV, whether any pricing concessions caused the CSM decline, whether stop-loss growth is organic or M&A-driven, and if Medicaid dental government sales being zero this quarter is the new normal.

A: Manjit confirmed MCV is 30% of Hong Kong sales and said product evolution over the past year changed features and mix, so margins have adjusted but remain mid-30% overall. David said stop-loss is an organic priority given their analytics and underwriting, and Kevin said M&A in stop-loss is not a priority. On Medicaid dental, management said government sales are lumpy, they will keep a disciplined approach, and they have a pipeline but will only keep profitable business.

"I think if you pull back and you look at the overall margins we're generating, we're still generating mid-30% margins, which are delivering the lift in ROE you're seeing." — Manjit Singh