TORONTO, May 10 (Reuters) – Shares of Sun Life Financial (SLF.TO), opens new tab fell nearly 6% on Friday after Canada’s No. 2 insurer missed quarterly profit estimates due to weakness in its dental insurance business in the United States, with CEO Kevin Strain expecting turbulence in the near term.
Sun Life posted its first profit miss in 12 quarters after market close on Thursday, also impacted by the sale of its Sun Life UK business and poor earnings at its wealth and asset management unit.
The company’s shares were down 5.7% by Friday afternoon. Bigger rival Manulife Financial Corp’s (MFC.TO), opens new tab shares were up 1% after hitting a more than 15-year high on Thursday on the back of stronger-than-expected quarterly profit.
Strain said its DentaQuest business still faces some challenges but expects it will hit $100 million in annual income in 2025. When it acquired DentaQuest for $2.5 billion in 2022 as part of a push to expand in the United States it had originally forecast that much income for 2023 for the dental business.
“We’re still a big believer in this business and the acquisition we did and that it’s going to meet the long-term objectives we had,” Strain said.
Medicaid enrollments in Sun Life’s U.S. dental insurance program have declined after the end of the COVID public health emergency last year and costs from the remaining members have increased.
Strain said the company is now negotiating for higher payments from states, with about 25% of its Medicaid business already repriced close to the company’s pricing targets and the remaining expected to be repriced by the end of the year.
Source: Sun Life shares slump with U.S. dental biz recovering only in 2025 / Reuters