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Sun Life Financial (SLF) |
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WIKI ANALYSIS
Sun Life Financial (NYSE: SLF) is a financial services firm based in Canada. SLF provides investment management, savings, pension, and health insurance products to both individual and corporate clients. As an insurance provider, SLF will seek to profit from increasing insurance demand due to the aging "baby boomer" population. In addition, the firm's large portfolio of assets make it at risk to fluctuating interest rates.
Business Overview
In the past fiscal year, Sun Life incurred declines in both revenue and net income.[1] For the current fiscal year, SLF is expecting to have low volatility and continue to have high dividend rates.[2]
Trends and Forces
Aging US Population Causes Shift in Insurance Demand
The "baby boomer" generation is heading towards retirement, which is expected to create robust demand for various insurance and wealth accumulation products. Increased longevity means that that this group will need to generate enough wealth to last decades into retirement. As a top insurance company with strong brand recognition and a diversified portfolio of products, SLF is very well positioned to take advantage of this demographic shift.
Sun Life's Portfolio is Sensitive to Interest Rate Risk.
Interest rates will affect any firm involved in any type of investment or firm that issues corporate debt or equity. Changes in the interest rate will invariably change the fundamental values of both equity and debt, since the fundamental value of debt is determined by the time weighted average of payments discounted by current short or long interest rates, and the fundamental value of equity is determined by the value of a firm today along with any projects in the future discounted by some factor over the risk free interest rate. Sun Life's large assets makes it particularly effected by the interest rate.
Competition
- Manulife Financial (MFC) MFC is also a Canadian financial services firm that provides pension and health insurance products.
- MetLife (MET) MET competes with SLF in the health insurance, pension, and savings businesses.
- Prudential Financial (PRU) PRU also competes with SLF for health insurance and pension clients.
- Royal Bank Of Canada (RY) RY is a Canadian bank that competes with SLF for investment management clients.
References
- ↑ SLF 2010 Annual Report
- ↑ Bloomberg, "Fitch Affirms Sun Life Financial Inc's Ratings; Outlook Stable," 06/22/2011
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