TORONTO — COVID-19 has delivered a rough quarter to Sun Life Financial Inc., but its top executive is confident the insurer will bounce back as demand for virtual care and increased coverage grows.
The Toronto-based insurer said this week that market declines triggered by the pandemic caused its net income to plunge by 37 per cent to $391 million in its first quarter.
Sun Life earned 67 cents per share for the three months ended March 31, down from $1.04 per share or $623 million a year earlier.
Even as revenues were dropping, customers were looking to beef up coverage in areas like short-term disability, critical illness or virtual care — a move Sun Life president and CEO Dean Connor doesn't believe will slow down.
"We have seen in the past, after major crises like the Spanish flu and World War II, and we're starting to see it here: people's interest in insurance goes up," he told The Canadian Press.
"They're more focused on insurance and they have reason to think about it more and that drives more sales."
His remarks came as the pandemic has pushed Sun Life — and every other insurer — to quickly adapt to a population with very different demands.
As some companies have mulled bankruptcy, layoffs and pay cuts, extended coverage and virtual care is on the minds of more Canadians.
Choices in those areas are not being made slowly anymore.
"Every business has found a whole new gear, including Sun Life, a gear we didn't know we had. We see our clients making decisions at lightning speed," Connor said.
His business has been impacted because with Canadians asked to physically distance and stay home as much as possible, doctors offered virtual appointments and patients put off seeking care for non-emergency ailments. Dentists, chiropractors, physiotherapists and other medical professionals closed their offices.
Sun Life responded by doling out payment grace periods and offering credits against dental and non-drug-related extended health care premiums in hopes of reducing invoices for Canadian businesses, who are already struggling with low cash flow.
It offered 50 per cent credit per month against paid dental premiums and a 20 per cent credit for non-drug-related, extended health care premiums.
Sun Life also delved into mixing technology and coverage with its Lumino Health Virtual Care offering, a partnership with Montreal-based Dialogue Technologies and a referral network the company runs with Akira, EQ Care and Maple.
"A lot of these tools we had already built out before the crisis, but the crisis has forced everyone to accelerate the adoption of these tools, so I think that's another benefit or silver lining to this cloud," Connor said.
COVID-19 had a mixed impact on the company. Individual insurance and wealth sales in April totalled about 80 per cent and 90 per cent of the prior year, and were aided by re-pricing strategies and virtual health-care programs that Sun Life said have been popular.
Sun Life's underlying earnings grew by seven per cent in the quarter to $770 million or $1.31 per share. That compared with $717 million or $1.20 per share in the first quarter of 2019.
Sun Life's shares gained $3.02 or 6.7 per cent at $47.81 in late afternoon trading on the Toronto Stock Exchange.
But there were "significant" declines too. Second quarter sales are uncertain because of strict quarantine protocols impacting face-to-face sales and the inability to predict when offices will be allowed to reopen and the economy to rebound.
"Realistically, this will be a challenging year for financial institutions and there will likely be reductions to sales, premiums and assets under management levels, credit impacts," Connor said. on the earnings call.
For now, the company is focused aiding the 95 per cent of employees still working from home — a transition that was speedy because it was aided by 1,200 laptop computers Connor has said the company had stowed away "for a rainy day."
Meanwhile, in Asia, it is helping workers in China and Vietnam return to offices on a gradual basis.
Those uncomfortable about heading back to traditional offices will be allowed to continue to work from home.
Those who return will be rotating what days of the week they can visit the office, so workers can physically distance, Connor said.
There will also be increased sanitization of shared surfaces, escalators and door handles that will give workers the confidence to feel safe in the office.
Connor will have an eye on the return to offices in Asia because of the lessons it can provide for Canada and beyond.
"We are watching closely, we're benefiting, we're learning," he said.
This report by The Canadian Press was first published May 6, 2020.
Companies in this story: (TSX:SLF)
Tara Deschamps, The Canadian Press