Manulife, Sun Life warn of more COVID-19 hurdles in Asia

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FILE PHOTO: The Sun Life Financial logo is seen at their corporate headquarters in Toronto

By Nichola Saminather

TORONTO – Senior executives at Canada’s two biggest life insurers said on Thursday they were bracing for more COVID-19 related uncertainties in their fastest-growing market of Asia after a resurgence of the virus and lockdowns in the region weighed on their quarterly earnings.

Manulife Financial Corp and Sun Life Financial Inc have been targeting expansion in the region, which has been their growth engine in many past quarters. But waves of COVID-19 that have hit different countries at different times and repeated lockdowns have increased claims and weighed on business growth.

“What we have experienced in Asia from time to time is that there is the resurgence of COVID and the containment measures do come back and have an impact on volumes,” Anil Wadhwani, chief executive of Manulife’s Asian business, said on an analyst call on Thursday. “We don’t believe that the recovery is going to be immediate.”

Manulife’s core profit from Asia fell almost 5% due to pandemic-related challenges in Indonesia, the Philippines and Vietnam, but growth in asset management and Canada earnings helped drive a 4.5% increase in company-wide profit.

Smaller rival Sun Life paid out almost C$87 million ($70 million) in total claims related to COVID-19 this quarter, bringing payments since the pandemic began to about C$700 million, Sun Life’s Chief Executive Kevin Strain told Reuters.

Death claims related to COVID-19 in Indonesia, the Philippines and India contributed to a 12% reduction in underlying earnings for Asia in the third quarter from a year earlier for Sun Life.

Its U.S. business also came under some pressure from the pandemic, with the three months through September the worst for death claims related to COVID-19 for working-age people, Strain said.

Underlying profit overall rose 7% thanks to strength in its asset management unit, and the company raised its medium-term return on equity target to over 16% from the current 12-14%.

“It’s hard to tell whether there’s going to be new variants,” Strain said in an interview, referring to the virus. “What you are seeing in Asia is higher vaccination rates. That should help in terms of claims, but I don’t think we’re out of COVID yet.”

Sun Life shares fell 0.8% to C$70.80 in morning trading in Toronto. Manulife shares dropped 2.6% to C$24.36. The Toronto stock benchmark added 0.5%.

($1 = 1.2431 Canadian dollars)

(Reporting by Nichola Saminather; Editing by Will Dunham)