TORONTO--Sun Life Financial Inc. expects to complete most of its planned U.S. job cuts by mid-year, Chief Executive Dean Connor said Thursday.
Connor, who took over in December when Don Stewart retired, moved quickly and decisively to reshape Canada's third-largest life insurer to adapt to the ultra-low interest rates that have battered profits and tied up capital. His first step entailed discontinuing the sale of individual variable annuities and life insurance, a move that eliminates about 800 jobs, or almost 27% its U.S. insurance workforce.
All job reductions have been identified and several people have already left, Connor said in an interview. The process will be completed by mid-year, he said.
"We're on target for the expense reductions we identified in December and the repositioning of the business is on track," he said.
Sun Life Wednesday posted a fourth-quarter net loss of C$525 million, or 90 Canadian cents a share, after taking hefty charges related to revaluing variable-annuity and segregated fund insurance contracts for ultra-low rates and shuttering its U.S. individual life insurance business. The results disappointed some analysts and once again sparked concern over Sun Life's dividend.
Thursday in Toronto, the stock is down 0.4% to C$20.80.
Connor said the company is comfortable that earnings can support a high payout ratio of 50-60% and its capital position remains strong. "Decisions around the dividend are taken over the mid-term as opposed to the next quarter," he said. There is "no specific trigger that would change the dividend."
While Sun Life retrenches in the U.S. life insurance business, it's ramping up its build-out in Asia. In China, the company sells products in more than 100 cities, which account for about 70% of the nation's insurance sales, through bank branches, more than 2,760 of its own Sun Life Everbright agents, telemarketing and the workplace, he said.
"We can get larger in the markets in which we already operate," Connor said. "We are trying to grow our agency force and sales and telemarketing, both of those are inherently more profitable than the bank channel, and we are working with bank partners to augment overtime the profitability of the sales in the bank channel."
In India, where regulatory change forced the industry to revamp products and retrain their agents, Connor said Sun Life Birla has 15,000 employees and about 140,000 agents. "That's a business that continues to grow, and we are growing our footprint," he said. "I think, in the mid-to-longer term, it has terrific prospects. Unlike China, we've turned the corner and we're making a profit in India."
The company hasn't said when it expects its business in China will be profitable.