Sun Life Financial CEO says U.S. tariff impacts on market appear manageable so far

The impact of U.S. tariffs on financial markets has been manageable for Canada’s second-largest life insurer, its chief executive officer says.

Sun Life Financial Inc. SLF-T CEO Kevin Strain said Friday he has been scenario-testing impacts on his company as a cautionary measure amid current economic uncertainty.

During an interview with The Globe and Mail, Mr. Strain said Sun Life has a very strong capital position, but it is an unusual time in the industry, so he wants to be cautiously prepared.

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“We are trying to make sure we understand the situation. But look where everything is – markets are a little bit down but have roughly held in, interest rates are roughly the same, the currency is roughly the same as well as credit,” he said.

“We don’t want to overreact to the negative, so I think we’re preparing for the worst, but not expecting the worst.”

Sun Life beat analysts’ profit expectations as it reported first-quarter “underlying” net income of $1.04-billion, or $1.82 a share. That is up from $875-million, or $1.50 a share, in the same period last year. Sun Life’s net income for the quarter was $928-million, up from $818-million in the first quarter of 2024.

Analysts’ expectations were set at $1.70 a share, according to an RBC Capital Markets report.

The insurer saw its profit increase across all three of its geographic segments: Canada, Asia and the United States. In recent months, Mr. Strain has spoken directly with local governments in all three.

“We are able to get a much better perspective than if we were just in one of those locations and I can see that in all of the markets where we do business, governments want strong economies, and they’re trying to do their piece to create that,” he said. “Governments all over the world are thinking about prosperity, and wealth generation, and retirement, but health care is a massive issue.”

During these meetings – at home and abroad – Mr. Strain said he has talked with health ministers about the growing concern of rising health care costs.

“It’s having an impact on their citizens and on their deficits,” he added.

Sun Life’s U.S. segment reported $218-million in underlying income, up 15 per cent from $189-million in the same quarter in 2024.

However, conversations about proposed Medicaid cuts coming out of Washington could indirectly affect Sun Life’s U.S. group-benefits business, as some state-funded health plans face uncertain revenue, Sun Life’s U.S. head, Dan Fishbein, said during an analyst call on Friday.

Responding to a question on whether Medicaid cuts would hit profits at group-benefit subsidiary DentaQuest – a 2021 acquisition that has previously seen profits stall owing to public-health restrictions around COVID-19 – Mr. Fishbein said he doesn’t see any direct impact to the dental group-benefits business, but that it could have a ripple effect if certain U.S. states look to reduce their health budgets.

“That is making some of the second round of renegotiations that we’re engaged in this year – to get our pricing back to where it needs to be – go somewhat more slowly than perhaps we had hoped or expected,” Mr. Fishbein said. “So that’s certainly a factor.”