Sun Life Financial Services

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Case Details:

Case Code : BSTR112
Case Length : 32 Pages
Period : 1982 - 2002
Organization : Sun Life Financial Services
Pub Date : 2002
Teaching Note :Not Available
Countries : Canada
Industry : Financial Services

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Human Resources

Sun Life focused on employee development and offered a comprehensive package of benefits to ensure that its employees were happy to work for the organization. The culture of the organization was people-focused. The company wished to develop a set of shared values, which would serve as a guide for all employees. Sun Life encouraged employees to 'deliver excellence, make a difference, anticipate the future, be open-minded and act with integrity', as was stated in its business code for its employees. To fulfil its role as a socially responsible corporate entity, Sun Life encouraged its employees to support a variety of non-profit organizations and to participate in charitable activities...

Corporate Governance

Sun Life followed a strong 'code of business conduct' right from its inception, and this formed the basis of its principles of corporate governance in later years. The objectives of Sun Life's 'code of business conduct' were:

To demonstrate to the public and stakeholders that Sun Life's ethics were sound;

To describe Sun Life Financial's values and standards of business conduct;

To guide employees on how to resolve potentially difficult situations and conflicts of interest;

To promote principles of respect and fairness in the workplace and in dealings with the public and stakeholders...

Financial Performance

Sun Life's revenues increased to C$16.7 billion in 2001 from C$16.2 billion in 2000, an increase of C$483 million or 3% (Refer Table IX for Sun Life' financial performance summary). The company's strong performance in insurance premiums and higher investment income was offset by decreases in annuity premiums and fee income.

In 2001, ROE declined to 12.8% from 13.1% in 2000 - this decrease was attributed to the increased equity base in 2001. Another reason for the decrease was that Sun Life had invested some excess funds, which had been raised for the acquisition of Keyport Financial, in low-yield short-term securities. This adversely affected the company's overall performance in 2001...

Future Outlook

With the acquisition of Keyport, IFMG and Clarica, Sun Life emerged as one of the largest players in the North American insurance markets in 2002. The company's management stated that it would strive to consolidate its business operations and achieve its objective of being among the top ten players in the North American market. Analysts pointed out that with the enactment of new financial services legislation in Canada in late 2001, consolidation in the industry would increase, and by 2004, the Canadian insurance market would be dominated by only three or four players...

The Global Life Insurance Industry

Insurance is essentially a social device to reduce or eliminate risk of loss to life and property. A large number of people form an association that shares risks attached to individuals. The risks which can be insured against include fire, the perils of sea, death, accidents and burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.

The insurance business is divided into 1) life insurance and 2) non-life (general) insurance, which includes fire, marine, social, and various other forms of insurance. The life insurance industry across the world has evolved over many decades based on the principle of insurance being a collective bearing of risk, which offers individuals an opportunity to protect themselves...

The Canadian Life Insurance Industry

Canada, like the US, is a high-tech industrialized country. Its market-oriented economic system, pattern of production, and high living standards are points of similarity with the US. Canada had an annual growth rate of 3% on average since1993. In the same period, unemployment was falling and government budget surpluses were being diverted to the reduction of public sector debt. There was a dramatic increase in trade and economic integration with US due to 1989 US-Canada Free Trade Agreement and the 1994 North America Free Trade Agreement (which included Mexico)...


Exhibit I: Sun Life - Employee Benefits
Exhibit II: Consolidated Statement of Operations
Exhibit III: Consolidated Statements of Cash Flows
Exhibit IV: Stock Price Chart (1999-2002)
Exhibit V: Eight-Year Summary Financial Statements


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