Analysts see a challenging year ahead for Canada’s big life and health insurers as macroeconomic pressures have varying impacts on their operations
He says the insurance sector has held up well and stands to rebound in 2023 as interest rate increases peak and inflation eases.
In between the two is Sun Life, which has broadened its base with wealth management acquisitions and is targeting emerging markets for growth in insurance and other financial services. Its shares are down 8 per cent with its dividend yielding 4.6 per cent. “We like the stability of that core insurance business,” he says. “But outside of that, each of these companies has growth drivers that aren’t obvious.”
Nigel D’Souza, analyst and partner with Veritas Investment Research Corp. in Toronto, sees the global economic outlook as offering stiff headwinds for profits. Where Mr. Johal sees rebound potential in wealth management for the sector, Mr. D’Souza sees higher risk. “If you’re just betting on equity markets doing better, why do that owning Sun Life? Why not just own a market exchange-traded fund or an index fund?” he says.
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