Sun Life shares sink after profit disappoints, warns of US challenges

TORONTO, Feb 13 (Reuters) - Sun Life Financial's SLF.TO shares fell 9% on Thursday after the Canadian insurer reported quarterly profit below analysts' estimates and warned its U.S. business would face challenges in 2025.

The company said its U.S. business faced industry-related difficulties, resulting in higher claims related to cancer treatment or other severe conditions in its medical stop-loss business.

Medical stop-loss insurance protects employers from large claims that may exceed a set limit.

The U.S. business, which contributes one-fifth of Sun Life's earnings, recorded a 39% decline in underlying net income in the fourth quarter.

Executives told analysts on a call on Thursday that the company saw a "change in the severity of stop-loss claims" in the fourth quarter and could raise prices this year to lessen the impact.

"One quarter certainly does not make a trend, but weaker results out of the U.S. in particular will feed into concerns," Scotiabank analyst Meny Grauman said in a note.

The earnings miss is the second for Sun Life in fiscal 2024, which was marked by a challenging time for its dental business that it built through the acquisition of DentaQuest for $2.5 billion in 2022.