“Over the last ten years we have transformed the US business from a commercial investment business to an investment-driven investment strategy,” said Dan Fishbein, president of Sun Life Financial US. “The acquisition of DentaQuest continues this evolution, transforming our US business into a large, healthcare-focused group, which accounts for more than 70% of our revenue from clinical services.
“These changes have transformed Sun Life US from a capital-intensive business to a lean and strong cash-generating business; from businesses with a long-term risk profile to smaller risk-adjusted and cash-strapped businesses; from low-growth markets to high-growth markets; and from return on equity (ROE) in a single figure to return on equity in the teenage years.”
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DentaQuest, based in Boston and founded in 2001, has brought more than 33 million members in 36 states and more than 2,400 employees to Sun Life US. At the time of the purchase, it was the largest provider of US Medicaid dental care, with the growth of Medicare Advantage, sales, and the US Affordable Care Act (ACA).
The leadership team for the integrated dental business under Sun Life US consists of DentaQuest integrators and Sun Life leaders, all focused on growth strategies, revenue synergies, and operational optimization, according to Fishbein.
“We are approaching the merger with great care and our goal is to realize the full potential of what we are doing, including delivering value to our customers, delivering what we want and saving value to our shareholders, creating new opportunities for our employees, and providing a great merger experience for all,” he said. .
“We have a strong track record of successfully integrating profitable businesses into groups, while minimizing disruption for our customers. Many of the leaders who managed the Assurant integration are involved in the DentaQuest integration. We are focused on integration projects that will support our goal of $60 million in cost savings by 2024. We are off to a strong start with an integrated leadership team, stakeholders, and a detailed plan for the remaining steps.”
Sun Life US announced its second-quarter 2022 financial results on August 3, where it reported insurance sales of $213 million, up 12% year-over-year, led by higher dental and medical loss sales. The business reported revenue of $213 million, up 36%, or $56 million, from a year earlier, but partially due to costs related to the DentaQuest acquisition.
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When Sun Life first announced DentaQuest, it gave a projection of 42 percent on an ROE basis in 2022. In 2024, after realizing the financial combination, Sun Life expects the acquisition to add approximately 50 basis points to the underlying ROE.
“DentaQuest basic income in one month [June 2022] it was $10 million,” said Fishbein. “We are confident in the expansion we made when we announced it, and the results in June will support that. We saw higher margins in June than we expected, and slightly lower revenue, but the higher margin made up for the small difference in revenue. All in all […] This first month gives us confidence in our previous intentions. “
Fishbein said he is excited about the future at Sun Life US, adding: “We now have four strong businesses with leading positions in the dental and loss market, and a top 10 employee benefit business. Although recent results have been impacted by the impact of COVID, once this is over, We remain committed to achieving our medium-term goals in the US, including a 10% or higher return on investment in our businesses.”