TORONTO — Sun Life Financial Inc.'s chief executive says the potential upside of operating the new Canadian dental care plan outweighs the risks as the insurer pushes further into the health benefits space.
Chief executive Kevin Strain said Thursday that the insurer has the capacity to take on the program, which the government says is the largest coverage rollout in the history of Canada, potentially extending coverage to nine million Canadians.
"It's quite significant, they're pretty big numbers," said Strain. "We have the scale to deliver on this."
The federal government announced in early December that it had awarded a contract worth roughly $747 million to Sun Life to help administer the program over five years, with potential to extend it another five.
The rollout of such a large program has left many in the dental industry pushing for more details on how it will work and raising concerns about compensation, but Strain said the program seems like a good opportunity for Sun Life.
"I actually think the upside is better than the downside, right, we're actually going to help Canadians with their dental health."
He said his own 83-year-old father, who didn't have dental coverage, was excited after recently getting his introductory package in mail.
The dental contract comes as Sun Life has been working to push further into the health side of group benefits and client coverage in recent years.
Sun Life bought DentaQuest, the largest provider of Medicaid dental benefits in the U.S. for $3.1 billion in 2021. It reported in its latest results that its U.S. dental business has recorded more than US$650 million in sales since closing the acquisition in mid-2022, and has about 36 million members as of Jan. 1.
It also bought Dialogue Health Technologies Inc., a Canadian virtual health care and wellness platform, in a $365-million deal last year, having partnered with Dialogue in 2020 to launch Sun Life's Lumino Health online platform.
In November, the insurer also invested $9.5 million in Pillway, an online pharmacy operator.
"We've been building out new capabilities in the group benefits," said Strain. "I'd say over the past three years that we've really accelerated our thinking of group benefits in Canada being a health business."
The insurer, which also has an extensive and growing presence in Asia, is focusing its health efforts on the Canadian and U.S. markets for now, as programs have to align with national care systems and would have to expand country by country, he said.
Overall, group health and protection made up 32 per cent of sales last year, while wealth and asset management made up 41 per cent and individual protection accounted for 27 per cent.
Late Wednesday, the insurance giant reported underlying net income of $983 million for the last quarter of 2023, up from $892 million in the fourth quarter a year earlier.
This report by The Canadian Press was first published Feb. 8, 2024.
Companies in this story: (TSX:SLF)
Ian Bickis, The Canadian Press
