TORONTO (Reuters) – Sun Life Financial Inc. CEO Kevin Strain said on Tuesday the company’s U.S. dental insurance business was improving after losses last quarter and that it was on track to meet its $100 million profit target in the segment in 2025.

Shares of the Canadian insurer rose about 5% in midday trading in Toronto after second-quarter earnings beat expectations.

The Dental segment reported a loss in the second quarter due to Medicaid redeterminations, which put pressure on Medicaid and Medicare Advantage revenues and led to a 5% decline in U.S. segment core revenue.

As more Medicaid plans are priced and costs are generally reduced, improvements are likely to occur in this segment.

About 90 percent of Medicaid contracts are expected to have to be recalculated this year, the company said.

“We continue to believe that the U.S. is a good long-term growth market for us in both the group insurance business and the asset management business of MFS and SLC,” Strain said in an interview.

As part of its strategy to expand its presence in the United States, Sun Life has acquired dental benefits provider DentaQuest, which now accounts for around a fifth of its total basic income.

“We would look to expand growth there (in the US) as well as in Asia,” he said, adding that the US is a growing segment with potential in both insurance and asset management.

Jefferies analyst John Aiken noted that while the U.S. dental business faces challenges, it offers “upside potential that should be easy to see given management’s actions to date.”

Sun Life’s share price gains on Tuesday have pushed the company’s performance up year-to-date. Shares in competitor Manulife have gained 18.8 percent so far this year.

(Reporting by Nivedita Balu in Toronto)