Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2020 Earnings Presentation
20 slides from Sun Life Financial's earnings presentation, May 6, 2020
Slide 1: Q1 2020 Financial & Operating Results
Q1 2020 Financial & Operating Results For the period ended March 31, 2020 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-looking statements and non-IFRS financial measures
In this presentation, Sun Life Financial Inc. (“SLF” or “SLF Inc.”), its subsidiaries and, where applicable, its joint ventures and associates are referred to as “we”, “us”, “our”, “Sun Life” and the “Company”. Forward-looking statements Certain statements in this presentation and certain oral state
Slide 3: Dean Connor, President and Chief Executive Officer
Dean Connor President and Chief Executive Officer S U N L I F E • Q 1 2 0 2 0 3
Slide 4: Supporting our employees, Clients, and communities through COVID-19
Supporting our employees, Clients, and communities through COVID-19 Employees and Advisors Clients Communities • 95% of employees globally working • Strong service continuity • Donated more than $2 million globally to from home help support efforts focused on health care, • Longer grace periods for
Slide 5: Key highlights
Key highlights Executing on our ambition to be one of the best insurance and asset management companies globally Financial Accomplishments MFS US$1.8B #1 in Barron’s rankings and ranked in $391 M (37)% $770 M +7% net inflows the top 10 for the 11th time in 12 years Reported net income Underlying net
Slide 6: Kevin Strain, Executive Vice President & Chief Financial Officer
KEVIN STRAIN Executive Vice President & Chief Financial Officer S U N L I F E • Q 1 2 0 2 0 6
Slide 7: Q1 2020 results
Q1 2020 results $ millions YoY Capital management (except EPS, ROE, Book value per share, AUM) Q1’20 Q4’19 Q1’19 Change Reported net income 391 719 623 (37)% Underlying net income(1) 770 792 717 7% 143% SLF LICAT ratio(3) Reported EPS(2) 0.67 1.22 1.04 (36)% 130% SLA LICAT ratio(3) Underlying EPS(1)
Slide 8: Business group performance
Business group performance Reported net income ($ millions) Underlying net income(1) ($ millions) Impact of currency increased reported net income by $7M Impact of currency increased underlying net income by $7M 237 239 256 219 237 242 227 164 150 161 155 124 122 100 80 CORP CORP CAN U.S. AM ASIA CA
Slide 9: Sources of earnings
Sources of earnings Sources of earnings Highlights Common shareholders $ millions Q1’20 Q1’19 Expected profit: continued business growth, with particular strength in Canada Expected profit on in-force business 816 739 and Asset Management Impact of new business 6 (11) Impact of new business: gai
Slide 10: Sales results by business group
Sales results by business group Insurance sales by business(1) Wealth sales by business(1) $776M $59.9B (1)% YoY +66% YoY Value of new business(1)(2) Canada U.S. Asia $380M Asset Management Canada Asia (1)% YoY Canada insurance sales down 19% driven by lower large case Canada wealth sales up $2.
Slide 11: Operating expenses
Operating expenses Expenses up 3% on a constant currency basis ($ millions) 1,668 34 40 12 (73) 9 43 1,733 Operating expense increase driven by growth in business volumes and restructuring costs Q1 2019 Controllable Contractual Currency Fair Value Impact of Restructuring Q1 2020 Expenses Volumes Adj
Slide 12: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio Debt securities by credit rating As of March 31, 2020 • Considerable de-risking of the Investment profile BB and lower portfolio in recent years to prepare As of March 31, 2020 1% BBB for an economic slowdown AAA 24% • 97% of fixed income rated 22%
Slide 13: Highlighted exposures – debt securities and loans
Highlighted exposures – debt securities and loans Oil & Gas Aviation, Hotels, • 97% investment grade Exposure Oil & Gas Restaurants & Real Estate(1) • 60% in pipelines, storage or transport March 31, 2020 Leisure ($ millions) Value % Value % Value % AA - A 1,611 35% 2,068 64% 1,397 57% Aviation, Hot
Slide 14: Actively monitoring potential COVID-19 impacts
Actively monitoring potential COVID-19 impacts Equity market impacts on Asset Management & Wealth businesses Lower for longer interest rate environment Credit impacts from downgrades and impairments Potential Sales headwinds as a result of social distancing measures Impacts(1) Elevated unf
Slide 15: Appendix
Appendix S U N L I F E • Q 1 2 0 2 0 15
Slide 16: Reconciliation of underlying net income
Reconciliation of underlying net income Q1’20 Q1’20 $ millions Pre-tax Post-tax Reported net income 391 Net equity market impact (including basis risk impact of $(57) million)(1) (483) (360) Net interest rate impact (including credit spread impact of $127 and swap spread impact of $39 million)(1) 33
Slide 17: Other notable items
Other notable items Impact of other items on our net income Q1’20 Q1’20 $ millions Pre-tax Post-tax Experience related items Impact of investment activity on insurance contract liabilities 166 130 Credit (21) (15) Mortality (3) (4) Morbidity 9 9 Lapse and other policyholder behaviour (16) (14) Expen
Slide 18: Market movements and impacts in the quarter
Market movements and impacts in the quarter Equity Market Impacts YTD MTD ($millions, after-tax) Q1 2020 Market Movements March 31, 2020 April 30, 2020 Equity market movement and volatility (303) S&P/ TSX (21.6)% +10.5% Basis risk (57) S&P 500 (20.0)% +12.7% CA 10 - year (101) bps (15) bps Total (36
Slide 19: Reconciliation of Select Net Income Measures
Use of Non-IFRS Financial Measures We report certain financial information using non-IFRS financial measures, as we believe that these measure provide information that is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from peri
Slide 20: Forward-Looking Statements
Forward-Looking Statements From time to time, the Company makes written or oral forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities l