Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q3 2021 Earnings Presentation
39 slides from Sun Life Financial's earnings presentation, November 2021
Slide 1: Building Sustainable Shareholder Value
Q3 2021 Building Sustainable Shareholder Value
Slide 2: Agenda
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 2
Slide 3: A $41.2 billion leading global financial services organization
A $41.2 billion leading global financial services organization1 42,100 Employees* Offices in 27 markets* 140,900 Advisors* Operating through a balanced and diversified model and focused on creating shareholder value now and in the future $1.39 trillion AUM 2 *At the end of 2020. Includes Asia joint
Slide 4: The Sun Life story
The Sun Life story • A diversified business model, with four strong pillars that can each compete, win and grow in their respective markets and that leverage each other • Bound together by a strong balance sheet and risk culture, including no U.S. Variable Annuity or U.S. Long-Term Care • Building o
Slide 5: Executing on our ambition to be one of the best asset management and insurance companies
Executing on our ambition to be one of Our Purpose: Help Clients achieve lifetime financial security and live the best asset management and healthier lives insurance companies globally Four Pillar Strategy Key Priorities A global leader in both public and AM alternative asset classes through 1 Think
Slide 6: Consistently delivering value to shareholders through our balanced and diversified business mix
Consistently delivering value to shareholders through our balanced and diversified business mix 5- y e ar t ot al s har e hold er r e t urn 1 B us i ne s s t y p e d i v e r si fi cat i on Sept ember 30, 2021 Q3 2021 underlying net income 2,3 Sun Life 13.0% Run-Off Wealth 9% Asset Managers 20.6% 16%
Slide 7: Business mix shift and strong execution support an increase in our underlying ROE objective
Business mix shift and strong execution support an increase in our underlying ROE1,5 objective We’ve shifted our mix to capital-light Strong track-record of execution on our and lower interest sensitive businesses medium-term financial objectives Mix as % of Medium-term 16%+ 5-year 2021 2012 20202 U
Slide 8: Digital leadership
Digital leadership Building new digital models and a partnership ecosystem • New digital partnerships in Asia, including Cermati, Moneygment and TheBank.vn • Lumino Health and Sun Life GO in Canada • Partnering with Conquest Planning Inc. in Canada to provide a digital financial planning tool • Turn
Slide 9: Leveraging global trends
Leveraging global trends Individual and employer attention on Digital acceleration physical and mental health Demographic shifts Sustainability and DE&I expectations Growing prosperity in Asia Continued growth of alternative asset classes Gig economy and shift in nature of Future of work and rising
Slide 10: Agenda
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 10
Slide 11: Business group performance
Business group performance R eported net i ncome ($ millions) Underl y ing net i ncome 1 ($ millions) I m pa ct of cur r ency t r a ns la t ion decr ea sed r epor t ed net incom e by $ 4 1M I mpa ct of cur r ency t r a ns la t ion decr ea sed under lying net income by $ 3 6 M +2% +141% +20% +22% (1)
Slide 12: Canada is a growth market for Sun Life
Canada is a growth market for Sun Life Q3’21 highlights Underl y ing net i ncome 1 ($ m illions) • Ella, our digital coach, proactively connected with Clients over 13 million 1,073 1,108 1,036 1,012 times in 2021 YTD, driving an additional $582 million in wealth deposits, and $800 million in insuran
Slide 13: Shaping the industry and capitalizing on opportunities in Canada
Shaping the industry and capitalizing on opportunities in Canada • Leveraging our worksite advantage • Expanding our role in health and well-being, including Shaping the market as a increasing our focus on mental health leader in our Canadian home • A leader in the growing pension risk transfer mark
Slide 14: Deepening Client relationships in U.S. Group Benefits
Deepening Client relationships in U.S. Group Benefits Q3’21 highlights Underl y ing net i ncome 2 (US$ m illions) 469 425 396 399 • On October 3, 2021, announced intention to acquire DentaQuest Group, Inc. 1, which will position Sun Life as a leading dental benefits provider Interest on par seed • L
Slide 15: Key trends and opportunities in the U.S.
Key trends and opportunities in the U.S. Improving health outcomes and costs Large, complex U.S. benefits ecosystem, anchored by the We are focused on making things easier for Clients while $3.8T healthcare market1 improving health outcomes and reducing costs Most U.S. employees are covered by a sel
Slide 16: Positioned in Asia's largest and fastest growing markets
Positioned in Asia’s largest and fastest growing markets Q3’21 highlights Underl y ing net i ncome 1 ($ millions) 579 572 • In Singapore, we launched our first High Net Worth life insurance product, 550 extending our presence to eight markets in Asia and reinforcing our position 523 among the global
Slide 17: Capturing growth opportunities in Asia
Capturing growth opportunities in Asia Local Markets International Hubs Philippines Vietnam International • Ranked 1st in insurance • 6th in insurance sales and 4th in • Leverages the high-net-worth sales1,2 bancassurance sales1,6 opportunities in Asia to offer Clients and distribution partners best
Slide 18: Unlocking value through listing of India Asset Management Joint Venture
Unlocking value through listing of India Asset Management Joint Venture One of the largest Asset Managers in India1 with a strong track record of performance ABSLAMC’s initial valuation2: approximately C$3.4 billion Net income 3 Assets Under Management 4 (US$ millions) June 30, 2021 (US$ billions) O
Slide 19: Expanding asset management capabilities
Expanding asset management capabilities Q3’21 highlights Underl y ing net i ncome 1 ($ m illions) 1,297 1,128 • 92%, 84% and 83% of MFS’s U.S. retail mutual fund assets ranked in 1,004 925 the top half of their Morningstar categories based on ten-, five- and three-year performance, respectively • Q3
Slide 20: MFS: diversification of assets under management
MFS: diversification of assets under management 1 A sset cl ass mi x I nv estor ty pe US$, as at September 30, 2021 US$, as at September 30, 2021 Non-U.S. Balanced Retail Fixed 5% 6% Insurance Income 9% 13% U.S. Equity 42% US$657 U.S. Retail 53% billion AUM1 Non-U.S. Institutional Equity 32% 40% S U
Slide 21: SLC Management: diversification of assets under management
SLC Management: diversification of assets under management 1 A sset cl ass mi x I nv estor ty pe $, as at September 30, 2021 $, as at September 30, 2021 Real Estate Endowment/ Cash and Debt Foundation Other 3% 2% 2% Insurance Infrastructure Companies 8% 23% Public Fixed $176 Income Pension 33% Funds
Slide 22: Agenda
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 22
Slide 23: Capital generation provides good capital flexibility
Capital generation provides good capital flexibility Cap ital d ep l oy ment p r ior ities: Funding organic Target dividend M&A opportunities growth payout ratio of and strategic Share buybacks3 40-50%1,2 investments Target minimum cash at the holding company of $500 million2 1 Represents Non-IFRS f
Slide 24: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Inc. Capital metric LICAT 143% SLF Inc. Financial lever age r atio 22.2% Lever age capacity to 25/30% ~$1.2B/$3.6B Cash and other liquid assets $2.8B SLA SLA - External Capital Securities Subordinated Debt Outstand1� F11'1t Call Date Asset Management
Slide 25: Strong capital position with significant deployment potential
Strong capital position with significant deployment potential1 Capi tal depl oyment potential Depl oyment opportunities ($ billions, a t Sept em ber 30, 2021) Type Considerations Cash2 Additional financial $2.3 Organic Making further investments in building out new business leverage to 30% investmen
Slide 26: Low leverage ratios and strong ratings
Low leverage ratios and strong ratings Q3 2021 capital ($ m illions) Subordinated debt 4,434 Tier 2 Sun Life Assurance Company of SLEECS (innovative tier 1 securities) 200 Canada Tier 1 Preferred shareholders’ equity and Financial Strength Ratings 2,531 other equity instruments 1 A.M. Best A+ To tal
Slide 27: Agenda
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 27
Slide 28: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio D ebt s ecu r i t i es by cr edi t r a t i n g • Highly diversified with the I nv e s t m e nt p r ofi l e As o f S e pt ember 30, 2021 largest non government As o f Sept ember 30, 2021 BB and lower BBB- related exposure of 0.4% of BBB 3% 1% total
Slide 29: Agenda
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 29
Slide 30: Our sustainability plan brings our Purpose to life
Our sustainability plan brings our Purpose to life Focused on areas of expertise where we can have the most positive impact: Financial Security Healthier Lives Sustainable Investing • Provide innovative financial • Offer products and tools to help Clients • Manage capital with sustainability embedde
Slide 31: Strong sustainability achievements and recognition
Strong sustainability achievements and recognition Financial Security Healthier Lives Sustainable Trusted and Responsible Investing Business • $1B of insurance • $38M committed to • $60.1B sustainable • Appointed Chief Sustainability Officer coverage and $700M of diabetes globally since investment A
Slide 32: Appendix
Appendix 32
Slide 33: Market movements and impacts in the quarter
Market movements and impacts in the quarter Equity Market Impacts Q3’21 Q2’21 Q3’20 ($millions, post-tax) Market Movements Q3’21 Q2’21 Q3’20 Equity market movement and volatility 19 95 42 S&P/ TSX (0.5)% +7.8% +3.9% Basis risk 5 4 8 S&P 500 +0.2% +8.2% +8.5% Total 24 99 50 CA 10 - year +12 bps (17)
Slide 34: Market sensitivities
Market sensitivities C h a ng e i n I n t er est R a t es 5 As at September 30, 2021 As at December 31, 2020 50 basis point 50 basis point 50 basis point 50 basis point ($ millions, unless otherwise noted) decrease increase decrease increase C h a ng e i n Equ i ty M a r kets 1 Potential impact on n
Slide 35: LICAT capital framework
Total ratio Total ratio LICAT capital framework (SLF Inc.) (SLA) 143% 124% Available capital Surplus allowance + eligible deposits + • Similar to MCCSR • Essentially the provisions for adverse deviation • Retained earnings / common and preferred (PfADs) for non-economic risks equity continue to be t
Slide 36: Use of Non-IFRS Financial Measures
In this presentation, Sun Life Financial Inc. (“SLF” or “SLF Inc.”), its subsidiaries and, where applicable, its joint ventur es and associates are referred to as “we”, “us”, “our”, “Sun Life” and the “Company”. Sun Life Assurance Company of Canada is referred to as “SLA”. Use of Non-IFRS Financial
Slide 37: Forward-Looking Statements
Forw ard-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
Slide 38: Source Information
Source Information for slide 14 1 See “Forward-looking Statements” in the appendix 2 Represents a non-IFRS financial measure; see “Use of Non-IFRS Financial Measures” in the appendix 3 After-tax profit margin for U.S. Group Benefits calculated on underlying net income as a percentage of net premiums
Slide 39: Sun Life Investor Relations
Sun Life Investor Relations Yaniv Bitton Vice-President, Head of Investor Relations & Capital Markets 416-979-6496 yaniv.bitton@sunlife.com S U N L I F E • Q 3 2 0 2 1 39