Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Presentation (August 2021)
38 slides from Sun Life Financial's investor presentation, Aug 5, 2021
Slide 1: Q2 2021 Building Sustainable Shareholder Value
Q2 2021 Building Sustainable Shareholder Value
Slide 2: Business overview
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 2
Slide 3: A $37.4 billion leading global financial services organization
A $37.4 billion leading global financial services organization1 Operating through a balanced and diversified model and focused on creating shareholder value now and in the future S U N L I F E • Q 2 2 0 2 1 1 Market capitalization (C$) as at June 30, 2021 3
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 insurance and asset management companies globally
Executing on our ambition to be one of the best insurance and asset management companies globally A Leader in Insurance and A Leader in U.S. Wealth Solutions in our CAN US Group Benefits Canadian Home Market A Leader in Asia A Leader in Global AM ASIA through Distribution Asset Management Excellence
Slide 6: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5- y ear total sharehol der return 1 Progress on m edi um-term obj ectiv es June 30, 2021 12.7% Medium-term o bjective Q2 2021 Sun Life 10.8% Underlying ROE 2 TSX 12-14% 16.0% G lo bal lifecos 10.8% Underlying EPS growth2 8-10% 19% Canadian lifecos 10.7%
Slide 7: Digital transformation deeply embedded throughout the organization
Digital transformation deeply embedded throughout the organization Building new digital models and a partnership ecosystem • Asia digital sales channels, including affordable products through online marketplace Lazada • Lumino Health and Sun Life GO in Canada • Turnkey Absence capabilities through F
Slide 8: Balanced and diversified business
Balanced and diversified business Busi ness ty pe di v ersi fication Busi ness Group di v ersi fication Q2 2021 underlying net income 1,2 Q2 2021 underlying net income 1,2 Run-off UK 7% Asia 2% Asset 16% Management Asset Wealth 33% Management 15% 33% U.S. 18% Group Individual Canada Insurance Insura
Slide 9: Leveraging global trends
Leveraging global trends • Demographic shifts: Changing population including the aging of Baby Boomers and growth in wealth/financial needs of Millennials • Digital transformation: Digital, data and analytics changing Client behaviours and expectations • Growing prosperity in Asia: Growing demand fo
Slide 10: Business overview
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 decr ea s ed r epor t ed net incom e by $ 7 0 M I m pa ct of cur r ency decr ea s ed under lying net incom e by $ 7 5 M +245% +33% (1)% +13% +3% +34% +20% +6% Constant +245%
Slide 12: Canada is a growth market for Sun Life
Canada is a growth market for Sun Life Q2’21 highlights Underl y ing net i ncome 1 • Ella, our digital coach, proactively nudged Clients in the first half of 2021, ($ m illions) driving an additional $488 million in wealth deposits , and $664 million in 1,036 1,012 1,073 1,111 insurance coverage • A
Slide 13: Shaping the industry and capitalizing on opportunities in Canada
Shaping the industry and capitalizing on opportunities in Canada Executing w ith financial discipline, Making it easier for Clients to Shaping the market as a leader and putting Clients at the centre do business w ith us in our Canadian home market • Putting our Clients at the centre and creating •
Slide 14: Deepening Client relationships in U.S. Group Benefits
Deepening Client relationships in U.S. Group Benefits Q2’21 highlights Underl y ing net i ncome 1 • On July 1, 2021, Sun Life completed its acquisition of Pinnacle Care (US$ m illions) 483 425 International, Inc., which will join our U.S. medical stop-loss business; 396 399 provides leading health c
Slide 15: Growing through U.S. market opportunities
Growing through U.S. market opportunities Em pl oy ee benef its Stop- l oss Employees responsible for more 67%4 of U.S. employees are covered by a health and benefits costs but lack self-insured plan with a trend of smaller relevant education and experience employers moving in this direction5 Growin
Slide 16: Positioned in Asia's largest and fastest growing markets
Positioned in Asia’s largest and fastest growing markets Q2’21 highlights Underl y ing net i ncome 1 • Individual insurance sales up 49% 1,2 over prior year on a constant currency basis ($ millions) 591 579 • 74% of new business applications were submitted digitally 3, up 41 percentage 550 points fr
Slide 17: Capturing growth opportunities in Asia
Number of advisors Capturing growth opportunities in Asia +8% year-over-year 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
Slide 18: Expanding asset management capabilities
Expanding asset management capabilities Q2’21 highlights Underl y ing net i ncome 1 • 96%, 61% and 93% of MFS’s U.S. retail mutual fund assets ranked in ($ m illions) 1,128 1,229 the top half of their Morningstar categories based on ten-, five- and 925 1,004 three-year performance, respectively • Q2
Slide 19: 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$, as at June 30, 2021 US$, as at June 30, 2021 Non-U.S. Balanced Retail Fixed 4% 6% Insurance Income 9% 12% U.S. Equity 42% US$662 U.S. Retail 53% billion AUM1 Non-U.S. Institutional Equity 32% 42% S U N L I F E
Slide 20: SLC Management: diversification of assets under management
SLC Management: diversification of assets under management1 A sset cl ass mi x I nv estor ty pe $, as at June 30, 2021 $, as at June 30, 2021 Real Estate Cash and Endowment/ Debt Other Foundation 4% 1% 2% Infrastructure Insurance 8% Companies 24% Public Fixed Income $169 Pension Private Fixed 34% Fu
Slide 21: Capital management
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 21
Slide 22: 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 buybacks2 40-50%1,3 investments Target minimum cash at the holding company of $500 million3 S U N L I F E • Q 2 2 0
Slide 23: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Inc. Capital metric LICAT 147% SLF Inc.1 Financial lever age r atio 24.7% Lever age capacity to 25%/30% ~$0.1B/$2.4B Cash and other liquid assets $3.2B SLA Asset Management LICAT 125% SLC UK Canada Bermuda Asia U.S. MFS Management Capitalized to meet
Slide 24: Strong capital position with significant deployment potential
Strong capital position with significant deployment potential1 Capi tal depl oyment potential Depl oyment opportunities ($ billions, a t June 30, 2021) Type Considerations Additional Cash2 Organic Making further investments in building out new business financial leverage investments models and advan
Slide 25: Low leverage ratios and strong ratings
Low leverage ratios and strong ratings Q2 2021 operating Debt supporting reserve financing l ev erage debt Senior debt 300 ($ m illions) To tal o perating leverage debt 300 Sun Life Assurance Company of Canada Q2 2021 capital Subordinated debt 4,433 Tier 2 Financial Strength Ratings ($ m illions) SL
Slide 26: Asset portfolio
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 26
Slide 27: 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 Ju n e 30, 2021 largest non-government As o f June 30 , 2021 BB and lower BBB- related exposure at 0.4% of BBB 3% 1% total fixed incom
Slide 28: Sustainability
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 28
Slide 29: 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 30: Strong sustainability achievements and recognition
Strong sustainability achievements and recognition Financial Healthier Sustainable Security Lives Investing (12 years in a row) • $1B of insurance • $38M committed • $60.1B sustainable coverage and to diabetes investment AUM $700M of savings globally since 2012 • Sun Life and its products driven by
Slide 31: Appendix
Appendix 31
Slide 32: Market movements and impacts in the quarter
Market movements and impacts in the quarter Equity Market Impacts Q2’21 Q1’21 Q2’20 ($millions, post-tax) Market Movements Q2’21 Q1’21 Q2’20 Equity market movement and volatility 95 67 105 S&P/ TSX +7.8% +7.3% 16.0% Basis risk 4 5 (46) S&P 500 +8.2% +5.8% 20.0% Total 99 72 59 CA 10 - year (17) bps +
Slide 33: Market sensitivities
Market sensitivities C h a ng e i n I n t er est R a t es 5 As at J une 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 net i
Slide 34: LICAT capital framework
Total ratio Total ratio LICAT capital framework (SLF Inc.) (SLA) 147% 125% 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 35: 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 36: Forward-Looking Statements
Forw ard-Looking Statements From time to time, we make 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 legislatio
Slide 37: Source Information for slides
Source Information for slide 14 1 Represents a non-IFRS financial measure. See “Use of Non-IFRS Financial Measures” in the appendix 2 After-tax profit margin for U.S. Group Benefits calculated on underlying net income as a percentage of net premiums on a trailing four quarters basis 3 $35 million of
Slide 38: 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 2 2 0 2 1 38
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