Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Day (October 2016)
53 slides from Sun Life Financial's investor day presentation, Oct 20, 2016
Slide 1: Sun Life Investment Management Investor Day
SUN LIFE INVESTMENT MANAGEMENT INVESTOR DAY OCTOBER 20th, 2016
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in the presentations prepared for the Sun Life Financial Investor Day 2016 held on October 20, 2016 and certain oral statements made by senior management at the Sun Life Financial Investor Day 2016 (collectively, the “Investor Day presentations”), includ
Slide 3: Agenda
AGENDA 10:00 a.m. – 12:00 p.m. 01 Dean Connor President & CEO, Sun Life 02 Steve Peacher 03 Carl Bang President, Sun Life President, Sun Life Financial Investment Management Institutional Investments (Canada) Inc. 04 Sean McShea President, Ryan Labs Asset 05 Don McDonald CEO, Prime Advisors 06 Gary
Slide 4: Dean Connor
Dean Connor CHIEF EXECUTIVE OFFICER, SUN LIFE FINANCIAL
Slide 5: A strategy focusing on growth, higher ROE, and less volatile businesses
A STRATEGY FOCUSING ON GROWTH, HIGHER ROE, AND LESS VOLATILE BUSINESSES A $26 billion(1) leading, international financial services provider… operating through a balanced and diversified model… focused on creating shareholder value now and in the future (1) Market capitalization as of September 30, 2
Slide 6: Complementary asset management operations
COMPLEMENTARY ASSET MANAGEMENT OPERATIONS SUN LIFE FINANCIAL ASSET MANAGEMENT MFS AUM C$549 billion SLIM AUM C$49 billion • Active management in public markets • Private asset classes and customized solutions • A broad range of equity and fixed income • Alternative yield strategies products • Privat
Slide 7: Steve Peacher
Steve Peacher PRESIDENT, SUN LIFE INVESTMENT MANAGEMENT
Slide 8: Well-positioned for strong growth
WELL-POSITIONED FOR STRONG GROWTH • Institutional demand for liability-driven investing, alternative fixed income and real estate is strong and growing • Sun Life Investment Management is well-positioned to capitalize on trends to increase AUM and expand margins • Leveraging capabilities across the
Slide 9: Challenging times for pension funds
CHALLENGING TIMES FOR PENSION FUNDS Historical Funded Status of U.S. Corporate DB plans 108% 101% Aggregate GAAP Funded % 93% 92% 90% 90% 85% 84% 83% 82% 82% 79% 79% 79% 78% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16E Source: Goldman Sachs Asset Management, Pension Solutions report
Slide 10: Increased allocations to fixed income
INCREASED ALLOCATIONS TO FIXED INCOME U.S. Corporate Plans Asset Allocation 70% 60% Asset-Weighted Target Asset Allocations (%) 50% 43 40% 37 30% 20% 15 10% 5 0% '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Equity Debt Other Real Estate Source: Goldman Sachs Asset Management, 2015 Pension Rev
Slide 11: Growing demand among North American institutional investors
GROWING DEMAND AMONG NORTH AMERICAN INSTITUTIONAL INVESTORS Fixed Income AUM Growth Alternatives AUM Growth (US$ trillions) (US$ trillions) +14% +23% $3.2 $4.2 $3.7 $2.6 2016E 2020E 2016E 2020E The persistent asset-liability gap for public DB plans…is driving larger allocations to alternatives in an
Slide 12: Well-diversified asset managers positioned for growth
WELL-DIVERSIFIED ASSET MANAGERS POSITIONED FOR GROWTH PHILOSOPHY Institutions should invest their assets in a customized manner aligned specifically with the profile of their liabilities, and portfolios should include alternative asset classes that can enhance return and diversification without addi
Slide 13: A successful foundation on which to build
A SUCCESSFUL FOUNDATION ON WHICH TO BUILD Strong Achievements Over the Past Twelve Months: 12.6% $48,580 Client Retention $43,139 Strong Investment Performance Employee Retention AUM Growth of over $5 billion Q2 2015 Q2 2016 Bentall Kennedy Prime Advisors Ryan Labs SLIIC Inc. (1) AUM as of J
Slide 14: A diversified asset and client base
A DIVERSIFIED ASSET AND CLIENT BASE Assets Under Management(1) Client Mandates TOTAL 800+ AUM $48.6 Clients billion Pension Funds Insurance Companies LDI Public Fixed Income Endowment / Foundations Trusts Private Fixed Income Real Estate Other (1) AUM as of June 30,2016 14
Slide 15: Positioned for asset growth and margin improvement
POSITIONED FOR ASSET GROWTH AND MARGIN IMPROVEMENT Current AUM $21B $18B $8B $2B Ta r g e t $100 billion of AUM and 20+% operating margin by 2020 AUM as at June 30, 2016. AUM and margin targets are forward–looking statements and are not guidance. 15
Slide 16: Opportunity to capture a growing market
OPPORTUNITY TO CAPTURE A GROWING MARKET Investment Performance ~ Client Satisfaction ~ AUM Growth ~ Profitability EXCEEDING CLIENT EMPHASIZING DEVELOPING NEW EXPANDING EXPECTATIONS TALENT & CULTURE INVESTMENT DISTRIBUTION SOLUTIONS • Continued strong • Experienced, • Develop new • Invest in distribu
Slide 17: Leveraging opportunities to achieve target
LEVERAGING OPPORTUNITIES TO ACHIEVE TARGET 100 New Strategies 29% Existing 63% Business 8% Market Appreciation 17
Slide 18: Carl Bang
Carl Bang PRESIDENT, SUN LIFE INSTITUTIONAL INVESTMENTS (CANADA) INC.
Slide 19: Design and deliver investment solutions for liability-based institutional investors
DESIGN AND DELIVER INVESTMENT SOLUTIONS FOR LIABILITY-BASED INSTITUTIONAL INVESTORS Specializing in • Experience of over 200 investment professionals managing private • Long-standing experience in asset-liability management, private asset asset class and liability-driven classes, public fixed income
Slide 20: Proven investment experience
PROVEN INVESTMENT EXPERIENCE Sun Life Assurance Company of Canada Average tenure General Account invested assets as of Investment team Size of team of management June 30, 2016 team at SLF $15.9 Private fixed income 46 15 Real estate 20 20 $26.7 Commercial mortgages 48 23 $141.4 $71.8 billion Derivat
Slide 21: Providing a full range of investment solutions
PROVIDING A FULL RANGE OF INVESTMENT SOLUTIONS ENHANCE REDUCE TRANSFER YIELD V O L AT I L I T Y RISK Commercial Private Fixed Liability-Driven Longevity Annuity Buy In Mortgage Income Funds Investing Insurance / Buy Out Funds Strategies SUN LIFE INSTITUTIONAL INVESTMENTS (Canada) Inc. DEFINED BENEFI
Slide 22: Increasing assets under management
INCREASING ASSETS UNDER MANAGEMENT All figures as of September 2016 2,221 4,334 (in $ millions) 1,444 669 2014 Seed Capital SLF Pension Assets Funded Sales & Total AUM & (Inception) (General Account) Commitments Commitments 22
Slide 23: Establishing strong investment track record
ESTABLISHING STRONG INVESTMENT TRACK RECORD Private Fixed Income Commercial Mortgage Fund Investment Performance Investment Performance 5.5% 6.8% 5.0% 6.5% 6.3% Rate of Total Return 4.0% Rate of Total Return 3.9% 3.9% 5.0% 4.5% 4.7% 3.2% 1 Year 2 Years Since inception¹ 1 Year 2 Years Since inception
Slide 24: Opportunity to capture a growing market
OPPORTUNITY TO CAPTURE A GROWING MARKET EXCEEDING CLIENT EMPHASIZING DEVELOPING NEW EXPANDING EXPECTATIONS TALENT & CULTURE INVESTMENT DISTRIBUTION SOLUTIONS • Consistently • Grow high-performing • Sun Life Short Term • Coordinate sales outperform the team to support Private Fixed Income efforts wit
Slide 25: Sean McShea
Sean McShea PRESIDENT, RYAN LABS ASSET MANAGEMENT
Slide 26: Actively managed fixed income solutions
ACTIVELY MANAGED FIXED INCOME SOLUTIONS Outperformed • Active fixed income manager since 1988 the market over • 25 professionals based in New York City the last • Repeatable investment process to capture a risk premium 14 years (1) • Consistent returns over market cycles with high information ratios
Slide 27: Deliver solutions catered to client needs
DELIVER SOLUTIONS CATERED TO CLIENT NEEDS Alpha Generation Analytics Custom Third Party Liability Benchmarks Benchmarks 27
Slide 28: Growing assets under management
GROWING ASSETS UNDER MANAGEMENT Assets Under Management (US$ millions) 5,887 • First quartile ranking in investment grade total return 4,856 strategies 2,355 3,819 1,735 • Active total return strategies attract institutional investors 1,528 with short and intermediate assignments 1,621 3,532 648 3,1
Slide 29: Diversified by client and objective
DIVERSIFIED BY CLIENT AND OBJECTIVE Assets Under Management Client Accounts US$5.9 billion 147 Short/Intermediate Duration Corporate Public Core Duration Union/Taft-Hartley Foundations/Endowments Healthcare Risk Retention Pools Long Duration Special Purpose AUM as of June 30, 2016 29
Slide 30: Ryan Labs value proposition: active fixed income management
RYAN LABS VALUE PROPOSITION: ACTIVE FIXED INCOME MANAGEMENT 1 Client service driven 2 Tenured investment professionals 3 Outperformed the market for the last 14 years(1) 4 Liability-driven strategies/problem solutions (1) Outperformed the Barclays U.S. Aggregate Index since 2002 30
Slide 31: Proven investment performance
PROVEN INVESTMENT PERFORMANCE Core Fixed Income vs. Barclays U.S. Aggregate Strategy 3 YR 5 YR 10 YR Core Fixed Income Returns 4.88% 4.58% 6.25% Outperformance vs. Index 0.82% 0.82% 1.12% Return Quartile Rankings 1st 1st 1st Information Ratio Quartile Rankings 1st 1st 1st Performance data as of June
Slide 32: Opportunity to capture a growing market
OPPORTUNITY TO CAPTURE A GROWING MARKET EXCEEDING CLIENT EMPHASIZING DEVELOPING NEW EXPANDING EXPECTATIONS TALENT & CULTURE INVESTMENT DISTRIBUTION SOLUTIONS • Maintain net • Protect investment • Launch derivative • Focus on hospitals performance over culture overlay • Outsourced Chief benchmark C
Slide 33: Don McDonald
Don McDonald CHIEF EXECUTIVE OFFICER, PRIME ADVISORS, INC.
Slide 34: Customized approach to liability-based investing for insurance companies
CUSTOMIZED APPROACH TO LIABILITY-BASED INVESTING FOR INSURANCE COMPANIES Experience • Specializing in managing investment grade bond portfolios for the insurance industry maximizing yield • 48 professionals based in Redmond, WA and Windsor, CT for fixed income • Extensive experience in managing asse
Slide 35: Growing assets across a diversified client base
GROWING ASSETS ACROSS A DIVERSIFIED CLIENT BASE Assets Under Management Client Mandates by Type (US$ billions) 14.0 12.4 10.9 86 7.5 clients 2006 2010 2014 Q2 2016 Property & Casualty Life/Health Other Client mandate information and AUM as at June 30, 2016 35
Slide 36: Insurance outsourcing trends are expected to continue
INSURANCE OUTSOURCING TRENDS ARE EXPECTED TO CONTINUE Non-Affiliated Insurance Company Outsourced Assets (US$ billions) 2,070 +38% 1,496 1,200 2013 2016 2021 Outsourced non-affiliated insurance general account assets are expected to grow over US$500 billion in the next 5 years. Source: Cerulli & Ass
Slide 37: A disciplined approach to working with our clients
A DISCIPLINED APPROACH TO WORKING WITH OUR CLIENTS “The Prime Advantage” The Prime Integrated Investment Management Solution Client Specific Portfolio Cash Flow Management Investment Analysis & Accounting & Tax Reporting Modeling 37
Slide 38: Bringing broad knowledge and experience to clients
BRINGING BROAD KNOWLEDGE AND EXPERIENCE TO CLIENTS PORTFOLIO MANAGERS Senior Portfolio Strategist Senior Investment Strategist Investment background Actuarial & Insurance background Prime Advisors, Inc. Client Advantages of the Team Approach • Insurance and market experience • Efficient strategy exe
Slide 39: Customized portfolios to achieve returns and manage risks
CUSTOMIZED PORTFOLIOS TO ACHIEVE RETURNS AND MANAGE RISKS Total Returns Gross of Fees Managing beyond performance to meet 0.55% clients’ unique needs: • Yield, income, or total return focus • Tax status of clients (after-tax and/or Average Alpha 0.60% pre-tax returns) Generation 0.71% 3.74% • Intere
Slide 40: Opportunity to capture a growing market
OPPORTUNITY TO CAPTURE A GROWING MARKET DEVELOPING NEW EXPANDING EXCEEDING CLIENT EMPHASIZING INVESTMENT DISTRIBUTION EXPECTATIONS TALENT & CULTURE SOLUTIONS • Maintain strong • Maintain distinct • Dividend equity • Develop total asset investment client service model management performance • Real Es
Slide 41: Gary Whitelaw
Gary Whitelaw CEO, BENTALL KENNEDY GROUP
Slide 42: A leading real estate investment management firm
A LEADING REAL ESTATE INVESTMENT MANAGEMENT FIRM Premier name in • One of North America’s largest real estate investment advisors Canadian real • Integrated North American platform with extensive property expertise estate with well- • 1,000 employees in 12 offices across North America established U.
Slide 43: Well-positioned to benefit from increased allocations to real estate
WELL-POSITIONED TO BENEFIT FROM INCREASED ALLOCATIONS TO REAL ESTATE 84% 53% 35% Investors that expect Investors that are Forecasted growth of to increase or maintain below their strategic investor demand for their private real targets for real estate(1) global real estate from estate allocations in
Slide 44: Broad and diversified asset mix with a global client base
BROAD AND DIVERSIFIED ASSET MIX WITH A GLOBAL CLIENT BASE Select Bentall Kennedy Clients • AustralianSuper AUM by Asset Type (1) • CalPERS • Canada Post Pension Plan Land • Canadian General Electric • Clients of Morgan Stanley Multi-Family • CPPIB Medical Residential • Government of Newfoundland and
Slide 45: Top-tier commercial assets in highly liquid major markets
TOP-TIER COMMERCIAL ASSETS IN HIGHLY LIQUID MAJOR MARKETS U.S. Core Open-End Fund vs. Benchmark Returns AUM by Product Type (2) 12.6% 12.0% 11.7% 11.3% 10.8% Total Net Return 10.4% Canadian Separate Accounts 1 Year 3 Year 5 Year Fund Return ODCE(1) U.S. Core Canadian Core Open-End Fund vs. Target Re
Slide 46: Bentall Kennedy value proposition: invest soundly + sustainably
BENTALL KENNEDY VALUE PROPOSITION: INVEST SOUNDLY + SUSTAINABLY 1 Exceptional client service and fiduciary culture Reliable and stable returns – driven by research-led strategies focused on 2 fundamentals 3 Global leadership in sustainable investing Active real estate management – leverages our cros
Slide 47: Opportunity to capture a growing market
OPPORTUNITY TO CAPTURE A GROWING MARKET DEVELOPING NEW EXPANDING EXCEEDING CLIENT EMPHASIZING INVESTMENT DISTRIBUTION EXPECTATIONS TALENT & CULTURE SOLUTIONS • Deliver superior • Build upon the • Closed End fund • U.S. and International investment engaged and strategies client teams performance expe
Slide 48: Steve Peacher
Steve Peacher PRESIDENT, SUN LIFE INVESTMENT MANAGEMENT
Slide 49: What does Sun Life bring?
WHAT DOES SUN LIFE BRING? Investment Capabilities Co-investment Distribution Stability 49
Slide 50: Well-positioned for strong growth
WELL-POSITIONED FOR STRONG GROWTH • Institutional demand for liability-driven investing, alternative fixed income and real estate is strong and growing • Sun Life Investment Management is well-positioned to capitalize on trends to increase AUM and expand margins • Leveraging capabilities across the
Slide 51: Investor Day Panel Q&A Session
SUN LIFE INVESTMENT MANAGEMENT INVESTOR DAY Panel Q&A Session
Slide 52: Use of Non-IFRS Financial Measures
In this presentation, Sun Life Financial Inc. and its subsidiaries, joint ventures and associates are referred to as “we”, “us”, “our” and the “Company”. Use of Non-IFRS Financial Measures The Company prepares its financial statements in accordance with international financial reporting standards ("
Slide 53: Forward-Looking Statements
Forward-Looking Statements This presentation includes 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 legislation