Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Presentation (November 2019)
32 slides from Sun Life Financial's investor presentation, November 2019
Slide 1: Building sustainable shareholder value
2019 Building sustainable Q3 shareholder value
Slide 2: Business Overview, Capital Management, Asset Portfolio, ESG
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q3 2019 | Sun Life | 2
Slide 3: The World of Sun Life
THE WORLD OF SUN LIFE A $35 billion 1 leading international financial services organization… operating through a balanced and diversified model… focused on creating shareholder value now and in the future Q3 2019 | Sun Life 1 Market capitalization (C$), as at September 30, 2019. | 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 sectors and which leverage each other Bound together by a strong balance sheet and risk culture, including no U.S. Variable Annuity or Long-Term Care Digital transformati
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 Each pillar Top Disproportionate Top quartile total viewed quartile Client share of top shareholder as a leader experience talent return Q3 2019 | Sun Life | 5
Slide 6: A growth strategy focused on high ROE and strong capital generation
A GROWTH STRATEGY FOCUSED ON HIGH ROE AND STRONG CAPITAL GENERATION THROUGH LEADING POSITIONS IN ATTRACTIVE MARKETS GLOBA LLY 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 Asset AM ASIA through Distri
Slide 7: Digital transformation deeply embedded throughout the organization
DIGITAL TRANSFORMATION DEEPLY EMBEDDED THROUGHOUT THE ORGANIZATION Digitizing current Asia point of sale tools (needs, illustration, application, fulfillment) interactions and Web and mobile functionality in Canada and Asia processes U.S. dental provider access Use digital to be Predictive m
Slide 8: Well-positioned to leverage global trends
WELL-POSITIONED TO LEVERAGE GLOBAL TRENDS Demographic Digital Shifts Transformation Changing population Digital, data and including the aging analytics changing of Baby Boomers Client behaviours and and growth of expectations Millennials Downloading of Growing Responsibility Prosperity in Asia Incre
Slide 9: Delivering value to shareholders
DELIVERING VALUE TO SHAREHOLDERS NET INCOME1 TOTAL SHAREHOLDER RETURN ($ millions) FIVE YEARS AS OF SEPTEMBER 30, 2019 (Annualized) CAGR 9%* SLF Inc. 2,947 2,983 2,546 2,522 2,485 2,479 2,335 Global Lifecos 2,149 Canadian Lifecos TSX U.S. Lifecos 2016 2017 2018 LTM** Q3'19 4% 5% 6% 7% 8% 9% 10% 11%
Slide 10: Balanced and diversified business
BALANCED AND DIVERSIFIED BUSINESS BUSINESS DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION Q3’19 UNDERLYING NET INCOME1* Q3’19 UNDERLYING NET INCOME1* Run-off UK 10% 5% Asset U.S. Management 16% Canada Group 30% 32% Insurance 19% Asia 17% Wealth Individual 16% Asset Insurance Management 25% 30% 146% LICA
Slide 11: Business group performance
BUSINESS GROUP PERFORMANCE REPORTED NET INCOME (LOSS) UNDERLYING NET INCOME1 ($ millions) ($ millions) Impact of currency decreased reported net income by $7M Impact of currency increased underlying net income by $7M 268 251 251 251 335 241 223 221 139 135 138 164 170 110 US CAN AM ASIA CAN US AM AS
Slide 12: Canada is a growth market for Sun Life
CANADA IS A GROWTH MARKET FOR SUN LIFE Q3’19 HIGHLIGHTS ASSETS UNDER UNDERLYING NET Expanded our suite of healthcare MANAGEMENT3 INCOME3 innovations, including pharmacogenomics, ($ millions) ($ millions) to support the treatment of Clients and help them get back to work sooner1 Our industry-lead
Slide 13: Sun Life is well-positioned to shape the industry and capitalize on opportunities in Canada
SUN LIFE IS WELL-POSITIONED TO SHAPE THE INDUSTRY AND CAPITALIZE ON OPPORTUNITIES IN CANADA Supporting Clients with Shaping the market through Innovation and Digital Capabilities holistic advice at moments that matter Digitally enabled Client touchpoints provide on demand services Investment in
Slide 14: Expanding capabilities across our asset classes and delivering exceptional investment performance
EXPANDING CAPABILITIES ACROSS OUR ASSET CLASSES AND DELIVERING EXCEPTIONAL INVESTMENT PERFORMANCE UNDERLYING NET INCOME1 ($ millions ) Q3’19 HIGHLIGHTS Asset Management net inflows of $3.2 billion, including US$1.3 billion at MFS and $1.5 billion at SLC Management Pre-tax net operating profit ma
Slide 15: MFS is a leader in long-term performance
MFS IS A LEADER IN LONG-TERM PERFORMANCE Average Barron's 10-year Ranking Over the Last 5 Years 0 for Firms Who Made the Top 20 all 5 Years 3.8 4.8 (Average Barron's Ranking) 5 6.0 7.8 8.0 9.8 10 15.0 15 20 MFS T Rowe Vanguard John Hancock JP Morgan Delaware Columbia Barron’s rankings of MFS Family
Slide 16: Evolution of SLC Management
EVOLUTION OF SLC MANAGEMENT Accelerate growth Accelerate growth Develop capabilities under a cohesive Develop capabilities, operating model launch new products and position for and maintain strong future acquisitions Strategy performance Leverages Sun Life’s experience in LDI strategies and alternat
Slide 17: Extending our reach and deepening client relationships in U.S. Group Benefits
EXTENDING OUR REACH AND DEEPENING CLIENT RELATIONSHIPS IN U.S. GROUP BENEFITS Q3’19 HIGHLIGHTS UNDERLYING NET AFTER-TAX PROFIT MARGIN FOR INCOME1 Employers on the Sun Life + Maxwell U . S . G R O U P B E N E F I T S 1,2 (US$ millions) Health benefits administration platform are selecting nearly th
Slide 18: Growing through U.S. market opportunities
GROWING THROUGH U.S. MARKET OPPORTUNITIES U.S. Employee Benefits U.S. Stop-Loss Market Market Opportunity Opportunity Employees responsible 61%3 of U.S. employees are for more health and covered by a self-insured plan benefits costs but lack with a trend of smaller employers education and experience
Slide 19: Well-positioned in Asia's largest and fastest growing markets
WELL-POSITIONED IN ASIA’S LARGEST AND FASTEST GROWING MARKETS Q3’19 HIGHLIGHTS UNDERLYING NET INCOME1 ($ millions) Asia sales up 45% on a constant currency basis, reflecting 49% growth in insurance sales across our seven local markets and 14% growth in International sales1 461 523 547 458 Reache
Slide 20: Capturing growth opportunities in Asia
CAPTURING GROWTH OPPORTUNITIES IN ASIA 17% Total Company #1 ranked insurance1 company for 8 years Insurance: 9th in Agency3 Underlying Net PHILIPPINES in a row HONG KONG 2nd largest MPF based on Income* from 2nd largest mutual fund2 provider based on net inflows, #4 based on Asia** over the
Slide 21: Capital Management
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q3 2019 | Sun Life | 21
Slide 22: Capital generation provides good capital flexibility
CAPITAL GENERATION PROVIDES GOOD CAPITAL FLEXIBILITY Funding Organic Growth Target Dividend Payout M&A Opportunities Share Buybacks ratio of 40-50%1 and Strategic Investments Strong Capital Generation Capital Flexibility Capital deployment priorities unchanged Target minimum cash at the holding
Slide 23: Strong capital position with significant deployment potential
STRONG CAPITAL POSITION WITH SIGNIFICANT DEPLOYMENT POTENTIAL 1 CAPITAL DEPLOYMENT POTENTIAL ($ billions) DEPLOYMENT 2 DESCRIPTION/CONSIDERATIONS Cash OPPORTUNITIES $2.3 Making further investments in building out new Organic Investments business models and advancing our leading digital Leverage $5.2
Slide 24: Financial flexibility under capital model
FINANCIAL FLEXIBILITY UNDER CAPITAL MODEL SLF - External Capital Securities LICAT 146% Subordinated Debt Coupon Outstanding First Call Balance Date Financial leverage ratio 22.8% SLF SLF T2B (Series 2007-1) 5.40% $398 29-May-37 $2.8 billion cash and SLF T2B (Series 2015-1) 2.60% $499 25-Sep-20 other
Slide 25: Strong operating and financial leverage
STRONG OPERATING AND FINANCIAL LEVERAGE Operating Leverage Debt (C$ millions) Q3 2019 Debt supporting reserve financing Operating Senior Debt 300 Leverage Bilateral Senior Financing1 2,066 Total Operating Leverage Debt 2,366 Capital (C$ millions) Q3 2019 Tier 2 Subordinated Debt 3,538 SLEECS (Innova
Slide 26: LICAT capital framework
LICAT CAPITAL FRAMEWORK TOTAL TOTAL RATIO RATIO RA IO Available Capital + Surplus Allowance + Eligible Deposits Base Solvency Buffer TOTAL RATIO (SLF Inc.) = 146% AVAILABLE CAPITAL SURPLUS ALLOWANCE BASE SOLVENCY + ELIGIBLE DEPOSITS BUFFER Similar to MCCSR Sum of aggregate capital Essentially
Slide 27: Asset Portfolio
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q3 2019 | Sun Life | 27
Slide 28: High quality, well-diversified investment portfolio
HIGH QUALITY, WELL-DIVERSIFIED INVESTMENT PORTFOLIO INVESTMENT PROFILE DEBT SECURITIES BY CREDIT RATING (as at September 30, 2019) (as at September 30, 2019) Leading non-public portfolio with Investment Equity significant origination capabilities Properties BB and lower Cash and Cash 5% Securities
Slide 29: Environmental, Social, Governance
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q3 2019 | Sun Life | 29
Slide 30: Strong commitment to sustainability
STRONG COMMITMENT TO SUSTAINABILITY Awards & Recognition Sustainable Financial Healthier INVESTING SECURITY LIVES $900M $25M ~$15B additional in-plan deposits committed to invested in sustainable driven by Ella, our digital diabetes globally infrastructure to-date coach, in 2018 since 2012 Financial
Slide 31: Use of 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”. Sun Life Assurance Company of Canada is referred to as “SLA”. Use of Non-IFRS Financial M
Slide 32: 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
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