Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2023 Earnings Presentation
40 slides from Sun Life Financial's earnings presentation, August 2023
Slide 1: Q2'23 Delivering sustainable shareholder value
Q2’23 Delivering sustainable shareholder value
Slide 2: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q2 2023 2
Slide 3: A leading global financial services organization
A leading global financial services organization Balanced & diversified $1.37T business model2 ~85M 52,500 97,400 Offices in Assets Under $40.5B Year-to-date at June 30, 2023 Clients3,4 Employees3,5 Advisors3,6 28 markets3 Management market cap7 (AUM)1,7 Individual - Protection 27% Wealth & asset ma
Slide 4: The Sun Life story
The Sun Life story • A diversified business model, with four well-positioned business groups, focused on creating value and positively impacting our Clients, employees and shareholders • Portfolio of businesses that have strong growth prospects and capital generation in attractive global markets • S
Slide 5: Leveraging global trends
Leveraging global trends • Individual and employer attention on physical and mental health • Demographic shifts in developed markets • Increased economic, market and geopolitical volatility • Gig economy and shift in nature of work • Digital acceleration • Adoption of digital health technologies • G
Slide 6: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q2 2023 6
Slide 7: Executing on our ambition to be one of the best asset management and insurance companies globally
Executing on our ambition to be one of the best asset management and insurance companies globally Four Pillar Strategy Our Purpose Key Priorities Help Clients achieve lifetime financial security and • Think and act like a digital company AM A global leader in both public and live healthier lives alt
Slide 8: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5-year total shareholder return2 Performance against medium-term objectives June 30, 2023 5-years Medium-term objective3 Q2’23 ending 20224 Sun Life 9.8% Underlying EPS growth1 14% 9% 8-10% Canadian Lifecos 10.6% Underlying ROE1 17.7% 14.7% 18%+ TSX 7.7%
Slide 9: Our Sustainability Plan brings our Purpose to life
Our Sustainability Plan brings our Purpose to life The plan has three pillars, representing the areas where we have the greatest opportunity to drive positive impact in society, while creating competitive advantage for Sun Life: Increasing Fostering Advancing financial security healthier lives susta
Slide 10: Sustainability highlights show progress against our plan
Sustainability highlights show progress against our plan In line with our commitment to sustainable investing, this quarter we announced our second sustainability bond offering, issuing $500 million. We will invest an amount equal to the net proceeds of this offering into green and/or social assets
Slide 11: Digital leadership
Digital leadership Q2 2023 highlights Thinking and acting like a digital company focused on: Making health care more accessible in Canada • Launched Lumino Health Pharmacy, a new online pharmacy app, empowering Canadians with the support they need to take action throughout their health journey Digit
Slide 12: Distribution excellence
Distribution excellence Distribution across the four pillars AM • MFS partners with leading retail intermediary firms and global institutional consultants Omni-channel approach • SLC Management distributes products through acquired affiliates Crescent Capital, to serving Clients, including BentallGr
Slide 13: Agenda
• Business and strategic overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q2 2023 13
Slide 14: Q2 2023 results – Strong underlying ROE of 17.7%
Q2 2023 results – Strong underlying ROE1 of 17.7% Profitability Q2’23 Q2’22 Change Results Highlights Underlying net income1 ($ millions) 920 808 +14% Reported net income ($ millions) 660 930 (29)% Earnings reflect strong business fundamentals and diversified business mix7 Underlying EPS1,2 ($) • We
Slide 15: Q2 2023 results
Q2 2023 results Underlying net income1 ($ millions) Reported net income ($ millions) Impact of currency translation increased underlying net income by $27M2 Impact of currency translation increased reported net income by $25M2 476 372 295 296 299 298 248 215 210 175 134 150 149 118 122 7 0 (38) (113
Slide 16: Asset Management: A global leader in both public and alternative asset classes
Asset Management: A global leader in both public and alternative asset classes through MFS and SLC Management Business Group Results (C$) Q2 2023 highlights (C$) • Underlying net income in-line y/y, driven by SLC fee-related earnings (FRE) up 19% Profitability Q2’23 Q2’22 Change y/y on higher AUM, o
Slide 17: MFS: Wealth & asset management
Wealth & asset management RETAIL INSTITUTIONAL TOTAL MFS US$394B AUM1 US$195B AUM1 US$589B AUM1 Distributed through financial advisors Partner with leading consultants to manage MFS is a strong strategic and financial affiliated with brokerage houses, financial assets for public and corporate pensio
Slide 18: SLC Management: Wealth & asset management
Wealth & asset management Real Estate IG Credit Alternative Credit Infrastructure Distribution $84B AUM1,3 $58B AUM1,3 $54B AUM1,3 $17B AUM1,3 $5B AUM1,2,3 Top global ranking in the Invests across spectrum Seeks investments in high- 200+ infrastructure One of the largest ⬤ ⬤ ⬤ of investment grade qu
Slide 19: Canada: A leader in health, wealth, and insurance
Canada: A leader in health, wealth, and insurance Business Group Results Q2 2023 highlights Profitability Q2’23 Q2’22 Change • Underlying net income up 24% y/y, reflecting better disability experience on Wealth & asset management ($ millions) 110 110 0% higher margins, lower claims volumes, and shor
Slide 20: Canada business overview
Wealth & asset Individual – Group – Health management Protection & Protection Group Retirement Services (GRS) Individual Wealth Individual Insurance Sun Life Health $127B AUM1,3,4 $32B AUM1,3,4 $5.1B Net premiums1,5 $6.3B Net premiums1,5 Canada ~1.3M Clients2 ~0.7M Clients2 ~1.9M Clients2 ~3.8M Clie
Slide 21: U.S.: A leader in health and benefits
U.S.: A leader in health and benefits Business Group Results (US$) Q2 2023 highlights (US$) Profitability Q2’23 Q2’22 Change +45% • Underlying net income up 57% y/y, reflecting good premium growth, full quarter Group – Health & Protection ($ millions) 149 103 contribution from DentaQuest, favourable
Slide 22: U.S. business overview
Group – Health Individual – & Protection Protection Dental Health Group Individual US$2.8B Net premiums1,3,4 US$2.4B Net premiums1,3 US$2.0B Net premiums1,3 US$15.8B AUM1,8 ~37M Members ~9M Members ~8M Members ~0.2M Members Second largest Dental Largest independent Stop- Top ten U.S. Group Life Clos
Slide 23: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Business Group Results Q2 2023 highlights (% in constant currency1) Profitability Q2’23 Q2’22 Change CC1 • Underlying net income up 25% y/y, on higher premiums reflecting good sales Wealth & asset management ($ millions) 13 15 (13)% (15)% momen
Slide 24: Asia business overview
Philippines Hong Kong Vietnam Indonesia $258M ins. sales1,2 $208M ins. sales1,2 $177M ins. sales1,2 $75M ins. sales1,2 • 1st in total premiums1,3 for • 7th in insurance sales and 6th • 10th in insurance sales and 8th Asia 12 consecutive years • 2nd in MPF net inflows and 3rd based on AUM1,6 in banca
Slide 25: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q2 2023 25
Slide 26: Capital model provides financial flexibility
SLA - External Capital Securities Coupon Principal. $M. Per Call/Maturity Date CLI Series 2 Sub Debenture 6.30% $150 15-May-28 Innovative Tier 1 Securities Capital model provides financial flexibility SLEECS Series B 7.09% %200 30-Jun-32 SLF Inc. LICAT1 148% SLA Asset Management LICAT1 139% SLF inc.
Slide 27: Capital strength & flexibility
Capital strength & flexibility • Target minimum cash and other liquid assets at the holding company of $500 million1,2,3 Q2’23 Capital Q2’23 Capital metrics SLF Inc. ($millions) Deployment opportunities LICAT4 148% Subordinated debt5 $6,679 • Organic investments Financial leverage ratio1 23.3% Innov
Slide 28: M&A activity reflects strategic priorities
M&A activity reflects strategic priorities • Activity over last ten years promotes growth in Asia and Asset Management and builds out group benefits/dental capabilities in the U.S. Asset Management Canada U.S. Asia 2017 – Majority acquisition 2015 – Acquisition of 2015 – Expanded 2016 – Expanded 201
Slide 29: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q2 2023 29
Slide 30: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio Investment profile Debt securities by credit rating As of June 30, 2023 As of June 30, 2023 • 75% of the portfolio is fixed income; 97% of fixed income BB and lower BBB- rated investment grade1 3% 1% Equity BBB AAA Investment securities 14% 20% • O
Slide 31: Mortgages and investment property exposures
Mortgages and investment property exposures Mortgages by type and geography1 Mortgages by type and rating1,3 As of June 30, 2023 As of June 30, 2023 Multi-family % of Multi-family ($millions) Office Industrial Retail Other Total ($millions) Office Industrial Retail Other Total residential Total resi
Slide 32: Appendix
Appendix Sun Life – Q2 2023 32
Slide 33: Ratings and recognitions in Sustainability
Ratings and recognitions in Sustainability Named among the Best Workplaces™ for Inclusion in Canada. This recognition is especially significant since the results are based on employee responses to inclusion-related statements. Recognized by Women Lead Here for the third year in a row. Published by (
Slide 34: Market sensitivities
Market sensitivities Change in Equity Markets1,2,3 Change in Interest Rates2,3,6 As at June 30, 2023 25% 10% 10% 25% As at June 30, 2023 As at December 31, 20225 ($millions, unless otherwise noted) decrease decrease increase increase ($millions, unless otherwise noted) 50 basis point 50 basis point
Slide 35: Note to Readers and forward-looking statements
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”. Reported net income (loss) refers to Common shareholders' net income (loss) determined in
Slide 36: Use of Non-IFRS Financial Measures
Use of Non-IFRS Financial Measures We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information that is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from per
Slide 37: Footnotes from slides 3 and 8
From slide 3 2 Business Mix based on underlying net income, excluding Corporate expenses and other. Wealth & asset management includes MFS Investment Management, SLC Management, Canada Individual Wealth, Group Retirement Services, Asia Wealth & asset management. Group – Health & Protection includes
Slide 38: Footnotes from slides 16 and 17
From slide 16 2 MFS pre-tax gross operating margin was 33% in Q2 2023 and 32% in Q2 2022. 3 Calculated on a last twelve-month basis. 4 SLC total AUM including the General Account was $361 billion at June 30, 2023. 5 Institute for Market Transformation and the U.S. Department of Energy Better Buildin
Slide 39: Footnotes from slide 24
From slide 24 2 FY2022 Individual – protection sales. These include the sales in the company’s joint ventures and associates with local partners in Asia based on our proportionate equity interest. 3 Insurance Commission of the Philippines, based on Q4 2022 year-to-date total premium income for Sun L
Slide 40: Sun Life Investor Relations
Sun Life Investor Relations David Garg Senior Vice-President, Capital Management and Investor Relations 416-408-8649 david.garg@sunlife.com Paul Poon Assistant Vice President, Investor Relations 416-305-3389 paul.poon@sunlife.com Sun Life – Q2 2023 40