Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Merger or Acquisition (May 2001)
16 slides from Sun Life Financial's merger presentation, May 3, 2001
Slide 1: Keyport/IFMG Acquisition: Product … Distribution … Scale
Keyport/IFMG Acquisition: Product … Distribution … Scale … Significant EPS Accretion ... May 3, 2001
Slide 2: Forward Looking Information
Forward Looking Information This presentation contains forward looking statements with respect to the Company, including its business operations and strategy and financial performance and condition. Although Management believes that the expectations reflected in such forward looking statements are r
Slide 3: Strategic Highlights
Strategic Highlights • Highly strategic acquisition of Keyport and IFMG is immediately accretive to EPS – Broadens product range – Strengthens distribution – Enhances scale-driven operating economics – Adds $.15-.20 to EPS in 2002 • Improves U.S. market position – #10 in variable annuities – #11 in
Slide 4: Term Sheet
Term Sheet • Price $2.6 billion (US $1.702B) – Price to book 1.3 x U.S. GAAP book value – Price to LTM earnings 13.3 x • Form of Consideration All Cash • Accounting Purchase - using newly proposed FASB and CICA guidelines • Sources of Financing $1.5B existing cash » $1.1B external financing • Levera
Slide 5: Product Line Enhanced: Fixed Annuities
PP RR O ODD UU CC TT Product Line Enhanced: Fixed Annuities • Strategic product fill-in to address full range of customer needs: – All stages of economic and market cycles – Both asset accumulation and payout products • Innovation strengths with world-class annuity expertise: – Payout annuities – In
Slide 6: Keyport: $29.5 billion AUM with Continuing Sales Momentum
PP RR O ODD UU CC TT Keyport: $29.5 billion AUM with Continuing Sales Momentum AUM Sales CAGR ‘98 - ‘00 Institutional Growth $4.2 37% Other ($Billions) Surplus 8% 8% 7% $3.0 Single 2.1 55% Premium $2.3 Whole Life 0.9 11% Fixed Fixed and Annuities Indexed 0.9 1.4 1.1 19% Equity 39% Indexed Variable 0
Slide 7: Achieves #6 Ranking in Bank Channel for Annuities
DDIISSTTRRIIBBUUTTIIOONN Achieves #6 Ranking in Bank Channel for Annuities • IFMG distributes mutual funds and annuities to retail customers through small and medium sized banks. – 55 clients nationwide – “Turn-key” programs for bank annuity sales • $5.0 billion 2000 sales • Leading third party dist
Slide 8: IFMG: $5 Billion in Sales with Strong Growth Trend
DDIISSTTRRIIBBUUTTIIOONN IFMG: $5 Billion in Sales with Strong Growth Trend Diversified Sales Sales Growth ($Billions) 1.6 Other Annuities and Mutual Funds 1.2 22% 1.1 0.4 Liberty 0.5 Annuity Mutual 0.5 Processing Funds 46% 1.2 Keyport 0.7 Keyport 0.6 Annuities Annuities 24% Liberty Mutual Funds 199
Slide 9: Capture #10 Ranking in Variable Annuities
SSCCAALLEE Capture # 10 Ranking in Variable Annuities Sun Life Financial Keyport Total AUM Sales Rank AUM Sales Rank AUM Sales Rank Variable Annuities 29.0 5.9 16 4.3 1.1 33 33.3 7.0 10 Fixed Annuities - - - 11.5 2.0 11 11.5 2.0 11 Indexed Annuities - - - 3.6 0.6 12 3.6 0.6 12 Institutional Annuitie
Slide 10: Enhances Profile in High Growth U.S. Market
Enhances Profile in High Growth U.S. Market Reported 2000 Net Income - $792 million Pro Forma 2000 Net Income - $893 million ($ Millions) ($ Millions) 3% 3% 15% 23% 13% 20% 28% 31% 28% 36% Canada U.S. MFS U.K. Asia 10
Slide 11: Immediate EPS Accretion
Immediate EPS Accretion (C$ millions) 2000 2002 2003 Keyport & IFMG baseline (CAS) 212* 205-210 240-250 Cost savings (after tax) 20-25 30-35 Less: Earnings on Excess Capital 75 75 Financing costs (after tax) 35 35 Earnings Pick-up 90-95 140-150 EPS accretion ($ per share) .15-.20 .28-.32 ROE enhance
Slide 12: Projections Based on Conservative Assumptions
Projections Based on Conservative Assumptions • Cost Savings of CAD$ 30-35 million (pre-tax) in 2002 • $20-25 million Systems/Distribution/Investments • $10 million Corporate overhead and back office – Targeted cost savings are 20-25% of Keyport’s cost base – Additional cost savings targeted for 200
Slide 13: Price is Attractive Relative to Comparable Transactions
Price is Attractive Relative to Comparable Transactions Date Buyer/Target Transaction Price/ Price/ LTM value (C$) book earnings Sun Life Financial/Keyport-IFMG $2.6 1.3 13.3 08/00 AXA Group/AXA Financial $14.1 3.8 30.0 07/00 ING/Actua 11.6 3.2 27.9 05/00 ING Group/Reliastar 7.5 2.3 18.9 03/00 Hartf
Slide 14: Strategic and Financial Win
TRANSACTIONSUMMARY TRANSACTION SUMMARY Strategic and Financial Win • Immediately accretive to EPS and ROE • Important product extension in annuities • Distribution capabilities enhance channel breadth • Achieve targeted Top 10 ranking in annuities • Capture scale-driven operating economies 14
Slide 15: Major IPO Commitments Addressed
CORPORATESUMMARY CORPORATE SUMMARY Major IPO Commitments Addressed • “Excess capital” fully deployed above hurdle rate returns • U.K. performance issues addressed through downsizing and gradual repatriation of capital. • Efficiency programs have led to enhanced profitability. • Legacy issues progres
Slide 16: Alda
Alda Sun “ ww: Life Financial
Sun Life Financial — Merger or Acquisition (May 2001) on 6ix