Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Presentation (August 2019)
32 slides from Sun Life Financial's investor presentation, August 2019
Slide 1: Building sustainable shareholder value
2019 Building sustainable Q2 shareholder value
Slide 2: Business Overview, Capital Management, Asset Portfolio, ESG
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q2 2019 | Sun Life | 2
Slide 3: The World of Sun Life
THE WORLD OF SUN LIFE A $32.1 billion1 leading international financial services organization… operating through a balanced and diversified model… focused on creating shareholder value now and in the future Q2 2019 | Sun Life 1 Market capitalization (C$), as at June 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
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 Q2 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 CAN U.S. A Leader in Insurance and A Leader in U.S. Group Wealth Solutions in our Benefits Canadian Home Market A Leader in Asia through A Leader in Global Asset Distribution Excellenc
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 JUNE 30, 2019 (Annualized) CAGR 8%* SLF Inc. 2,947 2,904 2,546 2,522 2,485 2,335 2,365 Global Lifecos 2,149 U.S. Lifecos Canadian Lifecos TSX 2016 2017 2018 LTM** Q2'19 4% 5% 6% 7% 8% 9% 10% 11% Sourc
Slide 10: Balanced and diversified business
BALANCED AND DIVERSIFIED BUSINESS BUSINESS DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION Q2’19 UNDERLYING NET INCOME1* Q2’19 UNDERLYING NET INCOME1* Run-off UK 12% 5% Asset U.S. Management 14% Canada 31% 31% Group Insurance 18% Asia 19% Wealth Individual Asset 16% Insurance Management 23% 31% 144% LICA
Slide 11: Business group performance
BUSINESS GROUP PERFORMANCE REPORTED NET INCOME UNDERLYING NET INCOME1 ($ millions) ($ millions) Impact of currency increased reported net income by $15M Impact of currency increased underlying net income by $16M 245 243 245 216 262 214 229 145 147 125 110 148 133 134 105 94 CAN US AM ASIA CAN US AM
Slide 12: Canada is a growth market for Sun Life
CANADA IS A GROWTH MARKET FOR SUN LIFE Q2’19 HIGHLIGHTS ASSETS UNDER UNDERLYING NET Across our digital platforms in Canada, MANAGEMENT2 INCOME2 reached a milestone of over 10 million ($ millions) ($ millions) cumulative health care provider user ratings, with average search volumes of approximatel
Slide 13: 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 asset classes and delivering exceptional investment performance
EXPANDING CAPABILITIES ACROSS OUR ASSET CLASSES AND DELIVERING EXCEPTIONAL INVESTMENT PERFORMANCE UNDERLYING NET INCOME2 Q2’19 HIGHLIGHTS ($ millions) On June 18, combined our fixed income institutional asset management businesses into SLC Management, creating a new Top 100 Global Asset Management
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: SLC Management is leveraging a strong foundation for continued growth
SLC MANAGEMENT IS LEVERAGING A STRONG FOUNDATION FOR CONTINUED GROWTH SLC Develop Management capabilities strategy Develop capabilities, Leverages Sun Life’s launch new products experience in LDI and maintain strong strategies and performance alternative asset classes Aug. 2013 April 2014 April 2015
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 Q2’19 HIGHLIGHTS UNDERLYING NET AFTER-TAX INCOME1 PROFIT MARGIN FOR U.S. Group Benefits sales1 of US$168 million in the (US$ millions) G R O U P B E N E F I T S 1,2 second quarter of 2019 increased 40% compared to US$120
Slide 18: Well-positioned to grow through U.S. market opportunities
WELL-POSITIONED TO GROW THROUGH U.S. MARKET OPPORTUNITIES U.S. Employee Benefits U.S. Stop-Loss Market Market Opportunity Opportunity Employees responsible 61%3 of U.S. employees are for more health and covered by a self-insured plan benefits costs but lack with a trend of smaller employers educatio
Slide 19: Well-positioned in Asia's largest and fastest growing markets
WELL-POSITIONED IN ASIA’S LARGEST AND FASTEST GROWING MARKETS Q2’19 HIGHLIGHTS UNDERLYING NET INCOME1 ($ millions) Asia individual insurance sales1 in our 7 local markets up 20% from the prior year, driven by our Most Respected Advisor program and digital enhancements to advisor apps 458 461 523 5
Slide 20: Well-positioned to capture growth opportunities
WELL-POSITIONED TO CAPTURE GROWTH OPPORTUNITIES 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 3rd largest mutual fund2 provider based on net inflows, #4 based on Asia**
Slide 21: Capital Management
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q2 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% and Strategic Investments Strong Capital Generation Capital Flexibility Capital deployment priorities unchanged Target minimum cash at the holding c
Slide 23: Strong capital position with significant deployment potential
STRONG CAPITAL POSITION WITH SIGNIFICANT DEPLOYMENT POTENTIAL 1 CAPITAL DEPLOYMENT POTENTIAL ($ billions) Cash DEPLOYMENT DESCRIPTION/CONSIDERATIONS $1.7 2 OPPORTUNITIES Making further investments in building out new Organic Investments business models and advancing our leading digital Leverage $5.5
Slide 24: Financial flexibility under capital model
FINANCIAL FLEXIBILITY UNDER CAPITAL MODEL SLF - External Capital Securities LICAT 144% Outstanding First Call Subordinated Debt Coupon Balance Date Financial leverage ratio 20.4% SLF T2B (Series 2007-1) 5.40% $399 29-May-37 SLF $2.2 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) Q2 2019 Debt supporting reserve financing Operating Senior Debt 600 Leverage Bilateral Senior Financing1 2,066 Total Operating Leverage Debt 2,666 Capital (C$ millions) Q2 2019 Tier 2 Subordinated Debt 2,791 SLEECS (Innova
Slide 26: LICAT capital framework
LICAT CAPITAL FRAMEWORK TOTAL TOTAL RATIO RATIO Available Capital + Surplus Allowance + Eligible Deposits Base Solvency Buffer TOTAL RATIO (SLF Inc.) = 144% AVAILABLE CAPITAL SURPLUS ALLOWANCE BASE SOLVENCY + ELIGIBLE DEPOSITS BUFFER Similar to MCCSR Sum of aggregate capital ÷ Essentially the pr
Slide 27: Asset Portfolio
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q2 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 June 30, 2019) (as at June 30, 2019) Leading non-public portfolio with Investment significant origination capabilities Properties Equities BB and lower Cash and Cash 5% 3% 1% Strong Rea
Slide 29: Environmental, Social, Governance
1 2 3 4 BUSINESS CAPITAL ASSET ENVIRONMENTAL, OVERVIEW SOCIAL, MANAGEMENT PORTFOLIO GOVERNANCE Q2 2019 | Sun Life | 29
Slide 30: Strong commitment to sustainability
STRONG COMMITMENT TO SUSTAINABILITY Sustainable Investing Financial Security Healthier Lives $15 Invested in sustainable Financial literacy $25 Committed to diabetes infrastructure to date campaigns in Asia globally billion million Reduction in GHG emissions Documents rewritten Ella, our digital coa
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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