Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Day (March 2021)
78 slides from Sun Life Financial's investor day presentation, Mar 18, 2021
Slide 1: Investor Day
INVESTOR DAY MARCH 18, 2021 “s SLC KE Management . | AlpfraRed CRESCENT BentallGreenOak
Slide 2: Leigh Chalmers
Leigh Chalmers SVP, Head of Investor Relations & Capital Management S LC M AN AG E ME N T • IN V E ST OR DAY 2
Slide 3: Agenda
Agenda Introduction 30 min SLC Management overview Q&A 10 min Sun Life co-investment SLC Management fixed income Distribution 35 min BentallGreenOak Financial overview 60 min InfraRed Capital Partners Q&A 15 min Crescent Capital Group Closing remarks 5 min Q&A 15 min Break 10 min S LC M AN AG E M EN
Slide 4: About SLC Management
In the Investor Day presentations (as hereinafter defined), Sun Life Financial Inc. (“SLF Inc.”), its subsidiaries and, where applicable, its joint ventures and associates are referred to as “we”, “us”, “our”, “Sun Life” and the “Company”. About SLC Management SLC Management is a global institutiona
Slide 5: Dean Connor
Dean Connor Chief Executive Officer, Sun Life S LC M AN AG E M EN T • IN V E ST O R DAY 5
Slide 6: Executing on our ambition to be one of the best insurance and asset management companies
SUN LIFE ASSET MANAGEMENT Executing on our ambition to be one of the best insurance and asset management companies globally US$610B AUM2 Active management in public markets Broad range of equity and fixed CAN U.S. income products Solution-based opportunities ASIA AM A Leader in C$145B AUM2,3 Global
Slide 7: Entering the next stage of growth for SLC Management
Entering the next stage of growth for SLC Management C$145B Third-party assets1 (C$ billions) Capabilities Culture Breadth and depth of Strong investment 39 investment capabilities to philosophy and culture 48 SLC Management: Fixed income meet Client needs Opportunities BentallGreenOak: Real estate
Slide 8: We're in the right business with the right team at the right time
WE’RE IN THE WITH THE RIGHT AT T H E R I G H T RIGHT BUSINESS TEAM TIME S LC M AN AG E ME N T • IN V E ST OR DAY 88
Slide 9: Steve Peacher
Steve Peacher President, SLC Management S LC M AN AG E ME N T • IN V E ST OR DAY 9
Slide 10: SLC Management is a leading global asset manager
SLC Management is a leading global asset manager CAPABILITIES DEMAND SYNERGIES GROWTH SLC Management has built Institutional demand for Complementary businesses 2025 objectives1,2 a platform of world class alternative assets and drive product and AUM3 investment capabilities fixed income is strong d
Slide 11: SLC Management overview
SLC Management overview PROFILE GLOBAL FOOTPRINT ⬤ ⬤ ⬤ Founded 2013 A diversified investment management firm that offers a AUM1 C$303B range of yield orientated asset Employees2 1,176 classes designed to help our Investment professionals 500+ Clients meet their long-term financial obligations Countr
Slide 12: Business diversified across asset class, Client type and domicile
SLC Management’s business is diversified across asset class, Client type and domicile AUM by asset class1 Client by investor type Client domicile (C$ billions) 2% 13 12 5% 4% 5% 20 9% 11% 47 139 11% 1,300+ 1,300+ C$303B Clients2 13% Clients2 71% 69% 72 Public fixed income Private credit Pension Insu
Slide 13: Institutional investors face challenges meeting return targets in a 'lower for longer' environment
Institutional investors face challenges meeting return targets in a ‘lower for longer’ environment Fixed income yields (%) Fixed income yields are at historic lows; below the 5.25-8.00% U.S. public pension plan expected 12 return range1 10 8 5.25- 6 8.00% 4 2 0 2010 2011 2012 2013 2014 2015 2016 201
Slide 14: Traditional public market portfolios can be insufficient to meet return expectations
Traditional public market portfolios can be insufficient to meet return expectations Traditional 60/40 allocation Current pension plan allocation2 Pension plans face challenges Alternatives meeting their return targets in the Fixed 26% public markets income 40% Equity Allocations to alternatives ass
Slide 15: Growing demand for SLC Management's capabilities
Growing demand for SLC Management’s capabilities Alternatives expected to grow by approximately US$1 trillion over the next five years Public fixed income assets expected to grow to nearly US$18 trillion by 2023 Alternatives AUM1 Public fixed income AUM2 (US$ billions) (US$ trillions) Private debt R
Slide 16: Markets for customized solutions have continued to grow
Markets for customized solutions have continued to grow LDI assets1 Outsourced insurance assets2 (US$ billions) (US$ trillions) +21% +18% CAGR 140 2.6 110 95 2.2 2018 2019 2020 2018 2019 Compound Annual Growth Rate (CAGR) S LC M AN AG E ME N T • IN V E ST OR DAY 1Source: Pension & Investments, Top 1
Slide 17: SLC Management has raised nearly C$19B across multiple asset classes
Since the beginning of 2020 SLC Management has raised nearly C$19B across multiple asset classes, products, and geographies FIXED INCOME REAL ASSETS • TALF Fund • European Specialty • U.S. Core Plus strategy • European Infrastructure Lending Fund II Income strategy • U.S. Investment Grade • Europe V
Slide 18: Capabilities stack up against pre-eminent alternative asset managers
SLC Management’s capabilities stack up against the world’s pre-eminent alternative asset managers SLC MANAGEMENT BLACKSTONE BROOKFIELD Investment capabilities C$303B AUM1 C$766B AUM2 C$742B AUM2 Public fixed income ⬤ ⬤ ⬤ Private credit ⬤ ⬤ ⬤ Real estate debt ⬤ ⬤ ⬤ Direct real estate ⬤ ⬤ ⬤ Infrastruc
Slide 19: Sun Life co-investment is a competitive advantage
Sun Life co-investment is a competitive advantage – C$2.2B1 committed CO-INVESTMENT COMPETITIVE ADVANTAGE Sun Life Yield and diversification SLC Management Speed to market Clients and growth Alignment of interest S LC M AN AG E M EN T • IN V E ST O R DAY 1 See “Forward-looking information” in the ap
Slide 20: Co-investment has enabled over C$7.4B of third-party commitments
Sun Life co-investment has enabled SLC Management to raise over C$7.4B of third-party commitments Examples of products launched since 2014 SLC Management’s fixed income business BGO InfraRed European Infrastructure Income Canadian Private Fixed Income Funds Separate account with foreign bank strateg
Slide 21: Sustainability is important to us and our Clients
Sustainability is important to us and our Clients 150 years 1st Top 100 Sustainable investing Experience managing Global life insurer to Most sustainable Clients We co-invest in assets1 issue sustainability corporations in the world2 sustainable assets bond alongside our Clients demonstrating true S
Slide 22: How we deliver results for our Clients
How we deliver results for our Clients CAPABILITIES PERFORMANCE DISTRIBUTION SCALE TALENT RESULTS FOR CLIENTS Broad set of yield- Consistent investment Sales efforts Organized for Build a high Meeting Client oriented investment performance and organized to bring growth through a performing and objec
Slide 23: Steve Peacher
Steve Peacher President, SLC Management S LC M AN AG E ME N T • IN V E ST OR DAY 23
Slide 24: Fixed income business built from a strong foundation
SLC Management’s fixed income business – built from a strong foundation Unique capabilities in LDI and A leader in investment grade Consistent strong insurance asset management private fixed income1 performance Integration of the investment grade fixed income businesses Sun Life Public and Ryan Labs
Slide 25: Fixed income business well-positioned for continued growth
SLC Management’s fixed income business is well-positioned for continued growth Third-party AUM1 (C$ billions) +12% CAGR 48 Private fixed income 31 Canadian public fixed income C$133B Sun Life General Account U.S. total return fixed income assets1,2 managed by (formerly Ryan Labs) SLC Management’s fi
Slide 26: Fixed income is a strategic priority
Fixed income is a strategic priority for SLC Management ALLOCATIONS EXPERTISE SOLUTIONS RELATIONSHIPS All Clients have Management of Bolsters our capabilities Builds and extends allocations to fixed customized insurance and and ability to provide Client relationships income pension portfolios soluti
Slide 27: Sonny Kalsi and John Carrafiell
Sonny Kalsi BentallGreenOak John Carrafiell BentallGreenOak S LC M AN AG E ME N T • IN V E ST OR DAY 27
Slide 28: Global leadership team with local presence
Global leadership team with local presence U.S. EUROPE 7 offices 6 offices Edmonton 6 states 6 countries Calgary Winnipeg London Cologne Vancouver Montreal 202 Professionals 55 Professionals Seattle Ottawa Luxembourg Toronto Paris San Francisco Boston Chicago Madrid Milan New York Seoul CANADA ASIA
Slide 29: Breadth of investment strategies
Breadth of investment strategies Equity strategies Debt strategies Real estate services Development Knowledge and experience of A market leader in Offers extensive experience Vertically integrated experts to target and deliver providing real estate in full-service property and development capability
Slide 30: BGO manages US$53B on behalf of a diverse investor base
BGO manages US$53B on behalf of a diverse investor base that includes over 90% institutional capital BGO AUM1,2 BGO AUM1 BGO AUM1,4 BGO AUM1 By asset type By asset geography By investor type By investor domicile 2% 3% 3% 8% 5% 23% 11% 10% 24% 28% 7% 10% 49% 10% 12% 58% 37% 17% 34% 7% 21% 21% Residen
Slide 31: ESG and Equity, Diversity and Inclusion Leader
ESG and Equity, Diversity and Inclusion Leader BGO has been a vocal advocate for change in diversity within the Top rankings in the ENERGY STAR® Partner A+ rating from United commercial real estate industry 2020 Global Real of the Year-Sustained Nations Principles for Estate Sustainability Excellenc
Slide 32: BGO ranks among the largest global real estate managers
BGO ranks among the largest global real estate managers 1 1 2020 Global Ranking RE AUM RE AUM Global Value Rank Debt Core / Core+ Global – All Categories (US$ billions) As % of Top 100 Presence Add 1 The Blackstone Group 279 6.8% ✓ ✓ ✓ ✓ 2 Brookfield Asset Management 208 5.0% ✓ ✓ ✓ ✓ 3 Nuveen Real E
Slide 33: History of strong fundraising activity and performance
History of strong fundraising activity and performance Value Add Series1 Real Estate Private Debt1 U.S. Asia Europe Europe Target 13-15% net IRR2,3 Target 14-16% net IRR2,3 Target 14-16% net IRR2,3 Target 7-9% net IRR2,3 (US$ millions) (US$ millions) (US$ millions) (US$ millions) 2,205 2.2x 2.2x 1,9
Slide 34: Diversified AUM and revenue across geographies
Diversified AUM and revenue across geographies Strong contribution from international revenue growth BGO AUM1 BGO AUM1 (Dec 31, 2020) International revenue (US$ billions) By asset geography (Europe & Asia) (US$ millions) International 6% AUM1 36% 14% 15% 56 Europe 107 53 11% Asia 53% CAGR 3% 46 Cana
Slide 35: Next phase of growth
Next phase of growth High demand ‘Core’ risk asset types Logistics Data Centers Logistics Core plus Multifamily Residential Life Sciences International Value add funds series Korea Logistics Warehouse S LC M AN AG E ME N T • IN V E ST OR DAY 35
Slide 36: Werner von Guionneau and Chris Gill
Werner von Guionneau InfraRed Capital Partners Chris Gill InfraRed Capital Partners S LC M AN AG E M EN T • IN V E ST O R DAY 36
Slide 37: Long-tenured leadership team
Long-tenured leadership team Senior professionals average over 20 years with the business and infrastructure experience1 5 150+ 28 43% : 57% offices professionals nationalities female : male ratio Werner von Chris Gill Harry Seekings Marie Dierickx Richard Goulder Sarah Gledhill Guionneau Deputy Chi
Slide 38: Our assets are the fabric of healthy communities
Our assets are the fabric of healthy communities and a critical component in achieving sustainable economic growth We develop and operate infrastructure assets globally ~300 Infrastructure transactions completed since 1997 Social infrastructure Transport Renewables Communications S LC M AN AG E ME N
Slide 39: Our asset base
Our asset base ~80% of our US$10B Infrastructure AUM1,2 is permanent & long-term capital, providing solid foundations Assets by strategy3 Assets by type Investors by region Investors by segment Capital gain Unlisted North America Other Wealth 21% 37% Asia 6% 13% Managers 13% 43% Insurance 16% Income
Slide 40: Consistently strong performance for nearly 25 years
Consistently strong performance for nearly 25 years1,2 InfraRed Capital Gain Funds3,4 InfraRed Income Funds5 Fund Size Fund Size Fund Vintage Net IRR Fund Vintage Net Return (US$ millions) (US$ millions) Principal book (core) 1997 150 30%+ achieved Income Fund 1 (core) 2006 4,400 9.0% Develop. Fund
Slide 41: Sustainability at the very core of delivering long-term outperformance
Sustainability at the very core of delivering long-term outperformance Strategy Action Reporting Working towards being Fully integrated into investment and Transparent reporting best-in-class since 2011 management processes A+ 2020 Score1 1Principles for Responsible Investment ratings are based on s
Slide 42: Historical infrastructure AUM growth
Historical infrastructure AUM growth AUM1 growth 2016-2020 (US$ billions) 16.7% 10.4 CAGR Strong AUM growth 5.6 across the existing strategies 2016 2020 S LC M AN AG E ME N T • IN V E ST OR DAY 1Assets Under Management (AUM) is a Non-IFRS financial measure; see “Use of Non-IFRS Financial Measures” i
Slide 43: Next phase of growth
Next phase of growth Well positioned for expansion in attractive segments of global infrastructure Leveraging synergies with Sun Life Targeting Americas as a next high growth market: • Transporting a proven infrastructure income investment model to North America Cultural fit Distribution • Focused o
Slide 44: Mark Attanasio and Jean-Marc Chapus
Mark Attanasio Crescent Capital Group Jean-Marc Chapus Crescent Capital Group S LC M AN AG E ME N T • IN V E ST OR DAY 44
Slide 45: Seeking attractive returns with less volatility, lower default rates
Seeking to deliver attractive returns with less volatility, lower default rates and higher recovery than the market average Alternative credit investment manager founded in 1991 50+ 30+ 95+ Private credit Public credit Operations investment investment professionals professionals professionals • Stro
Slide 46: We invest in below investment grade loans and bonds
We invest our Client’s capital in below investment grade loans and bonds with a focus on capital preservation and high current income (7% - 14%) Typical balance sheet Private credit Public credit Debt Senior Broadly syndicated loans Unitranche Equity Junior Public high yield bonds U.S. direct lendin
Slide 47: Selected sponsors, industries, and borrowers
Selected sponsors, industries, and borrowers Sponsors Private credit borrowers Public credit borrowers Business Automotive services Consumer Media services Retail Technology Software Telecommunication S LC M AN AG E ME N T • IN V E ST OR DAY 47
Slide 48: Diversified assets and investor base
Diversified assets and investor base AUM1 by strategy AUM1 by vehicle type AUM1 by investor domicile Public Credit 13% 5% 4% 13% 32% 6% 35% Private 15% 19% 15% 46% US$31B Credit US$31B US$31B 68% 72% 24% 33% Senior debt Closed-ended funds North America Junior debt Separately managed accounts Asia Co
Slide 49: Responsible Investing
Responsible Investing 2020 PRI summary scorecard1,2 ESG integration Firm Investment process • ESG working group • New investments Strategy & governance • Training • Ongoing monitoring A • Reporting • Engagement Fixed income: Corporate non-financial • Research 1Represents Crescent’s aggregate score f
Slide 50: Performance & fundraising: select private credit strategies
Performance & fundraising: select private credit strategies Credit solutions U.S. direct lending European specialty (US$ millions) (US$ millions) lending (€ millions) Strong vintage over Target net IRR1 Target net IRR1 12-14% (unlevered) 6% - 8% (unlevered) Target net IRR1 vintage fundraising track
Slide 51: Performance & fundraising: select public credit strategies
Performance & fundraising: select public credit strategies Defensive high yield High income Syndicated credit solutions1 (US$ millions) (US$ millions) (US$ millions) Net returns2 Net returns2 Net returns2 8.77% / 7.85% / 6.60% 4.70% / 5.69% / 4.77% 4.65% / 5.63% / 6.56% Strong AUM growth across (1yr
Slide 52: Historical AUM growth
Historical AUM growth AUM1 growth 2015-2020 (US$ billions) 11% CAGR Strong AUM growth 31 across the existing strategies Expanded platform’s 18 capabilities by adding new strategies 2015 2020 S LC M AN AG E ME N T • IN V E ST OR DAY 1Assets Under Management (AUM) is a Non-IFRS financial measure; see
Slide 53: Next phase of growth
Next phase of growth Secular shift Expand into towards adjacent alternatives strategies Expand Accelerate investor types growth of existing strategies Expand investor geographies S LC M AN AG E ME N T • IN V E ST OR DAY 53
Slide 54: Randy Brown
Randy Brown CIO, Sun Life & Head of Insurance Asset Management, SLC Management S LC M AN AG E ME N T • IN V E ST OR DAY 54
Slide 55: Sun Life General Account increasing allocations to private asset classes
Sun Life General Account increasing allocations to private asset classes Rates are low and Returns on real estate, projected to be “low for long” infrastructure, and below investment grade fixed income are Negative yields on US$13.7 trillion1 attractive of global debt Income is attractive for these
Slide 56: Demand for SLC Management capabilities across Sun Life
Demand for SLC Management capabilities across Sun Life LIABILITY SURPLUS SLC MANAGEMENT SEGMENTS SEGMENTS Demand for private asset Opportunity to pursue total Capacity to support product classes / non-fixed income return driven strategies to development and drive delivering yield and total complemen
Slide 57: Supporting Sun Life investment goals
Supporting Sun Life investment goals Capacity Sustainability Return profile • C$2.21 billion committed in total • Sun Life’s sustainability strategy • Asset duration matching for long- across Crescent, BGO, and InfraRed highlights our commitment to tailed liabilities (represents 1.2% of total invest
Slide 58: Tom Murphy
Tom Murphy Head of Institutional Business, SLC Management S LC M AN AG E ME N T • IN V E ST OR DAY 58
Slide 59: A menu of connected investment capabilities
SLC Management – a menu of connected investment capabilities 1. Fixed income Clients 2. Real assets Clients 3. Clients searching for enhanced income Significant opportunity to “connect the dots” and enhance Client value IN V E ST O R DAY S LC M AN AG E ME N T • IN V E ST OR DAY 59
Slide 60: Global Client base
Global Client base ⬤ ⬤ ⬤ Clients by investor type Clients by investor domicile We have a significant opportunity to broaden 5% 4% 5% 2% Client relationships 9% 11% 11% 1,300+ 13% 1,300+ Clients1 Clients1 71% 69% Only 50 Pension funds U.S. Canada Clients are investing with more Insurers EMEA Asia tha
Slide 61: Significantly enhanced distribution opportunities
Significantly enhanced distribution opportunities Geographic expansion Channel expansion Product innovation EXAMPLES EXAMPLES EXAMPLES Expand InfraRed’s Evaluate high net Explore presence in North worth and family multi-asset America office channels solutions Accelerate the growth Leverage Sun Life
Slide 62: Cross-platform wins – consultant case study
Cross-platform wins – consultant case study Consultants advise on: Our key strategies are on the recommended list of the: C$45.7T institutional assets globally 10 largest global consultants Introduced fixed SUMMER FALL Strengthened relationship income capabilities 2020 2020 through new acquisition C
Slide 63: Cross-platform wins – Client case study
Cross-platform wins – Client case study Insurer needed an asset manager with: A deep Strong investment understanding of management CASE STUDY asset-liability capabilities in both management (“ALM”) markets Cross-border insurance in the U.S. and Canada asset management mandate with the captive insura
Slide 64: Marlene Van den Hoogen
Marlene Van den Hoogen Chief Financial and Operating Officer, SLC Management S LC M AN AG E ME N T • IN V E ST OR DAY 64
Slide 65: Increase in third party AUM driven by organic growth and acquisitions
Increase in third party AUM driven by organic growth and acquisitions AUM1 Net annual flows – reported (C$ billions) (C$ billions) 145 84 59 66 54 11 12 10 8 7 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 -4 -5 SLC Management BGO2 InfraRed Crescent3 -6 -6 -12 Inflows Outflows 1Assets Under Mana
Slide 66: Aligning third-party AUM to include committed capital
Aligning third-party AUM to include committed capital across the business Restating C$145B to C$154B in AUM1 by including all signed commitments Total AUM1 (C$ billions) Non Fee Earning AUM C$25B 12 21 Non Fee Earning 13 Leverage C$154B 133 Fee Earning AUM C$129B Committed capital Invested assets 1A
Slide 67: AUM diversified across vehicle type, asset class and geography
AUM is broad-based and diversified across vehicle type, asset class and geography AUM1 by vehicle type AUM1 by asset class AUM1 by geography (C$ billions) (C$ billions) (C$ billions) 4% 8% 4% 11% 9% 18% 37% 32% 21% C$154B 35% C$154B C$154B 29% 25% 67% Separate accounts IG private fixed income Canada
Slide 68: Fundraising diversified across different asset classes
Fundraising diversified across different asset classes Total funds raised – 20201 Forecasted fundraising – 20212 (C$ billions) (C$ billions) 11% 16% 24% 21% 40% C$13B C$23B 29% 31% 28% Real estate Investment grade fixed income Alternative credit Infrastructure S LC M AN AG E ME N T • IN V E ST OR DA
Slide 69: Revenue stream will be primarily fee related in the medium term
Revenue stream will be primarily fee related in the medium term Fee Related Revenue Investment Income Performance Revenue • Management fees • Investment income on • Carry or performance • Transaction related fees co-investment related revenue • Catch-up fees • Excludes General Account • Generally ex
Slide 70: Operating margin and underlying net income
Operating Margin reflects the profitability of the business while Underlying Net Income reflects the share of net income to Sun Life Underlying net income1 (C$ millions) Operating margin Reflects 100% of the acquired businesses • Operating income defined as pre-tax 26% underlying income prior to amo
Slide 71: SLC Management positioned for growth over the medium term
SLC Management positioned for growth over the medium term1 2025 objectives Assets Under Operating Underlying Net Management Margin Income C$225B2,3 30%-35%2 C$225M2 1 See “Forward-looking information” in the appendix to these slides 2Assets Under Management (AUM), operating margin and underlying net
Slide 72: Steve Peacher
Steve Peacher President, SLC Management S LC M AN AG E ME N T • IN V E ST OR DAY 72
Slide 73: SLC Management is a leading global asset manager
SLC Management is a leading global asset manager CAPABILITIES DEMAND SYNERGIES GROWTH SLC Management has built Institutional demand for Complementary businesses 2025 objectives1,2 a platform of world class alternative assets and drive product and AUM3 investment capabilities fixed income is strong d
Slide 74: Appendix
Appendix S LC M AN AG E ME N T • IN V E ST OR DAY 74
Slide 75: 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
Slide 76: Medium-Term Financial Objectives
Medium-Term Financial Objectives SLC Management’s medium-term financial objectives are forward-looking non-IFRS financial measures. Our ability to achieve those objectives is dependent on our success in achieving growth initiatives and business objectives that are described in the Investor Day prese
Slide 77: Non-IFRS measures
Non-IFRS measures Assets Under Management (AUM), operating margin, net returns, internal rate of return (IRR) and underlying net income are Non-IFRS financial measures. We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information th
Slide 78: Slide-specific Notes
Slide-specific Notes Slide 31 - Energy Star Partner of the Year awards are awarded by the United States Environmental Protection Agency (“EPA”). An Energy Star Partner of the Year Award is the highest level of EPA recognition, reflecting the EPA's assessment that the partner perform at a superior le