Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Merrill Lynch Insurance Investors Conference 2002
27 slides from Sun Life Financial's conference presentation, Feb 14, 2002
Slide 1: Growth Strategy Gains Traction
Growth Strategy Gains Traction Merrill Lynch Insurance Investors Conference February 14, 2002 Donald A. Stewart Chairman and Chief Executive Officer
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: Non-solicitation Caution
Non-solicitation Caution Certain aspects of this presentation relate to Sun Life Financial’s proposed combination with Clarica Life Insurance Company. This presentation does not constitute an offer to sell or a solicitation of an offer to exchange any securities, or the solicitation of a proxy from
Slide 4: Business Model Focused on Growing Shareholder Wealth
Business Model Focused on Growing Shareholder Wealth STRATEGIC OVERVIEW • Focus on markets where effective scale can be built and sustained • Wealth management for growth and capital efficiency • Protection businesses stabilize earnings stream • Deliver on commitments to shareholders 4
Slide 5: Successful Execution is Driving Value Growth
Successful Execution is Driving Value Growth TRACK RECORD • C$160 million in cost savings delivered a year ahead of schedule • Keyport and Clarica transaction deliver strategic objectives and EPS accretion • Acquisition integration already producing visible earnings contribution • U.K. restructuring
Slide 6: Acquisitions Used to Achieve Strategic and Financial Objectives
Acquisitions Used to Achieve Strategic and Financial Objectives GROWTH STRATEGY • Strategic objectives: – Achieves scale economics in annuity market and distribution channel 4 #12 ranking in US annuity market 4 Bank channel - leadership in 3rd party distribution • Financial objectives: – Immediate E
Slide 7: Keyport/IFMG Integration is Well Ahead of Schedule and Achieving Record Sales
Keyport/IFMG Integration is Well Ahead of Schedule and Achieving Record Sales GROWTH STRATEGY • New, consolidated management team • Cost savings of C$ 20-25 million in 2002 – Support functions consolidation completed – In-house management established for US$ 9 billion in assets • Revenue gains alrea
Slide 8: Achieving Strategic and Financial Objectives - Clarica
Achieving Strategic and Financial Objectives - Clarica GROWTH STRATEGY • Strategic objectives: – Establishes leadership position in Canadian market – Customers/ earnings/ product/ distribution – 7 million customers in Canada • Financial objectives: – Immediate EPS accretion* 4 5 cents in 2002 (based
Slide 9: Actions in 2001 Have Set the Stage For Earnings Growth
Actions in 2001 Have Set the Stage For Earnings Growth EARNINGS GROWTH • Earnings visibility for integration of acquisitions • Cost efficiencies have dramatically enhanced operating leverage • Wealth management businesses well-positioned for equity market rebound 9
Slide 10: Four Drivers of Near-Term Earnings Growth
Four Drivers of Near-Term Earnings Growth GROWTH STRATEGY • Keyport/IFMG integration, 2002 • Clarica integration, 2002/2003 • Core organic growth • Equity market rebound 10
Slide 11: Strong Cash Flow Creates Opportunity for Fine-Tuning Capital Structure
Strong Cash Flow Creates Opportunity for Fine-Tuning Capital Structure EARNINGS GROWTH • Clarica an all-stock transaction – preserves tax-free exchange for significant retail shareholder base – Maintains balance sheet flexibility • C$3 billion in excess capital expected to be generated over next 3 y
Slide 12: Consistent Performance
Consistent Performance TRACK RECORD 1.00 0.80 0.59 0.60 0.48 0.50 0.48 0.50 0.51 0.45 0.47 0.57 0.40 0.20 0.00 (1) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2000 2001 (1) Adjusted as if demutualization took place on January 1, 2000 . 12
Slide 13: Consistent Performance Despite Equity Market Challenges
Consistent Performance Despite Equity Market Challenges TRACK RECORD 1.00 1,420 1,447 1,476 1,366 1,273 0.80 1,234 1,154 1,115 0.59 0.60 0.48 0.50 0.48 0.50 0.51 0.45 0.47 0.57 0.40 0.20 0.00 (1) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2000 2001 (1) Adjusted as if demutualization took place on January 1, 2000 . 13
Slide 14: Balanced Business Mix Achieves Growth With Consistent Performance
Balanced Business Mix Achieves Growth With Consistent Performance STRATEGIC BALANCE EARNINGS MIX Pre-Clarica Pre-Clarica Post-Clarica Long-Term Pre-Keyport Post-Keyport Post-Keyport Target Protection 46% Wealth & Other Management 54% Protection 40% Wealth & Other Management 60% Protection & Other 50
Slide 15: Internationally Diversified Business Portfolio
Internationally Diversified Business Portfolio STRATEGIC DIVERSITY Sun Life 2001 2001 Pro Forma with Clarica Asia & Asia & Other Other 4% UK. 3% UK. Canada 17 % 20 % 24 % Canada 41% U.S. U.S. 39 % 52 % EARNINGS MIX (1) 15 (1) Earnings based on 12 months ended December 2001
Slide 16: Solid Competitive Positions Across a Diverse Franchise
Solid Competitive Positions Across a Diverse Franchise STRATEGIC DIVERSITY Canada Leading market share in every market which is competively significant U.S. # 12 position in Annuities MFS # 8 in mutual funds Rapidly growing institutional business U.K. Radical restructuring lifts ROE above hurdle rat
Slide 17: Clarica Combination Creates Leading Market Positions in Canada
Clarica Combination Creates Leading Market Positions in Canada SOLID COMPETITIVE POSITION • Individual Life & Annuity – #1 Market Rank (Insurance Premiums) – #1 Market Rank (Annuity Premiums) – Sun Life focused on affluent customers, Clarica strong in mid-market retail segment • Group Retirement Ser
Slide 18: Leading Market Positions in Canada Create Leverage for Enhanced Performance
Leading Market Positions in Canada Create Leverage for Enhanced Performance SOLID COMPETITIVE POSITION • Group Market – State-of-the-art products require significant IT investment – Growing client preference for single provider of savings and protection • Retail – Enhanced distribution model tailore
Slide 19: Significant Step in Becoming A North American Leader
Significant Step in Becoming A North American Leader SOLID COMPETITIVE North American Life Insurance Companies Market Capitalization POSITION At February 8, 2002 Rank Company (US$bn) 1 AIG 193.3 2 Metlife 21.4 3 Prudential 18.1 4 Hartford 15.4 5 Sun Life Pro Forma (1) 13.2 6 AFLAC 13.1 7 Manulife 12
Slide 20: U.S. Annuity and Insurance Operations Have Tightly Focused Strategy
U.S. Annuity and Insurance Operations Have Tightly Focused Strategy SOLID COMPETITIVE POSITION • Annuities – Focus on fixed, indexed and variable annuities – #12 in annuities with Keyport (3Q’01) • Group Life & Health – Focus on life, disability and stop-loss – #11 in group life and health (excludin
Slide 21: MFS: 8th Largest Mutual Fund Company in the U.S.
MFS: 8th Largest Mutual Fund Company in the U.S. SOLID COMPETITIVE December 2001 POSITION AUM(1) (US$Bn) 1 Fidelity (combined) $537 2 Vanguard Group 480 3 American Fund Distributors 333 4 Putnam Investments 180 5 Franklin Distributors 155 6 Janus 112 7 T.Rowe Price Investment Svcs. 87 8 MFS Investme
Slide 22: MFS: Net New Flows Consistently at Top of Non-Proprietary Channel
MFS: Net New Flows Consistently at Top of Non-Proprietary Channel SOLID COMPETITIVE POSITION Net New Net New Net New Net New 1998 Flows % of 1999 Flows % of 2000 Flows % of 2001 Flows % of $MM Flows $MM Flows $MM Flows $MM Flows Putnam 11,595 15% Alliance 11,592 24% AIM Management 15,398 17% America
Slide 23: Variable Annuity Market Net New Flows
Variable Annuity Market Net New Flows SOLID COMPETITIVE POSITION Net New Net New Net New November Net New 1998 Flows 1999 Flows 2000 Flows YTD 2001 Flows Manager $MM Manager $MM Manager $MM Manager $MM Wellington 4,795 Janus 8,521 Janus 10,125 MFS 2,652 Putnam 3,469 Alliance 3,227 MFS 5,125 PIMCO 1,
Slide 24: U.K. Business Has Been Aggressively Restructured
U.K. Business Has Been Aggressively Restructured CAPITAL REDEPLOYED • Exited direct sales force business in 1Q’01 • Sold Sun Bank and SLC Asset Management in 4Q’01 • Pension Redress issue on schedule • Outsourcing of Individual Insurance operations - January, 2002 • ROE of 19.9% in 4Q’01 24
Slide 25: Asia Poised For Long-Term Growth
Asia Poised For Long-Term Growth LONG-TERM GROWTH • Philippines – #2 in individual life insurance – Established and growing business achieving hurdle rate returns • India – C$1 billion AUM in mutual funds – 8,000 Individual Life policies sold • China – Advanced stage to launch insurance operations •
Slide 26: IPO Commitments Delivered
IPO Commitments Delivered DELIVER ON COMMITMENTS • Cost reduction targets achieved • Capital effectively redeployed – Keyport/IFMG redeploys C$1.4 billion excess capital – Partial redeployment of U.K. capital • Earnings targets on schedule • Legacy issues effectively managed • Management and shareho
Slide 27: A Compelling Investment Story
A Compelling Investment Story SUMMARY • Competitive positions established in all key markets • Wealth management businesses provide growth upside potential • Action plan for next leg of EPS growth – Keyport/IFMG integration, 2002 – Clarica integration, 2002/2003 – Core franchise growth – Equity mark
Sun Life Financial — Merrill Lynch Insurance Investors Conference 2002 on 6ix