Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q4 2015 Earnings Presentation
30 slides from Sun Life Financial's earnings presentation, Feb 11, 2016
Slide 1: Building Sustainable Shareholder Value 2015
BUILDING SUSTAINABLE SHAREHOLDER VALUE 2015
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this presentation and certain oral statements made during the earnings conference call on February 11, 2016 (collectively, this “presentation”), including, but not limited to, statements that are not historical facts, are forward-looking and are subje
Slide 3: Sun Life Financial in 2016
SUN LIFE FINANCIAL SUN LIFE FINANCIAL IN 2016 A leading, international financial services provider… operating through a balanced and diversified model… focused on creating shareholder value now and in the future 3
Slide 4: Our Four Pillar Strategy
SUN LIFE FINANCIAL OUR FOUR PILLAR STRATEGY A growth strategy focused on high ROE and strong capital generation through leading positions in attractive markets globally LEADER in FINANCIAL PROTECTION and WEALTH SOLUTIONS in our Canadian home market ✓✓ PREMIER GLOBAL ASSET MANAGER, anchored by MFS LE
Slide 5: Management at a Glance
SUN LIFE FINANCIAL SUN LIFE AT A GLANCE Lifetime Financial Security • Brand • Customer Insights • The Brighter Way—Lean Six Sigma LEVERAGE • Digital and Data Analytics • Third Party Investment Sourcing • Risk and Capital Diversification • Distribution MANAGEMENT CANADA ASSET ASIA U.S. FOUR PILLARS H
Slide 6: Long Term Macro Drivers of Consumer Demand
SUN LIFE FINANCIAL PRODUCTS & MARKETS POSITIONED FOR GROWTH LONG TERM MACRO DRIVERS OF CONSUMER DEMAND RETIREMENT DOWNLOADING GROWTH of baby boomers of responsibility from of the middle class in the government & employers to emerging markets of Asia employees 6
Slide 7: Compared to Other North American Life Insurers
SUN LIFE FINANCIAL COMPARED TO OTHER NORTH AMERICAN LIFE INSURERS 1. Leadership position in Canada, one of the best financial markets in the world 2. First-rate investment management businesses – MFS and Sun Life Investment Management 3. Significant and growing business in Asia, exclusively in highe
Slide 8: Relative Stock Performance from Announcement of Four Pillar Strategy
SUN LIFE FINANCIAL RELATIVE STOCK PERFORMANCE FROM ANNOUNCEMENT OF FOUR PILLAR STRATEGY(1) YTD 8% increase in quarterly common share dividend for 2015 160 140 Stock Appreciation % SLF 128% 120 100 80 60 Dividend Yield 3.6%* 40 20 0 (1) Period December 31, 2011 to December 31, 2015 8 *As at December
Slide 9: Strong Execution, Exceeding 2015 Objectives
SUN LIFE FINANCIAL STRONG EXECUTION, EXCEEDING 2015 OBJECTIVES • Committed $2.4 billion in capital through six transactions UNDERLYING NET INCOME in support of four pillar strategy (C$ millions) • Investments in Canadian wealth gaining traction: • Excellent performance from Sun Life Global Investmen
Slide 10: Q4'15 Results
SUN LIFE FINANCIAL Q4’15 RESULTS C$ millions Q4’15 Q3’15 Q4’14 (except EPS and ROE) Operating net income 598 478 511 Underlying net income 646 528 360 Reported net income 536 482 502 Diluted operating EPS (C$) 0.98 0.78 0.83 Diluted underlying EPS (C$) 1.05 0.86 0.59 Operating ROE 12.7% 10.5% 12.6%
Slide 11: Business Group Performance
SUN LIFE FINANCIAL BUSINESS GROUP PERFORMANCE SOLID GROWTH IN UNDERLYING EARNINGS SLFCanada SLF Canada ACROSS BUSINESSES (C$ millions) • Favourable disability results and investing activity • New business gains in Group Retirement Services 269 • Continued investment in Individual Wealth 181 183 SLF
Slide 12: Sales Results
SUN LIFE FINANCIAL SALES RESULTS C$ millions Q4’15 Change over Q4’14 2015 Change over 2014 Individual life and health 276 20% 916 10% Group life and health 491 (16%) 1,256 1% Total Insurance sales 767 (6%) 2,172 5% Wealth – SLF Asset Management 24,247 4% 100,523 10% Wealth – Non SLF Asset 5,387 (18%
Slide 13: New Medium-Term Objectives
SUN LIFE FINANCIAL NEW MEDIUM-TERM OBJECTIVES(1) Average EPS growth: 8-10% per annum ROE objective: 12-14% Payout ratio(2): 40-50% (1) The objectives are forward-looking non-IFRS financial measures and are not earnings guidance. These objectives were provided on March 5, 2015 (Investor Day). 13 (2)
Slide 14: SLF Canada: Growing Earnings Power
SLF CANADA GROWING EARNINGS POWER ASSETS UNDER UNDERLYING NET INCOME Q4’15 HIGHLIGHTS MANAGEMENT (C$ millions) (C$ millions) • Strengthened leadership position in 894 Defined Benefit Solutions with innovative $530 million group 152,560 823 141,689 799 annuity transaction 127,906 • Continued momentum
Slide 15: Asset Management
SUN LIFE FINANCIAL SUN LIFE FINANCIAL ASSET MANAGEMENT SUN LIFE FINANCIAL ASSET MANAGEMENT AUM C$572 billion AUM C$58 billion • Strong fund performance and operating • Sun Life Investment Management (SLIM) margins at MFS gross sales of $2.2 billion • MFS named among the “Best Mutual Fund Families” b
Slide 16: U.S.: Continuing the Evolution
SUN LIFE U.S. CONTINUING THE EVOLUTION SLF U.S. UNDERLYING NET INCOME (US$ millions) Q4’15 HIGHLIGHTS • Improved profitability through expense 341 initiatives, claims management and pricing 282 actions 554 • Acquisition of Assurant employee benefits 240 business on track to close by end of Q1 2016 •
Slide 17: Combination Results in Complete Portfolio of Group Businesses
SUN LIFE U.S. COMBINATION RESULTS IN COMPLETE PORTFOLIO OF GROUP BUSINESSES Group Dental Partnership Life & Disability & Vision Voluntary Stop Loss Business COMBINED BUSINESS: COMBINED BUSINESS: COMBINED BUSINESS: COMBINED BUSINESS: Disability RMS: • BIF: US$1.9 billion • BIF: US$0.7 billion • BIF:
Slide 18: Asia: Sales Growth, Expanded Footprint
SUN LIFE ASIA SALES GROWTH, EXPANDED FOOTPRINT INDIVIDUAL LIFE AND UNDERLYING NET HEALTH INSURANCE INCOME Q4’15 HIGHLIGHTS (C$ millions) SALES(1) (C$ millions) Wealth Protection • Strengthened presence in Asia, announcing 252 CAGR +14% agreements to increase ownership positions in CAGR +43% 488 84%
Slide 19: Deliberate Capital and Cash Allocation
SUN LIFE FINANCIAL DELIBERATE CAPITAL AND CASH ALLOCATION DATE AMOUNT APPLICATION RESULTS Q2 2013 $300 million Acquisition of Malaysia business Meeting business case expectations $480 million of net income Q4 2013 $250 million Restructure of U.S. reinsurance arrangement (Q4’13 and 2014) Q1 2014 $500
Slide 20: Balanced and Diversified Business Model
SUN LIFE FINANCIAL BALANCED AND DIVERSIFIED BUSINESS MODEL BY BUSINESS GROUP(1) – 2015 STRONG UNDERLYING EARNINGS GROWTH FROM BOTH Underlying net income $2.3 billion WEALTH AND INSURANCE BUSINESSES(2) (C$ millions) 2,305 SLF Asia 10% 1,816 SLF Canada SLF Asset 36% Management 29% SLF U.K. SLF U.S. 7%
Slide 21: Wealth Management
SUN LIFE FINANCIAL WEALTH MANAGEMENT(1) Sales Value of new business 2015 (C$ billions) C$1.2 billion 123 Wealth 114 111 100 Protection 40% 60% 2012 2013 2014 2015 Fee income Assets under management (C$ millions) (C$ billions) 746 4,911 4,053 606 3,339 528 2,632 398 2012 2013 2014 2015 2013 2014 2015
Slide 22: Strong Capital and Financial Position
SUN LIFE FINANCIAL STRONGCAPITAL STRONG CAPITALAND ANDFINANCIAL FINANCIALPOSITION POSITION MCCSR RATIO – • $1 billion cash level at Sun Life Financial Inc. as at SUN LIFE ASSURANCE December 31, 2015 COMPANY OF CANADA • $500 million minimum cash target 240% 219% Financial Strength Rating 217% Sun Lif
Slide 23: Capital Model
SUN LIFE FINANCIAL CAPITAL MODEL $1 billion cash at Holding SLF Company(1) Sun Life Asset SLA MCCSR of 240% Management Sun Life MFS Investment Management U.S. U.K. Canada Bermuda Asia Branch Book value excl. from MCCSR Capitalized to meet local capital rules (1) At December 31, 2015. 23
Slide 24: Quality Asset Portfolio
SUN LIFE FINANCIAL QUALITY ASSET PORTFOLIO 2015 INVESTED ASSETS (C$138 billion) • Investment portfolio is well diversified by Equities 4% geography, asset class, industry sector or issuer Investment • High quality asset base Properties 5% • Exposure to the energy sector for debt securities Other and
Slide 25: Energy Exposure
SUN LIFE FINANCIAL ENERGY EXPOSURE Debt Securities & Corporate Loan Highlights Energy Exposure Total $5.6 billion • Total energy debt securities & corporate loan exposure 4% of total Exploration & invested assets Production • 93% of our energy portfolio is rated 15% investment grade Integrated 14% P
Slide 26: Sustainable Shareholder Value
SUN LIFE FINANCIAL SUSTAINABLE SHAREHOLDER VALUE COMPELLING FOUR PILLAR STRATEGY EXECUTING ON GROWTH AMBITIOUS AND ACHIEVABLE OBJECTIVES DISCIPLINED CAPITAL/RISK MANAGEMENT EXECUTION EXCELLENCE 26
Slide 27: Contact Investor Relations
SUN LIFE FINANCIAL INVESTOR RELATIONS CONTACT GREG DILWORTH JUSTIN WANG Vice President, IR Assistant Vice President, IR gregory.dilworth@sunlife.com justin.wang@sunlife.com 416-979-6230 416-496-3553
Slide 28: Use of Non-IFRS Financial Measures
In this presentation, Sun Life Financial Inc. and its subsidiaries, joint ventures and associates are referred to as “we”, “us”, “our” and the “Company”. Use of Non-IFRS Financial Measures We report certain financial information using non-IFRS financial measures, as we believe that these measures pr
Slide 29: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including statements (i) related to our pending acquisition of the U.S Employee Benefits Business of Assurant ,Inc., (ii) statements relating to our growth strategies, (iii) statements concerning our medium-term financial objectives
Slide 30: Financial Objectives
Financial Objectives Our 2015 overall company financial objectives, as updated in 2013, were operating net income of $1.85 billion and operating ROE of 12%-13%. Our 2015 results exceeded our net income objective with operating net income of $2.25 billion, and we achieved our objective with an ROE of