Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2017 Earnings Presentation
33 slides from Sun Life Financial's earnings presentation, 2017
Slide 1: Building Sustainable Shareholder Value
BUILDING S U S TA I N A B L E SHAREHOLDER VA L U E First Quarter, 2017
Slide 2: Business Overview
BUSINESS OVERVIEW Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 3: Sun Life Financial in 2017
SUN LIFE FINANCIAL IN 2017 A $30 billion1 leading, international financial services provider… operating through a balanced and diversified model… focused on creating shareholder value now and in the future 3 1 Market capitalization (C$), as of March 31, 2017
Slide 4: The Sun Life Story: Ambitious and Achievable
THE SUN LIFE STORY: AMBITIOUS AND ACHIEVABLE We have four strong pillars that can each compete, win and grow in their respective 1 sectors and which leverage each other Bound together by a strong balance sheet and risk culture, including no direct U.S. 2 Variable Annuity or Long-Term Care Underpinne
Slide 5: Setting a Bold New Objective
SETTING A BOLD NEW OBJECTIVE Our ambition is to be ONE OF THE BEST insurance and asset management companies globally Each pillar viewed Disproportionate as one of the best Top Quartile Share of Top Top Quartile TSR in its markets Client Experience Talent 5
Slide 6: This Will Feel Different
CLIENT FOR LIFE: A STEP From: To: Customers Clients Product sale Advice and solutions One-time interaction A lifetime relationship Reactive Proactive: Sun Life has my back Insurance jargon Language that people understand Complex paper driven processes Simplified digital proce
Slide 7: Ambition to Be One of the Best Insurance and Asset Management Companies
AMBITION TO BE “ONE OF THE BEST” INSURANCE AND ASSET MANAGEMENT COMPANIES IN THE WORLD A growth strategy focused on high ROE and strong capital generation through leading positions in attractive markets globally A Leader in Insurance Digital Data & A Leader in U.S. Group and Wealth Solutions Analyti
Slide 8: Key Drivers Support Medium-Term EPS Objectives
KEY DRIVERS SUPPORT MEDIUM-TERM EPS OBJECTIVES 1%-2% 8%-10% 2%-3% 5% Organic Growth & Margin Improvement Recently Acquired Medium-Term Objective Existing Initiatives Businesses Additional opportunities through effective capital deployment 1 The objectives are forward-looking non-IFRS financial measu
Slide 9: Delivering Value to Shareholders
DELIVERING VALUE TO SHAREHOLDERS TOTAL SHAREHOLDER RETURN NET INCOME1 FIVE YEARS AS OF (C$ MILLIONS) MARCH 31, 2017 (ANNUALIZED RETURN) CAGR 9%* 2,485 2,496 2,335 2,305 2,326 Sun Life 2,185 1,762 1,816 Canadian Lifecos Canadian Banks S & P 500 U.S. Lifecos 2014 2015 2016 LTM Q1'17 TSX Reported Net I
Slide 10: Balanced and Diversified Business
BALANCED AND DIVERSIFIED BUSINESS BUSINESS GEOGRAPHIC DIVERSIFICATION DIVERSIFICATION Q1’17 UNDERLYING NET INCOME Q1’17 UNDERLYING NET INCOME* RUN-OFF 11% SLF UK 7% ASSET MANAGEMENT SLF US GROUP 32% 13% SLF INSURANCE CANADA 17% 37% SLF ASIA 13% INDIVIDUAL WEALTH INSURANCE 13% SLF ASSET 27% MANAGEMEN
Slide 11: Business Group Performance
BUSINESS GROUP PERFORMANCE UNDERLYING NET INCOME REPORTED NET INCOME (C$ MILLIONS) (C$ MILLIONS) 229 266 218 183 170 169 177 171 111 77 79 95 91 68 73 37 SLF Canada SLF U.S. SLF Asset SLF Asia SLF Canada SLF U.S. SLF Asset SLF Asia Management Management Q1 16 Q1 17 Q1 16 Q1 17 Underlying net income
Slide 12: SLF Canada: Growing Earnings Power
SLF CANADA: GROWING EARNINGS POWER Q1’17 HIGHLIGHTS ASSETS UNDER UNDERLYING NET MANAGEMENT INCOME • Individual Insurance sales of $144 million, (C$MILLIONS) (C$MILLIONS) more than double the prior year • Individual Wealth sales up 16% from growth across all product lines • Group Benefits and Group R
Slide 13: SLF Canada: New Engines Accelerating Growth
SLF CANADA: NEW ENGINES ACCELERATING GROWTH AND ALREADY SEEING THE RESULTS Client Solutions Sun Life Global Defined Benefit Investments Sun GIF Brighter Way Digital Health Solutions Building retail wealth (Segregated Digital initiatives Solutions Centralized distribution Funds) ope
Slide 14: SLF Asset Management: Premier Global Asset Management Operations
SLF ASSET MANAGEMENT: PREMIER GLOBAL ASSET MANAGEMENT OPERATIONS Q1’17 HIGHLIGHTS ASSETS UNDERLYING • Strong long-term fund performance UNDER MANAGEMENT NET INCOME recognized by Barron’s Best Fund Families (C$BILLIONS) (C$MILLIONS) of 2016 • MFS ranked among top 10 for 5- and 10-year periods in the
Slide 15: SLF Asset Management: MFS' Path to Net Inflows
SLF ASSET MANAGEMENT: MFS’ PATH TO NET INFLOWS 2 Year View on Net Flows Gross Sales Redemptions* Net Flows 2016 2015 Inc/(Dec) 2016 2015 (Inc)/Dec 2016 2015 Inc/(Dec) U.S. retail remains (US$ billions) relatively strong U.S. Retail 46.8 40.8 6.0 (45.1) (38.8) (6.3) 1.7 2.1 (0.4) while the improvemen
Slide 16: SLF Asset Management: SunLife Investment Management Well Positioned for Growth
SLF ASSET MANAGEMENT: SUNLIFE INVESTMENT MANAGEMENT WELL POSITIONED FOR GROWTH Ta r g e t $100 billion of AUM and 20+% operating margin by 2020 • Institutional demand for liability-driven investing, alternative fixed income and real estate is strong and growing • Sun Life Investment Management is we
Slide 17: SLF U.S.: Strong Contribution to Future Earnings
SLF U.S.: STRONG CONTRIBUTION TO FUTURE EARNINGS Q1’17 HIGHLIGHTS SLF U.S. UNDERLYING NET INCOME • Integration of the U.S. employee benefits business is (US$MILLIONS) progressing well. Group Benefits sales higher from acquired business • Announced the acquisition of The Premier Dental Group 240 341
Slide 18: SLF U.S.: Uniquely Broad Product Portfolio in Group Benefits
SLF U.S.: UNIQUELY BROAD PRODUCT PORTFOLIO AND CAPABILITES IN GROUP BENEFITS Cross Selling ~ One-Stop Shopping ~ Increased Visibility DENTAL VOLUNTARY/ STOP-LOSS DISABILITY LIFE & VISION WORK SITE Extensive market Total absence Client centric #2 largest dental Extensive array of data and largest man
Slide 19: SLF Asia: Growing Our Asia Business
SLF ASIA: GROWING OUR ASIA BUSINESS UNDERLYING NET INDIVIDUAL LIFE INCOME AND HEALTH Q1’17 HIGHLIGHTS INSURANCE SALES1 (C$MILLIONS) (C$MILLIONS) • Individual insurance and wealth sales increased by 31% and 84%, respectively; driven by growth in most markets and increased ownership levels • Retained
Slide 20: SLF Asia Market Presence
SLF ASIA MARKET PRESENCE • Wholly owned Third Hong Kong Party Pensions • Since 1892 Administrator (TPA) • Since 2002 • ~ 1,900 advisors • Ranked #1 in TPA(3) • Joint venture with the China Everbright Group • Insurance & Asset Management Company established in 2012 • ~ 3,200 advisors Philippines • Si
Slide 21: Capital Management
fi CAPITAL MANAGEMENT Sun “<5 Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 22: Strong Capital Generation with Balanced Approach to Deployment
STRONG CAPITAL GENERATION WITH BALANCED APPROACH TO DEPLOYMENT EXPECTED ANNUAL CAPITAL FINANCIAL STRENGTH CAPITAL GENERATION DEPLOYMENT RATINGS (2014 -2016) (C$ billions) Sun Life Assurance Company 2.7 Q1’17 2.5 of Canada SLF US AA-(2) SLF 2.0 Standard & Poor’s Canada Moody’s Aa3 A.M. Best A+ SLF UK
Slide 23: Strong Capital Adequacy and Flexible Balance Sheet
STRONG CAPITAL ADEQUACY AND FLEXIBLE BALANCE SHEET M C C S R R A T I O S (1) HOLDING COMPANY L E V E R A G E R A T I O (1) C A S H (1) (C$ millions) 1,827 250% 250% 249% 243% 240% 1,100 229% 990 226% 816 217% 23.6% 23.0% 22.6% 22.1% 2014 2015 2016 Q1'17 2014 2015 2016 Q1'17 2014 2015 2016 Q1'17 Mini
Slide 24: Capital Model SLF SLA
CAPITAL MODEL MCCSR 249% $1.1 billion cash at Leverage 22.6% Holding Company SLF Leverage Capacity SLF - External Capital Securities to 25/30%: ~$0.9/$2.8B Outstanding First Call Subordinated Debt Coupon Balance Date SLF T2B (Series 2007-1) 5.40% $398 29-May-37 SLF T2B (Series 2008-1) 5.59% $400 30-
Slide 25: Operating and Financial Leverage
OPERATING AND FINANCIAL LEVERAGE Operating Leverage Debt (C$ millions) Q1 2017 Debt supporting reserve financing Operating Senior Debt 599 Leverage Bilateral Senior Financing (1) 2,034 Total Operating Leverage Debt $2,633 Capital (C$ millions) Q1 2017 Tier 2 Subordinated Debt $3,037 SLEECS (Innovati
Slide 26: Asset Portfolio
ASSET PORTFOLIO Sun “<5 Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 27: High Quality, Well Diversified Investment Portfolio
HIGH QUALITY, WELL DIVERSIFIED INVESTMENT PORTFOLIO DEBT SECURITIES BY COMPETITIVE INVESTED ASSETS RATING Policy ADVANTAGES Cash and Loans and BB and Cash Real Estate Other 6% Equivalents 5% Lower 2% AAA Leading non-public 5% Equities 18% portfolio with significant 4% BBB 28% origination capabilit
Slide 28: Appendix
APPENDIX Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 29: Sustainable, Healthier Communities for Life
SUSTAINABLE, HEALTHIER COMMUNITIES FOR LIFE Sun Life has been named one of 12 Canadian companies Sun Life Financial is one of 2016 Global 100 Most In December 2014, Sun Life Assurance Company of and the only North American life insurer to be included in Sustainable Corporations in the World, as sele
Slide 30: Advancing Sustainability in Four Key Areas
ADVANCING SUSTAINABILITY IN FOUR KEY AREAS 30
Slide 31: 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 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
Slide 33: Material Assumptions and Risk Factors
Material Assumptions and Risk Factors The Company’s medium-term financial objectives are forward looking non-IFRS financial measures and do not constitute guidance. Our ability to achieve those objectives is dependent on the Company’s success in achieving the growth initiatives, business objectives