Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2022 Earnings Presentation
24 slides from Sun Life Financial's earnings presentation, May 12, 2022
Slide 1: Q1 2022 Financial & Operating Results
Q1 2022 Financial & Operating Results For the period ended March 31, 2022 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-looking statements and 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”. Forward-looking statements Certain statements in this presentation and certain oral state
Slide 3: Kevin Strain, President and Chief Executive Officer
Kevin Strain President and Chief Executive Officer S U N L I F E • Q 1 2 0 2 2 3
Slide 4: First quarter financial highlights
First quarter financial highlights Executing on our ambition to be one of the best asset management and insurance companies globally Financial Earnings Growth Financial Growth Strength Strength Diversified Business Mix 4 Reported net income SLF Inc. LICAT ratio2,3 $858M (8)% 143% +2 pp 22% Underlyin
Slide 5: Strategic initiatives driving Client Impact
Our Purpose: Help Clients achieve Strategic initiatives driving Client Impact lifetime financial security and live Launched Stellar, the first ESG-focused savings plan in the Hong Kong market, enabling Clients healthier lives to build wealth while driving positive environmental impacts First major i
Slide 6: Digital Leadership
Digital Leadership Thinking and acting like a digital company DIGITAL EXPERIENCES Amazing Client, employee, advisor, and partner experiences DIGITAL CAPABILITIES Enable our experiences and improve our digital maturity DIGITAL WAYS OF WORKING Empowering our people to support our digital journey Stron
Slide 7: Manjit Singh, Executive Vice President & Chief Financial Officer
Manjit Singh Executive Vice President & Chief Financial Officer S U N L I F E • Q 1 2 0 2 2 7
Slide 8: Q1 2022 results
Q1 2022 results PROFITABILITY Q1’22 Q1’21 Change Results Highlights Reported net income ($ millions) 858 937 (8)% Solid results in a challenging operating environment Underlying net income ($ millions)1 843 850 (1)% • Canada and the U.S. delivered strong fundamental Reported EPS ($)2 1.46 1.59 (8)%
Slide 9: First quarter business group performance
First quarter business group performance Reported net income ($ millions) Underlying net income1 ($ millions) Impact of currency translation decreased reported net income by $6M1 Impact of currency translation decreased underlying net income by $6M1 +34% (35)% (20)% (19)% +12% +5% (31)% (4)% Constan
Slide 10: MFS: A global leader in public asset management
MFS: A global leader in public asset management Business Group Results Quarterly Highlights (US$) • Underlying net income up 4% y/y driven by higher average net assets PROFITABILITY (US$ millions) Q1’22 Q1’21 Change • Pre-tax net operating profit margin of 39%, consistent with prior year Reported ne
Slide 11: SLC Management: Growing a premier alternatives platform
SLC Management: Growing a premier alternatives platform Business Group Results Quarterly Highlights • Fee-related earnings (FRE) up 38% y/y, reflecting strong capital raising PROFITABILITY ($ millions) Q1’22 Q1’21 Change and growth in fee-earning AUM Fee-related earnings1 54 39 +38% • Pre-tax FRE ma
Slide 12: Canada: A leader in insurance and asset management
Canada: A leader in insurance and asset management Business Group Results Quarterly Highlights • Underlying net income up 5% PROFITABILITY ($ millions) Q1’22 Q1’21 Change • Broad-based business growth, higher market-driven fees, and higher Reported net income 263 405 (35)% investment gains; partiall
Slide 13: U.S.: A leader in health & benefits
U.S.: A leader in health & benefits Business Group Results Quarterly Highlights (US$) • Underlying net income of $93 million includes continued elevated PROFITABILITY (US$ millions) Q1’22 Q1’21 Change COVID-19 mortality Reported net income 133 167 (20)% • Q1 COVID impacts of $30 million, mostly mort
Slide 14: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Business Group Results Quarterly Highlights (constant currency1) • Underlying net income down 1% PROFITABILITY ($ millions) Q1’22 Q1’21 Change CC1 • Sales headwinds in Hong Kong and mortality experience in International Reported net income 161
Slide 15: Appendix
Appendix S U N L I F E • Q 1 2 0 2 2 15
Slide 16: Sources of earnings
Sources of earnings Sources of earnings (SOE)1 Reported Underlying Common shareholders SOE highlights $ millions, pre-tax Q1’22 Q1’21 Q1’22 Q1’21 Expected profit on in-force business excluding Asset Mgmt. 550 522 550 522 • Expected profit up 7% in constant currency5, driven by strong business growth
Slide 17: SOE experience gains/(losses) - details
SOE1 experience gains/ (losses) - details Q1’22 Q1’21 Q1’22 Q1’21 $ millions Pre-tax Pre-tax Post-tax Post-tax Net equity market impact (3) 98 (2) 72 Net interest rate impact2 120 289 (30) 141 Impact of changes in the fair value of investment properties2 71 (6) 65 (3) Market-Related Impacts2 188 381
Slide 18: Reconciliation of underlying net income
Reconciliation of underlying net income Q1’22 Q1’22 $ millions Pre-tax Post-tax Reported net income 858 Net equity market impact (including basis risk impact of $22 million)1 (3) (2) Net interest rate impact (including credit spread impact of $40 million and swap spread impact of $(13))1 120 (30) Im
Slide 19: Market movements and impacts in the quarter
Market movements and impacts in the quarter Market Movements Q1’22 Q1’21 Equity Market Impacts Q1’22 Q1’21 ($millions, post-tax) S&P/ TSX +3.1% +7.3% Equity market movement and volatility (24) 67 S&P 500 (4.9)% +5.8% Basis risk 22 5 CA 10 - year +98 bps +88 bps Total (2) 72 CA 30 - year +71 bps +77
Slide 20: Operating expenses
Operating expenses Reduction driven by fair value adjustments and lower restructuring charges ($ millions) Increases in controllable expenses and contractual volumes driven by: 2,086 • Higher compensation costs 1,997 reflecting strong performance in Asset Management • Higher sales distribution costs
Slide 21: Use of Non-IFRS Financial Measures
Use of Non-IFRS Financial Measures We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information that is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from per
Slide 22: Risk Factors
Risk Factors Important risk factors that could cause our assumptions and estimates, and expectations and projections to be inaccurate and our actual results or events to differ materially from those expressed in or implied by the forward-looking statements contained in this document, are set out bel
Slide 23: Footnotes continued
Footnotes continued From slide 8 2 All EPS measures refer to fully diluted EPS, unless otherwise stated. 3 LICAT ratio of SLF and of Sun Life Assurance Company of Canada (“SLA”). Our LICAT ratios are calculated in accordance with OSFI-mandated guideline, Life Insurance Capital Adequacy Test. 4 Inclu
Slide 24: Footnotes continued
Footnotes continued From slide 14 1 Percentage change is reported on a constant currency basis, which excludes the impacts of foreign exchange translation. Refer to the Non-IFRS Financial Measures section in the appendix to these slides and in our Q1 2022 MD&A. 2 Represents a non-IFRS financial meas