Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Salomon Smith Barney 2003 Financial Services Conference
28 slides from Sun Life Financial's conference presentation, Jan 28, 2003
Slide 1: Salomon Smith Barney 2003 Financial Services Conference
Salomon Smith Barney 2003 Financial Services Conference C. James Prieur President & Chief Operating Officer January 28, 2003
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 Sun Life Financial management believes that the expectations reflected in such forward looki
Slide 3: Corporate Value Drivers
Strategic Corporate Value Drivers Overview • Diversified business model • Attractive competitive positions in focus markets • Disciplined risk management • Multiple catalysts for earnings growth • Track record of delivering on commitments to shareholders 3
Slide 4: Diversified Earnings Sources
Strategic Diversified Earnings Sources Overview Asia UK 2 % 9% MFS 11 % Canada Total US Canada = 47% = 42% 47 % US 31 % 4
Slide 5: Solid Competitive Positions in Attractive Focus Markets
Strategic Solid Competitive Positions in Overview Attractive Focus Markets Leadership position in Canada Significant positions in US niche markets MFS: International investment management Attractive growth prospects in Asia UK rationalization driving enhanced returns 5
Slide 6: Leadership Position in Canada
Leadership Position in Canada Individual Life Insurance Premiums (1) - 2001 (C$mm) Individual Annuity Premiums (1) - 2001 (C$mm) $577 $1,823 $496 $1,585 $1,259 $364 $800 $626 $564 $213 $513 $432 $164 $141 $133 $103 Sun/Clarica Great-West Clarica Manulife Industrial Sun Life Canada Trans- Alliance Fi
Slide 7: Strengthening Mutual Fund Capabilities
Strengthening Mutual Fund Capabilities • 31% ownership of CI Funds • #4 in Canadian market • $ 33.8 B in fee-earning assets (Dec. 31/02) 7
Slide 8: Solid Positions in US Selected Markets
Solid Positions in US Selected Markets Tightly focused segment strategies in US Annuity and Insurance Operations • Annuities – Focus: fixed, indexed and variable annuities – #16 ranking in annuities (3Q’02) • Group Life & Health – Focus: life, disability and stop-loss – #13 in group life and health
Slide 9: Strong Growth in Individual and Group Insurance
Strong Growth in Individual and Group Insurance Group Life & Health Earnings Individual Life Earnings YTD 3Q’02 vs YTD 3Q’01 YTD 3Q’02 vs YTD 3Q’01 up 15% $ mm up 21% $ mm 45 140 40 120 35 100 30 25 80 20 60 15 40 10 5 20 0 0 2000 2001 2002 2000 2001 2002 9
Slide 10: Annuities Earnings Pressures, But No GMDB Charges
Annuities Earnings Pressures, But No GMDB Charges Retirement Products & Services 90 80 70 Earnings $mm 60 50 68 48 40 48 30 20 27 10 21 13 1 15 15 12 8 0 (1) 1Q'01 2Q'01 3Q'01 4Q'01 1Q'02 2Q'02 3Q'02 (1) 4Q’01 includes only 2 months of Keyport earnings RPS Keyport 10
Slide 11: MFS: Diversified International Investment Manager
MFS: Diversified International Investment Manager • Top 10 in US retail mutual funds • Growing institutional business • High growth international expansion 11
Slide 12: Positive Net Flows Demonstrate MFS' Marketing Success
Positive Net Flows Demonstrate MFS’ Marketing Success (US $ millions) September Full Year Year to Date 1999 2000 2001 2001 2002 Beginning AUM $98,010 $137,178 $147,411 $147,411 $137,359 Net Flows $13,773 21,384 17,194 15,693 2,344 Market Appr/(Depr) $25,395 (11,151) (27,246) (41,434) (32,346) Ending
Slide 13: MFS Participates in Diverse Markets: Variable Annuities
MFS Participates in Diverse Markets: Variable Annuities Sep 2002 Rank Sep '02 Sep '01 % Change 1 Wellington 31,750 39,652 -19.9 2 Fidelity* 24,062 30,212 -20.4 3 Putnam 23,270 31,529 -26.2 4 Capital Research 19,858 21,664 -8.3 5 MFS 19,722 24,307 -18.9 6 Alliance 19,322 26,315 -26.6 7 Janus 17,112 2
Slide 14: MFS Ranks Among Top 10 Largest Retail Mutual Funds
MFS Ranks Among Top 10 Largest Retail Mutual Funds Nov 2002 Primary Rank Complex Meth Dist AUM* Nov '02 Nov '01 1 Fidelity Direct/Whsle $469 $530 2 Vanguard Direct 463 472 3 American Funds Wholesale 333 327 4 Franklin Templeton Wholesale 152 153 5 Putnam Wholesale 139 178 6 PIMCO Funds Wholesale 110
Slide 15: Asia Poised for Long-term Growth
Asia Poised for Long-term Growth • Philippines (since 1895) – #2 in individual life insurance – Established and growing business achieving hurdle rate returns • Hong Kong (since 1892) – Entry in bancassurance market – New product introductions • India (1892-1956, 1999 onwards) – Assets Under Managem
Slide 16: Asia Has Produced Strong Sales Growth
Asia Has Produced Strong Sales Growth 200.0 180.0 160.0 140.0 120.0 C$ mn 100.0 200 80.0 60.0 110 40.0 60.0 67.1 20.0 49.5 0.0 1999A 2000A 2001A 2002F 2003P 16
Slide 17: UK: Enhanced Returns With Reduced Risk
UK: Enhanced Returns With Reduced Risk > $500 mm Repatriated Improved Capital Returns Business Divestitures Operations Outsourced SLC Asset Sun Bank Management Group 17
Slide 18: Disciplined Risk Management
Risk Disciplined Risk Management Management Process • Equity sensitivity is controlled • Diverse business model has stabilized earnings • Conservative, diversified investment portfolio 18
Slide 19: Business Mix Has Evolved as Risk Management Offsets Weaknesses
Business Mix Has Evolved as Risk Acquisitions & Protection Offset Management Weaknesses in Equity-Linked Businesses Operating Earnings C$ mm 400 350 300 250 Acquisitions 200 Protection & Other 150 100 50 Equity-Linked 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2000 2001 2002 19
Slide 20: Business Mix Has Evolved as Risk Management Offsets Weaknesses (EPS)
Business Mix Has Evolved as Risk Acquisitions & Protection Offset Management Weaknesses in Equity-Linked Businesses Operating EPS $0.60 Acquisitions $0.50 $0.40 Protection & Other $0.30 $0.20 $0.10 Equity-Linked $0.00 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2000 2001 2002 20
Slide 21: Consistent Performance Despite Equity Market Challenges
Consistent Performance Despite Risk Equity Market Challenges Management S&P 500 Index Daily Average 1,447 1,476 1,420 1,366 Reported EPS 1.00 1,273 Operating EPS 1,234 1,154 1,115 1,132 1,070 0.80 895 0.60 EPS 0.57 0.59 0.59 0.57 0.40 0.51 0.48 0.50 0.48 0.50 0.47 0.45 0.20 0.00 (1) 1Q 2Q 3Q 4Q 1Q 2
Slide 22: Hedge Offsets Actuarial Liability Risk Increase in 2002
Hedge Offsets Actuarial Liability Risk Increase in 2002 Management • Purpose - Partially hedge GMDB and DAC exposure • Instrument - S&P 500 Puts • Units Purchased in 2Q, 2001 - 1.23 million • Strike Price - 995 on S&P 500 • Intrinsic Value at September 30 - US $ 221 million, C$ 345 million • Maturit
Slide 23: Disciplined Investment Process
Risk Disciplined Investment Process Management Invested Assets: C$106 Billion Mortgages Equities Real Estate 15% 4% 3% Cash 8% 3% Other 67% Bonds Invested assets (excluding policy loans) at September, 2002 23
Slide 24: Modest Exposure to Names in News
Modest Exposure to Names in News Risk Management 3Q'02 PAR VALUE NAME US$ mm United Airlines 77 Qwest 76 Xcel Energy 62 Telus 60 Southern California Edison 49 WorldCom 45 U.S. Airways 38 K-Mart 29 AT&T Canada 28 Teleglobe 27 Xerox 23 Pacific Gas & Electric 11 Global Crossing - 24
Slide 25: Multiple Catalysts For Earnings Growth
Earnings Multiple Catalysts For Earnings Growth Growth • Clarica integration has achieved interim objectives • Strong organic growth in key markets • Poised to participate in equity rebound • Generation of excess capital over next 3 years 25
Slide 26: Commitments to Shareholders Have Been Met
Commitments to Shareholders Have Been Met • IPO objectives achieved – $160 mm in cost savings – $1.6 B in excess capital deployed – Lagging business units restructured • Keyport EPS accretion targets met ahead of schedule • Clarica integration has met interim targets 26
Slide 27: Multi-Faceted Strategy Drives Growth
Multi-Faceted Strategy Drives Growth Strategically Multiple Stable Shareholder Diverse Growth Predictable Value Platform Catalysts Earnings 27
Slide 28: Questions & Answers
Questions & Answers C. James Prieur President & Chief Operating Officer January 28, 2003
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