Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q4 2007 Earnings Presentation
30 slides from Sun Life Financial's earnings presentation, February 2008
Slide 1: Fourth Quarter 2007 Financial and Operating Results
Q4 Fourth Quarter 2007 Financial and Operating Results For the period ended December 31, 2007 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-Looking Statement
Forward-Looking Statement Q4 Certain statements in this presentation, including those relating to the Company’s strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects”, “anticipates”, “intends”,
Slide 3: Donald A. Stewart, Chief Executive Officer
Q4 Donald A. Stewart Chief Executive Officer, Sun Life Financial
Slide 4: Setting the Stage for 2008
Q4 Setting the Stage for 2008 • 2007 Accomplishments • 2008 Priorities 4
Slide 5: Rick McKenney, Chief Financial Officer
Q4 Rick McKenney Executive Vice-President & Chief Financial Officer, Sun Life Financial
Slide 6: Fully Diluted Operating EPS & Operating ROE
Q4 Fully Diluted Operating EPS & Operating ROE 1.03 1.01 0.96 0.98 0.94 • Fully diluted 0.5 0.5 operating EPS of 0.5 $0.98, up 4%(1) 0.5 • Operating ROE up 14.6 14.8 14.0 13.5 14.3 30 basis points (bps) to 14.3% Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 ROE (%) Accounting Changes Fully Diluted EPS (dollars) (1)
Slide 7: Sources of Earnings
Q4 Sources of Earnings (C$ millions) Q4'07 Q4'06 Change Expected profit on in-force business 534 499 35 Impact of new business (8) (108) 100 Experience gains or losses (36) 116 (152) Management actions / changes in assumptions 111 (11) 122 Earnings on operations 601 496 105 Earnings on surplus 137 1
Slide 8: Premiums and Deposits
Q4 Premiums and Deposits (C$ millions) 18,748 3,415 16,422 3,622 8,450 7,888 6,883 4,912 Q4'06 Q4'07 (1) Managed Funds Other Wealth Products Life & Health (1) Includes mutual funds, segregated funds and annuities 8
Slide 9: Value of New Business
Q4 Value of New Business (C$ millions) 870 702 2006 2007 Note: All amounts are based on 2006 annual average exchange rates. rates. 9 Q4’ Q4 ’ 07 amounts are estimated.
Slide 10: Assets Under Management
Q4 Assets Under Management (C$ billions) 505 516 510 496 492 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 CI Financial (1) 63 65 70 69 67 MFS and Other 253 256 251 241 238 Segregated Funds 71 73 73 73 73 General Funds 118 122 116 113 114 (1) CI Financial company reports. Includes 100% of CI Financial’ Financial’s
Slide 11: Capital Management
Q4 Capital Management 22.2% 22.4% 22.3% 22.0% 22.0% 222% 223% 217% 212% 213% Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 (1) (2) MCCSR Ratio Debt Ratio (1) Represents the MCCSR ratio of Sun Life Assurance Company of Canada Canada (2) Represents the ratio of sub debt, preferred shares, Partnership Cumulative Secur
Slide 12: SLF Canada
Q4 SLF Canada Net Income (C$ millions) 257 263 Q4'06 Q4'07 Group Wealth 41 40 Group Benefits 60 76 Individual Insurance 156 147 & Investments ROE 14.3% 15.0% 12
Slide 13: SLF Canada Individual Sales
Q4 SLF Canada Individual Sales Individual Insurance Individual Wealth (C$ millions) (C$ millions) 52 54 895 828 11 13 304 288 41 41 540 591 Q4'06 Q4'07 Q4'06 Q4'07 Sun Life Financial Advisors Wholesale Seg Funds & Other Mutual Funds 13
Slide 14: SLF Canada
Q4 SLF Canada Group Retirement Services Group Benefits DC Plan Assets Business In-Force (C$ billions) (C$ billions) 6.1 32.6 5.7 30.3 Q4'06 Q4'07 Q4'06 Q4'07 14
Slide 15: SLF U.S.
Q4 SLF U.S. Net Income (US$ millions) 165 86 Q4'06 Q4'07 Employee Benefits 16 24 Group Individual Life 9 84 Annuities 61 57 ROE 9.7% 15.3% 15
Slide 16: SLF U.S.
Q4 SLF U.S. Annuity Gross Sales Annuity Net Sales (US$ millions) (Redemptions) (US$ millions) 1,143 1,099 (237) (490) Q4'06 Q4'07 Q4'06 Q4'07 Fixed 211 100 Fixed (243) (361) Fixed Index 168 98 Fixed Index 31 (73) Other Variable 245 183 Other Variable 128 33 Variable 519 718 Variable (153) (89) 16
Slide 17: SLF U.S.
Q4 SLF U.S. Individual Life Employee Benefits Group Sales Business In-Force (US$ millions) (US$ billions) 2.1 86 24 1.2 52 49 22 21 62 30 28 2005 Avg. Q4'06 Q4'07 Q4'06 Q4'07 (1) Acquisition Individual BOLI/COLI/PPVUL (1) Bank- Bank-owned life insurance (BOLI), Corporate- Corporate-owned life insura
Slide 18: MFS
Q4 MFS Net Income Pre-Tax (US$ millions) Operating Margin 74 40% 62 34% Q4'06 Q4'07 Q4'06 Q4'07 18
Slide 19: MFS
Q4 MFS Net Sales Assets Under Management (US$ billions) (US$ billions) 200 1.0 Q4’07 187 Q4’06 (3.2) Q4'06 Q4'07 Retail Mutual Funds Gross New Sales 4.3 4.1 Redemptions (5.4) (6.0) Net New Sales (1.1) (1.9) Q4'06 Q4'07 Managed Funds Net New Sales 2.1 (1.3) Total Net New Sales 1.0 (3.2) 19
Slide 20: SLF Asia
Q4 SLF Asia Net Income Sales(1) (C$ millions) (C$ millions) 203 38 33 95 Q4'06 Q4'07 ROE 12.6% 13.6% Q4'06 Q4'07 (1) Includes 100% of the sales of the Company’ Company’s joint ventures in China and India 20
Slide 21: Q4 2007 Financial Performance
Q4 2007 Financial Performance • Operating EPS growth of 11% to $3.98 • Operating ROE growth of 50 basis points to 14.3% • Dividend payout ratio of 33% • Share repurchases of $502 million 21
Slide 22: Medium-Term Objectives
Q4 Medium-Term Objectives • Average operating EPS growth of 10% per annum • Achieve 15% operating ROE over the medium-term • Deploy capital effectively – Organic growth – Selective acquisitions – Dividends (payout ratio: 30% - 40%) – Share repurchases Assumptions for medium- medium-term objectives o
Slide 23: Jim Anderson, Chief Investment Officer
Q4 Jim Anderson Executive Vice President & Chief Investment Officer, Sun Life Financial
Slide 24: Investment Overview
Q4 Investment Overview Real Estate • Highly diversified asset 4% Equities Other portfolio 5% 8% Cash & • High quality bond portfolio Short- Terms with 98% rated investment 5% Bonds grade Mortgages & Corp. 58% Loans • Strong Enterprise Risk 20% Management Q4’07 Invested Assets $103 billion 24
Slide 25: What We Do Not Own
Q4 What We Do Not Own No direct exposure to: • Subprime mortgages-without subordination • Structured investment vehicles (SIVs) • Non-bank sponsored asset-backed commercial paper (ABCP) We do not invest based: • Solely upon credit ratings • Solely upon “spread per ratings category” • Upon broker/dea
Slide 26: Bond Portfolio Detail
Q4 Bond Portfolio Detail Held for Available Total Investment Trading for Sale Grade (C$ millions) Government Issues/ 12,419 1,796 14,215 99% Guaranteed Bonds Corporate Bonds 32,253 6,670 38,923 97% Asset Backed Bonds 5,936 682 6,618 99% Total 50,608 9,148 59,756 98% 26
Slide 27: Asset Backed Bonds
Q4 Asset Backed Bonds Market Investment CMBS • 90% is ‘AAA’ or pre-2006 Value Grade • 99% is fixed rate (C$ millions) Commercial Mortgage 2,523 99.6% Non-Agency RMBS Backed Securities • 91% is ‘AAA’ or pre-2006 (CMBS) • 85% is fixed rate Residential Mortgage 1,486 99.9% Backed Securities CDO’s (RMBS
Slide 28: Additional Portfolio Detail
Q4 Additional Portfolio Detail Monoline Exposure • $84 million of direct exposure • $961 million of indirect exposure • Average credit quality absent the wrap is between ‘A’ and ‘BBB’ Asset-Backed • No Montreal Accord ABCP Commercial Paper • Immaterial indirect exposure in the U.S. through (ABCP) in
Slide 29: Mortgages & Real Estate
Q4 Mortgages & Real Estate Mortgages by Type Real Estate by Type Land, Dev. Other & Other 6% 9% Industrial Residential Retail 15% 7% 24% Retail 36% Industrial 19% Multi Family 20% Office Office 41% 23% $15.5 billion $4.3 billion 29
Slide 30: Questions & Answers
Q4 Questions & Answers