Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2005 Earnings Presentation
23 slides from Sun Life Financial's earnings presentation, August 2005
Slide 1: Second Quarter 2005 Financial and Operating Results
Q2 Second Quarter 2005 Financial and Operating Results For the period ended June 30, 2005 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-Looking Statement
Q2 Forward-Looking Statement 2005 Some of the 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”, “i
Slide 3: Highlights
Q2 Highlights 2005 • ROE increased 1% to 13% from 12% in Q2 2004 • EPS of 81 cents up 11% Q2/Q2 (16% in constant currency) • Value of New Business up 25% • Net inflows at MFS reached US$3.5 billion • Achieved objective of 75 wholesalers in U.S. Annuities • Repurchased approximately 6 million shares
Slide 4: Q2 EPS up 16% in Constant Currency
Q2 Q2 EPS up 16% in Constant Currency (1) 2005 1,192 1,181 1,162 S&P 500 1,123 1,104 (average) (Cents) 85 81 78 81 73 74 77 73 73 74 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 EPS (constant Q2'04 currency) 73 74 78 81 85 EPS 73 73 74 77 81 (1) Using average currency exchange rates for the second quarter of 2004
Slide 5: ROE up 1% to 13%
ROE up 1% to 13% Q2 2005 1,192 1,181 1,162 S&P 500 1,123 1,104 (average) 13.0 12.6 12.0 12.1 11.9 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 ROE (%) 12.0 11.9 12.1 12.6 13.0 Net Income ($ mm) 438 439 438 458 477 5
Slide 6: Value of New Business up 25%
Q2 Value of New Business up 25% 2005 (C$ Millions) Period-over-Period 737 Change 590 MFS: +0.5% Non-MFS: +40% 12 Months Ended 12 Months Ended Q2'04 Q2'05 MFS 221 222 Non-MFS 369 515 Total 590 737 Note: All amounts are based on 2004 annual average exchange rates 6 Q2’05 amounts are estimated
Slide 7: SLF Canada
Q2 SLF Canada 2005 (C$ Millions) • ROE up 1% Q2/Q2 2,500 280 Net Income 2,000 260 • Net income up 7% Q2/Q2 Revenue 1,500 240 – Favourable credit 1,000 experience 500 220 – Improved fee income 0 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 200 – Better mortality and Revenue 2,032 1,960 2,029 2,146 2,104 morbidity N
Slide 8: Individual Sales – SLF Canada
Individual Sales – SLF Canada Q2 2005 Premiums and Deposits (1) Individual Wealth (C$ Millions) • 37% of CI Financial retail net 875 654 550 sales from SLF 511 463 • Sales up 28% led by market based funds Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Sales 45 40 39 40 150 Individual Life and Health Rolling 4 quarte
Slide 9: Group Retirement Services – Canada
Group Retirement Services – Canada Q2 2005 23.9 24.6 22.5 • DC Plan assets up 13% 21.7 21.6 Q2/Q2 • Asset retention at participant level up 80% to $106 million in Q2 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 DC Plan Assets (C$ B) 21.7 21.6 22.5 23.9 24.6 Sales (C$ mm) 296 185 674 995 285 9
Slide 10: Group Benefits – SLF Canada
Group Benefits – SLF Canada Q2 2005 Business In Force and Sales • Sales increased 23% Q2/Q2 (C$ Millions) 4,928 5,011 • Business In Force up 7% 90 4,699 4,739 4,765 5,000 Business In Force over last year reaching $5 Total Sales 60 billion 4,000 30 • Strong persistency 0 3,000 Q2'04 Q3'04 Q4'04 Q1'05
Slide 11: SLF United States
Q2 SLF United States 2005 • Net income up 34% Q2/Q2 (US$ Millions) – Annuity earnings up 2,500 120 $39 million Q2/Q2 on 2,000 Net Income 100 improved equity Revenue 1,500 markets and spreads 1,000 80 – Better mortality and 500 60 morbidity in Group 0 40 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 – Individual Lif
Slide 12: SLF U.S. Annuity Sales
SLF U.S. Annuity Sales Q2 2005 (US$ Millions) 1,129 1,014 • Increased the number of 888 866 858 wholesalers to 75 from 32 in Q4 2004 • Launched several product initiatives including SunDex ProVantage and identity Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 theft monitoring service Gross Sales Variable Annuities 4
Slide 13: Individual Sales – SLF U.S.
Individual Sales – SLF U.S. Q2 2005 Sales • Sales momentum continues 120 112 350 100 85 Quarterly Sales Rolling 4 Quarters 80 (US$ Millions) (US$ Millions) 80 300 • Core sales up 23% from a 64 60 year ago and 50% from 51 Q1’05 40 250 20 0 200 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 BOLI, COLI and HNW (1) 29 7
Slide 14: Group Life and Health – SLF U.S.
Group Life and Health – SLF U.S. Q2 2005 Business In Force and Sales (US$ Millions) • Business In Force up 874 912 868 18% Q2/Q2 772 777 • Sales up 30% Q2/Q2 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Business 772 777 874 868 912 In Force Sales 54 43 126 27 70 (1) Single premiums reported at 10% 14
Slide 15: MFS Investment Management
MFS Investment Management Q2 2005 1,192 1,181 S&P 500 1,162 • Strong institutional net (average) 1,123 1,104 sales of $4.2 billion 40 30% Pre-Tax Margin 30 • Continued improvement in (US$ Millions) Net Income retail fund flows 20 20% 10 0 10% Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Net Income 30 32 36 37 34 P
Slide 16: MFS Assets Under Management
Q2 MFS Assets Under Management 2005 Assets Under Management (US$ Billions) 146 150 145 137 134 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Domestic Funds 74 72 76 74 74 Other Investment 4 4 5 5 6 Products MFS/Sun Funds 11 10 11 10 10 Institutional Accounts 41 41 46 47 51 International Funds 7 7 8 9 9 16
Slide 17: MFS Net Fund Sales
MFS Net Fund Sales Q2 2005 Net New Sales Market Movement (US$ Billions) (US$ Billions) Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Mutual Funds Mutual Funds 0.2 (0.7) 6.6 (1.6) 0.5 Gross New Sales 3.4 2.9 3.7 4.3 4.0 Managed Redemptions (6.3) (5.1) (5.4) (5.2) (4.7) Funds 0.3 (0.2) 5
Slide 18: SLF Asia
Q2 SLF Asia 2005 (C$ Millions) • Revenue up 13% Q2/Q2 250 25 200 20 Net Income Revenue • Net income up due to 150 15 improved earnings in the 100 10 Philippines 50 5 0 0 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Revenue 182 189 239 214 205 Net Income 10 10 18 6 19 ROE 9.0% 9.3% 16.8% 5.4% 17.6% 18
Slide 19: First Year Annualized Premiums - Asia
Q2 First Year Annualized Premiums - Asia (1) 2005 (C$ Millions) • Foundation for growth – Hong Kong acquisition 48 51 to triple agency force 43 31 31 – New individual life product launch in India – Indonesia sales up 66% Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 (1) Includes 50% of the sales of the Company’s jo
Slide 20: Impaired Assets
Impaired Assets Q2 2005 750 0.50% Impaired Asset Ratio 522 512 C$ Millions 500 441 347 0.25% 298 250 0 0.00% Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Gross Impaired Assets 522 512 441 347 298 Total Allowances 330 295 263 203 155 Net Impaired Assets(1) 192 217 178 144 143 Net Impaired Assets as 0.19% 0.22% 0.18
Slide 21: Capital Management
Capital Management Q2 2005 • Dividend increased to 25.5 cents, up 6% from Q1 (16% YTD) 247% 248% 239% 238% 238% • Issued $325 million 4.8% preferred shares on July 15 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 • Redeemed $150 million 6.5% MCCSR Ratio(1) 239% 238% 238% 247% 248% preferred shares on June 30 Debt R
Slide 22: Sources of Earnings
Sources of Earnings Q2 2005 Q2/05 Q2/04 (C$ millions) Total Total Change Expected profit 366 369 (3) Impact of new business (23) (27) 4 Experience gains or losses 111 57 54 Assumption changes and management actions 38 33 5 Earnings from operations 492 432 60 Earnings on surplus 146 112 34 Earnings b
Slide 23: Questions & Answers
Questions & Answers Sun Life Financial