Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2003 Earnings Presentation
33 slides from Sun Life Financial's earnings presentation, Jul 29, 2003
Slide 1: Analyst Presentation: Financial and Operating Results
Analyst Presentation Financial and Operating Results Second Quarter 2003 July 29, 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 Management believes that the expectations reflected in such forward looking statements are r
Slide 3: Second Quarter 2003 - Highlights
Second Quarter 2003 - Highlights • Record EPS of $0.60 with shareholder earnings of $366 million up 25% from Q2'02, and ROE up 100 basis points over Q1'03 • Strong Q2'03 earnings in Canada -- $218 million up $34 million over Q1'03 • MFS earnings up 50% from Q1'03 (or 61% excluding impact of currency
Slide 4: Shareholders' Net Income
Shareholders’ Net Income ($ Millions) 1,447 1,476 1,420 1,366 S&P 500 1,273 (average) 1,234 1,154 1,115 1,132 1,070 938 895 886 861 361 366 350 343 293 243 256 211 212 215 197 203 202 181 Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Operating Earnings 181 197 2
Slide 5: Financial Performance
Financial Performance 1,070 S&P 500 (average) 938 895 886 861 59 60 60 57 58 16.0% 56 55 14.0% EPS (cents) 50 12.0% ROE 45 10.0% 40 8.0% 35 6.0% Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Operating EPS 59 57 58 56 60 ROE (1) 11.7% 9.8% 9.8% 9.3% 10.3% (1) Based on operating earnings. 5
Slide 6: Premiums and Segregated Fund Deposits
Premiums and Segregated Fund Deposits ($ Billions) 6.6 5.8 5.3 5.5 5.3 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Segregated Fund 1.5 1.3 2.3 1.3 1.4 Deposits Premiums and 4.3 4.0 4.3 4.2 3.9 Premium Equivalents 6
Slide 7: First Year Annualized Premiums
First Year Annualized Premiums ($ Millions) Individual Life & Health Group Life & Health 269 168 126 110 146 95 95 118 110 98 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 (1) U.S. - BOLI 2 14 105 3 13 Canada 25 36 26 50 32 U.S. - Individual 53 47 91 55 77 - ASO 10 19 19 16 7 Canada 21
Slide 8: Assets Under Management
Assets Under Management ($ Billions) 369 347 361 337 342 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Mutual Funds 131 113 117 108 109 Managed Funds and 66 61 68 65 71 Other Segregated Funds 54 50 53 48 50 General Funds 118 123 123 116 112 8
Slide 9: MFS Net Fund Sales
MFS Net Fund Sales Net New Sales Market Movement (US$ Billions) (US$ Billions) 2.9 12.6 1.0 1.3 4.4 0.9 (2.4) (1.4) (14.0) (16.3) Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Mutual Funds Mutual Funds (10.2) (8.6) 2.7 (1.3) 7.8 Gross New Sales 5.0 4.4 4.5 4.5 5.4 Managed Redemptions (
Slide 10: MFS - Top U.S. Mutual Fund Companies
MFS - Top 10 U.S. Mutual Fund Companies Net New Assets Flows (June 30/03) (YTD June/03) ($US Billions) 1 Vanguard 512 17.3 2 Fidelity 510 10.4 3 American Funds 384 25.0 4 Franklin Templeton 166 3.8 5 Putnam 139 (6.1) 6 PIMCO Funds 134 14.7 7 T. Rowe Price 89 4.2 8 Janus 82 (3.2) 9 OppenheimerFunds 8
Slide 11: U.S. Annuity Sales
U.S. Annuity Sales (US$ Millions) 1,200 1,007 980 951 896 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Gross Sales Variable Annuities 611 456 388 390 479 Fixed Annuities 519 467 390 474 368 Indexed Annuities 70 84 118 116 104 Total Gross Sales 1,200 1,007 896 980 951 Net Sales Variable Annuities (278) (356) (317)
Slide 12: Revenue
Revenue ($ Millions) 5,832 5,803 6,028 5,758 5,579 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Fee Income 821 730 724 705 684 Investment Income 1,136 1,377 1,451 1,389 1,460 Life & Health 1,646 2,067 2,397 2,115 2,147 Premiums Annuity Premiums 2,229 1,629 1,456 1,549 1,288 12
Slide 13: Operating Expenses
Operating Expenses ($ Millions) Non-MFS MFS 502 40% $300 60% $500 465 436 427 411 $400 30% 242 224 217 $300 206 199 20% $200 40% $200 10% $100 $0 0% $100 20% Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Acquisitions (net 75 114 125 111 111 Operating 242 224 217 206 199 of savings) & E
Slide 14: Provisions for Credit Losses
Provisions for Credit Losses 150 100 $ millions 50 0 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Provision 115 128 116 40 38 14
Slide 15: Impaired Assets
Impaired Assets 1,000 952 1.00% 919 810 750 0.75% $ millions 506 500 0.50% 332 250 0.25% 0 0.00% Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Gross Impaired Assets 332 506 952 919 810 Total Allowances 287 418 495 422 402 Net Impaired Assets (1) 45 88 457 497 408 Net Impaired Assets as 0.04% 0.08% 0.41% 0.48% 0.41%
Slide 16: Financial Strength
Financial Strength (1) Debt to Total Capital MCCSR 23.2% 237% 247% 22.6% 22.1% 22.2% 22.4% 230% 206% 210% Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 (1) Includes preferred shares and SLEECS as part of debt capital. 16
Slide 17: SLF Canada
SLF Canada ($ Millions) 240 2,000 200 1,600 Net Income Revenue 160 1,200 120 800 80 400 40 0 0 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Revenue 1,323 2,059 2,199 2,150 2,112 Net Income 94 173 185 184 218 ROE 12.1% 9.9% 10.8% 10.7% 12.7% 17
Slide 18: SLF United States
SLF United States ($ Millions) 3,000 120 Net Income Revenue 2,000 80 1,000 40 0 0 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Revenue 3,247 2,559 2,757 2,620 2,627 Net Income 75 101 100 54 63 ROE 6.1% 7.4% 7.3% 4.8% 6.0% 18
Slide 19: MFS
MFS 1,070 S&P 500 (average) Assets Under Management 895 886 938 ($ Billions) 861 80 Net Income (1) 186 178 170 170 60 ($ Millions) 165 40 20 0 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Mutual Funds 122 113 117 108 109 Net Income 58 39 30 28 42 Managed Funds 64 57 61 57 61 ROE 59.4%
Slide 20: SLF Asia
SLF Asia ($ Millions) 200 15 Net Income 150 Revenue 10 100 5 50 0 0 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Revenue 185 161 192 145 140 Net Income 4 6 12 7 6 ROE 3.3% 4.9% 9.4% 5.6% 5.9% 20
Slide 21: SLF United Kingdom
SLF United Kingdom ($ Millions) 600 80 60 Net Income Revenue 400 40 200 20 0 0 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Revenue 537 395 432 403 371 Net Income 66 34 48 50 43 ROE 32.7% 14.8% 20.4% 19.5% 18.3% 21
Slide 22: SLF Canada Update
SLF Canada Update Bob Astley, President, Sun Life Financial Canada 22
Slide 23: Overview
Overview • Integration • Business Momentum • Building the Growth Platform 23
Slide 24: Integration
Integration Delivered 8 cents accretion Q2/03 • Savings: ¾ Sustainable monthly run rate savings was $17.3 million in June ¾ Achieved approximately 79% of our 2004 target of $270 million • Expenses: ¾ Costs within plan • Timeline: ¾ On track for 2003 completion 24
Slide 25: Milestones
Milestones Reached all of the planned milestones for Q2/03 9 Canadian Investment Business Unit completed all systems conversions as planned -- only one remaining 9 Converted SLF branded guaranteed wealth products to a common system 9 Over 50% of Group Retirement Services assets and plans converted 9
Slide 26: Looking Forward
Looking Forward Key milestones for Q3 ¾ Convert Clarica Universal Life policies to new platform ¾ Issue all retail life products on a single system ¾ Over 75% of Group Retirement Services clients/plan sponsors converted ¾ Complete Group Benefits small business conversion 26
Slide 27: Independent Career Advisors
Independent Career Advisors 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 27
Slide 28: Canadian Individual Insurance Sales
Canadian Individual Insurance Sales Sales Market Share ($ millions) (%) 60 40% 44 44 30% 40 36 38 30 20% 20 10% 0 0% Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 (1) Sales 44 36 44 30 38 (2) Market Share 15.5% 14.2% 14.3% 10.8% N/A (1) Represents the combined Sun Life and Clarica life & health sales (2) Market sha
Slide 29: Business Momentum
Business Momentum • Wholesale channel strengthening • Excellent Group Benefit results – New IBM Canada business • Group Retirement Services sales consistent with market conditions • Customer retention continues to be very good 29
Slide 30: Building the Growth Platform
Building the Growth Platform • Focus turning to enhancing innovative practices • Building on technology leadership • No parallel systems • Launch the Advisor Business Centre 30
Slide 31: SLF Canada Summary
SLF Canada Summary • Integration proceeding well -- in the home stretch • Excellent financial results • Business sales momentum building • Continued confidence 31
Slide 32: Summary
Summary • Strong performances in Canadian operations and at MFS • Integration of Clarica continues on track, accretion targets continue to be met • ROE improves by 100 basis points • 14 million shares repurchased year-to-date 32
Slide 33: Sun Life Financial
in d _ \ r Sun Se. Life Financial