Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Day (March 2015)
40 slides from Sun Life Financial's investor day presentation, Mar 5, 2015
Slide 1: Investor Day 2015
Investor Day 2015 Thursday March 5th, 2015 Sun Life Financial Inc. Forward-looking statements Certain statements in the presentations prepared for the Sun Life Financial Investor Day 2015 held on March 5, 2015 and certain oral statements made by senior management at the Sun Life Financial Investor D
Slide 2: Agenda – Investor Day 2015; Strategic Overview
SUN LIFE FINANCIAL AGENDA – INVESTOR DAY 2015 Start Topic Speaker 8:30 am Introduction IR 8:35 am Strategic overview Dean Connor 9:00 am SLF Canada Kevin Dougherty 9:30 am MFS Mike Roberge 10:00 am Asset Management Steve Peacher 10:15 am Break 10:30 am SLF U.S. Dan Fishbein 11:00 am SLF Asia Kevin S
Slide 3: Sun Life Financial in 2015; Our Four Pillar Strategy
SUN LIFE FINANCIAL SUN LIFE FINANCIAL IN 2015 A leading, international financial services provider… operating through a balanced and diversified model… focused on creating shareholder value now and in the future 2 SUN LIFE FINANCIAL OUR FOUR PILLAR STRATEGY A growth strategy focused on high ROE and
Slide 4: Sun Life at a Glance; Products & Markets Positioned for Growth
SUN LIFE FINANCIAL SUN LIFE AT A GLANCE Lifetime Financial Security • Brand • Customer Insights • The Brighter Way—Lean Six Sigma LEVERAGE • Digital and Data Analytics • Third Party Investment Sourcing • Risk and Capital Diversification • Distribution MANAGEMENT CANADA ASSET ASIA U.S. FOUR PILLARS H
Slide 5: On Track to Exceed 2015 Earnings Objective; Balanced and Diversified Business Model
SUN LIFE FINANCIAL ON TRACK TO EXCEED 2015 EARNINGS OBJECTIVE(1) UNDERLYING NET INCOME (C$ millions) 1,816 1,581 1,200 1,100 1,271 1,196 Protection & Wealth 969 9% CAGR 926 616 270 302 481 MFS 32% CAGR 2013 2011 2012 2013 2014 MFS Protection & Wealth • 2014 Underlying ROE 11.6% versus 2015 objective
Slide 6: Investing in Growth: Canada and Asset Management
SUN LIFE CANADA INVESTING IN GROWTH LEADER in FINANCIAL PROTECTION and WEALTH SOLUTIONS in our Canadian home market ✓ UNDERLYING NET INCOME (C$ millions) FUTURE EARNINGS DRIVERS 799 823 • Sun Life Global Investments 746 • Individual Wealth expansion • Group Retirement Services growth • Defined Benef
Slide 7: Investing in Growth: U.S. and Asia
SUN LIFE U.S. INVESTING IN GROWTH LEADER in U.S. GROUP BENEFITS and INTERNATIONAL high net worth solutions ✓ UNDERLYING NET INCOME (C$ millions) FUTURE EARNINGS DRIVERS • Improve operational results in 291 group insurance 264 266 • Grow Stop-loss business • Grow Voluntary Benefits business • Build d
Slide 8: Asia Is a Significant and Growing Part of Sun Life; U.K. Operations
SUN LIFE FINANCIAL ASIA IS A SIGNIFICANT AND GROWING PART OF SUN LIFE • 18% of underlying net income and 19% of value of new business derived from Asian customers UNDERLYING NET INCOME (C$ millions) 321 192 International High Net Worth Asia MFS Asia Pacific SLF Asia 2012 2014 12 MFS Asia Pacific inc
Slide 9: Deliberate Capital and Cash Allocation; Disciplined Approach to M&A
SUN LIFE FINANCIAL DELIBERATE CAPITAL AND CASH ALLOCATION DATE AMOUNT APPLICATION RESULTS Q2 2013 $300 million Acquisition of Malaysia business Meeting business case expectations Restructure of U.S. reinsurance $480 million of net income Q4 2013 $250 million arrangement (Q4’13 and 2014) Q1 2014 $500
Slide 10: Risk and Return Always Begins with Products; Improving Customer Experience
SUN LIFE FINANCIAL RISK AND RETURN ALWAYS BEGINS WITH PRODUCTS Management operating system is granular, focusing on product design, returns and risk signature Primary focus is on value for customers and shareholders – less about top line sales Annual incentive plan reinforces this: • 50% based
Slide 11: Leadership Is a Competitive Advantage; Highly Engaged Employees
SUN LIFE FINANCIAL LEADERSHIP IS A COMPETITIVE ADVANTAGE 18 SUN LIFE FINANCIAL HIGHLY ENGAGED EMPLOYEES • Engagement continues to rise across the company OVERALL ENGAGEMENT INDEX 75% 69% 66% 2010 2012 2014 19 11
Slide 12: Compared to Other North American Life Insurers; New Medium-Term Objectives
SUN LIFE FINANCIAL COMPARED TO OTHER NORTH AMERICAN LIFE INSURERS 1. Leadership position in Canada, one of the best financial markets in the world 2. First-rate investment manager in MFS 3. Significant and growing business in Asia, exclusively in higher growth markets 4. Leading medical stop-loss bu
Slide 13: Sustainable Shareholder Value; SLF Canada Review
SUN LIFE FINANCIAL SUSTAINABLE SHAREHOLDER VALUE COMPELLING FOUR PILLAR STRATEGY EXECUTING ON GROWTH AMBITIOUS AND ACHIEVABLE OBJECTIVES DISCIPLINED CAPITAL/RISK MANAGEMENT EXECUTION EXCELLENCE 22 SLF CANADA REVIEW Kevin Dougherty President , Sun Life Financial Canada 13
Slide 14: SLF Canada Strategic Focus; Growing Earnings Power
SLF CANADA STRATEGIC FOCUS LEADER in FINANCIAL PROTECTION and WEALTH SOLUTIONS in our Canadian home market ✓ A strong and growing foundation in core businesses Growing leadership in Group Benefits Growing leadership in Group Retirement Services Growing and evolving Career Sales Force and indep
Slide 15: Market Leadership in Group Benefits and Group Retirement Services
SLF CANADA MARKET LEADERSHIP IN GROUP BENEFITS #1 market share with leading growth rate among top 5(1) Best customer retention in the industry(2) Winning with better technology and service Driving Market Leadership and Net Sales Growth GB NET SALES GB BUSINESS IN-FORCE (excludes Client Solutio
Slide 16: Strong Momentum in Both Group Businesses; Total Benefits
SLF CANADA STRONG MOMENTUM IN BOTH GROUP BUSINESSES ✓Big wins in both group businesses GRS: Largest DC transfer ever in Canada: the University of British Columbia Largest stand-alone RIF plan transfer: Western University GB: Won Ontario Power Generation: largest GB sale in the last decade 6 SL
Slide 17: Investments in Key Markets Like Quebec; Growing Individual Insurance
SLF CANADA …AND INVESTMENTS IN KEY MARKETS LIKE QUEBEC “Gagner le Quebec” strategy launched in 2011 Re-established Sun Life’s commitment to the Quebec Market Adapted the go-to-market strategy and the brand to resonate with Quebecers INSURANCE WEALTH SALES(2) SALES(1) (C$ millions) (C$ millions
Slide 18: Growing Career Sales Force; Third Party Channels
SLF CANADA … BY GROWING AND EVOLVING OUR CAREER SALES FORCE ✓Career Sales Force Over 3,900 in total sales power 7 consecutive years of growth in sales power In over 1,200 communities across the country 73% of advisors now dual licensed providing holistic advice – Life, Health, Wealth, and Re
Slide 19: Accelerating Growth in Wealth Businesses; The Group Advantage
SLF CANADA ACCELERATING GROWTH IN WEALTH BUSINESSES ✓As the baby boomer generation ✓ 3 Key Competitive enters retirement there will be Advantages for Sun Life significant movement of assets(1) Leadership at the worksite - access Workplace Savings to six million Canadians and Plan Assets $159B “tho
Slide 20: Accelerate Growth in Client Solutions; Driving Asset Growth
SLF CANADA ACCELERATE GROWTH IN CLIENT SOLUTIONS 14 SLF CANADA CLIENT SOLUTIONS DRIVING ASSET GROWTH Leveraging relationships with six million Canadians Using big data to produce meaningful interactions and next best actions with customers WEALTH CSF ADVISOR LEADS IN-PLAN ASSET GATHERING ROLLOVE
Slide 21: Leadership in Defined Benefit Solutions; Longevity Insurance Policy
SLF CANADA LEADERSHIP IN DEFINED BENEFIT SOLUTIONS ✓Market Leader in Defined Benefit Solutions First in Canadian annuity market sales since 2008(1) First Canadian annuity buy-in solution in 2009 First Canadian inflation linked annuity buy-in (Canadian Wheat Board) in 2013 First Canadian prov
Slide 22: The Group Advantage; Strategic Investments in Retail Wealth
SLF CANADA THE GROUP ADVANTAGE ✓ The Group Advantage GROUP DRIVEN WEALTH SALES (C$ millions) 5,570 Access to employers and six million Canadians Driving asset growth and 3,799 customers for life Defined Benefit Solutions Sales Driving growth in expected profit 2,873 GRS Net Sales In-Plan Asset
Slide 23: Career Sales Force Growth; Launch Third Party Wealth Distribution
SLF CANADA CAREER SALES FORCE GROWTH 7th consecutive year of net gains in sales power Focus on dual licensed advisors, now paying off with strong wealth sales, and over 2,500 dual- licensed advisors Highest rating among dedicated sales agencies for advisor satisfaction(1) Career Sales Force
Slide 24: SLGI – Focused on Investment Solutions; Growing Sun Life Global Investments
SLF CANADA SLGI – FOCUSED ON INVESTMENT SOLUTIONS ✓Best asset managers under one roof % OF FUNDS ABOVE BENCHMARK(1) 1 Year 3 Year 100% 100% 100% 86% Granite Managed Portfolios Granite Target Date Granite Managed Portfolios Granite Target Funds Date Funds (1) For Granite Managed Portfolios - benchmar
Slide 25: New Segregated Fund Offering; Sustainable Shareholder Value
SLF CANADA INTRODUCING A NEW SEGREGATED FUND OFFERING CANADIAN SEGREGATED FUND INDUSTRY SALES (C$ millions) Fully manufactured, 13,125 administered and distributed by SLF 10,465 10,796 New suite of Greater economic value, Sun Life competitive guarantees and risk management capability manufactured se
Slide 26: MFS Review; Strategic Focus
MFS REVIEW Mike Roberge Co-CEO/President, MFS ASSET MANAGEMENT STRATEGIC STRATEGICFOCUS FOCUS GROWING MFS by being MARKET and Client Driven • INVESTMENT PERFORMANCE: winning today and positioning ourselves for the future of investment management • CLIENT SERVICE: making client service a true differe
Slide 27: Asset Diversification by Channel; Assets by Style
ASSET MANAGEMENT ASSET DIVERSIFICATION BY CHANNEL 2010 2014 US$222 billion US$431 billion Non-U.S. retail 5% Non-U.S. retail 7% Institutional Institutional 36% U.S. retail 38% U.S. retail 38% 39% Insurance 21% Insurance 16% 3 MFS AUM values as at December 31. 2010 does not include McLean Budden AUM.
Slide 28: AUM by Client Location; MFS Global Investment Platform
ASSET MANAGEMENT ASSETS UNDER MANAGEMENT BY CLIENT LOCATION 2010 2014 US$222 billion US$431 billion Middle East Middle East 4% Australia/ 2% Canada Other Americas Other Americas New Zealand 1% 1% <0.5% Asia 6% 5% Australia/ Canada New Zealand Asia 5% Europe 5% 7% 7% Europe 10% U.S. 69% U.S. 77% 5 MF
Slide 29: MFS Investment Performance; Market Trends and Implications
ASSET MANAGEMENT MFS INVESTMENT PERFORMANCE Percentage of Assets Ranked in Top Half of Lipper Peer Group, 10-Year period TOTAL US EQUITIES GLOBAL/INT'L FIXED INCOME 97% 99% 99% 84% 92% 97% 90% 99% 99% 87% 89% 99% 86% 84% 81% 76% 76% 67% 51% 25% 7 Investment performance as at December 31, 2014. ASSET
Slide 30: MFS Trailing 8-Quarter Flows; Product Strategy
ASSET MANAGEMENT MFS TRAILING 8-QUARTER FLOWS RETAIL Annualized Gross Sales Rate INSTITUTIONAL Annualized Gross Sales Rate Annualized Redemption Rate Annualized Redemption Rate 44.8% 40.9% 37.1% 31.6% 36.9% 30.5% 26.3% 28.1% 17.7% 14.2% 19.8% 15.5% 10.8% 7.4% 10.8% 8.9% 8 16 6 11 4 Assets (US$ billi
Slide 31: MFS Product Styles with Gross Sales Over US$1 Billion; Capability Development
ASSET MANAGEMENT MFS PRODUCT STYLES WITH GROSS SALES OVER US$1 BILLION IN 2014 Lower-Tracking Global/Ex-U.S. Regional Active Fixed Income Multi-Asset Error Active Equity Equity Blended Research International Value U.S. Large Cap Value Emerging Markets Debt Asset Allocation Funds Global Equity U.S. G
Slide 32: MFS Growth and Leverage; Dividend Contributions to Sun Life
ASSET MANAGEMENT MFS GROWTH AND LEVERAGE 40% 41% 34% $426 33% $368 $286 $261 ANA CAGR: 18% ANA (US $billions) 2011 2012 2013 2014 Pre-Tax Profit(1) Earnings CAGR: 28% $452 $531 $802 $938 (US$ millions) 13 (1) U.S. GAAP measure. ASSET MANAGEMENT MFS DIVIDEND CONTRIBUTIONS TO SUN LIFE $426 $349 $231 $
Slide 33: MFS Cost Structure Flexibility; Prime Brand Funnel
ASSET MANAGEMENT MFS COST STRUCTURE FLEXIBILITY Total Company Expenses Personnel Expenses Sales Amortization Commissions of Variable 10% Deferred Formulaic Fixed Comp 21% 26% 15% Variable Variable Discretionary Compensation Salaries and - Short Term Variable Benefits Discretionary 44% 32% 31% - Long
Slide 34: Sustainable Shareholder Value; Asset Management – Stephen Peacher
ASSET MANAGEMENT SUSTAINABLE SHAREHOLDER VALUE DELIVER CONTINUED STRONG INVESTMENT PERFORMANCE GROW AND DIVERSIFY AUM DELIVER LONG-TERM SUSTAINABLE ENTERPRISE VALUE BUILD A WORLD CLASS BRAND EXECUTION EXCELLENCE 17 ASSET MANAGEMENT Stephen C. Peacher Executive Vice President and Chief Investment Off
Slide 35: Asset Management; Investments – General Account Asset Mix
SUN LIFE FINANCIAL ASSET MANAGEMENT MFS Sun Life Sun Life Sun Life Asset Birla Sun Life Sun Life Investment Global Management Everbright (Global) (India) Management Investments (Philippines) (China) Ryan Labs (Canada) AUM: AUM: AUM: AUM: AUM: AUM: US$431 billion C$7 billion C$10 billion C$1 billion
Slide 36: Investments – Public and Private Bonds; Drivers of Earnings on Surplus
SUN LIFE FINANCIAL INVESTMENTS – PUBLIC AND PRIVATE BONDS • Diversified portfolio across multiple sectors • 97.5% of bonds are investment grade BREAKDOWN BY RATING – 2014 BREAKDOWN BY SECTOR – 2014 (C$ billions) (C$ billions) $86.5 billion $86.5 billion 3% 8% 13% 5% 6% 34% 31% 16% 6% 11% 10% 37% 20%
Slide 37: Sun Life Investment Management; Client Demand
SUN LIFE INVESTMENT MANAGEMENT SUN LIFE INVESTMENT MANAGEMENT Mission: to design and deliver investment solutions that help clients achieve their goals by utilizing our long-standing expertise in asset-liability management, private asset classes and public fixed income and derivatives markets SUN LI
Slide 38: Value Proposition: Private Fixed Income Spreads
SUN LIFE INVESTMENT MANAGEMENT VALUE PROPOSITION CANADIAN PRIVATE FIXED INCOME U.S. PRIVATE FIXED INCOME 500 500 403 400 400 318 304 291 288 293 275 277 300 256 258 300 bps bps 246 207 207 200 200 164 159 146 200 150 147 162 134 92 77 100 100 67 0 0 YEAR 2009 2010 2011 2012 2013 2014 YEAR 2009 2010
Slide 39: Ryan Labs Asset Management; Product Roadmap
SUN LIFE INVESTMENT MANAGEMENT RYAN LABS ASSET MANAGEMENT • Acquisition extends Sun Life Investment Management into the U.S. • Institutional fixed income manager targeting pension funds and other institutional investors • True LDI provider – Established client base – Strong investment results – Prop
Slide 40: Sustainable Shareholder Value
SUN LIFE FINANCIAL SUSTAINABLE SHAREHOLDER VALUE SIGNIFICANT ASSET MANAGEMENT OPERATIONS HIGH QUALITY GENERAL ACCOUNT PORTFOLIO STRONG RISK MANAGEMENT OPPORTUNITY TO GROW SUN LIFE INVESTMENT MANAGEMENT EXECUTION EXCELLENCE 12 40