Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2004 Earnings Presentation
24 slides from Sun Life Financial's earnings presentation, Jul 29, 2004
Slide 1: Second Quarter 2004 Financial and Operating Results
Sun Life Financial Inc. Second Quarter 2004 Financial and Operating Results Analyst Presentation July 29, 2004
Slide 2: Forward Looking Statement
4 1 Forward Looking Statement 3 Q 2 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,”
Slide 3: Second Quarter 2004 Highlights
4 1 Second Quarter 2004 Highlights 3 Q 2 • Record earnings of $438 million, up 20% from 2Q’03 • ROE 12% -- up 170 basis points from 2Q’03 • U.S. Business Group earnings up 82% – Annuities up with improving market conditions – Individual Life up from effective interest rate management • MFS earnings
Slide 4: Record Operating EPS - up 22% from 2Q'03
4 1 Record Operating EPS - up 22% from 2Q’03 3 Q 2 1,132 1,123 S&P 500 1,056 (average) 1,000 938 % up 22 73 71 69 65 60 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Operating EPS (cents) 60 65 69 71 73 Reported EPS (cents) 60 65 34 61 73 4
Slide 5: Record Operating Earnings - up 20% from 2Q'03
4 1 Record Operating Earnings - up 20% from 2Q’03 3 Q 2 1,132 1,123 S&P 500 1,056 (average) 1,000 938 438 425 417 394 366 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Operating Earnings ($ millions) 366 394 417 425 438 (1) ROE (%) 10.3 11.3 11.8 12.0 12.0 (1) Based on operating earnings 5
Slide 6: SLF Canada Revenue
4 1 SLF Canada 3 Q 2 (C$ Millions) • 2Q revenues up over same 2,500 250 period last year, down from 2,000 200 1Q due to seasonality Net Income Revenue 1,500 150 • Increased contributions from 1,000 100 CI and better credit 500 50 experience offset weaker 0 0 earnings in Group Benefits 2Q'03 3Q'03 4Q
Slide 7: Retail Sales - Canada
Retail Sales - Canada 4 Q 1 3 2 (1) Premiums and Deposits (C$ Millions) 744 Retail Wealth 568 511 • Premiums and deposits up 31% 389 383 over 2Q’03 – down from first quarter due to seasonality 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Sales (C$ Millions) Individual Life & Health • ICA Spring Campaign - the 38 4
Slide 8: Group Retirement Services - Canada
4 1 Group Retirement Services - Canada 3 Q 2 • Defined contribution plan assets up 19% 2Q/2Q Defined Contribution Plan Assets (C$ Billions) • Year-to-date sales 3 times 21.7 year ago level 20.2 21.4 18.9 18.2 • Strong positive net flows in 2Q’04 due to lower plan terminations 2Q'03 3Q'03 4Q'03 1Q'04
Slide 9: Group Life and Health - Canada
Group Life and Health - Canada 4 1 3 Q 2 Sales and Business In-Force • Strong first quarter sales (C$ Millions) included IBM 97 • Business in-force up 6% over a year ago 39 46 40 30 • Increased investment in 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 customer service ASO Premium Equivalents 7 15 9 56 10 initiati
Slide 10: SLF United States Revenue
4 1 SLF United States 3 Q 2 (US$ Millions) 2,000 100 • Net income up 82% 2Q/2Q 80 Net Income 1,500 – Increased earnings in all Revenue 60 business lines 1,000 40 – Improved equity and credit 500 20 markets 0 0 – Enhanced spreads 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Revenue 1,878 1,622 1,654 1,781 1,807 Net
Slide 11: U.S. Annuity Sales
U.S. Annuity Sales 4 Q 1 3 2 (US$ Millions) 1,129 • Strong Equity Indexed 1,053 951 Annuities sales almost 5 883 775 times 2Q’03 – # 3 in industry EIA sales • Customer preferences shifted from fixed to equity- 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 linked products Gross Sales Variable Annuities 479 584 519 5
Slide 12: First Year Annualized Premiums – U.S.
4 1 First Year Annualized Premiums – U.S. 3 Q 2 Sales and Business In-Force (US$ Millions) Group Life & Health • Group Life sales up 70% from 119 2Q’03. Stop Loss and 54 Disability sales also strong. 40 34 30 • Business in-force up 13% from 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 2Q’03 40 34 119 30 54 Sales •
Slide 13: MFS Investment Management Operating Earnings
4 1 MFS Investment Management 3 Q 2 1,132 1,123 S&P 500 1,056 (average) • 2Q/2Q operating earnings flat 1,000 938 – Average net assets up 13% 40 Operating Earnings (1) – Revenue increase of 9% 30 (US$ Millions) offset by higher expenses 20 10 0 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Operating 30 36 37 35 30
Slide 14: MFS Assets Under Management
4 1 MFS Assets Under Management 3 Q 2 Assets Under Management (US$ Billions) 140 142 137 • AUM up $9 billion or 128 129 7% from 2Q’03, down $5 billion from 1Q’04 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Domestic Funds 73 72 77 77 74 Other Investment 4 4 4 4 4 Products MFS/Sun Funds 11 11 11 11 11 Institutional
Slide 15: MFS Net Fund Sales
MFS Net Fund Sales 4 Q 1 3 2 Net New Sales Market Movement (US$ Billions) (US$ Billions) 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Mutual Funds Mutual Funds 7.8 1.2 6.0 1.6 0.2 Gross New Sales 5.4 4.5 4.4 4.7 3.4 Managed Redemptions (4.5) (6.5) (4.8) (6.3) (6.3) Funds 4.8 1.1 4.8 1
Slide 16: MFS Sales and Market Ranking
4 1 MFS Sales and Market Ranking 3 Q 2 • MFS – one of only 4 companies to • MFS continues to rank maintain top 10 ranking in gross among the largest U.S. sales in each of the 4 major industry mutual fund managers categories Name Assets June '04 1 Vanguard $632 2 Fidelity 626 Domestic Equity Internat
Slide 17: SLF Asia Revenue
4 1 SLF Asia 3 Q 2 (C$ Millions) 200 15 • Revenue up 10% 2Q/2Q (17% in local currencies) 150 Net Income 10 Revenue • Net Income up 67% 2Q/2Q 100 (83% in local currencies) 5 50 – Higher sales and improved investment yields in Hong 0 0 Kong contribute to earnings 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Revenue
Slide 18: First Year Annualized Premiums - Asia
First Year Annualized Premiums(1) - Asia 4 Q 1 3 2 • Annualized premiums up 74% 2Q/2Q (85% in local (C$ Millions) currencies) 40 33 31 • India: Life insurance sales 24 triple 2Q’03 18 • Philippines: strong savings product sales 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 (1) Includes 50% of the sales of the Compa
Slide 19: SLF United Kingdom Revenue
4 1 SLF United Kingdom 3 Q 2 (£ Millions) • Stable earnings from closed- block business with 18.9% 200 30 ROE Net Income 150 Revenue 20 100 • $300 million capital 50 10 redeployed 0 0 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Revenue 164 154 146 134 136 Net Income 19 28 21 19 17 ROE 18.3% 27.9% 20.4% 19.1% 18.9
Slide 20: Operating Expenses
Operating Expenses 4 1 3 Q 2 Non-MFS MFS (C$ Millions) (C$ Millions) 30% 231 60% 484 225 $500 465 454 204 429 199 201 417 $200 20% 40% $250 $100 10% 20% $0 0% $0 0% 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Operating 465 429 484 417 454 Operating 199 204 201 231 225 (1) (3) Expense
Slide 21: Net Impaired Assets Down by Half
4 1 Net Impaired Assets Down by Half 3 Q 2 1,000 1.00% 810 806 Impaired Asset Ratio 750 699 0.75% C$ Millions 563 522 500 0.50% 250 0.25% 0 0.00% 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 Gross Impaired Assets 810 806 699 563 522 Total Allowances 402 403 366 336 330 Net Impaired Assets (1) 408 403 333 227 192 N
Slide 22: Capital Management
4 1 Capital Management 3 Q 2 • Quarterly dividends increased to 22 cents per share up 29% for the 245% year 239% 238% 241% 234% • Target dividend payout ratio increased to 25- 35% 2Q'03 3Q'03 4Q'03 1Q'04 2Q'04 • 1.6 million shares MCCSR Ratio (1) 239% 234% 238% 241% 245% repurchased in 2Q’04 Debt Ra
Slide 23: Sources of Earnings
4 1 Sources of Earnings 3 Q 2 2004 - 2003 (C$ Millions) 2Q'04 2Q'03 Change Expected profit 447 460 (13) New business gain or loss (61) (71) 10 Experience gains or losses 32 7 25 Assumption changes 14 15 (1) Earnings from operations 432 411 21 Earnings on surplus 132 111 21 Operating earnings before
Slide 24: Questions & Answers
a, @uvestions'& Answers