Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2015 Earnings Presentation
33 slides from Sun Life Financial's earnings presentation, August 2015
Slide 1: Building Sustainable Shareholder Value Q2 2015
BUILDING SUSTAINABLE SHAREHOLDER VALUE Q2 2015
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this presentation including, but not limited to, statements that are not historical facts, are forward-looking and are subject to inherent risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may di
Slide 3: Sun Life Financial in 2015
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 3
Slide 4: Our Four Pillar Strategy
SUN LIFE FINANCIAL OUR FOUR PILLAR STRATEGY A growth strategy focused on high ROE and strong capital generation through leading positions in attractive markets globally LEADER in FINANCIAL PROTECTION and WEALTH SOLUTIONS in our Canadian home market ✓✓ PREMIER GLOBAL ASSET MANAGER, anchored by MFS LE
Slide 5: Management at a glance
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 6: Long term macro drivers of consumer demand
SUN LIFE FINANCIAL PRODUCTS & MARKETS POSITIONED FOR GROWTH LONG TERM MACRO DRIVERS OF CONSUMER DEMAND RETIREMENT DOWNLOADING GROWTH of baby boomers of responsibility from of the middle class in the government & employers to emerging markets of Asia employees 6
Slide 7: Compared to other North American life insurers
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 8: Stock price performance
SUN LIFE FINANCIAL STOCK PRICE PERFORMANCE(1) From Announcement of Four Pillar Strategy SLF 120.6% Stock Appreciation % Dividend Yield 3.7% 8 (1) Period December 31, 2011 to June 30, 2015
Slide 9: Q2'15 Results
SUN LIFE FINANCIAL Q2’15 RESULTS(1) C$ millions Q2’15 Q1’15 Q2’14 (except EPS and ROE) Operating net income 731 446 488 Underlying net income 615 516 499 Reported net income 726 441 425 Diluted operating earnings per share (EPS) (C$) 1.19 0.73 0.80 Diluted underlying EPS (C$) 1.00 0.84 0.81 Operatin
Slide 10: Sales results
SUN LIFE FINANCIAL SALES RESULTS C$ millions (unless otherwise noted) Q2’15 Change over Q2’14 Individual life and health 214 8% Group life and health 213 8% Total Insurance sales 427 8% Wealth sales 6,614 58% MFS sales 24,673 16% SLIM(1) sales 619 nm(2) Total Wealth sales 31,906 25% (1) Sun Life Inv
Slide 11: On track to exceed 2015 earnings objective
SUN LIFE FINANCIAL ON TRACK TO EXCEED 2015 EARNINGS OBJECTIVE(1) UNDERLYING NET INCOME (C$ millions) 2,008 1,816 665 1,581 616 MFS 481 30% CAGR 1,271 1,343 302 1,200 1,100 969 Protection & Wealth 11% CAGR LTM 2012 2013 2014 Q2’15 Protection & Wealth MFS • Q2’15 Underlying ROE 13.9% versus 2015 objec
Slide 12: New medium-term objectives
SUN LIFE FINANCIAL NEW MEDIUM-TERM OBJECTIVES(1) Average EPS growth: 8-10% per annum ROE objective: 12-14% Payout ratio(2): 40-50% (1) The objectives are forward-looking non-IFRS financial measures and are not earnings guidance. These objectives were provided on March 5, 2015 (Investor Day). 12 (2)
Slide 13: SLF Canada strategic focus
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 14: SLF Canada growing earnings power
SLF CANADA GROWING EARNINGS POWER ASSETS UNDER UNDERLYING NET INCOME Q2’15 HIGHLIGHTS MANAGEMENT (C$ millions) (C$ millions) • Continued improvement in disability results in Group 149,504 869 141,689 Benefits 127,906 823 799 • Completed the largest ever defined benefit contribution transfer in the G
Slide 15: Asset Management strategic focus
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 differentiator across all client segments • GROW IN O
Slide 16: Strong asset management capabilities
ASSET MANAGEMENT STRONG ASSET MANAGEMENT CAPABILITIES Q2’15 HIGHLIGHTS MFS ASSETS UNDER MFS OPERATING NET MANAGEMENT(1) INCOME(1) (US$ billions) (US$ millions) MFS 567 • MFS assets under management of 557 440 US$440 billion 413 431 465 • Strong fund performance, gross sales increased to US$20.1 bill
Slide 17: MFS trailing quarter flows
ASSET MANAGEMENT MFS TRAILING 8 QUARTER FLOWS 26.8% 22.3% 22.4% 18.3% 18.2% 18.9% 21.6% 17.8% Overall Annualized Gross Sales Rate 25 15 (US$ in Billions) 5 (5) (15) (25) Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Annualized Redemption Rate 17.7% 19.0% 18.7% 16.9% 20.0% 20.7% 21.7% 19.4%
Slide 18: Growing and diversifying asset management pillar
ASSET MANAGEMENT GROWING AND DIVERSIFYING SUN LIFE’S ASSET MANAGEMENT PILLAR SUN LIFE INVESTMENT MANAGEMENT LIABILITY‐DRIVEN INVESTING AND ALTERNATIVE YIELD STRATEGIES SUN LIFE SUN LIFE RYAN LABS PRIME INVESTMENT BENTALL INVESTMENT ASSET ADVISORS MANAGEMENT KENNEDY OPERATIONS MANAGEMENT INC. CANADA
Slide 19: U.S. Group Benefits strategic focus
SUN LIFE U.S. STRATEGIC FOCUS STRATEGIC FOCUS GROUP BENEFITS Small to large national employers, excluding jumbo cases Market Solutions delivered through brokers, consultants and private Focus exchanges Stop-loss Product Group and voluntary life, disability, dental Breadth Cancer, critical
Slide 20: SLF U.S. continuing the evolution
SUN LIFE U.S. CONTINUING THE EVOLUTION SLF U.S. TOTAL GROUP BENEFIT SALES Q2’15 HIGHLIGHTS (US$ millions) • Good progress in underlying profitability of 666 Group Benefits 599 571 • Group Benefits business in-force stable at US$2.5 billion LTM 2013 2014 2013 2014 LTM Q2'15 Q2’15 20
Slide 21: Asia strategic focus
SUN LIFE ASIA STRATEGIC FOCUS Market Seven higher growth markets Focus Partners that share our values and have impact in their markets A mix of products by market that bring favourable return-risk Product results Breadth Insurance in seven markets, health and accident in six markets, wealth
Slide 22: Asia sales growth, expanded footprint
SUN LIFE ASIA SALES GROWTH, EXPANDED FOOTPRINT UNDERLYING NET INDIVIDUAL LIFE AND INCOME HEALTH INSURANCE Q2’15 HIGHLIGHTS(1) (C$ millions) SALES(2) (C$ millions) Wealth Protection • Individual insurance sales up 19% driven by CAGR +12% 465 agency growth in key markets CAGR +37% 231 422 187 373 • He
Slide 23: Deliberate capital and cash allocation
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 24: Balanced and diversified business model
SUN LIFE FINANCIAL BALANCED AND DIVERSIFIED BUSINESS MODEL BY BUSINESS GROUP(1) – Q2’15 STRONG UNDERLYING EARNINGS GROWTH FROM BOTH Underlying net income $615 million WEALTH AND INSURANCE BUSINESSES(2) (C$ millions) 615 SLF Asia 499 11% SLF MFS Canada 27% 39% SLF U.S. 16% SLF U.K. 7% Q2'14 Q2'15 Pro
Slide 25: Wealth management
SUN LIFE FINANCIAL WEALTH MANAGEMENT(1) Sales Fee income Assets under management (C$ billions) (C$ millions) (C$ billions) 121 673 114 4,425 100 111 606 4,053 528 3,339 2,632 398 2013 LTM 2012 2014 Q2’15 2012 2013 2014 LTM 2012 2013 2014 Q2’15 Q2’15 Wealth Protection Value of new 40% business LTM Q2
Slide 26: Strong capital and financial position
SUN LIFE FINANCIAL STRONGCAPITAL STRONG CAPITALAND ANDFINANCIAL FINANCIALPOSITION POSITION MCCSR RATIO – • $1.7 billion cash level at Sun Life Financial Inc. as at SUN LIFE ASSURANCE June 30, 2015 COMPANY OF CANADA • $500 million minimum cash target 219% 217% 223% Financial Strength Rating Sun Life
Slide 27: Capital model
SUN LIFE FINANCIAL CAPITAL MODEL $1.7 billion cash at Holding SLF Company(1) SLA MCCSR of 223% MFS U.S. Book value U.K. Canada Bermuda Asia excl. from Branch MCCSR Capitalized to meet local capital rules (1) At June 30, 2015. 27
Slide 28: Quality asset portfolio
SUN LIFE FINANCIAL QUALITY ASSET PORTFOLIO Q2’15 INVESTED ASSETS • Investment portfolio is well diversified by Equities (C$130 billion) geography, asset class, industry sector or issuer 4% Investment • High quality asset base Properties • Self originated mortgage portfolio is diversified 5% across a
Slide 29: Sustainable shareholder value
SUN LIFE FINANCIAL SUSTAINABLE SHAREHOLDER VALUE COMPELLING FOUR PILLAR STRATEGY EXECUTING ON GROWTH AMBITIOUS AND ACHIEVABLE OBJECTIVES DISCIPLINED CAPITAL/RISK MANAGEMENT EXECUTION EXCELLENCE 29
Slide 30: Investor Relations Contact
SUN LIFE FINANCIAL INVESTOR RELATIONS CONTACT GREG DILWORTH JUSTIN WANG Vice President, IR Assistant Vice President, IR gregory.dilworth@sunlife.com justin.wang@sunlife.com 416‐979‐6230 416‐496‐3553
Slide 31: Use of Non-IFRS Financial Measures
In this presentation, Sun Life Financial Inc. and its subsidiaries, joint ventures and associates are referred to as “we”, “us”, “our” and the “Company”. Use of Non‐IFRS Financial Measures We report certain financial information using non‐IFRS financial measures, as we believe that they provide info
Slide 32: Forward-Looking Statements
Forward‐Looking Statements Certain statements in this presentation, including statements (i) related to our proposed acquisition of the Bentall group of companies and the expected AUM of Sun Life Investment Management (ii) statements relating to our growth strategies, (iii) statements concerning our
Slide 33: Material assumptions and risk factors
Material assumptions and risk factors The Company’s medium-term financial objectives do not constitute guidance. Our ability to achieve our medium-term financial objectives is dependent on the Company’s success in achieving the growth initiatives, business objectives and productivity and expense tar