Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q3 2023 Earnings Presentation
40 slides from Sun Life Financial's earnings presentation, November 2023
Slide 1: Q3'23 Delivering sustainable shareholder value
Q3’23 Delivering sustainable shareholder value
Slide 2: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q3 2023 2
Slide 3: A leading global financial services organization
A leading global financial services organization Balanced & diversified $1.34T business model2 ~85M 52,500 97,400 Offices in Assets Under $38.7B Year-to-date at September 30, 2023 Clients3,4 Employees3,5 Advisors3,6 28 markets3 Management market cap7 (AUM)1,7 Group - Health & Protection 31% Wealth &
Slide 4: The Sun Life story
The Sun Life story • A diversified business model, with four well-positioned business groups, focused on creating value and positively impacting our Clients, employees and shareholders • Portfolio of businesses that have strong growth prospects and capital generation in attractive global markets • S
Slide 5: Leveraging global trends
Leveraging global trends • Individual and employer attention on physical and mental health • Demographic shifts in developed markets • Increased economic, market and geopolitical volatility • Gig economy and shift in nature of work • Digital acceleration • Adoption of digital health technologies • G
Slide 6: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q3 2023 6
Slide 7: Executing on our ambition to be one of the best asset management and insurance companies
Executing on our ambition to be one of the best asset management and insurance companies in the world Four Strategic Pillars Our Purpose Strategic Imperatives Help Clients achieve lifetime financial security and live healthier lives AM A global leader in both public • Develop deep Client relationshi
Slide 8: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5-year total shareholder return2 Performance against medium-term objectives September 30, 2023 5-years Medium-term objective3 Q3’23 ending 20224 Sun Life 9.6% Underlying EPS growth1 (2)% 9% 8-10% Canadian Lifecos 10.5% Underlying ROE1 17.7% 14.7% 18%+ TS
Slide 9: Our Sustainability Plan brings our Purpose to life
Our Sustainability Plan brings our Purpose to life The plan has three pillars, representing the areas where we have the greatest opportunity to drive positive impact in society, while creating competitive advantage for Sun Life: Increasing Fostering Advancing financial security healthier lives susta
Slide 10: Sustainability highlights show progress against our plan
Sustainability highlights show progress against our plan Increasing financial Fostering healthier Advancing sustainable Operating as a trusted security lives investing and responsible business Over 120,000 New surrogacy, adoption $14.2 billion 36.9% financial roadmaps created for & fertility service
Slide 11: Digital leadership
Digital leadership Q3 2023 highlights Thinking and acting more like a digital company focused on: Strengthening our commitment to supporting the health of Canadians • In October, we completed the acquisition of Dialogue Health Technologies Inc. • This acquisition will provide affordable, on-demand a
Slide 12: Distribution excellence
Distribution excellence Distribution across the four pillars AM • MFS partners with leading retail intermediary firms and global institutional consultants Omni-channel approach • SLC Management distributes products through acquired affiliates Crescent Capital, to serving Clients, including BentallGr
Slide 13: Agenda
• Business and strategic overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q3 2023 13
Slide 14: Q3 2023 results
Q3 2023 results Profitability Q3’23 Q3’22 Change Results Highlights Underlying net income1 ($ millions) 930 949 (2)% Reported net income ($ millions) 871 111 nm Earnings reflect strong business fundamentals and diversified business mix • Wealth & asset management (+9% y/y): includes higher investmen
Slide 15: Q3 2023 results
Q3 2023 results Underlying net income1 ($ millions) Reported net income ($ millions) Impact of currency translation increased underlying net income by $16M2 Impact of currency translation increased reported net income by $17M2 AM CAN U.S. ASIA CORP AM CAN U.S. ASIA CORP 365 330 338 298 293 268 227 2
Slide 16: Asset Management: A global leader in public and alternative asset classes
Asset Management: A global leader in both public and alternative asset classes through MFS and SLC Management Business Group Results (C$) Q3 2023 strategic highlights Profitability Q3’23 Q3’22 Change MFS Underlying net income1 ($ millions) 330 298 +11% • Pre-tax net operating margin1 of 41% flat com
Slide 17: MFS US$556B AUM
Wealth & asset management RETAIL INSTITUTIONAL TOTAL MFS US$376B AUM1 US$180B AUM1 US$556B AUM1 Distributed through financial advisors Partner with leading consultants to manage MFS is a strong strategic and financial affiliated with brokerage houses, financial assets for public and corporate pensio
Slide 18: SLC Management
Wealth & asset management Real Estate IG Credit Alternative Credit Infrastructure Distribution $84B AUM1,2 $58B AUM1,2 $55B AUM1,2 $17B AUM1,2 $5B AUM1,2,3 Top global ranking in the Invests across spectrum Seeks investments in high- 200+ infrastructure One of the largest ⬤ ⬤ ⬤ of investment grade qu
Slide 19: Canada: A leader in health, wealth, and insurance
Canada: A leader in health, wealth, and insurance Business Group Results Q3 2023 strategic highlights Profitability Q3’23 Q3’22 Change • Sun Life was selected to move forward in the final stages of contract negotiations with the Government of Canada to be the administrator of the Wealth & asset mana
Slide 20: Canada overview
Wealth & asset Individual – Group – Health management Protection & Protection Group Retirement Services (GRS) Individual Wealth Individual Insurance Sun Life Health $124B AUM1,3,4 $31B AUM1,3,4 $5.1B Net premiums1,5 $6.3B Net premiums1,5 Canada ~1.3M Clients2,3 ~0.7M Clients2,3 ~1.9M Clients2,3 ~2.6
Slide 21: U.S.: A leader in health and benefits
U.S.: A leader in health and benefits Business Group Results (US$) Q3 2023 strategic highlights Profitability Q3’23 Q3’22 Change • We established a new preferred partnership with OptiMed, a U.S. national health care organization, to make specialty drugs more accessible and affordable for Group – Hea
Slide 22: U.S. overview
Group – Health Individual – & Protection Protection Dental Health Group Individual US$2.8B Net premiums1,3,4 US$2.4B Net premiums1,3 US$2.0B Net premiums1,3 US$14.3B AUM1,8 ~37M Members ~9M Members ~8M Members ~0.2M Members Second largest Dental Largest independent Stop- Top ten U.S. Group Life Clos
Slide 23: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Business Group Results Q3 2023 strategic highlights Profitability Q3’23 Q3’22 Change CC1 • We launched our 15-year exclusive bancassurance partnership with Dah Wealth & asset management ($ millions) 11 19 (42)% (40)% Sing Bank in Hong Kong with
Slide 24: Asia overview
Philippines Hong Kong Vietnam Indonesia $258M ins. sales1,2 $208M ins. sales1,2 $177M ins. sales1,2 $75M ins. sales1,2 • 1st in total premiums1,3 for • 5th in insurance sales and 5th Asia 12 consecutive years • 3rd in MPF net inflows and 3rd based on AUM1,6 in bancassurance sales1,8 • 11th in insura
Slide 25: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q3 2023 25
Slide 26: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Inc. LICAT1 147% SLA Asset Management LICAT1 138% DentaQuest SLC Canada Bermuda Asia U.S. (U.S.) MFS Management Capitalized to meet local capital rules Book value excl. from LICAT All information as at September 30, 2023; all dollar amounts are in C$,
Slide 27: Capital strength & flexibility
Capital strength & flexibility • Target minimum cash and other liquid assets at the holding company of $500 million1,2,3 • Increase to common share dividend from $0.75 to $0.78 per share, as of Q4’23 Q3’23 Capital Q3’23 Capital metrics SLF Inc. ($ millions) Deployment opportunities LICAT4 147% Subor
Slide 28: M&A activity reflects strategic priorities
M&A activity reflects strategic priorities • Activity over last ten years promotes growth in Asia and Asset Management and builds out group benefits/dental capabilities in the U.S. Asset Management Canada U.S. Asia 2018 – Acquisition 2016 – Acquisition 2016 – Expanded 2016 – Expanded of Assurant 201
Slide 29: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q3 2023 29
Slide 30: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio Investment profile Debt securities by credit rating • 74% of the portfolio is fixed As of September 30, 2023 As of September 30, 2023 income; 97% of fixed income BB and lower rated investment grade1 BBB- 1% Equity 3% AAA BBB Investment securities 2
Slide 31: Mortgages and investment property exposures
Mortgages and investment property exposures Mortgages by type and geography1 Mortgages by type and rating1,3 As of September 30, 2023 As of September 30, 2023 Multi-family % of Multi-family ($millions) Office Industrial Retail Other Total ($millions) Office Industrial Retail Other Total residential
Slide 32: Appendix
Appendix Sun Life – Q3 2023 32
Slide 33: Ratings and recognitions in Sustainability
Ratings and recognitions in Sustainability For the 14th consecutive year, Sun Life has earned a spot on the Corporate Knights’ 2023 Global 100 Most Sustainable Corporations in the World. We ranked in the #1 position among insurance companies globally and represented one of only 11 Canadian companies
Slide 34: Market sensitivities
Market sensitivities Change in Equity Markets1,2,3 Change in Interest Rates2,3,6 As at September 30, 2023 25% 10% 10% 25% As at September 30, 2023 As at December 31, 20225 ($millions, unless otherwise noted) decrease decrease increase increase ($millions, unless otherwise noted) 50 basis point 50 ba
Slide 35: Note to Readers and forward-looking statements
In this presentation, Sun Life Financial Inc. (“SLF” or “SLF Inc.”), its subsidiaries and, where applicable, its joint ventures and associates are referred to as “we”, “us”, “our”, “Sun Life” and the “Company”. Reported net income (loss) refers to Common shareholders' net income (loss) determined in
Slide 36: Use of Non-IFRS Financial Measures
Use of Non-IFRS Financial Measures We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information that is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from per
Slide 37: Footnotes
Footnotes From slide 3 2 Business Mix based on underlying net income, excluding Corporate expenses and other. Wealth & asset management includes MFS Investment Management, SLC Management, Canada Individual Wealth, Group Retirement Services, Asia Wealth & asset management. Group – Health & Protection
Slide 38: Footnotes continued
Footnotes continued From slide 16 2 MFS pre-tax gross operating margin was 36% in Q3 2023 and 36% in Q3 2022. 3 This ratio is based on the last twelve months. IFRS 17 and IFRS 9 were adopted on January 1, 2023, as such Q3 2022 margin is under an IAS 39 basis. 4 Does not include the General Account.
Slide 39: Footnotes continued
Footnotes continued From slide 24 2 FY2022 Individual – protection sales. These include the sales in the company’s joint ventures and associates with local partners in Asia based on our proportionate equity interest. 3 Insurance Commission of the Philippines, based on Q2 2023 year-to-date total prem
Slide 40: Sun Life Investor Relations
Sun Life Investor Relations David Garg Senior Vice-President, Capital Management and Investor Relations 416-408-8649 david.garg@sunlife.com Paul Poon Assistant Vice President, Investor Relations 416-305-3389 paul.poon@sunlife.com Sun Life – Q3 2023 40