Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2023 Earnings Presentation
42 slides from Sun Life Financial's earnings presentation, May 2023
Slide 1: Q1'23 Delivering sustainable shareholder value
Q1’23 Delivering sustainable shareholder value
Slide 2: Agenda
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q1 2023 2
Slide 3: A leading global financial services organization
A leading global financial services organization Balanced & diversified $1.36T business model2 ~85M 52,500 97,400 Offices in Assets Under $37B Clients 3 Employees 3,4 Advisors 3,5 28 markets 3 Management market cap6 (AUM)1,6 Group - Health & Protection 30% Wealth & asset management 41% Individual -
Slide 4: The Sun Life story
The Sun Life story • A diversified business m odel, with four w ell-positioned business groups, focused on creating value and positively im pacting our Clients, employees and shareholders • Portfolio of businesses that have strong grow th prospects and capital generation in attractive global markets
Slide 5: Leveraging global trends
Leveraging global trends • Individual and employer attention on physical and m ental health • Dem ographic shifts in developed markets • Increased economic, market and geopolitical volatility • Gig economy and shift in nature of w ork • Digital acceleration • Adoption of digital health technologies
Slide 6: Agenda: Strategic overview
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q1 2023 6
Slide 7: Executing on our ambition to be one of the best asset management and insurance companies globally
Executing on our ambition to be one of the best asset management and insurance companies globally Four Pillar Strategy Our Purpose Key Priorities Help Clients achieve lifetime financial security and • Think and act like a digital company AM A global leader in public and live healthier lives alternat
Slide 8: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5-year total shareholder return2 Performance against medium-term objectives March 31, 2023 5-years Medium-term objective3 Q1’23 ending 20224 Sun Life 7.8% Underlying EPS grow th1 24% 9% 8-10% Canadian Lifecos 9.0% Underlying ROE1 17.3% 14.7% 18%+ TSX 8.8
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 sust
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 Nearly 100,000 New surrogacy, adoption $14.2 billion 36.9% financial roadmaps created to-date1 & fertility
Slide 11: Digital leadership
Digital leadership Q1 2023 Highlights Thinking and acting like a digital company focused on: Enhancing our Sun Life One Plan tool in Canada • Digital tool enables Clients to update their financial roadmaps directly, while collaborating with their adv isor on personalized goals Digital Experiences •
Slide 12: Distribution excellence
Distribution excellence Distribution across the four pillars Omni-channel approach AM • MFS partners w ith leading retail intermediary firms and global institutional consultants to serving Clients, including • SLC Managem ent distributes products through acquired affiliates Crescent Capital, more mo
Slide 13: Agenda: Business group results & highlights
• Business and strategic overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q1 2023 13
Slide 14: Q1 2023 results – Strong underlying ROE of 17.3%
Q1 2023 results – Strong underlying ROE of 17.3% Profitability Q1’23 Q1’22 Change Results Highlights Underly ing net income ($ millions) 1 895 720 +24% Earnings reflect strong business fundam entals and diversified business m ix 6 Reported net income ($ millions) 806 665 +21% • Wealth & asset m anag
Slide 15: Q1 2023 results
Q1 2023 results Underlying net income1 ($ millions) Reported net income ($ millions) Impact of currency translation increased underlying net income by $32M2 Impact of currency translation increased reported net income by $28M2 321 316 329 282 311 237 254 256 206 168 133 141 134 107 111 56 (47) (69)
Slide 16: Asset Management: A global leader in both public and alternative asset classes
Asset Management: A global leader in both public and alternative asset classes Underlying net income1 Q1 2023 highlights ($ millions) • Published interim net zero targets for 2030 for Sun Life’s General Account3, reinforcing our 1,238 1,199 com m itm ent to reducing the clim ate im pacts of investme
Slide 17: MFS: creating value through active investment mandates
MFS: creating value through active investment mandates • Engage Clients to align w ith MFS to focus on longer investment horizons, leveraging our proven ability to deliver Continue to deliver superior investment over benchmark performance through a market cycle performance while allocating capital •
Slide 18: SLC Management: strong capabilities in alternative investments
SLC Management: strong capabilities in alternative investments • Deliver superior investment performance, expand and deepen our distribution relationships and build out products Help investors meet their investment objectives by offering a broad suite of • Offer our Clients a compelling suite of inv
Slide 19: Canada: A leader in health, wealth, and insurance
Canada: A leader in health, wealth, and insurance Underlying net income1 Q1 2023 highlights ($ millions) • Underlying net incom e of $316 m illion up 53% over prior year, reflecting higher investment 1,173 1,063 income, improved disability, and higher premiums reflecting good sales momentum • Enhanc
Slide 20: Shaping the industry and capturing opportunities in Canada
Shaping the industry and capturing opportunities in Canada 1 • Create a One Sun Life digital experience Advance our One Sun Client strategy • Expand our proactive, predictive, and personal contact through our digital coach, Ella • Scale and accelerate SLGI Asset Managem ent as a grow th engine • Be
Slide 21: U.S.: A leader in health and benefits
U.S.: A leader in health and benefits Underlying net income1 Q1 2023 highlights (US $ millions) • Underlying net incom e of US$176 m illion, up US$93 m illion over prior year, driven by strong 624 performance across all businesses 531 • After-tax profit margin for group benefits of 9.7% 1,6 • GB & D
Slide 22: Advancing our strategy of being a leader in health and benefits in the U.S.
Advancing our strategy of being a leader in health and benefits in the U.S. • Extend our leadership position in medical stop-loss and innovative risk management solutions by expanding into offerings like Health Navigator pow ered by PinnacleCare • Leverage DentaQuest's scale and expertise to provide
Slide 23: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Underlying net income1 Q1 2023 highlights ($ millions) 547 • Underlying net incom e of $141 m illion up 4% over prior year in constant currency 4, driven by 539 higher premiums reflecting good sales momentum, improved mortality, partially offse
Slide 24: Capitalizing on new opportunities in Asia to drive scale
Capitalizing on new opportunities in Asia 1 to drive scale • Create a trusted brand for Sun Life in Asia to facilitate lead generation, relationship building, and recruitment • Build sustainable scale through a diversified mix of high performing, quality-focused distribution channels that Lev erage
Slide 25: Capturing growth opportunities in Asia
Capturing growth opportunities in Asia ASEAN Hong Kong Joint Ventures Philippines • Ranked 3rd in MPF net inflow s and 3rd India based on AUM1,6 • #1 ranked insurance company • 7th in individual insurance, w ith an overall based on total premiums 1,2 • 13th in insurance sales, w ith a market market
Slide 26: Agenda: Capital management
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q1 2023 26
Slide 27: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Inc. SLF Inc. - External Capital Securities Subordinated Debt Co....,on Pronopal SM Par CaU Oate LICAT1 148% Slf Series 2007-1 5� $400 Z9-May-37 SLF Series 2016-2 3.05'11> $1,000 19-Sep-Z3 SlF Series 2019-1 SUstainabillty Bond Z. 38'11> $750 13 -Aug-Z
Slide 28: 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 $0.72 to $0.75 per share Q1 ’23 Capital Ca pital m etrics SLF In c. ($m illions) Deploy ment opportunities LICAT 4 148% Subordinated debt
Slide 29: 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 2017 – Majority acquisition 2015 – Majority acquisition 2015 – Expand 2016 – Expanded
Slide 30: Agenda: Asset portfolio
• Business overview • Strategic overview • Business group results & highlights • Capital management • Asset portfolio Sun Life – Q1 2023 30
Slide 31: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio Investment profile Debt securities by credit rating • Highly diversified w ith the As of March 31, 2023 As of March 31, 2023 largest non-government BB and lower related exposure at 0.4% of BBB- 1% Equity 3% AAA total fixed income Inv estment securi
Slide 32: Mortgages and investment property exposures
Mortgages and investment property exposures Mortgages by type and geography1 Mortgages by type and rating1,5 As of March 31, 2023 As of March 31, 2023 Multi-family % of Multi-family ($millions) Office Industrial3 Retail Other Total ($millions) Office Industrial 3 Retail Other Total residential Total
Slide 33: Appendix
Appendix Sun Life – Q1 2023 33
Slide 34: IFRS 17 transition – Strong capital position and underlying ROE objective of 18%+
IFRS 17 transition – Strong capital position and underlying ROE 1 objective of 18%+ Transition impacts in-line with estimates2 Re-affirming medium-term financial objectives6 Estimated IFRS 17 transition impacts impact Actual result Medium-term financial objective 15-20% Common shareholders’ equity i
Slide 35: Ratings and recognitions in Sustainability
Ratings and recognitions in Sustainability Named among the Best Workplaces™ for Inclusion in Canada. This recognition is especially significant since the results are based on employee responses to inclusion-related statements. Recognized by Women Lead Here for the third year in a row . Published by
Slide 36: Market sensitivities
Market sensitivities Change in Equity Markets1,2,3 Change in Interest Rates 6,7,3 As at March 31, 2023 25% 10% 10% 25% As at March 31, 2023 As at December 31, 20225 ($millions, unless otherwise noted) decrease decrease increase increase ($millions, unless otherwise noted) 50 basis point 50 basis poi
Slide 37: Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9
Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9 2022 results have been restated for the adoption of IFRS 17 and the related IFRS 9 classification overlay (“the new standards”). The restated results may not be fully representative of our future earnings profile, as we were no
Slide 38: Use of Non-IFRS Financial Measures
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 39: Footnotes: From slides 3 and 8
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 includes
Slide 40: Footnotes: From slides 16 and 19
From slide 16 2 Excludes assets managed on behalf of the Insurance businesses for the General Fund. For more details, see the Non-IFRS Financial Measures section in our Q1 2023 MD&A. 3 2030 interim net zero targets for Sun Life's General Account include a minimum 40% reduction in carbon intensity fo
Slide 41: Footnotes: From slide 34
From slide 34 2 As disclosed on February 8, 2023 in our 2022 Annual MD&A 3 As at January 1, 2022. 4 8.3% decrease in restated 2022 results includes refinements to the Underlying Net Income (UNI) definition, effective January 1, 2023. Excluding this change, the decline in restated underlying net inco
Slide 42: Sun Life Investor Relations
Sun Life Investor Relations Yaniv Bitton Vice-President, Head of Investor Relations & Capital Markets 416-979-6496 yaniv.bitton@sunlife.com Paul Poon Assistant Vice President, Investor Relations 416-305-3389 paul.poon@sunlife.com Sun Life – Q1 2023 42