Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Scotia Capital Financials Summit 2006
32 slides from Sun Life Financial's conference presentation, Sep 13, 2006
Slide 1: Scotia Capital Financials Summit 2006
Scotia Capital Financials Summit 2006 Robert C. Salipante President, Sun Life Financial U.S. September 13, 2006
Slide 2: Forward-Looking Statement
Forward-Looking Statement 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”, “intends”,
Slide 3: SLF: Creating Shareholder Value
SLF: Creating Shareholder Value • Significant improvement in ROE • High quality earnings • Strong record of value of new business growth • Diversified business mix with strategic assets – MFS, CI Financial, McLean Budden • Growing presence in Asia • Strong capital position and effective capital depl
Slide 4: Key Elements of Strategy
Key Elements of Strategy • Diversified earnings platform – Balancing mature businesses with emerging markets – Geographic balance between domestic and international – Business balance between protection and wealth • Global distribution capabilities – Industry-leading distribution capabilities in Can
Slide 5: Diversified Earnings Platform: International Growth Opportunities
Diversified Earnings Platform: International Growth Opportunities Long-term growth engine Organic and acquisition growth potential Strategic opportunities in Well-positioned Wealth Management Canadian franchise Cash provider 5
Slide 6: Global Distribution Capabilities: Enhancing Distribution in North America and Asia
Global Distribution Capabilities: Enhancing Distribution in North America and Asia • Industry-leading group businesses • Industry-leading exclusive sales force • Gaining traction in Individual wholesale • Adding new partnerships • Growing domestic VA gross sales • Growing MFS global distribution cap
Slide 7: Sustainable Earnings Growth: Strong Operating EPS and ROE Performance
Sustainable Earnings Growth: Strong Operating EPS and ROE Performance Constant 2002 C$ 13.4% 13.1% 12.0% 10.7% 10.6% 3.65 3.93 3.15 2.63 2.32 GR 16% CA 3.39 2.91 3.24 2.32 2.50 2002 2003 2004 2005 LTM Q2'06 Operating ROE Operating EPS Currency Impact 7
Slide 8: Executing U.S. Strategy
Executing U.S. Strategy • Diversified earnings and operating platform – Broad array of products – Multi-site service strategy • Broad and expanding distribution capabilities – NFP and M Financial – 83 experienced VA wholesalers – MGIS and Concordia distribution partnerships • Sustainable earnings gr
Slide 9: SLF Diversified Earnings Platform
SLF Diversified Earnings Platform U.K. Asia 10% 4% MFS 10% Canada 51% U.S. 25% Sun Life Financial Operating Earnings* Last Twelve Months (LTM) ending Q2’06 *Operating Earnings, excluding Corporate Other 9
Slide 10: Diversified U.S. Operations
Diversified U.S. Operations SLF U.S. Earnings • Annuities LTM Q2’06 – Fixed – Variable – Fixed Indexed Group Life & Health – Private Placement VA 8% – Medium Term Notes Individual Life 22% • Individual Life – UL (Single & Joint Life) Annuities 70% – VUL (Single & Joint Life) – COLI / BOLI – Private
Slide 11: Annuities Focus Shifted to Higher ROE Products
Diversified U.S. Operations: Annuities Focus Shifted to Higher ROE Products Annuity Sales 2002 LTM Q2’06 FIA 8% FIA 26% Fixed Variable Variable 56% Fixed 36% 67% 7% 11
Slide 12: Individual Life Insurance Sales Mix
Diversified U.S. Operations: Individual Life Insurance Sales Mix Individual Life Sales PPVUL 2% COLI/ BOLI 24% Core Offshore 60% 14% US$260 Million Annualized Premium LTM Q2’06 12
Slide 13: Broad Array of Individual Insurance Products
Diversified U.S. Operations: Broad Array of Individual Insurance Products Fixed Individual Domestic Variable Corporate Offshore Private Placement 13
Slide 14: Group Insurance - Balanced Mix of Businesses
Diversified U.S. Operations: Group Insurance - Balanced Mix of Businesses Business In-Force Disability Insurance Life 28% Insurance 37% Medical Stop-Loss 35% US$1,089 million as of June 30, 2006 14
Slide 15: Multi-Site Service Center Strategy
Diversified U.S. Operations: Multi-Site Service Center Strategy • Expanded offsite call center & service functions • Multiple advantages: – Expanded processing day – Improved product time to market – Expense savings Operations Staff Systems Staff Headcount Avg Comp Headcount Avg Comp US$ US$ Wellesl
Slide 16: Broad and Expanding Distribution: Annuities
Broad and Expanding Distribution: Annuities Sun Life Financial Distributors (SLFD) • Field force of scale – 83 wholesalers • Experienced, mature sales force – Average industry experience > 10 Years • Distribution access – Financial planners – Financial institutions – Wirehouses 16
Slide 17: Annuities – Balanced Distribution
Broad and Expanding Distribution: Annuities – Balanced Distribution U.S. Domestic VA Distribution Industry Sun Life U.S. Direct 1% Bank 13% Bank Captive Wirehouse/ 32% 35% Regional 34% Independent Firms 31% Independent Wirehouse/ Firms Regional 34% 20% 2005 new sales: US$132 billion LTM Q2’06 new sa
Slide 18: Broad and Expanding Distribution: Individual Insurance
Broad and Expanding Distribution: Individual Insurance • Deepening already strong distribution relationships Broker/ Dealer Sales by 14% Distribution Independent Channel Other Agents LTM as of Q2’06 29% 57% Independent Agents Broker/Dealers Other • Independent Marketing • Wirehouses • Benefit Plan C
Slide 19: Broad and Expanding Distribution: Individual Insurance
Broad and Expanding Distribution: Individual Insurance • 160 owned firms • 2,000+ producers in 41 states • 210+ affiliated third-party distributors • Target clients: – High net worth individuals – Growing entrepreneurial companies • 110 member firms in 35 states • 500 producers • Target clients: – U
Slide 20: Group Insurance - MGIS
Broad and Expanding Distribution: Group Insurance - MGIS • SLF is exclusive provider of group life and disability benefits to Medical Group Insurance Services physician groups • Market Leader in U.S. physician segment • Opportunity to significantly grow business – Increase life and disability sales
Slide 21: Group Insurance – Dental Joint Venture
Broad and Expanding Distribution: Group Insurance – Dental Joint Venture • Initiated partnership with United Concordia • SLF will distribute dental, packaged with Life or LTD • SLF will receive marketing allowance on dental; UC will retain 100% underwriting risk • Dental is proven aggregator for lif
Slide 22: Distribution Results: Domestic VA Sales
Distribution Results: Domestic VA Sales (US$ millions) Domestic VA Sales by Quarter 451 411 373 377 349 341 334 292 290 296 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 22
Slide 23: Distribution Results: Individual
Distribution Results: Individual Account Value - Active Products (US$ billions) 23% R $9.3 C AG $8.5 0.1 $7.3 4.5 $5.5 4.2 3.8 2.9 2.0 1.9 1.5 0.9 2.0 2.4 2.7 1.7 2003 2004 2005 Q2'06 Core Offshore COLI/BOLI High Net Worth 23
Slide 24: Distribution Results: Group
Distribution Results: Group Group Insurance Sales Group Insurance In-Force (US$ millions) (US$ millions) 1,038 1,089 345 314 874 764 252 683 233 590 180 191 483 437 104 136 + 20% R + 15% CA GR CAG 1999 2000 2001 2002 2003 2004 2005 LTM 1999 2000 2001 2002 2003 2004 2005 Q2’06 Q2’06 24
Slide 25: Strong Risk Management – Annuities
Sustainable Earnings Growth: Strong Risk Management – Annuities • ALM and hedging programs are in place to address option and guarantee exposures – Fixed Annuity • Exposure: minimum interest and BV cash-out guarantees • Objective: hedge economic exposures and constrain impact of interest rate change
Slide 26: Strong Risk Management – Universal Life
Sustainable Earnings Growth: Strong Risk Management – Universal Life • Minimum interest guarantees create exposure to sustained low interest rates • Book value cash-out guarantees create exposure to sharply rising interest rates • Current portfolio rate of 6% provides substantial margin over minimum
Slide 27: Disciplined Spread Management
Sustainable Earnings Growth: Disciplined Spread Management Fixed Annuity Spreads 1.97% 1.72% 1.63% 1.51% 1.53% 1.31% 1.30% 1.24% 1.19% 1.15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 27
Slide 28: Individual Life Earnings Reflect Higher New Business Strain in Q2'06
Sustainable Earnings Growth: Individual LifeEarnings Reflect Higher New Business Strain in Q2’06 (US$ millions) Individual Life Earnings 100 77 81 74 2003 2004 2005 LTM Q2'06 28
Slide 29: Proven Track Record in Group Insurance
Sustainable Earnings Growth: Proven Track Record in Group Insurance Group Life & Health Earnings (US$ millions) 41 40 35 31 30 27 17 R +19% 13 C AG 1999 2000 2001 2002 2003 2004 2005 LTM Q2'06 29
Slide 30: Solid Earnings Trend
Sustainable Earnings Growth: Solid Earnings Trend SLF U.S. Earnings 12.9% 12.8% 10.4% 7.3% 7.3% 409 425 300 238 218 2002 2003 2004 2005 LTM Q2'06 Earnings ROE 30
Slide 31: Executing U.S. Strategy
Executing U.S. Strategy • Diversified earnings and operating platform – Broad array of products – Multi-site service strategy • Broad and expanding distribution capabilities – NFP and M Financial – 83 experienced VA wholesalers – MGIS and Concordia distribution partnerships • Sustainable earnings gr
Slide 32: Questions & Answers
Questions & Answers Robert C. Salipante President, Sun Life Financial U.S. September 13, 2006
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