Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2022 Earnings Presentation
26 slides from Sun Life Financial's earnings presentation, Aug 4, 2022
Slide 1: Q2 2022 Financial & Operating Results
Q2 2022 Financial & Operating Results For the period ended June 30, 2022 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-looking statements and 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”. Forward-looking statements Certain statements in this presentation and certain oral state
Slide 3: Kevin Strain, President and Chief Executive Officer
Kevin Strain President and Chief Executive Officer S U N L I F E • Q 2 2 0 2 2 3
Slide 4: Second quarter financial highlights
Second quarter financial highlights Executing on our ambition to be one of the best asset management and insurance companies globally Financial Earnings Growth Financial Growth Strength Strength Diversified Business Mix 3 Reported net income SLF Inc. LICAT ratio2 $785M (13)% 128% (19) pp 18% Underly
Slide 5: Progress on our Client Impact strategy
Our Purpose: Help Clients achieve Progress on our Client Impact strategy lifetime financial security and live Generated strong sales growth across our global markets, reflecting our focus on meeting healthier lives our Clients’ needs Launched the first Shariah-compliant, investment-linked Takaful ES
Slide 6: Digital Leadership
Digital Leadership Thinking and acting like a digital company DIGITAL EXPERIENCES Amazing Client, employee, advisor, and partner experiences DIGITAL CAPABILITIES Enable our experiences and improve our digital maturity DIGITAL WAYS OF WORKING Empowering our people to support our digital journey Stron
Slide 7: Dan Fishbein, President, Sun Life U.S.
Dan Fishbein President, Sun Life U.S. S U N L I F E • Q 2 2 0 2 2 7
Slide 8: DentaQuest acquisition closed on June 1, 2022
DentaQuest acquisition closed on June 1, 2022 Financially and strategically attractive transaction • Sun Life is now the second-largest dental benefits provider by membership, serving more than 50 million Americans across all our benefits products Sun Life U.S. Operating Model • Advances Sun Life’s
Slide 9: Manjit Singh, Executive Vice President & Chief Financial Officer
Manjit Singh Executive Vice President & Chief Financial Officer S U N L I F E • Q 2 2 0 2 2 9
Slide 10: Q2 2022 results
Q2 2022 results PROFITABILITY Q2’22 Q2’21 Change Results Highlights Reported net income ($ millions) 785 900 (13)% Results reflect strength of diversified business mix Underlying net income ($ millions)1 892 883 +1% • Solid insurance business growth Reported EPS ($)2 1.34 1.53 (12)% • Moderating COV
Slide 11: Second quarter business group performance
Second quarter business group performance Reported net income ($ millions) Underlying net income1 ($ millions) Impact of currency translation increased reported net income by $16M1 Impact of currency translation increased underlying net income by $12M1 +34% (60)% +36% (8)% (13)% +19% (7)% (3)% Const
Slide 12: MFS: A global leader in public asset management
MFS: A global leader in public asset management Business Group Results Quarterly Highlights (US$) • Underlying net income down 17% y/y driven by lower average net PROFITABILITY (US$ millions) Q2’22 Q2’21 Change assets, largely due to declines in global equity markets Reported net income 228 191 +19%
Slide 13: SLC Management: Growing a premier alternatives platform
SLC Management: Growing a premier alternatives platform Business Group Results Quarterly Highlights • Fee-related earnings (FRE) up 13% y/y, reflecting strong capital raising PROFITABILITY ($ millions) Q2’22 Q2’21 Change and growth in fee-earning AUM Fee-related earnings1 52 46 +13% • FRE margin dow
Slide 14: Canada: A leader in insurance and asset management
Canada: A leader in insurance and asset management Business Group Results Quarterly Highlights • Underlying net income growth of 19% y/y driven by business growth PROFITABILITY ($ millions) Q2’22 Q2’21 Change and favourable experience Reported net income 160 404 (60)% • Insurance earnings reflect bu
Slide 15: U.S.: A leader in health & benefits
U.S.: A leader in health & benefits Business Group Results Quarterly Highlights (US$) • Underlying net income of $121 million reflects moderating COVID PROFITABILITY (US$ millions) Q2’22 Q2’21 Change impacts and one month contribution from DentaQuest Reported net income 167 127 +31% • Reported net i
Slide 16: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Business Group Results Quarterly Highlights (constant currency1) • Underlying net income down 2% y/y PROFITABILITY ($ millions) Q2’22 Q2’21 Change CC1 • In Hong Kong, COVID-related restrictions drove lower sales and Reported net income 131 143
Slide 17: Appendix
SUN LIFE & ‘Appendix Q2 2022 17
Slide 18: Sources of earnings
Sources of earnings Sources of earnings (SOE)1 Reported Underlying Common shareholders SOE highlights $ millions, pre-tax Q2’22 Q2’21 Q2’22 Q2’21 Expected profit on in-force business excluding Asset Mgmt. 547 529 547 529 • Expected profit up 5% in constant currency5, driven by business growth, parti
Slide 19: SOE experience gains/(losses) - details
SOE1 experience gains/ (losses) - details Q2’22 Q2’21 Q2’22 Q2’21 $ millions Pre-tax Pre-tax Post-tax Post-tax Net equity market impact2 (212) 136 (160) 99 Net interest rate impact2 16 (80) (69) (36) Impact of changes in the fair value of investment properties2 44 22 43 22 Market-related Impacts2 (1
Slide 20: Reconciliation of underlying net income
Reconciliation of underlying net income Q2’22 Q2’22 $ millions Pre-tax Post-tax Reported net income 785 Net equity market impact (including basis risk impact of $10 million)1 (211) (159) Net interest rate impact (including credit spread impact of $20 million and swap spread impact of $5 16 (68) mill
Slide 21: Market movements and impacts in the quarter
Market movements and impacts in the quarter Change in Interest Rates 5 Market Movements Q2’22 Q2’21 Equity Market Impacts Q2’22 Q2’21 ($millions, post-tax) S&P/ TSX (13.8)% +7.8% Equity market movement and volatility (169) 95 S&P 500 (16.4)% +8.2% Basis risk 10 4 CA 10 - year +82 bps (17) bps Total
Slide 22: Operating expenses
Operating expenses Increase driven by investments and the impact of acquisitions, offset by lower fair value adjustments and productivity ($ millions) Net increases in controllable expenses and contractual volumes 2,036 2,061 driven by: • Insurance business growth and continued investment in strateg
Slide 23: 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 24: Risk Factors
Risk Factors Important risk factors that could cause our assumptions and estimates, and expectations and projections to be inaccurate and our actual results or events to differ materially from those expressed in or implied by the forward-looking statements contained in this document, are set out bel
Slide 25: Footnotes continued
Footnotes continued From slide 13 2 Total AUM including the General Account was $335 billion. 3 See “Forward-looking Statements” and “Risk Factors” on slides 23 and 24. 4 Awarded by the U.S. Environmental Protection Agency and the U.S. Department of Energy. From slide 14 2 Wealth & Insurance Underly
Slide 26: Footnotes continued
Footnotes continued From slide 16 1 Percentage change is reported on a constant currency basis, which excludes the impacts of foreign exchange translation. Refer to the Non-IFRS Financial Measures section in the appendix to these slides and in our Q2 2022 MD&A. 2 Represents a non-IFRS financial meas