Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Presentation (February 2020)
32 slides from Sun Life Financial's investor presentation, February 2020
Slide 1: Q4 2019 Building Sustainable Shareholder Value
2019 Building Sustainable Q4 Shareholder Value
Slide 2: Business Overview, Capital Management, Asset Portfolio, Sustainability
1 2 3 4 BUSINESS CAPITAL ASSET OVERVIEW SUSTAINABILITY MANAGEMENT PORTFOLIO Q4 2019 | Sun Life | 2
Slide 3: The World of Sun Life
THE WORLD OF SUN LIFE A $34.8 billion 1 leading international financial services organization… operating through a balanced and diversified model… focused on creating shareholder value now and in the future Q4 2019 | Sun Life 1 Market capitalization (C$), as at December 31, 2019 | 3
Slide 4: The Sun Life Story
THE SUN LIFE STORY A diversified business model, with four strong pillars that can each compete, win and grow in their respective sectors and which leverage each other Bound together by a strong balance sheet and risk culture, including no U.S. Variable Annuity or Long-Term Care Digital transformati
Slide 5: Executing on our ambition to be one of the best insurance and asset management companies
EXECUTING ON OUR AMBITION TO BE ONE OF THE BEST INSURANCE AND ASSET MANAGEMENT COMPANIES GLOBALLY Each pillar Top Disproportionate Top quartile total viewed quartile Client share of top shareholder as a leader experience talent return Q4 2019 | Sun Life | 5
Slide 6: A growth strategy focused on high ROE and strong capital generation
A GROWTH STRATEGY FOCUSED ON HIGH ROE AND STRONG CAPITAL GENERATION THROUGH LEADING POSITIONS IN ATTRACTIVE MARKETS GLOBA LLY A Leader in Insurance and A Leader in U.S. Wealth Solutions in our CAN US Group Benefits Canadian Home Market A Leader in Asia through A Leader in Global Asset AM ASIA Distri
Slide 7: Digital transformation deeply embedded throughout the organization
DIGITAL TRANSFORMATION DEEPLY EMBEDDED THROUGHOUT THE ORGANIZATION Digitizing current Asia point of sale tools (needs, illustration, application, fulfillment) interactions and Web and mobile functionality in Canada and Asia processes U.S. dental provider access Use digital to be Predictive m
Slide 8: Well-positioned to leverage global trends
WELL-POSITIONED TO LEVERAGE GLOBAL TRENDS Demographic Digital Shifts Transformation Changing population Digital, data and including the aging analytics changing of Baby Boomers Client behaviours and and growth of expectations Millennials Downloading of Growing Responsibility Prosperity in Asia Incre
Slide 9: Delivering value to shareholders
DELIVERING VALUE TO SHAREHOLDERS NET INCOME1 TOTAL SHAREHOLDER RETURN3 ($ millions) FIVE YEARS AS OF DECEMBER 31, 2019 (Annualized) CAGR2 9% 2,947 3,057 SLF Inc. 2,546 2,618 2,485 2,522 2,335 Canadian Lifecos 2,149 Global Lifecos TSX U.S. Lifecos 2016 2017 2018 2019 4% 5% 6% 7% 8% 9% 10% 11% 12% Rep
Slide 10: Balanced and diversified business
BALANCED AND DIVERSIFIED BUSINESS BUSINESS DIVERSIFICATION GEOGRAPHIC DIVERSIFICATION 2019 UNDERLYING NET INCOME1,2 2019 UNDERLYING NET INCOME1,2 Run-off UK 11% 5% Asset U.S. Management 16% Canada 31% 31% Group Insurance 19% Asia 17% Wealth Individual 15% Asset Insurance Management 24% 31% 143% LICA
Slide 11: Business group performance
BUSINESS GROUP PERFORMANCE REPORTED NET INCOME UNDERLYING NET INCOME1 ($ millions) ($ millions) Impact of currency increased reported net income by $2M Impact of currency increased underlying net income by $2M in the fourth quarter of 2019 in the fourth quarter of 2019 281 275 264 244 245 228 227 13
Slide 12: Canada is a growth market for Sun Life
CANADA IS A GROWTH MARKET FOR SUN LIFE Q4’19 AND 2019 HIGHLIGHTS UNDERLYING NET ASSETS UNDER In Q4 2019, GRS grew sales 19% over prior MANAGEMENT1 year driven by strong Defined Benefit INCOME1 Solutions sales of $1.5 billion as we continue ($ millions) ($ millions) to shape the market by bringing
Slide 13: Sun Life is well-positioned to shape the industry in Canada
SUN LIFE IS WELL-POSITIONED TO SHAPE THE INDUSTRY AND CAPITALIZE ON OPPORTUNITIES IN CANADA Supporting Clients with Shaping the market through Innovation and Digital Capabilities holistic advice at moments that matter Digitally enabled Client touchpoints provide on demand services Investment in
Slide 14: Asset Management: expanding capabilities and delivering investment performance
ASSET MANAGEMENT: EXPANDING CAPABILITIES ACROSS OUR ASSET CLASSES AND DELIVERING EXCEPTIONAL INVESTMENT PERFORMANCE UNDERLYING NET INCOME1 Q4’19 and 2019 HIGHLIGHTS ($ millions ) Completed the BentallGreenOak acquisition, expanding the capabilities of SLC Management Entered into an agreement wit
Slide 15: MFS: diversification of assets under management
MFS: DIVERSIFICATION OF ASSETS UNDER MANAGEMENT 1 ASSET CLASS MIX INVESTOR TYPE (US$, as at December 31, 2019) (US$, as at December 31, 2019) Balanced Non-U.S. Retail 4% Fixed Income 6% 13% Non-U.S. Insurance Equity 11% 43% U.S. Retail 49% $527.4 $527.4 billion billion U.S. Equity Institutional 40%
Slide 16: Evolution of SLC Management
EVOLUTION OF SLC MANAGEMENT Accelerate growth Accelerate growth Develop capabilities under a cohesive Develop capabilities, operating model launch new products and position for and maintain strong future acquisitions Strategy performance Leverages Sun Life’s experience in LDI strategies and alternat
Slide 17: Extending our reach in U.S. Group Benefits
EXTENDING OUR REACH AND DEEPENING CLIENT RELATIONSHIPS IN U.S. GROUP BENEFITS Q4’19 and 2019 HIGHLIGHTS UNDERLYING NET AFTER-TAX PROFIT MARGIN FOR INCOME1 Completed the integration of the U.S. U . S . G R O U P B E N E F I T S 1,2 (US$ millions) employee benefits business acquired in 2016 (reachin
Slide 18: Growing through U.S. market opportunities
GROWING THROUGH U.S. MARKET OPPORTUNITIES U.S. Employee Benefits U.S. Stop-Loss Market Market Opportunity Opportunity Employees responsible for 61%4 of U.S. employees are more health and benefits covered by a self-insured plan costs but lack education with a trend of smaller employers and experience
Slide 19: Well-positioned in Asia's largest and fastest growing markets
WELL-POSITIONED IN ASIA’S LARGEST AND FASTEST GROWING MARKETS Q4’19 and 2019 HIGHLIGHTS UNDERLYING NET INCOME1 ($ millions) Signed a 15-year bancassurance partnership with Tien Phong Commercial Bank, a digital leader in Vietnamese banking, and signed an expanded distribution agreement in Indonesia
Slide 20: Capturing growth opportunities in Asia
CAPTURING GROWTH OPPORTUNITIES IN ASIA 17% Total Company Underlying Net #1 ranked insurance3 company for 8 2nd largest MPF based on Income1 from Asia PHILIPPINES years in a row HONG KONG net inflows, #4 based on in 20192 2nd largest mutual fund4 provider based AUM1,8 on AUM1 Top 10 in agency
Slide 21: Capital Management
1 2 3 4 BUSINESS CAPITAL ASSET OVERVIEW SUSTAINABILITY MANAGEMENT PORTFOLIO Q4 2019 | Sun Life | 21
Slide 22: Capital generation provides good capital flexibility
CAPITAL GENERATION PROVIDES GOOD CAPITAL FLEXIBILITY Funding Organic Growth Target Dividend Payout M&A Opportunities Share Buybacks ratio of 40-50%1 and Strategic Investments Strong Capital Generation Capital Flexibility Capital deployment priorities unchanged Target minimum cash at the holding
Slide 23: Strong capital position with significant deployment potential
STRONG CAPITAL POSITION WITH SIGNIFICANT DEPLOYMENT POTENTIAL 1 CAPITAL DEPLOYMENT POTENTIAL ($ billions) 2 Cash DEPLOYMENT DESCRIPTION/CONSIDERATIONS $1.8 OPPORTUNITIES Making further investments in building out new Organic Investments business models and advancing our leading digital Leverage $5.3
Slide 24: Financial flexibility under capital model
FINANCIAL FLEXIBILITY UNDER CAPITAL MODEL SLF - External Capital Securities Outstanding First Call Subordinated Debt SLF T2B (Series 2007-1) Coupon 5.40% Balance $398 29-May-37 Date SLF - External Capital Securities SLF T2B (Series 2015-1) 2.60% $500 25-Sep-20 Outstanding First Call SLF T2B (Series
Slide 25: Strong operating and financial leverage
STRONG OPERATING AND FINANCIAL LEVERAGE Operating Leverage Debt (C$ millions) Q4 2019 Debt supporting reserve financing Operating Senior Debt 300 Leverage Bilateral Senior Financing1 1,967 Total Operating Leverage Debt 2,267 Capital (C$ millions) Q4 2019 Tier 2 Subordinated Debt 3,538 SLEECS (Innova
Slide 26: LICAT capital framework
LICAT CAPITAL FRAMEWORK TOTAL RATIO Available Capital + Surplus Allowance + Eligible Deposits Base Solvency Buffer TOTAL RATIO (SLF Inc.) = 143% AVAILABLE CAPITAL SURPLUS ALLOWANCE BASE SOLVENCY + ELIGIBLE DEPOSITS BUFFER Similar to MCCSR Sum of aggregate capital Essentially the provisions for
Slide 27: Asset Portfolio
1 2 3 4 BUSINESS CAPITAL ASSET OVERVIEW SUSTAINABILITY MANAGEMENT PORTFOLIO Q4 2019 | Sun Life | 27
Slide 28: High quality, well-diversified investment portfolio
HIGH QUALITY, WELL-DIVERSIFIED INVESTMENT PORTFOLIO INVESTMENT PROFILE DEBT SECURITIES BY CREDIT RATING (as at December 31, 2019) (as at December 31, 2019) Leading non-public portfolio with Investment Equity significant origination capabilities Properties BB and lower Cash and Cash 5% Securities 3
Slide 29: Sustainability
1 2 3 4 BUSINESS CAPITAL ASSET OVERVIEW SUSTAINABILITY MANAGEMENT PORTFOLIO Q4 2019 | Sun Life | 29
Slide 30: Strong commitment to sustainability
STRONG COMMITMENT TO SUSTAINABILITY Awards & Recognition Sustainable Financial Healthier INVESTING SECURITY LIVES $19.3B $360M $31M invested in sustainable of in-plan deposits driven committed to real estate and by 18.6M digital nudges diabetes globally infrastructure from Ella since 2012 First life
Slide 31: 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”. Sun Life Assurance Company of Canada is referred to as “SLA”. Use of Non-IFRS Financial M
Slide 32: Forward-Looking Statements
Forward-Looking Statements From time to time, the Company makes written or oral forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities l
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