Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2018 Earnings Presentation
18 slides from Sun Life Financial's earnings presentation, May 9, 2018
Slide 1: Q1'18 Financial & Operating Results
Q1’18 F I N A N C I A L & O P E R AT I N G R E S U LT S For the period ended March 31, 2018 Sun Life Financial Inc. (unaudited) Life’s brighter under the sun
Slide 2: Forward-looking statements
Forward-looking statements Certain statements in this presentation and certain oral statements made during the earnings conference call on May 9, 2018 (collectively, this “presentation”), including, but not limited to, statements that are not historical facts, are forward-looking and are subject to
Slide 3: Dean Connor, President and Chief Executive Officer
DEAN CONNOR President and Chief Executive Officer Life’s brighter under the sun 3
Slide 4: Strong progress across all four pillars
Q1 STRONG PROGRESS ACROSS ALL FOUR PILLARS DOING MORE FOR FINANCIAL HIGHLIGHTS KEY ACCOMPLISHMENTS CLIENTS Q1’18 reported net income of $669 VNB up 33% over the prior year on strong Increased digital enablement capabilities for million, up from Q1’17; underlying net sales and improved mix Grou
Slide 5: Kevin Strain, EVP & Chief Financial Officer
KEVIN STRAIN Executive Vice President & Chief Financial Officer Life’s brighter under the sun 5
Slide 6: Q1'18 Results
Q1 Q1’18 RESULTS C$ millions (except EPS and ROE) Q1’18 Q4’17 Q1’17 Reported net income 669 207 551 Underlying net income(1) 770 641 573 Diluted reported EPS (C$) 1.09 0.34 0.89 Diluted underlying EPS(1) (C$) 1.26 1.05 0.93 Reported ROE 13.1% 4.1% 11.0% Underlying ROE(1) 15.1% 12.7% 11.5% Assets u
Slide 7: Q1'18 Business Group Performance
Q1 Q1’18 BUSINESS GROUP PERFORMANCE REPORTED NET INCOME (C$ millions) Impact of currency reduced reported net income by $19M Growth in fee income and the contribution from the interest on par seed capital, partially offset by mortality and morbidity experience Lower reported income from equity m
Slide 8: Sources of Earnings View
Q1 SOURCES OF EARNINGS VIEW Sources of earnings Common shareholders Q1’18 Q1’17 Expected profit: business growth across all pillars, C$ millions particularly in SLF Asset Management and SLF Asia. Expected profit on in-force business 734 651 New business strain: reflects improvements in SLF Impact of
Slide 9: Improved Capital and Cash Position under LICAT
Q1 IMPROVED CAPITAL AND CASH POSITION UNDER LICAT TOTAL RATIO Available Capital + Surplus Allowance Base Solvency Buffer LICAT Ratio Holdco Cash LICAT Ratio Sun Life Financial Sun Life Financial Sun Life Assurance 149% 139% Q1 ($ billions) 2018 $(1.2) Q1’18 Pro-forma LICAT Ratio: 132% Holdco cash (S
Slide 10: Lower Capital Requirements at Supervisory Target
Q1 LOWER CAPITAL REQUIREMENTS AT SUPERVISORY TARGET Frees up $1.2 billion in cash to Sun Life Financial (holdco) MCCSR LICAT Q4 2017 Q1 2018 ($ billions) ($ billions) Sun Life Assurance Company of Canada $25.4 ($ billions) MCCSR LICAT MCCSR/LICAT Q4 2017 Q1 2018 7.1 Available Capital(1) $16.0 $25.4
Slide 11: Interest Rate & Equity Market Sensitivities
Q1 INTEREST RATE & EQUITY MARKET SENSITIVITIES Sun Life Assurance Company of Canada Potential Impact on Market Sensitivities(1) LICAT Ratio Q1 2018 Equity Markets 10% increase 0.5 points 10% decrease (0.5) points Interest Rates 50 basis point increase (4) points 50 basis point decrease 3 points 1 po
Slide 12: Sales Results by Business Group
Q1 SALES RESULTS BY BUSINESS GROUP INSURANCE SALES BY BUSINESS WEALTH SALES BY BUSINESS $665M $39.8B -14% +6% YoY YoY SLF Canada SLF U.S. SLF Asia SLF Canada SLF Asset Management SLF Asia SLF Asia sales up 32% on a constant currency basis, SLF Asia individual sales up 18% on a constant supported
Slide 13: Appendix
APPENDIX Life’s brighter under the sun 13
Slide 14: Operating Expenses
Q1 OPERATING EXPENSES Figures are in C$ millions 28 51 2 11 1 1,618 1,598 45 Q1 2017 Actual Controllable Fair Value Contractual Impact of Other Currency Q1 2018 Actual Expenses Adjustments Volumes Acquisitions Increase in controllable expenses reflects investments in growth partially funded throug
Slide 15: Reconciliation of Underlying Income
Q1 RECONCILIATION OF UNDERLYING INCOME Q1’18 Q1’18 C$ millions Pre-tax After-tax Reported net income 669 Net equity market impact (including basis risk impact of $(10) million)(1) (63) (45) Net interest impact (including credit spread impact of $ 17 million and swap spread (12) (27) impact of $(17)
Slide 16: Other Notable Items
Q1 OTHER NOTABLE ITEMS Impact of other items on our net income Q1’18 Q1’18 C$ millions Pre-tax After-tax Experience related items Impact of investment activity on insurance contract liabilities 56 48 Mortality (21) (16) Morbidity 13 12 Credit 25 21 Lapse and other policyholder behaviour (34) (29) Ex
Slide 17: Reconciliation of Net Income Measures
In this presentation, Sun Life Financial Inc. and its subsidiaries, joint ventures and associates are referred to as “we”, “us”, “our” and the “Company”. Use of Non-IFRS Financial Measures We report certain financial information using non-IFRS financial measures, as we believe that these measure pro
Slide 18: 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