Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q2 2016 Earnings Presentation
34 slides from Sun Life Financial's earnings presentation, August 2016
Slide 1: Building Sustainable Shareholder Value
Q2’16 BUILDING SUSTAINABLE SHAREHOLDER VALUE Life’s brighter under the sun
Slide 2: Business Overview
BUSINESS OVERVIEW Life’s brighter under the sun
Slide 3: Sun Life Financial in 2016
SUN LIFE FINANCIAL Q2 SUN LIFE FINANCIAL IN 2016 2016 A $26 billion(1) leading, international financial services provider… operating through a balanced and diversified model… focused on creating shareholder value now and in the future Click to edit Master title style 3 (1) Market capitalization (C$)
Slide 4: Sun Life at a Glance: Four Pillars
SUN LIFE FINANCIAL Q2 SUN LIFE AT A GLANCE 2016 Lifetime Financial Security Click to edit Master •title style • Brand • Customer Insights • The Brighter Way—Lean Six Sigma LEVERAGE Digital and Data Analytics • Third Party Investment Sourcing • Risk and Capital Diversification • Distribution MANAGEME
Slide 5: Products & Markets Positioned for Growth
SUN LIFE FINANCIAL Q2 PRODUCTS & MARKETS POSITIONED FOR GROWTH 2016 LONG Click to edit MasterTERM title styleMACRO DRIVERS OF CONSUMER DEMAND RETIREMENT DOWNLOADING GROWTH of baby boomers of responsibility from of the middle class in the government & employers to emerging markets of Asia employees 5
Slide 6: New Medium-Term Objectives
SUN LIFE FINANCIAL Q2 NEW MEDIUM-TERM OBJECTIVES(1) 2016 Average Click to edit Master titleEPS stylegrowth: 8-10% per annum ROE objective: 12-14% Payout ratio(2): 40-50% (1) The objectives are forward-looking non-IFRS financial measures and are not earnings guidance. These objectives were provided o
Slide 7: Compared to Other North American Life Insurers
SUN LIFE FINANCIAL Q2 COMPARED TO OTHER NORTH AMERICAN LIFE INSURERS 2016 1. Leadership position in Canada, one of the best financial markets in the world Click to edit Master 2. First-rate title investment style management businesses – MFS and Sun Life Investment Management 3. Significant and growi
Slide 8: Total Shareholder Return
SUN LIFE FINANCIAL Q2 TOTAL SHAREHOLDER RETURN(1) 2016 SLF 174% Click to edit Master title style (1) Period December 31, 2011 (launch of the Four Pillar Strategy) to June 30, 2016 8
Slide 9: Balanced and Diversified Business Model
SUN LIFE FINANCIAL Q2 BALANCED AND DIVERSIFIED BUSINESS MODEL 2016 BY BUSINESS GROUP – UNDERLYING NET INCOME BY Q2 2016 Underlying Net Income BUSINESS TYPE (2) Click to edit Master title style $554 million(1) (C$ millions) 615 554 SLF Asia 15% SLF Canada 34% SLF Asset Management 26% SLF U.K. SLF U.S
Slide 10: Q2'16 Results
SUN LIFE FINANCIAL Q2 Q2’16 RESULTS 2016 C$ millions Q2’16 Q1’16 Q2’15 (except EPS and ROE) Reported net income 480 540 726 Click to edit Master title style Operating net income 474 531 731 Underlying net income 554 582 615 Diluted operating EPS (C$) 0.77 0.87 1.19 Diluted underlying EPS (C$) 0.90 0
Slide 11: Business Group Performance
SUN LIFE FINANCIAL Q2 BUSINESS GROUP PERFORMANCE 2016 UNDERLYING NET INCOME ACROSS SLF Canada BUSINESSES • Solid result against strong comparative in prior year (C$ MILLONS) Click to edit Master title style • Mortality, morbidity and policyholder experience largely in- line with expectations 250 SLF
Slide 12: SLF Canada: Growing Earnings Power
SLF CANADA Q2 GROWING EARNINGS POWER 2016 Q2’16 HIGHLIGHTS ASSETS UNDER UNDERLYING NET INCOME MANAGEMENT (C$MILLIONS) Individual insurance sales up 16% (C$MILLIONS) Group Benefits sales up 12% Group Benefits retained its top industry ranking for the seventh consecutive year(1) Individual wea
Slide 13: Increasing Market Presence in Canadian Mutual Fund Market
SLF CANADA Q2 INCREASING MARKET PRESENCE IN CANADIAN MUTUAL FUND MARKET 2016 Year over Year change in Net Sales(1) Industry SLGI 20,000 1400 103% 18,000 1200 16,000 15,486 14,000 958 1000 12,000 63% 800 C$ millions 10,000 C$ millions 600 8,000 473 6,000 5,595 400 4,000 200 2,000 0 0 Q2 15 Q2 16 Q2 1
Slide 14: Premier Global Asset Management Operations
SLF ASSET MANAGEMENT Q2 PREMIER GLOBAL ASSET MANAGEMENT OPERATIONS 2016 Q2’16 HIGHLIGHTS ASSETS UNDERLYING UNDER MANAGEMENT NET INCOME MFS recognized by Barron’s among the Best Mutual (C$BILLIONS) (C$MILLIONS) Fund Families Ranked #1 for 5-year performance Ranked #2 for 10-year performance M
Slide 15: MFS Blended Research – A Unique Source of Alpha
SLF ASSET MANAGEMENT Q2 MFS BLENDED RESEARCH – A UNIQUE SOURCE OF ALPHA 2016 Fundamental U.S. Core Equity median manager return (%) minus quantitative U.S. Core Equity median manager return (%) Blending two complementary research signals • Past performance is no guarantee of future results. • • Resu
Slide 16: SLF U.S.: Continuing the Evolution
SLF U.S. Q2 CONTINUING THE EVOLUTION 2016 Q2’16 HIGHLIGHTS SLF U.S. UNDERLYING NET INCOME Integration of U.S. employee benefits business (US$MILLIONS) progressing well Launched an expanded group benefits product portfolio under the Sun Life Financial brand through unified sales teams Growth in
Slide 17: Combination Results in Complete Portfolio of Group Businesses
SLF U.S. Q2 COMBINATION RESULTS IN COMPLETE PORTFOLIO OF GROUP BUSINESSES 2016 Group Dental Partnership Life & Disability & Vision Voluntary Stop Loss Business COMBINED BUSINESS: COMBINED BUSINESS: COMBINED BUSINESS: COMBINED BUSINESS: Disability RMS: • BIF: US$1.8 billion • BIF: US$0.6 billion • BI
Slide 18: SLF Asia: Growing Our Asia Business
SLF ASIA Q2 GROWING OUR ASIA BUSINESS 2016 UNDERLYING NET INCOME INDIVIDUAL LIFE AND Q2’16 HIGHLIGHTS (C$MILLIONS) HEALTH INSURANCE Individual insurance sales increased by SALES (1) (C$MILLIONS) 28%, driven by increased ownership levels and growth in most markets Continued investment in growth t
Slide 19: Markets of Growth
SLF ASIA Q2 MARKETS OF GROWTH 2016 (1) The joint venture received license to operate in January 2013. (2) Acquisition of the joint venture was completed in April 2013. • Since 2002 (3) TPA Ranking – The Gadbury Report of MPF Market Shares as of June 30, 2016 • Joint venture with the China Everbright
Slide 20: Capital Management
CAPITAL MANAGEMENT Life’s brighter under the sun
Slide 21: Strong Capital and Financial Position
SUN LIFE FINANCIAL Q2 STRONG CAPITAL AND FINANCIAL POSITION 2016 MCCSR RATIO – SUN LIFE • $0.8 billion cash level at Sun Life Financial Inc. as at ASSURANCE COMPANY OF June 30, 2016 Click to edit Master title style CANADA • $500 million minimum cash target Financial Strength Rating Sun Life Assuranc
Slide 22: Capital Model
SUN LIFE FINANCIAL Q2 CAPITAL MODEL 2016 $0.8 billion cash at Holding MCCSR of SLF - External Capital Securities SLF Company(1) 225% Subordinated Debt Coupon Outstanding Balance First Call Date Click to edit Master title style SLF T2B (Series 2007-1) 5.40% $398 29-May-37 SLF T2B (Series 2008-1) 5.59
Slide 23: Operating and Financial Leverage
SUN LIFE FINANCIAL Q2 OPERATING AND FINANCIAL LEVERAGE 2016 Operating Leverage Debt (C$ millions) Q2 2016 Debt supporting reserve financing Operating Click to edit Master titleSenior Leverage styleDebt 598 Bilateral Senior Financing(1) 2,097 Total Operating Leverage Debt $2,695 Capital (C$ millions)
Slide 24: Asset Portfolio
ASSET PORTFOLIO Life’s brighter under the sun
Slide 25: Assets Under Management
SUN LIFE FINANCIAL Q2 SUN LIFE ASSETS UNDER MANAGEMENT 2016 Click to edit Master title style 25
Slide 26: Quality Asset Portfolio – General Account
SUN LIFE FINANCIAL Q2 QUALITY ASSET PORTFOLIO – GENERAL ACCOUNT 2016 Q2’16 INVESTED ASSETS (C$141 billion) Investment portfolio is well diversified Equities by geography, asset class, industry Click to edit Master title style 4% Investment sector or issuer Properties 5% High quality asset base O
Slide 27: Energy Exposure
SUN LIFE FINANCIAL Q2 ENERGY EXPOSURE 2016 Debt Securities & Corporate Loan Highlights Carrying Value by Rating (as of June 30, 2016) Click to edit Master title style Total of $5.4 billion in energy debt securities and corporate loans, 4% of total invested assets. Credit BB and AAA AA A BBB Qualit
Slide 28: Appendix
APPENDIX Life’s brighter under the sun
Slide 29: Sustainable, Healthier Communities for Life
SUN LIFE FINANCIAL Q2 SUSTAINABLE, HEALTHIER COMMUNITIES FOR LIFE 2016 Sun Life has been named one of 12 Canadian companies Sun Life Financial is one of 2016 Global 100 Most In December 2014, Sun Life Assurance Company of and the only North American life insurer to be included in Sustainable Corpora
Slide 30: Advancing Sustainability in Four Key Areas
SUN LIFE FINANCIAL Q2 ADVANCING SUSTAINABILITY IN FOUR KEY AREAS 2016 Click to edit Master title style 30
Slide 31: Forward-looking statements and Non-IFRS Financial 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”. Forward-looking statements Certain statements in this presentation including, but not limited to, statements that are not historical facts, are fo
Slide 32: Reconciliation of Net Income 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 33: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation, including statements (i) relating to our growth strategies, (ii) statements concerning our medium-term financial objectives, (iii) statements relating to productivity and expense initiatives, growth initiatives and other business ob
Slide 34: Financial Objectives
Financial Objectives Our 2015 overall company financial objectives, as updated in 2013, were operating net income of $1.85 billion and operating ROE of 12%-13%. Our 2015 results exceeded our net income objective with operating net income of $2.25 billion, and we achieved our objective with an ROE of