Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q4 2016 Earnings Presentation
34 slides from Sun Life Financial's earnings presentation, March 2017
Slide 1: Building Sustainable Shareholder Value Q4'16
BUILDING S U S TA I N A B L E SHAREHOLDER VA L U E Q4’16
Slide 2: Business Overview
fi BUSINESS OVERVIEW Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 3: Sun Life Financial in 2016
SUN LIFE FINANCIAL IN 2016 A $32 billion(1) leading, international financial services provider… operating through a balanced and diversified model… focused on creating shareholder value now and in the future 3 (1) Market capitalization (C$), as of December 31, 2016
Slide 4: The Sun Life Story: Ambitious and Achievable
THE SUN LIFE STORY: AMBITIOUS AND ACHIEVABLE We have four strong pillars that can each compete, win and grow in their respective 1 sectors and which leverage each other Bound together by a strong balance sheet and risk culture, including no direct U.S. 2 Variable Annuity or Long-Term Care Underpinne
Slide 5: Setting a Bold New Objective
SETTING A BOLD NEW OBJECTIVE Our ambition is to be ONE OF THE BEST insurance and asset management companies globally Each pillar viewed Disproportionate as one of the best Top Quartile Share of Top Top Quartile TSR in its markets Client Experience Talent 5
Slide 6: Client for Life: This Will Feel Different
CLIENT FOR LIFE: A STEP From: To: Customers Clients Product sale Advice and solutions One-time interaction A lifetime relationship Reactive Proactive: Sun Life has my back Insurance jargon Language that people understand Complex paper driven processes Simplified digital proce
Slide 7: Ambition to Be One of the Best Insurance and Asset Management Companies
AMBITION TO BE “ONE OF THE BEST” INSURANCE AND ASSET MANAGEMENT COMPANIES IN THE WORLD A growth strategy focused on high ROE and strong capital generation through leading positions in attractive markets globally A Leader in Insurance Digital Data & A Leader in U.S. Group and Wealth Solutions Analyti
Slide 8: Key Drivers Support Medium-Term EPS Objectives
KEY DRIVERS SUPPORT MEDIUM-TERM EPS OBJECTIVES 1%-2% 8%-10% 2%-3% 5% Organic Growth & Margin Improvement Recently Acquired Medium-Term Objective1 Existing Initiatives Businesses Additional opportunities through effective capital deployment 1 The objectives are forward-looking non-IFRS financial meas
Slide 9: Delivering Value to Shareholders
DELIVERING VALUE TO SHAREHOLDERS TOTAL SHAREHOLDER RETURN NET INCOME1 FIVE YEARS AS OF (C$ MILLIONS) DECEMBER 31, 2016 (ANNUALIZED RETURN) 2,487 2,335 Sun Life 2,253 2,305 1,943 1,920 1,816 Canadian Lifecos 1,581 1,479 1,271 U.S. Lifecos Canadian Banks S & P 500 TSX 2012 2013 2014 2015 2016 Operatin
Slide 10: Balanced and Diversified Business
BALANCED AND DIVERSIFIED BUSINESS BUSINESS GEOGRAPHIC DIVERSIFICATION DIVERSIFICATION 2016 UNDERLYING NET INCOME 2016 UNDERLYING NET INCOME RUN-OFF 13% SLF UK ASSET 7% MANAGEMENT 28% SLF US SLF 18% CANADA GROUP 35% INSURANCE 18% SLF ASIA WEALTH 12% 10% INDIVIDUAL INSURANCE SLF ASSET 31% MANAGEMENT 2
Slide 11: Business Group Performance
BUSINESS GROUP PERFORMANCE UNDERLYING NET INCOME OPERATING NET INCOME (C$ MILLIONS) (C$ MILLIONS) 269 390 243 183 188 158 200 188 183 163 87 121 62 73 52 59 SLF Canada SLF U.S. SLF Asset SLF Asia SLF Canada SLF U.S. SLF Asset SLF Asia Management Management Q4 15 Q4 16 Q4 15 Q4 16 Underlying net inco
Slide 12: SLF Canada: Growing Earnings Power
SLF CANADA: GROWING EARNINGS POWER Q4’16 HIGHLIGHTS ASSETS UNDER UNDERLYING NET Strong sales in Individual Insurance and Wealth MANAGEMENT INCOME and Group Retirement Services (GRS) driving (C$MILLIONS) (C$MILLIONS) new business gains Continued investment in Individual Wealth 2016 HIGHLIGHTS E
Slide 13: SLF Canada: New Engines Accelerating Growth
SLF CANADA: NEW ENGINES ACCELERATING GROWTH AND ALREADY SEEING THE RESULTS Client Solutions Sun Life Global Defined Benefit Investments Sun GIF Brighter Way Digital Health Solutions Building retail wealth (Segregated Digital initiatives Solutions Centralized distribution Funds) ope
Slide 14: SLF Asset Management: Premier Global Asset Management Operations
SLF ASSET MANAGEMENT: PREMIER GLOBAL ASSET MANAGEMENT OPERATIONS Q4’16 HIGHLIGHTS MFS earnings were higher, driven by an increase in ASSETS UNDERLYING average net assets partially offset by the impact of UNDER MANAGEMENT foreign exchange NET INCOME (C$BILLIONS) (C$MILLIONS) Net outflows of US$(9
Slide 15: SLF Asset Management: MFS' Path to Net Inflows
SLF ASSET MANAGEMENT: MFS’ PATH TO NET INFLOWS 2 Year View on Net Flows Gross Sales Redemptions* Net Flows 2016 2015 Inc/(Dec) 2016 2015 (Inc)/De 2016 2015 Inc/(Dec) U.S. retail remains (US$ billions) c relatively strong U.S. Retail 46.8 40.8 6.0 (45.1) (38.8) (6.3) 1.7 2.1 (0.4) while the improveme
Slide 16: SLF Asset Management: Sun Life Investment Management Well Positioned for Growth
SLF ASSET MANAGEMENT: SUNLIFE INVESTMENT MANAGEMENT WELL POSITIONED FOR GROWTH Ta r g e t $100 billion of AUM and 20+% operating margin by 2020 • Institutional demand for liability-driven investing, alternative fixed income and real estate is strong and growing • Sun Life Investment Management is we
Slide 17: SLF U.S.: Strong Contribution to Future Earnings
SLF U.S.: STRONG CONTRIBUTION TO FUTURE EARNINGS Q4’16 HIGHLIGHTS SLF U.S. UNDERLYING NET INCOME Favourable investing activity and credit experience (US$MILLIONS) Unfavourable morbidity experience in Group and mortality experience in In-force Management 2016 HIGHLIGHTS Integration of U.S. empl
Slide 18: SLF U.S.: Broad Product Portfolio in Group Benefits
SLF U.S.: UNIQUELY BROAD PRODUCT PORTFOLIO AND CAPABILITES IN GROUP BENEFITS Cross Selling ~ One-Stop Shopping ~ Increased Visibility DENTAL VOLUNTARY/ STOP-LOSS DISABILITY LIFE & VISION WORK SITE Extensive market Total absence Client centric #2 largest dental Extensive array of data and largest man
Slide 19: SLF Asia: Growing Our Asia Business
SLF ASIA: GROWING OUR ASIA BUSINESS UNDERLYING NET INDIVIDUAL LIFE Q4’16 HIGHLIGHTS AND HEALTH INCOME (C$MILLIONS) INSURANCE SALES1 Business growth across the region (C$MILLIONS) Higher levels of investment in projects and initiatives 2016 HIGHLIGHTS Individual insurance and wealth sales incre
Slide 20: SLF Asia Market Presence
SLF ASIA MARKET PRESENCE Wholly owned Third Hong Kong Party Pensions Since 1892 Administrator (TPA) Since 2002 730 employees Ranked #1 in TPA3 Partnership with the China 1,900 advisors Everbright Group Insurance Asset Management Company established in 2012 2,250 employees 2,500 a
Slide 21: Capital Management
fi CAPITAL MANAGEMENT Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 22: Strong Capital Generation with Balanced Approach to Deployment
STRONG CAPITAL GENERATION WITH BALANCED APPROACH TO DEPLOYMENT EXPECTED ANNUAL CAPITAL FINANCIAL STRENGTH CAPITAL GENERATION DEPLOYMENT RATING (2014 -2016) (C$ billions) Sun Life Assurance Company 2.7 2016 2.5 of Canada SLF US AA-(2) SLF 2.0 Standard & Poor’s Canada Moody’s Aa3 A.M. Best A+ SLF UK S
Slide 23: Strong Capital Adequacy and Flexible Balance Sheet
STRONG CAPITAL ADEQUACY AND FLEXIBLE BALANCE SHEET M C C S R R A T I O S (1) HOLDING COMPANY L E V E R A G E R A T I O (1) C A S H (1) (C$ millions) 1,827 250% 250% 243% 240% 226% 990 217% 816 24% 23% 22% 2014 2015 2016 2014 2015 2016 2014 2015 2016 Minimum Cash Target Target Leverage Ratio Upper Ra
Slide 24: Capital Model
CAPITAL MODEL MCCSR 243%(1) $0.8 billion cash at Leverage 23%(1) Holding Company(1) SLF Leverage Capacity SLF - External Capital Securities(1) Outstanding First Call to 25/30%: ~$0.7/$2.6B(1) Subordinated Debt Coupon Balance Date SLF T2B (Series 2007-1) 5.40% $398 29-May-37 SLF T2B (Series 2008-1) 5
Slide 25: Operating and Financial Leverage
OPERATING AND FINANCIAL LEVERAGE Operating Leverage Debt (C$ millions) Q4 2016(1) Debt supporting reserve financing Operating Senior Debt 599 Leverage Bilateral Senior Financing(2) 2,034 Total Operating Leverage Debt $2,633 Capital (C$ millions) Q4 2016(1) Tier 2 Subordinated Debt $3,037 SLEECS (Inn
Slide 26: Asset Portfolio
fi ASSET PORTFOLIO Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 27: High Quality, Well Diversified Investment Portfolio
HIGH QUALITY, WELL DIVERSIFIED INVESTMENT PORTFOLIO DEBT SECURITIES BY COMPETITIVE INVESTED ASSETS RATING Policy ADVANTAGES Cash and BB and Loans and Leading non-public Cash Real Other Equivalents Lower Estate 6% 6% 2% AAA 5% Equities 18% portfolio with significant 4% BBB 28% origination capabilit
Slide 28: Appendix
APPENDIX Life Financial SUN LIFE FINANCIAL INC. Life's brighter under the sun
Slide 29: Sustainable, Healthier Communities for Life
SUSTAINABLE, HEALTHIER COMMUNITIES FOR LIFE 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 Corporations in the World, as sele
Slide 30: Advancing Sustainability in Four Key Areas
ADVANCING SUSTAINABILITY IN FOUR KEY AREAS 30
Slide 31: Forward-looking statements
Forward-looking statements Certain statements in this Presentation prepared for Investors include material from Sun Life Financial Earning Conference Call held on February 16, 2017 and the Sun Life Financial Investor Day 2017 held on March 9, 2017 (collectively, the y represent “Investor Presentatio
Slide 32: Forward-Looking Statements; Reconciliation of Net Income Measures
Forward-Looking Statements Certain statements made in the Investor Day Presentations are forward-looking and include, but are not limited to statements relating to our growth strategies and initiatives, medium-term financial objectives, strategic goals, productivity and expense initiatives and other
Slide 33: Use of Non-IFRS Financial Measures
In this Investor 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 me
Slide 34: Material Assumptions and Risk Factors
Material Assumptions and Risk Factors The Company’s medium-term financial objectives are forward looking non-IFRS financial measures and do not constitute guidance. Our ability to achieve those objectives is dependent on the Company’s success in achieving the growth initiatives, business objectives