Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2021 Earnings Presentation
38 slides from Sun Life Financial's earnings presentation, May 2021
Slide 1: Building Sustainable Shareholder Value
Q1 2021 Building Sustainable Shareholder Value
Slide 2: Business overview
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 2
Slide 3: A $37.2 billion leading global financial services organization
A $37.2 billion leading global financial services organization1 Offices in 27 markets* 140,900 Advisors* 42,100 Employees* Operating through a balanced and diversified model and focused on creating shareholder value now and in the future S U N L I F E • Q 1 2 0 2 1 *At the end of 2020. Includes Asia
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 markets and that leverage each other • Bound together by a strong balance sheet and risk culture, including no U.S. Variable Annuity or U.S. Long-Term Care • Building o
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 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 A Leader in Global AM ASIA through Distribution Asset Management Excellence
Slide 6: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5-year total shareholder return 1 Progress on medium-term objectives March 31, 2021 12.8% Medium-term objective Q1 2021 Sun Life 10.0% Underlying ROE2 TSX 12-14% 15.3% Global lifecos 9.7% Underlying EPS growth2 8-10% 11% Canadian lifecos 10.6% Dividend p
Slide 7: Digital transformation deeply embedded throughout the organization
Digital transformation deeply embedded throughout the organization Building new digital models and a partnership ecosystem • Asia digital sales channels, including affordable products through online marketplace Lazada • Lumino Health and Sun Life GO in Canada • New turnkey Absence capabilities throu
Slide 8: Balanced and diversified business
Balanced and diversified business Business type diversification Business Group diversification Q1 2021 underlying net income 1,2 Q1 2021 underlying net income 1,2 Run-off UK 13% 6% Asset Asia Management Asset 16% 30% Management Wealth 30% 16% U.S. Individual 18% Insurance Canada Group 23% 30% Insura
Slide 9: Leveraging global trends
Leveraging global trends • Demographic shifts: Changing population including the aging of Baby Boomers and growth in wealth/financial needs of Millennials • Digital transformation: Digital, data and analytics changing Client behaviours and expectations • Growing prosperity in Asia: Growing demand fo
Slide 10: Business group results & highlights
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 10
Slide 11: Business group performance
Business group performance Reported net income ($ millions) Underlying net income 1 ($ millions) Impact of currency decreased reported net income by $33M Impact of currency decreased underlying net income by $31M 405 291 285 256 242 239 211 230 198 171 164 161 155 159 100 CORP CORP (42) CAN U.S. AM
Slide 12: Canada is a growth market for Sun Life
Canada is a growth market for Sun Life Q1’21 highlights Underlying net income 1 • Ella, our digital coach, proactively connected with Clients over 3.6 million ($ millions) times, driving an additional $294 million in wealth deposits, and $461 1,036 1,012 1,073 1,102 million in insurance coverage • L
Slide 13: Shaping the industry and capitalizing on opportunities in Canada
Shaping the industry and capitalizing on opportunities in Canada Executing with financial discipline, Making it easier for Clients to Shaping the market as a leader and putting Clients at the centre do business with us in our Canadian home market • Putting our Clients at the centre and creating • Cr
Slide 14: Deepening Client relationships in U.S. Group Benefits
Deepening Client relationships in U.S. Group Benefits Q1’21 highlights Underlying net income 2 • In April, we entered into an agreement to acquire Pinnacle Care (US$ millions) 425 440 International, Inc.1, a leading U.S. health care navigation and 396 399 medical intelligence provider Interest on •
Slide 15: Growing through U.S. market opportunities
Growing through U.S. market opportunities Employee benefits Stop-loss Employees responsible for more 67%4 of U.S. employees are covered by a health and benefits costs but lack self-insured plan with a trend of smaller relevant education and experience employers moving in this direction5 Growing life
Slide 16: Positioned in Asia's largest and fastest growing markets
Positioned in Asia’s largest and fastest growing markets Q1’21 highlights Underlying net income 1 ($ millions) 583 • Individual insurance sales1,2 up 27% in Local Markets 579 550 • Launched SunCanvas, an intuitive virtual solution for advisors, enabling 523 stronger engagement and easier planning, s
Slide 17: Capturing growth opportunities in Asia
Number of advisors Capturing growth opportunities in Asia +9% year-over-year Local Markets International Hubs Philippines China International • Ranked 1st in insurance • 8th in insurance among foreign • Leverages the high-net-worth sales1,2 JVs1,6 opportunities in Asia to offer Clients and distribut
Slide 18: Expanding asset management capabilities
Expanding asset management capabilities Underlying net income 1 Q1’21 highlights ($ millions) • Strong flows at SLC Management with fee-eligible inflows of 1,128 1,177 925 1,004 approximately $8.5 billion • On April 1, 2021, SLC Management announced that BentallGreenOak ("BGO") acquired Metropolitan
Slide 19: MFS: diversification of assets under management
MFS: diversification of assets under management 1 Asset class mix Investor type US$, as at March 31, 2021 US$, as at March 31, 2021 Non-U.S. Balanced Retail Fixed 4% 6% Insurance Income 10% 13% U.S. Equity 42% US$626 U.S. Retail 52% billion AUM1 Non-U.S. Institutional Equity 32% 41% S U N L I F E •
Slide 20: SLC Management: diversification of assets under management
SLC Management: diversification of assets under management1 Asset class mix Investor type $, as at March 31, 2021 $, as at March 31, 2021 Real Estate Cash and Endowment/ Debt Other foundation 4% 1% 2% Insurance Infrastructure companies 9% 24% Public Fixed $160 Income 35% Pension Private Fixed Funds
Slide 21: Capital management
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 21
Slide 22: Capital generation provides good capital flexibility
Capital generation provides good capital flexibility Capital deployment priorities: Funding organic Target dividend M&A opportunities growth payout ratio of and strategic Share buybacks2 40-50%1,3 investments Target minimum cash at the holding company of $500 million3 S U N L I F E • Q 1 2 0 2 1 1 R
Slide 23: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Capital metric LICAT 141% SLF Financial leverage ratio 22.7% Leverage capacity to 25%/30% ~$0.9B/$3.2B Cash and other liquid assets $2.3B SLA SLA - External Capital Securities Outstanding Balance, SM First Call Date Asset Management LICAT 124% Subor d
Slide 24: Strong capital position with significant deployment potential
Strong capital position with significant deployment potential 1 Capital deployment potential Deployment opportunities ($ billions, at March 31, 2021) Type Considerations Cash2 Additional $1.8 Organic Making further investments in building out new business financial leverage investments models and ad
Slide 25: Low leverage ratios and strong ratings
Low leverage ratios and strong ratings Q1 2021 operating Debt supporting reserve financing leverage debt Senior debt 300 ($ millions) Total operating leverage debt 300 Sun Life Assurance Company of Canada Q1 2021 capital Subordinated debt 4,432 Tier 2 Financial Strength Ratings ($ millions) SLEECS (
Slide 26: Asset portfolio
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 26
Slide 27: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio Debt securities by credit rating Investment profile As of March 31, 2021 • Highly diversified with the As of March 31, 2021 largest non-government BBB- BB and lower 3% 2% related exposure at 0.4% BBB 10% of total fixed income AAA Debt securities 20
Slide 28: Sustainability
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 28
Slide 29: Our sustainability plan brings our Purpose to life
Our sustainability plan brings our Purpose to life Focused on areas of expertise where we can have the most positive impact: Financial Security Healthier Lives Sustainable Investing • Provide innovative financial • Offer products and tools to help Clients • Manage capital with sustainability embedde
Slide 30: Strong sustainability achievements and recognition
Strong sustainability achievements and recognition Financial Healthier Sustainable Security Lives Investing (12 years in a row) • $1B of insurance • $38M committed • $60.1B sustainable coverage and to diabetes investment AUM $700M of savings globally since 2012 • Sun Life and its products driven by
Slide 31: Appendix
Appendix 31
Slide 32: Market movements and impacts in the quarter
Market movements and impacts in the quarter Equity Market Impacts Q1’21 Q4’20 Q1’20 Market YTD YTD YTD ($millions, post-tax) Movements Q1’21 Q4’20 Q1’20 Equity market movement and volatility 67 122 (303) S&P/ TSX +7.3% +2.2% (21.6)% Basis risk 5 (14) (57) S&P 500 +5.8% +16.3% (20.0)% Total 72 108 (3
Slide 33: Market sensitivities
Market sensitivities Change in Interest Rates 5 As at March 31, 2021 As at December 31, 2020 50 basis point 50 basis point 50 basis point 50 basis point ($ millions, unless otherwise noted) decrease increase decrease increase Change in Equity Markets 1 Potential impact on net income2,3,6 $(100) $50
Slide 34: LICAT capital framework
Total ratio Total ratio LICAT capital framework (SLF Inc.) (SLA Inc.) 141% 124% Available capital Surplus allowance + eligible deposits + • Similar to MCCSR • Essentially the provisions for adverse deviation • Retained earnings / common and preferred (PfADs) for non-economic risks equity continue to
Slide 35: Reconciliation of Select Net Income 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 36: 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
Slide 37: Peer Groups included in TSR chart
Peer Groups included in TSR chart for slide 6 Canadian Lifecos – Manulife Financial Corporation, Great-West Life, and Industrial Alliance Global Lifecos – AXA SA, Prudential PLC, Allianz SE, Aviva PLC, Assicurazioni Generali SpA, AIA Group Ltd., China Life Insurance Co. Ltd, Great Eastern Holdings,
Slide 38: Sun Life Investor Relations
Sun Life Investor Relations Yaniv Bitton Vice-President, Head of Investor Relations & Capital Markets 416-979-6496 yaniv.bitton@sunlife.com S U N L I F E • Q 1 2 0 2 1 38