Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Presentation (February 2022)
38 slides from Sun Life Financial's investor presentation, February 2022
Slide 1: Q4 2021 Building Sustainable Shareholder Value
Q4 2021 Building Sustainable Shareholder Value
Slide 2: Business overview
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 2
Slide 3: A $41.3 billion leading global financial services organization
A $41.3 billion leading global financial services organization1 50,000 Employees 118,400 Advisors Balanced and diversified Offices in 27 business model markets Wealth & Asset Management Group & Shorter Duration Insurance Traditional Insurance $1.44 trillion AUM 2 As of December 31, 2021. Includes As
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 asset management and insurance companies
Executing on our ambition to be one of Our Purpose: Help Clients achieve the best asset management and lifetime financial security and live healthier lives insurance companies globally Four Pillar Strategy Key Priorities A global leader in both public and AM alternative asset classes through 1 Think
Slide 6: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5-year total shareholder return 2 Medium-term objectives3 December 31, 2021 1-Year 5-Year4 Sun Life 10.5% Underlying ROE1 15.4% 14.2% Asset Managers 20.1% 16%+ Canadian banks 12.2% TSX 10.0% Underlying EPS growth1 Canadian lifecos 10% 10% 7.1% 8-10% Glob
Slide 7: Digital leadership
Digital leadership Building new digital models and a partnership ecosystem • New digital partnerships in Asia, including Cermati, Moneygment, TheBank.vn and Investa • Lumino Health and Sun Life GO in Canada • Partnering with Conquest Planning Inc. in Canada to provide a digital financial planning to
Slide 8: Leveraging global trends
Leveraging global trends Individual and employer attention on Digital acceleration physical and mental health Demographic shifts Sustainability and DE&I expectations Growing prosperity in Asia Continued growth of alternative asset classes Gig economy and shift in nature of Future of work and rising
Slide 9: Business group results & highlights
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 9
Slide 10: Business group performance
Business group performance Reported net income ($ millions) Underlying net income1 ($ millions) Impact of currency translation decreased reported net income by $33M1 Impact of currency translation decreased underlying net income by $22M 1 (48)% +40% (3)% +238% +15% +9% (51)% +12% Constant currency1,
Slide 11: Expanding asset management capabilities
Expanding asset management capabilities Q4’21 and 2021 highlights Underlying net income ($ m illions) 1,346 1,128 • MFS delivered strong fund performance2 for Clients throughout the year; 925 1,004 maintained a top 10 position in the U.S. mutual fund industry3 • 97%, 96% and 80% of MFS’s U.S. retail
Slide 12: MFS: diversification of assets under management
MFS: diversification of assets under management Asset class mix Investor type US$, as at D ecember 31, 2021 US$, as at D ecember 31, 2021 Non-U.S. Balanced Retail Fixed 5% 6% Insurance Income 9% 12% U.S. Equity 43% US$693 U.S. Retail 53% billion AUM Non-U.S. Institutional Equity 32% 40% S U N L I F
Slide 13: SLC Management: diversification of assets under management
SLC Management: diversification of assets under management1 Asset class mix Investor type $, as at D ecember 31, 2021 $, as at D ecember 31, 2021 Real Estate Cash and Endowment/ Debt Other Foundation 4% 1% 2% Infrastructure Insurance 8% Companies Public Fixed 24% $184 Income Pension Private Fixed 33
Slide 14: Canada is a growth market for Sun Life
Canada is a growth market for Sun Life Q4’21 and 2021 highlights Underlying net income ($ m illions) • Ella, our digital coach, proactively connected with Clients over 20 million times in 1,073 1,131 1,036 1,012 2021, driving an additional $690 million in wealth deposits, and $950 million in insuran
Slide 15: Shaping the industry and capitalizing on opportunities in Canada
Shaping the industry and capitalizing on opportunities in Canada • Leveraging our worksite advantage • Expanding our role in health and well-being, including Shaping the market as a increasing our focus on mental health leader in our Canadian home • A leader in the growing pension risk transfer mark
Slide 16: Deepening Client relationships in U.S. Group Benefits
Deepening Client relationships in U.S. Group Benefits Q4’21 and 2021 highlights U.S. Underlying net income • Enhanced digital capabilities are making it easier for Clients to get the (US$ m illions) 425 413 399 coverage they need, and helping drive record Group Benefits sales of 396 US$1.2 billion1
Slide 17: Key trends and opportunities in the U.S.
Key trends and opportunities in the U.S. Improving health outcomes and costs Large, complex U.S. benefits ecosystem, anchored by the We are focused on making things easier for Clients while $3.8T healthcare market1 improving health outcomes and reducing costs Most U.S. employees are covered by a sel
Slide 18: Positioned in Asia's largest and fastest growing markets
Positioned in Asia’s largest and fastest growing markets Q4’21 and 2021 highlights Underlying net income ($ m illions) 586 • Surfaced shareholder value through the IPO of our India asset management joint 579 venture1 550 523 • Vietnam bancassurance distribution more than tripled sales 2 compared to
Slide 19: Capturing growth opportunities in Asia
Capturing growth opportunities in Asia Local Markets International Hubs Philippines Vietnam International • #1 ranked insurance • 6th in insurance sales and 4th in • Leverages the high-net-worth company based on total bancassurance sales1,6 opportunities in Asia to offer Clients premium1,2 and distr
Slide 20: Capital management
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 20
Slide 21: 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 buybacks 40-50%1,2 investments Target minimum cash and other liquid assets at the holding company of $500 million1,2,3 1 Re
Slide 22: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Inc. Capital metric SLF Inc. LICAT2 145% CLI Series 2 Sub Debenture Financial leverage ratio 1,3 25.5% Additional leverage capacity to 30%1,4 $2.2B SLF Inc. cash and other liquid assets1,3,5 $4.7B SLA Asset SLA - External Capital Securities Coupon Pri
Slide 23: Strong capital position with significant deployment potential
Strong capital position with significant deployment potential1 Capital deployment potential1 Deployment opportunities ($ billions, a t Decem ber 31, 2021) Type Considerations Cash2,3 Additional financial $4.2 leverage to 30% Organic Making further investments in building out new business $2.2 invest
Slide 24: Leverage ratio and financial strength ratings
Leverage ratio and financial strength ratings Q4 2021 capital ($ m illions) Subordinated debt1 6,425 Tier 2 Innovative capital instruments (SLEECS) 200 Tier 1 Sun Life Assurance Company of Equity Canada Financial Strength Ratings Preferred shareholders’ equity and other 2,239 A.M. Best A+ equity ins
Slide 25: Asset portfolio
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 25
Slide 26: High quality, well-diversified investment portfolio
High quality, well-diversified investment portfolio D ebt secu r ities by cr edit r atin g • Highly diversified with the Investment profile As o f D e c e mbe r 3 1, 2 0 2 1 largest non-government As o f December 31, 2021 BBB- related exposure at 0.4% 2% BB and lower BBB 1% of total fixed income 13%
Slide 27: Sustainability
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 27
Slide 28: 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 29: Strong sustainability achievements and recognition
Strong sustainability achievements and recognition Financial Security Healthier Lives Sustainable Trusted and Responsible Investing Business • $951M of insurance • $42.7M committed to • Appointed a Chief Sustainability • $60.1B sustainable coverage and $690M of diabetes globally since Officer report
Slide 30: Appendix
Appendix 30
Slide 31: Market movements and impacts in the quarter
Market movements and impacts in the quarter C h ange in In terest Rat es 5 Market Movements Q4’21 Q3’21 Q4’20 Equity Market Impacts Q4’21 Q3’21 Q4’20 ($millions, post-tax) S&P/ TSX +5.7% (0.5)% +8.1% Equity market movement and volatility 97 19 122 S&P 500 +10.6% +0.2% +11.7% Basis risk 10 5 (14) CA
Slide 32: Market sensitivities
Market sensitivities C h ange in In terest Rat es 5 As at December 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 C h ange in Equ ity Markets 1 Potential impact on net income2,3,6 $
Slide 33: LICAT capital framework
Total ratio Total ratio LICAT capital framework (SLF Inc.) (SLA) 145% 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 be t
Slide 34: 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 35: 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 36: Footnotes from slide 6
From slide 6 2 Source: Bloomberg; 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, and Ping An
Slide 37: Footnotes from slide 22
From slide 22 2 Our LICAT ratios are calculated in accordance with OSFI-mandated guideline, Life Insurance Capital Adequacy Test 3 Includes $2.0 billion of proceeds from the subordinated debt offerings completed in November 2021, of which $1.5 billion is subject to contractual terms requiring us to
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 4 2 0 2 1 38
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