Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Investor Presentation (February 2023)
37 slides from Sun Life Financial's investor presentation, February 2023
Slide 1: Q4 2022 Building Sustainable Shareholder Value
Q4 2022 Building Sustainable Shareholder Value
Slide 2: Business overview
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 2
Slide 3: A leading global financial services organization
A leading global financial services organization1 85M Clients 52,500 employees2 Balanced and diversified business model O ffices in Wealth & Asset Management 28 markets Group & Shorter Duration Insurance Traditional Insurance 97,400 advisors $1.33 trillion AUM 3 $37 billion market cap 1 All figures
Slide 4: The Sun Life story
The Sun Life story • A diversified business model, with four well-positioned business groups, focused on creating value and positively impacting our Clients, employees and shareholders • Portfolio of businesses that have strong growth prospects and capital generation opportunities in attractive glob
Slide 5: Executing on our ambition to be one of the best asset management and insurance companies globally
Executing on our ambition to be one Our Purpose: Help Clients achieve lifetime financial security and live healthier lives of the best asset management and insurance companies globally Four Pillar Strategy Key Priorities A global leader in both public and AM alternative asset classes through MFS 1 T
Slide 6: Consistently delivering value to shareholders
Consistently delivering value to shareholders 5 -year total shareholder return1 Performance against medium-term objectives Dec ember 3 1, 2022 Sun Life 8.0% Medium-term objective 2,3,4 1-Year 5-Year5 TSX 6.9% Underlying ROE2 1 5 .1% 1 4 .7% 1 6 %+ Canadian Banks 6.8% Underlying EPS growth2 Canadian
Slide 7: Digital leadership
Digital leadership Thinking and acting like a digital company DIGITAL EXPERIENCES Amazing Client, employee, advisor, and partner experiences DIGITAL CAPABILITIES Enable our experiences and improve our digital maturity DIGITAL WAYS OF WORKING Empowering our people to support our digital journey Stron
Slide 8: Leveraging global trends
Leveraging global trends Individual and employer attention on physical Digital acceleration and mental health Demographic shifts in developed markets Adoption of digital health technologies Increased economic, market and geopolitical Growth of alternative asset classes volatility Gig economy and shi
Slide 9: Business group results & highlights
Business overview Business group results & highlights Capital management Asset portfolio Sustainability 9
Slide 10: Fourth quarter business group performance
Fourth quarter business group performance Reported net income ($ millions) Underlying net income1 ($ millions) Impact of currency translation increased reported net income by $32M 1 Impact of currency translation increased underlying net income by $36M 1 130% +3% +29% (78)% (18)% +22% +233% +17% Con
Slide 11: Asset Management: A global leader in both public and alternative asset classes
Asset Management: A global leader in both public and alternative asset classes Q4’22 and full year highlights Underlying net income1 ($ millions) 1,346 • 2022 Full Year: $ 21.5B of net inflows1 at SLC Management 1,204 1,128 1,004 • In 2022, MFS maintained leadership position in U.S. retail mutual fu
Slide 12: MFS: creating value through active investment mandates
MFS: creating value through active investment mandates A sset class mix Investor type US$, a s a t D ecember 31, 2022 US$, a s a t D ecember 31, 2022 Non-U.S. Balanced Retail 5% 5% Fixed Income 12% U.S. Equity Institutional 44% 33% US$548 U.S. Retail 62% billion AUM1 Non-U.S. Equity 39% S U N L I F
Slide 13: SLC Management: strong capabilities in alternative investments
SLC Management: strong capabilities in alternative investments A sset class mix Investor type $, a s a t D ecember 31, 2022 $, a s a t D ecember 31, 2022 Real Estate Cash and Endowment/ Debt Other Foundation 5% <1% 2% Infrastructure Insurance 8% Companies Public Fixed 24% Income $210 28% Pension Pri
Slide 14: Canada: A leader in health, wealth, and insurance
Canada: A leader in health, wealth, and insurance Q4’22 and full year highlights Underlying net income1 ($ millions) • 2022 Full Year: 1 2% increase in underlying net income1 1,266 1,131 1,012 1,073 • Q4’22: Underlying net income of $324 million up 22% over prior year 1 • Published two data driven i
Slide 15: Shaping the industry and capitalizing on opportunities in Canada
Shaping the industry and capitalizing on opportunities in Canada • Capturing growing decumulation opportunity and seeking to be the retirement income provider of choice, by leveraging our worksite advantage Shaping the market as a leader in • Expanding our role in health and well-being, including in
Slide 16: U.S.: A leader in health and benefits
U.S.: A leader in health and benefits Q4’22 and full year highlights Underlying net income1 (US$ millions) • 2022 Full Year: 3 5 % increase in underlying net income1,2 557 399 425 413 • Q4’22: Underlying net income1 of US$177 million, up US$121 million over prior year • Expanded DentaQuest’s Advanta
Slide 17: Key trends and opportunities in the U.S.
Key trends and opportunities in the U.S. Health and benefits market is large and complex Helping Clients access the healthcare and coverage they need Expanded our Dental business to increase access to oral healthcare in Healthcare market is $4.3T1 and most U.S. employees underserved communities ar
Slide 18: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Q4’22 and full year highlights Underlying net income1 • 2022 Full Year: 9% increase in underlying net income1,2 , delivering record Asia earnings ($ millions) • Q4’22: Underlying net income1 of $152M up 16% over prior year2 627 • In Q4, insuran
Slide 19: Capturing growth opportunities in Asia
Capturing growth opportunities in Asia Local Markets International Hubs Philippines Vietnam International • #1 ranked insurance • 6 in insurance sales th 1,6 • Leverages the high-net-worth c ompany based on total opportunities in Asia to offer Clients and • 5 t h in bancassurance insurance sales1,6
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 C apital deployment priorities: Funding organic Target underlying M&A opportunities growth dividend payout ratio and strategic Share buybacks of 40-50%1,2 investments Target minimum cash and other liquid assets at the holding company of $500 milli
Slide 22: Capital model provides financial flexibility
Capital model provides financial flexibility SLF Inc. SLF Inc. - External Capital Securities Subardinated Debt Coupon Principal, $M Par Call Date SLF Series 2007-1 $400 29-May-37 LICAT1 130% SLF Series 2016-2 5.40% 3.05% $1,000 14-Sep-23 SLF Series 2019-1 Sustainability Bend 2.38% $750 13-Aug-24 SLF
Slide 23: Capital flexibility & deployment opportunities
Capital flexibility & deployment opportunities C apital flexibility D eployment opportunities (as at Dec ember 3 1 , 2 0 2 2) Capital metrics SLF Inc. Type Considerations Organic Making further investments in building out new business models LICAT1 130% investments and advancing our leading digital
Slide 24: Leverage ratio and financial strength ratings
Leverage ratio and financial strength ratings Q 4 2022 capital ($ millions) Subordinated debt 6,676 Tier 2 Innovative capital instruments (SLEECS) 200 Tier 1 Sun Life Assurance Company of Equity Canada Financial Strength Ratings Preferred shareholders’ equity and other equity 2,239 A.M. Best A+ inst
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 e b t secu rit ies by cred it r ating • Highly diversified with the I nvestment profile A s of De ce m be r 31, 2022 largest non-government As of Dec ember 3 1, 2 022 BB and lower BBB- related exposure at 0.4% of BBB 3% 1% 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 and • Manage capital with sustainability emb
Slide 29: Strong sustainability achievements and recognition
Strong sustainability achievements and recognition Financial Security Healthier Lives Sustainable Investing Trusted and Responsible Business • Our di gital coach, Ella, helped Clients • $46.7M committed to • $65B 2s us tainable investment • DE&I focus and progress: deposit an extra $697M i nto their
Slide 30: Appendix
Appendix 30
Slide 31: Market movements and impacts in the quarter
Market movements and impacts in the quarter C hange in I nterest Ra tes 5 Mar ket Movements Q4 ’22 Q3’22 Q4’21 Eq u ity Market Impacts Q4 ’22 Q3’22 Q4’21 ($millions, post-tax) S&P/ TSX +5.1% (2.2)% +5.7% Equity market movement and volatility (48) (53) 97 S&P 500 +7.1% (5.3)% +10.6% Basis risk 14 5 1
Slide 32: Market sensitivities
Market sensitivities C hange in I nterest Ra tes 5 A s at December 31, 2022 As at December 31, 2021 5 0 b asis point 5 0 b asis point 50 basis point 50 basis point ($ millions, unless otherwise noted) d e crease i n crease decrease increase C hange in Equity Markets 1 Potential impact on net income2
Slide 33: Use of Non-IFRS Financial 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 34: 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 35: Footnotes from slide 6
From slide 6 1 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 36: Footnotes from slides 18 and 19
From slide 18 2 Constant currency Q4 2022 vs Q4 2021 4 Million Dollar Round Table ("MDRT"), a global independent association of the world's leading life insurance and financial services professionals 5 Based on December 2022 position From slide 19 2 Insurance Commission of the Philippines, based on
Slide 37: 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 Paul Poon Assistant Vice President, Investor Relations 416-305-3389 paul.poon@sunlife.com S U N L I F E • Q 4 2 0 2 2 37
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