Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q4 2022 Earnings Presentation
25 slides from Sun Life Financial's earnings presentation, Feb 9, 2023
Slide 1: Q4 2022 Financial & Operating Results
Q4 2022 Financial & Operating Results For the period ended December 31, 2022 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-looking statements and 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”. Forward-looking statements Certain statements in this presentation and certain oral state
Slide 3: Kevin Strain, President and Chief Executive Officer
Kevin Strain President and Chief Executive Officer S U N L I F E • Q 4 2 0 2 2 3
Slide 4: Fourth quarter financial highlights
Fourth quarter financial highlights Executing on our ambition to be one of the best asset management and insurance companies globally Financial Earnings Growth Financial Growth Strength Strength Diversified Business Mix 3 Reported net income Reported ROE1 $951M (12)% 15.1% (2.9) pp 21% Underlying ne
Slide 5: Resilient full year results
Resilient full year results Full year 2022 results (vs. 2021) $3.1B (22)% 12.5% (4.6) pp $4.3B +18% $1.3B (7)% Reported net income Reported ROE1 Insurance sales1 Value of New Business1 $3.7B +4% 15.1% (0.3) pp $204B (11)% $1.3T (8)% Underlying net income1 Underlying ROE1 Wealth sales & asset managem
Slide 6: Progress on our Client Impact strategy
Our Purpose: Help Clients achieve Progress on our Client Impact strategy Strengthening distribution in our growth markets lifetime financial security and live Announced exclusive bancassurance partnership with Dah Sing Bank, increasing distribution reach of healthier lives our life and health insura
Slide 7: Manjit Singh, Executive Vice President & Chief Financial Officer
Manjit Singh Executive Vice President & Chief Financial Officer S U N L I F E • Q 4 2 0 2 2 7
Slide 8: Fourth quarter results
Fourth quarter results PROFITABILITY Q4’22 Q4’21 Change Results Highlights Reported net income ($ millions) 951 1,078 (12)% Results reflect strength of diversified business mix Underlying net income ($ millions)1 990 898 +10% • Strong protection and health growth in Canada, the U.S., Reported EPS ($
Slide 9: 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 $32M1 Impact of currency translation increased underlying net income by $36M1 130% +3% +29% (78)% (18)% +22% +233% +17% Const
Slide 10: MFS: A global leader in public asset management
MFS: A global leader in public asset management Business Group Results Quarterly Highlights (US$) • Underlying net income down 26% y/y driven by lower average net PROFITABILITY (US$ millions) Q4’22 Q4’21 Change assets, largely reflecting global equity market declines Reported net income 223 234 (5)%
Slide 11: SLC Management: Growing a premier alternatives platform
SLC Management: Growing a premier alternatives platform Business Group Results Quarterly Highlights • Fee-related earnings (FRE) up 22% y/y, driven by capital raising and PROFITABILITY ($ millions) Q4’22 Q4’21 Change growth in fee-earning AUM Fee-related earnings1 73 60 +22% • Underlying net income
Slide 12: Canada: A leader in health, wealth, and insurance
Canada: A leader in health, wealth, and insurance Business Group Results Quarterly Highlights • Underlying net income of $324 million, up 22% y/y: PROFITABILITY ($ millions) Q4’22 Q4’21 Change • Insurance earnings reflect business growth, improved disability Reported net income 367 356 +3% experienc
Slide 13: U.S.: A leader in health and benefits
U.S.: A leader in health and benefits Business Group Results Quarterly Highlights (US$) • Underlying net income of $177 million reflecting strong performance PROFITABILITY (US$ millions) Q4’22 Q4’21 Change across the business, including the contribution of DentaQuest Reported net income 81 68 +19% •
Slide 14: Asia: A regional leader focused on fast-growing markets
Asia: A regional leader focused on fast-growing markets Business Group Results Quarterly Highlights (constant currency1) • Underlying net income up 16% y/y, driven by solid business growth, partially PROFITABILITY Q4’22 Q4’21 Change CC offset by lower fee-based income reflecting equity market declin
Slide 15: Strong 5-yr performance; well positioned for future growth
Strong 5-yr performance; well positioned for future growth Medium-term objective1,2 1-Year 5-Year3 Underlying ROE1 15.1% 14.7% 16%+ (increases to 18%+)2 Underlying EPS growth1 4% 9% 8-10% Underlying dividend payout ratio1,4 44% 41% 40-50% 1 This statement represents a medium-term financial objective
Slide 16: Progressing well towards IFRS 17/9 adoption
Progressing well towards IFRS 17/9 adoption • No impact on strategy or on the strong fundamentals of our diversified business mix • Key impacts expected on transition: • High single digit decrease1 in 2022 IFRS 17 underlying net income as we restate the comparative year • High single digit increase
Slide 17: Appendix
SUN LIFE & ‘Appendix Q4 2022 17
Slide 18: Sources of earnings
Sources of earnings Sources of earnings (SOE)1 Reported Underlying SOE highlights Common shareholders $ millions, pre-tax Q4’22 Q4’21 Q4’22 Q4’21 • Expected profit up 10% in constant currency4, driven by health and protection business Expected profit on in-force business excluding Asset Mgmt. 620 54
Slide 19: SOE experience gains/(losses) - details
SOE1 experience gains/ (losses) - details Q4’22 Q4’21 Q4’22 Q4’21 $ millions Pre-tax Pre-tax Post-tax Post-tax Net equity market impact2 (1) 140 (29) 107 Net interest rate impact2 (180) (88) (35) (35) Impact of changes in the fair value of investment properties2 (84) 102 (65) 85 Market-related impac
Slide 20: Reconciliation of underlying net income
Reconciliation of underlying net income Q4’22 Q4’22 $ millions Pre-tax Post-tax Reported net income 951 Net equity market impact (including basis risk impact of $14 million)1 (6) (34) Net interest rate impact (including credit spread impact of $(16) million and swap spread impact of $4 (180) (35) mi
Slide 21: Market movements and impacts in the quarter
Market movements and impacts in the quarter Change in Interest Rates 5 Market Movements Q4’22 Q3’22 Q4’21 Equity Market Impacts Q4’22 Q3’22 Q4’21 ($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 10 CA 10
Slide 22: 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 23: Forward-Looking Statements continued
Forward-Looking Statements continued Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. Future results and shareholder value may differ materially from those expressed in these forward-looking statements. In additio
Slide 24: Footnotes continued
Footnotes continued From slide 8 2 All EPS measures refer to fully diluted EPS, unless otherwise stated. 3 LICAT ratio of SLF and of Sun Life Assurance Company of Canada (“SLA”). Our LICAT ratios are calculated in accordance with OSFI-mandated guideline, Life Insurance Capital Adequacy Test. 4 SLA i
Slide 25: Footnotes continued
Footnotes continued From slide 14 1 Percentage change is reported on a constant currency basis, which excludes the impacts of foreign exchange translation. Refer to the Non-IFRS Financial Measures section in the appendix to these slides and in our 2022 Annual MD&A. 2 Represents a non-IFRS financial