Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q3 2003 Earnings Presentation
31 slides from Sun Life Financial's earnings presentation, Oct 28, 2003
Slide 1: Analyst Presentation: Financial and Operating Results Third Quarter 2003
Analyst Presentation Financial and Operating Results Third Quarter 2003 October 28, 2003
Slide 2: Forward Looking Information
Forward Looking Information This presentation contains forward looking statements with respect to the Company, including its business operations and strategy and financial performance and condition. Although Management believes that the expectations reflected in such forward looking statements are r
Slide 3: Third Quarter 2003 - Highlights
Third Quarter 2003 - Highlights • Record EPS of $0.65, up 14% from Q3/02 - ROE at 11.3%, up 150 b.p. from Q3/02 • MFS earnings up 26% in Q3/03 vs. Q3/02, and up 41% on a US currency basis • Clarica transaction 19 cents accretive year-to-date – on track to exceed accretion target of 20 cents for 2003
Slide 4: Shareholders' Net Income
Shareholders’ Net Income ($ Millions) 1,420 1,447 1,476 1,366 S&P 500 (average) 1,273 1,234 1,154 1,115 1,132 1,070 938 1,000 895 886 861 394 361 343 366 350 293 256 243 215 203 211 202 212 197 181 Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Operating Ea
Slide 5: Financial Performance: EPS and ROE
Financial Performance 1,000 938 S&P 500 (average) 895 886 861 65 65 16.0% 60 60 57 58 56 14.0% EPS (cents) 55 12.0% ROE 50 10.0% 45 40 8.0% 35 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 6.0% Operating EPS 57 58 56 60 65 ROE (1) 9.8% 9.8% 9.3% 10.3% 11.3% (1) Based on operating earnings 5
Slide 6: First Year Annualized Premiums
First Year Annualized Premiums ($ Millions) Individual Life & Health Group Life & Health 269 168 126 146 149 110 95 93 118 110 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 (1) U.S. - BOLI 14 105 3 13 5 Canada 36 26 50 32 31 U.S. - Individual 47 91 55 77 89 - ASO 19 19 16 7 15 U.S. 55
Slide 7: Assets Under Management
Assets Under Management ($ Billions) 347 361 337 342 348 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Mutual Funds 113 117 108 109 109 Managed Funds and 61 68 65 71 77 Other Segregated Funds 50 53 48 50 51 General Funds 123 123 116 112 111 7
Slide 8: MFS Net Fund Sales
MFS Net Fund Sales Net New Sales Market Movement (US$ Billions) (US$ Billions) 2.9 12.6 1.3 0.9 4.4 2.3 (2.4) (1.4) (14.0) (0.8) Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Mutual Funds Mutual Funds (8.6) 2.7 (1.3) 7.8 1.2 Gross New Sales 4.4 4.5 4.5 5.4 4.5 Managed Redemptions (5.0)
Slide 9: MFS - Top 10 U.S. Mutual Fund Companies
MFS - Top 10 U.S. Mutual Fund Companies Net New Assets Flows (Sept. 30/03) (YTD Sept./03) (US$ Billions) 1 Fidelity 530 14.3 2 Vanguard 526 20.6 3 American Funds 413 40.9 4 Franklin Templeton 173 5.9 5 Putnam 140 (8.8) 6 PIMCO Funds 136 15.9 7 T. Rowe Price 94 5.9 8 OppenheimerFunds 83 0.6 9 Janus 8
Slide 10: U.S. Annuity Sales
U.S. Annuity Sales (US$ Millions) 1,007 980 951 896 775 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Gross Sales Variable Annuities 456 388 390 479 584 Fixed Annuities 467 390 474 368 102 Indexed Annuities 84 118 116 104 89 Total Gross Sales 1,007 896 980 951 775 Net Sales Variable Annuities (356) (317) (284) (101
Slide 11: Revenue
Revenue ($ Millions) 5,803 6,028 5,758 5,579 5,282 Q3/02 Q4/02 Q1/02 Q2/03 Q3/03 Fee Income 730 724 705 684 707 Investment Income 1,377 1,451 1,389 1,460 1,409 Life & Health 2,067 2,397 2,115 2,147 2,260 Premiums Annuity Premiums 1,629 1,456 1,549 1,288 906 11
Slide 12: Operating Expenses
Operating Expenses ($ Millions) Non-MFS MFS 502 30% $300 60% $500 465 436 427 429 20% 224 217 206 199 204 $200 40% $250 10% $0 0% $100 20% Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Operating 436 502 427 465 429 Operating 224 217 206 199 204 (1) Expenses Expenses (1) (2) Exp. Ratio
Slide 13: Provisions for Credit Losses
Provisions for Credit Losses 150 100 $ Millions 50 0 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Provision 128 116 40 38 20 13
Slide 14: Impaired Assets
Impaired Assets 1,000 952 1.00% 919 810 806 Impaired Asset Ratio 750 0.75% $ Millions 506 500 0.50% 250 0.25% 0 0.00% Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Gross Impaired Assets 506 952 919 810 806 Total Allow ances 418 495 422 402 403 (1) Net Impaired Assets 88 457 497 408 403 Net Impaired Assets as 0.08%
Slide 15: Financial Strength
Financial Strength (1) Debt to Total Capital MCCSR 237% 247% 242% 22.6% 22.1% 22.2% 22.4% 230% 21.4% 210% Q3/02 Q4/02 Q1/02 Q2/03 Q3/03 Q3/02 Q4/02 Q1/02 Q2/03 Q3/03 (1) Includes preferred shares and SLEECS as part of debt capital 15
Slide 16: SLF Canada
SLF Canada ($ Millions) 240 2,000 200 1,600 160 Net Income Revenue 1,200 120 800 80 400 40 0 0 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Revenue 2,059 2,199 2,150 2,112 2,109 Net Income 173 185 184 218 206 ROE 9.9% 10.8% 10.7% 12.7% 12.0% 16
Slide 17: SLF United States
SLF United States ($ Millions) 3,000 120 Net Income Revenue 2,000 80 1,000 40 0 0 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Revenue 2,559 2,757 2,620 2,627 2,239 Net Income 101 100 54 63 97 ROE 7.4% 7.3% 4.8% 6.0% 9.6% 17
Slide 18: MFS
MFS 1,000 938 S&P 500 (average) Assets Under Management 895 886 861 ($ Billions) 60 Net Income (1) 170 178 170 174 165 ($ Millions) 40 20 0 Q3/02 Q4/02 Q1/02 Q2/03 Q3/03 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Mutual Funds 113 117 108 109 109 Net Income 39 30 28 42 49 Managed Funds 57 61 57 61 65 ROE 43.0% 36
Slide 19: SLF Asia
SLF Asia ($ Millions) 200 15 150 Net Income Revenue 10 100 5 50 0 0 Q3/02 Q4/02 Q1/02 Q2/03 Q3/03 Revenue 161 192 145 140 144 Net Income 6 12 7 6 11 ROE 4.9% 9.4% 5.6% 5.9% 10.0% 19
Slide 20: SLF United Kingdom
SLF United Kingdom ($ Millions) 600 80 60 Net Income 400 Revenue 40 200 20 0 0 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Revenue 395 432 403 371 342 Net Income 34 48 50 43 63 ROE 14.8% 20.4% 19.5% 18.3% 27.9% 20
Slide 21: Sources of Earnings - First 9 Months 2003
Sources of Earnings - First 6 Months 2003 ($ Millions) 2003 2002 Change Expected Profit on In-force Business 896 860 36 New Business Gain or Loss (144) (224) 80 Experience Gains and Losses (17) 74 (91) Changes in Assumptions 38 (25) 63 Earnings on Operations 773 685 88 Earnings on Surplus 215 144 71
Slide 22: SLF Canada Update
SLF Canada Update Bob Astley President, Sun Life Financial Canada 22
Slide 23: Overview
Overview ¾ Integration nearing successful completion ¾ Business performance solid ¾ Maintaining momentum 23
Slide 24: Integration
Integration Delivered 6 cents accretion Q3/03, 19 cents year-to-date ¾ Savings: • Sustainable monthly run rate savings was $17.9 million in September • Achieved over 80% of our 2004 target of $270 million ¾ Expenses: • Costs within plan ¾ Timeline: • On track for completion in 2003! 24
Slide 25: Milestones
Milestones Reached all of the planned milestones for Q3/03 Completed Investment Unit integration Converted Clarica Universal Life policies to new platform Issued all retail life products on a single system Converted 92% of Group Retirement Services clients/plan sponsors Completed small business conv
Slide 26: Looking Forward
Looking Forward Key milestones for Q4 ¾ Complete harmonization of employee benefits ¾ Finish Group client/plan sponsor conversions ¾ Integrate full electronic support for all new retail sales 26
Slide 27: SLF Canada
SLF Canada ($ Millions) 240 2,000 200 1,600 160 Net Income Revenue 1,200 120 800 80 400 40 0 0 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Revenue 2,059 2,199 2,150 2,112 2,109 Net Income 173 185 184 218 206 ROE 9.9% 10.8% 10.7% 12.7% 12.0% 27
Slide 28: Business Performance - Retail Canadian Individual Insurance Sales
Business Performance – Retail Canadian Individual Insurance Sales Sales Market Share ($ millions) (%) 60 40% 44 30% 40 38 36 30 31 20% 20 10% 0 0% Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 (1) Sales 36 44 30 38 31 (2) Market Share 14.2% 14.3% 10.8% 12.7% N/A (1) Represents the combined Sun Life and Clarica life
Slide 29: Business Performance - Group
Business Performance - Group ¾ Positive net sales in Group Benefits ¾ ITX award for IT Leadership ¾ Strong client retention in both Group Benefits and Group Retirement Services ¾ Group Retirement Services: Falconbridge sale - $280 million of assets 29
Slide 30: Maintaining Momentum
Maintaining Momentum ¾ Finish integration by year end ¾ 100 Top Canadian employers list – again! ¾ Optimize the integrated companies 30
Slide 31: phage
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