Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q4 2003 Earnings Presentation
28 slides from Sun Life Financial's earnings presentation, Jan 29, 2004
Slide 1: Fourth Quarter 2003 Financial and Operating Results
Sun Life Financial Inc. Fourth Quarter 2003 Financial and Operating Results January 29, 2004
Slide 2: Forward Looking Statement
2 3 Forward Looking Statement 1 Q 4 Some of the statements contained in this presentation, including those relating to the Company’s strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anti
Slide 3: Fourth Quarter 2003 Highlights
2 3 Fourth Quarter 2003 Highlights 1 Q 4 • Record operating earnings of $417 million, up 16% from 4Q/02 – operating ROE at 11.8%, up 200 b.p. from 4Q/02 • Record operating EPS of 69 cents, up 19% from 4Q/02 • Dividend increase of 4 cents, or 24% • Charge of $211 million related to MFS • MFS’ U.S. do
Slide 4: Record Operating EPS - up 19% from 4Q'02
Record Operating EPS 2 3 --up 19% from 4Q’02 1 Q 4 1,273 S&P 500 1,234 1,154 (average) 1,115 1,132 1,070 1,056 1,000 938 895 886 861 9% up 1 69 65 57 59 59 60 57 58 56 50 51 48 1Q'01 2Q'01 3Q'01 4Q'01 1Q'02 2Q'02 3Q'02 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Operating EPS (cents) 48 50 51 57 59 59 57 58 56 60
Slide 5: Record Operating Earnings - up 16% from 4Q'02
Record Operating Earnings 2 3 -- up 16% from 4Q’02 1 Q 4 1,056 1,000 S&P 500 938 (average) 886 861 394 417 361 366 343 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Operating Earnings 361 343 366 394 417 ROE (1) (%) 9.8 9.3 10.3 11.3 11.8 (1) Based on operating earnings 5
Slide 6: SLF Canada
2 3 SLF Canada 1 Q 4 (C$ Millions) • Net income up 20% 4Q/4Q 2,500 250 2,000 200 • Successful integration of Clarica – 26 cents accretive 2003 1,500 150 – Well positioned for 2004 1,000 100 • ROE up 170 b.p. 4Q/4Q 500 50 0 0 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Revenue 2,199 2,150 2,112 2,109 2,265 Net Inc
Slide 7: Group Retirement Services - Canada
2 3 Group Retirement Services - Canada 1 Q 4 #1 in Market Share (1) • Sales $1 billion for 2003 All Others Sun Life • #1defined contribution pension plan 24% 30% supplier in Canada in terms of assets under administration Manulife 9% Standard Great-West 10% 27% (1) Source: Benefits Canada 7
Slide 8: First Year Annualized Premiums - Canada
2 3 First Year Annualized Premiums - Canada 1 Q 4 (C$ Millions) 44 42 38 Individual Life & Health 30 31 • ICA sales rise on successful 4Q’03 campaign • ICA up 43 members 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 • New product launches planned Individual 44 30 38 31 42 for early 2004 66 45 46 32 30 Group Life &
Slide 9: SLF United States
2 3 SLF United States 1 Q 4 (US$ Millions) 2,000 80 • Earnings up 6% 4Q/4Q Net Income 1,500 60 Revenue • Improved credit 1,000 40 environment vs. 2002 500 20 • Variable Annuity CTE 0 0 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 levels to 80 in 4Q’03 Revenue 1,757 1,733 1,878 1,622 1,654 • ROE up 180 b.p. 4Q/4Q N
Slide 10: U.S. Annuity Sales
2 3 U.S. Annuity Sales (US$ Millions) 1 Q 4 980 951 896 883 775 • New business priced to achieve targeted risk adjusted returns 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 • Variable annuity sales up Gross Sales Variable Annuities 388 390 479 584 519 34% 4Q/4Q Fixed Annuities 390 474 368 102 147 Indexed Annuities
Slide 11: First Year Annualized Premiums - U.S.
2 3 First Year Annualized Premiums – U.S. 1 Q 4 (US$ Millions) 125 64 68 38 48 Individual Life • Sales up 18% for individual ex- 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 BOLI products for the full year BOLI (1) 67 2 9 4 2 Individual 58 36 55 64 46 119 Group Life & Health 78 • 4Q’03 sales up across all lines 40
Slide 12: MFS Investment Management
2 3 MFS Investment Management 1 Q 4 1,056 1,000 S&P 500 938 886 861 (average) • 4Q/4Q operating earnings rise 95% (1) 40 Operating Earnings • Improved equity markets and 30 continued cost controls (US$ millions) contribute to strong operating 20 earnings • Operating ROE 66.6% 10 0 4Q'02 1Q'03 2Q'03
Slide 13: MFS Assets Under Management
2 3 MFS Assets Under Management (US$ Billions) 1 Q 4 Assets Under Management 140 128 129 113 112 • Assets rise $27 billion year-over- year up 24% • Sales contribute $4 billion and market improvements $23 billion 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Domestic Funds 67 65 73 72 77 • Institutional AUM up 51% O
Slide 14: MFS Positive Net Fund Sales in 4Q'03
2 3 MFS Positive Net Fund Sales in 4Q’03 1 Q 4 Net New Sales Market Movement (US$ Billions) (US$ Billions) 2.9 12.6 10.8 1.3 0.8 0.9 4.4 2.3 (2.4) (0.8) 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Mutual Funds Mutual Funds 2.7 (1.3) 7.8 1.2 6.0 Gross New Sales 4.5 4.5 5.4 4.5 4.4 Man
Slide 15: SLF Asia
2 3 SLF Asia 1 Q 4 (C$ Millions) 200 15 • Year-over-year improvement in 150 Net Income earnings from expense Revenue 10 management and business 100 growth 5 50 • Earnings for 2003 up 83% in 0 0 local currencies 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Revenue 192 145 140 144 158 Net Income 12 7 6 11 13 ROE 9.4
Slide 16: First Year Annualized Premiums - Asia
2 3 First Year Annualized Premiums(1) - Asia 1 Q 4 (C$ Millions) 33 • Hong Kong sales up 43% in 4th 29 quarter 22 24 18 • 9,000 agents in India; sales up 120% over 4Q’02 • Poised for growth in China 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 (1) Includes 50% of the sales of the Company’s joint ventures in India
Slide 17: SLF United Kingdom
2 3 SLF United Kingdom 1 Q 4 (£ Millions) 200 30 • Continued stable earnings from Net Income 150 Revenue run-off block 20 100 10 • Repatriated £125 million of 50 capital in 2003 0 0 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Revenue 175 166 164 154 146 Net Income 19 21 19 28 21 ROE 20.4% 19.5% 18.3% 27.9% 20.4%
Slide 18: Operating Expenses
2 3 Operating Expenses 1 Q 4 (C$ Millions) Non-MFS MFS 502 30% $250 60% $500 465 484 427 429 217 206 204 55% 199 201 20% $200 50% $250 10% $150 45% $0 0% $100 40% 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Operating 502 427 465 429 484 Operating 217 206 199 204 201 Expenses (1) Expe
Slide 19: Impaired Assets
2 3 Impaired Assets 1 Q 4 (C$ Millions) 1,000 952 919 1.00% 810 806 Impaired Asset Ratio 750 699 0.75% C$ millions 500 0.50% 250 0.25% 0 0.00% 4Q'02 1Q'03 2Q'03 3Q'03 4Q'03 Gross Impaired Assets 952 919 810 806 699 Total Allowances 495 422 402 403 366 Net Impaired Assets (1) 457 497 408 403 333 Net
Slide 20: Capital Management
2 3 Capital Management 1 Q 4 • Stock buyback program continues with 18.3 million shares repurchased in 2003 for $527 million • Dividend increase of 4 cents • Debt to total capital ratio reduced to 21.4% from 22.1% at 4Q’02 20
Slide 21: Sources of Earnings
2 3 Sources of Earnings 1 Q 4 (C$ Millions) 2003 2002 Total Total Expected Profit on In-force Business 1,889 1,849 New Business Gain or Loss (248) (278) Experience Gains and Losses 96 (253) Changes in Assumptions (96) 94 Earnings on Operations 1,641 1,412 Earnings on Surplus 439 410 Operating Earnin
Slide 22: SLF Canada Integration Update
2 3 1 Q 4 SLF Canada Integration Update Bob Astley 22
Slide 23: Exceeded Accretion Target
2 3 Exceeded Accretion Target 1 Q 4 30 Actual accretion 25 26¢ 20¢ 19 20 13 15 10 5 5 0 1Q 2003 2Q 2003 3Q 2003 4Q 2003 23
Slide 24: Integration Milestones
2 3 Integration Milestones 1 Q 4 9On time 9On budget 9Target cost savings achieved 24
Slide 25: Leveraging Our Scale
2 3 Leveraging Our Scale 1 Q 4 • Enhanced investment management capabilities • Increased Group Retirement Services productivity • Created integrated services platform • Reduced retail life administration unit costs by 20% 25
Slide 26: Independent Career Advisors - Sales Power
Independent Career Advisors - 2 Q 3 1 4 Sales Power 4,500 4192 4216 4130 4135 4096 4111 4092 4,000 3597 3497 3313 3,500 3135 3199 3109 3,000 2,500 2,000 1,500 1,000 500 0 4Q'00 2Q'01 4Q'01 2Q'02 4Q'02 2Q'03 4Q'03 26
Slide 27: Looking Forward
2 3 Looking Forward 1 Q 4 9 Integration completed 9 Positioned for GROWTH 9 Customer focused 27
Slide 28: Questions & Answers
a, @uvestions'& Answers