Sun Life Financial Inc. · TSX:SLF
Sun Life Financial — Q1 2005 Earnings Presentation
30 slides from Sun Life Financial's earnings presentation, 2005
Slide 1: First Quarter 2005 Financial and Operating Results
Q1 First Quarter 2005 Financial and Operating Results Three months ended March 31, 2005 Sun Life Financial Inc. (unaudited)
Slide 2: Forward-Looking Statement
Q1 2005 Forward-Looking Statement Some of the statements 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”, “anticipates”, “i
Slide 3: Highlights Q1 2005
Highlights Q1 2005 • ROE 12.6% up 60 bps compared to Q1 2004 • Operating EPS up 9% over Q1 2004 – up 13% on constant currency basis • Repurchased 4.4 million shares ($173 million) • Issued $400 million Class A Non-Cumulative Perpetual Preferred Shares • Top ranked insurer in Report on Business Socia
Slide 4: Q1 Operating EPS up 13% in Constant Currency
Q1 Operating EPS up 13% Q1 in Constant Currency(1) 2005 1,192 1,162 S&P 500 1,132 1,123 1,104 (average) (Cents) 80 77 74 72 71 74 77 71 73 73 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 (2) Operating EPS (constant Q1'04 currency) 71 72 74 77 80 Operating EPS (2) 71 73 73 74 77 Reported EPS 61 73 73 74 77 (1) Usin
Slide 5: ROE up 60 Basis Points
ROE up 60 Basis Points Q1 2005 1,192 1,162 1,132 1,123 S&P 500 1,104 (average) ($ Millions) 458 438 439 438 424 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Operating Earnings 424 438 439 438 458 (1) Operating ROE (%) 12.0 12.0 11.9 12.1 12.6 (1) Based on operating earnings 5
Slide 6: Value of New Business
Value of New Business Q1 2005 ($ Millions) Period-over-Period Change 674 606 MFS: -20% Non-MFS: +31% 12 Months Ended 12 Months Ended Q1'04 Q1'05 MFS 238 191 Non-MFS 368 483 Total 606 674 Note: All amounts are based on 2004 annual average exchange rate 6 Q1’05 amounts are estimated
Slide 7: Premiums and Deposits – SLF Canada
Q1 Premiums and Deposits – SLF Canada 2005 (C$ Millions) 5,412 • Premiums and deposits up 4,564 19% Q1’05/Q1’04 3,464 • 25% CAGR Q1’05 vs Q1’03 Q1'03 Q1'04 Q1'05 Premiums 1,312 1,314 1,330 Segregated Fund Deposits 869 1,111 1,696 Managed Fund Sales 622 1,323 1,437 CI Mutual Fund Sales 157 269 372 th
Slide 8: SLF Canada Revenue and Net Income
SLF Canada Q1 2005 (C$ Millions) • ROE up 110 bps Q1/Q1 2,500 280 Net Income 2,000 260 Revenue • 7% increase in earnings 1,500 240 Q1/Q1 1,000 500 220 – Favourable annuity 0 200 mortality experience Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 – Positive credit Revenue 2,141 2,032 1,960 2,029 2,146 experience Net
Slide 9: Individual Sales – SLF Canada
Individual Sales – SLF Canada Q1 2005 Premiums and Deposits (1) Individual Wealth (C$ Millions) 875 • Market-based RRSP sales 744 up 45% Q1/Q1 511 463 550 • 32% of CI Funds retail net sales from Sun Life Financial Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Individual Life and Health Sales (C$ Millions) • CSF sal
Slide 10: Group Retirement Services – SLF Canada
Group Retirement Services – Q1 SLF Canada 2005 Sales and DC Plan Assets • Sales of $995 million, up 24 23.9 1,500 Sales (C$ millions) 58% from a year ago 22.5 DC Plan Assets 21.7 21.6 (C$ billions) 21.4 1,000 • Ranked #1 provider of 20 employer sponsored 500 retirement plans 16 0 Q1'04 Q2'04 Q3'04 Q
Slide 11: Group Benefits – SLF Canada
Group Benefits – SLF Canada Q1 2005 Business In Force and Sales (C$ Millions) • 5.1% increase in business in 4,928 force vs Q1’04 120 4,689 4,699 4,739 4,765 5,000 90 4,500 Business In Total Sales • Sales up 159% over previous Force quarter 60 4,000 30 3,500 • Investing in customer service 0 3,000 Q
Slide 12: SLF United States Revenue and Net Income
SLF United States Q1 2005 (US$ Millions) • Strengthening of GMDB reserve and higher group 2,000 100 mortality affected US 1,500 Net Income earnings Revenue 80 1,000 60 • Individual and Group Life 500 earnings up US$19 million 0 40 Q1/Q1 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Revenue 1,781 1,807 1,832 1,825 1
Slide 13: SLF U.S. Annuity Sales
SLF U.S. Annuity Sales Q1 2005 (US$ Millions) 1,129 1,053 • Focused on building distribution 1,014 – Currently 63 wholesalers up 866 858 from 32 at year end – 75 expected by June • VA market share up modestly Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Gross Sales Variable Annuities 592 492 448 421 487 Fixed Annu
Slide 14: First Year Annualized Premiums – SLF U.S.
First Year Annualized Premiums – Q1 SLF U.S. 2005 Business In Force and Sales (US$ Millions) Group Life & Health 756 772 777 874 868 • 15% growth in business in force Q1/Q1 • Sales down from Q4’04 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 levels due to seasonality Business In 756 772 777 874 868 Force Sales 30
Slide 15: MFS Investment Management Operating Earnings
MFS Investment Management Q1 2005 • Steady growth in operating 1,192 S&P 500 1,162 earnings over past 4 (average) 1,132 1,123 quarters 1,104 40 30% • Improved ranking in Operating Earnings (1) Barron’s Fund Families 30 (US$ Millions) Survey 20 20% 10 • Back-to-back quarters of net inflows 0 10% Q1'0
Slide 16: MFS Assets Under Management
Q1 MFS Assets Under Management 2005 Assets Under Management (US$ Billions) 142 146 145 137 134 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Domestic Funds 77 74 72 76 74 Other Investment 4 4 4 5 5 Products MFS/Sun Funds 11 11 10 11 10 Institutional Accounts 43 41 41 46 47 16 International Funds 7 7 7 8 9
Slide 17: MFS Net Fund Sales
MFS Net Fund Sales Q1 2005 Net New Sales Market Movement (US$ Billions) (US$ Billions) Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Mutual Funds Mutual Funds 1.6 0.2 (0.7) 6.6 (1.6) Gross New Sales 4.7 3.4 2.9 3.7 4.3 Managed Redemptions (6.3) (6.3) (5.1) (5.4) (5.2) Funds 1.5 0.3 (0.
Slide 18: MFS Sales and Market Ranking
MFS Sales and Market Ranking Q1 MFS continues to rank 2005 among the largest U.S. mutual fund managers Assets Name Mar '05 1 Vanguard 706 2 Fidelity 667 3 American Funds 657 4 Franklin Templeton 228 5 PIMCO Funds 170 6 T Rowe Price 138 7 Putnam 107 8 OppenheimerFunds 107 9 Dodge & Cox 82 10 American
Slide 19: MFS - Fund Performance
Q1 MFS - Fund Performance 2005 % of MFS Funds Ranked in Top Half by Lipper as at March 31, 2005 81% 71% 75% 1-Year Period 3-Year Period 5-Year Period 19
Slide 20: SLF Asia Revenue and Net Income
SLF Asia Q1 2005 (C$ Millions) • 35% increase in revenue 250 20 Q1/Q1 reflecting 200 Net Income 15 Revenue improvements in Hong Kong 150 and Indonesia 100 10 50 5 • Q1 earnings at seasonal 0 0 levels, down from record Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 level in Q4’04 Revenue 158 182 189 239 214 Net Incom
Slide 21: First Year Annualized Premiums - Asia
Q1 First Year Annualized Premiums - Asia (1) 2005 • Q1’05 sales up 28% over Q1’04, up 33% in local (C$ Millions) currencies 48 51 40 43 • Initial approvals received to 31 commence operations in Hangzhou, China • Sun Life Everbright awarded Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 license to sell group insuranc
Slide 22: Net Impaired Assets and Impaired Asset Ratio
Net Impaired Assets Q1 2005 750 0.75% Impaired Asset Ratio 563 522 512 C$ Millions 500 441 0.50% 203 250 0.25% 0 0.00% Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Gross Impaired Assets 563 522 512 441 347 Total Allowances 336 330 295 263 203 Net Impaired Assets (1) 227 192 217 178 144 Net Impaired Assets as 0.23%
Slide 23: Capital Management
Capital Management Q1 2005 247% 239% 238% 238% • Reorganization completed 235% January 4, 2005 • ROE improvement of 60 bps • 4.4 million shares ($173 million) Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 repurchased MCCSR Ratio (1) 235% 239% 238% 238% 247% • $400 million of preferred shares Debt Ratio 21.0% 20.6%
Slide 24: Sources of Earnings
Sources of Earnings Q1 2005 (C$ millions) Q1/05 Q1/04 Change Expected profit 380 365 15 Impact of new business (66) (31) (35) Experience gains or losses 71 83 (12) Assumption changes and management actions 69 55 14 MFS settlement and charges - (62) 62 Earnings from operations 454 410 44 Earnings on
Slide 25: Summary
Summary Q1 2005 • Strong constant currency earnings growth of 13% exceeded target of 10%. • ROE increase of 60 bps in Q1 compared favourably to full year target of 75 bps. • Continued rapid growth of Non-MFS VNB (+31%) points to profitable sales and value creation. • Results consistent with annual t
Slide 26: Embedded Value at December 31, 2004
2004 Embedded Value at December 31, 2004 26
Slide 27: Embedded Value - Highlights
Embedded Value - Highlights 2004 • Embedded Value (EV) before capital transactions is up 15% from opening EV. After dividends and share buyback of $832 million, EV per share is up 10% • Value of New Business (VNB) grew by 18% to $684 million on a constant currency basis • Towers Perrin have confirme
Slide 28: Growth in Embedded Value
Growth in Embedded Value 2004 ($ millions) 2004 2003 Embedded value at January 1 13,160 14,179 Gain on in-force business Expected growth 1,194 1,096 Experience variances 279 272 Assumption and methodology changes 156 (68) 1,629 1,300 Value of new business (1) 684 580 Currency (574) (1,744) Change in
Slide 29: Embedded Value Assumptions for 2004
Embedded Value Assumptions for 2004 2004 Canada United States Asia United Kingdom GAAP Basis Canadian Canadian Canadian Local Solvency Capital 150% MCCSR 150% MCCSR 150% MCCSR Local Solvency margin Discount Rate (%) 8.25 7.75 - 8.75 8 - 15 8 Risk Margin (%) 3.5 3.5 - 4.5 3.75 - 6.5 3.5 Equity Return
Slide 30: Questions & Answers
Questions & Answers Sun Life Financial