FoURth QUARtER 2010 CoMpAny pRoFILE
Fourth Quarter 2010
company profile December 31, 2010
WHO WE ARE
Sun Life Financial is a leading international financial services organization, offering a diverse range of life and health insurance, savings, investment management, retirement and pension products and services to both individual and corporate customers. Sun Life manages its operations and reports its financial results in five business segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial United States (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia) and Corporate. The Corporate segment includes the operations of Sun Life Financial’s United Kingdom business unit (SLF U.K.) and Corporate Support operations, which include the company’s the life reinsurance business, which was sold on December 31, 2010, and our run-off reinsurance business as well as investment income, expenses, capital and other items not allocated to Sun Life Financial’s other business segments.
An International Financial Services Company
Sun Life Financial Canada
U.S.
MFS
Asia
Corporate
Products and Services • • • • • •
Individual Life & Health Individual Annuity Group Life & Health Group Pension Asset Management Mutual Funds
• Individual Life • Individual Annuity • Group Life & Health
• Mutual Funds • Asset Management
• • • • •
Individual Life & Health Group Life Group Pension Mutual Funds Asset Management
• U .K. Pension products • Run-off reinsurance
Distribution • Direct Sales Agents • Independent & Managing General Agents • Financial Intermediaries • Pension & Benefit Consultants • Direct Sales (Including Internet & Telemarketing)
• Independent & Managing General Agents • Financial Intermediaries • Banks • Pension & Benefit Consultants
• Financial Intermediaries • Banks • Pension & Benefit Consultants
• Direct Sales Agents • Independent & Managing General Agents • Financial Intermediaries • Banks • Pension & Benefit Consultants • Direct Sales (Including Internet & Telemarketing)
ENTERPRISE PRIORITIES Generate value building growth
• Sustain profitable top-line growth
Intensify customer focus
• M eet the needs of customers by delivering top quality products and services that are grounded in consumer insight
Enhance productivity and efficiency
• Continuously improve productivity and efficiency to increase competitiveness
Strengthen risk management
• Continue to enhance risk management processes and practices to maximize shareholder value
Foster innovation
• Embed creativity and innovation throughout the organization to improve business results and gain competitive advantage
Life’s brighter under the sun
SLF CANADA SLF Canada is a market leader with a client base representing one in five Canadians. Its distribution breadth, strong service and technology infrastructure and brand recognition provide an excellent platform for growth. SLF Canada’s three business units Individual Insurance & Investments, Group Benefits and Group Wealth - offer a full range 4600 of protection and wealth accumulation products and services to individuals and corporate clients. 2010 BUSINESS HIGHLIGHTS
Managing segregated fund profitability & risk
• Individual life and health insurance sales grew by 20% to $201 million and reflected a more profitable product mix driven by strong sales of term life insurance and a successful re-entry into the participating insurance market.
1,083
2,514
• Group Benefits delivered strong sales results, with sales up 33% to $433 million for 2010. Group Benefits was also successful in installing a number of important administrative changes to the federal Public Service Health Care Plan, the largest group plan in Canada, enhancing the service we provide to over 1.2 million members and dependents.
2,104
100
2007
2008
2009
2010
Individual segregated fund deposits (C$ millions)
• In October 2010, Sun Life Global Investments (Canada) Inc. lanuched a new line-up of mutual funds, featuring funds managed by MFS, Sun Capital 11800 Advisers and McLean Budden. Emphasizing profitable individual insurance sales
478
538
• In Group Retirement Services, Pension rollover sales increased by 22% to a record $1 billion, and a four quarter retention rate of 50%. 250
1,736
1,752
1500
Steady growth in Group Benefits business in-force
Industry leading rollover sales
201 1,043 163
160
168
6,520
6,145
7,305
6,878
855 736
725
80
2007
2008
2009
2010
2000
2007
478
538
478
538
478
538
2008
2009
2010
300
2007
2008
2010
Rollover sales (C$ millions)
Business in-force (C$ millions)
Individual insurance sales (C$ millions)
2009
SLF ASIA SLF Asia operates through subsidiaries in the Philippines, Hong Kong and Indonesia as well as joint ventures with local partners in India, Indonesia and China. These five markets hold about 70% of the total Asian population. In India, Birla Sun Life Asset Management Company has been recognized as “The Asset Management Company of the Year” in India by Hong Kong’s The Asset Magazine. 2010 BUSINESS HIGHLIGHTS
1500
• In July 2010, Sun Life Everbright was restructured as a domestic insurance company, which reduced our ownership from 50% to 24.99%. The repositioning provides an opportunity for Sun Life Everbright to capture a larger share of China’s growing financial services sector. 22000 • In the Philippines, we are ranked number one in new business with a 16% market share, based on adjusted first year premium.
Asia Individual Insurance Sales
801
Birla Sun Life asset management*
13,610
833
12,244
680 538
596
BIRLA SUN LIFE INDIVIDUAL LIFE SALES By channel (% of sales*)
9,529
478
10,105
478
538
5,578
200
2007
2008
2009
2010
3000
2007
2008
2009
2010
Dec 2010
Individual life insurance sales* (C$ millions)
Assets under management (C$ millions)
* Includes the Company's joint ventures in India and China on a 100% basis
* Fiscal year ended March 31. Represents 100% of BSLAMC’s Assets Under Management.
Agents - 70% Bancassurance - 17%
CAB** - 13% ** Corporate agents & brokers
* Fiscal year-to-date from April 2010 to Dec. 2010
SLF U.S. SLF U.S. delivers protection, wealth accumulation and retirement income products to individuals and businesses through its three business units. The Annuities business unit offers variable annuities, fixed annuities and investment management services. The Individual business unit offers protection products to affluent individuals and small business owners, such as single and joint universal 600 Group (EBG) offers group life insurance, life, variable universal life and corporate-owned life insurance (COLI). The Employee Benefits short-term and long term disability insurance, medical stop loss insurance, dental insurance and voluntary worksite products. 2010 BUSINESS HIGHLIGHTS • In EBG, we reorganized our distribution model to increase specialization and better align with key segments such as the small-to-mid sized and voluntary markets. EBG reported record sales of US$612 million in 2010.
Gaining momentum in core Life Insurance sales 294
• In individual insurance, we exited the no-lapse guarantee universal life business to focus on product lines which have greater potential for sustainable and profitable growth.
538
• SLF U.S. announced the sponsorship of the Sun Life Financial Stadium, home of the Miami Dolphins, helping to increase aided consumer awareness to 18% from 6% in just five months.
174
146
136
89 20
2007
2008
Core life sales
Employee Benefits group
2,105
2,060
STRONG GROSS DOMESTIC VARIABLE ANNUITY SALES
2,192
2,083
3,213
478
500
2007
478
538
2008
2009
2010
200
2007
3,284
Business in-force (US$ millions)
41
40
2009
2010
31 23
2,000
2008
2010
Other insurance sales
INCREASE WHOLESALER PRODUCTIVITY
2,817 538
2009
33
(US$ millions)
75
6500
3500
179
149
478
538
2009
0
2010
2007
2008
Average Productivity (US$ millions)
Annuity gross sales (US$ millions)
MFS INVESTMENT MANAGEMENT MFS is a global asset management company, which offers products and services that address the varying needs of investors over time. Individual investors have access to MFS advisory services through a broad selection of financial products including mutual funds, variable annuities, separately managed accounts, college and retirement savings plans and offshore products. 2010 BUSINESS HIGHLIGHTS • MFS’ assets under management increased by 19% to end the year at a record high of US$222 billion. • Gross sales also reached a record high of US$53 billion. 30
300to be strong during 2010, with 85% of MFS’ fund • U.S. retail investment performance continued assets ranking in the top half of their respective three-year Lipper categories at December 31, 2010.
Strong Growth in Assets Under Management
Performance Translating into POSITIVE net sales
2010 Assets Under Management By Type
222 199.6
199.6
14.1
187.5
? 538
7.6
6.7
538 134.5
4.8 0
2009
Institutional
100
2010
Retail
(US$ billions)
2008
2009
2010
Assets under management (US$ millions)
Institutional - 57%
Retail - 43%
FINANCIAL STRENGTH
500
Well diversified balance sheet Q4’10 Invested Assets
Minimum Continuing Capital & Surplus Requirements (MCCSR)*
232%
221%
228%
2009
2010
538 478 0
2008
* Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of Sun Life Assurance Company of Canada
Bonds - 60% Cash & Short Term - 8% Real Estate - 4%
Diversified by geography
Financial Strength 2010 Revenue Breakdown*
Mortgages & Cop. Loans - 18% Equities - 5% Other - 5%
3
History of delivering consistent dividends
1.32
Canada - 46% Asia - 7% Corporate - 8%
U.S. - 33% MFS - 6%
1.44
1.44
1.44
2008
2009
2010
478
538 0
2007
*Based on 2010 FY Revenue- excluding fair value changes in Held-for-trading Assets
KEY TAKEWAYS
1 2 3
Financially strong
Fourth Quarter Financial Highlights
Strong risk management
• Net income of $508 million, compared to $296 million in the fourth quarter of 2009
Diversified and balanced
• E arnings per share (diluted) of $0.88, up from $0.52 in the previous year • R eturn on equity of 12.4%, up from 7.6% in the same period one year ago • Quarterly dividend of $0.36 per share
For further information please contact: Investor Relations [email protected] www.sunlife.com/investors
The forward-looking information in this document is not a guarantee of future performance and involves certain risks and uncertainties that are difficult to predict. The future results and stockholder value of the Company may differ materially from those expressed in this forward-looking information due to, among other factors, the matters set out under “Risk Factors” in the Company’s Annual Information Form and the factors detailed in its other filings with the Canadian and U.S. securities regulators, including its annual and interim management’s discussion and analysis (MD&A), and the annual and interim financial statements. These documents are available for review at www.sedar.com. Management evaluates the Company’s performance on the basis of financial measures calculated in accordance with GAAP. Management also uses certain non-GAAP measures such as LTM, Operating EPS & ROE, VNB, Embedded Value, Sources of Earnings and information calculated on a constant currency basis. “LTM” refers to the last twelve months ended this quarter. This measure is used to allow comparison with past annual results. Management believes these measures provide useful information to investors but these measures do not have standardized meanings and may not be comparable with similar measures used by other companies. Additional information about these non-GAAP measures is provided in the Company’s annual and interim MD&A.
company profile December 31, 2010
WHO WE ARE
Sun Life Financial is a leading international financial services organization, offering a diverse range of life and health insurance, savings, investment management, retirement and pension products and services to both individual and corporate customers. Sun Life manages its operations and reports its financial results in five business segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial United States (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia) and Corporate. The Corporate segment includes the operations of Sun Life Financial’s United Kingdom business unit (SLF U.K.) and Corporate Support operations, which include the company’s the life reinsurance business, which was sold on December 31, 2010, and our run-off reinsurance business as well as investment income, expenses, capital and other items not allocated to Sun Life Financial’s other business segments.
An International Financial Services Company
Sun Life Financial Canada
U.S.
MFS
Asia
Corporate
Products and Services • • • • • •
Individual Life & Health Individual Annuity Group Life & Health Group Pension Asset Management Mutual Funds
• Individual Life • Individual Annuity • Group Life & Health
• Mutual Funds • Asset Management
• • • • •
Individual Life & Health Group Life Group Pension Mutual Funds Asset Management
• U .K. Pension products • Run-off reinsurance
Distribution • Direct Sales Agents • Independent & Managing General Agents • Financial Intermediaries • Pension & Benefit Consultants • Direct Sales (Including Internet & Telemarketing)
• Independent & Managing General Agents • Financial Intermediaries • Banks • Pension & Benefit Consultants
• Financial Intermediaries • Banks • Pension & Benefit Consultants
• Direct Sales Agents • Independent & Managing General Agents • Financial Intermediaries • Banks • Pension & Benefit Consultants • Direct Sales (Including Internet & Telemarketing)
ENTERPRISE PRIORITIES Generate value building growth
• Sustain profitable top-line growth
Intensify customer focus
• M eet the needs of customers by delivering top quality products and services that are grounded in consumer insight
Enhance productivity and efficiency
• Continuously improve productivity and efficiency to increase competitiveness
Strengthen risk management
• Continue to enhance risk management processes and practices to maximize shareholder value
Foster innovation
• Embed creativity and innovation throughout the organization to improve business results and gain competitive advantage
Life’s brighter under the sun
SLF CANADA SLF Canada is a market leader with a client base representing one in five Canadians. Its distribution breadth, strong service and technology infrastructure and brand recognition provide an excellent platform for growth. SLF Canada’s three business units Individual Insurance & Investments, Group Benefits and Group Wealth - offer a full range 4600 of protection and wealth accumulation products and services to individuals and corporate clients. 2010 BUSINESS HIGHLIGHTS
Managing segregated fund profitability & risk
• Individual life and health insurance sales grew by 20% to $201 million and reflected a more profitable product mix driven by strong sales of term life insurance and a successful re-entry into the participating insurance market.
1,083
2,514
• Group Benefits delivered strong sales results, with sales up 33% to $433 million for 2010. Group Benefits was also successful in installing a number of important administrative changes to the federal Public Service Health Care Plan, the largest group plan in Canada, enhancing the service we provide to over 1.2 million members and dependents.
2,104
100
2007
2008
2009
2010
Individual segregated fund deposits (C$ millions)
• In October 2010, Sun Life Global Investments (Canada) Inc. lanuched a new line-up of mutual funds, featuring funds managed by MFS, Sun Capital 11800 Advisers and McLean Budden. Emphasizing profitable individual insurance sales
478
538
• In Group Retirement Services, Pension rollover sales increased by 22% to a record $1 billion, and a four quarter retention rate of 50%. 250
1,736
1,752
1500
Steady growth in Group Benefits business in-force
Industry leading rollover sales
201 1,043 163
160
168
6,520
6,145
7,305
6,878
855 736
725
80
2007
2008
2009
2010
2000
2007
478
538
478
538
478
538
2008
2009
2010
300
2007
2008
2010
Rollover sales (C$ millions)
Business in-force (C$ millions)
Individual insurance sales (C$ millions)
2009
SLF ASIA SLF Asia operates through subsidiaries in the Philippines, Hong Kong and Indonesia as well as joint ventures with local partners in India, Indonesia and China. These five markets hold about 70% of the total Asian population. In India, Birla Sun Life Asset Management Company has been recognized as “The Asset Management Company of the Year” in India by Hong Kong’s The Asset Magazine. 2010 BUSINESS HIGHLIGHTS
1500
• In July 2010, Sun Life Everbright was restructured as a domestic insurance company, which reduced our ownership from 50% to 24.99%. The repositioning provides an opportunity for Sun Life Everbright to capture a larger share of China’s growing financial services sector. 22000 • In the Philippines, we are ranked number one in new business with a 16% market share, based on adjusted first year premium.
Asia Individual Insurance Sales
801
Birla Sun Life asset management*
13,610
833
12,244
680 538
596
BIRLA SUN LIFE INDIVIDUAL LIFE SALES By channel (% of sales*)
9,529
478
10,105
478
538
5,578
200
2007
2008
2009
2010
3000
2007
2008
2009
2010
Dec 2010
Individual life insurance sales* (C$ millions)
Assets under management (C$ millions)
* Includes the Company's joint ventures in India and China on a 100% basis
* Fiscal year ended March 31. Represents 100% of BSLAMC’s Assets Under Management.
Agents - 70% Bancassurance - 17%
CAB** - 13% ** Corporate agents & brokers
* Fiscal year-to-date from April 2010 to Dec. 2010
SLF U.S. SLF U.S. delivers protection, wealth accumulation and retirement income products to individuals and businesses through its three business units. The Annuities business unit offers variable annuities, fixed annuities and investment management services. The Individual business unit offers protection products to affluent individuals and small business owners, such as single and joint universal 600 Group (EBG) offers group life insurance, life, variable universal life and corporate-owned life insurance (COLI). The Employee Benefits short-term and long term disability insurance, medical stop loss insurance, dental insurance and voluntary worksite products. 2010 BUSINESS HIGHLIGHTS • In EBG, we reorganized our distribution model to increase specialization and better align with key segments such as the small-to-mid sized and voluntary markets. EBG reported record sales of US$612 million in 2010.
Gaining momentum in core Life Insurance sales 294
• In individual insurance, we exited the no-lapse guarantee universal life business to focus on product lines which have greater potential for sustainable and profitable growth.
538
• SLF U.S. announced the sponsorship of the Sun Life Financial Stadium, home of the Miami Dolphins, helping to increase aided consumer awareness to 18% from 6% in just five months.
174
146
136
89 20
2007
2008
Core life sales
Employee Benefits group
2,105
2,060
STRONG GROSS DOMESTIC VARIABLE ANNUITY SALES
2,192
2,083
3,213
478
500
2007
478
538
2008
2009
2010
200
2007
3,284
Business in-force (US$ millions)
41
40
2009
2010
31 23
2,000
2008
2010
Other insurance sales
INCREASE WHOLESALER PRODUCTIVITY
2,817 538
2009
33
(US$ millions)
75
6500
3500
179
149
478
538
2009
0
2010
2007
2008
Average Productivity (US$ millions)
Annuity gross sales (US$ millions)
MFS INVESTMENT MANAGEMENT MFS is a global asset management company, which offers products and services that address the varying needs of investors over time. Individual investors have access to MFS advisory services through a broad selection of financial products including mutual funds, variable annuities, separately managed accounts, college and retirement savings plans and offshore products. 2010 BUSINESS HIGHLIGHTS • MFS’ assets under management increased by 19% to end the year at a record high of US$222 billion. • Gross sales also reached a record high of US$53 billion. 30
300to be strong during 2010, with 85% of MFS’ fund • U.S. retail investment performance continued assets ranking in the top half of their respective three-year Lipper categories at December 31, 2010.
Strong Growth in Assets Under Management
Performance Translating into POSITIVE net sales
2010 Assets Under Management By Type
222 199.6
199.6
14.1
187.5
? 538
7.6
6.7
538 134.5
4.8 0
2009
Institutional
100
2010
Retail
(US$ billions)
2008
2009
2010
Assets under management (US$ millions)
Institutional - 57%
Retail - 43%
FINANCIAL STRENGTH
500
Well diversified balance sheet Q4’10 Invested Assets
Minimum Continuing Capital & Surplus Requirements (MCCSR)*
232%
221%
228%
2009
2010
538 478 0
2008
* Minimum Continuing Capital and Surplus Requirements (MCCSR) ratio of Sun Life Assurance Company of Canada
Bonds - 60% Cash & Short Term - 8% Real Estate - 4%
Diversified by geography
Financial Strength 2010 Revenue Breakdown*
Mortgages & Cop. Loans - 18% Equities - 5% Other - 5%
3
History of delivering consistent dividends
1.32
Canada - 46% Asia - 7% Corporate - 8%
U.S. - 33% MFS - 6%
1.44
1.44
1.44
2008
2009
2010
478
538 0
2007
*Based on 2010 FY Revenue- excluding fair value changes in Held-for-trading Assets
KEY TAKEWAYS
1 2 3
Financially strong
Fourth Quarter Financial Highlights
Strong risk management
• Net income of $508 million, compared to $296 million in the fourth quarter of 2009
Diversified and balanced
• E arnings per share (diluted) of $0.88, up from $0.52 in the previous year • R eturn on equity of 12.4%, up from 7.6% in the same period one year ago • Quarterly dividend of $0.36 per share
For further information please contact: Investor Relations [email protected] www.sunlife.com/investors
The forward-looking information in this document is not a guarantee of future performance and involves certain risks and uncertainties that are difficult to predict. The future results and stockholder value of the Company may differ materially from those expressed in this forward-looking information due to, among other factors, the matters set out under “Risk Factors” in the Company’s Annual Information Form and the factors detailed in its other filings with the Canadian and U.S. securities regulators, including its annual and interim management’s discussion and analysis (MD&A), and the annual and interim financial statements. These documents are available for review at www.sedar.com. Management evaluates the Company’s performance on the basis of financial measures calculated in accordance with GAAP. Management also uses certain non-GAAP measures such as LTM, Operating EPS & ROE, VNB, Embedded Value, Sources of Earnings and information calculated on a constant currency basis. “LTM” refers to the last twelve months ended this quarter. This measure is used to allow comparison with past annual results. Management believes these measures provide useful information to investors but these measures do not have standardized meanings and may not be comparable with similar measures used by other companies. Additional information about these non-GAAP measures is provided in the Company’s annual and interim MD&A.
