TORONTO, March 9, 2017 /CNW/ - Sun Life Financial Inc.
(TSX: SLF) (NYSE: SLF) (the "Company") is hosting Investor Day 2017
today, providing investors with an update on the Company's
performance, strategic goals, and is reaffirming its medium-term
financial objectives of:
- Annual underlying earnings per share (EPS) growth of
8-10%,
- Underlying return on equity (ROE) in the range of 12-14%,
- Common share dividend payout ratio of 40-50% of underlying net
income
"Over the past five years, Sun Life's Four Pillar strategy has
generated industry-leading shareholder returns. It combines a
balanced and diversified mix of businesses that each offer good
growth prospects, and a preferred risk and return on equity
profile," said Dean Connor,
President and Chief Executive Office, Sun Life Financial. "Today,
we are reaffirming our commitment to our medium-term financial
objectives, underpinned by organic and existing initiatives, margin
improvement activities, and growth from our newly acquired
businesses. Our strong capital position also provides us with
flexibility to support our growth aspirations."
The Company shared the following highlights from across its Four
Pillars where it aims to be a leader in the markets in which we
operate:
A Leader in Insurance and Wealth Solutions in our Canadian
Home Market
- Recent investments in growth including in Sun Life Global
Investments, Defined Benefit Solutions, Retail Wealth and Client
Solutions, which are expected to become more meaningful
contributors of net income in the Canadian business
- Investments in technology that harvest rich data and analytics
to create differentiated Client experiences and solutions
A Leader in Asia through
Distribution Excellence in Higher Growth Markets
- Sun Life has strong momentum in Asia, nearly tripling underlying net income
over the past five years
- With investments of almost $1
billion in the region since 2012, SLF Asia is
well-positioned to increase its Client base across the seven
countries in which it operates and 3 billion people currently
living in these markets
A Leader in U.S. Group Benefits and International High Net
Worth Solutions
- Deploying a plan to grow U.S. Group margins from 3.5% to
between 5-6% in the medium-term, and continue to integrate and
deliver on the synergies of its employee benefits acquisition
- Global trends in the International High Net Worth market and
strong internal capabilities to accelerate growth in the
International Life business
A Leader in Global Asset Management
- Strong investment performance and continued demand for actively
managed investment products, helping to position MFS Investment
Management to gain greater market share
- Reiterating Sun Life Investment Management's target of reaching
$100 billion in assets under
management (AUM)
"On the next leg of our journey, we've set a goal to become one
the best insurance and asset management companies in the world. We
see this objective as ambitious but achievable, and it means doing
more for our Clients," Connor said. "This includes the digital
transformation of our business models and Client experience. By
staying connected to our Clients we'll earn more of their business,
retain them longer, and they'll refer others to Sun Life".
Key Factors and Assumptions Related to Medium-Term Financial
Objectives
The Company's medium-term financial objectives are forward-looking
non-IFRS financial measures. Our ability to achieve those
objectives is dependent on the Company's success in achieving
growth initiatives, business objectives and productivity and
expense targets that are described in the Investor Day
presentations and on certain other key assumptions that
include:
- no significant changes in the level of interest rates;
- average total equity market return of approximately 8% per
annum;
- credit experience in line with best estimate actuarial
assumptions;
- no significant changes in the level of our regulatory capital
requirements;
- no significant changes to our effective tax rate;
- no significant change in the number of shares outstanding;
- other key assumptions include: no material changes to our
hedging program, hedging costs that are consistent with our best
estimate assumptions, no material assumption changes including
updates to the economic scenario generator and no material
accounting standard changes: and
- our best estimate actuarial assumptions used in determining our
insurance and investment contract liabilities.
Our underlying ROE is dependent upon capital levels and options
for deployment of excess capital. Our medium-term financial
objectives do not reflect the indirect effects of interest rate and
equity market movements including the potential impacts on goodwill
or the current valuation allowance on deferred tax assets as well
as other items that may be non-operational in nature.
Our target dividend payout ratio of 40-50% of our underlying net
income assumes that economic conditions and our results will enable
us to maintain our payout ratio in the target range, while
maintaining a strong capital position. The declaration, amount and
payment of dividends is subject to the approval of SLF Inc.'s Board
of Directors and our compliance with the capital requirements in
the Insurance Companies Act (Canada). Additional information on dividends
is provided in the section in our 2016 Annual MD&A under the
heading Capital and Liquidity Management – Shareholder
Dividends.
Although considered reasonable by the Company, we may not be
able to achieve our medium-term financial objectives as the
assumptions on which these objectives were based may prove to be
inaccurate. Accordingly, our actual results could differ materially
from our medium-term financial objectives as described in this news
release and in the Investor Day presentations and we may not be
able to achieve our objectives. Our medium-term financial
objectives do not constitute guidance.
The Company does not undertake any obligation to update or
revise its forward-looking statements to reflect events or
circumstances after the date of this document or to reflect the
occurrence of unanticipated events, except as required by law.
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
period to period. These non-IFRS financial measures do not have any
standardized meaning and may not be comparable with similar
measures used by other companies. For certain non-IFRS financial
measures, there are no directly comparable amounts under IFRS.
These non-IFRS financial measures should not be viewed as
alternatives to measures of financial performance determined in
accordance with IFRS.
Operating net income (loss) and financial measures based on
operating net income (loss), consisting of operating EPS or
operating loss per share, and operating ROE, are non-IFRS financial
measures. Operating net income (loss) excludes from reported net
income the impact of the following amounts that when adjusted,
enable our investors to better assess the underlying performance of
our businesses: (i) certain hedges in SLF Canada that do not
qualify for hedge accounting - this adjustment enhances the
comparability of our net income from period to period, as it
reduces volatility to the extent it will be offset over the
duration of the hedges; (ii) fair value adjustments on MFS's
share-based payment awards, that are settled with MFS's own shares
and accounted for as liabilities and measured at fair value each
reporting period until they are vested, exercised and repurchased -
this adjustment enhances the comparability of MFS's results with
publicly traded asset managers in the
United States; (iii) acquisition, integration and
restructuring amounts (including impacts related to acquiring and
integrating acquisitions); (iv) goodwill and intangible asset
impairment charges; and (v) other items that are not operational or
ongoing in nature (e.g., gain or loss on disposal of businesses).
Operating EPS also excludes the dilutive impact of convertible
instruments.
Underlying net income (loss) and financial measures based on
underlying net income (loss), consisting of underlying EPS or
underlying loss per share, and underlying ROE, are non-IFRS
financial measures. Underlying net income (loss) removes from
operating net income (loss) the impact of the following items that
create volatility in our results under IFRS, and when removed
assist in explaining our results from period to period: (a) market
related impacts; (b) assumption changes and management actions; and
(c) other items that have not been treated as adjustments to
operating net income, and when removed assist in explaining our
results from period to period. Market related impacts include: (i)
the impact of changes in interest rates that differ from our best
estimate assumptions in the reporting period and the value of
derivative instruments used in our hedging programs, including
changes in credit and swap spreads, and any changes to the assumed
fixed income reinvestment rates in determining the actuarial
liabilities; (ii) the impact of returns in equity markets, net of
hedging, above or below our best estimate assumptions of
approximately 2% per quarter in the reporting period and of basis
risk inherent in our hedging program for products that provide
benefit guarantees; and (iii) the impact of changes in the fair
value of real estate properties in the reporting period. Assumption
changes reflect the impact of revisions to the assumptions used in
determining our liabilities for insurance contracts and investment
contracts. The impact for insurance contracts and investment
contracts of actions taken by management in the current reporting
period, referred to as management actions include, for example,
changes in the prices of in-force products, new or revised
reinsurance on in-force business, and material changes to
investment policies for assets supporting our liabilities.
Underlying EPS also excludes the dilutive impact of convertible
instruments.
Other non-IFRS financial measures that we use include adjusted
revenue, administrative services only ("ASO") premium and deposit
equivalents, mutual fund assets and sales, managed fund assets and
sales, premiums and deposits, adjusted premiums and deposits,
assets under management ("AUM"), assets under administration,
reported ROE, and effective income tax rates on an operating net
income and underlying net income basis.
All EPS measures in this news release and the Investor Day
presentation refer to fully diluted EPS, unless otherwise stated.
As noted above, operating EPS and underlying EPS exclude the
dilutive impact of convertible instruments.
Forward-Looking Statements
From time to time, the Company makes written or oral
forward-looking statements within the meaning of certain securities
laws, including the "safe harbour" provisions of the United States
Private Securities Litigation Reform Act of 1995 and applicable
Canadian securities legislation. Forward-looking statements
contained in this news release include, but are not limited to
statements relating to our growth strategies and initiatives,
medium-term financial objectives, strategic goals, productivity and
expense initiatives and other business objectives; and other
statements that are not historical or are predictive in nature or
that depend upon or refer to future events or conditions and
statements that include words such as "aim", "anticipate",
"assumption", "believe", "could", "estimate", "expect", "goal",
"initiatives", "intend", "may", "objective", "outlook", "plan",
"project", "seek", "should", "strategy", "strive", "target", "will"
and similar expressions. Forward-looking statements include
the information concerning our possible or assumed future results
of operations. The forward-looking statements made in this news
release and Investor Day presentations are stated as at
March 9, 2017 and represent our
current expectations, estimates and projections regarding future
events and are not statements of historical facts. These
forward-looking statements are not a guarantee of future
performance and involve inherent risks and uncertainties and are
based on key factors and assumptions, all of which are difficult to
predict.
Future results and shareholder value may differ materially from
those expressed in forward-looking statements due to, among other
factors:
- the assumptions and other factors set out in this news release
and the Investor Day presentations;
- the matters set out in the Company's 2016 annual management's
discussion and analysis under Critical Accounting Policies and
Estimates and Risk Management;
- the risk factors set out in the Company's annual information
form for the year ended December 31,
2016 under Risk Factors; and
- other factors detailed in the Company's annual and interim
financial statements and any other filings with Canadian and U.S.
securities regulators made available at www.sedar.com and
www.sec.gov.
Important risk factors that could cause our assumptions and
estimates, and expectations and projections to be inaccurate and
our actual results or events to differ materially from those
expressed in or implied by the forward-looking statements contained
in this news release, are set out below. The realization of our
forward-looking statements, essentially depends on our business
performance which, in turn, is subject to many risks. Factors that
could cause actual results to differ materially from expectations
include, but are not limited to: credit risks - related to
issuers of securities held in our investment portfolio, debtors,
structured securities, reinsurers, counterparties, other financial
institutions and other entities; market risks - related to
the performance of equity markets; changes or volatility in
interest rates or credit spreads or swap spreads; real estate
investments; and fluctuations in foreign currency exchange rates;
insurance risks - related to mortality, morbidity, longevity
and policyholder behaviour; product design and pricing; the impact
of higher-than-expected future expenses; and the availability, cost
and effectiveness of reinsurance; business and strategic
risks - related to global economic and political conditions;
changes in distribution channels or Client behaviour including
risks relating to market conduct by intermediaries and agents; the
impact of competition; the design and implementation of business
strategies; changes in the legal or regulatory environment,
including capital requirements and tax laws; tax matters, including
estimates and judgments used in calculating taxes; the performance
of our investments and investment portfolios managed for Clients
such as segregated and mutual funds; our international operations,
including our joint ventures; market conditions that affect our
capital position or ability to raise capital; downgrades in
financial strength or credit ratings; and the impact of mergers,
acquisitions and divestitures; operational risks - related
to breaches or failure of information system security and privacy,
including cyber-attacks; our ability to attract and retain
employees; the execution and integration of mergers, acquisitions
and divestitures; legal, regulatory compliance and market conduct,
including the impact of regulatory inquiries and investigations;
our information technology infrastructure; a failure of information
systems and internet-enabled technology; dependence on third-party
relationships, including outsourcing arrangements; business
continuity; model errors; information management; the environment,
environmental laws and regulations and third-party policies; and
liquidity risks - the possibility that we will not be able
to fund all cash outflow commitments as they fall due.
The Company does not undertake any obligation to update or
revise its forward-looking statements to reflect events or
circumstances after the date of this document or to reflect the
occurrence of unanticipated events, except as required by law.
Investor Day 2017 Information
Sun Life Financial is holding Investor Day 2017 at 8:30 a.m. ET on Thursday,
March 9, 2017, to provide investors and analysts with an
update on the Company's performance, strategic goals, financial
objectives and plans. To listen to the live webcast and view the
presentation slides, please visit www.sunlife.com/investorday. The
webcast and presentations will be archived on the Company's website
following the event until Friday, March 9,
2018.
About Sun Life Financial
Sun Life Financial is a leading international financial services
organization providing a diverse range of insurance, wealth and
asset management solutions to individuals and corporate Clients.
Sun Life Financial has operations in a number of markets worldwide,
including Canada, the United States, the United Kingdom, Ireland, Hong
Kong, the Philippines,
Japan, Indonesia, India, China,
Australia, Singapore, Vietnam, Malaysia and Bermuda. As of December 31, 2016, Sun
Life Financial had total assets under management of $903 billion. For more information please
visit www.sunlife.com.
Sun Life Financial Inc. trades on the Toronto (TSX), New
York (NYSE) and Philippine (PSE) stock exchanges under the
ticker symbol SLF.
Note to Editors: All figures in Canadian dollars.
Media Relations Contact:
Gannon Loftus
Manager, Media & PR
Corporate Communications
T. 416-979-6345
gannon.loftus@sunlife.com
Investor Relations Contact:
Greg Dilworth
Vice-President
Investor Relations
T. 416-979-6230
investor.relations@sunlife.com
SOURCE Sun Life Financial Inc.