Company announces medium-term financial
objectives
TORONTO, March 5, 2015 /CNW/ - Sun Life Financial
Inc. (TSX: SLF) (NYSE: SLF)1 will hold Investor Day 2015
at 8:30 a.m. EST today, to provide
investors with an update on the Company's performance, strategic
goals, financial objectives and plans to grow the business. The
event will feature presentations from Dean
Connor, President and Chief Executive Officer, and other
members of the Sun Life Financial Executive Team.
"Since the announcement of our four pillar strategy three years
ago, Sun Life has taken action to reduce risk and earnings
volatility and delivered 15% per annum growth in underlying net
income," Connor said. "Today, we benefit from a balanced business
model which generates a large proportion of earnings from
wealth businesses, while roughly half of our results come from
operations outside of Canada. As a result of investments in
our business and successful execution of this balanced and
diversified model, we are on track to exceed our 2015 earnings
objective of $1.85 billion."
"Looking forward, we are confident that our four pillar strategy
will continue to deliver earnings growth and capital generation,"
Connor said in announcing the following medium-term financial
objectives for the Company:
- Annual underlying earnings per share (EPS) growth of
8-10%2,
- Underlining return on equity (ROE) in the range of 12-14%,
- Common share dividend payout ratio of 40-50% of underlying net
income
"Each of our four pillars has unique business drivers that will
contribute to achieving these objectives, but one common element
across the Company is a commitment to providing excellent customer
service," Connor said. "We are using a consistent research
approach across the enterprise to provide in-depth insights into
our customer experience and using those insights to drive business
planning, including the increasing use of digital initiatives to
build relationships with customers and make it easier to do
business with Sun Life."
During the Investor Day presentations, executives will provide
details of plans across the Company's four pillars to continue to
grow earnings to meet our medium-term financial objectives:
Leader in financial protection and wealth solutions in our
Canadian home market
- Expanding retail wealth distribution to accelerate growth,
including investing in offerings and distribution at Sun Life
Global Investments, which has exceeded $10
billion in client assets under management in four
years.
- Growing and evolving Sun Life's Career Sales Force and
independent channels by continuing to provide first-class products
and customer service.
- Continuing to build on leadership positions in both Group
Benefits and Group Retirement Services by enhancing their leading
Total Benefits platform and mobile initiatives, as well as Defined
Benefit Solutions pension-risk transfer and Client Solutions
businesses.
Premier global asset manager, anchored by MFS
- Consistently delivering strong, longer-term performance for
clients; MFS has grown average net assets by an average compound
rate of 18% over the past four years, and generated strong
earnings.
- Continuing to build its global research platform and expand its
distribution footprint, and investing for the long-term in
marketing, technology and infrastructure.
- Growing Sun Life Investment Management, which continues to win
new mandates in Canada and
expanding its platform into the U.S. through the announced
acquisition of New York-based Ryan
Labs Asset Management.
Leader in U.S. group benefits and International high net
worth solutions
- Expanding the Group Benefits product portfolio, particularly
Voluntary Benefits, and building enrollment, distribution and
technology capabilities, including partnerships with private
exchanges to capitalize on the Affordable Care Act.
- Expanding global distribution capabilities in our Sun Life
Financial International high net worth business.
Grwing Asia through distribution excellence in higher growth
markets
- Expanding agency distribution and productivity and growing
alternative channels, particularly bancassurance.
- Investing across the region to accelerate and professionalize
our agency sales force, with an aim to improve customer experience,
persistency and increase the number and quality of agents.
- Increasing Shariah businesses in Indonesia and Malaysia and expanding Health and Accident and
wealth businesses across Asia.
- Growing Health & Accident insurance and wealth management
solutions.
Key Factors and Assumptions Related to Medium-Term Financial
Objectives
The Company's medium-term financial objectives do not constitute
guidance. Our ability to achieve our medium-term financial
objectives is dependent on the Company's success in achieving the
growth initiatives, business objectives and productivity and
expense targets that will be described in the Investor Day
presentations and on certain other key assumptions that
include:
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(i)
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a modest increase in
interest rates, broadly in line with the forward yield
curve;
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(ii)
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average equity market
growth of 8% per annum, in-line with long term
experience;
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(iii)
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credit experience
within current actuarial assumptions;
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(iv)
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no significant
changes in regulatory capital requirements;
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(v)
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no significant
changes to our effective tax rate;
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(vi)
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share repurchases in
line with current program; and
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(vii)
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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.
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Our medium-term financial objectives are also based on best
estimate actuarial assumptions as at December 31, 2014. Our underlying ROE is
dependent upon capital levels and options for deployment of excess
capital. Our 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.
Although considered reasonable by the Company, we may not be
able to achieve our 2015 financial objectives or our medium-term
financial objectives as our assumptions may prove to be inaccurate.
Accordingly, our actual results could differ materially from our
objectives as described in this news release and in the Investor
Day presentations and we may not be able to achieve our
objectives.
Non-IFRS Financial Measures
The Company prepares its financial statements in accordance with
international financial reporting standards ("IFRS"). We report
certain financial measures that are not prepared in accordance with
IFRS ("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 and operating ROE are non-IFRS financial
measures, that exclude from reported net income and reported ROE
the impact of: (i) certain hedges in SLF Canada that do not qualify
for hedge accounting; (ii) fair value adjustments on share-based
payment awards at MFS; (iii) the loss on the sale of our U.S.
annuity business; (iv) the impact of assumption changes and
management actions related to the sale of our U.S. annuity
business; (v) restructuring and other related costs (including
impacts related to the sale of our U.S. annuity business); (vi)
goodwill and intangible asset impairment charges; and (vii) other
items that are not operational or ongoing in nature.
Underlying net income, underlying EPS and underlying ROE are
non-IFRS financial measures that remove the impact of the following
items: (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 net impact of changes in interest rates
that differ from our best estimate assumptions in the reporting
period on investment returns 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 net impact of changes in equity markets, net of hedging,
above or below our best estimate assumptions of approximately 2%
growth per quarter in the reporting period and of basis risk
inherent in our hedging program for products that provide benefit
guarantees; and (iii) the net 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 of assumption changes related to 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
or material changes to investment policies for asset segments
supporting our liabilities.
Our medium-term financial objectives are forward-looking
non-IFRS financial measures. It is not possible to provide
reconciliations of those financial objectives to IFRS financial
measures on a forward-looking basis because our medium-term
financial objectives are based on factors and assumptions that are
projected to occur in the future and actual results may vary
significantly from those projected factors and assumptions.
Additional information about non-IFRS financial measures and
reconciliations to the closest IFRS measure can be found in
our annual management's discussion and analysis for the year ended
December 31, 2014, under the heading
Non-IFRS Financial Measures.
Forward-Looking Statements
Certain statements made in this news release are forward-looking
and include, but are not limited to statements relating to our
growth strategies and initiatives, 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. Forward-looking statements may also include words
such as "aim", "anticipate", "assumption", "believe", "could",
"estimate", "expect", "goal", "intend", "may", "objective",
"outlook", "plan", "project", "seek", "should", "initiatives",
"strategy", "strive", "target", "will" and similar expressions. All
such forward-looking statements are made pursuant to the "safe
harbour provisions" of applicable Canadian securities laws and of
the United States Private Securities Litigation Reform Act of 1995.
The forward-looking statements contained in this news release
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 as set out in this news
release, 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:
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the assumptions and
other factors set out in this news release and in presentations at
Investor Day 2015;
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the matters set out
in the Company's 2014 annual management's discussion and analysis
under Impact of the Low Interest Rate Environment and Critical
Accounting Policies and Estimates and Risk Management;
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the risk factors set
out in the Company's annual information form for the year ended
December 31, 2014 under Risk Factors; and
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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.
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By their very nature, forward-looking statements are subject to
inherent risks and uncertainties and are based on several
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking statements. As a result, we cannot guarantee that
any forward-looking statement will materialize and undue reliance
should not be placed on these forward-looking statements. The
forward-looking statements contained in this news release describe
our expectations, estimates and projected future events at
March 5, 2015. Except as may be
required by Canadian securities laws, we do not undertake any
obligation to update or revise any forward-looking statements
contained in this news release. The forward-looking statements do
not reflect the potential impact of any non-recurring or other
special items or of any dispositions, mergers, acquisitions, other
business combinations or other transactions that may be announced
or that may occur after March 5,
2015.
Forward-looking statements are presented to assist investors and
others in understanding our expected financial position and results
of operations as at the date of this news release, as well as our
objectives, strategic priorities and business outlook, and in
obtaining a better understanding of our anticipated operating
environment. Readers are cautioned that such forward-looking
statements may not be appropriate for other purposes.
Material Risks
Important risk factors that could cause our assumptions and
estimates 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,
including our financial objectives, are listed below. These risks
include, but are not limited to: business risks - economic
and geo-political risks; risks in implementing business strategies;
changes in legislation and regulations, including capital
requirements and tax laws; the inability to maintain strong
distribution channels and risks relating to market conduct by
intermediaries and agents; risks relating to operations in
Asia, including SLF's joint
ventures; the impact of competition; the performance of SLF's
investments and investment portfolios managed for clients such as
segregated and mutual funds; market conditions that affect the
SLF's capital position or its ability to raise capital; risks
related to liquidity; downgrades in financial strength or credit
ratings; risks relating to estimates and judgments used in
calculating taxes; the impact of mergers, acquisitions and
divestitures; the ineffectiveness of risk management policies and
procedures; risks relating to the closed block of business;
market, credit and liquidity risks - the performance of
equity markets; credit risks related to issuers of securities held
in SLF's investment portfolio, debtors, structured securities,
reinsurers, derivative counterparties, other financial institutions
and other entities; changes or volatility in interest rates or
credit spreads or swap spreads; fluctuations in foreign currency
exchange rates; risks relating to real estate investments; risks
related to market liquidity; insurance risks - risks
relating to the rate of mortality improvement; risks relating to
policyholder behaviour; risks relating to product design and
pricing; risks relating to mortality and morbidity, including the
occurrence of natural or man-made disasters, pandemic diseases and
acts of terrorism; the impact of higher-than-expected future
expenses; the availability, cost and effectiveness of reinsurance;
operational risks - breaches or failure of information
system security and privacy, including cyber terrorism; risks
relating to SLF's information technology infrastructure; failure of
information systems and Internet-enabled technology; the ability to
attract and retain employees; legal and regulatory proceedings,
including inquiries and investigations; risks relating to financial
modelling errors; business continuity risks; dependence on
third-party relationships, including outsourcing arrangements; and
risks relating to the environment, environmental laws and
regulations and third-party policies.
Investor Day 2015 Information
Sun Life Financial will host Investor Day 2015 at 8:30 a.m. EST on Thursday,
March 5, 2015 to provide investors and analysts with an
update on the Company's performance, strategic goals, financial
objectives and plans to grow the business. To listen to the live
webcast and view the presentation slides, please visit
www.sunlife.com/InvestorDay 10 minutes prior to the start of the
presentations. The webcast and presentations will be archived on
the Company's website following the event.
About Sun Life Financial
Celebrating 150 years in 2015, Sun Life Financial is a leading
international financial services organization providing a diverse
range of protection and wealth products and services to individuals
and corporate customers. Sun Life Financial and its partners have
operations in key 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, 2014 the Sun Life Financial group of companies had total
assets under management of $734
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.
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1 Together with its subsidiaries and joint ventures,
collectively referred to as "the Company", "Sun Life Financial",
"Sun Life", "we", "our" and "us".
2 Operating net income, operating ROE, underlyng net
income and underlying ROE are non-IFRS financial measures. Our
financial objectives are forward-looking, non-IFRS financial
measures and are based on the key factors and assumptions and
subject to the material risks described in this news release. For
additional information see Non-IFRS Financial Measures and
Forward-Looking Statements.
SOURCE Sun Life Financial Inc. - Financial News