Sun Life Financial Reports Fourth Quarter and Full Year 2015 Results
OREANDA-NEWS. The information contained in this document concerning the fourth quarter of 2015 is based on the audited annual and unaudited interim financial results of Sun Life Financial Inc. ("SLF Inc.") for the period ended December 31, 2015. SLF Inc. and its subsidiaries are collectively referred to as "the Company", "Sun Life Financial", "we", "our", and "us", and also includes, where applicable, our joint ventures and associates. Unless otherwise noted, all amounts are in Canadian dollars.
Fourth Quarter 2015 Financial Highlights
- Operating net income(1) of $598 million or $0.98 per share(1), compared to $511 million or $0.83 per share in the fourth quarter of 2014. Reported net income of $536 million or $0.87 per share, compared to $502 million or $0.81 per share in the same period last year
- Underlying net income(1) of $646 million or $1.05 per share(1) in the fourth quarter of 2015, compared to $360 million or $0.59 per share in the fourth quarter of 2014
- Operating return on equity(1) ("ROE") of 12.7% and underlying ROE(1) of 13.8% in the fourth quarter of 2015, compared to operating ROE and underlying ROE of 12.6% and 8.8% in the same period last year, respectively
- Quarterly dividend declared of $0.39 per share
- Minimum Continuing Capital and Surplus Requirements ratio for Sun Life Assurance Company of Canada of 240%
- Global assets under management ("AUM") of $891 billion
2015 Annual Financial Highlights
- Operating net income of $2,253 million or $3.68 per share, compared to $1,920 million or $3.13 per share in 2014. Reported net income of $2,185 million or $3.55 per share, compared to $1,762 million or $2.86 per share in 2014
- Underlying net income of $2,305 million or $3.76 per share in 2015, compared to $1,816 million or $2.96 per share in 2014
- Operating ROE of 12.6% and underlying ROE of 12.8% in 2015, compared to operating ROE and underlying ROE of 12.2% and 11.6% in 2014, respectively
- Dividends declared in the year of $1.51 per share
"Our strong fourth quarter capped off a successful year of growth and momentum for Sun Life," said Dean Connor, President and Chief Executive Officer, Sun Life Financial. "In 2015, we achieved underlying net income of $2.3 billion, surpassing our 2015 financial objective of $1.85 billion and ended the year with assets under management of $891 billion. We increased our quarterly common share dividend by 8% while maintaining a strong capital position. We also announced six transactions, committing $2.4 billion in capital in building our asset management businesses, adding capabilities and scale in our U.S. operations and strengthening our presence in Asia."
"The benefits of Sun Life's four pillar strategy, diversified business mix, and de-risking actions were evident in 2015. The drop in commodity prices, the TSX decline and lower interest rates created headwinds for SLF Canada. However, the resulting devaluation of the Canadian dollar increased income generated from our business outside of Canada, which also benefited from relatively stronger economic growth," said Dean Connor.
"In 2015, our clients received approximately $14 billion in claims and benefits payments. Our clients need us now more than ever, and we will continue to find new and innovative ways to provide them with the right products and solutions to achieve lifetime financial security."
|(1)||Operating net income (loss), operating earnings (loss) per share, operating ROE, underlying net income (loss), underlying earnings (loss) per share, and underlying ROE are not based on International Financial Reporting Standards. All earnings per share ("EPS") measures refer to fully diluted EPS, unless otherwise stated. See Use of Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures.|
"Our Canadian operations executed well. We grew our Wealth business with the successful launch of our new segregated fund, Sun Life Guaranteed Investment Funds, and grew SLGI mutual fund sales by 28%," Connor said. "We ended the year with over 4,100 people in our Career Sales Force. Both Group Benefits and Group Retirement Services extended their #1 positions in the Canadian market through continuing innovation, strong client services and strong sales."
"In the U.S., we made excellent progress this year in improving the profitability of our group life and disability business, and we continue to be a leader in medical stop-loss insurance where we reported a 12% increase in business in-force year over year," said Connor. "Our acquisition of Assurant, Inc.'s U.S. Employee Benefits business is expected to close by the end of the first quarter of 2016, and this will add both scale and new capabilities to drive growth in our U.S. pillar."
"MFS maintained its focus on client service and continued its strong investment performance," said Connor. "MFS ended the year with assets under management of US$413 billion and maintained margins of 40% for the year. We expanded our asset management pillar by acquiring Bentall Kennedy, Prime Advisors and Ryan Labs in 2015, which together with Sun Life Investment Management Inc., generated net sales of $1.5 billion in the year."
"SLF Asia had a strong year, finishing with underlying net income of $252 million and increased insurance and wealth sales for 2015," said Connor. "We also announced agreements to increase our joint venture ownership in PVI Sun Life in Vietnam and Birla Sun Life Insurance in India, in line with our Asia strategy."
Reported net income was $536 million in the fourth quarter of 2015, compared to reported net income of $502 million in the fourth quarter of 2014. The following table sets out our operating net income and underlying net income for the fourth quarter of 2015 and 2014.
|($ millions, after-tax)||Q4'15||Q4'14|
|Operating net income||598||511|
|Market related impacts||(36)||(21)|
|Assumption changes and management actions||(12)||172|
|Underlying net income||646||360|
The Board of Directors of SLF Inc. today declared a quarterly shareholder dividend of $0.39 per common share.
Our strategy is focused on four key pillars of growth. We detail our continued progress against these pillars below.
Fourth Quarter Highlights
Leader in financial protection and wealth solutions in our Canadian home market
Sales in our Canadian business units continued to grow in the final quarter of 2015. In Individual Insurance & Wealth, wealth sales grew by 13% over the same quarter in 2014 driven by Sun Life Global Investments (Canada) Inc. ("SLGI") mutual fund sales. Our new segregated fund product, Sun Life Guaranteed Investment Funds, produced sales of $125 million in the fourth quarter leading to a 57% increase in segregated fund sales over the same period in the prior year. Insurance sales grew by 14% compared to the fourth quarter of 2014, largely driven by participating insurance and term and personal health insurance.
SLGI reported retail sales of $383 million, up from $204 million in the same period of the prior year. In addition, SLGI received the Morningstar Award for "Best Pooled Fund of Fund Series" for the Granite Target Date Series funds.
Group Retirement Services ("GRS") had total sales of $2.2 billion, compared to $3.0 billion in the fourth quarter of 2014 which included a single large retained case. GRS total sales were driven by strong Defined Benefit Solutions ("DBS") sales of $898 million, where we continued to innovate in the defined benefit space with a $530 million annuity transaction. GRS total sales also included pension rollover sales of $687 million in the fourth quarter of 2015, up from $481 million in the fourth quarter of 2014.
Our Group Benefits ("GB") business had sales of $78 million in the fourth quarter, compared to $209 million in the prior year due to a significant large case win in the fourth quarter of 2014. As a result of overall growth in net sales, business in-force of $9.1 billion was up 6% in the year compared to 2014.
Premier global asset manager, anchored by MFS
MFS Investment Management ("MFS") had AUM of US$413 billion as at December 31, 2015, compared to US$404 billion as at September 30, 2015. Gross sales were US$16.5 billion in the fourth quarter of 2015 while net outflows were US$4.7 billion, primarily due to institutional client net outflows.
MFS's long-term retail fund performance remained strong with 75%, 87% and 97% of MFS's mutual fund assets ranked in the top half of their Lipper categories based on three-, five- and ten-year performance, respectively, as of December 31, 2015.
Sun Life Investment Management ("SLIM") completed its first full quarter following the completion of the acquisitions made in 2015 with net sales of $454 million and AUM of $58 billion.
Leader in U.S. group benefits and International high net worth solutions
On September 9, 2015, we entered into an agreement for the purchase of Assurant, Inc.'s U.S. Employee Benefits business ("Assurant EB"). The transaction is expected to close by the end of the first quarter of 2016, subject to regulatory approvals and customary closing conditions.
In U.S. Group Benefits, our actions in expense management, claims management and pricing continued to improve the results of our U.S. life and disability business.
In December, we re-focused our International business on the life insurance segment, where there is greater opportunity to achieve stronger growth and profitability and where we will continue to deliver a strong value proposition to our customers. At the same time, the International wealth business was closed to new sales.
Growing Asia through distribution excellence in higher growth markets
In the fourth quarter of 2015, we announced increased investments in our joint ventures in Vietnam and India. On January 7, 2016, we increased our ownership in our Vietnam joint venture, PVI Sun Life Insurance Company Limited ("PVI Sun Life"), from 49% to 75%. In December 2015, we announced an agreement to increase our ownership interest in Birla Sun Life Insurance Company Limited ("BSLI") from 26% to 49%. The BSLI transaction is expected to be completed by the end of the first quarter of 2016, subject to regulatory approvals and customary closing conditions.
In SLF Asia, we had individual insurance sales of $147 million in the fourth quarter of 2015 which reflected growth in Hong Kong, Indonesia, India and Malaysia over the fourth quarter of 2014, offset by lower sales in the Philippines which had exceptional sales in the fourth quarter of 2014. Overall, wealth sales slowed during the quarter across the region, reflecting uncertain market conditions.
Sun Life of Canada (Philippines), Inc. was awarded the "2015 Life Insurance Company of the Year Award" in the Asia Insurance Industry Awards. Through this award, we see recognition of our customer focus and progress on our Most Respected Agency initiative, an important strategy supporting our Asia growth pillar.
Leader in financial protection and wealth solutions in our Canadian home market
- During 2015, we continued to build our wealth businesses. GRS continued to be ranked #1 in market share(1), with a very strong year in defined contribution sales. In addition, Defined Benefit Solutions ("DBS") achieved sales of $6.6 billion driven by a $5 billion ground-breaking large case longevity insurance agreement and an innovative annuity transaction of $530 million. Client Solutions pension rollover sales were also strong at $2.2 billion, increasing by 40% from 2014. In the individual wealth market, we launched our new segregated fund product, Sun Life Guaranteed Investment Funds, with sales of $259 million for the year. SLGI completed its fifth full year of operation, and continued to offer top performing funds, with 15 of the 17 mutual funds with five-year performance records exceeding the peer median(2).
|(1)||As measured by Benefits Canada magazine's 2015 CAP Suppliers Report, based on June 30, 2015 assets under administration, and released in December 2015.|
|(2)||Morningstar performance statistics as at December 31, 2015.|