Company reports underlying net income of
$717 million and reported net income
of $623 million
The information in this document is based on the unaudited
interim financial results of Sun Life Financial Inc. ("SLF Inc.")
for the period ended March 31, 2019.
SLF Inc., its subsidiaries and, where applicable, its joint
ventures and associates are collectively referred to as "the
Company", "Sun Life Financial", "we", "our", and "us". Unless
otherwise noted, all amounts are in Canadian dollars.
TORONTO, May 8, 2019 /CNW/ - Sun Life Financial Inc. (TSX:
SLF) (NYSE: SLF) today announced its results for the first quarter
ended March 31, 2019. First quarter
reported net income was $623 million
and underlying net income(1) was $717 million.
Quarterly
results
|
|
Profitability
|
Q1'19
|
Q1'18
|
|
Reported net income
($ millions)
|
623
|
669
|
|
Underlying net
income(1) ($ millions)
|
717
|
770
|
|
Reported
EPS(2) ($)
|
1.04
|
1.09
|
|
Underlying
EPS(1)(2) ($)
|
1.20
|
1.26
|
|
Reported
ROE(1)
|
11.5%
|
13.1%
|
|
Underlying
ROE(1)
|
13.3%
|
15.1%
|
Growth
|
Q1'19
|
Q1'18
|
|
Insurance
sales(1) ($ millions)
|
780
|
665
|
|
Wealth
sales(1) ($ billions)
|
36.0
|
39.8
|
|
Value of new
business(1) ($ millions)
|
382
|
334
|
|
Assets under
management(1) ($ billions)
|
1,011
|
979
|
Financial
Strength
|
Q1'19
|
Q4'18
|
|
LICAT
ratios(3)
|
|
|
|
Sun Life Financial
Inc.
|
145%
|
144%
|
|
Sun Life
Assurance(4)
|
132%
|
131%
|
|
Financial leverage
ratio(1)
|
21.1%
|
21.2%
|
"We've delivered a strong first quarter with underlying net
income of $717 million, up 9% over
the prior year excluding the one-time interest on par seed capital,
and 14% growth in the value of new business," said Dean Connor, President and CEO, Sun Life
Financial. "We also achieved a major milestone with more than
one trillion dollars of assets under
management as at March 31, 2019. We
are pleased to announce an increase in our common share dividend by
5% to $0.525 and our intention to
amend our normal course issuer bid to allow for the purchase of an
additional four million common shares."
Connor added "We continue to drive outcomes that reflect our
Purpose and make it easier to do business with us. For example, in
the U.S., the newly launched Sun Life and Maxwell Health digital
platform offers employees of our Group Benefits plans the support
they need to make personalized benefit decisions through a faster
and more intuitive experience. And in Canada, Sun Life has collaborated with Rise
People Inc. to offer an integrated human resources, payroll and
benefits solution that drives greater value for employers and
employees through a digital experience."
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
All EPS measures
refer to fully diluted EPS, unless otherwise stated.
|
(3)
|
For further
information on the Life Insurance Capital Adequacy Test ("LICAT")
see section E - Financial Strength in this document.
|
(4)
|
Sun Life Assurance
Company of Canada ("Sun Life Assurance") is SLF Inc.'s principal
operating life insurance subsidiary.
|
Financial and Operational Highlights - Quarterly Comparison
(Q1 2019 vs. Q1 2018)
Our strategy is focused on four key pillars of growth, where we
aim to be a leader in the markets in which we operate. We detail
our continued progress in the four pillars below.
($ millions, unless
otherwise noted)
|
|
|
|
|
|
|
Reported net
income (loss)
|
Underlying net
income (loss)(1)
|
Insurance
sales(1)
|
Wealth
sales(1)
|
|
Q1'19
|
Q1'18
|
change
|
Q1'19
|
Q1'18
|
change
|
Q1'19
|
Q1'18
|
change
|
Q1'19
|
Q1'18
|
change
|
SLF Canada
|
237
|
249
|
(5)%
|
237
|
295
|
(20)%
|
362
|
296
|
22%
|
2,825
|
3,825
|
(26)%
|
SLF U.S.
|
124
|
96
|
29%
|
150
|
129
|
16%
|
160
|
136
|
18%
|
—
|
—
|
—
|
SLF Asset
Management
|
219
|
210
|
4%
|
227
|
231
|
(2)%
|
—
|
—
|
—
|
31,287
|
32,264
|
(3)%
|
SLF Asia
|
80
|
133
|
(40)%
|
122
|
128
|
(5)%
|
258
|
233
|
11%
|
1,881
|
3,736
|
(50)%
|
Corporate
|
(37)
|
(19)
|
nm(2)
|
(19)
|
(13)
|
nm(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
Total
|
623
|
669
|
(7)%
|
717
|
770
|
(7)%
|
780
|
665
|
17%
|
35,993
|
39,825
|
(10)%
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
Not
meaningful.
|
Our reported net income of $623
million in the first quarter of 2019 decreased $46 million from the first quarter of 2018, while
underlying net income decreased $53
million to $717 million. This
variance was primarily due to interest on par seed capital of
$110 million in the first quarter of
2018(1) and unfavourable credit experience, partially
offset by favourable mortality, lapse and other policyholder
behaviour, investing activity gains, morbidity experience and other
experience. In addition, underlying net income increased by
$22 million as a result of the impact
of foreign exchange.
Our reported ROE(2) was 11.5% in the first quarter of
2019. Underlying ROE(2) was 13.3%, compared to 15.1% in
the first quarter of 2018, reflecting higher underlying net income
in the first quarter of 2018 and increased common shareholders'
equity due to higher retained earnings and the impact of foreign
exchange reflected in other comprehensive income ("OCI"). Our
dividend is increasing by $0.025,
from $0.50 to $0.525. SLF Inc. and its wholly-owned holding
companies had $2,564 million in cash
and other liquid assets as at March 31,
2019.
A Leader in Insurance and Wealth Solutions in our Canadian
Home Market
SLF Canada's reported net income of $237
million in the quarter decreased 5% compared to the same
period in 2018, reflecting improved market related impacts more
than offset by the change in underlying net income, which decreased
$58 million due to interest on par
seed capital of $75 million in the
first quarter of 2018 and unfavourable credit experience, partially
offset by strong business growth across all business units and
investing activity gains.
SLF Canada insurance sales increased 22% to $362 million in the first quarter of 2019,
primarily driven by large case sales in Group Benefits ("GB") and
increased sales in individual insurance. Wealth sales decreased 26%
compared to the same quarter in the prior year, reflecting a large
case sale in Group Retirement Services ("GRS") in the first quarter
of 2018. Individual wealth sales were down 13% reflecting a weaker
RRSP season across the industry.
We have maintained our leadership position in our GB business,
ranking #1 based on 2018 year-end insured premiums and non- insured
deposits.(3) Combined with our #1 ranked GRS
business(4), this allows us to bring Clients a total
benefits offering, which includes integrated seamless solutions
across benefits and pensions.
We continue our focus on addressing the needs of Canadians and
shaping the industry in response to those needs, offering coverages
that reflect changing demographics, society and social values.
During the quarter, SLF Canada was the first major group benefits
provider to offer gender affirmation coverage, in line with our
previous industry firsts such as virtual health care coverage and
provider search with user ratings.
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Interest on seed
capital transferred from the participating account to the
shareholder account. For additional information, see section C -
Profitability in this document.
|
(2)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(3)
|
2019 Group Benefits
Providers Report published by Benefits Canada; based on insured
premiums and non-insured deposits.
|
(4)
|
Benefits Canada's
2018 Capital Accumulation Plan ("CAP") supplier survey, based on
June 30, 2018 assets under administration for top 10 CAP
providers.
|
A Leader in U.S. Group Benefits
Reported net income for SLF U.S. was $124
million, up $28 million from
the same quarter in the prior year, and underlying net income was
$150 million, up $21 million. Both reported and underlying net
income were driven by strong mortality and morbidity experience,
partially offset by interest on par seed capital of $35 million in the first quarter of 2018,
unfavourable credit experience and lower investing activity gains.
The after-tax profit margin for Group Benefits(1) was
7.9% as of the first quarter of 2019 reflecting favourable medical
stop-loss experience, compared to 5.6% as of the first quarter of
2018.
SLF U.S. Group Benefits sales in U.S. dollars increased 11%
compared to the same quarter in 2018, driven by increased medical
stop- loss sales, reflecting our strong momentum and leadership
position in the market.
Leveraging our Maxwell Health acquisition, we launched a
combined digital platform providing employers and their employees
with an intuitive digital benefits experience. In addition to
supporting the complete portfolio of Sun Life benefits, the new Sun
Life + Maxwell Health platform also enrolls health insurance from
third parties, provides real-time, 24/7 access to data and
automates HR tasks. This advanced technology solution makes it easy
for members to understand the benefit options available, which
helps people get the coverage they need.
A Leader in Global Asset Management
SLF Asset Management's reported net income of $219 million was up 4% from the first quarter of
2018 reflecting lower fair value adjustments on MFS Investment
Management's ("MFS") share-based payment awards. Underlying net
income was $227 million in the first
quarter of 2019, down 2% from the first quarter of 2018, reflecting
lower average net assets, largely offset by favourable investment
income, including return on seed capital, and the impact of foreign
exchange. The pre-tax net operating profit margin ratio for
MFS(1) was 38%, consistent with the first quarter of
2018.
SLF Asset Management ended the first quarter with $698.4 billion in assets under management,
consisting of $631.1 billion
(US$472.9 billion) from MFS and
$67.3 billion from Sun Life
Investment Management ("SLIM"). MFS's net outflows of $7.8 billion (US$5.9
billion) in the quarter were partially offset by SLIM net
inflows of $1.3 billion. MFS reported
record U.S. retail sales in the first quarter of 2019, resulting in
positive net flows of $0.9 billion
(US$0.7 billion) for mutual
funds.
MFS continued to rank in the top ten in the 2019 Barron's Fund
Family Rankings. For 10 of the last 11 years, MFS has been in the
top ten ranking for both the ten-year and the five-year firm-wide
performance categories. In the first quarter of 2019, 94%, 85% and
82% of MFS's retail fund assets ranked in the top half of their
Lipper categories based on ten-, five- and three-year performance,
respectively.
A Leader in Asia through
Distribution Excellence in Higher Growth Markets
SLF Asia's reported net income of $80
million was down $53 million
from the first quarter of 2018 reflecting unfavourable market
related impacts. Underlying net income of $122 million was down $6
million from the first quarter of 2018, due to unfavourable
credit and mortality experience, partially offset by investing
activity gains and favourable joint venture experience.
SLF Asia insurance sales were $258
million in the first quarter of 2019, up 11% compared to the
first quarter of 2018, with double- digit growth in six of seven
Insurance and Wealth markets. SLF International experienced lower
sales due to the competitive environment and market shifts. SLF
Asia wealth sales were down by 50% to $1.9
billion in the first quarter of 2019, compared to
$3.7 billion in the first quarter of
2018. This decrease was mainly attributable to lower mutual fund
sales in India due to market
volatility, and in the Philippines
due to elevated money market sales in the first quarter of 2018.
Our Hong Kong pension business
experienced comparable sales to the first quarter of 2018.
We continue to invest in our distribution capabilities. For
example, our agency headcount has grown 35% in the Philippines since the first quarter of
2018, we have established a broker channel in Vietnam and we continue expanding our
bancassurance footprint in India
through our distribution agreement with HDFC Bank Limited. In
addition, SLF Asia was recognized with awards in Hong Kong(2) and Indonesia(3) for our My Sun Life
Client app, and as the "Most Innovative Takaful
Provider"(4) in Malaysia. As well, our Hong Kong Rainbow
MPF(5) plan won 12 awards at the 2019 MPF
awards,(6) including the inaugural Employer's Choice
Award, where we were recognized for our focus on employer
servicing, features and benefits.
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
Mob-Ex Awards 2019
Hong Kong; Silver Award for Best App - Insurance Services and
Bronze Award for Best App - Financial
|
(3)
|
2019 Indonesia Life
Insurance Innovation Award for Top 3 Most User Friendly &
Satisfying Application.
|
(4)
|
2018 International
Finance Awards.
|
(5)
|
Mandatory provident
funds ("MPF") sold in Hong Kong.
|
(6)
|
The 2019 MPF Awards
were co-organized by MPF Ratings and Asia Asset Management. MPF
Ratings' assessments cover investment structure and performance,
fees and charges, and assessment of overall services, including
governance and transparency, customer service standard, services to
employers and members, member education and communication, account
administration efficiency and use of technology.
|
Sun Life Financial Inc.
For the period ended March 31,
2019
Dated May 8, 2019
Table of
Contents
|
A.
|
How We Report Our
Results
|
B.
|
Financial
Summary
|
C.
|
Profitability
|
D.
|
Growth
|
E.
|
Financial
Strength
|
F.
|
Performance by
Business Group
|
|
1. SLF
Canada
|
|
2. SLF
U.S
|
|
3. SLF
Asset Management
|
|
4. SLF
Asia
|
|
5.
Corporate
|
G.
|
Investments
|
H.
|
Risk
Management
|
I.
|
Additional Financial
Disclosure
|
J.
|
Legal and Regulatory
Matters
|
K.
|
Changes in Accounting
Policies
|
L.
|
Internal Control Over
Financial Reporting
|
M.
|
Non-IFRS Financial
Measures
|
N.
|
Forward-looking
Statements
|
About Sun Life Financial
Sun Life Financial Inc. ("SLF
Inc.") is a leading international financial services organization
providing insurance, wealth and asset management solutions to
individual 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 March
31, 2019, Sun Life Financial had total assets under
management ("AUM") of $1,011 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.
A. How We Report Our Results
Sun Life Financial Inc. ("SLF Inc."), its subsidiaries and,
where applicable, its joint ventures and associates are
collectively referred to as "the Company", "Sun Life Financial",
"we", "our", and "us". We manage our operations and report our
financial results in five business segments: Sun Life Financial
Canada ("SLF Canada"), Sun Life Financial United States ("SLF
U.S."), Sun Life Financial Asset Management ("SLF Asset
Management"), Sun Life Financial Asia ("SLF Asia"), and Corporate.
Information concerning these segments is included in our annual and
interim consolidated financial statements and accompanying notes
("Annual Consolidated Financial Statements" and "Interim
Consolidated Financial Statements", respectively, and "Consolidated
Financial Statements", collectively) and interim and annual
management's discussion and analysis ("MD&A"). We prepare our
unaudited Interim Consolidated Financial Statements using
International Financial Reporting Standards ("IFRS"), including in
accordance with the International Accounting Standard ("IAS") 34
Interim Financial Reporting. Reported net income (loss) refers to
Common shareholders' net income (loss) determined in accordance
with IFRS.
The information in this document is in Canadian dollars unless
otherwise noted.
1. Use of 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. Additional information concerning these
non-IFRS financial measures and reconciliations to the closest IFRS
measures are available in section M - Non-IFRS Financial Measures
in this document. Non-IFRS Financial Measures and reconciliations
are also included in our annual and interim MD&As and the
Supplementary Financial Information packages that are available on
www.sunlife.com under Investors – Financial results &
reports.
2. Forward-looking Statements
Certain statements in this document are 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. Additional information concerning
forward-looking statements and important risk factors that could
cause our assumptions, estimates, expectations and projections to
be inaccurate and our actual results or events to differ materially
from those expressed in or implied by such forward-looking
statements can be found in section N - Forward-looking Statements
in this document.
3. Additional Information
Additional information about SLF Inc. can be found in the Annual
and Interim Consolidated Financial Statements, the annual and
interim MD&As and SLF Inc.'s Annual Information Form ("AIF")
for the year ended December 31, 2018.
These documents are filed with securities regulators in
Canada and are available at
www.sedar.com. SLF Inc.'s Annual Consolidated Financial Statements,
annual MD&A and AIF are filed with the United States Securities
and Exchange Commission ("SEC") in SLF Inc.'s annual report on Form
40-F and SLF Inc.'s interim MD&As and Interim Consolidated
Financial Statements are furnished to the SEC on Form 6-Ks and are
available at www.sec.gov.
B. Financial Summary
|
Quarterly
results
|
($ millions, unless
otherwise noted)
|
Q1'19
|
Q4'18
|
Q1'18
|
Profitability
|
|
|
|
|
Net income
(loss)
|
|
|
|
|
|
Reported net income
(loss)
|
623
|
580
|
669
|
|
|
Underlying net income
(loss)(1)
|
717
|
718
|
770
|
|
Diluted Earnings
per share ("EPS") ($)
|
|
|
|
|
|
Reported EPS
(diluted)
|
1.04
|
0.96
|
1.09
|
|
|
Underlying EPS
(diluted)(1)
|
1.20
|
1.19
|
1.26
|
|
Reported basic EPS
($)
|
1.04
|
0.96
|
1.10
|
|
Return on equity
("ROE") (%)
|
|
|
|
|
|
Reported
ROE(1)
|
11.5%
|
10.9%
|
13.1%
|
|
|
Underlying
ROE(1)
|
13.3%
|
13.6%
|
15.1%
|
Growth
|
|
Sales
|
|
|
|
|
|
Insurance
sales(1)
|
780
|
1,314
|
665
|
|
|
Wealth
sales(1)
|
35,993
|
36,241
|
39,825
|
|
Value of new
business(1)
|
382
|
310
|
334
|
|
Premiums and
deposits
|
|
|
|
|
|
Net premium
revenue
|
4,370
|
5,313
|
4,645
|
|
|
Segregated fund
deposits
|
3,064
|
2,763
|
3,395
|
|
|
Mutual fund
sales(1)
|
23,664
|
22,135
|
24,056
|
|
|
Managed fund
sales(1)
|
9,976
|
9,629
|
12,345
|
|
|
ASO(2) premium and deposit
equivalents(1)
|
1,707
|
1,673
|
1,675
|
|
Total premiums and
deposits(1)
|
42,781
|
41,513
|
46,116
|
|
Assets under
management
|
|
|
|
|
|
|
General fund
assets
|
172,348
|
168,765
|
163,499
|
|
|
Segregated
funds
|
110,011
|
103,062
|
106,221
|
|
|
Mutual funds, managed
funds and other AUM(1)
|
729,026
|
679,316
|
709,206
|
|
Total
AUM(1)
|
1,011,385
|
951,143
|
978,926
|
Financial
Strength
|
|
|
|
|
LICAT(3) ratios
|
|
|
|
|
|
Sun Life Financial
Inc.
|
145%
|
144%
|
149%
|
|
|
Sun Life
Assurance(4)
|
132%
|
131%
|
139%
|
|
Financial leverage
ratio(1)
|
21.1%
|
21.2%
|
22.2%
|
|
Dividend
|
|
|
|
|
|
Dividend payout
ratio(1)
|
42%
|
42%
|
36%
|
|
|
Dividends per common
share ($)
|
0.500
|
0.500
|
0.455
|
|
Capital
|
|
|
|
|
|
Subordinated debt and
innovative capital instruments(5)
|
3,739
|
3,738
|
3,736
|
|
|
Participating
policyholders' equity and non-controlling interests
|
930
|
864
|
475
|
|
|
Total shareholders'
equity
|
23,782
|
23,706
|
22,804
|
|
Total
capital
|
28,451
|
28,308
|
27,015
|
|
Average common shares
outstanding (millions)
|
597
|
602
|
610
|
|
Closing common shares
outstanding (millions)
|
594.6
|
598.5
|
607.6
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
Administrative
Services Only ("ASO").
|
(3)
|
Life Insurance
Capital Adequacy Test ("LICAT") ratio.
|
(4)
|
Sun Life Assurance
Company of Canada ("Sun Life Assurance") is SLF Inc.'s principal
operating life insurance subsidiary.
|
(5)
|
Innovative capital
instruments consist of Sun Life ExchangEable Capital Securities,
and qualify as regulatory capital. However, under IFRS they are
reported as Senior debentures in the SLF Inc. Consolidated
Financial Statements. For additional information, see section I -
Capital and Liquidity Management - 1 - Capital in our 2018 annual
MD&A.
|
C. Profitability
The following table reconciles our reported net income and
underlying net income. The table also sets out the impact that
other
notable items had on our reported net income and underlying net income. All factors discussed in this document that impact our
underlying net income are also applicable to reported net income.
|
Quarterly
results
|
($ millions,
after-tax)
|
Q1'19
|
Q4'18
|
Q1'18
|
Reported net
income
|
623
|
580
|
669
|
Market related
impacts(1)
|
(69)
|
(153)
|
(68)
|
Assumption changes and
management actions(1)
|
(11)
|
13
|
(3)
|
Other
adjustments(1)
|
(14)
|
2
|
(30)
|
Underlying net
income(2)
|
717
|
718
|
770
|
Reported
ROE(2)
|
11.5%
|
10.9%
|
13.1%
|
Underlying
ROE(2)
|
13.3%
|
13.6%
|
15.1%
|
Impact of other
notable items on reported and underlying net income
|
|
|
|
Experience related
items(3)
|
|
|
|
Impact of investment
activity on insurance contract liabilities ("investing
activity")
|
61
|
28
|
48
|
Credit
|
(29)
|
23
|
21
|
Mortality
|
15
|
(11)
|
(16)
|
Morbidity
|
25
|
(12)
|
12
|
Lapse and other
policyholder behaviour
|
(8)
|
(4)
|
(29)
|
Expenses
|
11
|
(26)
|
(4)
|
Other
experience
|
(18)
|
44
|
62
|
|
|
(1)
|
Represents an
adjustment made to arrive at a non-IFRS financial measure. See
section M - Non-IFRS Financial Measures in this document for a
breakdown of components within this adjustment.
|
(2)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial
Measures.
|
(3)
|
Experience related
items reflect the difference between actual experience during the
reporting period and best estimate assumptions used in the
determination of our insurance contract liabilities.
|
Quarterly Comparison - Q1 2019 vs. Q1 2018
Our reported net income of $623
million in the first quarter of 2019 decreased $46 million from the first quarter of 2018, while
underlying net income decreased $53
million to $717 million. This
variance was primarily due to interest on par seed capital of
$110 million in the first quarter of
2018 and unfavourable credit experience, partially offset by
favourable mortality, lapse and other policyholder behaviour,
investing activity gains, morbidity experience and other
experience. In addition, underlying net income increased by
$22 million as a result of the impact
of foreign exchange. Business growth was negatively affected by
average net asset declines in our fee income businesses relative to
the first quarter of 2018, substantially offset by business growth
in insurance businesses.
- Market related impacts
Market related impacts in the first quarter of 2019 compared to the
same period last year reflected unfavourable net interest rate
impacts, substantially offset by favourable net equity market
impacts.
- Assumption changes and management actions
The effects of assumption changes and management actions ("ACMA")
decreased reported net income by $11
million during the first quarter of 2019 compared to
$3 million in the first quarter of
2018.
- Other adjustments
Other adjustments decreased reported net income by $14 million in the first quarter of 2019 compared
to a decrease of $30 million in the
first quarter of 2018. The reduced impact was primarily due to Fair
value adjustments on MFS's share-based payment awards.
- Experience related items
Favourable variances in morbidity, mortality, and lapse and other
policyholder experience were driven predominantly by SLF U.S.
Favourable expense experience arose mainly from expense discipline
across the organization. Favourable investing activity gains were
predominantly in SLF Canada. Unfavourable credit experience related
to downgrades of indirect exposures to a single name in the
utilities sector of $57 million, and
was reflected in SLF Canada, SLF U.S. and SLF Asia.
Other experience results for the first quarter of 2018 include the
impact of accrued investment income on seed capital of $110 million - $75
million in SLF Canada and $35
million in SLF U.S. ("interest on par seed capital"),
partially offset by a mix of smaller items. For further information
please see Note 10.C in the first quarter 2019 Interim Consolidated
Financial Statements.
- Income taxes
Our statutory tax rate is normally reduced by various tax benefits,
such as lower taxes on income subject to tax in foreign
jurisdictions, a range of tax exempt investment income, and other
sustainable tax benefits that are expected to decrease our
effective tax rate.
In the first quarter of 2019, our effective income tax rates on reported net income and underlying net income(1) were 11.0% and
17.8% compared to 16.4% and 15.8% in the first quarter of 2018, respectively. Our effective tax rate on underlying net income is
within our expected range of 15% to 20%.
- Impact of foreign exchange rates
During the first quarter of 2019, our reported net income and
underlying net income increased by $21
million and $22 million,
respectively, as a result of the impact of the movement of the
Canadian dollar in the first quarter of 2019 relative to the
average exchange rates in the first quarter of 2018.
D. Growth
1. Sales and Value of New Business
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Insurance
sales(1)
|
|
|
|
SLF Canada
|
362
|
219
|
296
|
SLF U.S.
|
160
|
844
|
136
|
SLF Asia
|
258
|
251
|
233
|
Total insurance
sales(1)
|
780
|
1,314
|
665
|
Wealth
sales(1)
|
|
|
|
SLF Canada
|
2,825
|
4,883
|
3,825
|
SLF Asia
|
1,881
|
1,935
|
3,736
|
Total wealth sales
excluding SLF Asset Management(1)
|
4,706
|
6,818
|
7,561
|
SLF Asset Management
sales(1)
|
31,287
|
29,423
|
32,264
|
Total wealth
sales(1)
|
35,993
|
36,241
|
39,825
|
Value of new business
("VNB")(1)
|
382
|
310
|
334
|
|
(1)
Represents a non-IFRS financial measure. See section M - Non-IFRS
Financial Measures in this document.
|
Total Company insurance sales were $780
million in the first quarter of 2019, up 17% (16% on a
constant currency basis) compared to the same period in 2018.
-
SLF Canada insurance sales increased mainly due to large case sales in Group Benefits ("GB") and higher individual
insurance sales.
-
SLF U.S. insurance sales increased mainly driven by higher medical stop-loss sales.
-
SLF Asia insurance sales were up 10% on a constant currency basis, reflecting double-digit sales growth in six of seven
Insurance and Wealth markets, and lower sales in International.
_____________
|
(1)
|
Our effective income
tax rate on underlying net income is calculated using underlying
net income and income tax expense associated with underlying net
income, which excludes amounts attributable to participating
policyholders.
|
Total Company wealth sales were $36.0
billion in the first quarter of 2019, down 10% (13% on a
constant currency basis) compared to the first quarter of 2018.
-
SLF Canada wealth sales decreased, reflecting decreases in Group Retirement Services ("GRS") and individual wealth.
-
SLF Asia wealth sales were down, primarily reflecting lower sales in India and the Philippines.
-
SLF Asset Management gross sales were lower, primarily reflecting lower managed fund sales, partially offset by the impact
of foreign exchange and higher mutual fund sales in MFS Investment Management's ("MFS").
The Company's total VNB in the first quarter of 2019 was
$382 million, up 14% compared to the
first quarter of 2018, driven by overall higher life and group
insurance sales and improved pricing in SLF U.S.
2. Premiums and Deposits
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Net premium
revenue
|
4,370
|
5,313
|
4,645
|
Segregated fund
deposits
|
3,064
|
2,763
|
3,395
|
Mutual fund
sales(1)
|
23,664
|
22,135
|
24,056
|
Managed fund
sales(1)
|
9,976
|
9,629
|
12,345
|
ASO premium and
deposit equivalents(1)
|
1,707
|
1,673
|
1,675
|
Total premiums and
deposits(1)
|
42,781
|
41,513
|
46,116
|
Total adjusted
premiums and deposits(1)(2)
|
41,319
|
40,354
|
46,282
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
Adjusted premiums and
deposits is a non-IFRS financial measure that excludes from
premiums and deposits the impact of Constant Currency Adjustment
and Reinsurance in SLF Canada's GB Operations Adjustment as
described in section M - Non-IFRS Financial Measures in this
document.
|
Net premium revenue was $4.4
billion, down $0.3 billion
from the first quarter of 2018, primarily due to lower premium
revenue in GRS in SLF Canada and International in SLF Asia,
partially offset by SLF U.S. and the impact of foreign
exchange.
Segregated fund deposits were $3.1
billion in the first quarter of 2019, down from the first
quarter of 2018, due to lower deposits in SLF Canada.
Sales of mutual funds were $23.7
billion in the first quarter of 2019, down from the first
quarter of 2018, reflecting decreased sales in India and the
Philippines in SLF Asia, partially offset by the impact of
foreign exchange, and increased sales in MFS.
Sales of managed funds were $10.0
billion in the first quarter of 2019, a decrease of
$2.4 billion from the first quarter
of 2018, primarily due to lower sales in MFS and Sun Life
Investment Management ("SLIM"), partially offset by the impact of
foreign exchange.
ASO premium and deposit equivalents in the first quarter of 2019
remain largely consistent with the same period in 2018.
The currency impact for total premium and deposits for the first
quarter of 2019 from the change in the Canadian dollar relative to
average exchange rates in the first quarter of 2018 increased total
premiums and deposits by approximately $1.6
billion.
3. Assets Under Management
AUM consist of general funds, segregated funds and other AUM.
Other AUM includes mutual funds and managed funds, which include
institutional and other third-party assets managed by the
Company.
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q3'18
|
Q2'18
|
Q1'18
|
Assets under
management(1)
|
|
|
|
|
|
General fund
assets
|
172,348
|
168,765
|
162,439
|
164,709
|
163,499
|
Segregated
funds
|
110,011
|
103,062
|
108,298
|
108,692
|
106,221
|
Mutual funds, managed
funds and other AUM(1)
|
729,026
|
679,316
|
712,782
|
712,719
|
709,206
|
Total
AUM(1)
|
1,011,385
|
951,143
|
983,519
|
986,120
|
978,926
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
AUM were $1,011.4 billion as at
March 31, 2019, compared to AUM of
$951.1 billion as at December 31, 2018. The increase in AUM of
$60.3 billion between December 31, 2018 and March 31, 2019 resulted primarily from:
(i)
|
an increase of $80.6 billion from favourable market movements;
|
(ii)
|
an increase of $2.2 billion of other business activities; partially offset by
|
(iii)
|
a decrease of $15.4 billion from the strengthening of the Canadian dollar relative to exchange rates at the end of the fourth
quarter of 2018; and
|
(iv)
|
net outflows of mutual, managed, and segregated funds of $7.1 billion.
|
For the first quarter of 2019, net outflows of mutual, managed
and segregated funds were $7.1
billion, predominantly driven by net outflows from MFS of
$7.8 billion and $0.5 billion from SLF Canada, partially offset by
net inflows of $1.3 billion from
SLIM.
E. Financial Strength
|
Quarterly
results
|
|
Q1'19
|
Q4'18
|
Q3'18
|
Q2'18
|
Q1'18
|
LICAT
ratio
|
|
|
|
|
|
Sun Life Financial
Inc.
|
145%
|
144%
|
145%
|
149%
|
149%
|
Sun Life
Assurance
|
132%
|
131%
|
130%
|
134%
|
139%
|
Financial leverage
ratio(1)
|
21.1%
|
21.2%
|
21.9%
|
21.8%
|
22.2%
|
Dividend
|
|
|
|
|
|
Dividend payout
ratio(1)
|
42%
|
42%
|
40%
|
40%
|
36%
|
Dividends per common
share ($)
|
0.500
|
0.500
|
0.475
|
0.475
|
0.455
|
Capital
|
|
|
|
|
|
Subordinated debt and
innovative capital instruments(2)
|
3,739
|
3,738
|
3,738
|
3,737
|
3,736
|
Participating
policyholders' equity and non-controlling interests
|
930
|
864
|
802
|
517
|
475
|
Preferred
shareholders' equity
|
2,257
|
2,257
|
2,257
|
2,257
|
2,257
|
Common shareholders'
equity
|
21,525
|
21,449
|
20,577
|
20,959
|
20,547
|
Total
capital
|
28,451
|
28,308
|
27,374
|
27,470
|
27,015
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
Innovative capital
instruments consist of Sun Life ExchangEable Capital Securities,
and qualify as regulatory capital. However, under IFRS they are
reported as Senior debentures in our Consolidated Financial
Statements. For additional information, see section I - Capital and
Liquidity Management - 1 - Capital in our 2018 annual
MD&A.
|
The Office of the Superintendent of Financial Institutions
("OSFI") implemented a revised regulatory capital framework
referred to as the Life Insurance Capital Adequacy Test in
Canada effective January 1, 2018. LICAT measures the capital
adequacy of an insurer using a risk-based approach and includes
elements that contribute to financial strength through periods when
an insurer is under stress as well as elements that contribute to
policyholder and creditor protection wind-up. In 2019, OSFI made a
number of revisions to their LICAT guideline. The two notable
revisions for SLF Inc. and Sun Life Assurance were the IFRS 16
Leases ("IFRS 16") accounting change and the additional group
morbidity and mortality risk requirements for group insurance
businesses.
SLF Inc. is a non-operating insurance company and is subject to
the LICAT guideline. As at March 31,
2019, SLF Inc.'s LICAT ratio was 145%, compared to 144% as
at December 31, 2018. The change was
primarily due to the favourable contribution of reported net income
and market movements, partially offset by dividends and repurchases
of common shares and the unfavourable impact from OSFI's LICAT
guideline revisions. The SLF Inc. LICAT ratios in both periods are
well above OSFI's regulatory minimum ratio of 90%.
Sun Life Assurance, SLF Inc.'s principal operating life
insurance subsidiary in Canada, is
also subject to the LICAT guideline. As at March 31, 2019, Sun Life Assurance's LICAT ratio
was 132%, compared to 131% as at December
31, 2018. The change was primarily due to the favourable
contribution of reported net income and market movements, partially
offset by dividends and the unfavourable impact from
OSFI's LICAT guideline revisions. The Sun Life
Assurance LICAT ratios in both periods are well above OSFI's
supervisory ratio of 100% and regulatory minimum ratio of 90%.
Our total capital consists of subordinated debt and other
capital instruments, participating policyholders' equity and total
shareholders' equity, which includes common shareholders' equity
and preferred shareholders' equity. As at March 31, 2019, our total capital was
$28.5 billion, compared to
$28.3 billion as at December 31, 2018. The increase in total capital
was primarily the result of total net income of $714 million and unrealized gains on
available-for-sale ("AFS") assets of $251
million, partially offset by the payment of $299 million of dividends on common shares,
foreign currency translation loss of $280
million included in other comprehensive income (loss) and
common shares purchased under SLF Inc.'s normal course issuer bid
of $200 million detailed below.
SLF Inc. and its wholly-owned holding companies had $2,564 million in cash and other liquid assets as
at March 31, 2019 ($2,523 million as at December 31, 2018). The increase in cash and
other liquid assets in the first quarter of 2019 was primarily
attributable to the dividends from the operating companies
including Sun Life Assurance, which were partially offset by the
payment of $299 million of dividends
on common shares, and the repurchase of $200
million of common shares. Other liquid assets as noted above
include cash equivalents, short-term investments and publicly
traded securities.
On March 14, 2019, SLF Inc.
announced its intention to redeem all of the outstanding
$250 million principal amount of
Series 2014-1 Subordinated Unsecured 2.77% Fixed/Floating
Debentures ("Series 2014-1 Debentures") on May 13, 2019 in accordance with the redemption
terms attached to such debentures. The redemption will be funded
from existing cash and other liquid assets.
During the quarter, both Standard & Poor's and Fitch
upgraded the financial strength ratings of Sun Life Assurance to AA
from AA-.
Normal Course Issuer Bid
On August 14, 2018, SLF Inc. renewed
its normal course issuer bid. This normal course issuer bid remains
in effect until the earlier of August 13,
2019 and the date on which SLF Inc. has purchased an
aggregate of 14.0 million common shares under the bid. During the
first quarter of 2019, SLF Inc. purchased approximately 4.0 million
common shares at a total cost of $200
million. All of the common shares purchased under SLF Inc.'s
normal course issuer bid were subsequently cancelled. As at
March 31, 2019, the total aggregate
shares cancelled and associated cost under SLF Inc.'s normal course
issuer bid are 12.6 million and $625
million, respectively.
Subject to the approval of OSFI and the Toronto Stock Exchange,
SLF Inc. intends to amend its existing normal course issuer bid to
increase the number of common shares that it may purchase for
cancellation from 14 million common shares to 18 million common
shares.
F. Performances by Business Group
|
Quarterly
results
|
(millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Reported net income
(loss)
|
|
|
|
SLF Canada
|
237
|
96
|
249
|
SLF U.S.
|
124
|
118
|
96
|
SLF Asset
Management
|
219
|
244
|
210
|
SLF Asia
|
80
|
125
|
133
|
Corporate
|
(37)
|
(3)
|
(19)
|
Total reported net
income (loss)
|
623
|
580
|
669
|
Underlying net income
(loss)(1)
|
|
|
|
SLF Canada
|
237
|
245
|
295
|
SLF U.S.
|
150
|
121
|
129
|
SLF Asset
Management
|
227
|
227
|
231
|
SLF Asia
|
122
|
140
|
128
|
Corporate
|
(19)
|
(15)
|
(13)
|
Total underlying net
income (loss)(1)
|
717
|
718
|
770
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
Information describing the business groups and their respective
business units is included in our 2018 annual MD&A. All factors
discussed in this document that impact our underlying net income
are also applicable to reported net income.
1. SLF Canada
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Individual Insurance
& Wealth
|
106
|
(27)
|
107
|
Group
Benefits
|
74
|
59
|
69
|
Group Retirement
Services
|
57
|
64
|
73
|
Reported net income
(loss)
|
237
|
96
|
249
|
Market related
impacts(1)
|
(1)
|
(134)
|
(44)
|
Assumption changes and
management actions(1)
|
—
|
(14)
|
(7)
|
Other
adjustments(2)
|
1
|
(1)
|
5
|
Underlying net income
(loss)(3)
|
237
|
245
|
295
|
Reported ROE
(%)(3)
|
13.5%
|
5.5%
|
15.1%
|
Underlying ROE
(%)(3)
|
13.5%
|
14.1%
|
17.9%
|
Insurance
sales(3)
|
362
|
219
|
296
|
Wealth
sales(3)
|
2,825
|
4,883
|
3,825
|
|
|
(1)
|
Represents an
adjustment made to arrive at a non-IFRS financial measure. See
section M - Non-IFRS Financial Measures in this document for a
breakdown of components within this adjustment.
|
(2)
|
Mainly comprised of
Certain hedges in SLF Canada that do not qualify for hedge
accounting. For further information, see section M - Non-IFRS
Financial Measures in this document.
|
(3)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
Profitability
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF
Canada's reported net income was $237
million in the first quarter of 2019, compared to
$249 million in the first quarter of
2018. Underlying net income in the first quarter of 2019 was
$237 million, compared to
$295 million in the first quarter of
2018.
Reported net income in the first quarter of 2019 compared to the
first quarter of 2018 reflected improved market related impacts,
primarily favourable net equity market impacts, partially offset by
more unfavourable net interest rate impacts. Underlying net income
was lower from the same period in 2018, due to interest on par seed
capital of $75 million in the first
quarter of 2018 and unfavourable credit experience, partially
offset by strong business growth across all business units and
investing activity gains.
Growth
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF Canada individual insurance sales increased by 6% in the first
quarter of 2019 to $93 million. Sales
in GB of $269 million increased 29%
due to large case sales.
SLF Canada wealth sales of $2.8
billion in the first quarter of 2019 were down compared to
$3.8 billion in the first quarter of
2018, primarily due to a decrease in GRS sales of 38% to
$1.2 billion, due to a large case
defined benefit sale in the first quarter of 2018, and lower
defined contribution sales in 2019. Individual wealth sales of
$1.6 billion decreased 13% reflecting
a weaker RRSP season across the industry.
2. SLF U.S.
|
Quarterly
results
|
(US$
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Group
Benefits
|
86
|
59
|
33
|
In-force
Management
|
7
|
30
|
43
|
Reported net income
(loss)
|
93
|
89
|
76
|
Market related
impacts(1)
|
(11)
|
4
|
(20)
|
Assumption changes and
management actions(1)
|
(2)
|
—
|
2
|
Acquisition,
integration and restructuring(1)
|
(6)
|
(6)
|
(8)
|
Underlying net income
(loss)(2)
|
112
|
91
|
102
|
Reported ROE
(%)(2)
|
13.6%
|
13.1%
|
11.2%
|
Underlying ROE
(%)(2)
|
16.3%
|
13.5%
|
15.1%
|
After-tax profit
margin for Group Benefits (%)(2)
|
7.9%
|
6.7%
|
5.6%
|
Insurance
sales(2)
|
120
|
639
|
108
|
(C$
millions)
|
|
|
|
Reported net income
(loss)
|
124
|
118
|
96
|
Underlying net income
(loss)(2)
|
150
|
121
|
129
|
|
|
(1)
|
Represents an
adjustment made to arrive at a non-IFRS financial measure. See
section M - Non-IFRS Financial Measures in this document for a
breakdown of components within this adjustment.
|
(2)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
Profitability
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF U.S.'s reported net income was US$93
million ($124 million) in the
first quarter of 2019, compared to reported net income of
US$76 million ($96 million) in the first quarter of 2018.
Underlying net income was US$112
million ($150 million),
compared to US$102 million
($129 million) in the first quarter
of 2018. The impact of foreign exchange increased reported net
income and underlying net income by $6
million and $7 million,
respectively.
Reported net income in the first quarter of 2019 compared to
reported net income in the first quarter of 2018 reflected improved
market related impacts primarily driven by the impact of changes in
the fair value of investment properties. Underlying net income
improved compared to the first quarter of 2018, primarily driven by
favourable morbidity and mortality experience, and improvements in
lapse and other policyholder behaviour experience. These variances
were partially offset by interest on par seed capital of
US$28 million ($35 million) in the first quarter of 2018,
unfavourable credit experience and lower investing activity gains.
The after-tax profit margin for Group Benefits was 7.9% as of the
first quarter of 2019, reflecting favourable medical stop-loss
experience related items, compared to 5.6% as of the first quarter
of 2018.
Growth
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF U.S. Group Benefits sales of US$120
million in the first quarter of 2019 increased 11% compared
to the first quarter of 2018 of US$108
million, driven by an increase in medical stop-loss sales
reflecting our strong momentum and leadership position in the
market.
3. SLF Asset Management
|
Quarterly
results
|
SLF Asset
Management (C$ millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Reported net
income
|
219
|
244
|
210
|
Fair value adjustments
on MFS's share-based payment awards(1)
|
(8)
|
28
|
(21)
|
Acquisition,
integration and restructuring(1)
|
—
|
(11)
|
—
|
Underlying net
income(2)
|
227
|
227
|
231
|
Assets under
management (C$ billions)(2)
|
698.4
|
649.7
|
681.7
|
Gross sales (C$
billions)(2)
|
31.3
|
29.4
|
32.3
|
Net sales (C$
billions)(2)
|
(6.5)
|
(8.5)
|
(5.1)
|
MFS (C$
millions)
|
|
|
|
Reported net
income
|
215
|
249
|
201
|
Fair value adjustments
on MFS's share-based payment awards(1)
|
(8)
|
28
|
(21)
|
Underlying net
income(2)
|
223
|
221
|
222
|
Assets under
management (C$ billions)(2)
|
631.1
|
584.2
|
621.6
|
Gross sales (C$
billions)(2)
|
29.0
|
27.9
|
29.6
|
Net sales (C$
billions)(2)
|
(7.8)
|
(8.7)
|
(5.4)
|
MFS (US$
millions)
|
|
|
|
Reported net
income
|
162
|
189
|
159
|
Fair value adjustments
on MFS's share-based payment awards(1)
|
(6)
|
22
|
(17)
|
Underlying net
income(2)
|
168
|
167
|
176
|
Pre-tax net operating
profit margin ratio(2)
|
38%
|
38%
|
38%
|
Average net assets
(US$ billions)(2)
|
456.7
|
451.6
|
495.0
|
Assets under
management (US$ billions)(2)(3)
|
472.9
|
428.4
|
482.2
|
Gross sales (US$
billions)(2)
|
21.8
|
21.1
|
23.4
|
Net sales (US$
billions)(2)
|
(5.9)
|
(6.6)
|
(4.3)
|
Asset appreciation
(depreciation) (US$ billions)
|
50.4
|
(50.0)
|
(5.1)
|
S&P 500 Index
(daily average)
|
2,720
|
2,689
|
2,733
|
MSCI EAFE Index
(daily average)
|
1,833
|
1,809
|
2,072
|
SLIM (C$
millions)
|
|
|
|
Reported net
income
|
4
|
(5)
|
9
|
Acquisition,
integration and restructuring(1)
|
—
|
(11)
|
—
|
Underlying net
income(2)
|
4
|
6
|
9
|
Assets under
management (C$ billions)(2)
|
67.3
|
65.5
|
60.1
|
Gross sales (C$
billions)(2)
|
2.3
|
1.5
|
2.7
|
Net sales (C$
billions)(2)
|
1.3
|
0.2
|
0.3
|
|
|
(1)
|
Represents an
adjustment made to arrive at a non-IFRS financial measure. See
section M - Non-IFRS Financial Measures in this document for a
breakdown of components within this adjustment.
|
(2)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(3)
|
Monthly information
on AUM is provided by MFS in its Corporate Fact Sheet, which can be
found at www.mfs.com/CorpFact. The Corporate Fact Sheet also
provides MFS's U.S. GAAP assets and liabilities as at March 31,
2019.
|
Profitability
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF Asset Management's reported net income was $219 million in the first quarter of 2019,
compared to $210 million in the first
quarter of 2018. SLF Asset Management had underlying net income of
$227 million in the first quarter of
2019, compared to $231 million in the
first quarter of 2018. The impact of foreign exchange increased
both reported net income and underlying net income by $11 million.
SLF Asset Management's higher reported net income compared to
the same quarter in 2018 reflected reduced Fair value adjustments
on MFS's share-based payment awards. Underlying net income was in
line with the first quarter of 2018. The unfavourable impact of
lower average net assets in MFS was largely offset by favourable
investment income including returns on seed capital and the impact
of foreign exchange.
In U.S. dollars, MFS's reported net income was US$162 million in the first quarter of 2019,
compared to US$159 million in the
first quarter of 2018, reflecting reduced fair value adjustments on
share-based payment awards. MFS's underlying net income was US
$168 million in the first quarter of
2019, compared to US$176 million in
the first quarter of 2018. Underlying net income compared to the
first quarter of 2018 reflected lower average net assets, partially
offset by favourable results in investment income including returns
on seed capital. The pre-tax net operating profit margin ratio for
MFS was 38%, consistent with the first quarter of 2018.
Growth
SLF Asset Management's AUM was $698.4
billion as at March 31, 2019,
compared to $649.7 billion as at
December 31, 2018. The increase in
AUM was primarily due to asset appreciation, partially offset by
the impact of foreign exchange and net outflows. MFS's AUM was
US$472.9 billion ($631.1 billion) as at March 31, 2019, compared to US$428.4 billion ($584.2
billion) as at December 31,
2018. The increase of US$44.5
billion was primarily driven by asset appreciation of
US$50.4 billion and gross sales of
US$21.8 billion, partially offset by
redemptions of US$27.7 billion. MFS
reported record U.S. retail sales in the first quarter of 2019,
resulting in positive net flows of US$0.7
billion for mutual funds.
In the first quarter of 2019, 94%, 85% and 82% of MFS's retail
fund assets ranked in the top half of their Lipper categories based
on ten-, five-, and three-year performance, respectively.
SLIM's AUM was $67.3 billion as at
March 31, 2019, compared to
$65.5 billion as at December 31, 2018. Net inflows in the first
quarter of 2019 of $1.3 billion
exceeded net inflows in the first quarter of 2018 by $1.0 billion.
4. SLF Asia
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Insurance and
Wealth
|
101
|
101
|
105
|
International
|
(21)
|
24
|
28
|
Reported net income
(loss)
|
80
|
125
|
133
|
Market related
impacts(1)
|
(42)
|
(22)
|
4
|
Assumption changes and
management actions(1)
|
—
|
9
|
1
|
Acquisition,
integration and restructuring(1)
|
—
|
(2)
|
—
|
Underlying net income
(loss)(2)
|
122
|
140
|
128
|
Reported ROE
(%)(2)
|
6.0%
|
9.9%
|
11.2%
|
Underlying ROE
(%)(2)
|
9.1%
|
10.9%
|
10.7%
|
Insurance
sales(2)
|
258
|
251
|
233
|
Wealth
sales(2)
|
1,881
|
1,935
|
3,736
|
|
|
(1)
|
Represents an
adjustment made to arrive at a non-IFRS financial measure. See
section M - Non-IFRS Financial Measures in this document for a
breakdown of components within this adjustment.
|
(2)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
Profitability
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF Asia's
reported net income was $80 million
in the first quarter of 2019, compared to reported net income of
$133 million in the first quarter of
2018. Underlying net income was $122
million, compared to $128
million in the first quarter of 2018. The impact of foreign
exchange increased reported net income and underlying net income by
$3 million and $4 million, respectively.
Reported net income in the first quarter of 2019 compared to the
first quarter of 2018 reflected unfavourable market related
impacts, primarily net interest rate impacts. Underlying net income
reflected unfavourable credit and mortality experience, partially
offset by investing activity gains and favourable joint venture
experience.
Growth
Quarterly Comparison - Q1 2019 vs. Q1 2018
SLF Asia
insurance sales were $258 million in
the first quarter of 2019, compared to $233
million in the first quarter of 2018. Total individual
insurance sales increased 13%, driven by double-digit growth in six
of seven Insurance and Wealth markets. SLF International
experienced lower sales due to the competitive environment and
market shifts. On a constant currency basis, insurance sales
increased 10%.
SLF Asia wealth sales were $1.9
billion in the first quarter of 2019, compared to
$3.7 billion in the first quarter of
2018. The decrease mainly reflects lower mutual fund sales in
India due to market volatility and
in the Philippines due to elevated
money market sales in the first quarter of 2018. Our Hong Kong pension business experienced
comparable sales to the first quarter of 2018.
5. Corporate
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
SLF U.K.
|
29
|
31
|
48
|
Corporate
Support
|
(66)
|
(34)
|
(67)
|
Reported net income
(loss)
|
(37)
|
(3)
|
(19)
|
Market related
impacts(1)
|
(9)
|
(2)
|
(3)
|
Assumption changes and
management actions(1)
|
(9)
|
18
|
—
|
Acquisition,
integration and restructuring(1)
|
—
|
(4)
|
(3)
|
Underlying net income
(loss)(2)
|
(19)
|
(15)
|
(13)
|
|
|
(1)
|
See section M -
Non-IFRS Financial Measures in this document for a breakdown of the
components.
|
(2)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
Profitability
Quarterly Comparison - Q1 2019 vs. Q1 2018
Reported net loss in Corporate was $37
million in the first quarter of 2019, compared to reported
net loss of $19 million in the first
quarter of 2018. Underlying net loss was $19
million, compared to underlying net loss of $13 million in the first quarter of 2018. The
change in reported net loss was largely due to ACMA and lower
investment activity gains in SLF U.K.
SLF U.K.'s reported net income in the first quarter of 2019
decreased compared to the first quarter of 2018 and was impacted by
ACMA and lower investment activity gains.
Corporate Support had a reported net loss of $66 million in the first quarter of 2019, in line
with the reported net loss of $67
million in the first quarter of 2018.
G. Investments
We had total general fund invested assets of $154.3 billion as at March
31, 2019, compared to $151.7
billion as at December 31,
2018. The increase in general fund invested assets was
primarily due to changes in net fair value growth, partially offset
by the currency impact of the strengthening Canadian dollar and
operational activity. Our general fund invested assets are well
diversified across investment types, geographies and sectors with
the majority of our portfolio invested in fixed income high-quality
assets.
The following table sets out the composition of our general fund
invested assets.(1)
|
March 31,
2019
|
December 31,
2018
|
|
Carrying value
|
% of total
carrying value
|
Carrying
value
|
% of total
carrying value
|
Cash, cash
equivalents and short-term securities
|
8,370
|
5%
|
9,506
|
6%
|
Debt
securities
|
76,715
|
50%
|
74,443
|
49%
|
Equity
securities
|
4,918
|
3%
|
4,634
|
3%
|
Mortgages and
loans
|
47,565
|
31%
|
46,822
|
31%
|
Derivative
assets
|
1,430
|
1%
|
1,112
|
1%
|
Other invested
assets
|
5,057
|
3%
|
4,830
|
3%
|
Policy
loans
|
3,215
|
2%
|
3,222
|
2%
|
Investment
properties
|
6,999
|
5%
|
7,157
|
5%
|
Total invested
assets
|
154,269
|
100%
|
151,726
|
100%
|
|
|
(1)
|
The values and ratios
presented are based on the carrying value of the respective asset
categories. Generally, the carrying values for fair value through
profit or loss ("FVTPL") and AFS invested assets are equal to their
fair values; however our mortgages and loans are generally carried
at amortized cost. For invested assets supporting insurance
contracts, in the event of default, if the amounts recovered are
insufficient to satisfy the related insurance contract liability
cash flows that the assets are intended to support, credit exposure
may be greater than the carrying value of the assets.
|
1. Debt Securities
Our debt securities
portfolio is actively managed through a regular program of
purchases and sales aimed at optimizing yield, quality and
liquidity, while ensuring that it remains well diversified and
duration-matched to insurance contract liabilities. With the
exception of certain countries where we have business operations,
including Canada, the United States, the United Kingdom and the Philippines, our exposure to debt
securities from any single country did not exceed 1% of total
invested assets on our Interim Consolidated Financial Statements as
at March 31, 2019.
The carrying value of FVTPL and AFS debt securities by
geographic location is presented in the following table.
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
($
millions)
|
FVTPL
debt
securities
|
AFS debt
securities
|
Total
|
% of
Total
|
FVTPL
debt
securities
|
AFS debt
securities
|
Total
|
% of Total
|
Debt
securities
|
|
|
|
|
|
|
|
|
Canada
|
26,557
|
4,513
|
31,070
|
40%
|
25,091
|
4,217
|
29,308
|
38%
|
United
States
|
21,294
|
6,161
|
27,455
|
36%
|
21,329
|
5,917
|
27,246
|
37%
|
Europe
|
8,960
|
1,375
|
10,335
|
13%
|
8,840
|
1,278
|
10,118
|
14%
|
Asia
|
3,744
|
518
|
4,262
|
6%
|
3,673
|
445
|
4,118
|
6%
|
Other
|
2,394
|
1,199
|
3,593
|
5%
|
2,469
|
1,184
|
3,653
|
5%
|
Total debt
securities
|
62,949
|
13,766
|
76,715
|
100%
|
61,402
|
13,041
|
74,443
|
100%
|
Our debt securities with a credit rating of "A" or higher
represented 73% of the total debt securities as at March 31, 2019, compared to 72% as at
December 31, 2018. Debt securities
with a credit rating of "BBB" or higher represented 99% of total
debt securities as at March 31, 2019,
consistent with December 31,
2018.
Our gross unrealized losses as at March
31, 2019 for FVTPL and AFS debt securities were $0.4 billion and $0.1
billion, respectively, compared with $1.4 billion and $0.2
billion, respectively, as at December
31, 2018. The decrease in gross unrealized losses was
largely due to the impact from declining interest rates and the
narrowing of credit spreads.
2. Mortgages and Loans
Mortgages and loans
disclosures in this section are presented at their carrying value
on our Interim Consolidated Financial Statements. Our mortgage
portfolio consisted almost entirely of first mortgages and our loan
portfolio consisted of private placement loans.
The carrying value of mortgages and loans by geographic location
is presented in the following table.(1)
Mortgages and
Loans by Geography
|
|
|
|
March
31, 2019
|
December 31,
2018
|
($
millions)
|
Mortgages
|
Loans
|
Total
|
Mortgages
|
Loans
|
Total
|
Canada
|
9,016
|
13,189
|
22,205
|
8,557
|
13,238
|
21,795
|
United
States
|
7,583
|
11,669
|
19,252
|
7,876
|
11,458
|
19,334
|
Europe
|
—
|
4,000
|
4,000
|
—
|
3,628
|
3,628
|
Asia
|
—
|
317
|
317
|
—
|
332
|
332
|
Other
|
—
|
1,791
|
1,791
|
—
|
1,733
|
1,733
|
Total
|
16,599
|
30,966
|
47,565
|
16,433
|
30,389
|
46,822
|
% of Total Invested
Assets
|
11%
|
20%
|
31%
|
11%
|
20%
|
31%
|
|
(1)
|
The geographic
location for mortgages is based on the location of the property and
for loans it is based on the country of the creditor's
parent.
|
As at March 31, 2019, we held
$16.6 billion of mortgages, compared
to $16.4 billion as at December 31, 2018. Our mortgage portfolio
consists entirely of commercial mortgages, including retail,
office, multi-family, industrial and land properties. As at
March 31, 2019, 34% of our commercial
mortgage portfolio consisted of multi-family residential mortgages;
there are no single family residential mortgages. Our uninsured
commercial portfolio had a weighted average loan-to-value ratio of
approximately 55% as at March 31,
2019, consistent with December 31,
2018. While we generally limit the maximum loan-to-value
ratio to 75% at issuance, we may invest in mortgages with a higher
loan-to-value ratio in Canada if
the mortgage is insured by the Canada Mortgage and Housing
Corporation ("CMHC"). The estimated weighted average debt service
coverage for our uninsured commercial portfolio is 1.76 times. Of
the $3.8 billion of multi-family
residential mortgages in the Canadian commercial mortgage
portfolio, 93% were insured by the CMHC.
As at March 31, 2019, we held
$31.0 billion of loans, compared to
$30.4 billion as at December 31, 2018. Private placement loans
provide diversification by type of loan, industry segment and
borrower credit quality. The private placement loan portfolio
consists of senior secured and unsecured loans to large- and
mid-market sized corporate borrowers, securitized lease/loan
obligations secured by a variety of assets, and project finance
loans in sectors such as power and infrastructure.
Mortgages and Loans Past Due or Impaired
The gross
carrying value and allowance for mortgages and loans past due or
impaired are presented in the following table.
|
March 31,
2019
|
|
Gross carrying value
|
Allowance
for losses
|
($
millions)
|
Mortgages
|
Loans
|
Total
|
Mortgages
|
Loans
|
Total
|
Not past
due
|
16,594
|
30,929
|
47,523
|
—
|
—
|
—
|
Past due:
|
|
|
|
|
|
|
Past due less than 90
days
|
—
|
—
|
—
|
—
|
—
|
—
|
Past due 90 days or
more
|
—
|
—
|
—
|
—
|
—
|
—
|
Impaired
|
30
|
90
|
120
|
25
(1)
|
53
|
78
|
Total
|
16,624
|
31,019
|
47,643
|
25
|
53
|
78
|
|
December 31,
2018
|
|
Gross carrying value
|
Allowance
for losses
|
($
millions)
|
Mortgages
|
Loans
|
Total
|
Mortgages
|
Loans
|
Total
|
Not past
due
|
16,427
|
30,332
|
46,759
|
—
|
—
|
—
|
Past due:
|
|
|
|
|
|
|
Past due less than 90
days
|
—
|
14
|
14
|
—
|
—
|
—
|
Past due 90
days or more
|
—
|
—
|
—
|
—
|
—
|
—
|
Impaired
|
31
|
93
|
124
|
25
(1)
|
50
|
75
|
Total
|
16,458
|
30,439
|
46,897
|
25
|
50
|
75
|
|
(1)
|
Includes $20 million
of sectoral provisions as at March 31, 2019, and $21 million of
sectoral provisions as at December 31, 2018.
|
Our impaired mortgages and loans, net of allowance for losses,
were $42 million as at March 31, 2019, compared to $49 million as at December
31, 2018.
3. Derivative Financial Instruments
The
values associated with our derivative instruments are presented in
the following table. Notional amounts serve as the basis for
payments calculated under derivatives contracts and are generally
not exchanged.
($
millions)
|
March 31,
2019
|
December 31,
2018
|
Net fair value asset
(liability)
|
(332)
|
(1,183)
|
Total notional
amount
|
59,678
|
59,198
|
Credit equivalent
amount(1)
|
622
|
542
|
Risk-weighted credit
equivalent amount(1)
|
15
|
15
|
(1)
|
Amounts presented are
net of collateral received.
|
The net fair value of derivatives was a liability of
$332 million as at March 31, 2019, compared to a liability of
$1,183 million as at December 31, 2018. The increase in net fair value
was primarily due to the impact of the strengthening of the
Canadian dollar against the U.S. dollar on foreign exchange
contracts, as well as the impact of downward shifts in yield
curves.
4. Asset Default Provision
We make
provisions for possible future credit events in the determination
of our insurance contract liabilities. The amount of the provision
for asset default included in insurance contract liabilities is
based on possible reductions in future investment yields that vary
by factors such as type of asset, asset credit quality (rating),
duration and country of origin. To the extent that an asset is
written off, or disposed of, any amounts that were set aside in our
insurance contract liabilities for possible future asset defaults
in respect of that asset are released.
Our asset default provision reflects the provision relating to
future credit events for fixed income assets currently held by the
Company that support our insurance contract liabilities. Our asset
default provision as at March 31,
2019 was $2,537 million
compared to $2,389 million as at
December 31, 2018. The increase of
$148 million was primarily due to
yield curve movement and changes in credit ratings.
H. Risk Management
The Company has established a Risk Management Framework to
assist in identifying, measuring, managing, monitoring and
reporting risks. The Risk Management Framework covers all risks and
these have been grouped into six major categories: credit, market,
insurance, business and strategic, operational and liquidity
risks.
Through our enterprise risk management processes, we oversee the
various risk factors identified in the Risk Management Framework
and provide reports to senior management and to the Board
Committees at least quarterly. Our enterprise risk management
processes and risk factors are described in our annual MD&A and
AIF.
When referring to segregated funds in this section, it is
inclusive of segregated fund guarantees, variable annuities and
investment products and includes Run-off reinsurance in our
Corporate business segment.
1. Market Risk Sensitivities
Our net
income(1) is affected by the determination of
policyholder obligations under our annuity and insurance contracts.
These amounts are determined using internal valuation models and
are recorded in our Consolidated Financial Statements, primarily as
Insurance contract liabilities. The determination of these
obligations requires management to make assumptions about the
future level of equity market performance, interest rates, credit
and swap spreads and other factors over the life of our products.
Differences between our actual experience and our best estimate
assumptions are reflected in our Consolidated Financial Statements.
Refer to Additional Cautionary Language and Key Assumptions Related
to Sensitivities in this section for important additional
information regarding these estimates.
The market value of our investments in fixed income and equity
securities fluctuates based on movements in interest rates and
equity markets. The market value of fixed income assets designated
as AFS that are held primarily in our surplus segment increases
with declining interest rates and decreases with rising interest
rates. The market value of equities designated as AFS and held
primarily in our surplus segment increases (decreases) with rising
(declining) equity markets. Changes in the market value of AFS
assets flow through other comprehensive income ("OCI") and are only
recognized in net income when realized upon sale, or when
considered impaired. The amount of realized gains (losses) recorded
in net income in any period is equal to the unrealized gains
(losses) or OCI position at the start of the period plus the change
in market value during the current period up to the point of sale
for those securities that were sold during the period. The sale or
impairment of AFS assets held in surplus can therefore have the
effect of modifying our net income sensitivity.
We realized $23 million (pre-tax)
in net gains on the sale of AFS assets during the first quarter of
2019 ($36 million pre-tax in the
first quarter of 2018). The net unrealized gains or OCI position on
AFS fixed income and equity assets were $122
million and $73 million,
respectively, after-tax as at March 31,
2019 ($(98) million and
$43 million, respectively, after-tax
as at December 31, 2018).
_________
|
(1)
|
Net income refers to
common shareholders' net income in section H - Risk Management in
this document.
|
Equity Market Sensitivities
The following table sets
out the estimated immediate impact on, or sensitivity of, our net
income and OCI, and Sun Life Assurance's LICAT ratio to certain
instantaneous changes in equity market prices as at March 31, 2019 and December 31, 2018.
As at March 31,
2019
|
($ millions, unless
otherwise noted)
|
Change
in Equity Markets(1)
|
25% decrease
|
10% decrease
|
10% increase
|
25% increase
|
Potential impact
on net income(2)(3)
|
$
|
(300)
|
$
|
(100)
|
$
|
100
|
$
|
250
|
Potential
impact on OCI(3)
|
$
|
(100)
|
$
|
(50)
|
$
|
50
|
$
|
100
|
Potential
impact on LICAT(2)(4)
|
|
2.0 point decrease
|
|
0.5 point decrease
|
|
0.5 point increase
|
|
1.0
point increase
|
|
As at December 31,
2018
|
($ millions, unless
otherwise noted)
|
Change in Equity
Markets(1)
|
25%
decrease
|
10%
decrease
|
10%
increase
|
25%
increase
|
Potential impact on
net income(2)(3)
|
$
|
(300)
|
$
|
(100)
|
$
|
100
|
$
|
250
|
Potential impact on
OCI(3)
|
$
|
(100)
|
$
|
(50)
|
$
|
50
|
$
|
100
|
Potential impact on
LICAT(2)(4)
|
|
2.0 point
decrease
|
|
1.0 point
decrease
|
|
0.5 point
increase
|
|
1.0 point
increase
|
|
|
(1)
|
Represents the
respective change across all equity markets as at March 31, 2019
and December 31, 2018. Assumes that actual equity exposures
consistently and precisely track the broader equity markets. Since
in actual practice equity-related exposures generally differ from
broad market indices (due to the impact of active management, basis
risk, and other factors), realized sensitivities may differ
significantly from those illustrated above. Sensitivities include
the impact of re-balancing equity hedges for dynamic hedging
programs at 2% intervals (for 10% changes in equity markets) and at
5% intervals (for 25% changes in equity markets).
|
(2)
|
The market risk
sensitivities include the estimated mitigation impact of our
hedging programs in effect as at March 31, 2019 and December 31,
2018, and include new business added and product changes
implemented prior to such dates.
|
(3)
|
Net income and OCI
sensitivities have been rounded to the nearest $50 million. The
sensitivities exclude the market impacts on the income from our
joint ventures and associates, which we account for on an equity
basis.
|
(4)
|
The LICAT
sensitivities illustrate the impact on Sun Life Assurance as at
March 31, 2019 and December 31, 2018. LICAT ratios are rounded to
the nearest 0.5%.
|
Interest Rate Sensitivities
The following table sets
out the estimated immediate impact on, or sensitivity of our net
income and OCI, and Sun Life Assurance's LICAT ratio to certain
instantaneous changes in interest rates as at March 31, 2019 and December 31, 2018.
Sun Life Assurance's LICAT ratio decreases with rising interest
rates and increases with declining interest rates, which is
opposite to our net income sensitivity. Increases to interest rates
will reduce the value of our assets and margins in our actuarial
liabilities, resulting in a lower LICAT ratio. The sensitivity of
Sun Life Assurance's LICAT ratio to changes in interest rates
fluctuates with changes in lapse behavior for certain products as
assumed in our insurance contract liabilities, which vary with the
level of short- and long-term interest rates.
|
($ millions,
unless otherwise noted)
|
As at
March 31, 2019
|
As at December
31, 2018
|
Change
in Interest Rates(1)
|
50 basis point
decrease
|
50 basis
point increase
|
50 basis point
decrease
|
50 basis point
increase
|
Potential impact
on net income(2)(3)(4)
|
$
|
(100)
|
$
|
100
|
$
|
(100)
|
$
|
50
|
Potential
impact on OCI(3)
|
$
|
250
|
$
|
(250)
|
$
|
250
|
$
|
(250)
|
Potential
impact on LICAT(2)(5)
|
|
4.0 point increase
|
|
2.0 point decrease
|
|
2.5 point increase
|
|
1.5
point decrease
|
|
|
(1)
|
Interest rate
sensitivities assume a parallel shift in assumed interest rates
across the entire yield curve as at March 31, 2019 and December 31,
2018 with no change to the Actuarial Standards Board ("ASB")
promulgated Ultimate Reinvestment Rate ("URR"). Variations in
realized yields based on factors such as different terms to
maturity and geographies may result in realized sensitivities being
significantly different from those illustrated above. Sensitivities
include the impact of re-balancing interest rate hedges for dynamic
hedging programs at 10 basis point intervals (for 50 basis point
changes in interest rates).
|
(2)
|
The market risk
sensitivities include the estimated mitigation impact of our
hedging programs in effect as at March 31, 2019 and December 31,
2018, and include new business added and product changes
implemented prior to such dates.
|
(3)
|
Net income and OCI
sensitivities have been rounded to the nearest $50 million. The
sensitivities exclude the market impacts on the income from our
joint ventures and associates, which we account for on an equity
basis.
|
(4)
|
The majority of
interest rate sensitivity, after hedging, is attributed to
individual insurance products. We also have interest rate
sensitivity, after hedging, from our fixed annuity and segregated
funds products.
|
(5)
|
The LICAT
sensitivities illustrate the impact on Sun Life Assurance as at
March 31, 2019 and December 31, 2018. LICAT ratios are rounded to
the nearest 0.5%.
|
Interest rate sensitivities do not include any impact from
changes to the ASB promulgated URR. In 2014, the ASB made changes
to the Canadian actuarial standards of practice with respect to
economic reinvestment assumptions used in the valuation of
insurance contract liabilities. The changes relate to assumed
future interest rates, credit spreads and the use of non-fixed
income assets supporting fixed obligations. When the ASB
promulgated these changes, the intention was to review these
assumptions every five years, or sooner if circumstances warrant.
The last update to the URR was a 10 basis point reduction in 2017.
Given the continuing low interest rates, the ASB has issued an
exposure draft on assumptions that includes a reduction in the URR
of 15 basis points. The final standard is expected to be released
in the third quarter, and will be effective this year. Based on
current assumptions, as at March 31,
2019, our estimated sensitivity to a 15 basis point decrease
in the URR would have been a decrease in reported net income of
approximately $100 million after tax.
The actual impact could differ from the Company's estimate. The
statements concerning expected URR changes are forward-looking.
2. Credit Spread and Swap
Spread Sensitivities
We have estimated the immediate
impact or sensitivity of our net income attributable to certain
instantaneous changes in credit and swap spreads. The credit spread
sensitivities reflect the impact of changes in credit spreads on
our asset and liability valuations (including non-sovereign fixed
income assets, provincial governments, corporate bonds, and other
fixed income assets). The swap spread sensitivities reflect the
impact of changes in swap spreads on swap-based derivative
positions and liability valuations.
($ millions,
unless otherwise noted)
|
Credit Spread Sensitivities(1)
|
Swap
Spread Sensitivities
|
Net income sensitivity(2)
|
50
basis point
decrease
|
50 basis point
increase
|
20 basis point
decrease
|
20 basis point
increase
|
March 31,
2019
|
$
|
(100)
|
$
|
75
|
$
|
25
|
$
|
(25)
|
December 31,
2018
|
$
|
(75)
|
$
|
75
|
$
|
25
|
$
|
(25)
|
|
|
(1)
|
In most instances,
credit spreads are assumed to revert to long-term insurance
contract liability assumptions generally over a five-year
period.
|
(2)
|
Sensitivities have
been rounded to the nearest $25 million.
|
The credit and swap spread sensitivities assume a parallel shift
in the indicated spreads across the entire term structure.
Variations in realized spread changes based on different terms to
maturity, geographies, asset classes and derivative types,
underlying interest rate movements, and ratings may result in
realized sensitivities being significantly different from those
provided above. The credit spread sensitivity estimates exclude any
credit spread impact that may arise in connection with asset
positions held in segregated funds. Spread sensitivities are
provided for the consolidated entity and may not be proportional
across all reporting segments. Refer to Additional Cautionary
Language and Key Assumptions Related to Sensitivities in this
section for important additional information regarding these
estimates.
3. General Account Insurance and
Annuity Products
Most of our expected sensitivity to
changes in interest rates and about two-thirds of our expected
sensitivity to changes in equity markets are derived from our
general account insurance and annuity products. We have implemented
market risk management strategies to mitigate a portion of the
market risk related to our general account insurance and annuity
products.
Individual insurance products include universal life and other
long-term life and health insurance products. Major sources of
market risk exposure for individual insurance products include the
reinvestment risk related to future premiums on regular premium
policies, asset reinvestment risk on both regular premium and
single premium policies and the guaranteed cost of insurance.
Interest rate risk for individual insurance products is typically
managed on a duration basis, within tolerance ranges set out in the
applicable investment policy or guidelines. Targets and limits are
established so that the level of residual exposure is commensurate
with our risk appetite. Exposures are monitored frequently, and
assets are re-balanced as necessary to maintain compliance within
policy limits using a combination of assets and derivative
instruments. A portion of the longer-term cash flows are backed
with equities and real estate.
For participating insurance products and other insurance
products with adjustability features, the investment strategy
objective is to provide a total rate of return given a constant
risk profile over the long term.
Fixed annuity products generally provide the policyholder with a
guaranteed investment return or crediting rate. Interest rate risk
for these products is typically managed on a duration basis, within
tolerance ranges set out in the applicable investment guidelines.
Targets and limits are established such that the level of residual
exposure is commensurate with our risk appetite. Exposures are
monitored frequently, and are re-balanced as necessary to maintain
compliance within prescribed tolerances using a combination of
fixed income assets and derivative instruments.
Certain insurance and annuity products contain minimum interest
rate guarantees. Market risk management strategies are implemented
to limit potential financial loss due to reductions in asset earned
rates relative to contract guarantees. These typically involve the
use of hedging strategies utilizing interest rate derivatives such
as interest rate floors, swaps and swaptions.
Certain insurance and annuity products contain features which
allow the policyholders to surrender their policy at book value.
Market risk management strategies are implemented to limit the
potential financial loss due to changes in interest rate levels and
policyholder behaviour. These typically involve the use of hedging
strategies such as dynamic option replication and the purchase of
interest rate swaptions.
Certain products have guaranteed minimum annuitization rates.
Market risk management strategies are implemented to limit the
potential financial loss and typically involve the use of fixed
income assets, interest rate swaps, and swaptions.
4. Segregated Fund Guarantees
Approximately
one-third of our equity market sensitivity and a small amount of
interest rate risk sensitivity as at March
31, 2019 are derived from segregated fund products. These
products provide benefit guarantees, which are linked to underlying
fund performance and may be triggered upon death, maturity,
withdrawal or annuitization. The cost of providing these guarantees
is uncertain and depends upon a number of factors including general
capital market conditions, our hedging strategies, policyholder
behaviour and mortality experience, each of which may result in
negative impacts on net income and capital.
The following table provides information with respect to the
guarantees provided for our segregated fund products.
As at March 31,
2019
|
|
|
|
|
($ millions)
|
Fund value
|
Amount
at Risk(1)
|
Value
of guarantees(2)
|
Insurance contract
liabilities(3)
|
SLF Canada
|
11,834
|
438
|
10,684
|
558
|
SLF Asia
|
2,765
|
291
|
2,920
|
110
|
Run-off
reinsurance(4)
|
2,274
|
243
|
1,170
|
243
|
Total
|
16,873
|
972
|
14,774
|
911
|
|
|
|
|
|
As at December 31,
2018
|
|
|
|
|
|
Fund value
|
Amount
at Risk
|
Value of
guarantees(2)
|
Insurance
contract
liabilities(3)
|
($
millions)
|
|
|
|
|
SLF Canada
|
11,202
|
792
|
10,742
|
552
|
SLF Asia
|
2,798
|
444
|
3,165
|
147
|
Run-off
reinsurance(4)
|
2,215
|
277
|
1,219
|
255
|
Total
|
16,215
|
1,513
|
15,126
|
954
|
|
|
(1)
|
The Amount at Risk
represents the excess of the value of the guarantees over fund
values on all policies where the value of the guarantees exceeds
the fund value. The Amount at Risk is not currently payable as the
guarantees are only payable upon death, maturity, withdrawal, or
annuitization if fund values remain below guaranteed
values.
|
(2)
|
For guaranteed
lifetime withdrawal benefits, the value of guarantees is calculated
as the present value of the maximum future withdrawals assuming
market conditions remain unchanged from current levels. For all
other benefits, the value of guarantees is determined assuming 100%
of the claims are made at the valuation date.
|
(3)
|
The insurance
contract liabilities represent management's provision for future
costs associated with these guarantees and include a provision for
adverse deviation in accordance with Canadian actuarial standards
of practice.
|
(4)
|
The Run-off
reinsurance business includes risks assumed through reinsurance of
variable annuity products issued by various North American
insurance companies between 1997 and 2001. This line of business is
part of a closed block of reinsurance, which is included in the
Corporate segment.
|
The movement of the items in the table above from December 31, 2018 to March
31, 2019 primarily resulted from the following factors:
(i)
|
the total fund values increased due to an increase in equity markets, which was partially offset by net redemptions from
products closed to new business;
|
(ii)
|
the total Amount at Risk decreased due to an increase in equity markets and net redemptions from products closed to new
business;
|
(iii)
|
the total value of guarantees decreased due to net redemptions from products closed to new business and the weakening
of the U.S. dollar against the Canadian dollar; and
|
(iv)
|
the
total insurance contract liabilities decreased due to an increase
in equity markets and net redemptions from products closed to new
business, which was partially offset by a decrease in interest
rates.
|
5. Segregated Fund Hedging
Our hedging
programs use derivative instruments to mitigate the interest and
equity related exposure of our segregated fund contracts. As at
March 31, 2019, over 90% of our
segregated fund contracts, as measured by associated fund values,
were included in a hedging program. While a large percentage of
contracts are included in the hedging program, not all of our
market risk exposure related to these contracts is hedged. For
those segregated fund contracts included in the hedging program, we
generally hedge the value of expected future net claims costs and
associated margins.
The following table illustrates the impact of our hedging
program related to our sensitivity to a 50 basis point decrease in
interest rates and a 10% and 25% decrease in equity markets for
segregated fund contracts as at March 31,
2019 and December 31,
2018.
Impact of Segregated Fund Hedging
March
31, 2019
|
|
|
|
($ millions)
|
Changes
in interest rates(1)
|
Changes in
equity markets(2)
|
Net income
sensitivity(3)(4)
|
50 basis point
decrease
|
10%
decrease
|
25%
decrease
|
Before
hedging
|
(200)
|
(150)
|
(450)
|
Hedging
impact
|
200
|
100
|
350
|
Net of
hedging
|
—
|
(50)
|
(100)
|
|
|
|
|
December 31, 2018
|
|
|
|
($ millions)
|
Changes
in interest rates(1)
|
Changes in
equity markets(2)
|
Net income
sensitivity(3)(4)
|
50 basis point
decrease
|
10%
decrease
|
25%
decrease
|
Before
hedging
|
(150)
|
(150)
|
(450)
|
Hedging
impact
|
150
|
100
|
350
|
Net of
hedging
|
—
|
(50)
|
(100)
|
|
|
(1)
|
Represents a parallel
shift in assumed interest rates across the entire yield curve as at
March 31, 2019 and December 31, 2018, with no change to the ASB
promulgated URR. Variations in realized yields based on factors
such as different terms to maturity and geographies may result in
realized sensitivities being significantly different from those
illustrated above. Sensitivities include the impact of re-balancing
interest rate hedges for dynamic hedging programs at 10 basis point
intervals (for 50 basis point changes in interest
rates).
|
(2)
|
Represents the change
across all equity markets as at March 31, 2019 and December 31,
2018. Assumes that actual equity exposures consistently and
precisely track the broader equity markets. Since in actual
practice equity-related exposures generally differ from broad
market indices (due to the impact of active management, basis risk
and other factors), realized sensitivities may differ significantly
from those illustrated above. Sensitivities include the impact of
re-balancing equity hedges for dynamic hedging programs at 2%
intervals (for 10% changes in equity markets) and at 5% intervals
(for 25% changes in equity markets).
|
(3)
|
Net income
sensitivities have been rounded to the nearest $50
million.
|
(4)
|
Since the fair value
of benefits being hedged will generally differ from the financial
statement value (due to different valuation methods and the
inclusion of valuation margins in respect of financial statement
values), this will result in residual volatility to interest rate
and equity market shocks in net income and capital. The general
availability and cost of these hedging instruments may be adversely
impacted by a number of factors, including volatile and declining
equity and interest rate market conditions.
|
6. Real Estate Risk
Real estate risk is the
potential for financial loss arising from fluctuations in the
value of, or future cash flows from our investments in real
estate. We are exposed to real estate risk and may experience
financial losses resulting from the direct ownership of real estate
investments or indirectly through fixed income investments secured
by real estate property, leasehold interests, ground rents, and
purchase and leaseback transactions. Real estate price risk may
arise from external market conditions, inadequate property
analysis, inadequate insurance coverage, inappropriate real estate
appraisals, or from environmental risk exposures. We hold direct
real estate investments that support general account liabilities
and surplus, and fluctuations in value will impact our
profitability and financial position. A material and sustained
increase in interest rates may lead to deterioration in real estate
values. An instantaneous 10% decrease in the value of our direct
real estate investments as at March 31,
2019 would decrease net income(1) by
approximately $275 million
($275 million decrease as at
December 31, 2018). Conversely, an
instantaneous 10% increase in the value of our direct real estate
investments as at March 31, 2019
would increase net income by approximately $275 million ($275
million increase as at December 31,
2018).
__________
|
(1)
|
Net income
sensitivities have been rounded to the nearest $25
million.
|
7. Additional Cautionary Language and Key Assumptions
Related to Sensitivities
Our market risk sensitivities
are measures of our estimated change in net income and OCI for
changes in interest rates and equity market price levels described
above, based on interest rates, equity market prices and business
mix in place as at the respective calculation dates. These
sensitivities are calculated independently for each risk factor,
generally assuming that all other risk variables stay constant. The
sensitivities do not take into account indirect effects such as
potential impacts on goodwill impairment or valuation allowances on
deferred tax assets. The sensitivities are provided for the
consolidated entity and may not be proportional across all
reporting segments. Actual results can differ materially from these
estimates for a variety of reasons, including differences in the
pattern or distribution of the market shocks, the interaction
between these risk factors, model error, or changes in other
assumptions such as business mix, effective tax rates, policyholder
behaviour, currency exchange rates and other market variables
relative to those underlying the calculation of these
sensitivities. The extent to which actual results may differ from
the indicative ranges will generally increase with larger capital
market movements. Our sensitivities as at December 31, 2018 have been included for
comparative purposes only.
We have also provided measures of our net income sensitivity to
instantaneous changes in credit spreads, swap spreads, real estate
price levels, and capital sensitivities to changes in interest
rates and equity price levels. The real estate sensitivities are
non-IFRS financial measures. For additional information, see
section M - Non-IFRS Financial Measures in this document. The
cautionary language which appears in this section is also
applicable to the credit spread, swap spread, real estate, and
LICAT ratio sensitivities. In particular, these sensitivities are
based on interest rates, credit and swap spreads, equity market,
and real estate price levels as at the respective calculation dates
and assume that all other risk variables remain constant. Changes
in interest rates, credit and swap spreads, equity market, and real
estate prices in excess of the ranges illustrated may result in
other-than-proportionate impacts.
As these market risk sensitivities reflect an instantaneous
impact on net income and OCI, they do not include impacts over time
such as the effect on fee income in our asset management
businesses.
The sensitivities reflect the composition of our assets and
liabilities as at March 31, 2019 and
December 31, 2018, respectively.
Changes in these positions due to new sales or maturities, asset
purchases/sales, or other management actions could result in
material changes to these reported sensitivities. In particular,
these sensitivities reflect the expected impact of hedging
activities based on the hedge programs in place as at the
March 31 and December 31 calculation dates. The actual impact
of hedging activity can differ materially from that assumed in the
determination of these indicative sensitivities due to ongoing
hedge re-balancing activities, changes in the scale or scope of
hedging activities, changes in the cost or general availability of
hedging instruments, basis risk (i.e., the risk that hedges do not
exactly replicate the underlying portfolio experience), model risk,
and other operational risks in the ongoing management of the hedge
programs or the potential failure of hedge counterparties to
perform in accordance with expectations.
The sensitivities are based on methods and assumptions in effect
as at March 31, 2019 and December 31, 2018, as applicable. Changes in the
regulatory environment, accounting or actuarial valuation methods,
models, or assumptions (including changes to the ASB promulgated
URR) after those dates could result in material changes to these
reported sensitivities. Changes in interest rates and equity market
prices in excess of the ranges illustrated may result in other than
proportionate impacts.
Our hedging programs may themselves expose us to other risks,
including basis risk (i.e., the risk that hedges do not exactly
replicate the underlying portfolio experience), volatility risk,
derivative counterparty credit risk, and increased levels of
liquidity risk, model risk and other operational risks. These
factors may adversely impact the net effectiveness, costs, and
financial viability of maintaining these hedging programs and
therefore adversely impact our profitability and financial
position. While our hedging programs are intended to mitigate these
effects (e.g., hedge counterparty credit risk is managed by
maintaining broad diversification, dealing primarily with highly
rated counterparties, and transacting through over-the-counter
contracts, cleared through central clearing houses, exchange-traded
contracts or bilateral over-the-counter contracts negotiated
directly between counterparties that include credit support
annexes), residual risk, potential reported earnings and capital
volatility remain.
For the reasons outlined above, our sensitivities should only be
viewed as directional estimates of the underlying sensitivities of
each factor under these specialized assumptions, and should not be
viewed as predictors of our future net income, OCI, and capital.
Given the nature of these calculations, we cannot provide assurance
that actual impact will be consistent with the estimates
provided.
Information related to market risk sensitivities and guarantees
related to segregated fund products should be read in conjunction
with the information contained in section M - Accounting and
Control Matters - 1 - Critical Accounting Policies and Estimates in
our 2018 annual MD&A. Additional information on market risk can
be found in Note 6 of our 2018 Annual Consolidated Financial
Statements and the Risk Factors section in the AIF.
I. Additional Financial Disclosure
1. Revenue
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Premiums
|
|
|
|
Gross
|
4,942
|
5,935
|
5,217
|
Ceded
|
(572)
|
(622)
|
(572)
|
Net
premiums
|
4,370
|
5,313
|
4,645
|
Net investment
income
|
|
|
|
Interest and other
investment income
|
1,398
|
1,475
|
1,354
|
Fair
value(1) and foreign currency changes on assets and
liabilities
|
4,154
|
(116)
|
(1,548)
|
Net gains (losses) on
available-for-sale assets
|
23
|
25
|
36
|
Fee
income
|
1,447
|
1,483
|
1,506
|
Total
revenue
|
11,392
|
8,180
|
5,993
|
Adjusted
revenue(2)
|
7,223
|
8,306
|
7,707
|
|
|
(1)
|
Represents the change
in FVTPL assets and liabilities.
|
(2)
|
Adjusted revenue is a
non-IFRS financial measure that excludes from revenue the impact of
Constant Currency Adjustment, FV Adjustment and Reinsurance in SLF
Canada's GB Operations Adjustment as described in section M -
Non-IFRS Financial Measures in this document.
|
Revenue in the first quarter of 2019 was $11.4 billion, up $5.4
billion compared to the first quarter of 2018. The increase
was mainly attributable to increases in the fair value of FVTPL
assets largely due to lower interest rate yields, partially offset
by lower net premium revenue. The impact of foreign exchange
increased revenue by $213
million.
Adjusted revenue of $7.2 billion
in the first quarter of 2019, decreased $0.5
billion compared to the first quarter of 2018. The decrease
was primarily due to lower net premium revenue in SLF Canada, and
lower fee income from SLF Asset Management.
2.
Changes in the Statements of Financial Position and in Shareholders' Equity
Total
general fund assets were $172.3
billion as at March 31, 2019,
compared to $168.8 billion as at
December 31, 2018, primarily a result
of a $4.2 billion increase from the
change in value of FVTPL assets and liabilities and an increase of
$1.0 billion from business
activities, partially offset by a decrease of $1.6 billion from the strengthening of the
Canadian dollar relative to exchange rates at the end of the fourth
quarter of 2018.
Insurance contract liabilities (excluding other policy
liabilities and assets) of $118.6
billion as at March 31, 2019
increased by $3.7 billion compared to
December 31, 2018, mainly due to
changes in balances on in-force policies (which include fair value
changes on FVTPL assets supporting insurance contract liabilities)
and balances arising from new policies partially offset by the
impact of foreign exchange.
Shareholders' equity, including preferred share capital, was
$23.8 billion as at March 31, 2019, compared to $23.7 billion as at December 31, 2018. The increase in shareholders'
equity was primarily due to:
(i)
|
shareholders' net income of $647 million in 2019, before preferred share dividends of $24 million;
|
(ii)
|
net unrealized gains on AFS assets in OCI of $251 million;
|
(iii)
|
an increase of $28 million from OCI of joint ventures and associates; and
|
(iv)
|
$8 million from stock options exercised and $3 million from stock-based compensation; partially offset by
|
(v)
|
common share dividend
payments of $299 million;
|
(vi)
|
a decrease of $280 million from the impacts of foreign exchange;
|
(vii)
|
$200 million from the repurchase and cancellation of common shares;
|
(viii)
|
$43 million from the remeasurement of defined benefit plans; and
|
(ix)
|
$22 million as a
result of the adoption of IFRS 16.
|
As at April 26, 2019, SLF Inc. had
593,523,395 common shares, 3,554,832 options to acquire SLF Inc.
common shares, and 92,200,000 Class A Shares outstanding.
3. Cash Flows
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q1'18
|
Net cash and cash
equivalents, beginning of period
|
7,194
|
5,956
|
Cash flows provided
by (used in):
|
|
|
Operating
activities
|
(1,227)
|
430
|
Investing
activities
|
(37)
|
(22)
|
Financing
activities
|
(601)
|
(956)
|
Changes due to
fluctuations in exchange rates
|
(77)
|
76
|
Increase
(decrease) in cash and cash equivalents
|
(1,942)
|
(472)
|
Net cash and cash
equivalents, end of period
|
5,252
|
5,484
|
Short-term
securities, end of period
|
2,944
|
2,293
|
Net cash, cash
equivalents and short-term securities, end of period
|
8,196
|
7,777
|
The operating activities of the Company generate cash flows
which include net premium revenue, net investment income, fee
income, and the sale and maturity of investments. They are the
principal source of funds to pay for policyholder claims and
benefits, commissions, operating expenses, and the purchase of
investments. Cash flows used in investing activities primarily
include transactions related to associates, joint ventures and
acquisitions. Cash flows provided by and used in financing
activities largely reflect capital transactions including payments
of dividends, the issuance and repurchase of shares, as well as the
issuance and retirement of debt instruments and preferred
shares.
The lower cash flows used in financing activities in the first quarter of 2019 compared to the same period last year were largely due
to senior debenture redemption in the first quarter of 2018,
partially offset by the repurchase and cancellation of SLF Inc.
common shares.
4. Quarterly Financial Results
The
following table provides a summary of our results for the eight
most recently completed quarters. A more complete discussion of our
historical quarterly results can be found in our interim and annual
MD&As for the relevant periods.
|
Quarterly
results
|
($ millions, unless
otherwise noted)
|
Q1'19
|
Q4'18
|
Q3'18
|
Q2'18
|
Q1'18
|
Q4'17
|
Q3'17
|
Q2'17
|
Total
revenue
|
11,392
|
8,180
|
5,998
|
6,826
|
5,993
|
8,648
|
5,555
|
8,122
|
Common shareholders'
net income (loss)
|
|
|
|
|
|
|
|
|
Reported
|
623
|
580
|
567
|
706
|
669
|
207
|
817
|
574
|
Underlying(1)
|
717
|
718
|
730
|
729
|
770
|
641
|
643
|
689
|
Diluted EPS
($)
|
|
|
|
|
|
|
|
|
Reported
|
1.04
|
0.96
|
0.93
|
1.16
|
1.09
|
0.34
|
1.32
|
0.93
|
Underlying(1)
|
1.20
|
1.19
|
1.20
|
1.20
|
1.26
|
1.05
|
1.05
|
1.12
|
Basic reported EPS
($)
|
|
|
|
|
|
|
|
|
Reported
|
1.04
|
0.96
|
0.94
|
1.16
|
1.10
|
0.34
|
1.33
|
0.93
|
Reported net income
(loss) by segment
|
|
|
|
|
|
|
|
|
SLF Canada
|
237
|
96
|
335
|
262
|
249
|
172
|
340
|
185
|
SLF
U.S.(2)
|
124
|
118
|
(267)
|
105
|
96
|
(63)
|
72
|
(178)
|
SLF Asset
Management
|
219
|
244
|
241
|
214
|
210
|
114
|
185
|
183
|
SLF
Asia(2)
|
80
|
125
|
164
|
133
|
133
|
121
|
216
|
356
|
Corporate
|
(37)
|
(3)
|
94
|
(8)
|
(19)
|
(137)
|
4
|
28
|
Total reported net
income (loss)
|
623
|
580
|
567
|
706
|
669
|
207
|
817
|
574
|
Underlying net income
(loss) by segment(1)
|
|
|
|
|
|
|
|
|
SLF Canada
|
237
|
245
|
251
|
245
|
295
|
232
|
222
|
266
|
SLF
U.S.(2)
|
150
|
121
|
139
|
125
|
129
|
95
|
121
|
101
|
SLF Asset
Management
|
227
|
227
|
251
|
216
|
231
|
226
|
204
|
199
|
SLF
Asia(2)
|
122
|
140
|
110
|
145
|
128
|
111
|
130
|
123
|
Corporate
|
(19)
|
(15)
|
(21)
|
(2)
|
(13)
|
(23)
|
(34)
|
—
|
Total underlying net
income (loss)(1)
|
717
|
718
|
730
|
729
|
770
|
641
|
643
|
689
|
|
|
(1)
|
Represents a non-IFRS
financial measure. See section M - Non-IFRS Financial Measures in
this document.
|
(2)
|
Effective January 1,
2018, we transferred our International business unit from SLF U.S.
to SLF Asia, and balances in 2017 have been changed to conform with
the current year presentation.
|
Fourth Quarter 2018
Reported net income was
$580 million in the fourth quarter of
2018, an increase compared to the same quarter in 2017, reflecting
the $251 million charge in 2017
related to the enactment of the U.S. Tax Cuts and Jobs Act,
positive impacts from other adjustments and ACMA, partially offset
by market related impacts. Underlying net income in the fourth
quarter of 2018 increased to $718
million compared to 2017, driven by the effect of the lower
income tax rate in the U.S., favourable expense experience that
resulted from ongoing expense management and lower incentive
compensation costs, and other experience, partially offset by
mortality and morbidity experience.
Third Quarter 2018
Reported net income was
$567 million in the third quarter of
2018, reflecting a $269 million
unfavourable change in ACMA compared to the same quarter in 2017.
Underlying net income was $730
million, primarily driven by strong business growth, the
lower income tax rate in the U.S. and higher investment income on
surplus assets, partially offset by new business strain.
Second Quarter 2018
Reported net income was
$706 million in the second quarter of
2018, reflecting an $82 million
favourable change in market related impacts compared to the same
quarter in 2017. Underlying net income was $729 million, primarily driven by strong business
growth and favourable morbidity experience, partially offset by
expenses, credit experience, and the impact of investment activity
on insurance contract liabilities.
First Quarter 2018
Reported net income was
$669 million in the first quarter of
2018, reflecting a $79 million
unfavourable change in market related impacts compared to the same
quarter in 2017. Underlying net income was $770 million, primarily driven by interest on par
seed capital of $110 million, strong
business growth, the lower income tax rate in the U.S., as well as
the impact of investment activity on insurance contract
liabilities, partially offset by weaker mortality and lapse
experience.
Fourth Quarter 2017
Reported net income was
$207 million in the fourth quarter of
2017, reflecting unfavourable impact of the U.S. tax reform, a
restructuring charge, and the impact from interest rates compared
to the fourth quarter of 2016. Underlying net income was
$641 million, reflecting the growth
in our wealth businesses and favourable morbidity and mortality
experience.
Third Quarter 2017
Reported net income was
$817 million in the third quarter of
2017, reflecting favourable market related activity primarily
driven by interest rates and changes in the fair values of real
estate, and favourable impact of ACMA, partially offset by the
unfavourable impact of the movement of the Canadian dollar and
other adjustments compared to the third quarter of 2016. Underlying
net income was $643 million,
reflecting favourable mortality experience, growth in fee income on
our wealth businesses and new business gains, partially offset by a
lower level of gains from investing activity.
Second Quarter 2017
Reported net income was
$574 million in the second quarter of
2017, reflecting the unfavourable effect of market related impacts
driven by interest rate changes, the unfavourable impact of
acquisition, integration and restructuring amounts, fair value
adjustments on MFS's share-based payment awards, and certain hedges
in SLF Canada that do not qualify for hedge accounting. Reported
net income also reflected the factors discussed in underlying net
income. Underlying net income was $689
million, reflecting business growth, gains from investing
activity on insurance contract liabilities, positive credit
experience and favourable morbidity and mortality experience,
partially offset by unfavourable lapse and other policyholder
experience, unfavourable expense experience, including investment
in growing our businesses, and unfavourable other experience.
J. Legal and Regulatory Matters
Information concerning legal and regulatory matters is provided
in our Annual Consolidated Financial Statements, our annual
MD&A, and the AIF, in each case, for the year ended
December 31, 2018, and in our Interim
Consolidated Financial Statements for the period ended March 31, 2019.
K. Changes in Accounting Policies
We have adopted several amended IFRS standards in the current
year. In addition, new IFRS standards were issued in the current
year. We adopted IFRS 16 Leases, which replaces IAS 17 and
related interpretations, on a modified retrospective basis as at
January 1, 2019. The adoption of IFRS
16 reduced opening retained earnings by $22
million on an after-tax basis as at January 1, 2019. For additional information,
refer to Note 2 in our Interim Consolidated Financial Statements
for the period ended March 31,
2019.
L. Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable
assurance regarding the reliability of the Company's financial
reporting and the preparation of its financial statements in
accordance with IFRS.
There were no changes in the Company's internal control over
financial reporting during the period, which began on January 1, 2019 and ended on March 31, 2019 that have materially affected, or
are reasonably likely to materially affect, the Company's internal
control over financial reporting.
M. Non-IFRS Financial Measures
1. Underlying Net Income and
Underlying EPS
Underlying net income (loss) and
financial measures based on underlying net income (loss), including
underlying EPS or underlying loss per share, and underlying ROE,
are non-IFRS financial measures. Underlying net income (loss)
removes from reported 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 that differ from our best estimate assumptions, which include: (i) impact of returns in equity markets, net
of hedging, for which our best estimate assumptions are
approximately 2% per quarter. This also includes the impact of the
basis risk inherent in our hedging program, which is the difference
between the return on underlying funds of products that provide
benefit guarantees and the return on the derivative assets used to
hedge those benefit guarantees; (ii) the impact of changes in
interest rates in the reporting period and on 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; and (iii) the impact of changes in the fair value of investment properties in the reporting period;
|
(b)
|
assumption changes and management actions, which include: (i) the impact of revisions to the methods and assumptions used in
determining our liabilities for insurance contracts and investment
contracts and (ii) the impact on insurance contracts and investment
contracts of actions taken by management in the current reporting
period, referred to as management actions which 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; and
|
(c)
|
Other adjustments:
|
|
|
|
|
(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 costs (including impacts related to acquiring and integrating acquisitions); and
|
|
(iv)
|
other items that are unusual or exceptional in nature.
|
All factors discussed in this document that impact our
underlying net income are also applicable to reported net
income.
All EPS measures in this document refer to fully diluted EPS,
unless otherwise stated. As noted below, underlying EPS excludes
the dilutive impact of convertible instruments.
The following table sets out the amounts that were excluded from
our underlying net income (loss) and underlying EPS, and provides a
reconciliation to our reported net income (loss) and EPS based on
IFRS.
Reconciliations of Select Net Income Measures
|
|
|
Quarterly
results
|
($ millions, unless
otherwise noted)
|
Q1'19
|
Q4'18
|
Q1'18
|
Reported net
income
|
623
|
580
|
669
|
Equity market
impact
|
|
|
|
Impact from equity
market changes
|
68
|
(139)
|
(35)
|
Basis risk
impact
|
(10)
|
(4)
|
(10)
|
Net equity market
impact
|
58
|
(143)
|
(45)
|
Interest rate
impact(1)
|
|
|
|
Impact of interest
rate changes
|
(122)
|
(68)
|
(27)
|
Impact of credit
spread movements
|
(27)
|
36
|
17
|
Impact of swap spread
movements
|
16
|
(9)
|
(17)
|
Net interest rate
impact
|
(133)
|
(41)
|
(27)
|
Impact of changes in
the fair value of investment properties
|
6
|
31
|
4
|
Market related
impacts
|
(69)
|
(153)
|
(68)
|
Assumption changes and
management actions
|
(11)
|
13
|
(3)
|
Other
adjustments:
|
|
|
|
Certain hedges in SLF
Canada that do not qualify for hedge accounting
|
1
|
(1)
|
6
|
Fair value adjustments
on MFS's share-based payment awards
|
(8)
|
28
|
(21)
|
Acquisition,
integration and restructuring
|
(7)
|
(25)
|
(15)
|
Total of other
adjustments
|
(14)
|
2
|
(30)
|
Underlying net income
(loss)
|
717
|
718
|
770
|
Reported EPS
(diluted) ($)
|
1.04
|
0.96
|
1.09
|
Market related impacts
($)
|
(0.12)
|
(0.25)
|
(0.11)
|
Assumption changes and
management actions ($)
|
(0.02)
|
0.02
|
(0.01)
|
Certain hedges in SLF
Canada that do not qualify for hedge accounting ($)
|
—
|
—
|
0.01
|
Fair value adjustments
on MFS's share-based payment awards ($)
|
(0.01)
|
0.05
|
(0.03)
|
Acquisition,
integration and restructuring ($)
|
(0.01)
|
(0.04)
|
(0.03)
|
Impact of convertible
securities on diluted EPS ($)
|
—
|
(0.01)
|
—
|
Underlying EPS
(diluted) ($)
|
1.20
|
1.19
|
1.26
|
(1)
|
Our exposure to
interest rates varies by product type, line of business, and
geography. Given the long-term nature of our business, we have a
higher degree of sensitivity in respect of interest rates at long
durations.
|
2. Additional Non-IFRS Measures
Management
also uses the following non-IFRS financial measures:
Return on equity. IFRS does not prescribe the calculation
of ROE and therefore a comparable measure under IFRS is not
available. To determine reported ROE and underlying ROE,
respectively, reported net income (loss) and underlying net income
(loss) is divided by the total weighted average common
shareholders' equity for the period. The quarterly ROE is
annualized.
Financial leverage ratio. This total debt to total
capital ratio is ratio of debt plus preferred shares to total
capital, where debt consists of all capital qualifying debt
securities. Capital qualifying debt securities consist of
subordinated debt and innovative capital instruments.
Dividend payout ratio. This is the ratio of dividends
paid per share to diluted underlying EPS for the period.
Sales. In SLF Canada, insurance sales consist of sales of
individual insurance and group benefits products; wealth sales
consist of sales of individual wealth products and sales in GRS. In
SLF U.S., insurance sales consist of sales by Group Benefits. In
SLF Asia, insurance sales consist of the individual and group
insurance sales by our subsidiaries and joint ventures and
associates, based on our proportionate equity interest, in
the Philippines, Hong Kong, Indonesia, India, China,
Malaysia, Vietnam and sales from our International
business unit; wealth sales consist of Hong Kong wealth sales, Philippines mutual fund sales, wealth sales by
our India and China insurance joint ventures and associates,
and Aditya Birla Sun Life AMC Limited's equity and fixed income
mutual fund sales based on our proportionate equity interest,
including sales as reported by our bank distribution partners. SLF
Asset Management sales consist of gross sales (inflows) for retail
and institutional Clients; unfunded commitments are not included in
sales. Sales are also expressed on a constant currency basis, which
is a measure of sales that provides greater comparability across
reporting periods by excluding the impact of exchange rate
fluctuations from the translation of functional currencies to the
Canadian dollar.
Value of New Business. VNB represents the present value
of our best estimate of future distributable earnings, net of the
cost of capital, from new business contracts written in a
particular time period, except new business in our SLF Asset
Management pillar. The assumptions used in the calculations are
generally consistent with those used in the valuation of our
insurance contract liabilities except that discount rates used
approximate theoretical return expectations of an equity investor.
Capital required is based on the higher of Sun Life Assurance's
LICAT operating target and local (country specific) operating
target capital. VNB is a useful metric to evaluate the present
value created from new business contracts. There is no directly
comparable IFRS measure.
Adjusted revenue. This measure is an alternative measure
of revenue that provides greater comparability across reporting
periods, by excluding the impact of: (i) exchange rate
fluctuations, from the translation of functional currencies to the
Canadian dollar, for comparisons ("Constant Currency Adjustment");
(ii) Fair value and foreign currency changes on assets and
liabilities ("FV Adjustment"); and (iii) reinsurance for the
insured business in SLF Canada's GB operations ("Reinsurance in SLF
Canada's GB Operations Adjustment").
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Revenue
|
11,392
|
8,180
|
5,993
|
Constant Currency
Adjustment
|
158
|
131
|
—
|
FV
Adjustment
|
4,154
|
(116)
|
(1,548)
|
Reinsurance in SLF
Canada's GB Operations Adjustment
|
(143)
|
(141)
|
(166)
|
Adjusted
revenue
|
7,223
|
8,306
|
7,707
|
Adjusted premiums and deposits. This measure is an
alternative measure of premiums and deposits that provides greater
comparability across reporting periods by excluding the impact of:
(i) the Constant Currency Adjustment and (ii) the Reinsurance in
SLF Canada's GB Operations Adjustment.
|
Quarterly
results
|
($
millions)
|
Q1'19
|
Q4'18
|
Q1'18
|
Premiums and
deposits
|
42,781
|
41,513
|
46,116
|
Constant Currency
Adjustment
|
1,605
|
1,300
|
—
|
Reinsurance in SLF
Canada's GB Operations Adjustment
|
(143)
|
(141)
|
(166)
|
Adjusted premiums and
deposits
|
41,319
|
40,354
|
46,282
|
Pre-tax net operating profit margin ratio for MFS. This
ratio is a measure of the profitability of MFS, which excludes the
impact of fair value adjustments on MFS's share-based payment
awards, investment income, and certain commission expenses that are
offsetting. These commission expenses are excluded in order to
neutralize the impact these items have on the pre-tax operating
profit margin ratio and have no impact on the profitability of MFS.
There is no directly comparable IFRS measure.
After-tax profit margin for SLF U.S. Group Benefits. This
ratio assists in explaining our results from period to period and
is a measure of profitability that expresses SLF U.S. Employee
Benefits and Medical Stop-Loss underlying net income as a
percentage of net premiums. This ratio is calculated by dividing
underlying net income (loss) by net premiums for the trailing four
quarters. There is no directly comparable IFRS measure.
Impact of foreign exchange. Items impacting our
Consolidated Statements of Operations, such as Revenue, Benefits
and expenses, and Total net income (loss), are translated into
Canadian dollars using average exchange rates for the respective
period. For items impacting our Consolidated Statements of
Financial Position, such as Assets and Liabilities, period end
rates are used for currency translation purposes.
Several IFRS financial measures are presented on a constant currency adjusted basis to exclude the impact of foreign exchange rate
fluctuations. These measures are calculated using the average or period end foreign exchange rates, as appropriate, in effect at the
date of the comparative period.
Assumption changes and management actions. In this
document the impact of ACMA on shareholders' net income (after-tax)
is included in reported net income and is excluded in calculating
underlying net income, as described in section C - Profitability in
this document.
Real estate market sensitivities. Real estate market
sensitivities are non-IFRS financial measures for which there are
no directly comparable measures under IFRS so it is not possible to
provide a reconciliation of these amounts to the most directly
comparable IFRS measures.
Other. Management also uses the following non-IFRS
financial measures for which there are no comparable financial
measures in IFRS: (i) ASO premium and deposit equivalents, mutual
fund sales, managed fund sales, insurance sales, and total premiums
and deposits; (ii) AUM, mutual fund assets, managed fund assets,
other AUM, and assets under administration; (iii) the value of new
business, which is used to measure the estimated lifetime
profitability of new sales and is based on actuarial calculations;
and (iv) assumption changes and management actions, which is a
component of our sources of earnings disclosure. Sources of
earnings is an alternative presentation of our Consolidated
Statements of Operations that identifies and quantifies various
sources of income. The Company is required to disclose its sources
of earnings by its principal regulator, OSFI.
N. 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 document include statements (i) relating to our
strategies, (ii) relating to our growth initiatives and other
business objectives, (iii) relating to the potential amendment of
SLF Inc.'s normal course issuer bid, (iv) relating to the potential
redemption of the Series 2014-1 Debentures, (v) relating to our
expected tax range for future years, (vi) set out in this document
under the heading H - Risk Management - 1. Market Risk
Sensitivities - Equity Market Sensitivities and Interest Rate
Sensitivities, (vii) that are predictive in nature or that depend
upon or refer to future events or conditions, and (viii) that
include words such as "achieve", "aim", "ambition", "anticipate",
"aspiration", "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. These statements
represent our current expectations, estimates, and projections
regarding future events and are not historical facts.
Forward-looking statements are not a guarantee of future
performance and involve risks and uncertainties that are difficult
to predict. Future results and shareholder value may differ
materially from those expressed in these forward-looking statements
due to, among other factors, the matters set out in this document
under the headings, C - Profitability - 5 - Income taxes, E -
Financial Strength and H - Risk Management and in SLF Inc.'s 2018
AIF under the heading Risk Factors and the factors detailed in SLF
Inc.'s other filings with Canadian and U.S. securities regulators,
which are available for review at www.sedar.com and www.sec.gov,
respectively.
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 document, 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 policyholder behaviour;
mortality experience, morbidity experience and longevity; 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; the design and
implementation of business strategies; changes in distribution
channels or Client behaviour including risks relating to market
conduct by intermediaries and agents; the impact of competition;
the performance of our investments and investment portfolios
managed for Clients such as segregated and mutual funds; changes in
the legal or regulatory environment, including capital requirements
and tax laws; the environment, environmental laws and regulations;
tax matters, including estimates and judgments used in calculating
taxes; 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; legal, regulatory
compliance and market conduct, including the impact of regulatory
inquiries and investigations; the execution and integration of
mergers, acquisitions, strategic investments and divestitures; 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; 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.
Earnings Conference Call
The Company's first quarter 2019 financial results will be
reviewed at a conference call on Thursday,
May 9, 2019, at 1:00 p.m. ET.
To listen to the call via live audio webcast and to view the
presentation slides, as well as related information, please visit
www.sunlife.com and click on the link to Quarterly reports under
Investors – Financial results & reports 10 minutes prior to the
start of the call. Individuals participating in the call in a
listen-only mode are encouraged to connect via our webcast.
Following the call, the webcast and presentation will be archived
and made available on the Company's website, www.sunlife.com, until
the Q1 2021 period end. The conference call can also be accessed by
phone by dialing 647-427-2311 (International) or 1-866-521-4909
(toll-free within North America).
A replay of the conference call will be available from Thursday, May 9, 2019 at 5
p.m. ET until 11:59 p.m. ET on Thursday, May 23, 2019 by
calling 416-621-4642 or 1-800-585-8367 (toll free within
North America) using Conference
ID: 1759087.
Consolidated Statements of Operations
|
For the three months
ended
|
(unaudited, in
millions of Canadian dollars except for per share
amounts)
|
March
31,
2019
|
March 31,
2018
|
Revenue
|
|
|
Premiums
|
|
|
Gross
|
$
|
4,942
|
$
|
5,217
|
Less: Ceded
|
572
|
572
|
Net
premiums
|
4,370
|
4,645
|
Net investment income
(loss):
|
|
|
Interest and other
investment income
|
1,398
|
1,354
|
Fair value and foreign
currency changes on assets and liabilities
|
4,154
|
(1,548)
|
Net gains (losses) on
available-for-sale assets
|
23
|
36
|
Net investment income
(loss)
|
5,575
|
(158)
|
Fee income
|
1,447
|
1,506
|
Total
revenue
|
11,392
|
5,993
|
Benefits and
expenses
|
|
|
Gross claims and
benefits paid
|
4,120
|
4,002
|
Increase (decrease) in
insurance contract liabilities
|
4,640
|
(554)
|
Decrease (increase) in
reinsurance assets
|
(21)
|
15
|
Increase (decrease) in
investment contract liabilities
|
24
|
(7)
|
Reinsurance expenses
(recoveries)
|
(508)
|
(528)
|
Commissions
|
564
|
573
|
Net transfer to (from)
segregated funds
|
(85)
|
(17)
|
Operating
expenses
|
1,668
|
1,618
|
Premium
taxes
|
100
|
92
|
Interest
expense
|
88
|
75
|
Total benefits and
expenses
|
10,590
|
5,269
|
Income (loss)
before income taxes
|
802
|
724
|
Less: Income tax
expense (benefit)
|
88
|
119
|
Total net income
(loss)
|
714
|
605
|
Less: Net income
(loss) attributable to participating policyholders
|
67
|
(88)
|
Shareholders' net
income (loss)
|
647
|
693
|
Less: Preferred
shareholders' dividends
|
24
|
24
|
Common
shareholders' net income (loss)
|
$
|
623
|
$
|
669
|
|
|
|
Average exchange
rates during the reporting periods:
|
|
|
U.S.
dollars
|
1.33
|
1.26
|
Earnings (loss)
per share
|
|
|
Basic
|
$
|
1.04
|
$
|
1.10
|
Diluted
|
$
|
1.04
|
$
|
1.09
|
Dividends per
common share
|
$
|
0.500
|
$
|
0.455
|
Consolidated Statements of Financial Position
|
|
As at
|
(unaudited, in
millions of Canadian dollars)
|
|
March
31, 2019
|
December 31,
2018
|
Assets
|
|
|
|
Cash, cash equivalents
and short-term securities
|
|
$
|
8,370
|
$
|
9,506
|
Debt
securities
|
|
76,715
|
74,443
|
Equity
securities
|
|
4,918
|
4,634
|
Mortgages and
loans
|
|
47,565
|
46,822
|
Derivative
assets
|
|
1,430
|
1,112
|
Other invested
assets
|
|
5,057
|
4,830
|
Policy
loans
|
|
3,215
|
3,222
|
Investment
properties
|
|
6,999
|
7,157
|
Invested
assets
|
|
154,269
|
151,726
|
Other
assets
|
|
5,554
|
4,498
|
Reinsurance
assets
|
|
4,135
|
4,141
|
Deferred tax
assets
|
|
1,278
|
1,209
|
Intangible
assets
|
|
1,754
|
1,779
|
Goodwill
|
|
5,358
|
5,412
|
Total general fund
assets
|
|
172,348
|
168,765
|
Investments for
account of segregated fund holders
|
|
110,011
|
103,062
|
Total
assets
|
|
$
|
282,359
|
$
|
271,827
|
Liabilities and
equity
|
|
|
|
Liabilities
|
|
|
|
Insurance contract
liabilities
|
|
$
|
125,491
|
$
|
121,923
|
Investment contract
liabilities
|
|
3,136
|
3,164
|
Derivative
liabilities
|
|
1,762
|
2,295
|
Deferred tax
liabilities
|
|
328
|
322
|
Other
liabilities
|
|
12,580
|
12,153
|
Senior
debentures
|
|
1,299
|
1,299
|
Subordinated
debt
|
|
3,040
|
3,039
|
Total general fund
liabilities
|
|
147,636
|
144,195
|
Insurance contracts
for account of segregated fund holders
|
|
103,265
|
96,663
|
Investment contracts
for account of segregated fund holders
|
|
6,746
|
6,399
|
Total
liabilities
|
|
$
|
257,647
|
$
|
247,257
|
Equity
|
|
|
|
Issued share capital
and contributed surplus
|
|
$
|
10,706
|
$
|
10,749
|
Shareholders' retained
earnings and accumulated other comprehensive income
|
|
13,076
|
12,957
|
Total shareholders'
equity
|
|
23,782
|
23,706
|
Participating
policyholders' equity
|
|
930
|
864
|
Total
equity
|
|
$
|
24,712
|
$
|
24,570
|
Total liabilities
and equity
|
|
$
|
282,359
|
$
|
271,827
|
|
|
|
|
Exchange rates at
the end of the reporting periods:
|
U.S.
dollars
|
1.33
|
1.36
|
Media
Relations Contact:
|
Investor
Relations Contact
|
Krista
Wilson
|
Gregory
Dilworth
|
Director,
Corporate Communications
|
Vice-President,
Investor Relations
|
Tel: 519-888-3900
ext.
341-4896
|
Tel:
416-979-6230
|
krista.wilson@sunlife.com
|
investor.relations@sunlife.com
|
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SOURCE Sun Life Financial Inc.