Sun Life Reports Third Quarter 2021 Results
PR Newswire
TORONTO, Nov. 3, 2021
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", "we", "our", and "us". We manage our operations and
report our financial results in five business segments: Canada, United States
("U.S."), Asset Management, Asia, and Corporate. The information in this
document is based on the unaudited interim financial results of SLF Inc. for
the period ended September 30, 2021 and should be read in conjunction with the
interim management's discussion and analysis ("MD&A") and our unaudited
interim consolidated financial statements and accompanying notes ("Interim
Consolidated Financial Statements") for the period ended September 30, 2021,
prepared in accordance with International Financial Reporting Standards
("IFRS"). We report certain financial information using non-IFRS financial
measures. For more details, refer to the Non-IFRS Financial Measures section
in this document. Additional information relating to SLF Inc. is available on
www.sunlife.com under Investors -- Financial results and reports, on the SEDAR
website at www.sedar.com, and on the U.S. Securities and Exchange Commission's
website at www.sec.gov. Reported net income (loss) refers to Common
shareholders' net income (loss) determined in accordance with IFRS. Unless
otherwise noted, all amounts are in Canadian dollars.
------------------------------------------------------------------------------ TORONTO, Nov. 3, 2021 /PRNewswire/ - Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) today announced its results for the third quarter ended September 30, 2021. Third quarter reported net income was $1,019 million and underlying net income(1) was $902 million.
"Sun Life delivered strong third quarter results," said Kevin Strain, President and CEO for Sun Life. "We continue to see positive momentum, enabled by digital tools and solutions, at a time when several of our markets are impacted by COVID-19. Our third quarter results highlight the value of our diversified business mix, supported by strong wealth and asset management results. With a track-record of delivering on our objectives, combined with the ongoing shift to fee-based capital-light businesses, we are pleased to announce an increase in our medium-term financial objective for underlying ROE to 16% plus."
Sun Life is also continuing to build on its long-term environmental and social commitments when it comes to integrating sustainability within its business strategy and aligning it to Sun Life's Purpose to help Clients achieve lifetime financial security and live healthier lives.
"The role of our business is to serve our Clients, our communities and society. We're doing our part by advancing our commitment to a cleaner, more inclusive and sustainable future with our announced goal to achieve net-zero by 2050 as an asset owner and manager and the appointment of our first Chief Sustainability Officer, Alanna Boyd," added Strain.
Quarterly results Year-to-date
Profitability Q3'21 Q3'20 2021 2020
Reported net income ($
millions) 1,019 750 2,856 1,660
Underlying net income
($ millions)(1) 902 842 2,635 2,351
Reported EPS ($)(2) 1.74 1.28 4.85 2.83
Underlying EPS
($)(1)(2) 1.54 1.44 4.50 4.02
Reported return on
equity ("ROE")(1) 17.6% 13.5% 16.7% 10.1%
Underlying ROE(1) 15.6% 15.1% 15.4% 14.3%
Growth Q3'21 Q3'20 2021 2020
Insurance sales ($
millions)(1) 628 681 2,068 2,076
Wealth sales ($
millions)(1)(3) 50,725 52,684 171,700 169,226
Value of new business
("VNB") ($
millions)(1)(4) 290 261 852 720
Assets under
management ("AUM") ($
billions)(1)(3) 1,386 1,196 1,386 1,196
Financial Strength Q3'21 Q3'20
LICAT ratios (at
period end)(5)
Sun Life Financial
Inc. 143% 144%
Sun Life Assurance(6) 124% 127%
Financial leverage
ratio (at period
end)(1) 22.2% 21.5%
__________
(1) Represents a non-IFRS financial measure. See the Non-IFRS Financial
Measures section in this document and in our interim MD&A for the
period ended September 30, 2021 ("Q3 2021 MD&A").
(2) All earnings per share ("EPS") measures refer to fully diluted EPS,
unless otherwise stated.
(3) Effective January 1, 2021, the methodology for gross flows and outflows
was updated for SLC Management. Prior period amounts have not been
updated. For more details, see the Non-IFRS Financial Measures section
in this document.
(4) Effective January 1, 2021, reflects a change in the timing of
recognition of U.S. VNB for group policies. We have updated prior
period amounts to reflect this change. For more details, see the
Non-IFRS Financial Measures section in this document.
(5) For further information on the Life Insurance Capital Adequacy Test
("LICAT"), see section E - Financial Strength in the Q3 2021 MD&A.
(6) Sun Life Assurance Company of Canada ("Sun Life Assurance") is SLF
Inc.'s principal operating life insurance subsidiary.
Financial and Operational Highlights - Quarterly Comparison (Q3 2021 vs. Q3 2020)
Our strategy is focused on four key pillars, where we aim to be a leader in the markets in which we operate.
($ millions, unless otherwise noted)
Reported Underlying Insurance Wealth
net income (loss) net income (loss)(1) sales(1) sales(1)(2)
Q3'21 Q3'20 change Q3'21 Q3'20 change Q3'21 Q3'20 change Q3'21 Q3'20 change
Canada 393 387 2% 290 293 (1)% 182 147 24% 5,918 6,837 (13)%
U.S. 46 (113) nm(3) 110 136 (19)% 199 230 (13)% -- -- --
Asset
Management 301 251 20% 362 294 23% -- -- -- 40,682 43,066 (6)%
Asia 288 236 22% 145 164 (12)% 247 304 (19)% 4,125 2,781 48%
Corporate (9) (11) nm(3) (5) (45) nm(3) -- -- -- -- -- --
Total 1,019 750 36% 902 842 7% 628 681 (8)% 50,725 52,684 (4)%
(1) Represents a non-IFRS financial measure. See the Non-IFRS Financial
Measures section in this document and in the Q3 2021 MD&A.
(2) Effective January 1, 2021, the methodology for gross flows and outflows
was updated for SLC Management. Prior period amounts have not been
updated. For more details, see the Non-IFRS Financial Measures section in
this document.
(3) Not meaningful.
Reported ROE was 17.6% in the third quarter of 2021, compared to 13.5% in the same period last year. Underlying ROE was 15.6%, up from 15.1% in the third quarter of 2020. We are also increasing our underlying ROE medium-term financial objective to 16%+ from our current objective of 12% to 14%. This update is supported by strong business performance and a meaningful shift in business mix towards more fee-based earnings requiring lower capital(1) .
Q3'21 reported net income of $1,019 million increased $269 million or 36% compared to the same period in 2020, driven by favourable market-related impacts from changes in the fair value of investment properties, and ACMA(2) , partially offset by a par allocation adjustment(3) . Underlying net income of $902 million increased by $60 million or 7%, driven by business growth, favourable credit experience and higher tax-exempt investment income. This was partially offset by morbidity and expense experience, and the unfavourable impacts of foreign exchange translation. Mortality experience was elevated in the U.S. and Asia, but relatively in line with the prior year. During the third quarter of 2021, the impacts of foreign exchange translation led to a decline of $41 million in reported net income and $36 million in underlying net income. Refer to the Non-IFRS Financial Measures section in this document for a reconciliation between reported net income and underlying net income.
SLF Inc. ended the quarter with a LICAT ratio of 143% and $2.8 billion in cash and other liquid assets(4) .
Canada: A leader in insurance and asset management
Canada's Q3'21 reported net income of $393 million was in line with the prior year, driven by favourable market-related impacts from changes in the fair value of investment properties, partially offset by a par allocation adjustment. Underlying net income of $290 million was in line with the prior year,as business growth, higher tax-exempt investment income and favourable credit experience were offset by unfavourable Group Benefits ("GB") morbidity experience and higher expenses. The prior year included favourable morbidity experience in GB, driven by lower disability claim volumes.
Canada insurance sales were $182 million in the third quarter of 2021, an increase of $35 million or 24% compared to the same period in 2020, driven by higher individual participating whole life insurance sales, and higher large case sales in GB. Canada wealth sales were $6 billion in the third quarter of 2021, a decrease of approximately $1 billion or 13% compared to the same period in 2020, reflecting lower defined contribution sales in Group Retirement Services ("GRS"), partially offset by higher individual wealth mutual fund sales.