Sun Life Financial Reports Strong 2Q 2015

Toronto—(PHStocks)—Sun Life Financial Inc. (PSE: SLF) has reported an operating net income of $731 million or $1.19 per share, compared to $488 million or $0.80 per share in the second quarter of 2014, and net income of $726 million or $1.18 per share, compared to $425 million or $0.69 per share in the same period last year.

“We are pleased to report a strong quarter, driven by excellent execution across all four growth pillars,” said Dean Connor, President and Chief Executive Officer, Sun Life Financial. “We achieved strong results in our Canadian business, delivered good results in MFS, continued Asia’s steep growth trajectory, and made good progress in the U.S. Our insurance sales increased by 8% and wealth sales by 25% over the second quarter of 2014. In addition to business momentum, we also benefited from market impacts, particularly from interest rates and currency.”

“During the quarter, we expanded and diversified our asset management pillar by announcing our acquisitions of Bentall Kennedy and Prime Advisors, and completing the acquisition of Ryan Labs,” Connor said. “Once completed, these acquisitions will be a part of Sun Life Investment Management, and will increase its third-party assets under management to approximately $50 billion, based on June 30 information.

SLF Canada delivered strong underlying net income, led by Group Benefits. Insurance sales grew by 22% and wealth sales grew by 61%.

MFS’s assets under management of US$440 billion and solid margins of 40% contributed to underlying net income of US$141 million, up 6% from the same quarter in the prior year.

“Our business momentum continues in Asia, achieving a ninth consecutive quarter of growth, with underlying net income of $71 million this quarter,” said Connor. “SLF U.S. delivered another quarter of improvement in Group Benefits business profitability.”

Leader in financial protection and wealth solutions in our Canadian home market

Individual insurance sales in Canada increased to $85 million, up by 13% from the second quarter of 2014, driven by growth in both third-party and Career Sales Force sales. Individual wealth sales increased by 23% to $1.3 billion, driven primarily by growth in mutual funds, partially offset by a decrease in the sales of guaranteed and fixed income products. During the quarter, we enhanced our retail wealth platform, with the launch of our new segregated products, Sun Life Guaranteed Investment Funds.

Sun Life Global Investments (Canada) Inc. (SLGI) continued its strong momentum with an 86% increase in retail mutual fund sales over the second quarter of 2014. All SLGI Granite target risk funds were above their respective benchmarks over a three-year period.

Group Benefits sales in Canada increased to $102 million, up 31% from the second quarter of 2014 due to higher sales in the large case market segment. Further, the claim trends in disability improved in the second quarter.

Group Benefits was ranked the #1 provider of employee benefit group insurance products in Canada for the sixth consecutive year in the Fraser Group, 2015 Group Universe Report as measured by 2014 revenue.

Group Retirement Services had sales of $3.5 billion which increased by 83% compared to the second quarter of 2014, mainly driven by a $2 billion mandate from the University of British Columbia pension plan, the largest Defined Contribution asset transfer ever completed in Canada. The increase was also due to pension rollover sales and Defined Benefit Solutions sales.

Premier global asset manager, anchored by MFS

We announced the acquisition of Bentall Kennedy during the quarter which is subject to customary closing conditions. In addition, we completed the acquisition of Ryan Labs Asset Management Inc. (Ryan Labs) on April 2, 2015 and the acquisition of Prime Advisors Inc. (Prime), subsequent to the quarter on July 31, 2015. Ryan Labs and Prime add expertise in customized fixed income portfolio management for pension funds and insurance companies. Bentall Kennedy, a premier real estate manager in Canada and the U.S., deepens and extends our real estate capabilities.

These acquisitions will expand Sun Life Investment Management (“SLIM”), whose goal is to offer institutional investors across North America a spectrum of capabilities, ranging from liability-driven investment strategies to alternative, yield-oriented assets in private markets. SLIM complements MFS, our established asset manager of retail and institutional products which focuses on generating superior investment returns in public markets. Together, MFS and SLIM position us to benefit from the growth in traditional active asset management as well as the trends toward liability-driven investing and alternative asset classes.

The total third-party assets under management (“AUM”) of Sun Life Investment Management Inc. and Ryan Labs was $8.1 billion as at June 30, 2015 and gross sales for the second quarter of 2015 were $619 million.

MFS Investment Management (“MFS”) AUM of US$440 billion at the end of June 30, 2015 declined slightly compared to the first quarter of 2015 with net outflows in the quarter of US$1.8 billion. Positive retail net inflows were more than offset by institutional net outflows.

MFS’s long-term retail fund performance remains strong with 82%, 88%, and 97% of MFS’s mutual fund assets ranked in the top half of their Lipper categories based on three-, five-, and ten-year performance, respectively, as of the second quarter of 2015.

Global AUM were $808 billion at the end of June 30, 2015.

Leader in U.S. group benefits and international high net worth solutions

Group Benefits in the U.S. continued to execute well, with earnings growth from investments in claims management, pricing actions, and expense management. Sales were down compared to the second quarter of 2014 given a more selective approach to pricing. The new Center for Healthy Work, in Scarborough, Maine, opened during the quarter, which will be a centre of excellence for disability claims management.

Our U.S. stop-loss insurance business achieved good results, maintaining its sales compared to the second quarter of 2014 and achieving 12% growth in business in-force over the second quarter of 2014 to US$1.0 billion.

The International business continues to realign product, marketing and distribution to create focus on select regions, distributors and customer segments.

Growing Asia through distribution excellence in higher growth markets

SLF Asia continued its steep growth trajectory. Individual insurance sales were up largely driven by agency sales in the Philippines and Indonesia, as well as bancassurance sales in Malaysia, partially offset by lower sales in India, China, and Hong Kong. Wealth sales grew compared to the second quarter of 2014 with strong mutual fund sales in India and strong Mandatory Provident Fund sales in Hong Kong.

We continued to invest in our brand in Asia and are pleased to be among the top six insurance companies in the 2015 list of Asia’s Top 1000 Brands from media research firm Nielsen and marketing authority Campaign Asia-Pacific. We improved our placement more than any of our peers in the insurance category, and notably at an individual market level, we achieved an improved position in the rankings in all seven of the markets where we have operations.