Sun Life Financial(US:SLF)2023-02-09 00:42Financial Performance - Reported net income for Q4'22 was $951 million, a decrease of 12% from Q4'21, primarily due to unfavorable market-related impacts and DentaQuest integration costs [41]. - Underlying net income for Q4'22 increased by 10% to $990 million, driven by business growth and contributions from the DentaQuest acquisition [41]. - Reported net income for Q4'22 was C$951 million, a 103% increase from Q3'22, driven by strong performance across business segments [74]. - Total underlying net income for the company was C$990 million in Q4'22, reflecting a 4% increase from Q4'21 [74]. - Reported net income for Q4'22 was $951 million, compared to $1,078 million in Q4'21, reflecting a decrease of 11.8% year-over-year [108]. - Underlying net income for Q4'22 increased to $990 million, up from $898 million in Q4'21, representing a growth of 10.2% [110]. - Reported diluted EPS for Q4'22 was $1.62, down from $1.83 in Q4'21, a decline of 11.5% [108]. - Reported net income for Q4'22 was $951 million, an increase from $466 million in Q3'22 [150]. - Underlying net income for Q4'22 reached $990 million, compared to $949 million in Q3'22, reflecting a growth of approximately 4.3% [150]. Sales Performance - Insurance sales in Q4'22 reached $1,843 million, up from $1,606 million in Q4'21, reflecting a growth of 15% [38]. - Wealth sales in Q4'22 were $45,754 million, a decrease of 19% compared to $56,708 million in Q4'21 [38]. - Total insurance sales rose by $237 million or 15% year-over-year, while total wealth sales decreased by $10,954 million or 19% year-over-year [52]. - Canada insurance sales increased by 2%, while U.S. insurance sales rose by 11% driven by higher dental and employee benefits sales [53]. - Asia insurance sales increased by 9% in Q4'22, driven by growth in India, International, the Philippines, and Vietnam, while wealth sales decreased by 56% [100]. - Canada wealth sales increased by C$0.9 billion or 16%, driven by higher defined contribution sales in Group Retirement Services [79]. Assets Under Management (AUM) - Total assets under management (AUM) as of Q4'22 were $1,325,859 million, down from $1,444,728 million in Q4'21, representing a decline of 8% [38]. - AUM net outflows in Q4 2022 were $12.7 billion, primarily due to $16.1 billion in MFS [57]. - Assets under management (AUM) totaled $1,325,859 million, a decrease of $118.9 billion or 8% from December 31, 2021 [55][56]. - Asset Management's AUM decreased by $107.2 billion or 10% from December 31, 2021, due to net asset value changes and net outflows [91]. - MFS's AUM decreased by $144.9 billion or 21% from December 31, 2021, reflecting significant asset value changes and net outflows [92]. - SLC Management's AUM increased by $25.7 billion or 14% as of December 31, 2022, driven by net inflows of $21.5 billion [93]. Tax and Regulatory Impacts - The effective tax rate for reported net income in Q4'22 was -1.0%, primarily due to the Canada Tax Rate Change [49]. - The legislation implementing an additional surtax of 1.5% on taxable income over $100 million positively impacted reported net income by $127 million in Q4'22 [48]. - Reported net income increased by $127 million in Q4 2022 due to a new surtax legislation in Canada [51]. - The effective income tax rate on reported net income was calculated using total income before income taxes, reflecting the impacts of tax legislation [51]. - The effective tax rate for underlying net income adjustments varied, reflecting the mix of business based on the company's international operations [110]. Operational Metrics - The dividend payout ratio remained stable at 43% in Q4'22 [38]. - The company reported a financial leverage ratio of 25.1% in Q4'22, a slight decrease from 25.5% in Q4'21 [38]. - The LICAT ratio for Sun Life Financial Inc. was 130% as of December 31, 2022, down from 145% a year earlier [59][61]. - Total capital increased by $1.6 billion to $36.3 billion, driven by reported net income of $3,060 million and foreign exchange translation impacts [64]. - The underlying dividend payout ratio is targeted between 40% and 50% based on underlying EPS, ensuring capital initiatives are met [146]. Business Developments - A new 15-year exclusive bancassurance partnership was announced with Dah Sing Bank in Hong Kong, expected to start in July 2023 [70]. - Sun Life completed the acquisition of a 51% interest in Advisors Asset Management, overseeing US$40.5 billion in assets as of December 31, 2022 [71]. - The company completed the acquisition of DentaQuest on June 1, 2022, which is expected to enhance its market position in the U.S. [122]. - The company completed the sale of its sponsored markets business to Canadian Premier Life Insurance Company on February 1, 2023 [71]. - The company plans to divest Sun Life UK, which may impact future financial performance and strategic positioning [156]. Market Conditions - Market-related impacts on reported net income were negative $273 million in Q4'22, compared to positive impacts of $153 million in Q4'21 [110]. - Experience-related items accounted for pre-tax gains and losses due to differences between actual experience and best estimate assumptions, impacting the Sources of Earnings framework [128]. - The financial results are subject to risks including market volatility, regulatory changes, and the ongoing impacts of the COVID-19 pandemic [158]. Income and Expenses - Total expenses for Q4'22 were $452 million, compared to $391 million in Q3'22 and $470 million in Q4'21, reflecting a decrease of 4% year-over-year [132]. - Fee income for Q4'22 was $501 million, up from $310 million in Q3'22 and $300 million in Q4'21, representing a year-over-year increase of 67% [132]. - Fee-related earnings for Q4'22 were $73 million, compared to $58 million in Q3'22 and $60 million in Q4'21, indicating a 22% increase from the previous quarter [132]. - Operating income for Q4'22 was $65 million, up from $42 million in Q3'22 and $64 million in Q4'21, showing a 55% increase quarter-over-quarter [132]. Segment Performance - In the U.S. segment, reported net income for Q4'22 was $81 million, up from $72 million in Q3'22 [152]. - The Asset Management unit reported an underlying net income of $313 million in Q4'22, a slight increase from $295 million in Q3'22 [151]. - The U.S. Group Benefits segment achieved an underlying net income of $115 million in Q4'22, compared to $103 million in Q3'22 [154]. - MFS reported net income of $223 million in Q4'22, down $11 million or 5%, with underlying net income decreasing by $70 million or 26% to $202 million, primarily due to declines in global equity markets [89]. - SLC Management's reported net income was $19 million in Q4'22, a significant recovery from a net loss of $155 million in the prior year, while underlying net income decreased by $2 million or 5% to $38 million [90].