Sun Life Financial(SLF) - 2024 Q2 - Quarterly Report

Financial Performance - Underlying net income for Q2 2024 was $1,000 million, an increase of $80 million or 9% from Q2 2023, with an underlying return on equity (ROE) of 18.1%[2] - Reported net income decreased to $646 million, down $14 million or 2% from Q2 2023, with a reported ROE of 11.7%[3] - Total revenue for Q2 2024 was $8.916 billion, an increase of $1.2 billion compared to Q2 2023, primarily driven by lower net investment losses and higher insurance revenue in Canada[151] - Reported net income for Q2'24 decreased by $14 million or 2% to $646 million, impacted by a restructuring charge of $138 million[35] - The company reported underlying net income of $1.000 billion for Q2 2024, an increase from $875 million in Q1 2024[157] - Reported net income for Q2 2024 reached $386 million, up $130 million or 51%, influenced by a gain on the partial sale of ABSLAMC and favorable ACMA impacts[98] Assets Under Management (AUM) - Assets under management (AUM) reached $1,465 billion, an increase of $98 billion or 7% from Q2 2023[3] - Total assets under management (AUM) reached $1,464.8 billion, a year-over-year increase from $1,366.8 billion[33] - Total assets under management (AUM) reached $1,464.8 billion in Q2'24, a decrease of $5.3 billion or 0.4% from Q1'24[62] - AUM increased by $65.2 billion or 5% from December 31, 2023, primarily due to favorable market movements of $68.2 billion and foreign exchange translation gains of $32.8 billion[63] - Asset Management AUM reached $1,072.1 billion, an increase of $56.2 billion or 6% from December 31, 2023, driven by net asset value changes of $90.4 billion, partially offset by net outflows of $31.1 billion and client distributions of $3.1 billion[82] Segment Performance - Wealth and asset management underlying net income was $455 million, up $36 million or 9% from the previous year[4] - Group - Health & Protection underlying net income decreased to $305 million, down $55 million or 15% from Q2 2023[4] - Individual - Protection underlying net income increased to $347 million, up $82 million or 31% from Q2 2023[4] - U.S. underlying net income decreased by US$11 million or 7% to US$149 million, driven by lower dental results and unfavorable morbidity experience[14] - Asia's underlying net income increased by $29 million or 19% to $179 million, driven by growth in individual protection and wealth management[17] - Underlying net income for the U.S. segment was $179 million, an increase of $29 million or 19%, driven by growth in Individual - Protection and Wealth & Asset Management[96] Sales and Flows - Wealth sales and asset management gross flows were $46,262 million, an increase of 9% year-over-year[4] - Canada’s wealth sales and asset management gross flows increased by 72% to $5 billion, driven by higher defined benefit solution sales[11] - Total wealth sales and asset management gross flows increased by $3.9 billion or 9% year-over-year, with Canada wealth sales rising by 72% driven by defined benefit solutions[59] - Total individual protection sales increased by $149 million or 25% from the prior year, with Asia individual sales rising by 29% driven by expanded distribution capabilities[60] Restructuring and Charges - The company recorded a restructuring charge of $138 million in Q2'24, expected to yield annual savings of approximately $200 million by 2026[48] - The company recorded a restructuring charge of $108 million in Q2 2024 within the Corporate business group[180] Tax and Regulatory - The effective income tax rate on underlying net income was 17.3% for Q2'24[43] - The effective income tax rate on underlying net income was 16.7%, while the reported net income tax rate was 21.5%[56] - The Pillar Two global minimum tax rules are expected to increase the effective tax rate on underlying net income by approximately one to two percentage points starting January 1, 2024[55] Market Sensitivities - A 25% decrease in private and public equity markets could lead to a potential after-tax net income impact of $(450) million[133] - A 10% increase in private and public equity markets is estimated to increase after-tax net income by $200 million as of June 30, 2024[133] - A 50 basis point increase in interest rates could decrease after-tax net income by $(25) million as of June 30, 2024[135] Cash and Liquidity - Net cash and cash equivalents at the end of Q2 2024 were $8.731 billion, an increase from $7.908 billion at the beginning of the period[155] - Operating activities generated cash flows of $1.167 billion in Q2 2024, compared to cash used of $2.487 billion in Q1 2024[155] Corporate Actions - The company issued $750 million in subordinated unsecured debentures in May 2024 to finance eligible assets[71] - During Q2'24, Sun Life Financial Inc. repurchased and canceled approximately 4.1 million common shares at a total cost of $287 million[72] Future Outlook - The company plans to continue focusing on market expansion and new product development to enhance long-term growth potential[177]