Sun Life Financial(US:SLF)2020-05-07 00:34Financial Data and Key Metrics Changes - Reported net income for Q1 2020 was $391 million, down 37% from Q1 2019, primarily due to equity market declines [19][34] - Underlying net income increased by 7% to $770 million, with underlying earnings per share up 9% to $1.31 [19][35] - Underlying return on equity for the quarter was 14.2% [19][35] - LICAT ratio remained unchanged at 143%, indicating strong capital position [21][38] - Assets under management decreased by $76 billion to $1.023 trillion, mainly due to unfavorable market movements [44] Business Line Data and Key Metrics Changes - Wealth sales grew by 66% year-over-year, with MFS achieving record sales [22][61] - Insurance sales slightly decreased to $776 million, primarily due to lower large case Group Benefits sales in Canada [25][59] - International Hubs insurance sales increased by 148% year-over-year, driven by growth in Hong Kong and International [27] - Asset management reported net income growth of 9%, driven by favorable fair value adjustments [49] Market Data and Key Metrics Changes - Canadian insurance sales were down 19%, while U.S. sales increased by 2% on a constant currency basis [59][60] - Individual insurance sales in Asia rose by 22% on a constant currency basis, with strong growth in Hong Kong and the Philippines [60][63] - Overall, MFS experienced net inflows of $1.8 billion, reflecting strong retail net flows [62] Company Strategy and Development Direction - The company is focusing on digital transformation to enhance client interactions and service delivery [29][30] - A four-pillar strategy is in place to ensure balanced and diversified earnings streams [21] - The company is evaluating M&A opportunities while adhering to regulatory guidelines [87][88] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic but expressed confidence in the company's strong capital and liquidity positions [79] - The company anticipates a challenging year for financial institutions, with potential reductions in sales and premium levels [31][32] - Management highlighted the importance of digital tools in maintaining sales activities during the pandemic [72][120] Other Important Information - The company has implemented measures to support clients facing financial hardships, including premium payment deferrals [76] - The company donated over $2 million to charities to support at-risk populations during the pandemic [17] Q&A Session Summary Question: How do capital allocation priorities shift due to regulatory measures? - Management indicated that share buybacks will be considered again once restrictions are lifted, and M&A opportunities will be evaluated based on various scenarios [86][88] Question: Any issues with the hedging program during market volatility? - Management expressed satisfaction with the hedging program, noting that it effectively covered actuarial liabilities related to market movements [95] Question: What is the outlook for lapse rates and credit losses? - Management stated that lapse rates could vary depending on the economic environment and product types, with potential increases in lapsation if unemployment rises [126] Question: How are sales performing in different regions? - Management reported mixed sales performance, with some markets recovering while others remain impacted by lockdowns [104][106]