Sun Life Financial Reports Fourth Quarter and Full Year 2016 Results

TORONTO, Feb. 15, 2017

TORONTO, Feb. 15, 2017 /PRNewswire/ - Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) today announced its results for the fourth quarter ended December 31, 2016. Fourth quarter reported net income was $728 million. Fourth quarter operating net income⁽¹⁾ and underlying net income⁽¹⁾ were $732 million and $560 million, respectively.

		Quarterly results				Full Year
		Q4'16		Q4'15		2016 ARIVA.DE Börsen-Geflüster Kurse Sun Life Financial 47,00 € +0,43%		2015
Reported net income ($ millions)		728		536		2,485		2,185
Operating net income(1) ($ millions)		732		598		2,487		2,253
Underlying net income(1) ($ millions)		560		646		2,335		2,305
Reported EPS(2) ($)		1.18		0.87		4.03		3.55
Operating EPS(1)(2) ($)		1.19		0.98		4.05		3.68
Underlying EPS(1)(2) ($)		0.91		1.05		3.80		3.76
Reported ROE(1)		14.8%		11.4%		13.0%		12.2%
Operating ROE(1)		14.9%		12.7%		13.0%		12.6%
Underlying ROE(1)		11.4%		13.8%		12.2%		12.8%

• Common share dividend declared of $0.42 per share for the quarter. Dividends declared in the year of $1.62 per share
• Minimum Continuing Capital and Surplus Requirements ratio for Sun Life Assurance Company of Canada of 226%. Cash and other liquid assets amounted to $1.6 billion for Sun Life Financial Inc. and its wholly-owned holding companies⁽³⁾
• Global assets under management ("AUM") of $903 billion compared to $891 billion as at December 31, 2015

"Our fourth quarter closed out a year defined by an intensified commitment to our Clients and significant progress on several fronts for Sun Life," said Dean Connor, President and Chief Executive Officer, Sun Life Financial. "I'm pleased with the execution of our digital and wealth initiatives in Canada, our sales momentum in Asia, the scaling and integration of our U.S. operations, and strong long-term investment performance in our asset management businesses."

"In 2016, we achieved underlying net income of $2.3 billion, raised our common share dividend twice, and generated 12.2% underlying return on equity," said Connor. "We also generated strong topline growth, increasing insurance sales by 27% and wealth sales by 14% for the year compared to 2015. Total shareholder return was 24% for the year."

"During the quarter we announced industry-leading underwriting and product changes in Canada that increase access and make it easier for Clients to do business with us," said Connor. "We also continued to improve our digital touchpoints and solutions, from new mobile apps to advanced analytics that provide Clients with proactive and relevant advice and prompts to meet their unique needs. In recognition of our focus, Sun Life earned the highest overall score in Forrester's annual Canadian Life Insurance Digital Sales Functionality Benchmark."

Operational Highlights

Our strategy is focused on four key pillars of growth, where we aim to be a leader in the markets in which we operate. We detail our continued progress in these pillars below. 

Fourth Quarter Operational Highlights

A Leader in Insurance and Wealth Solutions in our Canadian home market
Total Canadian sales were strong and increased compared to the fourth quarter of 2015 in each of our businesses. Individual insurance sales doubled over the same period in the prior year in anticipation of the tax legislation changes effective January 1, 2017. The increase was driven by Career Sales Force and third-party sales, particularly of participating permanent and universal life products.

Individual wealth sales of $1.5 billion were up 8% in the fourth quarter. We continued to experience solid growth in sales of our wealth manufactured⁽¹⁾ products including SLGI⁽²⁾ mutual funds, Sun GIF⁽³⁾ segregated funds, and payout annuities. These increases were partially offset by a decrease in sales of non-SLGI mutual funds.

Group Benefits and Group Retirement Services sales increased compared to the fourth quarter of 2015, primarily due to several large-case sales.

A Leader in global Asset Management
MFS Investment Management ("MFS") had AUM of US$426 billion as at December 31, 2016. Gross sales were US$19.8 billion in the fourth quarter of 2016 and net outflows were US$9.5 billion. Rebalancing by institutional Clients was the largest driver of outflows. An increase in non-U.S. retail redemptions, which were in line with the industry as a whole, was an additional contributor to the higher net outflows when compared to the previous quarter.

In the fourth quarter, we experienced asset depreciation of $5.6 billion reflecting the decline in fixed income and non-U.S. equity markets. MFS remains focused on long-term retail funds, where performance remained strong: 61%, 75% and 97% of MFS's U.S. retail mutual fund assets ranked in the top half of their Lipper categories based on three-, five- and ten-year performance, respectively, as of December 31, 2016.

Sun Life Investment Management had AUM of $53 billion as at December 31, 2016. Strong net inflows of $2.3 billion in the fourth quarter were driven primarily from Prime Advisors Inc. During the quarter, the Bentall Kennedy group of companies ("Bentall Kennedy") continued to expand its product offerings by creating products that are complementary to its core Canadian and U.S. diversified property funds.

A Leader in U.S. Group Benefits and International high net worth solutions
Sales in Group Benefits increased 32% compared to the fourth quarter of 2015, following our U.S. employee benefits business acquisition in 2016. Year over year, collectively, sales in the life, disability, and dental product lines doubled, and Disability Reinsurance Management Services sales remained strong.

A Leader in Asia through Distribution Excellence in Higher Growth Markets
SLF Asia individual insurance sales increased by 36% over the fourth quarter of the prior year, with growth in all markets. These results were driven by organic growth across the region as well as our increased ownership of businesses in India, Indonesia and Vietnam. Strong wealth sales were led by growth across India, Hong Kong and the Philippines.

We continued to invest in our Asia business during the quarter, and completed a transaction to acquire the remaining 25% share in Sun Life Vietnam Insurance Company Limited.

Annual Operational Highlights

A Leader in Insurance and Wealth Solutions in our Canadian home market

• We retained our industry-leading positions in Group Benefits⁽¹⁾ and Group Retirement Services ("GRS")⁽²⁾ and ranked second in the individual insurance⁽³⁾ business.
• The strategic investments we made in our businesses are delivering benefits as reflected in increased sales in our individual wealth manufactured products⁽⁴⁾, SLGI⁽⁵⁾ mutual funds and Sun GIF⁽⁶⁾, and our Defined Benefit Solutions products. SLGI completed its sixth full year of operations and continued to offer top-performing funds as all five of the Granite Managed Portfolios had four-year performance that exceeded the peer median⁽⁷⁾.
• We made significant investments to further enhance our Client experience and advance our digital innovation strategy, including the launch of Digital Health Solutions, a new business designed to help Canadians find new and better ways of accessing health care products and services. In addition, Client Solutions' Digital Benefits Assistant, which surfaces helpful ideas at the right time through our Clients' channel of choice, continued to build momentum by engaging Clients proactively and delivering personalized and relevant interactions. Other growth initiatives included the launch of automatic enrollment for SLGI's Private Client program, and GRS's MAX my money@work, a new digital Client enrollment tool.
• During 2016, we made enhancements to the my Sun Life Mobile App, enabling Clients to search for local healthcare providers and show Client ratings. This allows Clients to take a more active role in managing their health and well-being. In addition, the app allows Clients to submit claims and check coverage and savings balances.
• For the eighth year in a row, Canadians have voted Sun Life Financial as the "Most Trusted Life Insurance Company", part of the Reader's Digest Trusted Brand™ awards program.

A Leader in global Asset Management

• MFS continued to deliver strong long-term investment performance and grew AUM to US$426 billion as of December 31, 2016. We continued to invest in our technological infrastructure to ensure MFS continues to deliver world-class Client service and to position its platform for future growth.
• MFS was named Equity Manager of the Year in the U.K. by Financial News in October, 2016 in recognition for its Client service focus and long-term value.
• SLIM achieved strong sales growth and launched new products and funds, including Sun Life Institutional Investment (Canada) Inc.'s Short Term Private Fixed Income Plus Fund, Ryan Labs Asset Management Inc.'s ("Ryan Labs") strategies including Defensive Risk Premia, and two new funds from Bentall Kennedy, ending the year with net sales of $4.5 billion and AUM of $53.2 billion.
• Bentall Kennedy was ranked among the top five firms globally in the 2016 Global Real Estate Sustainability Benchmark rankings. This is the sixth year that the team at Bentall Kennedy has received this recognition.

A Leader in U.S. Group Benefits and International high net worth solutions

• In the first quarter of 2016, we closed the acquisition of Assurant Inc.'s U.S. Employee Benefits business, adding new capabilities and scale to our group benefits business in the U.S. The acquired business includes the second largest preferred provider dental network in the U.S., a group life and disability business with products and capabilities in voluntary benefits and vision, and integrated capabilities in benefits communications, deductions reporting and administration.
• The U.S. employee benefits business acquired in 2016 is proceeding in line with expectations, including the realization of transaction synergies. We are achieving our objectives in integrating our products, distribution, account management teams, and other organizational structures.
• In Group Benefits, we continued to improve the profitability of the disability business through expense, claims management and pricing actions that we have taken over the past few years. Sales increased significantly year over year reflecting the contribution of the U.S. employee benefits business acquired since closing in 2016.
• International launched a new life insurance product to broaden our offering to the international life insurance market. International sales increased 16% compared to the prior year.

A Leader in Asia through Distribution Excellence in Higher Growth Markets

• We have continued to invest in our Asia business, including acquiring full ownership of Sun Life Vietnam Insurance Company Limited, announcing we have agreed to an exclusive 15-year distribution agreement with FWD Life Insurance Company (Bermuda) Limited ("FWD") in Hong Kong and also to acquire its pension business consisting of the Mandatory Provident Fund and Occupational Retirement Schemes Ordinance businesses, acquiring full ownership of PT CIMB Sun Life in Indonesia and extending our bancassurance arrangement with PT Bank CIMB Niaga in Indonesia, and increasing our ownership in Birla Sun Life Insurance in India to 49%.
• Our individual insurance and wealth sales grew 29% and 25% respectively over 2015.

Recognition

• For the eighth consecutive year, SLF Inc. has been the only North American insurance company to be listed among the 2016 Global 100 Most Sustainable Corporations in the World (the "Global 100").
• Sun Life Financial was ranked in the top ten in The Globe and Mail's Board Games 2016 annual rating of governance practices of Canadian Boards of Directors compiled by the Report on Business.
• Corporate Knights recognized Sun Life as one of 2016's Best 50 Corporate Citizens in Canada ranking.

_________________________
(1)	The 2016 Fraser Group, most recently published Group Universe Report, based on 2015 data as measured by revenue, including administrative services only premium equivalents.
(2)	As measured by Benefits Canada magazine's 2016 CAP Suppliers Report, based on June 30, 2016 assets under administration, and released in December 2016.
(3)	LIMRA, for the nine months ended September 30, 2016.
(4)	Represents sales of individual wealth products developed by Sun Life, including Sun Life Global Investment mutual funds, Sun Life Guaranteed Investment Funds segregated funds, Guaranteed Investment Certificates, and Accumulation and Payout Annuities.
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