Sun Life Financial (SLF) 2025 Scotiabank Financials Summit summary

Strategic business mix and ROE targets

• Focus on low-capital, repriceable group benefits and asset management drives a 20% ROE target, seen as reasonable for the business mix and not overly aggressive.

• Asset management is trending toward half of the business, with significant growth expected from SLC and DentaQuest returning to normal profitability.

• Shift from traditional insurance to a balanced asset management and insurance model began post-financial crisis, improving resilience across economic cycles.

• Exiting U.S. life, variable annuities, and long-term care were key to achieving current ROE levels.

U.S. business performance and challenges

• Group benefits in the U.S. are built for scale and low capital, with acquisitions like Assurant and DentaQuest expanding capabilities.

• DentaQuest faces headwinds from post-pandemic Medicaid changes, leading to higher claims and delayed repricing, but long-term prospects remain positive.

• U.S. stop-loss business benefits from data, technology, and disciplined pricing, supporting strong ROE and profitability.

• Technology enhances client experience and operational efficiency, aiding competitive positioning in RFPs.

Asset management and alternatives strategy

• Asset management, including MFS and SLC, is a core growth driver, with a focus on public equity, fixed income, and alternatives.

• Alternatives platform has CAD 250 billion in third-party assets, spanning real estate, infrastructure, and private credit.

• Strong cash flow from MFS supports M&A and buybacks, with 90% of earnings returned in cash.

• The "flywheel" strategy leverages wealth and asset management synergies, especially in Asia and Canada.

• Despite intense competition in alternatives, the integrated insurance and asset management model is seen as a unique advantage.