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____________________
Solid Quarterly Results
Sun Life Financial Reports Record 2007 and Solid Fourth Quarter Results
Annual operating earnings up 10%, earnings per share up 11%
Note to Editors: All figures shown in Canadian dollars unless otherwise
noted.
TORONTO - Sun Life Financial Inc.(1) today announced operating earnings(2) of $560 million for the fourth quarter of 2007. Fully diluted operating earnings per share (EPS)(3) of $0.98 increased 4% over the fourth quarter of 2006. The strengthening of the Canadian dollar relative to foreign currencies since the fourth quarter of 2006 reduced operating earnings by $41 million or $0.07 per share. Excluding the impact of currency, operating EPS would have increased by 12% over the same period last year. Operating return on equity (ROE) was 14.3% for the quarter.
Operating earnings for the full year 2007 increased by 10% to a record
$2.3 billion. Operating EPS for the full year 2007 were $3.98, up 11% over
full year 2006 operating EPS of $3.58. Operating ROE was 14.3% for the year,
up 50 basis points from operating ROE of 13.8% in 2006. On a constant currency
basis, operating EPS were up 13% for the full year 2007.
"Despite a year characterized by economic uncertainty, we enjoyed record
financial results, reflecting Sun Life's strategy in action. Investments in
our distribution platform, product development and international reach fueled
sales, while brand building, select divestitures and a focused acquisition
strengthened Sun Life's competitive position even further," said Donald A.
Stewart, Chief Executive Officer. "Market volatility and uncertainty will
likely characterize the months ahead, although we believe that these economic
challenges may also offer opportunities to an organization with a strong risk
management culture, intense customer focus and innovative product solutions."
"Our 2007 EPS growth and ROE are strong despite volatile economic
conditions," said Richard P. McKenney, Chief Financial Officer. "The strength
of our balance sheet enables our continued pursuit of our growth objectives."
Operating earnings, operating EPS and operating ROE for the fourth
quarter of 2007 exclude after-tax charges to earnings of $3 million for
re-branding expenses in Canada and $2 million for integration costs in Sun
Life Financial's U.S. Employee Benefits Group. Including these charges, EPS
and ROE for the quarter were $0.97 and 14.2%, respectively.
Business Highlights
During the fourth quarter of 2007, the Company progressed on a number of
its strategic objectives and continued to deliver on its growth and
distribution expansion strategies in each of its markets.
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Sun Life Financial Canada (SLF Canada)
- Individual segregated fund sales in Canada, including sales of
SunWise Elite Plus with the guaranteed minimum withdrawal benefit
rider, increased by 37% to $426 million in the fourth quarter of 2007
over the same period last year.
- Group Retirement Services (GRS) sales increased by 76% over the
fourth quarter of 2006 including contracts with Canadian Tire, Suncor
Energy and Tenaris. Full year sales of $3.3 billion increased by 61%
over 2006. In addition, GRS retained $725 million of assets from
members leaving plans for the full year in 2007, an increase of 33%
over full year 2006.
- GRS ranked number one for the sixth consecutive year in Benefits
Canada magazine's December 2007 annual Defined Contribution (DC) Plan
Survey. With a market share of 32%, the annual survey also recognized
GRS as the fastest growing DC provider measured in dollars.
Sun Life Financial U.S. (SLF U.S.)
- The Employee Benefits Group (EBG) continued to successfully integrate
the acquisition made in the second quarter of 2007. Full year sales
of US$502 million were 30% ahead of full year 2006, while business
in-force increased to US$2.1 billion compared to US$1.2 billion at
the end of 2006, reflecting the impact of the acquisition.
- SLF U.S. continued to build upon the success of its Income ON
Demand(SM) product and enhanced distribution capabilities with gross
domestic variable annuity sales of US$718 million, an increase of 38%
over the fourth quarter of 2006. Full year 2007 gross domestic
variable annuity sales of US$2.8 billion exceeded full year 2006
sales by 65%.
- SLF U.S. established an unsecured long-term financing arrangement to
address U.S. statutory reserve requirements for certain universal
life policies under Actuarial Guideline 38 (also known as Regulation
AXXX).
MFS
- MFS's pre-tax operating margin ratio increased to 40% in the fourth
quarter of 2007 from 34% in the fourth quarter of 2006. The pre-tax
operating margin ratio for the full year 2007 increased to 36% from
29% for the full year in 2006.
- MFS's gross sales increased by 16% to US$43 billion for the full year
2007. Assets under management grew by 7% to US$200 billion from
US$187 billion one year ago.
- MFS's record of strong long-term performance in key asset classes was
recognized in the most recent Lipper/Barron's Fund Family Survey,
where MFS ranked 14th of 52 major fund families based on 10-year
performance.
Sun Life Financial Asia (SLF Asia)
- In China, Sun Life Everbright Life Insurance Company (Sun Life
Everbright) opened a branch in Shanghai, China's financial centre,
with sales beginning in January 2008. Sun Life Everbright, now
operating in 16 cities in China, continued its rapid geographic
expansion resulting in a second consecutive year of triple digit
sales growth.
- In India, Birla Sun Life Asset Management Company launched the Birla
Sun Life International Equity Fund, one of the most successful new
fund offerings in India in 2007, garnering $322 million in new funds.
Birla Sun Life Asset Management ranks fifth in terms of mutual fund
assets under management in India.
- Birla Sun Life Insurance Company (Birla Sun Life) sales grew by 106%
for the full year 2007, driven by increased investment in expansion.
Assets under management (AUM) increased by 89% in 2007 and now exceed
$1.6 billion. Driven by strong sales and superior fund performance
Birla Sun Life ranks among the leaders in AUM amongst private life
insurers.
Financial Highlights
- Operating ROE in the fourth quarter of 2007 increased 30 basis points
to 14.3% from operating ROE of 14.0% in the fourth quarter of 2006.
ROE of 14.2% increased 20 basis points from ROE of 14.0% in the
fourth quarter of 2006.
- Operating EPS of $0.98 for the quarter increased 4.3% compared to
operating EPS of $0.94 in the fourth quarter of 2006. EPS of
$0.97 for the quarter increased 3.2% compared to EPS of $0.94 in the
fourth quarter of 2006.
- Sun Life Financial declared $193 million in common shareholder
dividends during the quarter, representing a payout ratio of 34%.
Dividends for the full year 2007 were $752 million, an increase of
13% over 2006.
- Sun Life Financial repurchased approximately 2.5 million common
shares for $129 million during the fourth quarter of 2007, for a
total share buyback of $502 million in 2007.
- On January 30, 2008, Sun Life Financial completed a public offering
in Canada of $400 million principal amount of Series 2008-1
Subordinated Unsecured 5.59% Fixed/Floating Debentures due in 2023.
- On February 13, 2008, the Board of Directors approved an increase in
the quarterly dividend on common shares to 36 cents per share, up
from 34 cents per share paid previously. This represents an increase
of 12.5% over the past twelve months.
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