Sun Life 2015 Annual Report Download - page 17

Financial Objectives
Our 2015 overall company financial objectives, as updated in 2013, were operating net income of $1.85 billion and operating ROE of
12%-13%. Our 2015 results exceeded our net income objective with operating net income of $2.25 billion, and we achieved our
objective with an ROE of 12.6%.
At our March 5, 2015 Investor Day, we provided updated medium-term financial objectives to achieve average annual underlying EPS
growth of 8%-10% per annum, underlying ROE of 12%-14%, and a common share dividend payout ratio of 40%-50% of underlying net
income. Our ability to achieve our medium-term financial objectives is dependent on the Company’s success in achieving the growth
initiatives and business objectives that were described at our March 5, 2015 Investor Day and on certain key assumptions that include:
(i) a modest increase in interest rates, broadly in line with the forward yield curve;
(ii) average equity market growth of 8% per annum, in line with long-term experience;
(iii) credit experience within best estimate actuarial assumptions;
(iv) no significant changes in regulatory capital requirements;
(v) no significant changes to our effective tax rate;
(vi) no significant change in the number of shares outstanding; and
(vii) other key assumptions include: no material changes to our hedging program, hedging costs that are consistent with our best
estimate assumptions, no material assumption changes including updates to the economic scenario generator and no material
accounting standard changes.
Our medium-term financial objectives are also based on best estimate actuarial assumptions at the time the objectives were
established. The Company’s underlying ROE is dependent upon capital levels and options for deployment of excess capital. Our
medium-term financial objectives do not reflect the indirect effects of interest rate and equity market movements including the potential
impacts on goodwill or the current valuation allowance on deferred tax assets as well as other items that may be non-operational in
nature.
Our target dividend payout ratio of 40%-50% assumes that economic conditions and the Company’s results will enable us to maintain
our payout ratio in the target range, while maintaining a strong capital position. Our dividends are subject to the approval of the
Company’s Board of Directors at each quarter and SLF Inc.’s compliance with the capital requirements in the Insurance Companies Act
(Canada). Additional information on dividends is provided in the section in this MD&A under the heading Capital and Liquidity
Management – Shareholder Dividends.
Although considered reasonable by the Company, we may not be able to achieve our medium-term financial objectives as our
assumptions may prove to be inaccurate. Accordingly, our actual results could differ materially from our medium-term financial
objectives as described in the section in this MD&A under the heading Forward-looking Statements. Our medium-term financial
objectives do not constitute guidance.
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2015 15