Sun Life 2010 Annual Report Download - page 70

• Human Resources: Human resources policies and standards have been developed and implemented. We are committed to
employee training and development, and our compensation program is designed to attract, motivate and retain high-performing
employees and to encourage sound risk management by all employees. We endeavour to assess talent through leadership review
processes and build leadership bench strength and depth to succession options through enterprise leadership development
programs. Employee engagement is monitored through enterprise-wide employee engagement surveys and strategies are
implemented to address any issues.
• Environment: An environmental risk management program, which reflects our commitment to conducting all business activities in
a manner that recognizes the need to preserve the quality of the environment, is maintained to help protect investment assets
(primarily real estate, mortgage and structured finance portfolios) from losses due to environmental issues and to help ensure
compliance with applicable laws.
Liquidity Risk
We generally maintain a conservative liquidity position and employ a wide range of liquidity risk management practices and controls,
which are described below:
• Liquidity is managed in accordance with our liquidity policies and operating guidelines
• Stress testing of our liquidity is performed by comparing liquidity coverage ratios under 1-month and 1-year stress scenarios to our
policy thresholds. These liquidity ratios are measured and managed at the business segment level, and the total Company level.
• Cash management and asset-liability management programs support our ability to maintain our financial position by ensuring that
sufficient cash flow and liquid assets are available to cover potential funding requirements. We invest in various types of assets with
a view of matching them to our liabilities of various durations.
• Target capital levels exceed regulatory minimums. We actively manage and monitor our capital and asset levels, and the
diversification and credit quality of our investments
• We maintain various credit facilities for general corporate purposes
• We also maintain liquidity contingency plans for the management of liquidity in the event of a liquidity crisis
The following table summarizes the contractual maturities of our significant financial liabilities and contractual commitments as at
December 31, 2010.
Financial Liabilities and Contractual Obligations
December 31, 2010
($ millions)
Within
1 year
1 year to
3 years
3 years to
5 years
Over
5 years Total
General fund policy liabilities(1) 11,800 10,321 10,029 151,820 183,970
Senior debentures and unsecured financing(2) 231 462 462 9,454 10,609
Subordinated debt(2) 171 343 500 3,908 4,922
Bond repurchase agreements 1,270 – – – 1,270
Accounts payable and accrued expenses 2,678 – – – 2,678
Borrowed funds(2) 94 120 56 60 330
Total liabilities 16,244 11,246 11,047 165,242 203,779
Contractual commitments(3)
Contractual loan, equity and real estate 420 310 138 100 968
Operating leases 88 146 93 196 523
Total contractual commitments 508 456 231 296 1,491
December 31, 2009
($ millions)
Within
1 year
1 year to
3 years
3 years to
5 years
Over
5 years Total
General fund policy liabilities(1) 12,365 11,504 11,543 161,351 196,763
Senior debentures and unsecured financing(2) 233 459 459 9,654 10,805
Subordinated debt(2) 191 383 383 4,553 5,510
Bond repurchase agreements 1,266 – – – 1,266
Accounts payable and accrued expenses 1,927 – – – 1,927
Borrowed funds(2) 98 142 83 62 385
Total liabilities 16,080 12,488 12,468 175,620 216,656
Contractual commitments:(3)
Contractual loan, equity and real estate 419 197 119 69 804
Operating leases 90 138 65 39 332
Total contractual commitments 509 335 184 108 1,136
(1) General fund policyholder liability cash flows include estimates related to the timing and payment of death and disability claims, policy maturities, annuity payments,
minimum guarantees on segregated fund products, policyholder dividends, amounts on deposits, commissions and premium taxes offset by contractual future premiums
and fees on in-force contracts. These estimated cash flows are based on the best estimate assumptions used in the determination of policyholder liabilities. These
amounts are undiscounted and do not reflect recoveries from reinsurance agreements. The actuarial and other policy liability amounts included in SLF Inc.’s 2010
Consolidated Financial Statements are based on the present value of the estimated cash flows and are net of reinsured amounts. Due to the use of assumptions, actual
cash flows will differ from these estimates.
(2) Payments due based on maturity dates and includes expected interest payments. Actual redemption of certain securities may occur sooner as some include an option for
the issuer to call the security at an earlier date.
(3) Contractual commitments and operating lease commitments are not reported on the Consolidated Balance Sheets.
66 Sun Life Financial Inc. Annual Report 2010 Management’s Discussion and Analysis