Sun Life 2012 Annual Report Download - page 120

We do not offset financial instruments in our Consolidated Statements of Financial Position, as our rights of offset are conditional. The
following tables present the effect of conditional netting and similar arrangements. Similar arrangements include global master
repurchase agreements, security lending agreements and any related rights to financial collateral.
Net amount of
financial
instruments
presented in the
Statements of
Financial Position(1)
Related amounts not set
off in the Statements of
Financial Position
Net amountAs at December 31, 2012
Financial
instruments
Financial
collateral
(received)
pledged(2)
Financial assets
Derivative assets (Note 6.A.iv) $ 2,113 $ (288) $ (1,597) $ 228
Securities Lending (Note 5.H) 730 – (730) –
Reverse repurchase agreements (Note 8) 68 (68) – –
Total financial assets $ 2,911 $ (356) $ (2,327) $ 228
Financial Liabilities
Derivative liabilities $ (594) $ 288 $ 30 $ (276)
Repurchase agreements (Note 13.B) (1,395) 68 1,327 –
Total financial liabilities $ (1,989) $ 356 $ 1,357 $ (276)
(1) Net amounts of the financial instruments presented in the Consolidated Statements of Financial Position are the same as our gross recognized financial instruments, as we
do not offset financial instruments in our Consolidated Statements of Financial Position.
(2) Financial collateral excludes overcollateralization and, for exchange traded derivatives, initial margin. Total financial collateral, including initial margin and
overcollateralization, received on derivative assets was $1,790, received on securities lending was $771, received on reverse repurchase agreements was $68, pledged on
derivative liabilities was $140 and pledged on repurchase agreements was $1,395.
Net amount of
financial instruments
presented in the
Consolidated
Statements of
Financial Position(1)
Related amounts not set
off in the Consolidated
Statements of Financial
Position
Net amount
As at December 31, 2011
Financial
instruments
Financial
collateral
(received)
pledged(2)
Financial assets
Derivative assets (Note 6.A.v) $ 2,632 $ (542) $ (1,815) $ 275
Securities Lending (Note 5H) 746 – (746) –
Total financial assets $ 3,378 $ (542) $ (2,561) $ 275
Financial Liabilities
Derivative liabilities $ (1,059) $ 542 $115 $ (402)
Repurchase agreements (Note 13.B) (1,341) – 1,341 –
Total financial liabilities $ (2,400) $ 542 $ 1,456 $ (402)
(1) Net amounts of financial instruments presented in the Consolidated Statements of Financial Position are the same as our gross recognized financial instruments, as we do
not offset financial instruments in our Consolidated Statements of Financial Position.
(2) Financial collateral presented in the table above excludes overcollateralization and, for exchange traded derivatives, initial margin. Total financial collateral, including initial
margin and overcollateralization, received on derivative assets was $1,897, received on securities lending was $784, pledged on derivative liabilities was $540 and pledged
on repurchase agreements was $1,341.
6.A.iii Concentration Risk
Concentrations of credit risk arise from exposures to a single debtor, a group of related debtors or groups of debtors that have similar
credit risk characteristics, such as groups of debtors in the same economic or geographic regions or in similar industries. The financial
instrument issuers have similar economic characteristics so that their ability to meet contractual obligations may be impacted similarly
by changes in the economic or political conditions. We manage this risk by appropriately diversifying our investment portfolio through
the use of concentration limits. In particular, we maintain policies which set counterparty exposure limits to manage the credit exposure
for investments in any single issuer or to the same underlying credit. Exceptions exist for investments in securities which are issued or
guaranteed by the Government of Canada, United States or United Kingdom and issuers for which the Board has granted specific
approval. Mortgages are collateralized by the related property, and generally do not exceed 75% of the value of the property at the time
the original loan is made. Our mortgages and loans are diversified by type and location and, for mortgages, by borrower. Loans provide
diversification benefits (name, industry and geography) and often provide stronger covenants and collateral than public debt securities,
thereby providing both better credit protection and potentially higher recoveries in the event of default.
118 Sun Life Financial Inc. Annual Report 2012 Notes to Consolidated Financial Statements