Sun Life 2012 Annual Report Download - page 140

11.B Investment Contract Liabilities
11.B.i Description of Business
The following are the types of Investment contracts in force:
• Term certain payout annuities in Canada and the U.S.
• Guaranteed Investment Contracts in Canada
• Unit-linked products issued in the U.K. and Hong Kong; and
• Non-unit-linked pensions contracts issued in the U.K. and Hong Kong
11.B.ii Assumptions and Methodology
Investment Contracts with Discretionary Participation Features
Investment contracts with DPF are measured using the same approach as insurance contracts.
Investment Contracts without Discretionary Participation Features
Investment contracts without DPF are measured at FVTPL if by doing so a potential accounting mismatch is eliminated or significantly
reduced or if the contract is managed on a fair value basis. Other investment contracts without DPF are measured at amortized cost.
The fair value liability is measured through the use of prospective discounted cash-flow techniques. For unit-linked contracts, the fair
value liability is equal to the current unit fund value, plus additional non-unit liability amounts on a fair value basis if required. For non-
linked contracts, the fair value liability is equal to the present value of expected cash flows.
Amortized cost is measured at the date of initial recognition as the fair value of consideration received, less the net effect of principal
payments such as transaction costs and front-end fees. At each reporting date, the amortized cost liability is measured as the value of
future best estimate cash flows discounted at the effective interest rate. The effective interest rate is the one that equates the
discounted cash payments to the liability at the date of initial recognition.
11.B.iii Investment Contract Liabilities
Investment contract liabilities consist of the following:
As at December 31, 2012 SLF Canada SLF U.S.(1) SLF Asia Corporate Total
Individual participating life $– $–$– $18$18
Individual non-participating life – – 173 5 178
Individual annuities 1,771 29 – 68 1,868
Group annuities – – 239 – 239
Total investment contract liabilities(1) $ 1,771 $ 29 $ 412 $ 91 $ 2,303
(1) For investment contract liabilities categorized as held for sale, see Note 3.
Included in the Investment contract liabilities of $2,303 are liabilities of $496 for investment contracts with DPF, $1,772 for investment
contracts without DPF measured at amortized cost and $35 for investment contracts without DPF measured at fair value.
As at December 31, 2011 SLF Canada SLF U.S. SLF Asia Corporate Total
Individual participating life $ – $ – $ – $ 19 $ 19
Individual non-participating life – – 152 7 159
Individual annuities 1,581 76 – 68 1,725
Group annuities – 921 249 – 1,170
Total investment contract liabilities $ 1,581 $ 997 $ 401 $ 94 $ 3,073
Included in the Investment contract liabilities of $3,073 are liabilities of $487 for investment contracts with DPF, $1,620 for investment
contracts without DPF measured at amortized cost and $966 for investment contracts without DPF measured at fair value.
11.B.iv Changes in Investment Contract Liabilities
Changes in investment contract liabilities without DPF are as follows:
For the years ended December 31, 2012 2011
Measured at
fair value
Measured at
amortized cost
Measured at
fair value
Measured at
amortized cost
Balance as at January 1 $ 966 $ 1,620 $ 2,207 $ 1,396
Deposits – 433 – 395
Interest(1) 73819 40
Withdrawals (35) (266) (1,218) (228)
Fees –(3)–(2)
Change in fair value(1) 9–(19) –
Other –20517
Foreign exchange rate movements (22) (3) (28) 2
Balance 925 1,839 966 1,620
Less: Held for sale(2) 890 67
Balance, as at December 31 $ 35 $ 1,772 $ 966 $ 1,620
(1) Interest includes continuing operations of $33 in 2012 ($34 in 2011) for Measured at amortized cost. Change in fair value includes continuing operations of $(1) in 2012 ($(4)
in 2011) for Measured at fair value.
(2) See Note 3.
138 Sun Life Financial Inc. Annual Report 2012 Notes to Consolidated Financial Statements