Sun Life 2012 Annual Report Download - page 143

13. Other Liabilities
13.A Composition of Other Liabilities
Other liabilities consist of the following:
As at December 31, 2012 2011
Accounts payable $ 2,056 $ 2,202
Bank overdrafts and cash pooling 3106
Repurchase agreements 1,395 1,341
Accrued expenses and taxes 1,581 1,331
Borrowed funds 334 314
Senior financing 1,379 1,416
Accrued benefit liability (Note 27) 446 484
Special purpose entity liabilities 77 138
Other 654 679
Total other liabilities $ 7,925 $ 8,011
13.B Repurchase Agreements
We enter into repurchase agreements for operational funding and liquidity purposes. Repurchase agreements have maturities ranging
from 2 to 84 days, averaging 47 days, and bear interest at an average rate of 1.05% as at December 31, 2012 (1.06% as at
December 31, 2011). The fair values of the repurchase agreements approximate their carrying values. Refer to Note 6.A.ii for more
details on the collateral pledged.
13.C Borrowed Funds
Borrowed funds are encumbrances on real estate as follows as at December 31:
Currency of Borrowing Maturity 2012 2011
Cdn. dollars Current – 2028 $ 261 $ 214
U.S. dollars Current – 2024 73 100
Total borrowed funds $ 334 $ 314
The aggregate maturities of borrowed funds on real estate are included in Note 6.B.
Interest expense for the borrowed funds was $16 and $14 for 2012 and 2011, respectively.
13.D Senior Financing
On November 8, 2007, a SPE consolidated by SLF Inc. issued a U.S. $1,000 variable principal floating rate certificate (the “Certificate”)
to a financial institution (the “Lender”). At the same time, Sun Life Assurance Company of Canada-U.S. Operations Holdings, Inc.
(“U.S. Holdings”), a subsidiary of SLF Inc., entered into an agreement with the Lender, pursuant to which U.S. Holdings will bear the
ultimate obligation to repay the outstanding principal amount of the Certificate and be obligated to make quarterly interest payments at
three-month LIBOR plus a fixed spread. The SPE issued additional certificates after the initial issuance, totalling to U.S. $390, none of
which were issued during 2012 or 2011. Total collateral posted per the financing agreement was U.S. $36 as at December 31, 2012
(U.S. $35 as at December 31, 2011).
The maximum capacity of this agreement is U.S. $2,500. The agreement expires on November 8, 2037 and the maturity date may be
extended annually for an additional one-year period upon the mutual agreement of the parties, provided such date is not beyond
November 8, 2067.
The agreement could be cancelled or unwound at the option of U.S. Holdings in whole or in part from time to time, or in whole under
certain events. If the agreement is cancelled before November 8, 2015, U. S. Holdings may be required to pay a make-whole amount
based on the present value of expected quarterly payments between the cancellation date and November 8, 2015.
For the year ended December 31, 2012, we recorded $16 of interest expense relating to this obligation ($14 in 2011). The fair value of
the obligation is $1,010 ($797 in 2011), based on market prices for the same or similar instruments as appropriate.
Notes to Consolidated Financial Statements Sun Life Financial Inc. Annual Report 2012 141