Sun Life 2012 Annual Report Download - page 30

Assets Under Management (Combined Operations)
AUM consists of general funds, segregated funds and other AUM. Other AUM includes mutual funds and managed funds, which
include institutional and other third-party assets managed by the Company.
Total AUM were $532.8 billion as at December 31, 2012, compared to $465.8 billion as at December 31, 2011. The increase of
$67.0 billion was primarily driven by:
(i) favourable market movements on the value of mutual funds, managed funds and segregated funds of $48.5 billion;
(ii) net sales of mutual, managed and segregated funds of $24.0 billion, net of the inflow from Sun Capital Advisers;
(iii) business growth of $3.4 billion; and
(iv) an increase of $1.5 billion from the change in value of FVTPL assets and liabilities; partially offset by
(v) a decrease of $9.8 billion from the strengthening of the Canadian dollar against foreign currencies compared to the prior
period exchange rates; and
(vi) a decrease of $0.6 billion related to the sale of MFS McLean Budden’s private wealth business.
General fund assets were $133.1 billion at December 31, 2012, up $3.0 billion from the December 31, 2011. The increase in general
fund assets resulted primarily from:
(i) business growth of $3.4 billion; and
(ii) an increase of $1.4 billion from the change in value of FVTPL assets and liabilities; partially offset by
(iii) a decrease of $1.8 billion from a strengthening Canadian dollar against foreign currencies compared to the prior period
exchange rates.
Segregated fund assets were $92.7 billion as at December 31, 2012, compared to $88.2 billion as at December 31, 2011. The increase
in segregated fund assets was due to favourable market movement of $6.8 billion, partially offset by net redemption of $1.7 billion and
unfavourable currency impact of $0.6 billion.
Other AUM, which includes MFS AUM, increased to $307.0 billion, $59.5 billion higher than as at December 31, 2011. Favourable
market movements of $41.8 billion and net sales of $25.7 billion (net of the inflow from Sun Capital Advisers) were partially offset by
unfavourable currency impact of $7.4 billion and a decrease of $0.6 billion related to the sale of MFS McLean Budden’s private wealth
business.
Revenue from Continuing Operations
Revenues include (i) premiums received on life and health insurance policies and fixed annuity products, net of premiums ceded to
reinsurers; (ii) net investment income comprised of income earned on general fund assets, realized gains and losses on AFS assets
and changes in the value of derivative instruments and assets designated as FVTPL; and (iii) fee income received for services
provided. Premium and deposit equivalents from ASO, as well as deposits received by the Company on investment contracts such as
segregated funds, mutual funds and managed funds are not included in revenue; however, the Company does receive fee income from
these contracts, which is included in revenue. These fee-based deposits and ASO premium and deposit equivalents are an important
part of our business and as a result, revenue does not fully represent sales and other activity taking place during the respective
periods.
Net investment income can experience volatility arising from the quarterly fluctuation in the value of FVTPL assets, which may in turn
affect the comparability of revenue from period to period. The debt and equity securities that support insurance contract liabilities are
designated as FVTPL and changes in fair values of these assets are recorded in net investment income in our Consolidated
Statements of Operations. Changes in the fair values of the FVTPL assets supporting insurance contract liabilities are largely offset by
a corresponding change in the liabilities.
We perform cash flow testing whereby asset and liability cash flows are projected under various scenarios. When assets backing
insurance contract liabilities are written down in value to reflect impairment or default, the asset cash flows used in the valuation of the
liabilities are also re-assessed. Additional information on our accounting policies is provided in this MD&A under the heading Critical
Accounting Policies and Estimates.
28 Sun Life Financial Inc. Annual Report 2012 Management’s Discussion and Analysis