Sun Life 2012 Annual Report Download - page 76

Under our Canadian Dividend Reinvestment and Share Purchase Plan (the “Plan”), Canadian-resident common and preferred
shareholders may choose to have their dividends automatically reinvested in common shares and may also purchase common shares
through the Plan with cash. For dividend reinvestments, we may, at our option, issue common shares from treasury at a discount of up
to 5% to the volume weighted average trading price or direct that common shares be purchased on behalf of participants through the
TSX at the market price. Common shares acquired by participants through optional cash purchases may also be issued from treasury
or purchased through the TSX at SLF Inc.’s option, in either case at no discount. The common shares issued from treasury for dividend
reinvestments during 2012 were issued at a discount of 2%. An insignificant number of common shares were issued from treasury for
optional cash purchases at no discount. In 2012, SLF Inc. issued approximately 11.2 million shares from treasury under the Plan.
The Company grants stock options to certain employees and directors. These options are granted at the closing price of SLF Inc.’s
common shares on the TSX on the grant date for stock options granted after January 1, 2007, and the closing price of the trading day
preceding the grant date for stock options granted before January 1, 2007.
As at February 11, 2013, 12.8 million options to acquire SLF Inc. common shares and 599.9 million common shares of SLF Inc. were
outstanding.
Shareholder Dividends
The declaration, amount and payment of dividends by SLF Inc. is subject to the approval of our Board of Directors and is dependent on
our results of operations, financial condition, cash requirements, regulatory and contractual restrictions and other factors considered by
the Board of Directors. The Board of Directors reviews the level of dividends on a quarterly basis.
SLF Inc. maintained its quarterly common shareholders’ dividend at $0.36 per share throughout 2012. Total common shareholder
dividends declared in 2012 were $1.44 per share, consistent with 2011 levels.
Dividends declared in 2012
Amount
per share
Common shares $ 1.44
Class A preferred shares
Amount
per share
Series 1 $1.187500
Series 2 $1.200000
Series 3 $1.112500
Series 4 $1.112500
Series 5 $1.125000
Series 6R $1.500000
Series 8R $1.087500
Series 10R $0.975000
Series 12R $1.210235
Capital Adequacy
SLF Inc.
SLF Inc. is a non-operating insurance company and is subject to OSFI’s Guideline A-2 – Capital Regime for Regulated Insurance
Holding Companies and Non-Operating Life Companies, which sets out the capital framework for regulated insurance holding
companies and non-operating life companies (collectively, “Insurance Holding Companies”). The adequacy of capital of Insurance
Holding Companies is measured against a capital risk metric in accordance with this guideline. SLF Inc. is expected to manage its
capital in a manner commensurate with its risk profile and control environment. SLF Inc.’s regulated subsidiaries are expected to
comply with the capital adequacy requirements imposed in the jurisdictions in which they operate. SLF Inc.’s consolidated capital
position is above its internal target.
Sun Life Assurance
Sun Life Assurance is subject to the MCCSR capital rules for a life insurance company in Canada. The Company expects to maintain
an MCCSR ratio for Sun Life Assurance at or above 200%. With an MCCSR ratio of 209% as at December 31, 2012, Sun Life
Assurance’s capital ratio is well above OSFI’s supervisory target ratio of 150% and regulatory minimum ratio of 120%. The MCCSR
calculation involves using qualifying models or applying quantitative factors to specific assets and liabilities based on a number of risk
components to arrive at required capital and comparing this requirement to available capital to assess capital adequacy. Certain of
these risk components, along with available capital, are sensitive to changes in equity markets and interest rates as outlined in the Risk
Management section of this document.
74 Sun Life Financial Inc. Annual Report 2012 Management’s Discussion and Analysis