Sun Life 2015 Annual Report Download - page 108

In September 2014, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture was issued, which amends
IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. These amendments provide
guidance on the accounting for a sale or contribution of assets or businesses between an investor and its associate or joint venture. In
December 2015, the IASB deferred the effective date of these amendments indefinitely pending the outcome of its research project on
the equity method of accounting.
In January 2016, IFRS 16 Leases (“IFRS 16”) was issued, which replaces IAS 17 Leases, and related interpretations. IFRS 16 sets out
the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. For lessees,
IFRS 16 removes the classification of leases as either operating or financing and requires that all leases be recognized on the
statement of financial position, with certain exemptions that include leases of 12 months or less. The accounting for lessors is
substantially unchanged. The standard is effective for annual periods beginning on or after January 1, 2019, to be applied
retrospectively, or on a modified retrospective basis. We are currently assessing the impact the adoption of this standard will have on
our Consolidated Financial Statements.
In January 2016, IASB issued narrow-scope amendments to IAS 12 Income Taxes. The amendments clarify how to account for
deferred tax assets related to unrealized losses on debt instruments measured at fair value. The amendments are effective for annual
periods beginning on or after January 1, 2017. The amendments are to be applied retrospectively, with certain relief available upon
transition. We are currently assessing the impact the adoption of these amendments will have on our Consolidated Financial
Statements.
In January 2016, Disclosure Initiative (Amendments to IAS 7) was issued, which amends IAS 7 Statement of Cash Flows. The
amendments require entities to provide disclosure that enables users of financial statements to evaluate changes in liabilities arising
from financing activities, including both changes arising from cash flows and non-cash changes. The amendments are effective for
annual periods beginning on or after January 1, 2017, to be applied prospectively. We are currently assessing the impact the adoption
of these amendments will have on our Consolidated Financial Statements.
3. Acquisitions
Acquisitions Completed in 2015
Acquisitions in SLF Asset Management
On September 1, 2015, we completed the acquisition of the Bentall Kennedy group of companies (“Bentall Kennedy”) for cash
consideration of $557. Bentall Kennedy is a real estate investment manager operating in Canada and the U.S. and provides
specialized real estate investment management and real estate services, including property management and leasing. The acquired
business complements our expertise in asset-liability management, fixed income, and alternative asset classes by extending our real
estate and mortgage investment capabilities. The fair value of the net identifiable assets acquired was $392, which includes intangible
assets of $475 and a net deferred tax liability of $83. The acquired intangible assets include finite life intangible assets of $125 and
indefinite life intangible assets of $350. The finite life intangible assets relate to client relationships which are subject to amortization on
a straight-line basis over their projected economic lives of 20 years. The indefinite life intangible assets relate to fund management
contracts and will not be amortized. We recognized goodwill of $165 as a result of this transaction.
On July 31, 2015, we completed the acquisition of all of the shares of Prime Advisors, Inc. (“Prime Advisors”) for cash consideration of
$76. The acquired business increased our capacity for liability-driven investing as Prime Advisors specializes in customized fixed
income portfolios, primarily for U.S. insurance companies. The fair value of the net identifiable assets acquired in the transaction was
$23, which includes a client relationship intangible asset of $16 that is subject to amortization on a straight-line basis over its projected
economic life of 15 years. We recognized goodwill of $53 as a result of this transaction.
On April 2, 2015, we completed the acquisition of all the shares of Ryan Labs Asset Management Inc., previously Ryan Labs, Inc.,
(“Ryan Labs”), a New York-based asset manager for $46. The acquired business increased our capacity for liability-driven investing
and total return fixed income strategies in the United States. The purchase price consisted of SLF Inc. common shares valued at $34,
cash of $5, and estimated contingent consideration of $7 to be paid in SLF Inc. common shares if certain future performance targets
are achieved. The fair value of the net identifiable assets acquired in the transaction was $9, which includes an intangible asset of $11
and a related deferred tax liability of $5. The acquired intangible asset consists of client relationships which are subject to amortization
on a straight-line basis over its projected economic life of 15 years. We recognized goodwill of $37 as a result of this transaction.
Goodwill arising from these transactions includes the benefit of synergies, future business and other economic benefits.
The Total revenue and Total net income (loss) from these acquisitions included in our Consolidated Statements of Operations from the
dates of acquisition to December 31, 2015 were $99 and $15, respectively. Had these acquisitions been completed as at
January 1, 2015, Total revenue and Total net income (loss) in our Consolidated Statements of Operations for the year ended
December 31, 2015 would have been $19,423 and $2,318, respectively. For the year ended December 31, 2015, we incurred
acquisition costs of $12 that were included in Operating expenses.
Subsequent Acquisition
On January 7, 2016, we completed a transaction to increase our ownership interest in our joint venture insurance company in Vietnam,
PVI Sun Life Insurance Company Limited (“PVISL”), from 49% to 75% by acquiring from PVI Holdings an additional 26% of the charter
capital for cash consideration of $49. We also entered into an agreement that allows PVI Holdings to sell all of its outstanding shares to
us within a 10 year period. Due to the recent closing of the acquisition, the fair value determination and the initial purchase price
accounting for the business combination have not been completed.
Pending Acquisition
On September 9, 2015, we entered into an agreement with Assurant, Inc. (“Assurant”) to acquire Assurant’s U.S. Employee Benefits
business for cash consideration of US$940 which consists of a ceding commission and a payment for the acquisition of direct
106 Sun Life Financial Inc. Annual Report 2015 Notes to Consolidated Financial Statements