Sun Life 2015 Annual Report Download - page 109

subsidiaries. The transaction will add new capabilities and increase the size and scale of our Sun Life Financial United States (“SLF
U.S.”) business segment. The acquisition will be financed using a combination of cash and subordinated debt issued by SLF Inc. The
transaction is expected to close by the end of the first quarter of 2016 and is subject to regulatory approvals and customary closing
conditions.
4. Segmented Information
In the third quarter of 2015, we renamed our MFS segment to SLF Asset Management to reflect our asset management acquisitions
that were completed in 2015. This segment includes the operations of MFS, previously reported as the MFS segment. The operations
of Sun Life Investment Management (“SLIM”) have been added to this segment. SLIM consists of the results of acquisitions completed
in 2015, as described in Note 3, and Sun Life Investment Management Inc (“SLIM Inc.”).
We have five reportable segments: Sun Life Financial Canada (“SLF Canada”), SLF U.S., SLF Asset Management, Sun Life Financial
Asia (“SLF Asia”), and Corporate.
These reportable segments operate in the financial services industry and reflect our management structure and internal financial
reporting. Corporate includes the results of our U.K. business unit and our Corporate Support operations, which include run-off
reinsurance operations as well as investment income, expenses, capital, and other items not allocated to our other business groups.
Revenues from our reportable segments are derived principally from life and health insurance, investment management and annuities,
and mutual funds. Revenues not attributed to the strategic business units are derived primarily from Corporate investments and
earnings on capital. Transactions between segments are executed and priced on an arm’s-length basis in a manner similar to
transactions with third parties.
The expenses in each business segment may include costs or services directly incurred or provided on their behalf at the enterprise
level. For other costs not directly attributable to one of our business segments, we use a management reporting framework that uses
assumptions, judgments, and methodologies for allocating overhead costs, and indirect expenses to our business segments.
Intersegment transactions consist primarily of internal financing agreements which are measured at fair values prevailing when the
arrangements are negotiated. Intersegment investment income consists primarily of interest paid by SLF U.S. to Corporate.
Intersegment fee income is primarily asset management fees paid by SLF Canada and Corporate to SLF Asset Management, and by
SLF Asset Management to SLF U.S. Intersegment transactions are presented in the Consolidation adjustments column in the following
tables.
Management considers its external clients to be individuals and corporations. We are not reliant on any individual client as none are
individually significant to our operations.
Results by segment for the years ended December 31, are as follows:
SLF
Canada SLF U.S.
SLF Asset
Management
SLF
Asia Corporate
Consolidation
adjustments Total
2015
Gross premiums:
Annuities $ 2,715 $ 143 $ – $ – $ 30 $ – $ 2,888
Life insurance 3,783 2,382 – 1,195 102 – 7,462
Health insurance 4,105 2,333 – 16 20 – 6,474
Total gross premiums 10,603 4,858 – 1,211 152 – 16,824
Less: ceded premiums 5,582 627 – 40 180 – 6,429
Net investment income
(loss) 2,527 812 4 52 223 (63) 3,555
Fee income 998 210 3,727 306 157 (74) 5,324
Total revenue 8,546 5,253 3,731 1,529 352 (137) 19,274
Less:
Total benefits and
expenses 7,530 4,830 2,616 1,170 366 (137) 16,375
Income tax expense
(benefit) 177 90 424 48 (140) – 599
Total net income (loss) $ 839 $ 333 $ 691 $ 311 $ 126 $ – $ 2,300
Notes to Consolidated Financial Statements Sun Life Financial Inc. Annual Report 2015 107