Sun Life 2015 Annual Report Download - page 142

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11.A.v Impact of Method and Assumption Changes
Impacts of method and assumption changes on Insurance contract liabilities net of Reinsurance assets are as follows:
For the year ended December 31, 2015
Net increase (decrease)
before income taxes Description
Mortality / Morbidity $ (200) Updates to reflect mortality/morbidity experience in all
jurisdictions and changes to future mortality
improvement assumptions in the International
insurance business in SLF U.S.
Lapse and other policyholder behaviour 755 Updates to reflect experience as discussed below.
Expenses 90 Updates to reflect expense studies primarily in our
International wealth business in SLF U.S. and in the
individual wealth business in SLF Canada.
Investment returns (158) Updates to various investment related assumptions.
The largest item is a change to the provision for
investment risk in the SLF Canada participating
account.
Model enhancements and other (176) Other changes, the largest of which is a change in the
tax assumptions in the SLF U.S. insurance business.
Total impact of method and assumption
changes $ 311
Changes in lapse and policyholder behaviour assumptions were primarily in the individual insurance businesses in SLF Canada and
SLF U.S. The largest items, which all had negative impacts, were the increase in lapse rates at renewal for term insurance in SLF
Canada to reflect a stronger link between lapse rates and the size of the renewal premium increase; the reduction in lapse rates at
medium policy durations for Universal Life policies in SLF Canada to reflect emerging experience; the reduction in assumed premium
payments for flexible premium insurance policies in SLF U.S. to reflect the increasing tendency of policyholders to stop paying
premiums when their policy becomes fully funded; and the reduction in lapse rates on International insurance policies, especially for
no-lapse-guarantee policies.
For the year ended December 31, 2014
Net increase (decrease)
before income taxes Description
Mortality / Morbidity $ 527 Updates to reflect recent experience. Includes $490
relating to changes to future mortality improvement
assumptions.
Lapse and other policyholder behaviour 264 Updates to reflect recent lapse and premium
persistency experience across various product lines
and various jurisdictions.
Expenses 23 Updates to reflect recent experience.
Investment returns (212) Primarily updates to credit spread assumptions,
asset default assumptions, and provisions for
investment risks in the participating accounts.
Model enhancements and other (109) Reflects modelling enhancements across various
product lines and jurisdictions.
Economic reinvestment assumption changes (476) Reflects changes to Canadian actuarial standards of
practice which became effective in 2014.
Future funding costs liability release (296) Reflects increased certainty of U.S. regulatory
requirements related to captive arrangements.
Total impact of method and assumption
changes $ (279)
11.B Investment Contract Liabilities
11.B.i Description of Business
The following are the types of Investment contracts in-force:
• Term certain payout annuities in Canada and the U.S.
• Guaranteed Investment Contracts in Canada
• Unit-linked products issued in the U.K. and Hong Kong
• Non-unit-linked pensions contracts issued in the U.K. and Hong Kong
140 Sun Life Financial Inc. Annual Report 2015 Notes to Consolidated Financial Statements