Sun Life 2015 Annual Report Download - page 150

16.B Preferred Shares
The changes in preferred shares issued and outstanding for the years ended December 31 are as follows:
2015 2014
Preferred shares (in millions of shares)
Number of
shares Amount
Number of
shares Amount
Balance, January 1 92.2 $ 2,257 102.2 $ 2,503
Redeemed, Class A, Series 6R(1) ––(10.0) (246)
Converted, Class A, Series 8R(2) (6.0) (150) ––
Issued, Class A, Series 9QR(2) 6.0 150 ––
Balance, December 31 92.2 $ 2,257 92.2 $ 2,257
(1) Class A Non-Cumulative 5-Year Rate Reset Preferred Shares Series 6R of $250 were redeemed on June 30, 2014 at a redemption price of $25.00 per share, together with
all declared and unpaid dividends. At redemption, we recorded $246 to Preferred shares and $4 to Retained earnings in our Consolidated Statement of Changes in Equity.
(2) Holders of the Class A Non-Cumulative 5-Year Rate Reset Preferred Shares Series 8R (“Series 8R Shares”) had a right to convert all or part of their Series 8R Shares on a
one-for-one basis, into Class A Non-Cumulative Floating Rate Preferred Shares Series 9QR (“Series 9QR Shares”) on June 30, 2015 and certain holders exercised this
right on that date.
Further information on the preferred shares outstanding as at December 31, 2015, is as follows:
Class A Preferred shares
(in millions of shares) Issue date
Annual
dividend
rate
Annual
dividend
per share
Earliest redemption
date(1)
Number of
shares
Face
amount
Net
amount(2)
Series 1 February 25, 2005 4.75% $ 1.19 March 31, 2010(3) 16.0 $ 400 $ 394
Series 2 July 15, 2005 4.80% $ 1.20 September 30, 2010(3) 13.0 325 318
Series 3 January 13, 2006 4.45% $ 1.11 March 31, 2011(3) 10.0 250 245
Series 4 October 10, 2006 4.45% $ 1.11 December 31, 2011(3) 12.0 300 293
Series 5 February 2, 2007 4.50% $ 1.13 March 31, 2012(3) 10.0 250 245
Series 8R(4) May 25, 2010 2.275%(4) $ 0.83(4) June 30, 2020(5) 5.2 130 127
Series 9QR(6) June 30, 2015 Floating(6) Floating(6) June 30, 2020(7) 6.0 150 147
Series 10R(8) August 12, 2011 3.90% $ 0.98 September 30, 2016(9) 8.0 200 195
Series 12R(10) November 10, 2011 4.25% $ 1.06 December 31, 2016(11) 12.0 300 293
Total preferred shares 92.2 $ 2,305 $ 2,257
(1) Redemption of all preferred shares is subject to regulatory approval.
(2) Net of after-tax issuance costs.
(3) On or after the earliest redemption date, SLF Inc. may redeem these shares in whole or in part, at a premium that declines from 4% of the par amount to nil over the next
following four years.
(4) Prior to June 30, 2015, the annual dividend rate was 4.35%. The dividend rate was reset on June 30, 2015 to a fixed annual dividend rate of 2.275% until June 30, 2020.
Every five years thereafter, the dividend rate will reset to an annual rate equal to the 5-year Government of Canada bond yield plus 1.41%. The annual dividend per share in
the table above is the amount paid per share in 2015. Holders of the Series 8R Shares will have the right, at their option, to convert their Series 8R Shares into Series 9QR
Shares on June 30, 2020 and every five years thereafter.
(5) On June 30, 2020 and June 30 every five years thereafter, SLF Inc. may redeem these shares in whole or in part, at par.
(6) Holders of the Series 9QR Shares are entitled to receive quarterly floating rate non-cumulative dividends at an annual rate equal to the then 3-month Government of
Canada treasury bill yield plus 1.41%. The dividend rate for the period commencing on June 30, 2015 to but excluding September 30, 2015 was 2.075% per annum or $0.13
per share per quarter. The dividend rate for the period commencing on September 30, 2015 to but excluding December 31, 2015, was 1.786% per annum or $0.11 per
share per quarter. Total dividends paid in 2015 were $0.24 per share. Holders of the Series 9QR Shares will have the right, at their option, to convert their Series 9QR
Shares into Series 8R Shares on June 30, 2020 and on June 30 every five years thereafter.
(7) On June 30, 2020 and June 30 every five years thereafter, SLF Inc. may redeem these shares in whole or in part, at par, and on any other date at $25.50 per share.
(8) On September 30, 2016, and every five years thereafter, the annual dividend rate will reset to an annual rate equal to the 5-year Government of Canada bond yield plus
2.17%. Holders of the Series 10R Shares will have the right, at their option, to convert their Series 10R Shares into Class A Non-Cumulative Floating Rate Preferred Shares
Series 11QR (“Series 11QR Shares”) on September 30, 2016, and every five years thereafter. Holders of Series 11QR Shares will be entitled to receive quarterly floating
rate non-cumulative dividends at an annual rate equal to the then 3-month Government of Canada treasury bill yield plus 2.17%.
(9) On September 30, 2016 and September 30 every five years thereafter, SLF Inc. may redeem these shares in whole or in part, at par.
(10) On December 31, 2016, and every five years thereafter, the annual dividend rate will reset to an annual rate equal to the 5-year Government of Canada bond yield plus
2.73%. Holders of the Series 12R Shares will have the right, at their option, to convert their Series 12R Shares into Class A Non-Cumulative Floating Rate Preferred Shares
Series 13QR (“Series 13QR Shares”) on December 31, 2016 and on every five years thereafter. Holders of Series 13QR Shares will be entitled to receive quarterly floating
rate non-cumulative dividends at an annual rate equal to the then 3-month Government of Canada treasury bill yield plus 2.73%.
(11) On December 31, 2016 and December 31 every five years thereafter, SLF Inc. may redeem these shares in whole or in part, at par.
17. Interests in Other Entities
17.A Subsidiaries
Our principal subsidiaries are Sun Life Assurance and Sun Life Global Investments Inc. Sun Life Assurance holds our insurance
operations in Canada, the U.S., the U.K., Hong Kong, the Philippines, and Indonesia. These insurance operations are operated directly
by Sun Life Assurance Company of Canada or through other subsidiaries. Sun Life Global Investments Inc. holds our asset
management businesses, including Massachusetts Financial Services Company, Bentall Kennedy and Sun Life Global Investments
(Canada) Inc.
We are required to comply with various regulatory capital and solvency requirements in the jurisdictions in which we operate that may
restrict our ability to access or use the assets of the group and to pay dividends. Further details on these restrictions are included in
Notes 16 and 22.
148 Sun Life Financial Inc. Annual Report 2015 Notes to Consolidated Financial Statements