Sun Life 2015 Annual Report Download - page 172

ANALYSIS OF RESULTS
For the year ended December 31, 2015, the pre-tax expected profit on in-force business of $2,656 million was $290 million higher than
2014. The increase in expected profits was largely driven by currency impacts from the weakening of the Canadian dollar relative to
foreign currencies, growth in SLF Asia and SLF U.S., partially offset by a reduction in SLF Canada.
The new business issued in 2015 led to a loss of $182 million compared to $135 million a year ago. The change was mainly in
SLF Canada and in SLF U.S. due to sales levels and lower interest rates. Currency impacts from the weakening of the Canadian dollar
relative to foreign currencies also contributed to the increased new business loss.
The 2015 experience gain of $180 million pre-tax was primarily due to favourable impacts from investing activity on insurance contract
liabilities and favourable credit impact, partially offset by adverse experience from equity markets and expense experience.
For the year 2015, assumption changes and management actions resulted in a pre-tax loss of $43 million. In Canada, the pre-tax gain
of $31 million reflected favourable investment assumption updates including a change to the provision for investment risk in the
SLF Canada participating account and the reflection of investment strategy changes in SLF Canada non-participating insurance; a
favourable change in mortality assumptions; and an adverse change to lapse and premium persistency assumptions. In the U.S., the
pre-tax loss of $122 million reflected adverse changes to lapse and premium persistency assumptions partially offset by the impact of
favourable changes to reinsurance agreements and tax assumptions; and favourable changes in mortality and morbidity assumptions
including favourable mortality improvement assumption updates. In Asia, the pre-tax gain of $40 million arose largely from favourable
mortality and morbidity assumption changes, and model refinements.
For the year 2014, assumption changes and management actions lead to a pre-tax gain of $275 million. In Canada, the pre-tax gain of
$68 million included the favourable impact of changes to economic reinvestment assumptions and a favourable impact from modelling
refinements. These impacts were largely offset by mortality improvement updates and lapse and premium persistency assumption
updates. In the U.S., the pre-tax gain of $142 million included the favourable release of estimated future funding costs (reflecting
increased certainty of U.S. regulatory requirements related to captive arrangements) and gains from changes to economic
reinvestment assumptions, offset partially by lapse and premium persistency assumption updates and mortality improvement updates.
In Asia, the pre-tax gain of $20 million was due to favourable investment assumption updates including economic reinvestment
assumptions offset partially by adverse lapse impacts. In Corporate, pre-tax gain of $45 million, primarily in the U.K., was due to
favourable economic reinvestment assumption updates offset partially by mortality improvement updates.
Additional information can be found under the Assumption Changes and Management Actions section of the 2015 Management’s
Discussion and Analysis.
Net pre-tax earnings on surplus of $435 million in 2015 was $39 million higher than a year ago. The increase was primarily due to
higher investment income on surplus assets, higher real estate mark to market impacts and lower interest payments on external debt,
offset partially by lower available-for-sale gains.
170 Sun Life Financial Inc. Annual Report 2015 Sources of Earnings