Sun Life 2015 Annual Report Download - page 24

Net investment income can experience volatility arising from the quarterly fluctuation in the value of FVTPL assets and foreign currency
changes on assets and liabilities, which may in turn affect the comparability of revenue from period to period. The debt and equity
securities that support insurance contract liabilities are designated as FVTPL and changes in fair values of these assets are recorded
in net investment income in our Consolidated Statements of Operations. Changes in the fair values of the FVTPL assets supporting
insurance contract liabilities are largely offset by a corresponding change in the liabilities.
Revenue
($ millions) 2015 2014 2013
Premiums
Gross
Life insurance 7,462 7,003 6,882
Health insurance 6,474 5,916 5,451
Annuities 2,888 2,580 2,739
16,824 15,499 15,072
Ceded
Life insurance (1,962) (1,698) (1,785)
Health insurance (4,093) (3,803) (3,646)
Annuities (374) (2) (2)
(6,429) (5,503) (5,433)
Net premiums 10,395 9,996 9,639
Net investment income (loss)
Interest and other investment income 5,288 4,941 4,594
Fair value and foreign currency changes on assets and liabilities (1,961) 6,172 (4,220)
Net gains (losses) on AFS assets 228 202 145
3,555 11,315 519
Fee income 5,324 4,453 3,716
Total revenue 19,274 25,764 13,874
Adjusted revenue(1) 24,332 24,157 23,262
(1) Represents a non-IFRS financial measure that adjusts revenue for the impact of Constant Currency Adjustment, FV Adjustment, and Reinsurance in SLF Canada’s GB
Operations Adjustment as described in Non-IFRS Financial Measures.
Revenue of $19.3 billion in 2015 was down $6.5 billion from revenue of $25.8 billion in 2014. The decrease was primarily driven by
decreases in the fair value of FVTPL assets and lower net premium revenue in SLF U.S., partially offset by favourable currency impact
from the weakening Canadian dollar, higher net premium revenue in SLF Canada and SLF Asia, and increased fee income in SLF
Asset Management and SLF Canada. The weakening of the Canadian dollar relative to average exchange rates in 2014 increased
revenue by $1.4 billion. Adjusted revenue in 2015 was $24.3 billion, an increase of $0.1 billion from 2014. The increase in adjusted
revenue was primarily attributable to increased net premium revenue in SLF Canada and SLF Asia, and higher fee income in SLF
Asset Management and SLF Canada, partially offset by lower net premium revenue in SLF U.S. primarily due to lower International
sales.
Gross premiums were $16.8 billion in 2015, up from $15.5 billion in 2014. The increase of $1.3 billion in gross premiums was primarily
driven by favourable currency impact from the weakening Canadian dollar, increases in GRS, GB and Individual Insurance in SLF
Canada, and Hong Kong in SLF Asia, partially offset by decreases in SLF U.S.
Ceded premiums in 2015 were $6.4 billion, compared to $5.5 billion from 2014. The increase of $0.9 billion was primarily attributable to
increases in SLF Canada, SLF U.S., Run-off Reinsurance and favourable currency impact from the weakening Canadian dollar. The
impact of the ceded premiums in 2015 was largely offset in recovered claims and benefits that were recorded as reinsurance
recoveries in our Consolidated Statements of Operations.
Net investment income in 2015 was $3.6 billion, down $7.7 billion from $11.3 billion in 2014. The decrease in net investment income
was primarily due to decreases in the fair value of FVTPL assets compared to net gains in the prior year, across the Company.
Fee income was $5.3 billion in 2015, compared to $4.5 billion in 2014. The increase was driven by favourable currency impact from the
weakening Canadian dollar, and increased fee income in SLF Asset Management, SLF Canada and SLF Asia.
22 Sun Life Financial Inc. Annual Report 2015 Management’s Discussion and Analysis