Sun Life 2010 Annual Report Download - page 115

12. Other liabilities
12.A Composition of other liabilities
Other liabilities as at December 31 consist of the following:
2010 2009
Accounts payable $ 1,586 $ 1,313
Bank overdrafts 209 20
Bond repurchase agreements 994 1,006
Accrued expenses and taxes 821 566
Borrowed funds 280 321
Senior financing 1,385 1,383
Future income taxes (Note 19) 80 58
Accrued benefit liability (Note 22) 466 473
Other 341 292
Total other liabilities $ 6,162 $ 5,432
12.B Bond repurchase agreements
We enter into bond repurchase agreements for operational funding and liquidity purposes. Bond repurchase agreements have
maturities ranging from 4 to 82 days, averaging 54 days, and bear interest at rates averaging 1.06% as at December 31, 2010 (0.28%
in 2009). As at December 31, 2010, we had assets with a total fair value of $994 ($1,006 in 2009), pledged as collateral for the bond
repurchase agreements.
12.C Borrowed funds
The following obligations as at December 31 are included in borrowed funds in the table in Note 12A.
Currency of borrowing Maturity 2010 2009
Encumbrances on real estate Cdn. dollars 2011-2028 $ 160 $ 184
U.S. dollars 2011-2028 120 137
Total borrowed funds $ 280 $ 321
The aggregate maturities of encumbrances on real estate are included in Note 6B.
Interest expense for the borrowed funds was $17, $20 and $22 for 2010, 2009 and 2008, respectively.
12.D Senior financing
On November 8, 2007, a VIE consolidated by SLF Inc. issued a U.S. $1,000 variable principal floating rate certificate (the “Certificate”)
to a financial institution (the “Lender”). At the same time, Sun Life Assurance Company of Canada-U.S. Operations Holdings, Inc.
(“U.S. Holdings”), a subsidiary of SLF Inc., entered into an agreement with the Lender, pursuant to which U.S. Holdings will bear the
ultimate obligation to repay the outstanding principal amount of the Certificate and be obligated to make quarterly interest payments at
three-month LIBOR plus a fixed spread. The VIE issued additional certificates after the initial issuance in subsequent years, totaling to
U.S. $390, of which U.S. $75 and U.S. $200 of certificates during 2010 and 2009, respectively. Total collateral posted per the financing
agreement was U.S. $11 and U.S. $25 at December 31, 2010 and December 31, 2009, respectively.
The maximum capacity of this agreement is U.S. $2,500. The agreement expires on November 8, 2037 and the maturity date may be
extended annually for an additional one-year period upon the mutual agreement of the parties, provided such date is not beyond
November 8, 2067.
The agreement could be cancelled or unwound at the option of U.S. Holdings in whole or in part from time to time, or in whole under
certain events. If the agreement is cancelled before November 8, 2015, U. S. Holdings may be required to pay a make-whole amount
based on the present value of expected quarterly payments between the cancellation date and November 8, 2015.
For the year ended December 31, 2010, we recorded $14 of interest expense relating to this obligation ($22 and $48 in 2009 and 2008,
respectively). The fair value of the obligation is $1,010 ($1,069 in 2009), based on market prices for the same or similar instruments as
appropriate.
Notes to the Consolidated Financial Statements Sun Life Financial Inc. Annual Report 2010 111