Sun Life 2010 Annual Report Download - page 152

Experience gains of $27 million in 2010 were primarily attributable to favourable equity market impacts and the favourable impact of
investing activities on policy liabilities. Movements in interest rates were favourable as interest rate swap movements more than offset
the adverse impact of lower interest rates. These favourable impacts were partially offset by increased expense levels from business
initiatives in 2010 and unfavourable credit impacts.
Experience losses in 2009 of $630 million were primarily attributable to unfavourable impacts from downgrades on the Company’s
investment portfolio and net impairments partially offset by the favourable impacts of improved equity markets and increased interest
rates.
For the year 2010, assumption changes and management actions led gains of $60 million due primarily to favourable mortality
assumption updates and model refinements to improve the projection of future cash flows and the restructuring of Sun Life Everbright,
partially offset by the impact of higher persistency on products adversely impacted by low interest rates and the impact of higher
expenses.
For the year 2009, assumption changes and management actions led losses of $1,164 million due primarily to the unfavourable impact
of the implementation of equity- and interest rate-related actuarial assumption updates across the Company in the third quarter,
reserve strengthening for updates to lapse and other policyholder behaviour assumptions in the Company’s individual insurance
business and expenses reflecting the impact of recent experience studies in several of the Company’s businesses partially offset by
the favourable impact of mortality improvements on both life insurance and savings products.
Net pre-tax earnings on surplus of $350 in 2010 compared to $260 a year ago. The increase was due primarily to higher levels of
investment gains relative to the prior year.
For the Year Ended December 31, 2010
(in millions of Canadian dollars) SLF Canada SLF U.S. MFS SLF Asia Corporate Total
Expected Profit on In-Force Business 685 627 356 140 18 1,826
Impact of New Business (61) (157) – (101) 5 (314)
Experience Gains and Losses 139 (92) – 12 (32) 27
Management Actions and Changes in
Assumptions 30 (34) – 33 31 60
Earnings on Operations (pre-tax) 793 344 356 84 22 1,599
Earnings on Surplus 148 69 – 42 91 350
Earnings before Income Taxes 941 413 356 126 113 1,949
Income Taxes (94) (111) (137) (34) 134 (242)
Earnings before Non-controlling Interests, Par
Income and Preferred Share Dividends 847 302 219 92 247 1,707
Less:
Non-controlling Interests 11 – 11 – 1 23
Par Policyholders’ Income (Loss) 8 1 – – – 9
Preferred Share Dividends – – – – 93 93
Plus:
Gain on sale of life retrocession operations – – – – 1 1
Common Shareholders’ Net Income (Loss) 828 301 208 92 154 1,583
For the Year Ended December 31, 2009
(in millions of Canadian dollars) SLF Canada SLF U.S. MFS SLF Asia Corporate Total
Expected Profit on In-Force Business 745 849 258 106 51 2,009
Impact of New Business (42) (219) – (122) 3 (380)
Experience Gains and Losses 86 (588) – 17 (145) (630)
Management Actions and Changes in Assumptions (61) (930) – 62 (235) (1,164)
Earnings on Operations (pre-tax) 728 (888) 258 63 (326) (165)
Earnings on Surplus 99 (75) – 34 202 260
Earnings before Income Taxes 827 (963) 258 97 (124) 95
Income Taxes 54 502 (101) (21) 108 542
Earnings before Non-controlling Interests, Par Income
and Preferred Share Dividends 881 (461) 157 76 (16) 637
Less:
Non-controlling Interests 10 – 5 – – 15
Par Policyholders’ Income (Loss) 5 4 – – – 9
Preferred Share Dividends – – – – 79 79
Common Shareholders’ Net Income (Loss) 866 (465) 152 76 (95) 534
148 Sun Life Financial Inc. Annual Report 2010 Sources of Earnings