Sun Life 2010 Annual Report Download - page 51

Individual Insurance reported a loss of US$90 million in 2010 compared to a loss of US$159 million in 2009. Losses in 2010 reflected
reserve increases related to the decreasing interest rate environment relative to 2009 and policyholder behavior assumption updates.
Losses in 2009 were higher due to the implementation of equity and interest rate-related assumption updates and updates to
policyholder behaviour assumptions.
Overall sales in 2010 and 2009 were US$212 million and US$238 million, respectively. Sales of Individual Insurance domestic core
products of US$128 million were consistent with prior year. This includes a 42% decrease in NLG universal life sales, reflecting our
decision to exit this product line. NLG sales were replaced by growth in our other core universal life products, including a 39% increase
in sales of our small business solution.
Employee Benefits Group
SLF U.S.’s EBG business unit leverages its strong underwriting expertise and extensive distribution capabilities to provide group life,
long-term and short-term disability, medical stop-loss, and dental insurance to over 10 million group plan members. We currently
provide customer-focused products and services to meet the group insurance needs of small to medium-sized employers and their
employees. Our group insurance products are sold through independent brokers and benefit consultants. We support these brokers
and consultants through 34 regional group offices across the United States and more than 170 Sun Life sales representatives. These
representatives maintain close relationships with independent brokers and consultants who work directly with employers. In the first
quarter of 2010, we realigned the EBG sales force to create a more specialized distribution model and increase our focus on key
markets.
EBG earnings were US$115 million in 2010 compared to earnings of US$122 million in 2009. The decrease was primarily due to less
favourable claims experience.
Despite a challenging competitive environment, sales in 2010 were a record US$612 million, up 2% compared to 2009. Business
in-force of US$2.2 billion as at December 31, 2010 increased 5% over the prior year despite difficult economic conditions including low
wage rates and high unemployment.
2011 Outlook and Priorities
SLF U.S. competes in the sophisticated and highly competitive U.S. life insurance industry, in which the top companies have gained
unprecedented market share. Although there are encouraging signs that the U.S. economy has started to recover, high unemployment,
low interest rates, stressed commercial real estate markets and volatile financial markets will likely persist through 2011. In this
environment, the advantages of operational scale and growth have to be balanced with the risk profile of the business.
Several key trends provide opportunities for us to grow our core businesses. First, 78 million baby boomers are in or nearing
retirement, increasing the demand for retirement income security. Second, as the responsibility for retirement income shifts to the
individual and market volatility and uncertainty increases, the Annuities business can offer a unique value proposition through
guaranteed lifetime income. Third, the longer-term needs of baby boomers to transfer wealth to their children in a tax efficient manner
will provide growth opportunities for Individual Insurance. Fourth, longer life expectancy combined with rising medical expenses is
increasing demand for innovative solutions. Finally, as businesses try to stem rising health care expenses by shifting the cost of
benefits to employees, EBG has an opportunity to increase its voluntary benefits business.
To capitalize on the current business environment and trends, we will drive sustainable and profitable organic growth by developing
new solutions that satisfy consumer needs while effectively managing risk. SLF U.S. will maintain its focus on strengthening its
distribution capabilities and investing in marketing and brand development to support growth in each business. Effective risk
management and continuous improvements in operational efficiency remain top priorities.
MFS Investment Management
Business Profile
MFS is a global asset management company which offers products and services that address the varying needs of investors over time.
Individual investors have access to MFS advisory services through a broad selection of financial products including mutual funds,
variable annuities, separately managed accounts, college and retirement savings plans, and offshore products. Financial
intermediaries that provide sales support, product administration and client services distribute these products. MFS services
institutional clients by providing asset management services for corporate retirement plans, separate accounts, public or government
funds and insurance company assets. Institutional clients are serviced through a direct sales force and a network of independent
consultants.
Strategy
MFS’s strategy is to grow its business by continually exceeding clients’ expectations with superior investment performance. As
distribution of retail funds continues to move toward platform-driven sales, long-term investment performance has become even more
important. We will continue to challenge the structure of our investment process and add research talent to ensure that high investment
performance is maintained across a universe of securities that is becoming more geographically dispersed.
The expansion of institutional products and sales is also an important element of our strategy. We have launched a number of
institutionally-focused investment products that are designed to better meet the market separation of investment performance linked to
an index and investment performance based on active management of investment products. We have and will continue to add
investment talent to support the expanded product set and wholesalers to expand distribution capabilities geographically.
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2010 47