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Investments
The Company strives to ensure that all general fund investments are properly aligned with business objectives, meeting policyholder
obligations, and that adequate liquidity is maintained at all times. The Risk Review Committee of the Board of Directors approves
policies that contain prudent standards and procedures for the investment of our general fund assets. These policies include
requirements, restrictions and limitations for interest rate, credit, equity market, real estate market, liquidity, concentration, currency and
derivative risks. Compliance with these policies is monitored on a regular basis and reported annually to the Risk Review Committee.
The Investment Oversight Committee of the Board of Directors oversees investment policies, practices, procedures and controls
related to management of the general fund investments portfolio, the approval and monitoring of the annual Investment Plan and
monitoring of the investment performance of enterprise pension and savings plans.
The shaded text and tables in the following section of this MD&A represent our disclosure on Credit Risk – Asset Quality in
accordance with CICA Handbook Section 3862, Financial Instruments – Disclosures. Therefore, the shaded text and tables
represent an integral part of our audited 2010 Annual Consolidated Financial Statements for the years ended December 31, 2010
and December 31, 2009. The shading in this section does not imply that these disclosures are of any greater importance than non-
shaded tables and text, and the Investments disclosure should be read in its entirety.
Investment Profile
The Company had total general fund invested assets of $110 billion as at December 31, 2010. The majority of our general fund is
invested in medium- to long-term fixed income instruments, such as bonds and mortgages. Our portfolio composition is conservative,
with 86% of the general fund in cash and fixed income investments. Stocks and real estate comprised 5% and 4% of the portfolio,
respectively. The remaining 5% of the portfolio is comprised of policy loans, derivative assets and other invested assets.
Additional detail on our investments is provided in Notes 5 and 6 to our 2010 Consolidated Financial Statements.
Investments 2010 2009
($ millions)
Carrying
Value
Fair
Value
% of total
carrying
value
Carrying
Value
Fair
Value
% of total
carrying
value
HFT bonds 54,753 54,753 50 51,634 51,634 48
AFS bonds 10,752 10,752 10 9,673 9,673 9
Mortgages and corporate loans 19,511 20,430 18 19,449 19,941 18
HFT stocks 4,424 4,424 4 4,331 4,331 4
AFS stocks 808 809 1 635 649 1
Real estate 4,919 5,125 4 4,877 5,124 5
Policy loans and other invested assets 3,525 3,525 3 3,503 3,503 3
Cash, cash equivalents and short-term securities 8,487 8,487 8 11,868 11,868 11
Derivative assets 1,629 1,629 2 1,382 1,382 1
Other invested assets - HFT 419 419 - 425 425 -
other invested assets - AFS 454 492 - 452 484 -
Total invested assets 109,681 110,845 100 108,229 109,014 100
Bonds
Our bond portfolio is actively managed through a regular program of purchases and sales aimed at optimizing yield, quality and
liquidity, while ensuring that the asset portfolio remains diversified and well matched to actuarial liabilities by duration. As at
December 31, 2010, we held $65.5 billion of bonds, which constituted 60% of our overall investment portfolio. Bonds with an
investment grade of “A” or higher represented 68% of the total bond portfolio as at December 31, 2010, compared to 67% as at
December 31, 2009. Bonds rated “BBB” or higher represented 96% of the total bond portfolio as at December 31, 2010, unchanged
from December 31, 2009.
Included in the $65.5 billion of bonds were $13.4 billion of non-public bonds, which constituted 20% of our overall bond portfolio,
compared with $13.2 billion, or 22%, as at December 31, 2009. Corporate bonds that are not issued or guaranteed by sovereign,
regional and municipal governments represented 70% of the total bond portfolio as at December 31, 2010, compared to 73% as at
December 31, 2009. Total government issued or guaranteed bonds as at December 31, 2010 were $19.8 billion, compared to
$16.8 billion as at December 31, 2009. We have an immaterial amount of direct exposure to eurozone sovereign credits.
52 Sun Life Financial Inc. Annual Report 2010 Management’s Discussion and Analysis