Sun Life 2010 Annual Report Download - page 59

As at December 31, 2010, we held $6.5 billion in corporate loans compared to $5.7 billion in 2009. The carrying values of mortgages
and corporate loans by geographic location as at December 31 is shown in the following table. Residential mortgages include
mortgages for both single and multiple family dwellings.
Mortgages by Type and Location
($ millions) Residential Non-residential Total
December 31, 2010
Canada 2,270 5,154 7,424
United States 216 5,333 5,549
United Kingdom –4848
Total mortgages 2,486 10,535 13,021
Corporate loans 6,490
Total mortgages and corporate loans 19,511
December 31, 2009
Canada 2,341 5,193 7,534
United States 280 5,905 6,185
United Kingdom –5757
Total mortgages 2,621 11,155 13,776
Corporate loans 5,673
Total mortgages and corporate loans 19,449
In the United States, a gradual recovery of the commercial real estate market has begun, but is fractured with a disparity between
stabilized “core” properties within primary markets and lower quality assets or those located in secondary markets. Capitalization rates
continue to decline for quality properties that are both well located and leased. Despite the improvement in the overall economy, a
prolonged increase in real estate demand will be dependent upon job creation, which continues to lag. Due to the length of the
downturn, many borrowers have exhausted their financial resources, resulting in an increase in defaults and problem loans. These
troubled loans have become more widespread across property types and geographic locations.
The distribution of mortgages and corporate loans by credit quality as at December 31 is shown in the following table.
December 31, 2010
($ millions) Gross Carrying Value Allowance for losses
Mortgages
Corporate
loans Total Mortgages
Corporate
loans Total
Not past due 12,553 6,460 19,013 - - -
Past due:
Past due less than 90 days 73 73 - - -
Past due 90 to 179 days --- - --
Past due 180 days or more --- - --
Impaired 583 58 641 188(1) 28 216
Balance, December 31, 2010 13,209 6,518 19,727 188 28 216
(1) Includes $76 million of sectoral provisions
December 31, 2009
($ millions) Gross Carrying Value Allowance for losses
Mortgages
Corporate
loans Total Mortgages
Corporate
loans Total
Not past due 13,600 5,649 19,249 – – –
Past due:
Past due less than 90 days 30 30 – – –
Past due 90 to 179 days – – – – – –
Past due 180 days or more – 1 1 – – –
Impaired 252 33 285 106(2) 10 116
Balance, December 31, 2009 13,882 5,683 19,565 106 10 116
(2) Includes $55 million of sectoral provisions
Net impaired assets for mortgages and corporate loans, net of allowances for losses, amounted to $425 million as at December 31,
2010, $256 million higher than the December 31, 2009 level for these assets. The gross carrying value of impaired mortgages rose by
$331 million to $583 million at December 31, 2010. The majority of this increase related to mortgages for which a specific provision was
recorded. The remainder of this increase related to mortgages considered to be impaired because the terms of the loan were modified,
but for which a full recovery of principal is expected. The allowance for losses related to mortgages rose to $188 million at
December 31, 2010 from $106 million as at December 31, 2009. The addition of new provisions on specific mortgages was partly offset
by adjustments to provisions previously recorded, realized losses charged against this allowance and currency movements. The
sectoral provision related to mortgages included in the allowance increased by $21 million to $76 million, which reflects our anticipation
of continued pressure in the commercial mortgage market. Approximately 89% of the impaired mortgage loans are in the United States.
Management’s Discussion and Analysis Sun Life Financial Inc. Annual Report 2010 55