SUN LIFE ASSURANCE COMPANY OF CANADA

Download (0)

Full text

(1)

Ultimate Parent: Sun Life Financial Inc

SUN LIFE ASSURANCE COMPANY OF CANADA

150 King Street West

Toronto, ON, Canada M5H 1J9

Web: www.sunlife.com

Tel.: 416-979-9966

Fax: 416-585-9546

AMB#: 007101

Ultimate Parent#: 050913 AIIN#: AA-1561039

Data shown in the financial exhibits of this report is in Canadian dollars.

BEST’S CREDIT RATING

Best’s Financial Strength Rating: A+ Outlook: Stable

Best’s Financial Size Category: XV RATING RATIONALE

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

Rating Rationale: The ratings of Sun Life Assurance Company of Canada

(SLA) reflect the company’s market-leading positions in its core Canadian markets and its evolving market presence in the U.S. as well as in Asia, strong risk-adjusted capitalization and regulatory required capital position, improved operating results, integrated enterprise risk management process and globally diversified operations. The ratings also consider the company’s announced deleveraging strategy by exiting its large exposure to capital-intensive variable annuities and other lines of business in the U.S., which may allow its resources to be better positioned for other new growth opportunities. Partially offsetting

these strengths are the company’s sizeable exposure to real estate-linked assets through its investments in commercial mortgage loans, direct real estate and residential and commercial mortgage-backed securities, which could pose continuing risk to its balance sheet and risk-adjusted capitalization, and increasing competition in the company’s core markets.

Sun Life maintains a leading market position in several of its worldwide business units through its wealth management and protection businesses. In Canada, Sun Life holds a top three market position in Canada’s individual life and health, annuity, group pension and group life and health markets. The company’s retail market position in Canada is enhanced by its large career sales force, which has contributed to the company’s sales growth and excellent persistency in recent years. Sun Life benefits from a diversified revenue stream from multiple regions, profitable operations in Canada and favorable risk-adjusted capitalization; the regulatory capital ratio in Canada is considered to be strong. The company also maintains an expanding wealth management segment and life insurance operation in Asia. Additionally, the company benefits from a very integrated risk management framework to assist in managing, categorizing and monitoring risk exposures. Sun Life has worked to reduce the volatility in its results, by exiting variable annuity (VA) and individual life product sales in the U.S. market as of December 30, 2011. In December 2012, the company announced the sale of its domestic U.S. annuities business and certain life insurance businesses to Guggenheim Partners, which will eliminate the volatility these businesses have exhibited, as well as the need for further capital contributions to support these operations. The transaction was completed in August 2013. Going forward, Sun Life will focus on its employee benefits and wealth management in the U.S. along with retail and institutional asset management through Massachusetts Financial Services Company (MFS). As a result, A.M. Best believes SLA’s target U.S. risk-based capital levels will remain more than adequate going forward since volatility from the VA business will be eliminated.

While the U.S. operations focus on markets and businesses that are not highly interest rate sensitive and exposed to equity market fluctuations, significant competition remains from established players in these markets as well as in the markets in Canada and Asia. In addition, the company’s earnings performance could remain subject to new business strain and lower

SUN LIFE ASSURANCE COMPANY OF CANADA

Toronto, Ontario, Canada

(2)

investment income as it continues to realign the new core business strategies. The company retains exposure to real estate-linked assets through its investments in commercial mortgage loans, direct real estate and residential and commercial mortgage-backed securities and may be subject to significant losses should deterioration occur in the commercial real estate market. A large portion of the real estate portfolio is underwritten in Canada, where it typically performs better than similar investments in the U.S.

A.M. Best believes the ratings of SLA are well positioned at the current ratings. Negative rating pressure may occur should equity market volatility and low interest rates continue to impact earnings and capital levels, investment and earnings performance fall below A.M. Best’s expectations relative to its current ratings or the execution of the company’s refocused strategy fails to meet management expectations.

FIVE YEAR RATING HISTORY Date Best’s FSR Date Best’s FSR 06/28/13 A+ 10/26/11 A+ u 04/11/12 A+ 10/27/10 A+ 11/28/11 A+ 02/27/09 A+

KEY FINANCIAL INDICATORS ($000) Year Assets Capital & Equity AOCI Net Premiums Written Net Invest Income Net Income 2008 73,253,625 10,399,170 -1,365,473 12,954,206 2,013,232 1,506,414 2009 73,419,938 10,512,067 -1,467,429 9,494,829 4,711,644 714,707 2010 75,789,831 11,118,689 -1,606,706 9,870,669 5,108,617 1,571,565 2011 146,114,914 10,746,396 133,805 6,112,127 6,554,174 861,338 2012 154,620,990 11,731,285 181,813 5,675,482 4,375,854 1,345,142

(*) Beginning 2011, Total Assets and Total Liabilities are presented on a gross basis and include Segregated Accounts.

(*) Beginning 2011, Canadian insurers began reporting under International Financial Reporting Standards (IFRS). Data items prior to 2011 are stated under Canadian GAAP, as originally filed with A.M. Best. As a result, prior period may not be comparable.

Balances in the tables shown throughout the report are on a non-consolidated basis for Sun Life Assurance Company of Canada.

The Key Financial Indicators are based upon calculation derived from the non-consolidated financial segments of the Life-1 Annual Return.

BUSINESS PROFILE

Sun Life Assurance Company of Canada (SLF Canada) is the Canadian insurance company and lead insurance company for Sun Life Financial Inc.

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

The key life insurance subsidiary of Sun Life Financial Inc. (SLF) is Sun Life Assurance Company of Canada (SLA). SLA owns Sun Life and Health Insurance Company US (SLHIC), which currently markets group life and A&H products. With the sale of Sun Life Assurance Company of Canada (U.S.) (SLUS), and Sun Life Insurance and Annuity Company of New York (SLNY), SLHIC will become the U.S. marketing arm in the State of New York.

SLF and Guggenheim Partners executed a definitive agreement on December 17, 2012, whereby a Guggenheim Partners-led investor group will purchase Sun Life’s domestic U.S. annuities business and certain life insurance businesses for a purchase price of US$1.35 billion, as adjusted to reflect the performance of the business through closing. The transaction consists primarily of the sale of 100% of the shares of SLUS, which includes the U.S. domestic variable annuity, fixed annuity and fixed indexed annuity products, corporate and bank-owned life insurance products and variable life insurance products, as well as its wholly owned subsidiary, SLNY. This transaction will include the transfer of certain related operating assets, systems and employees that support these businesses. The transaction was completed in August 2013.

This sale should ultimately help the financial results of SLF going forward as these blocks of business had been very capital intensive and bottom line results declined in recent periods with the continued low interest rate environment, and volatility of equity markets. Going forward, group and voluntary benefits insurance products will continue to be sold through SLA’s US branch (SLA US) in 49 states, the District of Columbia, Puerto Rico and the US Virgin Islands. SLHIC is licensed in New York, and will write all group and voluntary benefits insurance products in that state, as well as assume this business that had been written by SLNY.

SLA maintains a market leading position in Canada with a customer base representing about one in five Canadians. SLA’s business segments, consisting of Individual Insurance & Investments, Group Benefits and Group Wealth, offer a full range of protection and wealth accumulation products and services to individuals and corporate clients. SLA also has investments in the Canadian asset management sector.

SLA’s Group Benefit (GB) business unit is a leading provider (#1 for 2012) of group life and health insurance products in Canada, with a market share of 22% based on business in force. GB provides life, dental, drug, extended health care, disability and critical illness benefits programs to employers of all sizes. In addition, voluntary benefits are offered directly to individual plan members, including post-employment life and health plans to members exiting their plan. Products are marketed and distributed across Canada by sales representatives in collaboration with independent advisors, benefits consultants and the Sun Life Financial Career Sales Force

SLA’s Canadian Individual Insurance and Investments business comprises permanent life, participating life, term life, universal life, critical illness, long-term care and personal health insurance, as well as savings and retirement products, including mutual funds, segregated funds, accumulation annuities, guaranteed investment certificates and payout annuities.

In September 2012, recognizing of the continuing low interest rates, SLA implemented new cost of insurance rates, which decreased the minimum interest rate guarantees. In addition, SLA closed of new Guaranteed Minimum Withdrawal Benefit segregated fund sales in third-party channels, re-priced of universal life and critical illness insurance products, and the launched Sunflex Retirement Income, a new payout annuity product.

While each of its business units remain focused on their respective markets, SLA recognizes the opportunity to serve its clients through the combination of some aspects of these businesses. This has led to the formation of SLA’s Total Benefits offering for group clients and customer solutions, which addresses the needs of individual and group clients as they do business with the company.

SLF U.S. focuses on the delivery of protection through its Employee Benefits Group (EBG). The EBG business unit offers group life insurance, short-term and long-term disability insurance, dental insurance and medical stop-loss insurance for employers. SLF U.S.’s group insurance business has historically been focused on small and medium-sized companies. The group products are marketed and distributed through an extensive network of 30K independent brokers and benefit consultants in approximately thirty-four regional sales offices across the U.S. and approximately 200 employee sales representatives. During 2007, SLF enhanced its U.S. group business platform when it acquired Genworth Financial, Inc.’s U.S. Employee Benefits Group. This acquisition was strategic in nature and bolstered Sun Life’s position in the U.S. market making them a top ten marketer in the U.S. employee benefits industry. In 2012, SLF U.S. transferred US$6.5 billion of variable annuity assets to MFS. This transaction provided policyholders with reduced fees and high-quality asset management services, while SLF U.S. benefited from lower operating costs and a related reduction in insurance contract liabilities. Going forward, Sun Life is looking to reallocate resources toward its highest growth and less capital-intensive segments, with its new focus on the employee benefits and voluntary insurance markets. SLF U.S. announced a significant investment in its voluntary capabilities over the next five years to expand its market presence in the employee voluntary benefits market in an effort to provide protection solutions to more U.S. workers.

SLA’s Group Wealth included ownership of McLean Budden Limited (investment management services for individuals, mutual funds, pension plans, and corporations). Minority shares were acquired and all shares of McLean Budden were transferred to MFS in 2011 (renamed MFS McLean Budden) and in 2012, MFS McLean Budden’s private wealth management business was sold. The Wealth Management business includes group pension and annuity products offered through its group retirement services business unit, mutual funds, asset management services primarily conducted through

(3)

distribution is through a multi-channel distribution network of pension consultants, advisors and with teams dedicated to the rollover sector and defined benefit solutions market. On May 13, 2010, SLF added to its wealth management capabilities through the establishment of a proprietary mutual fund company Sun Life Global Investments (Canada) Inc. (SLGI) which offers a proprietary family of funds to be marketed primarily to Canadian Retail Investors. SLGI is an extension of the wealth management capabilities currently recognized in its U.S. mutual fund company MFS Investment Management (MFS). During SLGI’s second full year of operations in 2012, sales reached more than $2 billion, client managed AUM grew to over $6 billion. In addition, all twelve of the original long-term mutual funds are ranked above the median and seven of twelve mutual funds are ranked in the top quartile for their respective two-year categories (as measured by Morningstar Research). In addition, SLGI acquired the mutual fund business of MFS McLean Budden in 2012 and launched the Granite Managed Portfolios, which are five internally managed portfolios that offer a multi-manager approach with broad diversification and active management.

MFS Investment Management, headquartered in Boston, MA, is a global investment management company which offers products and services that address the varying needs of investors over time. Individual investors have access to MFS’s advisory services through a broad selection of financial products including mutual funds, variable annuities, separate accounts, college and retirement savings plans, and offshore investment products. These products are distributed through financial intermediaries that provide sales support, product administration and client services. MFS provides asset management services to institutional clients 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. MFS’s strategy has expanded in recent years to include institutional product sales. Over the last few years, MFS has initiated several institutionally focused investment products, designed to better meet the market diversification of investment performance linked to an index and investment performance based on the management of investment vehicles. MFS is expected to continue adding intellectual capital to support the increased product offerings and wholesalers to expand distribution capabilities geographically.

As of June 30, 2013, the company’s ownership interest in MFS was 91.305%, with the remainder owned by MFS’s employees. As of year-end 2012, MFS had assets under management (AUM) of US$323 billion, up from US$253 billion at the end of 2011. The AUM includes US$33 billion sourced from Asia. The firm’s research platform includes more than 200 investment professionals in investment offices at its headquarters in Boston and in offices in Hong Kong, London, Mexico City, Sao Paulo, Singapore, Sydney, Tokyo and Toronto.

SLF Asia operates in seven markets, through subsidiaries in the Philippines, Hong Kong and Indonesia and through joint ventures (JV) with local partners in India, China, Indonesia, Vietnam and Malaysia, serving about 70% of the Asian population. It provides individual life insurance products and services in all operations, and savings, retirement and pension products and services in India, the Philippines and Hong Kong. Group insurance is also offered in India, the Philippines, Hong Kong and China. These protection and wealth management products are distributed to middle- and upper-income individuals, employer/employee groups and affinity clients. SLF Asia’s parent is SLA. With regional headquarters located in Hong Kong, the group consists of three operating entities in the Philippines, including Grepa JV, three operating entities in Hong Kong, three operations in Indonesia, including CIMB JV, three operating entities in India with two JVs at 26% and 50% ownership, and lastly, a 24.99% JV in China. In May 2012, SLA entered into an agreement with PVI Holdings to form PVI Sun Life Insurance Company Limited in Vietnam, a joint venture life insurance company. PVI Sun Life Insurance Company Limited received its license to operate from the Ministry of Finance of Vietnam in January 2013. Also in January 2013, SLF entered into a strategic partnership with Khazanah Nasional Berhad to acquire 98% of each of CIMB Aviva Assurance Berhad and CIMB Aviva Takaful Berhad (together, "CIMB Aviva") in Malaysia. The transaction was completed in April 2013. As a result, Sun Life Assurance acquired a 49% interest in CIMB Aviva.

SLF Asia’s focus is to increase scale in the markets it serves, developing into a significant growth segment in terms of revenue and earnings. As such, SLF Asia has increased its speed to market capabilities for new products and developing distribution channels, such as bancassurance and telemarketing while it leverages the company’s existing asset management capability. The local initiatives are expected to bolster the leveraging of SLF’s global resources to bring industry-leading products and services to Asia.

Philippines - Sun Life Financial’s Philippine operations distribute a diverse range of protection and savings products largely through their proprietary career agent sales force. The Business Group offers traditional and unit-linked individual life insurance products as well as mutual funds to individuals, while group life and health insurance products are marketed to employer groups. The Philippines are Sun Life’s most mature Asian operation (established in 1895) where it has become the #1 life insurer in the country. According to figures released by the Philippines Insurance Commission, the company was the top-ranked life insurer in 2011 as measured by total premium income. Its market position is enhanced with broadened product offerings and customer service capabilities. Sun Life undertook organizational realignment initiatives and reinforced its customer-oriented focus while actively pursuing strategic alternatives to sell bancassurance products in the country. In addition to their wholly owned life insurance and asset management subsidiaries, SLF maintains a joint venture with the Yuchengco Group, Sun Life Grepa Financial, Inc., in which SLF has a 49% ownership stake.

Hong Kong - Sun Life’s Hong Kong operation offers a complete range of products to address protection and savings needs. Individual life insurance, group life and health insurance, mandatory provident funds (the government legislated pension plan) and pension administration are supplied to individuals and businesses through a multi-channel distribution system that includes a career agency force, telemarketing, independent financial advisors, bancassurance and brokers. Sun Life’s success in the Hong Kong market is mainly attributable to its entry into the bancassurance market. The company established a bancassurance relationship with Hong Kong based CITIC Bank International. The bank partner focuses on high-end customers with strong customer service, consistent with Sun Life’s own marketing strategy. In addition, Sun Life acquired CMG Asia in 2005 increasing Sun Life Financial Hong Kong share of the individual life market. Recently, sales from independent financial advisors have contributed significantly to individual life sales.

India - Birla Sun Life Insurance Company Limited (BSLIC), SLF’s insurance joint venture in India, provides a full array of individual life insurance, group life insurance and group savings products. The company markets these products through a multi-channel distribution network, including a career agent sales force, bancassurance arrangements, brokers and worksite marketing, to reach different segments of the market. Diversified distribution network consists of almost 700 branches, 110,000 advisors complemented by 6 bancassurance partners. Birla Sun Life Asset Management Company Limited, the company’s asset management joint venture in India, offers a full array of mutual fund products to individuals and institutional investors. Independent financial advisors and banks deliver Birla Sun Life mutual funds to the retail sector, while direct distribution serves corporate accounts. Recent regulatory changes in India’s insurance industry have adversely impacted individual life insurance sales.

China - Sun Life Everbright, SLF’s joint venture in China, operates a multi-distribution model that combines a direct career agency and several banc assurance alliances to sell individual life and health insurance and savings products. On July 20, 2010, Sun Life Everbright Life Insurance Company Limited (SLEB) was restructured as a domestic insurance company. Under the restructuring of the joint venture with China Everbright Group Company, additional strategic investors were introduced, which reduced ownership in Sun Life Everbright from 50% to 24.99%. SLF will continue to provide its international governance, risk management and actuarial expertise and standards to SLEB. The restructuring as a domestic insurer should help drive expansion and further strengthen its position in China’s financial services market. SLEB currently operates in 15 provinces (60 cities) and plans to expand to 21 provinces by 2013. Sun Life will also be well represented on Sun Life Everbright’s board of directors and recommend a candidate for the company’s chief actuary, the primary architect of product development, pricing and related responsibilities. The repositioning of Sun Life Everbright as a domestic insurer in the market should also provide

(4)

additional avenues of growth in China’s financial services market and enable the company to fully leverage China Everbright Bank’s broad distribution capabilities. Group life and health insurance, along with pension products, are provided to employer groups through brokers, agents and the China Everbright Group Limited, the Company’s joint venture partner.

Sun Life Indonesia - SLF Asia’s Indonesian operations provide both traditional and investment linked individual life insurance to individuals through a career agent sales force and bancassurance partners. Life insurance products are also marketed to affinity groups via telemarketing. CIMB Niaga Bank is one of the largest banks in Indonesia, with over 600 branches and three million customers. SLF maintains a joint venture with PT Bank CIMB Niaga, in which they have a 49% ownership stake. Since its inception during the summer of 2009, the segment has reported favorable sales through its in-branch and telemarketing channels. Individual life and health insurance, as well as creditor life insurance is also marketed through a wholly-owned subsidiary, PT Sun Life Financial Indonesia. . In December 2010, a Shariah unit was launched. The objective for Shariah business is to contribute 25% of sale by 2015 as Shariah distribution and product suite are built.

The Corporate segment includes the results of SLF U.K and Corporate Support operations that consist of the company’s run-off reinsurance business as well as investment income, expenses, capital and other items not allocated to Sun Life Financial’s other business segments. Since 2008, SLF began consolidating the results of SLF Reinsurance into Corporate Support as reinsurance business is a closed block that consists of reinsurance assumed from other insurers with coverage of individual disability income, long-term care, group long-term disability and personal accident and medical coverage, as well as guaranteed minimum income and death benefit coverage.

TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS Reinsurance

Period ————DPW———— ——Prem Assumed——

Ending ($000) (% Chg) ($000) (% Chg) 2008 9,926,217 2.6 5,613,461 426.2 2009 11,075,457 11.6 1,364,775 -75.7 2010 11,374,088 2.7 1,213,582 -11.1 2011 11,330,092 -0.4 1,206,491 -0.6 2012 11,728,791 3.5 528,464 -56.2 Reinsurance

Period ———Prem Ceded——— ———NPW———

Ending ($000) (% Chg) ($000) (% Chg) 2008 2,585,504 -75.7 12,954,206 999.9 2009 2,945,461 13.9 9,494,829 -26.7 2010 2,717,059 -7.8 9,870,669 4.0 2011 6,424,456 136.4 6,112,127 -38.1 2012 6,581,773 2.4 5,675,482 -7.1

Territory: The company is licensed in all provinces and territories. It is also

licensed in the United States in the District of Columbia, Puerto Rico, U.S. Virgin Islands, AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI and WY. The company is also licensed in the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Servicing policies only: Cuba, Dominican Republic, Federation of Malaysia, Guyana, Haiti, Jamaica, Malta, Netherlands Antilles, Singapore, Sri Lanka, Trinidad and Tobago and Zimbabwe. Sun Life is also an accredited reinsurer in the state of New York.

2012 BY-LINE BUSINESS ($000)

——DPW—— —Prem Assumed—Reinsurance

Product Line ($000) (%) ($000) (%) Individual life 2,296,105 19.6 … … Group life 1,014,837 8.7 367 0.1 Individual annuities 623,987 5.3 312 0.1 Group annuities 1,107,075 9.4 … … Individual A&S 270,608 2.3 … … Group A&S 3,256,837 27.8 … … Non-Canadian 3,159,342 26.9 527,785 99.9 Total 11,728,791 100.0 528,464 100.0 Reinsurance ——Prem Ceded—— ——NPW—— Product Line ($000) (%) ($000) (%) Individual life 757,853 11.5 1,538,252 27.1 Group life 1,015,204 15.4 … … Individual annuities 335,741 5.1 288,558 5.1 Group annuities 692,229 10.5 414,846 7.3 Individual A&S 59,141 0.9 211,467 3.7 Group A&S 3,256,230 49.5 607 0.0 Non-Canadian 465,375 7.1 3,221,752 56.8 Total 6,581,773 100.0 5,675,482 100.0 RISK MANAGEMENT

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

SLF maintains a strong risk management framework that emanates from the Board of Directors and is reflected throughout the management and employees. This framework highlights five major categories of risk; credit risk, market risk, insurance risk, operational risk and strategic risk. Qualitative and quantitative measures have been set out to control the amount of risk the company is willing to bear with respect to each of these risk categories. This risk appetite defines the type and amount of risk SLF is willing to assume in pursuit of its business objectives. The same set of considerations is used in developing business strategy. This risk appetite is laid out in a formal policy that is approved by the Board of Directors. In addition to the company’s risk management framework, SLF uses the DCAT process that is required by the regulator to project income and capital for a five year period based on plausible adverse scenarios. SLF also stress tests the company’s earnings and MCCSR ratio to key emerging risks and scenarios on a regular basis.

OPERATING PERFORMANCE

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB#067413).

Operating Results: SLF reported net income of CAD1, 554 million in 2012,

compared to a reported loss of CAD370 million in 2011. Reported ROE was 11.6%, compared to negative 2.7% in 2011. Operating net income was $1,679 million in 2012, compared to $34 million in 2011. Operating ROE was 12.5% in 2012, compared to 0.3% in 2011. The net impact of certain hedges that do not qualify for hedge accounting in SLF Canada, fair value adjustments on share-based awards at MFS, restructuring and other related costs and goodwill and intangible asset impairment charges reduced reported net income by $184 million in 2012, compared to a reduction of $404 million in 2011. The 2011 reported loss included $266 million for goodwill and intangible asset impairments. SLF’s overall business and financial operations are affected by the global economic and capital market environment. Operating results are sensitive to interest rates, which have declined in response to more challenging conditions in the European Union and monetary policy actions in the United States, which impact fixed income reinvestment rates. In addition to the impact on fixed income reinvestment rates in insurance contract liabilities, a prolonged period of low interest rates can pressure earnings, regulatory capital requirements and the company’s ability to implement business strategy and plans.

Net income in 2012 reflected favorable impacts from equity markets, basis risk and increases in the fair value of real estate classified as investment properties, offset by declines in the fixed income reinvestment rates in our insurance contract liabilities that were driven by the continued low interest rate environment, and unfavorable impact from credit spread and swap spread movements. Investment activity on insurance contract liabilities and credit experience contributed positively, but were offset by unfavorable expense-related items, largely comprised of project-related and non-recurring costs, model experience and other refinements in our variable annuity products being sold, as well as lapse and other policyholder behavior experience. Net realized gains on sales of available for sale securities (AFS) and assumption changes and management actions contributed to net income in 2012.

Net income in 2011 was unfavorably impacted by the net impact of assumption changes and management actions of $910 million, including a $635 million charge to net income in the fourth quarter related to Hedging in the Liabilities. Results in 2011 were also unfavorably impacted by declines in

(5)

million and $224 million, respectively. This was partially offset by the favorable impact of investment activity on insurance contract liabilities, net realized gains on AFS securities, a net tax benefit from the reorganization of the U.K. operations and increases in the fair value of real estate classified as investment properties.

SLF anticipates that it will recognize a loss of the sale of its U.S. Annuity Business. The amount of the loss will reflect closing price adjustments, pre-closing transactions, closing costs and certain tax adjustments. The estimated loss on dispostion is based on income measured on IFRS basis, not all of which has been reflected in the estimated purchase price adjustment. The loss will be finalized in Q3 2012 once all closing price adjustments have been made. The loss related to the sale is estimated to be $1.1 billion.

SLF Canada’s reported net income was $788 million in 2012, compared to $422 million in 2011. Operating net income was $795 million in 2012, compared to $619 million in 2011. Operating net income in SLF Canada excludes the impact of certain hedges that do not qualify for hedge accounting, and goodwill and intangible asset impairment charges recorded in 2011.

Net income in 2012 reflected gains from increases in the value of real estate properties, the favorable impact of assumption changes and management actions in group benefits and group retirement services, and net realized gains on AFS securities. These items were partially offset by declines in fixed income reinvestment rates in insurance contract liabilities in Individual Insurance & Investments that were driven by the continued low interest rate environment.

Net income in 2011 reflected the net unfavorable impact of assumption changes and management actions, as well as lower equity market levels. The impact of these unfavorable items was partially offset by net realized gains on AFS securities, the favorable impact of fixed income investment activity on insurance contract liabilities and gains from increases in the value of real estate properties.

As a result of the pending sale of SLF’s U.S. Annuity Business, results for SLF U. S. are presented on a continuing operations basis, with a focus on Employee Benefits Group and Life and Investment Products. Reported net income for SLF U. S. from continuing operations was US$324 million in 2012, compared to a reported loss from continuing operations of US$303 million in 2011. Operating net income from continuing operations was US$324 million in 2012, compared to an operating loss from continuing operations of US$295 million in 2011. Operating net income in SLF U.S. excludes restructuring and other related costs and goodwill and intangible asset impairment charges recorded in 2011, which are set out in the table above.

Net income from continuing operations in 2012 included favorable impacts from improved equity markets, investment activity on insurance contract liabilities and updates to actuarial assumptions. These items were partially offset by unfavorable impacts from reduced interest rates and credit spread movements. Net income in EBG included unfavorable morbidity experience, an investment in our voluntary benefits capabilities and a charge related to a premiums receivable account reconciliation issue.

The loss from continuing operations in 2011 reflected the net unfavorable impact of assumption changes and management actions including the implementation of a change related to Hedging in the Liabilities. The loss also reflected the unfavorable impacts of interest rates, equity markets and mortality and morbidity experience, partially offset by gains from investment activity on insurance contract liabilities.

Reported net income from discontinued operations was US$172 million in 2012, compared to a reported loss from discontinued operations of US$606 million in 2011.

MFS reported net income of US$208 million in 2012, compared to US$188 million in 2011. Operating net income was US$302 million in 2012, compared to US$271 million in 2011. Operating net income in MFS excludes the impact of fair value adjustments on share-based payment awards, and restructuring and other related costs related to the transition of McLean Budden to MFS in 2011. The increase reflected higher average net assets, which increased from US$261.0 billion at December 31, 2011 to US$286.0 billion at December 31, 2012.

SLF Asia reported net income of $129 million in 2012, compared to reported net income of $138 million in 2011. Operating net income was $129 million in 2012, compared to $144 million in 2011. Operating net income in SLF Asia excludes restructuring and other related costs recorded in 2011.

Net income in 2012 included the unfavorable impact of declining interest rates in Hong Kong and higher levels of new business strain from increased sales in China and the Philippines. These items were partially offset by the favorable impact of assumption changes and management actions, and higher earnings in the Philippines due to business growth. Net income in 2011 reflected business growth, realized gains on AFS securities, the net favorable impact of assumption changes and management actions and low levels of new business strain as a result of sales levels in India and Hong Kong.

Individual life sales in 2012 were flat from 2011. On a local currency basis, sales growth in the Philippines and China was offset by lower sales in India. Sales in the Philippines were up 58% due to agency expansion, and the launch of Sun Life Grepa Financial, Inc. in October 2011. Sales in China were up 17% as a result of distribution growth.

Corporate includes the results of SLF U.K. and Corporate Support. For 2012 Corporate had a reported loss from Continuing Operations of $73 million, compared to a reported loss from Continuing Operations of $212 million in 2011. The operating loss from Continuing Operations was $69 million in 2012, compared to an operating loss from Continuing Operations of $199 million in 2011.

SLF U.K.’s reported net income was $213 million in 2012, compared to $153 million in 2011. Restructuring and other related costs were not a factor in 2012, compared to $3 million in 2011. Operating net income was $213 million in 2012, compared to $156 million in 2011. Net income in 2012 reflected favorable impacts from investment activity on insurance contract liabilities, refinements to actuarial models and tax related items. Net income in 2011 included a net tax benefit related to the reorganization of the U.K. operations, partially offset by the unfavorable impact of investment activity on insurance contract liabilities. Net income in both 2012 and 2011 reflected investment in regulatory initiatives such as Solvency II.

In Corporate Support, the reported loss from continuing operations was $286 million in 2012, compared to a reported loss of $365 million in 2011. Restructuring and other related costs were $4 million, compared to $10 million in 2011. The operating loss from continuing operations was $282 million in 2012, compared to an operating loss from continuing operations of $355 million in 2011. The loss from continuing operations in 2012 reflected lower expenses and lower losses in our run-off reinsurance business than the prior year. The loss from continuing operations in 2011 included an impairment of AFS securities. Both 2012 and 2011 reflected the net cost of reinsurance for the insured business in SLF Canada’s GB operations. Reported net income from discontinued operations was $7 million in 2012, compared to $29 million in 2011.

PROFITABILITY ANALYSIS ($000) Pre-tax Net Net Incom

Period Net Oper Operating Excl Unreal. Net Operating Operating Ending Income Gain Cap. Gains Income ROR ROE 2008 1,486,290 1,506,414 … 1,506,414 9.8 14.9 2009 513,321 714,707 … 714,707 4.8 6.8 2010 1,791,678 1,571,565 … 1,571,565 10.0 14.5 2011 862,041 861,338 … 861,338 6.3 7.9 2012 1,458,260 1,345,142 … 1,345,142 12.3 12.0 PROFITABILITY TESTS Comm &

Ben Paid Exp to NOG Operating

to NPW NPW to Tot NOG to Return on Net Total Year & Dep & Dep Assets Tot Rev Equity Yield Return

2008 55.5 12.9 2.2 9.8 14.9 … 3.70

2009 80.4 20.1 1.0 4.8 6.8 … 8.60

2010 75.6 19.9 2.1 10.0 14.5 … 9.10

2011 74.1 23.5 1.0 6.3 7.9 … 10.10

(6)

INVESTMENT GAINS ($000)

Net Realized Unrealized Inv Inc Inv Return on Total Inv Capital Capital Growth Yield Inv Assets Return Year Income Gains Gains (%) (%) (%) (%)

2008 2,013,232 … … … 3.7

2009 4,711,644 … … … 8.6

2010 5,108,617 … … … 9.1

2011 6,554,174 … … … 10.1

2012 4,375,854 … … … 5.5

BALANCE SHEET STRENGTH

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

Capitalization: The capitalization of SLA is considered strong on a

consolidated basis relative to its current insurance and investment risks. The company’s MCCSR has historically been above 200% (209% at year-end 2012). In addition, SLA maintains a strong level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s regulatory capital consists primarily of common equity along with a moderate mix of preferred equity, SLEECS (Sun Life ExchangEable Securities), which qualify as Tier 1 capital for regulatory capital purposes, and subordinated debt. There is an intercompany loan arrangement between SLF and SLA of $500 million.

In recent years, SLF has recorded a relatively flat shareholders’ equity position, as a result of the global economic pressures and Canadian dollar valuation sensitivities. Cumulative net income has exceeded shareholder dividends and common share repurchases over the last several years. However, Sun Life has a proven ability to raise additional funds through the capital markets as needed. The group’s current debt, hybrid securities, and preferred shares to total capital are within expectations for the current rating level, garnering some equity credit. Through year-end 2012, the group’s debt to capital ratio remained elevated relative to historical levels. This ratio improved in 2013 with the redemption of $350 million of subordinated debentures in June 2013. Interest coverage improved in 2012 due to improved operating results that are in line with A.M. Best’s expectations. In addition, SLF has taken advantage of the low interest rate environment in 2012 by refinancing $800 million in subordinated debt at a lower interest rate. Sun Life maintains an excellent liquidity position which provides for favorable debt servicing capabilities from a cash coverage basis.

Through Sun Life Capital Trust and Sun Life Capital Trust II, open-end trusts established in Ontario, SLA has issued two tranches of long-dated subordinated unsecured debt that qualify as capital for Canadian regulatory purposes (SLEECS Series B and 2009-1). The SLEECS Series B can be converted into SLA’s preferred shares that are exchangeable in certain limited circumstances at a future date into SLF common shares at a price equal to 95% of the trading price at the time of the exchange. The SLEECS represent low-cost and tax-efficient capital that A.M. Best believes provides the company with increased capital flexibility.

LEVERAGE ANALYSIS C&S

to Reins NPW Change

Year Liab Leverage to Capital in NPW

2008 16.5 80.9 1.2 999.9 2009 16.7 92.2 0.9 -26.7 2010 17.2 91.7 0.9 4.0 2011 7.9 94.9 0.6 -38.1 2012 8.2 90.2 0.5 -7.1 Current BCAR: 163

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

Liquidity: SLF maintains a portfolio of high quality assets. The investment

portfolio is broadly diversified and managed with respect to the company’s underlying policy obligations. The company invests the majority of its general fund assets in medium- to long-term fixed income investments while the assets supporting equity capital are invested in a broader range of asset classes including bonds, mortgages, equity securities, and real estate investments,

investment returns. The company’s asset portfolio is geographically diversified with thirty-two percent invested in the U.S., fifty-one percent in Canada, and the balance outside of North America, based on the jurisdiction of the incorporation of issuers. Market value for SLF’s invested assets through year-end 2012 was approximately CAD 106 billion.

The vast majority of SLF’s general funds are invested in fixed income instruments, such as bonds and mortgages with a medium- to long-term duration. Its portfolio is comprised of about 85% of the general funds in cash and fixed income investments. Real estate holdings comprise about five percent of the portfolio and stocks account for about four percent of the portfolio. The remaining six percent of the portfolio is comprised of policy loans, derivative assets and other invested assets.

LIQUIDITY ANALYSIS

Mtg & Cred Affil

Operating Ten Lns Invest

Cash Quick & RE to

Year Flow($000) Liquidity to Capital Capital

2008 8.4 69.7 155.2 79.5

2009 10.9 72.9 135.8 79.9

2010 8.4 75.2 124.6 74.8

2011 7.0 62.6 138.6 73.3

2012 6.5 61.2 136.5 70.5

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

Investments: Through year-end 2012, bonds represented about 51% of

invested assets. The quality of the bond portfolio remains high, with below investment grade issues representing a modest two percent of the total. Impaired assets to total invested assets is small. SLF’s bond portfolio is very diverse, represented by a large number of credits and good diversification across multiple segments. Its bond portfolio is actively managed through a regular program of purchases and sales directed at optimizing yield quality and liquidity, while ensuring that asset/liability matching requirements are met. The company maintains a larger proportion of private placements than historical levels — currently about 22% of total bonds, which is a 9% increase over the prior year. SLF maintains modest exposures to collateralized mortgage obligations and mortgage-backed securities in its United States branch operations and indirectly through its U.S.-domiciled subsidiaries. Although these investments are highly rated, they are volatile in price and duration during changing interest rate environments coupled with volatility in the global economy. The company utilizes derivative instruments to provide hedging protection on interest rates, currency exposures and equity volatility inherent in the VA product offering.

SLF’s mortgage loan portfolio represents about 11 % of total invested assets through year-end 2012, with the Canadian mortgage portfolio accounting for more than 60% of the total mortgage portfolio. The company’s mortgage portfolio is almost entirely in first mortgages. Mortgages are concentrated in office, retail, industrial, and apartment properties. Commercial mortgages account for about three-fourths of the total mortgage portfolio with the remainder invested in residential mortgages. The portfolio has a weighted average loan-to-value of around 60% and the estimated weighted average debt service coverage is 1.6 times. The Canada Mortgage and Housing Corporation insures around 21% of the Canadian commercial mortgage portfolio. Impaired mortgages and loans, net of allowances for losses, amounted to CAD 146 million at year-end 2012; substantially lower than the prior year. Approximately 88% of the impaired mortgage loans are in the U.S. A.M. Best will continue to monitor the results of the U.S. mortgage loan portfolio carefully.

The company also originates and manages mortgage-backed investments for institutional clients. The fee-based business allows SLF to leverage its commercial mortgage underwriting expertise and enhance its asset management strength. SLF’s real estate portfolio represents nearly six percent of invested assets as the group actively manages its real estate portfolio focusing on acquisitions and dispositions, leasing and rehabilitation, and the management of foreclosed properties. SLF also benefits from maintaining a portfolio with benign exposure to the U.S. subprime investment issues. Canadian properties account for three-quarters of the portfolio.

(7)

SLF’s equity portfolio represents about five percent of invested assets and remains well diversified by industry classification and issuer. To attain desired spreads and maintain appropriate matching, the company adheres to stringent asset/liability management guidelines for interest-sensitive products. A somewhat less conservative strategy is maintained for non-interest-sensitive products.

The company engages in securities lending for purposes of fee generation. At year-end 2012, securities with an estimated carrying and fair value of CAD 730 million were loaned for which collateral held was CAD 771 million.

SLF has approximately CAD 1 billion of liquidity available for its capital management needs. SLF also has $1 billion CAD of unutilized credit facilities and also receives net income from its asset management companies. SLA maintains an intercompany credit facility (loan agreement) with SLF for CAD 500 million. In addition, Canadian regulatory rules offer flexibility where capital flows are generally unrestricted between SLA and SLF. Dividends can also be paid from SLA and SLF, as long as the operating company continues to maintain adequate levels of capital and liquidity per regulatory guidelines.

SLF has a hedging program, involving the use of derivative instruments, to mitigate a portion of the equity market-related volatility in the cost of providing these guarantees. For segregated fund products (including variable annuities), we have implemented hedging programs involving the use of derivative instruments to mitigate a large portion of the equity market risk associated with the guarantees. The unhedged portion of risk for these products reflects equity market risks associated with items such as provisions for adverse deviation and a portion of fee income that is not related to the guarantees provided.

HISTORY

Date Incorporated: 03/18/1865 Date Commenced: 05/01/1871

Domicile: Canada

Originally incorporated as The Sun Insurance Company of Montreal in 1865, the name was changed in 1871 to Sun Mutual Life Insurance Company of Montreal, and in 1882 the present title Sun Life Assurance Company of Canada was adopted. In 1962, the company was organized as a mutual life insurance company. On March 22, 2000, the company completed its demutualization. Sun Life Financial Inc. (SLF) is the publicly traded holding company for its principal Canadian life insurance subsidiary, Sun Life Assurance Company of Canada (Sun Life) and is traded on the major stock exchanges in Toronto, New York and the Philippines.

SLF has made several business transactions to enhance its overall evolving business model.

SLF acquired Clarica Life Insurance Company (Clarica Life) and its wholly owned subsidiary, Clarica Life Insurance Company-U.S. in 2002, as an all-stock transaction valued at approximately $6.9 billion CAD. Clarica Life Insurance Company-U.S. was subsequently sold in early 2003 and Clarica Life Insurance Company was merged into Sun Life at the end of 2002. At the time of the transaction, based on assets under management, Clarica Life was Canada’s fourth largest life insurer with favorable market positions in a number of major Canadian business segments. The consolidation created one of Canada’s largest life insurance companies, with very strong market positions in all major protection and wealth accumulation business segments in Canada.

In 2002, SLF acquired an economic interest in CI in exchange for its subsidiary, Spectrum Investment Management Limited (Spectrum), and Clarica Diversico Ltd. (Diversico), the mutual fund subsidiary of Clarica Life. In 2007, Sun Life introduced an integrated brand strategy to reduce brand duplication and complexity in the Canadian market. This strategy included retiring the Clarica brand and aligning its career sales force with the Sun Life brand.

On May 31, 2007, the Company completed its acquisition of Genworth Financial Inc.’s U.S. Employee Benefits Group (Genworth EBG Business) for $725 million Sun Life Financial’s U.S. group business combined with the Genworth EBG Business and became Sun Life Financial Employee Benefits Group offering customers group life, disability, dental and stop loss insurance, and voluntary worksite products. This acquisition added scale and scope to Sun Life Financial’s U.S. Employee Benefits Group business and solidified its top ten leadership position in the important U.S. employee benefits industry. In addition, the increased access to markets, broadened product and service offerings and strengthened distribution platform position Sun Life Financial for long-term growth.

On June 22, 2007, the Company purchased approximately two million of additional trust units of CI Financial Income Fund for $66 million in order to maintain its existing combined interest in CI Financial Income Fund and Canadian International LP (collectively, CI Financial). SLF’s interest in CI Financial had decreased slightly as a result of CI Financial’s purchase of Rockwater Capital Corporation in the second quarter of 2007.

On November 7, 2007, the Company sold the U.S. subsidiaries that comprised of the Independent Financial Marketing Group business to LPL Holdings, Inc. The sale had no material effect on the 2007 financial results.

On February 29, 2008, the Company sold Sun Life Retirement Services (U.S.), Inc., a 401(k) plan administration business in the United States, to The Hartford Financial Services LLC (Hartford). The sale had no material effect on the 2008 financial results. The sale price was $47 million. Hartford acquired over 400 employees, $17 billion in AUM across roughly 6,000 plans and 465,000 plan participants

On December 12, 2008, SLF sold its 37% interest in CI Financial Income Fund to Bank of Nova Scotia for $2.2 billion CAD. The proceeds included $1.55 billion CAD in cash and the balance in common and preferred shares of Bank of Nova Scotia.

On July 15, 2009, Sun Life Financial and CIMB Group received regulatory approval to form a joint venture to distribute Sun Life Financial’s life, accident and health insurance products through the 600-plus retail branches of PT Bank CIMB Niaga in Indonesia.

On July 29, 2009, the company announced the restructuring of its insurance JV in China. During the third quarter of 2010, SLF repositioned the company in China when it completed its restructuring initiatives, reducing its ownership from 50% to about a 24.9% interest. SLF will continue to provide its international governance, risk management and actuarial expertise and standards to Sun Life Everbright. The repositioning of Sun Life Everbright as a domestic insurer in the market will provide additional avenues of growth in China’s financial services market and enable the company to fully leverage China Everbright Bank’s broad distribution capabilities.

On October 1, 2009, the Company completed the acquisition of the United Kingdom operations of Lincoln National Corporation for $387 million. The purchase price was subject to adjustment related to market and business performance prior to October 1, 2009. There were no material adjustments to the purchase price allocation of 2010.The acquisition increased Sun Life U.K.’s assets under management over 60% to $20 billion and doubled the number of policies in force to 1.1 million.

On December 31, 2010, the Company completed the sale of its reinsurance business to Berkshire Hathaway Life Company of Nebraska.

On July 7, 2011, Sun Life Assurance Company of Canada announced that it completed the acquisition of Buffett & Company Worksite Wellness, Inc.

On October 25, 2011, Sun Life Financial Inc. completed the acquisition of 49% of Grepalife Financial Inc., a Philippine life insurance company. The new joint venture includes an exclusive bancassurance relationship with the Yuchengco-owned Rizal Commercial Banking Corporation, which serves two million customers in more than 350 branches nationwide.

On November 8, 2011, McLean Budden Limited became the wholly owned subsidiary of MFS Investment Management and added approximately $30 billion to MFS’s assets under management. The combined assets under management of MFS and McLean Budden are C$261 billion (US$253 billion).

In May 2012, the Company entered into an agreement with PVI Holdings to form PVI Sun Life Insurance Company Limited in Vietnam, a joint venture life insurance company, and received its license to operate from the Ministry of Finance of Vietnam in January 2013

On December 17, 2012, the Company entered into a definitive stock purchase agreement to sell its U.S. annuities business and certain U.S. life insurance businesses (the “U.S. Annuity Business”), including all of the issued and outstanding shares of Sun Life Assurance Company of Canada (U.S.). The U.S. Annuity Business includes domestic U.S. variable annuity, fixed annuity and fixed indexed annuity products, corporate and bank-owned life insurance products and variable life insurance products. The transaction was completed in August 2013.

In January 2013, SLF entered into a strategic partnership with Khazanah Nasional Berhad to acquire 98% of each of CIMB Aviva Assurance Berhad and CIMB Aviva Takaful Berhad (together, “CIMB Aviva”) in Malaysia. The transaction was completed in April 2013. As a result, Sun Life Assurance acquired a 49% interest in CIMB Aviva.

(8)

MANAGEMENT

Officers: Chairman of the Board, James H. Sutcliffe; President and Chief

Executive Officer, Dean A. Connor; Presidents, Kevin P. Dougherty (SLF Canada), Kevin D. Strain (SLF Asia), Westley V. Thompson (SLF U.S.); Executive Vice President and Chief Financial Officer, Colm J. Freyne; Executive Vice President and Chief Investment Officer, Stephen C. Peacher; Executive Vice President and Chief Information Officer, Mark S. Saunders; Executive Vice President and Chief Risk Officer, Claude A. Accum; Executive Vice President and Chief Marketing Officer, Mary de Paoli (Public & Corporate Affairs ); Executive Vice President and General Counsel, Thomas A. Bogart (Corporate Development); Executive Vice President, Carolyn D. Blair (Human Resources ).

Directors: William D. Anderson, Richard H. Booth, John H. Clappison, Dean

A. Connor, David A. Ganong, Martin J. G. Glynn, Krystyna T. Hoeg, Idalene F. Kesner, Réal Raymond, Hugh D. Segal, James H. Sutcliffe (Chairman), Barbara G. Symiest.

REGULATORY

The 2012 annual independent audit of the company was conducted by Deloitte, LLP. The annual statement of actuarial opinion was provided by Lesley B. Thomson, Vice President and Appointed Actuary.

Reserve basis: (Current ordinary business): Canadian Asset Liability

Methodology (CALM).

REINSURANCE

The following text is derived from A.M. Best’s consolidated Credit Report on Sun Life Assurance Company of Canada (AMB# 067413).

The maximum net retention is CAD 25,000,000 for single life or joint first-to-die plans and CAD 30,000,000 for joint last-to-die plans in Canada. The maximum net retention is $25,000,000 for lives issued on a single life or joint-first-to-die basis and $30,000,000 for lives issued under joint last-to-die policies in the United States and Bermuda. Lower retention limits apply in other countries.

FINANCIAL INFORMATION

BALANCE SHEET ($000) - December 31, 2012

Assets Liabilities

Bonds 39,810,445 Net actuarial liabilities 75,699,721 Preferred shares 1,369,707 Accounts payable 3,678,853 Common shares 8,576,790 Other policy liabilities 4,671,603 Mortgage loans 10,377,958 Other liabilities 58,823,596 Contract loans 2,321,993 Deferred income tax 15,932 Cash 1,147,605 Total liabilities 142,889,705 Short-term investments 2,168,398 Policyholders equity 128,078 Other invested assets 7,934,061 Shareholders equity 11,603,207 Accounts receivable 7,787,003

Accrued invest income 659,510 Other assets 72,467,520

Assets 154,620,990 Total 154,620,990

SUMMARY OF OPERATIONS ($000)

Premiums: Benefits paid 4,673,378

Individual life 2,598,920 Change in reserves 2,433,755 Individual annuities 526,995 Plcyhldr divs & refunds 569,992 Group life 579,377 Trans from/to oth funds -79,800 Group annuities 450,946 Commissions 332,860 Acc & sickness group 1,307,777 Interest expenses 202,089 Acc & sickness individual 211,467 Gen exp & taxes 1,233,980 Total premiums 5,675,482 Other expenses 94,747 Net investment income 4,375,854

Misc income 874,641

Total 10,925,977 Total 9,461,001

Gain from operations before IT & extraordinary items... 1,464,976 Provision for inc taxes ... 113,118 Net operating inc before extraordinary items... 1,351,858 Net income (loss) ... 1,345,142

A Rating Report from the A.M. Best Company represents an independent opinion from the leading provider of insurer ratings of a company's financial strength and ability to meet its obligations to policyholders.

The A.M. Best Company is the oldest, most experienced rating agency in the world and has been reporting on the financial condition of insurance companies since 1899. The Best's Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance obligations. The rating is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer's claims-payment policies or procedures; the ability of an insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. A Best's Financial Strength Rating is not a recommendation to purchase, hold or terminate any insurance policy, contract or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser.

The company information appearing in this pamphlet is an extract from the complete company report prepared by the A.M. Best Company.

A Best's Financial Strength Rating is assigned after a comprehensive quantitative and qualitative evaluation of a company's balance sheet strength,

Best's Financial Strength Ratings are assigned according to the following scale:

Secure Best's Financial Strength Ratings

A++ and A+ . . . Superior A and A- . . . Excellent B++ and B+. . . Good

Vulnerable Best's Financial Strength Ratings

B and B-. . . Fair C++ and C+ . . . Marginal C and C- . . . Weak D . . . Poor E. . . .Under Regulatory Supervision F. . . .In Liquidation S. . . .Rating Suspended

For the latest

Best's Financial Strength Ratings

and

AMB Credit

Reports

visit the A.M. Best web site at

www.ambest.com

.

You may also obtain

AMB Credit Reports

by calling our Customer Service department at

Figure

Updating...

References

Related subjects :