Policyholder Dividend and Bonus Information
Bonus Rates on Individual With-Profit policies issued by the Hong Kong branch of Guardian Assurance Public Limited Company and transferred to CMG Asia Limited (now named Sun Life Hong Kong Limited)
With-Profit policies that were transferred by Guardian Assurance Public Limited Company to CMG Asia Limited are held in a separate sub-fund operated in accordance with the Scheme of Transfer dated July 21, 1999, and applicable law. A copy of the policyholder circular dated April 27, 1999, including a summary of the Scheme that was sent to affected policyholders prior to the transfer, is available on request.
In general, the sub-fund is closed to new business. No money or assets may be taken out of the sub-fund other than in connection with the management of the sub-fund and limited distributions to shareholders. The amount available for distribution to shareholders is limited to, at most, 10% of the amount determined to be available for distribution from time to time.
Life insurance involves the transfer of risk from an individual to a life insurer. In With-Profit policies a portion of the risk is shared among the policyholders and the insurer. As part of this risk-sharing relationship, With-Profit policyholders may also share, through bonuses declared on their policies, in certain rewards based on the experience underlying their policies. Bonuses are not guaranteed; they can vary from year to year.
Generally speaking, bonus rates reflect the experience, over time, of the classes of policies within the sub-fund, as adjusted to maintain consistency in distribution from one period to another. Bonus rates will typically vary based on the performance of a number of factors, with the investment return, including the impact of asset defaults, normally being the main determinant of dividend performance. Other factors may include, but are not limited to, mortality experience, taxes, administrative costs, and policyholder termination experience.
The bonus allocation process seeks to achieve reasonable equity among classes of policies and among generations of policies, although there may be practical limits in some circumstances. Bonuses are determined with the goal of avoiding a material surplus or deficiency in the sub-fund.
Annually, the directors of Sun Life Hong Kong Limited determine the amount available for distribution to With-Profit policyholders and shareholders from the sub-fund. This determination is based on the advice of the company's appointed actuary, who applies accepted actuarial principles and practices.