Policyholder Dividend and Bonus Information
Sun Life Closed Block
Dividends on Individual Participating Policies issued by Sun Life Assurance Company of Canada and transferred to Sun Life Financial (Hong Kong) Limited in 2000 and subsequently transferred to Sun Life Hong Kong Limited in 2006
Individual participating policies of Sun Life Hong Kong Limited ("the Company") that were transferred by Sun Life Assurance Company of Canada to Sun Life Financial (Hong Kong) Limited on March 31, 2000 and later transferred to Sun Life Hong Kong Limited on October 1, 2006 are, in general, part of a "Closed Block". These policies are subject to provisions contained in the Schemes of Transfer approved by the High Court and this description of the dividends on those policies is consistent with those provisions. A copy of the policyholder circular, including a summary of the Scheme, that was sent to all affected policyholders prior to each transfer, is available on request.
The Closed Block participating policyholders are eligible to receive distributions in respect of their policies, commonly referred to as policyholder dividends, as declared from time to time by the Board of Directors of the Company, in its discretion, in accordance with applicable law and the terms of the Schemes. Generally speaking, dividends on these policies reflect the experience, over time, of the participating business to which they belong, as adjusted to maintain consistency in distribution from one period to another. Dividends 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, inflation, policyholder termination experience, and policy expenses.
Policyholder dividends are also paid with the goal of avoiding a material tontine or deficiency in the Closed Block. All assets in the Closed Block will be used over the lifetime of the Closed Block to pay Policy benefits, expenses and taxes charged to the Closed Block.
Closed Block policies are accounted for separately from other policies.
The dividend allocation process followed by the Company in respect of participating policies recognizes the contributions made by the policies to the Closed Block. Not all policies contribute to the same extent or at the same time, and there are certain practical limits that apply to the recognition of the contributions in some circumstances. This process seeks to achieve reasonable equity between classes of policies and between generations of policies. In order to determine the contribution of policies, policies are grouped into classes with common experience factors such as mortality, investment return by currency, taxes and administrative expenses.