2009 dividend scales for Clarica and Sun Life participating policies unchanged
I am pleased to inform you that the Board of Directors of Sun Life Assurance Company of Canada ("Sun Life") approved the following recommendations today, October 30, 2008:
- The 2009 dividend scale for participating policies originally issued by Clarica will be unchanged. This affects dividends for Clarica, MetLife, Mutual Life, Allstate, and Prudential policies with anniversaries beginning January 1, 2009 through December 31, 2009.
- The 2009 dividend scale for Sun Life Financial participating policies will be unchanged. This affects policies with anniversaries beginning April 1, 2009 through March 31, 2010.
Most participating policies are eligible to receive dividends based on a variable scale set by the company each year.
While we are delighted to maintain the dividend scale this year through these unprecedented economic conditions, sustained low interest rates on bonds, loans, and mortgages and the marked deterioration in the equity markets over the last several weeks continue to put downward pressure on the par portfolio’s performance. Should current conditions persist or worsen, it is possible that a dividend scale reduction may be required next year.
Our customers are well-served by Sun Life’s strong capital position and financial strength through the current market conditions and can rely on Sun Life to be there when they need us the most.
Kevin Strain
Senior Vice-President, Individual Insurance & Investments
Decrease in Special Maturity Dividends on Sun Life participating policies takes effect April 1 (February 12, 2009)
The Board of Directors of Sun Life Assurance Company of Canada approved a decrease in the Special Maturity Dividends (SMD) on surrenders for the Sun Life Financial (SLF) participating policies effective April 1, 2009. The change will be effective for each policy as of the next anniversary date on or after April 1, 2009. The SMD is a terminal dividend payable only on death, maturity or surrender. This change does not impact participating policies originally issued or assumed by Clarica and its predecessor companies.
As announced on October 30, 2008, the annual dividend scale is unchanged for the 2009 dividend year. This adjustment to the SMD is required due to declining interest rates on bonds, loans and mortgages and the unprecedented deterioration in the equity markets over the last several months. For this reason, it is also likely that a reduction in the annual dividend scale will be required in 2010.
SMDs apply only to SLF participating policies issued before 1996, for policyholders that did not elect the Optional Dividend Benefit. The magnitude of the decrease is as follows:
- SMD – Death/Maturity: No change.
- SMD – Surrender: The average SMD surrender value decrease is approximately 30 per cent. Individual changes will vary based on the duration of the policy and its growth in paid-up additions and cash values. The overall impact when a client surrenders one of these policies (i.e. including SMDs and cash surrender values), means a total reduction in the range of five to 11 per cent.
Despite this decrease, we still expect to pay approximately $37.5 million in SMDs in 2009. The new lower SMDs will be shown on the client's anniversary statements with effective dates on or after April 1, 2009. The following note will continue to be displayed on the back of the statement: No loans are allowed against the Special maturity death benefit or cash value since neither are vested or guaranteed and Sun Life Assurance Company of Canada may at any time without notice, withdraw or adjust them.
Our customers are well-served by SLF's strong capital position and financial strength through the current market conditions and can rely on SLF to be there when needed the most.