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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
---------------------
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 24, 1997
Sun Life Assurance Company of Canada (US)
(EXACT OF NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
2-99959
33-29851
33-31711 (STATE OF OTHER JURISDICTION OF INCORPORATION)
33-41858
33-43008
33-58853
333-11699
333-13087 04-2461439
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
One Sun Life Executive Park (ZIP CODE)
Wellesley Hills, MA 02181
(781) 237-6030
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item #2 :
Effective December 24, 1997, the Registrant and its ultimate Parent, Sun Life
Assurance Company of Canada ("Sun Life of Canada"), reorganized the
corporate structure of a part of their United States business operations, by
completing with the approval of the Delaware Insurance Department, the
establishment of a two-tier holding company structure. In connection with
this reorganization, Massachusetts Financial Services Company ("MFS"), the
registered investment adviser that serves as adviser to the MFS/Sun Life
Series Trust and the Compass Variable Accounts, is no longer a subsidiary of
the Registrant, but remains under the control of Sun Life of Canada through
two other wholly-owned holding company subsidiaries. On December 24, 1997,
MFS was transferred via a dividend to the Registrant's parent, Sun Life of
Canada (U.S.) Holdings, Inc. There is no change in directors, officers, or
day to day management of any of the companies within this holding company
system and, in the case of MFS, its executive officers continue to report to
the Chairman of Sun Life of Canada.
MFS, which was acquired by the Registrant in 1982, has approximately
$67,243,000,000 under management as of September 30, 1997. The Registrant's
Statutory Statements of Operations for the year ended December 31, 1996,
reflected dividends from MFS of $49,350,000 in net investment income and an
income tax benefit of $29,973,000. For the nine month period ending September
30, 1997, the Registrant included dividends from MFS of $33,110,000 in net
investment income and an income tax benefit of $25,318,000. As of September
30, 1997, the Registrant's share of the stockholder's equity of MFS,
reflected in its Statutory Statement of Admitted Assets, Liabilities and
Capital Stock and Surplus, was $54,490,000. This Statement also reflected an
intercompany income tax receivable from MFS of $90,986,000 as of September
30, 1997. This reorganization is not expected to have any significant effect on
the ongoing operations of MFS or the Registrant.
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Item #7:
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Financial Information presented herein gives effect
to the Registrant's dividend of its subsidiary Massachusetts Financial
Services Company ("MFS") as part of the reorganization of a part of the
United States business of its ultimate parent, Sun Life Assurance Company of
Canada. The Unaudited Pro Forma Condensed Statutory Statements of
Operations reflect adjustments as if the reorganization had occurred on
January 1, 1996. The Unaudited Pro Forma Condensed Statutory Statement of
Admitted Assets, Liabilities and Capital Stock and Surplus reflects
adjustments as if the transaction had occurred on September 30, 1997. The
Unaudited Pro Forma Condensed Statutory Statement of Admitted Assets,
Liabilities and Capital Stock and Surplus includes the historical position of
the Registrant as of September 30, 1997.
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SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(WHOLLY-OWNED SUBSIDIARY OF
SUN LIFE OF CANADA (U.S.) HOLDINGS, INC.)
UNAUDITED PRO FORMA CONDENSED STATUTORY STATEMENT OF ADMITTED
ASSETS, LIABILITIES AND CAPITAL STOCK AND SURPLUS
SEPTEMBER 30, 1997
(in 000's)
<TABLE>
<CAPTION>
ADMITTED ASSETS AS FILED ADJUSTMENTS PRO FORMA
----------- ----------- ------------
<S> <C> <C> <C>
Bonds $ 2,050,234 $ $ 2,050,234
Common stocks 151,148 (54,490) 96,658
Mortgage loans on real estate 789,117 789,117
Properties acquired in satisfaction of debt 23,895 23,895
Investment real estate 75,992 75,992
Policy loans 39,505 39,505
Cash & short-term investments 649,015 649,015
Other invested assets 54,377 54,377
Life insurance premiums and annuity considerations
due & uncollected 9,166 9,166
Investment income due and accrued 55,669 55,669
Receivable from parent, subsidiaries and affiliates 34,906 (90,986) (56,080)
Other assets 987,419 987,419
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General account assets 4,920,443 (145,476) 4,774,967
Separate account assets
Unitized 8,866,932 8,866,932
Non-unitized 2,413,695 2,413,695
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TOTAL ADMITTED ASSETS $ 16,201,070 $ (145,476) $ 16,055,594
------------- ----------- ------------
------------- ----------- ------------
LIABILITIES
Aggregate reserve for life policies and contracts $ 2,192,547 $ $ 2,192,547
Supplementary contracts 2,460 2,460
Policy and contract claims 3,379 3,379
Provision for policyholders' dividends and coupons payable 31,250 31,250
Liability for premium and other deposit funds 1,548,669 1,548,669
Surrender values on cancelled policies 110 110
Interest maintenance reserve 30,668 30,668
Commissions to agents due and accrued 3,636 3,636
General expenses due or accrued 11,175 11,175
Transfers from Separate Accounts due or accrued (294,281) (294,281)
Taxes, licenses and fees due or accrued, excluding FIT 308 308
Federal income taxes due or accrued 48,589 48,589
Unearned investment income 21 21
Amounts withheld or retained by company as agent or trustee 100 100
Remittances and items not allocated 689 689
Borrowed money 600,000 600,000
Asset valuation reserve 63,003 63,003
Other liabilities 12,573 12,573
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General account liabilities 4,254,896 4,254,896
Separate account liabilities
Unitized 8,866,803 8,866,803
Non-unitized 2,413,695 2,413,695
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TOTAL LIABILITIES 15,535,394 0 15,535,394
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Common capital stock 5,900 5,900
Surplus notes 315,000 315,000
Gross paid in and contributed surplus 199,355 199,355
Unassigned funds 145,421 (145,476) (55)
Surplus 659,776 (145,476) 514,300
Total common capital stock and surplus 665,676 (145,476) 520,200
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TOTAL LIABILITIES, CAPITAL STOCK AND SURPLUS $ 16,201,070 $ (145,476) $ 16,055,594
------------- ----------- ------------
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</TABLE>
See Notes to Unaudited Pro Forma Condensed Statutory Financial Statements
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(WHOLLY-OWNED SUBSIDIARY OF
SUN LIFE OF CANADA (U.S.) HOLDINGS, INC.)
UNAUDITED PRO FORMA CONDENSED STATUTORY STATEMENT OF OPERATIONS
DECEMBER 31, 1996
(in 000's)
<TABLE>
<CAPTION>
INCOME AS FILED ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Premiums and annuity considerations $ 282,466 $ $ 282,466
Deposit-type funds 1,775,230 1,775,230
Considerations for supplementary contracts
without life contingencies and dividend accumulations 2,340 2,340
Net investment income 303,753 (49,350) 254,403
Amortization of interest maintenance reserve 1,557 1,557
Net gain from operations from Separate Accounts Statement 0 0
Other income 71,903 71,903
---------- -------- ----------
Total 2,437,249 (49,350) 2,387,899
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BENEFITS AND EXPENSES
Death benefits 12,394 12,394
Annuity benefits 146,654 146,654
Surrender benefits and other fund withdrawals 1,507,263 1,507,263
Interest on policy or contract funds 2,205 2,205
Payments on supplementary contracts
without life contingencies and of dividend accumulations 2,120 2,120
Increase aggregate reserves for life and accident and health
policies and contracts 162,678 162,678
Decrease in liability for premium and other deposit funds (392,348) (392,348)
Increase in reserve for supplementary contracts
without life contingencies and for dividend and coupon
accumulations 327 327
---------- -------- ----------
Total 1,441,293 0 1,441,293
Commissions on premiums and annuity considerations
(direct business only) 109,894 109,894
Commissions and expense allowances on reinsurance assumed 18,910 18,910
General insurance expenses 37,206 37,206
Insurance taxes, licenses and fees, excluding federal income taxes 8,431 8,431
Increase (decrease) in loading on and cost of collection in excess
of loading on deferred and uncollected premiums 901 901
Net transfers to Separate Accounts 678,663 678,663
---------- -------- ----------
Total 2,295,298 0 2,295,298
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NET GAIN FROM OPERATIONS BEFORE DIVIDENDS TO POLICYHOLDERS AND FIT 141,951 (49,350) 92,601
Dividends to policyholders 29,189 29,189
---------- -------- ----------
NET GAIN FROM OPERATIONS AFTER DIVIDENDS TO POLICYHOLDERS
AND BEFORE FIT 112,762 (49,350) 63,412
Federal income tax expense (benefit) (excluding tax on
capital gains) (2,702) 29,973 27,271
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NET GAIN FROM OPERATIONS AFTER DIVIDENDS TO POLICYHOLDERS AND FIT
AND BEFORE REALIZED CAPITAL GAINS 115,464 (79,323) 36,141
Net realized capital gains (losses) less capital gains tax and
transferred to the IMR 7,560 7,560
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NET INCOME $ 123,024 $ (79,323) $ 43,701
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---------- -------- ----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Statutory Financial Statements
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(WHOLLY-OWNED SUBSIDIARY OF
SUN LIFE OF CANADA (U.S.) HOLDINGS, INC.)
UNAUDITED PRO FORMA CONDENSED STATUTORY STATEMENT OF OPERATIONS
SEPTEMBER 30, 1997
(in 000's)
<TABLE>
<CAPTION>
INCOME AS FILED ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Premiums and annuity considerations $ 194,085 $ $ 194,085
Deposit-type funds 1,691,235 1,691,235
Considerations for supplementary contracts
without life contingencies and dividend accumulations 940 940
Net investment income 209,363 (33,110) 176,253
Amortization of interest maintenance reserve 813 813
Net gain from operations from Separate Accounts Statement 4 4
Other income 61,338 61,338
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Total 2,157,778 (33,110) 2,124,668
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BENEFITS AND EXPENSES
Death benefits 15,994 15,994
Annuity benefits 109,690 109,690
Surrender benefits and other fund withdrawals 1,388,459 1,388,459
Interest on policy or contract funds 194 194
Payments on supplementary contracts
without life contingencies and of dividend accumulations 766 766
Increase aggregate reserves for life and accident and health
policies and contracts 92,567 92,567
Decrease in liability for premium and other deposit funds (349,640) (349,640)
Increase in reserve for supplementary contracts without life
contingencies and for dividend and coupon accumulations 255 255
---------- -------- ----------
Total 1,258,285 0 1,258,285
Commissions on premiums and annuity considerations
(direct business only) 104,650 104,650
Commissions and expense allowances on reinsurance assumed 12,858 12,858
General insurance expenses 32,028 32,028
Insurance taxes, licenses and fees, excluding federal
income taxes 5,297 5,297
Increase (decrease) in loading on and cost of collection
in excess of loading on deferred and uncollected premiums (286) (286)
Net transfers to Separate Accounts 621,996 621,996
---------- -------- ----------
Total 2,034,828 0 2,034,828
---------- -------- ----------
NET GAIN FROM OPERATIONS BEFORE DIVIDENDS TO POLICYHOLDERS
AND FIT 122,950 (33,110) 89,840
Dividends to policyholders 24,227 24,227
---------- -------- ----------
NET GAIN FROM OPERATIONS AFTER DIVIDENDS TO POLICYHOLDERS
AND BEFORE FIT 98,723 (33,110) 65,613
Federal income tax expense (benefit} (excluding tax on
capital gains) (833) 25,318 24,485
---------- -------- ----------
NET GAIN FROM OPERATIONS AFTER DIVIDENDS TO POLICYHOLDERS
AND FIT AND BEFORE REALIZED CAPITAL GAINS 99,556 (58,428) 41,128
Net realized capital gains (losses) less capital gains tax
and transferred to the IMR 5,183 5,183
---------- -------- ----------
NET INCOME $ 104,739 $ (58,428) $ 46,311
---------- -------- ----------
---------- -------- ----------
</TABLE>
See Notes to Unaudited Pro Forma Condensed Statutory Financial Statements
<PAGE>
Basis of Presentation:
INVESTMENT IN SUBSIDIARIES:
The Unaudited Pro Forma Condensed Statutory Statement of Admitted Assets,
Liabilities and Capital Stock and Surplus presents the adjustment to reflect
the dividend declared by the Registrant of its subsidiary MFS. The adjustment
of $54,490,000 represents the equity value of MFS as of September 30, 1997.
The Unaudited Pro Forma Condensed Statutory Statements of Operations reflect
adjustments for the dividends declared by MFS to the Registrant of
$49,350,000 and $33,110,000 for the year ended December 31, 1996 and nine
months ended September 30, 1997, respectively.
INCOME TAXES:
The Unaudited Pro Forma Condensed Statutory Statement of Admitted Assets,
Liabilities and Capital Stock and Surplus presents the adjustment to reflect
the intercompany income tax receivable of $90,986,000 as of September 30,
1997 included in the dividend transaction of MFS. The Unaudited Pro Forma
Condensed Statutory Statements of Operations reflect related income tax
adjustments of $29,973,000 and $25,318,000 for the year ended December 31,
1996 and nine months ended September 30, 1997, respectively.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sun Life Assurance Company
of Canada (U.S.)
Date January 8, 1998 /s/ Robert P. Vrolyk
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Robert P. Vrolyk
Vice President
and Actuary
