Impact of IFRS 17 changes

IFRS 17 takes an incomplete view in assessing which contracts are onerous Onerous contracts ignore important sources of profits associated with the insurance contract, including: Risk Adjustment (RA) The release of the Risk Adjustment - compensation for taking risk Reinsurance profits Additional profits earned through reinsurance Asset returns Single contract Asset returns expected to be earned in excess of the discount rate Focuses on the value of a single contract, instead of the total value of a client An onerous contract does not equate to unprofitable business SUN LIFE I FR S 1 7 • MAY 2022 31

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