The liabilities associated with traditional life insurance (individual life, group life and disability insurance products) are computed using the net level premium method based on assumptions about future investment yields, mortality, morbidity and persistency. The assumptions used are based upon SLNY's experience and industry standards.
On December 31, 2002 at 5:00 p.m., Sun NY Predecessor and KBL completed a merger whereby SLNY became the surviving company and issued 4,001 additional shares of common stock to Keyport in exchange for the assets and liabilities of KBL. During 2002, KBL had total revenues of $63.3 million, total pretax expenditures of $67.2 million, a pretax loss of $3.9 million, and total assets of $1.9 billion.
At December 31, 2002, $7.78 million, or 48.5%, of the gross unrealized losses were on securities rated investment grade. In general, unrealized losses on investment grade securities reflect changes in interest rates or changes in credit spreads since the securities were acquired these losses are generally considered to be temporary in nature. SLNY's policy is to subject any security with a gross unrealized loss of greater than 20% to a comprehensive asset impairment process. Securities at any level of the SVO rating scale would be subject to such review should a drop in market valuation or any other event signal a potential problem.
Goodwill represents the difference between the purchase price paid and the fair value of the net assets acquired in connection with the acquisition of KBL (through the acquisition of Keyport) on October 31, 2001 by Sun Life Financial Services of Canada Inc. ("SLF"), a Canadian holding company and parent of SLOC. In accordance with SFAS No. 142, effective January 1, 2002, Goodwill is no longer amortized and is instead tested for impairment on an annual basis. In accordance with SFAS No. 142, SLNY has completed the required impairment tests of goodwill and indefinite-lived intangible assets and concluded that these assets are not impaired. Goodwill is tested for impairment on an annual basis using the discounted cash flow method.
Contractholder deposit funds consist of policy values that accrue to the holders of investment-related products such as deferred annuities and guaranteed investment contracts. The liabilities consist of net deposits and interest credited less administrative charges. The liability is before the deduction of any applicable surrender charges.
During December 2001, KBL received $66.0 million of additional capital contributions from Keyport.
The net deferred income tax liability represents the tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. The components of SLNY's deferred tax assets and liabilities as of December 31 was as follows (in 000's):
SLNY is not aware of any contingent liabilities arising from litigation, income taxes and other matters that could have a material effect upon the financial condition of SLNY.
SLNY leases various facilities and equipment under non-cancelable operating leases with terms of up to 10 years. As of December 31, 2002, minimum future lease payments under such leases are as follows (in 000's):