Sun Life Financial Inc. (SLF) has announced that it has successfully concluded the sale of some its U.S. Life Insurance business and U.S. annuities business to Delaware Life Holdings, LLC.
The agreement was announced last December. The transaction has matured as per schedule, since it was planned to close in the second quarter of 2013.
With this transaction, Sun Life has sold all the shares in its subsidiary Sun Life Assurance Company of Canada (U.S.). The unit dealt in domestic U.S. variable annuity, fixed annuity and fixed index annuity products, corporate and bank-owned life insurance products as well as variable life insurance products.
This strategic step was taken by Sun Life to reduce equity market and interest rate exposure, thereby limiting earnings volatility to involuntary forces.
Sun Life decided to offload the variable annuities and Individual Life Insurance in the U.S. to unlock capital tied to this runoff business. The capital can be deployed somewhere else to generate a higher return on equity. The sale will significantly reduce the risks faced by the company.
Sun Life would rather shift its focus toward products that require lower capital and generate more predictable earnings such as mutual funds and group benefits. These include voluntary benefits where the company is targeting to earn a place amongst the top five players.
The company is thus busy transforming its U.S. business to leverage its top position in Group Benefits by investing in the voluntary benefits and employee benefits business. It is also aggressively growing its MFS Investment Management, the U.S.-based asset manager, which has more than US$350 billion of assets under management globally.
Further details of the transaction will be available at Sun Life second quarter earnings release scheduled for Aug 7, 2013. The Zacks Consensus Estimates earnings of 66 cents per share more than 6.5 times higher than the year ago earnings of 10 cents per share.
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