Canada’s Sun Life Financial to sell some US businesses to Delaware Life Holdings for $1.35 bn
18 Dec 2012
Sun Life Financial Inc, Canada's third-biggest insurer, today agreed to sell its US annuity business and some life insurance businesses to Delaware Life Holdings, a company owned by shareholders of institutional asset manager Guggenheim Partners, for $1.35 billion.
The transaction includes the sale of Sun Life Financial's domestic US variable annuity, fixed annuity and fixed index annuity products, corporate and bank-owned life insurance products and variable life insurance products.
Sun Life Financial estimates that the transaction will result in a reduction in book value of $950 million at closing. As a result of the sale, Sun Life Financial's earnings sensitivities to equity markets would be reduced by 50 per cent and earnings sensitivities to interest rates would be reduced by 35 per cent, relative to the published earnings sensitivities as of 30 September, the Toronto-based company said in a statement.
At close, the transaction is expected to result in a cash level at Sun Life Financial of $1.9 billion, net of the planned repayment of $350 million of debt in June 2013
Post closing, expected by the end of Q2 2013, Sun Life Financial US in Wellesley, Massachusetts, Lethbridge, Alberta, and Waterford, Ireland will be renamed Delaware Life Insurance Company and Guggenheim Partners will provide services to the company including investment management.
Dean Connor, president and CEO of Sun Life Financial, said, ''This transaction represents a transformational change for Sun Life. It significantly advances our strategy of reducing Sun Life's risk profile and earnings volatility, focuses our US operations on our areas of greatest strength and opportunity, and crystallizes future earnings and capital releases that will further support our growth and shareholder value creation.
Todd Boehly, speaking on behalf of Delaware Life Holdings, said, ''Together with Sun Life Financial's employees, we look forward to maintaining a high level of customer service, strong capitalization and ratings, and to building on this impressive platform.''
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