Sun Life Financial Inc.
) in association with Khazanah Nasional Berhad (Khazanah)
acquired a Malayasian life insurance company - CIMB Aviva
Assurance Berhad and a Malayasian takaful company - CIMB Aviva
Takaful Berhad (taken together as 'the Company'). To expand its
global footprint, Sun Life previously announced the deal in Jan
2013 though pending regulatory approval in Malaysia and
As per the deal, Sun Life and Khazanah each acquired 49% stake
in the Company from the parent companies, Aviva International
Holdings Limited and CIMB group Holdings Limited (CIMB Group)
respectively. The remaining 2% is retained by CIMB Group. The new
owners will rebrand the company once it is rechristened after the
necessary regulatory approvals.
Sun Life Financial as well as Khazanah each paid RM900 million
(C$301 million) for the deal bringing the total purchase
consideration to 1.8 billion Malaysian Ringgit (C$602 million).
We view the financial position of Sun Life to be strong enough to
support this transaction and come up with more such deals in
future. As of Dec 31, 2012 the cash and cash equivalents of Sun
Life stood at $7.6 billion.
With the agreement, Sun Life Financial will obtain instant
access to millions of customers of CIMB Bank. Presently the bank
has a network of 312 branches and serves approximately 8 million
customers. The agreement will give an exclusive right of
distributing insurance as well as access to takaful products
across Malaysia to Sun Life. Takaful is a Shariah-compliant
alternative to an insurance scheme.
The partnership with Khazanah and the subsequent acquisition
of the Company will expand the product portfolio of Sun Life. SLF
will now be able provide an extensive choice to its Malaysian
clients who aim for long-term financial security. In turn this is
expected to strengthen the client base and improve revenues.
SLF Asia generated 7.7% of consolidated operating earnings in
2012. The acquisition is expected to enhance the contribution of
the segment in Sun Life's operating earnings going forward.
Management plans to drive 12.5% of consolidated operating
earnings from Sun Life Asia by 2015.
Sun Life currently carries a Zacks Rank #3 (Hold). Among
others from the industry
Lincoln National Corporation
Manulife Financial Corporation
) carry a Zacks Rank #2 (Buy) and appear impressive.
LINCOLN NATL-IN (LNC): Free Stock Analysis
MANULIFE FINL (MFC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
SUN LIFE FINL (SLF): Free Stock Analysis
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