Sun Life Financial Inc.
) recently provided an update on the previously announced
transaction to sell some of its U.S. Life Insurance business and
U.S. annuities business to Delaware Life Holdings, LLC.
The agreement was announced last December. The sellout was
scheduled to close in the second quarter of 2013, subject to
receipt of customary regulatory approvals.
This strategic step was taken by the company to reduce equity
market and interest rate exposure, thereby limiting earnings
volatility to involuntary forces.
As per the latest reports, the deal has received approvals
from a number of regulatory bodies. The Delaware Department of
Insurance and Financial Industry Regulatory Authority have also
given their consent for the sellout.
Currently the matter is being reviewed by the New York
Department of Financial Services. If this regulatory body takes
more than average time to give its nod, the transaction will
automatically get delayed.
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 transforming its U.S. business to leverage its
top position in Group Benefits by investing in the voluntary
Sun Life carries a Zacks Rank #3 (Hold).
StanCorp Financial Group Inc.
Protective Life Corp.
China Life Insurance Co.
) also have an active presence in the U.S life insurance
CHINA LIFE INS (LFC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
SUN LIFE FINL (SLF): Free Stock Analysis
To read this article on Zacks.com click here.