Markets
EIG

A.M. Best Rates Sun Life Financial's Subordinated Debentures

Sun Life Financial Inc. 's SLF new $500 million 2.60% subordinated unsecured fixed/floating Debentures in Canada were rated "bbb+" by A.M. Best. The outlook for the rating is stable. However, the market did not respond positively to the news as the company's share price declined 2.1% in the last trading session to close at $31.37.

Sun Life Financial will utilize the net from the issuance to partially fund its acquisition of Assurant, Inc.'s AIZ employee benefits business for $95 million. The remaining proceeds, if any, will be used for general corporate purposes.

Although the recent sale of Debentures is likely to increase the company's financial leverage, the same will remain within A.M. Best's rating guidelines. Also, Sun Life Financial's sturdy financial position and solid operational performance help it to generate enough funds to service debt uninterruptedly.

Sun Life Financial has displayed its prudence by procuring funds from the market by issuing Debentures while the interest rate is still low. By capitalizing on the low interest rate environment, the company is reducing its interest burden and, hence, facilitating margin expansion.

In Jul 2015, A.M. Best had reiterated Sun Life Financial's issuer credit rating (ICR) of "a-" and existing debt ratings. Concurrently, the credit rating agency reiterated the financial strength rating (FSR) of A+ (Superior) and ICR of "aa-" of the company's core insurance subsidiaries - Sun Life Assurance Company of Canada and Sun Life and Health Insurance Company (U.S.). The ratings reflect Sun Life Financial's solid business profile. The insurance company enjoys the leading position in group life and health benefits as well as group pension and individual insurance in the Canadian markets.

Strong ratings or rating affirmations from credit rating agencies play an important part in retaining investor confidence in the stock as well as in maintaining credit worthiness in the market. We believe these rating actions will help Sun Life Financial help it in writing more businesses going forward.

Zacks Rank & Key Picks from the Sector

Sun Life Financial presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the insurance space are Employers Holdings, Inc. EIG and Amerisafe, Inc. AMSF . Both stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ASSURANT INC (AIZ): Free Stock Analysis Report

AMERISAFE INC (AMSF): Free Stock Analysis Report

SUN LIFE FINL (SLF): Free Stock Analysis Report

EMPLOYERS HLDGS (EIG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

EIG AMSF AIZ SLF

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More