Life insurance unit in U.S. sold by Sun Life Financial

life insurance business sold

life insurance business soldThe sale of this and its American annuity business was made for a reported $1.35 billion.

Sun Life Financial has just announced that it has come to an agreement with Delaware Life Holdings to sell its U.S. annuity unit as well as some of its life insurance businesses for a reported $1.35 billion.

The buyer is a company that is owned by the Guggenheim Partners group of shareholders.

According to president and chief executive officer of the seller, Dean Connor, “This transaction represents a transformational change for Sun Life.” Connor’s company is based in Toronto, Canada. He went on to say that “The proceeds of the transaction will provide funding for our organic growth plans as well as for potential opportunities to make smaller acquisitions that move our strategy forward.”

American annuity and life insurance business has proven to be challenging over the last few years.

There are several factors that have made the life insurance marketplace more of a struggle for insurers, such as the difficult equity markets, low interest rates, and the considerable increase that is required in the amount of capital regulators now require.

According to Sun Life insurance company, the sale of its U.S. annuity business will be closing at some point in the middle of 2013. This will cause the earnings it receives from each share next year to drop by a predicted 22 cent each. The company decided to make the deal in order to be able to boost its cash holdings and give it the opportunity to pay off some of the debt that it has accumulated.

While giving his life insurance news announcement, Connor explained that his company has every intention of continuing its current dividends level on its common shares. It will also be using approximately $350 million of the money that it makes from the sale for the specific purpose of debt repayment on the loans that will mature in June.

This life insurance and annuity business sale will give the company’s management teams the opportunity to concentrate their efforts and capital back into their American group benefits business, which – according to Connor – it sees as one of its “four pillars” of growth.

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