Sun Life (SLF) to Sell U.S. Annuity Unit in $1.35B Deal
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Sun Life Financial, Inc. (NYSE: SLF) entered a definitive agreement whereby Delaware Life Holdings, a company owned by shareholders of Guggenheim Partners, will purchase Sun Life's domestic U.S. annuity business and certain life insurance businesses for a base purchase price of US$1.35 billion, as adjusted to reflect the performance of the business through closing.
Employees of Sun Life Financial U.S. in Wellesley, Massachusetts; Lethbridge, Alberta; and Waterford, Ireland will continue to support the acquired businesses, which will be renamed Delaware Life Insurance Company. Guggenheim Partners will provide services to the company including investment management.
The transaction is expected to close by the end of Q2 2013 subject to regulatory approvals and customary closing conditions.
The transaction will consist primarily of the sale of 100% of the shares of Sun Life Assurance Company of Canada (U.S.), which includes Sun Life Financial's domestic U.S. 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. It is estimated that the impact of the transaction on Sun Life Financial is approximately ($0.22) per share of earnings in 2013, assuming actual experience in line with actuarial best estimates. As a result of the sale, Sun Life Financial's earnings sensitivities to equity markets would be reduced by 50% and earnings sensitivities to interest rates would be reduced by 35%, relative to the published earnings sensitivities as of September 30, 2012. The transaction is not expected to result in any change to the Minimum Continuing Capital and Surplus Requirements ratio for Sun Life Assurance Company of Canada, which continues to have strong capital levels. At close, the transaction is expected to result in a cash level at Sun Life Financial Inc. of $1.9 billion, net of the planned repayment of $350 million of debt in June 2013. Holders of the Medium Term Notes (MTNs) issued by Sun Life Financial Global Funding III, L.P. will not be impacted by the sale of Sun Life Assurance Company of Canada (U.S.).
Morgan Stanley & Co. LLC served as financial advisor to Sun Life Financial Debevoise & Plimpton LLP served as legal advisor to Sun Life Financial.
Employees of Sun Life Financial U.S. in Wellesley, Massachusetts; Lethbridge, Alberta; and Waterford, Ireland will continue to support the acquired businesses, which will be renamed Delaware Life Insurance Company. Guggenheim Partners will provide services to the company including investment management.
The transaction is expected to close by the end of Q2 2013 subject to regulatory approvals and customary closing conditions.
The transaction will consist primarily of the sale of 100% of the shares of Sun Life Assurance Company of Canada (U.S.), which includes Sun Life Financial's domestic U.S. 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. It is estimated that the impact of the transaction on Sun Life Financial is approximately ($0.22) per share of earnings in 2013, assuming actual experience in line with actuarial best estimates. As a result of the sale, Sun Life Financial's earnings sensitivities to equity markets would be reduced by 50% and earnings sensitivities to interest rates would be reduced by 35%, relative to the published earnings sensitivities as of September 30, 2012. The transaction is not expected to result in any change to the Minimum Continuing Capital and Surplus Requirements ratio for Sun Life Assurance Company of Canada, which continues to have strong capital levels. At close, the transaction is expected to result in a cash level at Sun Life Financial Inc. of $1.9 billion, net of the planned repayment of $350 million of debt in June 2013. Holders of the Medium Term Notes (MTNs) issued by Sun Life Financial Global Funding III, L.P. will not be impacted by the sale of Sun Life Assurance Company of Canada (U.S.).
Morgan Stanley & Co. LLC served as financial advisor to Sun Life Financial Debevoise & Plimpton LLP served as legal advisor to Sun Life Financial.
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