DBRS Comments on Sun Life’s Completion of Sale of its U.S. Annuity Business

DBRS has reviewed the announcement made by Sun Life Financial Inc. (Sun Life or the Company; senior rating A (high), Stable) that it has completed the sale of its domestic U.S. annuity business and certain life insurance businesses. The sale was announced on December 17, 2012, and received regulatory approvals on July 31, 2013. There are no rating implications as DBRS’s ratings of Sun Life already incorporate the completion of this sale.

As previously acknowledged by DBRS, the sale removes a material source of earnings uncertainty and market risk exposure for Sun Life, which is a net positive development for the credit. This sale completes the Company’s shift in its U.S. growth strategy to focus on products requiring lower capital and generating more predictable earnings, including the asset management and employee benefits businesses. It remains too early to determine whether the investments in the employee benefits and voluntary benefits businesses will lead to long-term growth of predictable earnings.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Canadian Life Insurance Industry (January 3, 2013), which can be found on our website, www.dbrs.com, under Methodologies.