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A.M. Best Downgrades Ratings of Sun Life Assurance Company of Canada (US); Places Ratings Under Review

  A.M. Best Downgrades Ratings of Sun Life Assurance Company of Canada (US);
  Places Ratings Under Review

Business Wire

OLDWICK, N.J. -- December 18, 2012

A.M. Best Co. has downgraded the financial strength rating (FSR) to A-
(Excellent) from A (Excellent) and issuer credit ratings (ICR) to “a-” from
“a” of Sun Life Assurance Company of Canada (U.S.) (SLUS)  (Wilmington, DE) 
and Sun Life Insurance and Annuity Company of New York (SLNY) (New York, NY).
Concurrently, the ratings have been placed under review with negative
implications.

The ratings of Sun Life Financial Inc. (SLF) and Sun Life Assurance Company of
Canada remain unchanged.

The rating actions follow the December 17, 2012 announcement by SLF that it
has entered into a definitive agreement to sell its U.S. annuity and certain
life insurance business lines to a Guggenheim Partners-led investor group for
approximately $1.35 billion. This business will be transferred through the
legal entities listed above (SLUS and SLNY). The transaction is expected to
close in the second quarter of 2013, subject to regulatory and other customary
approvals. The regulatory solvency ratio of Sun Life Assurance Company of
Canada, SLF’s flagship insurance company, is not expected to be impacted by
this transaction. However, at close, the transaction will result in a
reduction in SLF’s book value of approximately $950 million. A.M. Best will
continue to monitor the impact on SLF.

SLF has indicated its commitment to a “Four Pillar” growth strategy, which in
the United States is focused primarily on the employee benefits market as well
as growing the company's asset management businesses globally through MFS and
its other asset management operations. A.M. Best’s rating actions reflect its
opinion that given the public announcement of SLF’s intention to divest of
these legal entities, they are ancillary operations for SLF and not part of
its ongoing business plans. As a result, the entities will no longer receive
any ratings support. The revised ratings reflect SLUS and SLNY’s adequate
stand-alone capitalization as well as an elevated risk profile that is
reflected in high levels of volatility in its reported earnings.

The ratings of SLUS and SLNY will remain under review pending discussions with
the new ownership group, a review of its business plan and capitalization
position post-close.

In addition, A.M. Best has downgraded the following debt ratings, as this
program rating now reflects A.M. Best’s belief that the program is on par with
SLF’s senior debt holders, which are rated “a-” with a stable outlook:

Sun Life Financial Global Funding III, LP—
-- to “a-” from “a” on $900 million senior secured global medium-term notes,
due 2013

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more information,
visit www.ambest.com.

       Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Richard McMillan, 908-439-2200, ext. 5615
Managing Sr. Financial Analyst
richard.mcmillan@ambest.com
or
Raj Shah, 908-439-2200, ext. 5409
Assistant Vice President
raj.shah@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com
 
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