Sun Life Financial Inc., Canada’s third-largest insurer, signed a C$150 million ($147 million) deal with the Canadian Wheat Board to take on the risk of funding its pension plan.
Sun Life will assume risk of inflation-linked pensions of the board’s members, the Toronto-based insurer said today in a statement. It’s the largest single-day purchase of inflation-linked annuities in Canada, Sun Life said.
“It’s a game changer in Canada,” Brent Simmons, Sun Life’s senior managing director of defined benefit solutions, said in a phone interview from Toronto. “For the companies that have made the decision to transfer that risk to an insurer, it’s a proactive step that let’s the company focus on its core business.”
Employers are seeking ways to manage obligations linked to workforces. Verizon Communications Inc. agreed last year to transfer about $7.5 billion in pension obligations to Prudential Financial Inc.
Sun Life said it has C$94 billion of fixed-income assets under management. The Canadian Wheat Board, based in Winnipeg, Manitoba, is a marketer of wheat and barley and said it has sold grain to more than 70 countries.