|[December 18, 2012]
A.M. Best Downgrades Ratings of Sun Life Assurance Company of Canada (US); Places Ratings Under Review
OLDWICK, N.J. --(Business Wire)--
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
Sun Life Financial Global Funding III, LP-
-- to "a-"
from "a" on $900 million senior secured global medium-term notes, due
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
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