A.M. Best Affirms Ratings of Sun Life Financial Inc. and Its Subsidiaries
July 09 2015 - 5:35PM
Business Wire
A.M. Best has affirmed the financial strength rating
(FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-”
of Sun Life Assurance Company of Canada (Sun Life) (Ontario,
Canada) and Sun Life and Health Insurance Company (U.S.)
(SLHIC) (Windsor, CT) – the core insurance subsidiaries of Sun
Life Financial Inc. (SLF) (Ontario, Canada) [NYSE:SLF].
Concurrently, A.M. Best has affirmed the ICR of “a-” and existing
debt ratings of SLF.
Additionally, A.M. Best has affirmed the FSR of A- (Excellent)
and the ICR of “a-” of Independence Life and Annuity Company
(Wilmington, DE), as well as the FSR of B++ (Good) and the ICR of
“bbb+” of Professional Insurance Company (Dallas, TX). The
outlook for all ratings is stable. (See link below for a detailed
listing of the companies and ratings.)
The rating affirmations reflect SLF’s strong business profile,
demonstrated by Sun Life’s leading positions in its core Canadian
markets – group life and health benefits, group pension and
individual insurance –and complemented by its renewed focus on the
U.S. group insurance and voluntary benefits space. SLF’s
diversified revenue stream is further enhanced by its global asset
management business, led by MFS Investment Management, and
bolstered by recent acquisitions in North America that have
increased the asset base and broadened its service capabilities.
Through local subsidiaries and partnerships, Sun Life continues to
expand its footprint in Asia, which is a key contributor to the
organization’s results. Additionally, SLF maintains sound
risk-adjusted capitalization, strong financial flexibility and a
sophisticated enterprise risk management process, which A.M. Best
views positively. In recent years, these disciplines have yielded
action plans to reduce the volatility of SLF’s results through
portfolio de-risking and focusing on less capital-intensive
businesses.
SLF’s sales and earnings trends are favorable and continue to
foster the group’s excellent financial flexibility. With a
debt-to-capital ratio (including preferred shares) of roughly 25%
and interest coverage of seven to eight times, SLF is within A.M.
Best’s guidelines for its current ratings.
While the focus of the group’s repositioned U.S. operations is
on markets and businesses that lack sensitivity to interest rates
and equity market fluctuations, significant competition remains
from established players in these markets, as well as in Canada and
Asia. As the organization continues to realign its core business
strategies, its results will remain subject to new business strain
and lower investment returns. Additionally, the company retains
exposure to real estate-linked assets through its investments in
commercial mortgage loans, direct real estate and residential and
commercial mortgage-backed securities, and may be subject to
significant losses should North American real estate market
fundamentals deteriorate. Moreover, reducing volatility through the
2013 sale of the U.S. annuity business and focusing on less
capital-intensive businesses will make SLF more dependent on cash
flows from its Canadian, global asset management businesses and
growing Asian business segments.
For a complete listing of FSRs, ICRs and debt ratings for SLF
and its life/health subsidiaries, please visit Sun Life Financial
Inc.
This press release relates to rating(s) that have been
published on A.M. Best's website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please visit A.M.
Best’s Ratings & Criteria Center.
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 © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20150709006294/en/
A.M. Best CompanyRichard McMillan, 908-439-2200, ext.
5615Managing Senior Financial Analystrichard.mcmillan@ambest.comorChristopher
Sharkey, 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorAndrew
Edelsberg, 908-439-2200, ext. 5182Vice
Presidentandrew.edelsberg@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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