Sun Life to exit two U.S. business segments
TORONTO (Reuters) - Sun Life Financial (SLF.TO: Quote) will stop marketing variable annuity and individual life insurance products in the United States by the end of the year to focus on growing its U.S. group insurance and employee benefits business.
The move, announced by Canada's No. 3 insurer on Monday, follows the completion of a strategic review under newly appointed Chief Executive Dean Connor. He took the reins after longtime CEO Don Stewart stepped down at the end of November.
The decision to stop selling variable annuity and individual life products in the United States will have no impact on existing customers and their policies, the company said.
The Toronto-based insurer said selling the products no longer enhances shareholder value because of shifts in capital markets and regulatory requirements.
The decision to exit these business segments is not expected to have a material impact on 2012 operating net income. Even so, the move will result in a one-time transition cost of between C$75 and C$100 million pre-tax.
Sun Life has roughly C$100 million in goodwill associated with its U.S. variable annuity business. It will review and likely take a writedown on this to account for it discontinuing sales of the product.
The company sees no impact to its risk-based capital ratio or its minimum continuing capital and surplus requirements ratio, Sun Life said.
"This decision reflects the company's intensified focus on reducing volatility and improving the return on shareholders' equity by shifting capital to businesses with superior growth, risk and return characteristics," the company said.
Earlier this month, Sun Life said it was cutting about 90 positions after weak market conditions pushed the insurer to its first quarterly loss in two years. Continued...