UPDATE 3-Sun Life sells U.S. annuity business, shares drop

Mon Dec 17, 2012 4:34pm EST
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* Guggenheim affiliate Delaware Life to pay $1.35 bln

* Sale will reduce impact of market swings on earnings

* Sun Life earnings, book value to be held back by deal

* CEO will update 2015 profit target after deal closes

* Shares fall 3.9 pct on Toronto Stock Exchange (Adds CEO and analyst comments, updates shares)

By Cameron French

TORONTO, Dec 17 (Reuters) - Sun Life Financial Inc will sell its U.S. annuity business for $1.35 billion to a firm connected to Guggenheim Partners in a deal that should reduce the exposure of the insurer's earnings to market swings and boost its cash levels.

While the deal could bring long-term benefits to Sun Life, whose earnings have been derailed by wild market swings during recent years, investors pulled the company's shares down by nearly 4 percent as the financial terms fell short of initial expectations.

"The stock's sort of correcting back because the deal isn't quite as big a windfall as I think the market was anticipating," said National Bank financial analyst Peter Routledge.   Continued...