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Sept 9 (Reuters) - Canadian insurer Sun Life Financial Inc said it would buy New York-based insurer Assurant Inc's employee-benefits business for $975 million, creating the sixth largest group benefits business in the United States.
The deal is expected to help Sun Life's U.S. group benefits business to grow by more than 50 percent to about $4 billion, the company said on Wednesday.
Assurant had said in April it was looking at strategic alternatives for its employee benefits business as it narrowed its focus to niche housing and lifestyle protection offerings.
Shares of Assurant, which boosted its buyback program by $750 million and raised its quarterly dividend, were up 1.6 percent at $74.49 in extended trading.,
Sun Life, Canada's third-largest life insurer, has been expanding its business through acquisitions.
The company bought U.S.-based investment management company Prime Advisors Inc and real estate investment manager Bentall Kennedy Group, both in June.
Sun Life acquired New York-based Ryan Labs Asset Management in January.
Upon closing of the Assurant deal - expected by the end of first quarter - Sun Life Financial U.S. will provide services to about 64,000 employers, the company said.
Excluding transaction and integration costs, Sun Life expects the deal to immediately add to earnings.
Bloomberg reported last month that Sun Life was in talks to buy Assurant's employee-benefits unit.
Morgan Stanley & Co LLC is Sun Life's financial adviser, while Debevoise & Plimpton LLP is its legal adviser.
Barclays Capital is Assurant's financial adviser, while Willkie Farr & Gallagher LLP is its legal adviser.
The assets for sale also include group life and disability, dental and vision, stop loss and voluntary and other types of insurance that people acquire through their employers.
Sun Life, Canada's third-largest life insurer, said in June that it would buy U.S.-based investment management company Prime Advisors Inc, to expand its asset management operations.
Sun Life also said in June it would acquire North American real estate investment manager Bentall Kennedy Group for C$560 million.
The company bought New York-based Ryan Labs Asset Management in January help it win more business with U.S. pension funds.
Reporting by Anannya Pramanick and Shubhankar Chakravorty in Bengaluru; Editing by Sriraj Kalluvila