(Reuters) - Sun Life Financial Inc (SLF.TO) will buy New York-based Ryan Labs Asset Management in a deal the Canadian insurer hopes will help it win more business with U.S. pension funds and other institutional investors, Sun Life said on Wednesday.
Toronto-based Sun Life did not disclose the value of the deal for Ryan Labs, which specializes in liability-driven investing, but said the acquisition would not be material to its results.
Sun Life launched a Canada-focused asset management division in early 2014 and said at the time it was looking to expand into the United States.
A liability-driven investment strategy involves calculating the future needs of a client like a pension fund and designing a portfolio that can meet those needs with the appropriate amount of risk.
Sun Life rival Manulife Financial Corp (MFC.TO) last year agreed to buy the Canadian assets of Britain’s Standard Life SL.L for nearly $4 billion in deal seen as giving Manulife additional liability-driven expertise.
Sun Life Chief Investment Officer Steve Peacher said on Wednesday that while the insurer felt it had the expertise to start up a Canadian asset management business that could serve pension funds and similar investors, it made more sense to buy an experienced provider to enter the U.S. market.
“It allows us to do something that we just couldn’t do on our own,” he said in a telephone interview.
Ryan Labs has about $5.1 billion in assets under management. Peacher said that, given the size of the U.S. pension market, the business could double and triple in size “very quickly.”
Ryan Labs President Sean McShea, who will continue to manage the business, said the backing of a well-financed insurer would give it an advantage, especially when pursuing big accounts.
“Having a big brother behind you really does help on the larger assignments,” he said in an interview.
Reporting by Jeffrey Hodgson in Washington; Editing by Chizu Nomiyama and Jonathan Oatis