September 26, 2008 / 1:19 PM / 10 years ago

UPDATE 3-Sun Life expects charge from WaMu investment

(Adds Great-West Lifeco, updates stock price)

TORONTO, Sept 26 (Reuters) - Canadian insurer Sun Life Financial Inc (SLF.TO) said on Friday it expected to record a third-quarter charge for its holdings in failed U.S. bank Washington Mutual Inc (WM.N), but could not yet quantify the amount.

The U.S. government has closed Washington Mutual and is selling the assets to JPMorgan Chase & Co (JPM.N) in the largest bank failure in U.S. history by far. For details, see: [ID:nN25440417].

Shares of Sun Life, Canada’s third-biggest life insurer by market value, tumbled 6.3 percent to C$37.00 in the afternoon on the Toronto Stock Exchange, while the broader market was hurt by Washington Mutual’s seizure and uncertainty around the $700 billion U.S. bailout plan.

Sun Life said it held bonds with a par value of C$18 million ($17.4 million) issued by Washington Mutual Inc; C$134 million from Washington Mutual Bank; and C$118 million from Washington Mutual Preferred Funding.

Last week, Sun Life said it held C$315 million in bonds issued by bailed-out insurance giant American International Group (AIG.N) and its subsidiaries. That came days after a statement that the Canadian firm would take a charge on its Lehman Brothers Holdings LEHMQ.PK investments, which filed for bankruptcy.

Sun Life said on Friday the bulk of its exposure to Washington Mutual was held in segments backing liabilities and represented less than 1 percent of its invested assets. It said it had more than C$100 billion in invested assets as of June 30, with a C$60 billion bond portfolio.

Sun Life also said the amount of the third-quarter charge depends on a number of factors, including the amount of expected recoveries and cash flow testing that will be done after the close of the quarter at the end of September.

Sun Life’s shares have tumbled more than 30 percent from the year high they hit last October.

Also on Friday, insurer Great-West Lifeco (GWO.TO) said it has fixed income securities of Washington Mutual with a par value of C$2.1 million.

The company said that its holdings of securities issued by Washington Mutual include mortgage-backed securities that were packaged by a subsidiary of the bank and are not exposed to Washington Mutual’s credit.

Great-West’s shares were down 2.7 percent at C$31.43.

Following the fall of Lehman and the bailout of AIG, Canadian insurance companies said last week they expect to take unspecified quarterly charges on securities related to the U.S. institutions. ($1=$1.03 Canadian) (Reporting by Susan Taylor and Leah Schnurr; Editing by Frank McGurty)

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