Standard & Poor’s has affirmed its AA+ counterparty credit and financial strength ratings on Sun Life Assurance Co of Canada and its U.S. subsidiaries. However, the ratings firm notes that the outlook is negative.

S&P says the affirmation reflects the Sun Life group’s extremely strong consolidated capital strength through the first quarter of 2001, very strong business profile, and very strong operating performance. It notes that the strong competition facing Sun Life and it subsidiaries partially offsets these strengths.

In determining the ratings for Sun Life, S&P cites the companies competitive market positions in Canada and the U.S. As well, As of March 31, 2001, consolidated capital strength was extremely strong for Sun Life’s business mix. The company’s Canadian regulatory capital adequacy ratio was 283%.

S&P notes that earnings continue to rebound after two years of earnings charges related to the company’s U.K. operations, and that Sun life maintains a well-diversified investment portfolio that has produced an excellent average annual yield of 8.1% over the past three years.

S&P also says that liquidity is extremely strong, noting that Sun Life’s liquidity ratio is 394%.

S&P believes that Sun Life may suffer some earnings volatility related to weaker equity markets and integration as well as operating risks associated with its pending acquisition of U.S.-based Keyport Life Insurance Co.

Despite this short-term risk, S&P concludes that Sun Life can sustain its long-term competitive advantages in the North America, and will maintain very strong financial strength.