Toronto-based Sun Life Financial Inc. has expanded its U.S. group benefits business dramatically with the announcement on Tuesday that it has closed the almost US$1-billion acquisition of New York-based Assurant Inc.’s U.S. employee benefits business.
The deal boosts Sun Life’s U.S. business and positions the firm as the sixth-largest group benefits business in the U.S. The acquisition, which was announced in September 2015, received regulatory approval late last month.
The transaction carries a price tag of approximately US$940 million involving a combination of reinsurance agreements, asset transfers and the direct purchase of certain businesses. It is being financed by a combination of cash and subordinated debt.
“This acquisition shows our commitment to being a leader in the U.S. group benefits business, adding greater breadth, capabilities and talent in one of our strategic pillars for growth,” adds Dean Connor, Sun Life’s president and CEO, in a statement. “It is also another example of disciplined capital deployment in support of our medium-term financial objectives.”
Excluding transaction and integration costs, the acquisition is expected to be immediately accretive to Sun Life, adding an estimated 8¢ a share to earnings and 30 basis points to its return on equity on an annualized basis for 2016.
Sun Life says that the two organizations are working to bring the businesses together under the Sun Life brand over the coming months.
“We’re now poised to offer one of the broadest arrays of employee benefits to U.S. employers of all sizes,” says Dan Fishbein, president of Sun Life Financial U.S., in the statement. “We have received an enthusiastic response across the board about the value our combined business will deliver.”