TORONTO — Sun Life Financial Inc. has reached an agreement to sell a division of the UK-based company to Phoenix Group Holdings PLC for about $385 million as part of a move to make the company more nimble.
The insurer said on Thursday it would sell SLF of Canada UK Ltd., or Sun Life UK, a company that handles life insurance and pension policies but is closed to new sales.
Sun Life said as part of the deal, it will form a long-term partnership to become a strategic asset management partner for Phoenix Group, including managing Sun Life UK’s $9 billion general account. .
The sale is in line with the company’s growth strategy for paying and low-capital businesses, Sun Life Chief Executive Kevin Strain said in a conference call with analysts.
“This is an exciting opportunity for us that aligns with our strategy of focusing on capital-intensive businesses in markets with natural tailwinds.”
The sale announcement comes a day after Sun Life reported second-quarter net income of $785 million, down 13% from a year earlier.
Sun Life said falling stock markets weighed on results, while its Canada and U.S. divisions were boosted by lower COVID-19-related impacts.
Earnings were also hurt by the costs of acquiring DentaQuest, the roughly $3.1 billion deal the company closed on June 1.
“Over the past decade, we have transformed the US business from a primarily retail individual life insurance and annuity business into a high-performing, market-leading employee benefits business,” said Daniel Fishbein, president of Sun Life US.
“The acquisition of DentaQuest continues this evolution, transforming our company’s footprint in the United States into a larger, more healthcare-focused organization.”
Fishbein said the acquisition is also part of the company’s broader shift from a focus on capital-intensive to small-capitalization businesses.
Sun Life’s U.S. division saw net income jump 36% to $213 million, in part thanks to a 90% drop in undercover COVID-19 deaths.
“The really big change was a big decrease in COVID mortality from the first to the second trimester,” Fishbein said.
Canadian revenue was down 60% in the quarter from a year ago to $160 million, primarily due to lower equity markets, while lower claims volumes and reduced duration of claims mitigated the impact.
The company’s Asia division posted an 8% drop in net profit to $131 million as some COVID-19-related restrictions weighed on sales.
This report from The Canadian Press was first published on August 4, 2022.
Companies in this story: (TSX:SLF)
Ian Bickis, The Canadian Press