Sun Life to Buy Assurant's Employee-Benefits Business
10 September 2015 - 7:50AM
Dow Jones News
Sun Life Financial Inc. agreed to buy the employee-benefits
business of Assurant Inc. in a complicated transaction valued at
$975 million, the latest sign of consolidation in the insurance
industry.
The transaction is part of a deal boom that is combining
companies across the health, life and property-casualty insurance
sectors. While the Canadian insurer's purchase of the Assurant unit
is much smaller than property-casualty insurer ACE Ltd.'s pending
$28.3 billion acquisition of Chubb Corp., it is more typical of the
deals that industry executives, bankers and analysts expect in
coming months. Sun Life is based in Toronto.
Insurers are pursuing these small-to-midsize deals to gain
economies of scale in areas where they see themselves as leading
players, and to divest units where they aren't. The activity comes
at a time of heightened competition and ultralow interest rates
that have been pressuring insurers' profits since 2008. Insurers
invest customers' premium dollars, primarily in bonds, until claims
come due.
The Sun Life deal will create the sixth-largest group-benefits
business by revenue in the U.S. Such units sell products to
employers for their workers, including dental, disability-income
and basic life insurance. Rivals include MetLife Inc., Cigna,
Aetna, Unum Group and Prudential Financial. Sun Life said the
transaction "will add significant new capabilities" to its existing
unit.
Assurant said earlier this year that it was looking for buyers
for the unit as it seeks to focus on its mortgage-insurance and
property-insurance businesses.
Upon closing, Sun Life's U.S. unit will provide protection
through about 64,000 employers in small, medium and large
workplaces, Sun Life said.
The deal will be done through reinsurance agreements, asset
transfers and the direct purchase of certain legal entities, the
company said. The acquisition is expected to close in early 2016.
It will be financed with a combination of cash and subordinated
debt.
Write to Leslie Scism at leslie.scism@wsj.com
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(END) Dow Jones Newswires
September 09, 2015 17:35 ET (21:35 GMT)
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