New CEO outlines Sun Life Financial growth strategy
TORONTO - Sun Life Financial Inc. announced the completion of a major strategic review of its businesses. Dean A. Connor, President and Chief Executive Officer, said the company will be repositioned to accelerate growth, improve return on shareholders' equity and reduce volatility by concentrating its future growth into four key pillars:
1 Continuing to build on its leadership position in Canada in insurance, wealth management and employee benefits;
2 Becoming a leader in group insurance and voluntary benefits in the U.S.;
3 Supporting continued growth in MFS Investment Management, and broadening Sun Life's other asset management businesses around the world;
4 Strengthening Sun Life's competitive position in Asia.
As a result of this strategic review, the Company announced that it will close its domestic U.S. variable annuity and individual life products to new sales effective December 30, 2011 . The decision to discontinue sales in these two lines of business is based on unfavourable product economics which, due to ongoing shifts in capital markets and regulatory requirements, no longer enhance shareholder value. This decision reflects the Company's intensified focus on reducing volatility and improving the return on shareholders' equity by shifting capital to businesses with superior growth, risk and return characteristics.
The decision to stop selling variable annuity and individual life products in the U.S. will not impact existing customers and their policies. The Company will continue to provide quality service to its policyholders, while focusing on the profitability, capital efficiency and risk management of the in-force business.
"To achieve growth in the U.S., we will focus on increasing sales in our employee benefits business, which is already a top ten player, and will expand our presence in the growing voluntary benefits segment. We are confident that with the focused investment announced earlier this year we can build leading positions in these two sustainable, less capital-intensive businesses. We will also continue to support growth in MFS, our highly successful investment manager that has a large U.S. presence and over US$250 billion of assets under management globally," said Connor.
The changes announced today are not expected to have a material impact on the Company's 2012 operating net income. The estimated one-time transition cost associated with the discontinuation of these products is approximately $75 to $100 million on a pre-tax basis, a portion of which will be recorded in the fourth quarter of 2011, with the remainder expected to be charged to income in 2012. There is no immediate impact to the Risk-Based Capital ratio of Sun Life Assurance Company of Canada (U.S.) or to the Minimum Continuing Capital and Surplus Requirements ratio of Sun Life Assurance Company of Canada . In addition, as at September 30, 2011 , there is $97 million of goodwill associated with variable annuity business in SLF U.S. which will be reviewed and likely written down as part of the Company's decision to discontinue sales of the product.
"Today begins a new chapter in the history of Sun Life Financial," said Connor. "We are charting a new course with a new strategy that leverages what we do best today, and positions us for success as we pursue the many opportunities in our business around the world."