Transaction intended to free up capital
Sun Life Assurance Company of Canada, a division of Canadiajn life insurance group Sun LIfe Financial has agreed to sell its life reinsurance unit to Berkshire Hathaway Life Co of Nebraska. The transaction is subject to regulatory approval and is expected to close on 31 December. The sale price was not disclosed.
The sale follows a review of options for the reinsurance unit. “Our reinsurance business is profitable, but it is not a growth area for Sun Life Financial and this transaction releases capital which can be put to work in other businesses,” said Sun Life CEO Donald Stewart in a statement.
The transaction is expected to increase Sun Life’s minimum continuing capital and surplus requirement (MCCSR) ratio, by between 10 and 14 percentage points. Sun Life’s MCCSR ratio was 210% on 30 June 2010.
Sun Life’s reinsurance business has approximately 70 employees in offices in Canada, the US and Ireland. The unit assumes risks from life reinsurers and has life insurance in-force of C$113bn ($109.7bn).
“There was significant interest in the marketplace in purchasing our reinsurance business, which speaks to the depth and talent of our reinsurance team,” Stewart said. “Sun Life will work closely with Berkshire Hathaway to ensure a smooth transition for clients and employees.”