Ratings actions on Sun Life by A.M. Best

Rating Action: Sun Life (Downgrade)

On April 11, A.M. Best took two separate actions involving the U.S. insurance entities of Sun Life Financial, Inc. (Sun Life). Download the M Due Care Update.

First, A.M. Best affirmed its financial strength ratings of ‘A+’ (Superior) for Sun Life Assurance Co. of Canada and the U.S. Branch of Sun Life Assurance Co. of Canada. Second, A.M. Best downgraded its financial strength rating on Sun Life Assurance Co. of Canada (U.S.) and its subsidiaries (Sun Life US) to ‘A’ (Excellent) from ‘A+’ (Superior). The outlook on all ratings is stable.

In affirming the ratings of Sun Life Assurance Co. of Canada and its U.S. Branch, A.M. Best cited Sun Life’s strong business profile, diversified revenue streams, and favorable risk-adjusted capitalization. A.M. Best also noted that Sun Life’s operating subsidiaries are well-capitalized and that the company has a sophisticated hedging program in place and is reducing earnings volatility through additional risk mitigation steps such as product redesign.

According to A.M. Best, the downgrade of Sun Life Assurance Co. of Canada (U.S.) reflects its view of the diminished strategic importance of the U.S. operations due to Sun Life’s plans to discontinue certain key business lines in the United States including core individual life and variable annuity operations. Despite the downgrades, A.M. Best said it believes that Sun Life US is well positioned at its current rating level but that further negative rating actions could occur should equity market volatility and low interest rates continue to negatively impact earnings and capital levels.

M Commentary

The action by A.M. Best represents the last of the four rating agencies to downgrade the ratings of Sun Life’s U.S. subsidiaries. The ratings from all four rating agencies for Sun Life US are now lower than the ratings for Sun Life of Canada.

As mentioned in previous communications, it is important to recognize that all non-New York U.S. general account universal life policies have been issued by a U.S. branch of Sun Life of Canada, meaning that the financial strength of Canadian parent company applies. The financial strength ratings of Sun Life of Canada have not been downgraded. The downgrades apply to the U.S. subsidiary companies of Sun Life, which have issued variable life and variable annuity policies as well as any policies within the state of New York.

Below is a breakdown of the ratings for Sun Life of Canada (U.S. Branch) and Sun Life US.

Sun Life Assurance Co. of Canada (U.S. Branch)

FSR

Description

Category

Outlook

A.M. Best

A+

Superior

2nd of 15

Stable

Standard & Poor's

AA-

Very Strong

4th of 20

Stable

Moody's

Aa3

Excellent

4th of 21

Negative

Fitch Ratings

AA-

Very Strong

4th of 21

Negative


Comments

  • sage consulting http:www.sageplanning.com November 6, 2012

    hi daniel, there are a couple of ways to address this. we would be happy to discuss this with you further. please contact our office. thank you, the advisors at sage consulting


  • daniel l hopkins October 4, 2012

    if i was to invest sun finance will i be subject to canada income tax as a u.s. citizen...




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