Guggenheim Partners has once again bought an annuity business. But in a new twist, it has ventured into the variable annuity (VA) sphere.
Announced this morning, Delaware Life Holdings, a company owned by shareholders of Guggenheim, has agreed to buy the U.S. annuity business and certain life insurance lines from Sun Life Financial, Inc. of Toronto for $1.35 billion. The deal includes 100 percent of the shares of Sun Life Assurance Company of Canada (U.S.), which consists of the insurer’s U.S. variable, fixed and fixed indexed annuity businesses, corporate and bank-owned life insurance products and variable life insurance products.
In a statement announcing the sale agreement, Dean A. Connor, president and CEO of Sun Life Financial, said the deal tracks the company’s previously heralded strategy of reducing its risk profile and earnings volatility while concentrating on its employee benefit and voluntary benefit businesses in the U.S. The company, Connor added, intends to continue to grow MFS, its investment management business, which has a sizable U.S. presence with more than $300 billion of assets under management globally.
The transaction, he stated, “crystallizes future earnings and capital releases that will further support our growth and shareholder value creation.”
The deal is expected to close by the second quarter of next year, following regulatory approvals and customary closing conditions.
Last December, Sun Life revealed that it was exiting the variable annuity business and individual life insurance products in the U.S. Due to low interest rates in the U.S. and tougher capital reserve requirements for foreign-based insurers, companies like Sun Life have found it increasingly difficult to hedge their annuity business. Several have followed Sun Life’s lead and closed or curtailed their VA sales.
This represents the second time Guggenheim has crossed the border and fetched the annuity business of a Canadian insurer. In August, two of its affiliates, Security Benefit Life Insurance Co. and Equitrust Life Insurance Co., agreed to the purchase of Quebec-based Industrial Alliance Insurance and Financial Services, Inc.’s U.S. fixed annuity business for $800 million. Published reports have also speculated that Guggenheim is in the running to buy Aviva USA, a leading provider of indexed annuities.