Delaware Life Holdings (Delaware Life) announced the completion of its purchase of Sun Life Financial Inc.’s (Sun Life) U.S. annuity business late Friday afternoon.
Delaware Life, an affiliate of Guggenheim Partners, took control of 100 percent of the shares of Sun Life Assurance Company of Canada (U.S.) which includes all of Sun Life’s domestic U.S. variable annuity, fixed annuity, fixed index annuity, variable life and corporate- and bank-owned variable life products.
The transaction represents a sea change of sorts for the annuity industry as carriers, struggling with the protracted low interest rate environment, are desperate to get annuities with generous riders off their books while private equity (PE) companies are enthusiastically waiting with open arms.
The paradigm shift, however, has caused some concern. Typically, PE firms are looking for short-term investments with high returns and the antithetical nature of annuity products have caused some industry watchers to raise an eyebrow.
Last week, Delaware Life Holdings agreed to an enhanced set of solvency safeguards after being pressured by the New York Department of Financial Services. As the recent trend of PE firms entering the annuity business gathers steam, they can expect regulatory scrutiny and increased risk-based capital standards.