Sun Life Financial Inc. (TSX:SLF) made headlines Wednesday by agreeing to spend up to $975 million in cash and subordinated debt to acquire Assurant Employee Benefits.
Assurant Inc. (NYSE:AIZ) earlier announced plans to sell the benefits unit and shut down its health insurance unit. Assurant President Alan Colberg said his company will use the Sun Life deal as an opportunity to sharpen its focus on housing and lifestyle protection products and services.
Sun Life executives talked about using the benefits unit offices they are getting in Kansas City, Mo., and the benefits unit’s 1,700 employees, to reach the 30,000 small and midsize employers that have been using Assurant’s life, disability, dental and vision products.
Assurant Employee Benefits reported $49 million in net operating income for 2014 on $166 million in U.S. sales and $1.4 billion in revenue from coverage already in force.
Sun Life, a Toronto-based company, is already the second biggest seller of health stop-loss insurance, or insurance for employers’ self-insured group health plans, in the United States. The Patient Protection and Affordable Care Act of 2010 (PPACA) has raised the profile of health plan stop-loss insurance by exempting employers’ self-insured plans from some of the PPACA coverage requirements that apply to fully insured group health plans.
Sun Life and Assurant hope to close on the deal by March 31, 2016. Completing the acquisition would give Sun Life’s Sun Life Financial U.S. unit relationships with a total of about 64,000 U.S. employers.
What could the deal mean for insurance agents and brokers?
For three ideas, read on.
1. Dental makes Sun Life smile.
Sun Life executives welcomed the addition of the Assurant Employee Benefits life and disability operations today during a conference call with securities analysts, but what they talked about most often was Assurant’s group dental business.
Sun Life has catered mainly to employers with more than 500 employees. Assurant Employee Benefits has mostly served employers with 500 or fewer employees. But Dean Connor, Sun Life’s president, said Sun Life will probably migrate its dental business to the Assurant dental platform.
Dan Fishbein, president of Sun Life’s U.S. unit, said he sees immediate opportunities to cross-sell dental to existing customers as well as to new customers.