Sun Life sells reinsurance business to Berkshire Hathaway
Sun Life Financial Inc. has sold its life reinsurance business to Berkshire Hathaway Life Co. of Nebraska.
Berkshire Hathaway is led by billionaire CEO Warren Buffett. The company is a conglomerate with holdings in insurance, jewelry and apparel. Buffett has previously assumed risks from XL Group and CNA Financial Corp., as well as acquiring more than 10 per cent in Munich Re, the world’s largest reinsurer
The transaction is subject to regulatory approval and is expected to close December 31, 2010.
“This transaction reflects Sun Life Financial’s strategy to deploy capital to the parts of our business that can best achieve strong, sustainable growth,” said Donald Stewart, Chief Executive Officer, noting that the sale follows a review of options for the company’s reinsurance business. “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.”
The transaction is expected to increase Sun Life’s Minimum Continuing Capital and Surplus Requirement (MCCSR) ratio, by 10 to 14 percentage points. Sun Life’s MCCSR ratio was 210% as of June 30, 2010.
Sun Life’s reinsurance business has approximately 70 employees in offices in Canada, the U.S. and Ireland. The unit assumes risks from life reinsurers and has life insurance in-force of CDN$113 billion.
“There was significant interest in the marketplace in purchasing our reinsurance business, which speaks to the depth and talent of our reinsurance team,” Mr. Stewart said. “Sun Life will work closely with Berkshire Hathaway to ensure a smooth transition for clients and employees.”
