Sun Life may be looking at a brighter future now that it has decided to buy New York-based insurer Assurant. The purchase is expected to benefit the Canadian insurer by $4 billion.
Canadian insurer Sun Life Financial Inc. has expressed its plan to acquire Assurant Inc.'s employee-benefits business. The former said it is willing to buy the latter for $975 million.
Although the value of the purchase seems to be too much, the expected benefit the deal would reap is actually valued way more than that. Reuters reported that if Sun Life were to acquire Assurant's employee-benefits business, the growth of its U.S. group benefits business is expected to spike by as much as $4 billion or by 50 percent.
The news came amid Assurant's move to focus on property-casualty coverage, while Sun Life is working on its expansion beyond Canada. In fact, Sun Life has already bought Prime Advisors, a Redmond, Washington-headquartered asset manager.
"The acquisition of the Assurant employee-benefits business is directly on strategy, accelerating the growth of our U.S. group-benefits business," Sun Life CEO Dean Connor said in a statement, as quoted by Bloomberg.
The deal between Sun Life and Assurant could help increase the former's share by 8 Canadian cents in 2016. By 2019, the share could see an increment of 17 cents.
If ever Sun Life pushes through with this purchase, it would be its largest acquisition in more than 10 years, having purchased Clarica Life Insurance Co. in 2002 and two Liberty Financial units in the United States in 2001.
According to The Globe and Mail, the still unrealized deal will also mark the addition of other business lines to the Toronto-based insurer, such as vision benefits.
Also, the possible purchase couldn't have been more timely since Assurant has been looking to sell its employee-benefits business for several months now.
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