Sun Life to Purchase UK Insurance Sector of Lincoln National

24th June, 2009

The UK insurance sector of Lincoln National Corp is to be bought by Sun Life Financial Inc, reports have revealed.

The deal, which is to go through for £195 million ($139 million), will increase Sun Life Financial's UK assets by 60 percent, to 10.6 billion pounds. It will also double the number of the company's insurance policies to 1.1 million, as well as add 8 to 10 cents to earning per share in 2010.

Sun Life Chief Executive Officer, Donald Stewart, said last month that the company - which is Canada's third-biggest insurer - might purchase books and lines of businesses, rather than whole companies. The insurance company was also apparently in talks earlier this year to buy most of Hartford Financial Services Group Inc.'s life insurance unit. However, with the Sun Life cash deal to go through in the third quarter, it appears the anticipated moves were optimistic.

Yet Michael Goldberg, an analyst at Desjardins Securities Inc., said the acquisition "is not a game changer." He said, "It is instead a modest tuck-in that still leaves Sun with capacity if other opportunities arise."

Lincoln National Corp is re-building capital after reporting losses on investment declines and costs to protect savers from drops in the equity markets. The company also had to previously cut jobs, as well as decrease their dividend. The insurer ultimately accepted $950 million in U.S. rescue funds and sold debt and shares.

Sun Life fell 1.2 percent - or 39 cents, to C;$31.01 in trading on the Toronto Stock Exchange. Meanwhile, Lincoln National Corp, based near Philadelphia, fell 11 percent - or $1,92, to $15.83 on the New York Stock Exchange - the biggest decline in almost two months.

Various other acquisitions and partnerships have taken place in recent months, with Norwich Union's brand switching to Aviva, and Pacific Life Re and Abbey Life teaming up in a Longevity deal.

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