Sun Life has enough capital to aggressively seek deals, CEO says

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TORONTO (Nov 8): Sun Life Financial Inc’s capital strength allows the insurer to go on the offensive and chase further takeovers at home and abroad, Chief Executive Officer Dean Connor said.

“We are in a nice position — a very strong balance sheet with a very strong capital ratio,” Connor said Wednesday in a phone interview, citing Sun Life’s C$2.7 billion (US$2.1 billion) in cash and low debt. “This allows us to play a strong offense and a strong defense.”

Connor said he’s interested in more acquisitions in Sun Life’s focus areas of Canada, U.S. group benefits, Asia and asset management. The Toronto-based insurer is seeking transactions that bring new capabilities or allow accelerated growth, as well as acquiring larger stakes in joint ventures, similar to earlier deals in India, Vietnam and Indonesia.

“We would like to do more of those if we could,” Connor, 62, said after the firm disclosed third-quarter earnings that beat analysts’ expectations. Underlying profit rose 14% from a year earlier to C$730 million.

“Assets under management grew, so revenue grew, and we managed expenses carefully,” Connor said. “In addition, we had the benefit of U.S. tax reform, which helped our earnings. You put all that together and it produced particularly strong earnings growth.”

Sun Life has been on an acquisition spree for five years, spending at least US$2.1 billion on 17 transactions, according to data compiled by Bloomberg. Those include purchases of pension businesses, real-estate management firm Bentall Kennedy LP, U.S. asset manager Prime Advisors and stakes in Asian insurance companies.

Canadian life insurers, including Manulife Financial Corp, have been pushing for growth in Asia, a region Connor characterizes as having strong economic growth and being “very under-penetrated” for life and health insurance. Sun Life has Asian operations in India, China, Hong Kong, Philippines, Malaysia, Indonesia and Vietnam.

“Job 1 is to get larger in those seven markets in which we already operate,” Connor said.