Sun Life Financial Inc. And Core Subsidiaries Upgraded On Improved Business Risk Profile; The Outlook Is Stable

  • Sun Life Financial Inc. has successfully implemented its "four pillar" strategy, leading to an improved business risk profile as shown by its strong and very stable operating performance.
  • The company's financial risk profile continues to be characterized by healthy capitalization and strong financial flexibility.
  • We are raising our ratings on the group's insurance operating subsidiaries to 'AA' from 'AA-' and on the holding company to 'A+' from 'A'.
  • The outlook is stable, reflecting our expectation that the group will maintain its status as a top three insurer in Canada and continue to grow its other global businesses.
NEW YORK (S&P Global Ratings) March 14, 2019--, S&P Global Ratings said today 
it raised its financial strength and issuer credit ratings on holding company 
Sun Life Financial Inc. and its core operating companies (Sun Life Assurance 
Co. of Canada, Sun Life Assurance Co. of Canada (U.S. branch), and Sun Life 
and Health Insurance Co.; collectively, SLF), to 'AA' from 'AA-'. At the same 
time, we raised our ratings on the holding company to 'A+' from 'A'. The 
outlook is stable.

In 2012, SLF announced its "four pillar" strategy that focuses on its Canadian 
group and individual life, U.S. group, Asia group, and asset management 
businesses. Over the past seven years, SLF has grown these businesses 
profitably (including through acquisitions) while also divesting some of its 
noncore businesses, such as its U.S. variable annuity business in 2013.

The outlook on SLF is stable, reflecting our expectation that the group will 
continue to maintain its status as a top three insurer in Canada and continue 
to grow its Asia, U.S., and asset management businesses, earning consistent 
returns from each. We also expect the group to maintain its current level of 
capitalization, as well as fixed-charge coverage above 8.0x with financial 
leverage below 30%.

We could lower the ratings if we believe SLF's competitive advantage is 
deteriorating, resulting in a longer-term decline in operating performance 
relative to peers; if it loses its market position or experiences meaningful 
damage to its reputation in Canada; or if its asset management businesses see 
sustained losses.

While unlikely in the next two years, we could raise our ratings if SLF's 
capital redundancy at 'AAA' grows significantly and we believe management 
remains committed to 'AAA' levels of capital.