Sun Life to stop selling VA, individual life in U.S.

Sun Life Financial has announced that it will stop selling variable annuities and individual life products in the U.S., as the products were the primary causes of the company’s deep financial loss last quarter.

The Sun Life’s new CEO Dean Connor says the insurer will discontinue sales starting Dec. 30. The move will not affect existing policyholders.

The move to exit the variable annuity and individual life business in the U.S. comes after Sun Life faced massive charges in the third quarter as it hedged against future liabilities related to the insurance products.

One of the attractions of variable annuity products is that they offer a minimum rate of return guaranteed to investors, which can cost the insurer when markets are underperforming. Last month, Sun Life reported its first quarterly loss in two years, mostly as a result of U.S. operations which took a more than half-billion-dollar hit due to stock market chaos.

“Today begins a new chapter in the history of Sun Life Financial,” Connor said in a release. “We are charting a new course with a new strategy that leverages what we do best today, and positions us for success as we pursue the many opportunities in our business around the world.”

Sun Life said about $200 million of its third-quarter loss was related to an annual update of its actuarial methods and estimates–used to calculate the company’s obligations under various products sold.

However, the insurer didn’t specify how much of the hit would be from equities and how much from interest rates.

The company will focus on what it calls its four key pillars:

• Continuing to build on its leadership position in Canada in insurance, wealth management and employee benefits;
• Becoming a leader in group insurance and voluntary benefits in the U.S.;
• Supporting continued growth in MFS Investment Management, and broadening Sun Life’s other asset management businesses around the world; and
• Strengthening Sun Life’s competitive position in Asia.

“To achieve growth in the U.S., we will focus on increasing sales in our employee benefits business, which is already a top ten player, and will expand our presence in the growing voluntary benefits segment,” said Connor. “We are confident that with the focused investment announced earlier this year we can build leading positions in these two sustainable, less capital-intensive businesses.

“We will also continue to support growth in MFS, our highly successful investment manager that has a large U.S. presence and over US$250 billion of assets under management globally.”