TORONTO (Reuters) - Sun Life Financial
The move, that should safety collateral and revoke gain sensitivity in a low seductiveness rate environment, is billed as a start of a "new chapter" by Canada's No. 3 insurer, and comes only dual weeks after Dean Connor took over as arch executive from longtime conduct Donald Stewart.
However, a insurer is frequency pulling behind from a United States, Connor pronounced on a discussion call, though changeable a concentration to turn a personality in U.S. organisation word and intentional benefits. It will also pull forward with a MFS Investment Management business.
He also pronounced Sun Life would strengthen a flourishing position in Asia and addressed concerns that a association - that recently available a initial quarterly detriment in dual years due to diseased markets - competence be stirred to cut a pidend.
"We see a pision as being upheld by both a run rate gain and a clever collateral position we're during today," Connor said.
The company's shares, that were down 39 percent year-to-date during a start of Monday's session, rose 5 percent to C$19.25.
The stock's new slip has pushed a pision produce adult to scarcely 8 percent, call some analysts to envision Sun Life would follow a lead of incomparable opposition Manulife Financial
"These (discontinued) products did need Sun Life to put adult a lot of capital, so from that viewpoint a pision is a bit safer," pronounced Tony Demarin, arch investment officer during BCV Asset Management in Winnipeg.
CAPITAL INTENSIVE
Exiting a U.S. non-static annuities business - word contracts that pledge a hilt a smallest remuneration - will giveaway a insurer of products that had used adult a lot of collateral while burdening it with waste during durations when markets weaken.
Low bond yields and diseased batch markets meant insurers acquire rebate on a resources used to compensate out process obligations. These conditions have forced Canadian life insurers to catch complicated waste over a past few years.
"I consider it's satisfactory to contend that we formed a (new) plan ... on today's mercantile climate," Connor told Reuters.
"We are not basing a plan on wish that seductiveness rates will increase, so it's satisfactory to contend that we insincere that today's low seductiveness rates would continue and we built a plan around that."
The preference to stop charity U.S. inpidual life insurance is partially due to a problem of offered a products though a non-static payments sales team, Connor said.
The moves will outcome in a rebate of about 800 jobs, though will have no impact on existent business and their policies, and should not have a suggestive impact on 2012 handling earnings, a association said.
One-time transition costs should be in a operation of C$75 million to C$100 million, and a association has about C$100 million in goodwill compared with a U.S. non-static payments business that it might write down.
While both Sun Life and Manulife have struggled with their non-static payments businesses, Canaccord Genuity researcher Mario Mendonca pronounced he does not design Manulife to follow Sun Life's lead.
"Manulife's scale in both particular life and U.S. non-static annuities is significantly larger than Sun Life's. This suggests to us that Manulife's reduce section costs assistance to clear continued sales," he pronounced in a note.
He also pronounced that Manulife's proceed to placement would expected meant that shutting down one product line would have an impact on other some-more essential lines, such as a retirement and mutual account businesses.
($1=$1.03 Canadian)
(Reporting By Cameron French and Euan Rocha; modifying by Rob Wilson)
News referensi http://news.yahoo.com/sun-life-quit-two-business-lines-u-145500852.html
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