(The following statement was released by the rating agency)
CHICAGO, February 17 (Fitch) Fitch Ratings has assigned a rating of 'BBB+' to
Sun Life Financial Inc.'s (SLF) C$350 million issuance of 3.1% fixed/floating
subordinated unsecured debentures due 2026.
KEY RATING DRIVERS
This new issue is rated equivalent to the ratings of SLF's existing subordinated
unsecured debt. The proceeds will be used to partially fund the previously
announced acquisition of the employee benefits business of Assurant (N:AIZ), Inc. and
may also be used for general corporate purposes, which may include investments
in subsidiaries.
SLF's financial leverage ratio (FLR) was modest at 13% and total leverage at
22.1% as of Dec. 31, 2015. Pro forma FLR and total leverage remain within
Fitch's expectations for the rating category at 14.2% and 23.2%, respectively.
Fitch affirmed the ratings of SLF and its insurance operating subsidiaries on
Jan. 26, 2016.
RATING SENSITIVITIES
The key rating triggers that could result in an upgrade include:
--Consistent maintenance of fixed-charge coverage, excluding the net impact of
market factors, of over 10x;
--Sustained improvement in underlying and reported profitability with an ROE
maintained above 12%;
--Stable balance sheet fundamentals evidenced by an MCCSR ratio at or above 220%
and financial leverage below 20%.
The key rating triggers that could result in a downgrade include:
--A decline in fixed-charge coverage, excluding the net impact of market
factors, to below 6x;
--A sustained drop in the company's risk-adjusted capital position, including
the MCCSR ratio falling below 200%;
--An increase in financial leverage to over 25% or an increase in total leverage
to over 35%;
--A large acquisition that involves execution and integration risk or impacts
the company's leverage and capitalization.
FULL LIST OF RATING ACTIONS
Fitch assigns the following rating:
--3.10% subordinated debentures due 2026 'BBB+'.
Fitch currently rates the SLF entities as follows:
Sun Life Financial, Inc.
--Long-term Issuer Default Rating (IDR) 'A';
--5.7% senior notes due 2019 'A-';
--4.57% senior notes due 2021 'A-';
--4.95% senior notes due 2036 'A-';
--4.38% subordinated debentures due 2022 'BBB+';
--5.59% subordinated debentures due 2023 'BBB+';
--2.77% subordinated debentures due 2024 'BBB+';
--2.60% subordinated debentures due 2025 'BBB+';
--5.4% subordinated debentures due 2042 'BBB+';
--4.75% noncumulative preferred shares, series 1, 'BBB-';
--4.8% noncumulative preferred shares, series 2, 'BBB-';
--4.45% noncumulative preferred shares, series 3, 'BBB-';
--4.45% noncumulative preferred shares, series 4, 'BBB-';
--4.5% noncumulative preferred shares, series 5, 'BBB-';
--2.275% noncumulative preference shares series 8R, 'BBB-';
--2.075% (floating rate) noncumulative preference shares series 9QR, 'BBB-';
--3.9% noncumulative preference shares series 10R, 'BBB-';
--4.25% noncumulative preference shares series 12R 'BBB-'.
Sun Life Assurance Co. of Canada
--Insurer Financial Strength (IFS) rating 'AA-';
--Long-term IDR 'A+';
--6.30% subordinated notes due 2028 'A'.
Sun Life Capital Trust
--Sun Life ExchangEable Capital Securities (SLEECS), 7.093% series B, 'A-';
--Sun Life ExchangEable Capital Securities (SLEECS), 5.863% Series 2009-1, 'A-'.
The Rating Outlook is Stable.
Contact:
Primary Analyst
Dafina M. Dunmore, CFA
Director
+1-312-368-3136
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
Secondary Analyst
Tana M. Higman
Director
+1-312-368-3122
Committee Chairperson
James Auden, CFA
Managing Director
+1-312-368-3146
Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email:
hannah.james@fitchratings.com.
Additional information is available on www.fitchratings.com.
Applicable Criteria
Insurance Rating Methodology (pub. 16 Sep 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871172
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Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr
_id=999617
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https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999617
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&det
ail=31
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