TEXT-S&P cuts Sun Life Financial subs ratings to 'BBB'

Tue Dec 18, 2012 1:10pm EST

Overview
     -- Sun Life Financial Inc. (SLF) announced an agreement to sell
Sun Life Assurance Co. of Canada (U.S.) (SLUS) and Sun Life Insurance & Annuity
Co. of New York (SLNY) to Delaware Life Holdings, a company owned by
shareholders of Guggenheim Partners, for $1.35 billion.
     -- We are lowering our ratings on SLUS and SLNY to 'BBB' from 'BBB+'. We 
are also revising the outlook to developing from stable.
     -- The developing outlook reflects the uncertainty we have regarding the 
new owners' plans for SLUS and SLNY.

Rating Action
On Dec. 18, 2012, Standard & Poor's Ratings Services lowered its ratings on 
Sun Life Assurance Co. of Canada (U.S.) (SLUS) and Sun Life Insurance & 
Annuity Co. of New York (SLNY) to 'BBB' from 'BBB+'. At the same time, we 
revised the outlook to developing from stable. Our ratings and outlooks on SLF 
and its other subsidiaries are unaffected by this action.

Rationale
On Dec. 17, 2012, SLF announced its plan to sell its subsidiaries, SLUS and 
SLNY, to Delaware Life Holdings for $1.35 billion. The transaction is expected 
to close by mid-year 2013.

The rating downgrade reflects our view of the company's financial strength on 
a stand-alone basis. We believe SLUS and SLNY have acceptable capitalization 
and a modest competitive position and business profile stemming from their 
closed block of life and annuity businesses.

Outlook
The developing outlook reflects the uncertainty we have regarding the new 
owners' plans for SLUS and SLNY. After the transaction closes we will meet 
with management to understand their strategy for operating these companies.

We could raise the ratings if the new owners provide suitable explicit support 
to SLUS and SLNY. We could affirm the ratings if the companies, which are in 
run off, remain well capitalized with good earnings. We could lower the 
ratings if capitalization falls below our 'BBB' confidence levels or the 
earnings profile deteriorates.

Related Criteria And Research
Use Of CreditWatch And Outlooks, Sept. 14, 2009

Ratings List
Downgraded; Ratings Placed On CreditWatch
                                        To                  From
Sun Life Assurance Co. of Canada (U.S.)
Sun Life Insurance & Annuity Co. of New York
 Counterparty Credit Rating             BBB/Developing/--   BBB+/Stable/--
 Financial Strength Rating
  Local Currency                        BBB/Developing/--   BBB+/Stable/--

Downgraded
                                        To                  From
Sun Life Assurance Co. of Canada (U.S.)
 Senior Unsecured                       BBB                 BBB+
 Subordinated                           BBB-                BBB
Sun Life Insurance & Annuity Co. of New York
 Senior Unsecured                       BBB                 BBB+
 

Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.
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