(Corrects to insert dropped word "not" in 6th paragraph)
* Prefers organic growth in mutual funds
* Says satisfied with its capital position
* Says only M&A would create need to raise capital
* Aims to boost Sun Life brand in United States
(Writes through with comments from interview, adds byline)
By Andrea Hopkins
TORONTO, Nov 19 Sun Life Financial Inc (SLF.TO)
said on Thursday it is seeking acquisitions to expand its U.S.
insurance business but believes organic growth is the better
way to gain market share in mutual funds.
Sun Life, the fifth-largest insurer in North America by
market capitalization, is making a push into the United States,
aiming to take advantage of market consolidation after the
financial crisis that crippled competitors like AIG.
"If we have opportunities on the insurance side of the
business, where we can find blocks of business or perhaps
companies that have the right type of business on their books
now, with good risk characteristics, then we would be very
interested in exploring those," Sun Life President Jon Boscia
said in an interview after the company made presentations in
Announcing an advertising campaign aimed at U.S.
babyboomers through outlets like NFL Football and Fox
Television, Boscia said Canada's third-largest life insurer is
well-positioned to gain market share in the United States, free
of the baggage of bankruptcies and bailouts that have plagued
Retiring Americans are looking to be reassured about the
security of investments and annuities they need to supplement
their U.S. Social Security income, as well about stability of
the insurer or mutual fund company itself.
"Another way of looking at that is not only do they not
want to outlive their savings, they don't want to outlive the
provider of that cash flow either," Boscia said.
As proof of its relative conservatism, Sun Life said it is
willing to miss opportunities to expand its Boston-based fund
manager MFS Investment Management through acquisitions, because
they are often hard to harmonize.
The purchase of assets that Sun Life could easily transfer
into the MFS franchise -- grown organically over 85 years
rather than through acquisitions -- were another matter,
"Those types of acquisitions we are interested in and would
participate in," Boscia said.
He said Sun Life would also keep its distance from some of
the bargains on the U.S. insurance side if they involved
troubled companies that have poor performing businesses on
While there is growing appetite for life insurance products
and annuities, which offer steady income and often supplement
retirement savings, headwinds remain for the U.S. mutual fund
business because Americans remain concerned about their jobs.
"As long as people are worried about their jobs they have
the tendency to keep money in checking accounts and savings
accounts, where it is more liquid and they don't have a fear of
a loss of principle," Boscia said.
Despite the economic hurdles that remain, Sun Life said it
was comfortable with its capital levels, unless cash is needed
for a big acquisition.
"We've been consistent in saying we believe we have a very
high quality capital position," Boscia said, noting Sun Life
issued C$500 million in additional Tier I capital on
Rival insurer Manulife Financial Corp (MFC.TO) surprised
markets with a C$2.5 billion ($2.3 billion) equity financing on
Wednesday, diluting share values for a second time in less than
The move by Manulife has raised speculation that the
insurer either sees big clouds on the horizon and is being
extra prudent in building fortress capital levels, or sees
acquisition opportunities that will require extra cash.
The offerings sent shares of both insurers lower on
Thursday. Manulife shares dropped 7 percent to C$18.77 while
Sun Life shares were down 3.8 percent to C$27.60 in afternoon
trade on the Toronto Stock Exchange.
(Reporting by Andrea Hopkins; editing by Frank McGurty)