TORONTO Sun Life Financial Inc (SLF.TO) on Friday warned of a likely delay in the sale of its U.S. annuity business because the New York Department of Financial Services has yet to approve the deal.
Sun Life, Canada's No. 3 insurer, said in December that it would sell the business for $1.35 billion to a firm connected to Guggenheim Partners. The transaction, expected to reduce Sun Life's exposure to market swings and boost its cash levels, was originally set to close before the end of June.
The New York Department of Financial Services recently began a review of private investor groups as owners of annuity businesses, Sun Life said in a statement, adding that it expected that review to delay the closing of its deal.
The deal followed Sun Life's decision to stop selling variable annuities and individual life products in the United States to focus more on group insurance and voluntary benefits.
Variable annuities, retirement products that guarantee a minimum monthly payment, hit Sun Life earnings after the 2008 financial crisis, as low interest rates and Canadian accounting rules forced insurers to take upfront losses on products that will not come due for years.
Sun Life said it had received approvals from a number of regulators, including the Delaware Department of Insurance and the Financial Industry Regulatory Authority, for the sale of the unit to Delaware Life Holdings, which is owned by some Guggenheim clients and shareholders.
"We are continuing to work with Delaware Life Holdings LLC to obtain approval from the New York Department of Financial Services for the transaction and to close the transaction as soon as possible," Sun Life said.
(Reporting by Euan Rocha; Editing by Janet Guttsman and Lisa Von Ahn)