A.M. Best Assigns Rating to Sun Life Financial Inc.’s Subordinated Unsecured Debentures Offering

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has assigned a debt rating of “a+” to the issuance of CAD 350 million 5.12% fixed/floating subordinated unsecured debentures, due 2018 of Sun Life Financial Inc. (Sun Life) (Toronto, Ontario) (TSX: SLF) (NYSE: SLF). The outlook for the rating is stable.

The proceeds from the debentures are expected to be used for investments in Sun Life’s subsidiaries and for general corporate purposes. Sun Life’s debt to capital remains below 25%, and its interest coverage remains strong at more than 11 times, which is within A.M. Best’s expectations for the current rating.

The rating reflects Sun Life’s diversified and profitable operations, favorable risk-adjusted capitalization, prudent strategies related to investments and risk management and its very strong market position in all major business segments in Canada, complemented by growth outside of North America. Additionally, the company enjoys further diversification through its expanding Asia-based operations. Sun Life has strong debt servicing capabilities bolstered by its favorable liquidity posture, high quality investment portfolio and growth in operating earnings. Sun Life’s earnings are supported by its diverse operations and have been enhanced by expense synergies arising from earlier acquisitions and its ability to manage its operations efficiently through turbulent global economic pressures. Sun Life continues to generate strong earnings with first quarter 2008 net income of CAD 533 million.

Although operating earnings are stable and returns on equity remain favorable, A.M. Best believes Sun Life will continue to face challenges due to global economic pressures and equity market volatility. The strengthening of the Canadian dollar relative to foreign currencies also has added strain to its reported income. In addition, earnings at MFS may be pressured by the weak markets in the United States. Also, future earnings contribution from Sun Life’s international business may be subject to uncertainty, reflecting a number of risks inherent in emerging markets.

For Best’s Debt Ratings, all other Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.