AM Best Upgrades Credit Ratings of Independence Life and Annuity; Affirms Credit Ratings of Sun Life Financial and Most of Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a-” (Excellent) of Independence Life and Annuity Company (Independence) (Wilmington, DE). The outlook of these Credit Ratings (ratings) has been revised to stable from positive. Additionally, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa” (Superior) of Sun Life Assurance Company of Canada (Ontario, Canada) and Sun Life and Health Insurance Company (U.S.) (Lansing, MI). These companies are the core insurance subsidiaries of Sun Life Financial Inc. (SLF) (Ontario, Canada) [NYSE: SLF] (collectively referred to as Sun Life Group). Concurrently, AM Best has affirmed the Long-Term ICR of “a” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IRs) of SLF. (Please see below for a detailed listing of the Long-Term IRs.) Lastly, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Professional Insurance Company (Dallas, TX), an SLF runoff subsidiary. The outlook of these ratings is stable.

The ratings of Independence reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile, very strong enterprise risk management (ERM) and support from its parent organization. The rating upgrades of this entity are driven by its growth within the stop-loss insurance market beginning in 2020 after being in runoff prior to a strategic change. While premium growth remains moderate on an absolute basis, the company has seen meaningful growth on a percentage basis over the past several years.

The ratings of Sun Life Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong ERM. The group has maintained a favorable risk-adjusted capital level over the long term, partly due to the extensive array of stress and scenario testing conducted on capital, earnings, liquidity and other key metrics. The company continues to produce strong operating earnings from a diverse mix of business lines leading to dominant market positions in several products.

Finally, the ratings of Professional Insurance Company reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, very limited business profile and very strong ERM. The company continues to manage the runoff of its remaining liabilities profitably.

The following Long-Term IRs have been affirmed with stable outlooks:

Sun Life Financial Inc.—
-- “a-” (Excellent) on CAD 750 million 2.38% subordinated debentures, due 2029
-- “a-” (Excellent) on CAD 1 billion 2.58% subordinated debentures, due 2032
-- “a-” (Excellent) on CAD 750 million 2.06% subordinated debentures, due 2035
-- “a-” (Excellent) on CAD 400 million 5.40% subordinated debentures, due 2042
-- “bbb+” (Good) on CAD 250 million 4.45% Class A non-cumulative preferred stock, Series 3
-- “bbb+” (Good) on CAD 300 million 4.45% Class A non-cumulative preferred stock, Series 4
-- “bbb+” (Good) on CAD 250 million 4.50% Class A non-cumulative preferred stock, Series 5
-- “bbb+” (Good) on CAD 155 million 1.825% Class A non-cumulative preferred stock, Series 8R
-- “bbb+” (Good) on CAD 125 million floating rate Class A non-cumulative preferred stock, Series 9QR
-- “bbb+” (Good) on CAD 171 million 2.967% Class A non-cumulative preferred stock, Series 10R
-- “bbb+” (Good) on CAD 29 million floating rate Class A non-cumulative preferred shares, Series 11QR

The following Long-Term IRs have been affirmed with stable outlooks:

Sun Life Assurance Company of Canada—
-- “a+” (Excellent) on CAD 150 million 6.30% subordinated debentures, Series 2, due 2028 (originally issued by Clarica Life Insurance Company)

Sun Life Capital Trust—
-- “a” (Excellent) on CAD 200 million 7.093% non-cumulative Sun Life ExchangEable Capital Securities, call date 2032

The following indicative Long-Term IRs have been affirmed with stable outlooks:

Sun Life Financial Inc.—
-- “a” (Excellent) on senior unsecured debt
-- “a-” (Excellent) on subordinated debt
-- “bbb+” (Good) on preferred stock

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