PrefBlog

DBRS has announced that it:

placed Sun Life Financial Inc.’s (SLF or the Company) Issuer Rating and Senior Unsecured Debentures rating of “A” as well as its Subordinated Unsecured Debentures rating of A (low) and Preferred Shares rating of Pfd-2 Under Review with Positive Implications. DBRS also placed Sun Life Assurance Company of Canada’s (Sun Life Assurance or SLA) Financial Strength Rating and Issuer Rating of AA (low) as well as its Subordinated Debt rating of A (high) Under Review with Positive Implications. Additionally, DBRS placed Sun Life Capital Trust’s SLEECS Series B rating and Sun Life Capital Trust II’s SLEECS Series 2009-1 rating of “A” Under Review with Positive Implications.

KEY RATING CONSIDERATIONS
The Under Review with Positive Implications status reflects DBRS’s view that the Company has been making good progress in realizing benefits from its strategic business plan to diversify and balance its business mix to improve the quality of its earnings. Furthermore, SLF has had greater success than DBRS anticipated in addressing legacy items and improving its risk profile, placing the Company’s credit profile closer to its AA-rated peers. During the review period, which is expected to be concluded within 90 days, DBRS will focus on the Company’s improved ability to deliver sustained earnings commensurate with the higher rating level across its four core business segments while simultaneously maintaining strong regulatory capital levels.

DBRS has gained comfort from actions taken by management over the past year to turn around the performance of SLF’s legacy U.S. individual life block that is in run-off, including the reserve strengthening, which should reduce the probability of the block adversely impacting results. DBRS has also taken into account measures taken by the Company to manage its risk associated with having a higher proportion of mortgages, BBB-rated bonds and corporate loans in the Company’s investment portfolio. Overall, the investment portfolio is delivering investment yields near the 4% range and has contributed to SLF’s strong and stable earnings performance in recent years.

RATING DRIVERS
The ratings could be upgraded if SLF continues to generate consistent earnings across its four core business segments commensurate with the higher rating level while maintaining its strong capitalization and progress in strengthening its franchise.

As the ratings have the Under Review with Positive Implications status, a negative rating action is unlikely. However, the trends on the ratings could revert to Stable if the Canadian operations weaken materially or if an adverse event causes regulatory capital to decline substantially.

Affected issues are SLF.PR.A, SLF.PR.B, SLF.PR.C, SLF.PR.D, SLF.PR.E, SLF.PR.G, SLF.PR.H, SLF.PR.I, SLF.PR.J and SLF.PR.K .

This entry was posted on Monday, July 22nd, 2019 at 5:46 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.