SLF Preferreds Downgraded by Moodys

Moody’s has announced:

Moody’s Investors Service downgraded the credit ratings of Sun Life Financial Inc. (SLF; TSX: SLF) and the insurance financial strength (IFS) ratings of its operating companies to Aa3 from Aa2, as well as the ratings of its other affiliates. As part of this action, preferred shares issued by the holding company, SLF, were downgraded to Baa2 from Baa1. The Aa3 IFS ratings apply to SLF’s primary operating companies — Sun Life Assurance Company of Canada (SLA) and Sun Life Assurance Company of Canada U.S. (Sun Life US). This action follows the release of the company’s fourth quarter 2008 results. The rating outlook for SLA and its affiliates has been returned to stable. The outlook on Sun Life US and its affiliates remains at negative.

Regarding the future direction of SLF’s ratings, one or more of the following developments could lead to an additional downgrade: (1) SLA’s MCCSR ratio falls below 200% for a sustained period; (2) Sun Life US’s regulatory capital ratio (NAIC RBC) falls below 300% for a sustained period; (3) SLF’s financial leverage rises above 30%; or (4) SLF’s earnings coverage falls below 8x and cash coverage below 5x for a sustained period.

S&P has not commented on the 4Q08 Results; neither has DBRS.

SunLife has the following preferreds outstanding: SLF.PR.A, SLF.PR.B, SLF.PR.C, SLF.PR.D & SLF.PR.E.

One Response to “SLF Preferreds Downgraded by Moodys”

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