Assurant To Sell Employee Benefits Business To Sun Life Financial For $940 Mln

(RTTNews) - Specialized insurance provider Assurant Inc. (AIZ) said Wednesday that it has agreed to sell its employee benefits business to Canadian insurer Sun Life Financial Inc. (SLF, SLF.TO) for $940 million. The company noted that sale will enable it to sharpen its focus on housing as well as lifestyle protection products and services.

New York-based Assurant also said it will enhance its capital management plan and return additional capital to shareholders after its board of directors approved an increase in the quarterly dividend and authorized a new share repurchase program.

Assurant noted that the sale of the employee benefits business is structured as a combination of reinsurance agreements as well as the sale of certain legal entities and assets.

The company expects the transaction to close by the end of first quarter 2016 and result in about $1 billion of net proceeds, inclusive of capital releases.

Assurant Employee Benefits offers a product suite of voluntary and employer-paid products, including dental, long-term and short-term disability and life insurance.

The Kansas City, Missouri-based business serves more than 30,000 small as well as mid-sized employers and has about 1,700 employees in offices located across the U.S. These employees are expected to be offered positions with Sun Life Financial.

Assurant's board declared a fourth-quarter 2015 dividend of $0.50 per share of common stock and also authorized the repurchase of up to an additional $750 million of its common stock.

The dividend represents a 67 percent increase above the prior quarter's dividend and will be payable on December 14, 2015 to stockholders of record as of the close of business on November 30, 2015.

The additional share repurchase authorization is in addition to Assurant's existing remaining authorization of about $276 million and brings the total share repurchase authorization to more than $1 billion.

In a separate statement, Sun Life Financial said it will acquire Assurant's employee benefits business for a net investment of $975 million.

The company noted that the transaction will create the sixth largest group benefits business in the U.S., with the combined business, having one of the broadest product portfolios in the industry.

The transaction will significantly increase the size and scale of the Sun Life U.S. Group Benefits business, growing business in-force by more than 50 percent to about $4 billion. Upon closing, Sun Life Financial U.S. will provide protection through about 64,000 employers in small, medium and large workplaces.

Excluding transaction and integration costs, Sun Life Financial expects the acquisition to be immediately accretive. The company expects the acquisition to add $0.08 per share to earnings and 30 basis points to its return on equity on an annualized basis for 2016, and an estimated $0.17 per share to earnings in 2019.

AIZ closed Wednesday's trading at $73.32, down $0.46 or 0.62 percent on a volume of 703,918 shares. However, in after-hours, the stock gained $1.08 or 1.47 percent to $74.40.

SLF closed Wednesday's trading at $30.99, down $0.32 or 1.02 percent on a volume of 614,744 shares.