Taking the view that
reinsurance is not its game, Canadian insurer Sun Life Financial
(Sun Life) is to sell its life reinsurance business Sun Life
Reinsurance (SLR), to US conglomerate holding company Berkshire
Hathaway, headed bybnaire Warren Buffet. The value of the deal has
not been disclosed.
Sun Life reports that SLR has
C$113bn ($11bn) life insurance in-force and 70 employees in Canada,
the US and Ireland.
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Sun Life CEO Donald Stewart
commented: “This transaction reflects Sun Life Financial’s strategy
to deploy capital to the parts of our business that can best
achieve strong, sustainable growth. Our reinsurance business is
profitable, but it is not a growth area for Sun Life Financial and
this transaction releases capital which can be put to work in other
businesses.”
According to Sun Life, SLR’s
sale will increase its minimum continuing capital and surplus
requirement (MCCSR) ratio by 10 to 14 percentage points. Sun Life’s
MCCSR ratio was 210% at 30 June 2010.
For Berkshire Hathaway, SLR
strengthens its powerful position in the reinsurance market where
it owns two major reinsurers, General Reinsurance Corporation, the
world’s third-largest reinsurer which it bought in 1998, and
Nederlandse Reassurantie Groep bought from ING Group in 1997 for
€300m ($420m).
Over the past two years, Berkshire Hathaway has built up
significant minority interests in Munich Re and Swiss Re, the
world’s largest and second-largest reinsurers. Berkshire Hathaway’s
combined investment in the two is about $4.5bn. In addition, in
January 2010 it bought a block of US life reinsurance business from
Swiss Re for $1.3bn.
