OTTAWA (dpa-AFX) - Assurant Inc (AIZ) on Wednesday agreed to sell its employee benefits business to Sun Life Assurance Co of Canada, a subsidiary of Sun Life Financial Inc (SLF, SLF.TO), for $940 million.
Assurant also announced that it will enhance its capital management plan and return additional capital to shareholders as its board approved an increase in the quarterly dividend and authorized a new share repurchase program.
The sale of employee benefits business to Sun Life is structured as a combination of reinsurance agreements and sale of certain legal entities and assets.
The transaction is expected to close by the end of first quarter 2016 and result in about $1 billion of net proceeds inclusive of capital releases.
Serving more than 30,000 small and mid-sized employers, Assurant employee benefits offers a product suite of voluntary and employer-paid products including dental, long-term and short-term disability and life insurance. Headquartered in Kansas City, Missouri, the business has abouty 1,700 employees in offices located across the US. These employees are expected to be offered positions with Sun Life Financial.
For Sun Life, the transaction will create the sixth largest group benefits business in the US.
Excluding transaction and integration costs, Sun Life expects the acquisition to be immediately accretive, adding $0.08 per share to earnings and 30 basis points to Sun Life's return on equity on an annualized basis for 2016 and an estimated $0.17 per share to earnings in 2019.
Meanwhile, Assurant announced actions to return additional capital to board declared a fourth quarter 2015 dividend of $0.50 per share and authorized the repurchase of up to an additional $750 million of its stock. The dividend represents a 67 percent increase above the prior quarter's dividend and the additional authorization brings the total share repurchase authorization to more than $1 billion.
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