AM Best upgrades Sun Life Financial ratings

By The IJ Staff | December 06 2019 11:26AM

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Global credit rating agency, AM Best announced this week that it has upgraded several ratings for the Sun Life Assurance Company of Canada and Sun Life and Health Insurance Company in the United States.

AM Best has upgraded the long-term issuer credit ratings to aa from aa- and affirmed the company’s financial strength rating (FSR) of A+.  At the same time, AM Best announced it has upgraded the FSR to A- (excellent) from B++ (good) and the long term issuer credit ratings to a+ from bbb+ for the Independence Life & Annuity Company, a U.S. based strategic subsidiary, to reflect the increased strategic importance of the company’s operations.

Earnings remain susceptible to increased volatility

Although the company has focused on reducing volatility within the liability structure of its product offerings in recent periods, going forward, AM Best says Sun Life’s earnings remain moderately exposed to equity market volatility, changes in interest rates and fluctuations in foreign currencies. “AM Best notes the continuation of net outflows within the group’s asset management business in recent periods. While this has been mitigated by generally favourable equity markets during this time, the group’s earnings remain susceptible to increased volatility within the financial markets.”

“The upgrade of Sun Life’s long term issuer credit ratings reflects the continued strength and evolution of the organization’s strong enterprise risk management capabilities in relation to its risk profile. The group’s risk culture and governance is well-defined and embedded within all levels of the organization. Sun Life Group also conducts an extensive array of sensitivity and stress testing beyond what is required by regulators,” AM Best added in a statement released Wednesday. “AM Best expects that the group’s risk management practices will continue to evolve favorably.”

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