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Sun Life makes $560 million buy-in group annuity deal with Rio Tinto subsidiary

By The IJ Staff | January 17 2020 11:30AM

In a deal that organizers are calling the largest same-day transaction in the Canadian market to be placed with a single insurer, Sun Life Financial Inc. and Morneau Shepell announced Jan. 16 that Sun Life will assume pension risk from the Iron Ore Company of Canada, a majority-owned subsidiary of Rio Tinto.

The deal, valued at more than $560-million, covers more than 3,700 retirees and beneficiaries. Morneau Shepell says Sun Life was awarded the buy-in group annuity contract following a thorough due diligence process.

Under an annuity buy-in, in exchange for a lump-sum premium, an insurance company will make monthly pension payments to the plan, which in turn pays out monthly benefits to retirees and their beneficiaries.

“A transaction of this size and scale demonstrates Sun Life’s unique ability to help Canadian employers reduce their pension risk and provide long-term protection for their retirees,” says Brent Simmons, senior managing director and head of defined benefit solutions at Sun Life. “We were thrilled to work with the Iron Ore Company and Morneau Shepell to create such a meaningful and historic transaction. We continue to see these transactions grow in the Canadian market as companies look for better pension risk management solutions so they can focus on their core business.”

Previous Sun Life Financial group annuity deals:

  •          December 2019, Domtar Corporation
  •          November 2019, Rayonier Advanced Materials
  •          August 2019, Morneau Shepell (for Stelco’s Hamilton Works)
  •          April 2018, Alcoa Corp.
  •          July 2017, Husky Energy Inc.
  •          May 2017, undisclosed plan sponsor
  •          January 2017, Loblaw Companies
  •          December, 2015, two undisclosed plan sponsors
  •          March 2015, BCE Inc.
  •          June 2013, Canadian Wheat Board
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