The cash purchase will be completed in the third quarter, and will add 8 cents to 10 cents to earnings per share in 2010, according to a statement today from the Toronto-based company.
Sun Life Chief Executive Officer Donald Stewart said as recently as last month that Canada’s third-biggest insurer may buy books and lines of businesses, rather than entire companies. The insurer was in talks earlier this year to buy most of Hartford Financial Services Group Inc.’s life insurance unit, according to people with knowledge of the matter.
The transaction, which includes clients in life insurance, pensions and annuities, will double Sun Life’s U.K. policies to 1.1 million. The purchase increases its U.K. assets to 10.6 billion pounds.
Lincoln is rebuilding capital after posting losses on investment declines and costs to protect savers from dips in the equity markets. The insurer, which cut jobs and slashed the dividend, announced plans today to accept $950 million in U.S. rescue funds and sell debt and shares.
The acquisition “is not a game changer,” Michael Goldberg, an analyst at Desjardins Securities Inc., wrote in a note to clients. “It is instead a modest tuck-in that still leaves Sun with capacity if other opportunities arise.”
Sun Life fell 36 cents, or 1.2 percent, to C$31.04 in 9:50 a.m. trading on the Toronto Stock Exchange. Lincoln, based near Philadelphia, fell $1.40, or 7.9 percent, to $16.35 on the New York Stock Exchange.
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