Standard & Poor’s Ratings Services today placed its double–’A’–plus counterparty credit and financial strength ratings on Toronto-based Sun Life Assurance of Canada on CreditWatch with negative implications. The outlook on Sun Life had been negative.

At the same time, Standard & Poor’s also placed its ratings on most Sun Life’s affiliates and subsidiaries on CreditWatch negative.

Standard & Poor’s also revised its outlook on Clarica Life Insurance Co. to developing from positive.

The ratings service says this rate action is based on its view that Sun Life’s operating performance and capital strength, though both very strong, are increasingly susceptible to some marginal erosion because of the company’s exposure to sustained challenging equity-market conditions through its wealth-management businesses.

Standard & Poor’s says it intends to meet with Sun Life management to specifically review the company’s earnings and capital outlook, with a particular focus on its U.S.-based MFS Investment Management unit and U.S. annuity product lines. If a rating action is required at the end of this review, Standard & Poor’s does not anticipate more than a one-notch adjustment.

Sun Life’s consolidated financial position remained very strong through Mar. 31, 2002. Capital strength was very strong for Sun Life’s business mix as of March 31. The company’s Canadian regulatory capital adequacy ratio was 189%. Earnings in 2001 were strong, as demonstrated by net income of $921 million. First-quarter 2002 net income remained sound at $250 million.

Liquidity remains extremely strong, as demonstrated by a Standard & Poor’s liquidity ratio of 332% and by secure liquidity characteristics for Sun Life’s other insurance affiliates and subsidiaries.