Sun Life Financial Inc. is acquiring the UK operations of Lincoln National Corp. for $359 million (US$317 million), the Toronto-based insurer said Monday.

The acquisition will increase Sun Life UK’s assets under management by nearly 60% to £10.6 billion ($19 billion); and double the number of policies in force to 1.1 million.

Sun Life says the transaction is financially attractive, providing the insurer with an estimated earnings per share accretion of 8¢ to 10¢ in 2010. Return on equity is estimated to increase by 0.2%.

The deal is expected to be completed in the third quarter of 2009, and is subject to regulatory approvals and to purchase price adjustments related to market and business performance between signing and closing.

“Sun Life is seizing a compelling opportunity to expand the scale of its UK business by acquiring a highly complementary and sizable block of business,” says Donald Stewart, Sun Life Financial CEO.

“The combined operation is expected to generate attractive returns and serve to position Sun Life for future growth in one of the world’s largest life insurance markets,” he adds.

The combined operation will carry the Sun Life Financial of Canada name upon integration.

The two complementary operations each hold books of business in life insurance, pensions and annuities.

According to Sun Life, adding this book will enhance Sun Life UK’s earnings power, while Lincoln’s business and distribution platform in the UK, including relationships with independent financial advisors, provides Sun Life with an expanded opportunity to sell additional products.

IE