Source: The Canadian Press

Sun Life Financial Inc. (TSX:SLF), Canada’s third largest insurance company, has sold its life reinsurance business to Berkshire Hathaway Life Co. of Nebraska, Warren Buffett’s investment company.

The transaction, announced Wednesday, is subject to regulatory approval and is expected to close at the end of the year, the Toronto insurer said in a release.

Financial terms were not released.

“This transaction reflects Sun Life Financial’s strategy to deploy capital to the parts of our business that can best achieve strong, sustainable growth,” said CEO Donald Stewart, adding that the sale follows a review of options for the company’s reinsurance business.

Reinsurance is insurance that’s bought by an insurance company from another insurer to shift risk for potential losses on insurance policies. The reinsurer is paid a reinsurance premium for assuming the risk.

“Our reinsurance business is profitable, but it is not a growth area for Sun Life Financial and this transaction releases capital which can be put to work in other businesses.”

Sun Life’s reinsurance business has 70 employees in offices in Canada, the U.S. and Ireland. The unit assumes risks from life reinsurers and has life insurance in-force of C$113 billion.

“There was significant interest in the marketplace in purchasing our reinsurance business, which speaks to the depth and talent of our reinsurance team,” Stewart said. “Sun Life will work closely with Berkshire Hathaway to ensure a smooth transition for clients and employees.”

Sun Life operates around the world and ranks behind Great-West Lifeco and Manulife among Canada’s largest insurance companies.

Berkshire Hathaway, led by billionaire CEO Buffett. is a conglomerate with holdings in clothing, insurance and furniture, among other industries.

Buffett, who oversees the largest reinsurer in the U.S., has assumed risks from XL Group Plc and CNA Financial Corp. and has acquired more than 10 per cent in Munich Re, the world’s biggest reinsurer, and injected US$2.7 billion into No. 2 Swiss Reinsurance Co.

In trading on the TSX, shares in Sun Life Financial fell 20 cents to $27.83.

IE