Canadian Premier Life Insurance Company has entered into an agreement to acquire the sponsored markets business of Sun Life Assurance Company of Canada, a wholly owned subsidiary of Sun Life Financial (TSX: SLF).
Growing Association, Affinity, and Group Creditor Business
Sponsored markets include a variety of clients in the association and affinity group plans and group creditor business. As part of the transaction, more than 100 plan sponsors, and approximately 1.5 million insured clients and plan members/customers, will move from Sun Life to Canadian Premier. (See Analysts’ Top Stocks on TipRanks)
This acquisition allows Canadian Premier to expand the scope of its line of credit insurance products and provides it with the opportunity to do business in the adjacent market of association and affinity group plans. Canada Premier will continue to invest and grow its business in Canada, both internally and through acquisitions and strategic partnerships.
Sun Life is the leader in the Canadian group benefits market. It provides coverage to more than five million employees and their dependents.
The transaction is expected to close in early 2023, subject to customary closing conditions and required regulatory approvals.
Sun Life Health president Dave Jones said, “Canadian Premier is a great fit to take over our association & affinity and creditor group insurance businesses. They have exceptional depth and experience and I know our clients will be in great hands. We are committed to working closely with Canadian Premier to plan for a smooth and seamless transition. This transaction will allow Sun Life to focus on strategically growing the core segments within our group benefits business. As the largest group benefits provider in the country, we’re dedicated to delivering industry leading products and wellness solutions.”
Wall Street’s Take
On November 5, Scotiabank analyst Meny Grauman maintained a Buy rating on Sun Life and raised its price target to C$78 (from C$77). This implies 13% upside potential.
Overall, the consensus is that SLF is a Moderate Buy, based on nine Buys, one Hold, and one Sell. The average Sun Life price target of C$79.67 implies 15.5% upside potential to current levels.
TipRanks’ Smart Score
SLF scores a “Perfect 10” on the TipRanks Smart Score rating system, indicating that the stock returns are very likely to outperform the overall market.