Canadian insurance giant Sun Life has set up a new Bermuda insurance company to write participating life insurance for high-net-worth clients.
The move gives its offshore par business a dedicated legal home and its own fund, two months after the insurer brought its HNW operations together under a single brand.
Sun Life Bermuda Limited is a wholly owned subsidiary of Sun Life Assurance Company of Canada and is licensed and regulated by the Bermuda Monetary Authority. Sun Life's existing Bermuda branch will continue to write non-participating business alongside it.
The subsidiary's first product is a participating whole life policy co-developed with Sun Life Asset Management. Its par fund will invest across private credit, infrastructure, real estate, fixed income and public equities, using the group's in-house teams.
Sun Life said S&P Global Ratings had assigned the new company AA long-term issuer credit and financial strength ratings with a stable outlook. That would put it level with the parent, which holds an AA financial strength rating from S&P. The agency upgraded Sun Life Hong Kong to AA in March.
"As high net worth families look for more integrated approaches to protection, wealth accumulation and legacy planning, they increasingly need solutions that can support multiple objectives within a single structure," said Sujoy Ghosh, chief executive of Sun Life Private Wealth.
Participating whole life is not new to Sun Life's Bermuda business. Its international unit launched a par whole life product for HNW clients in 2019 and still lists the category among its offshore offerings. The difference now is structural. The new subsidiary has its own par fund, built with the asset management arm, rather than writing the business through the branch of the Canadian parent.
The subsidiary is the latest step in a reorganization that has been under way for several years. Sun Life combined its Singapore, Hong Kong and Bermuda HNW operations into one platform in 2020, IB reported at the time. In July, it rebranded that business as Sun Life Private Wealth, with operations in Bermuda, Dubai, Hong Kong and Singapore. At the July launch, Sun Life said the platform would serve clients with at least US$1 million in investible assets, and ultra-high-net-worth clients with US$30 million or more.
Sun Life said the latest move responds to demand for intergenerational wealth planning as wealth creation accelerates in Asia and the Middle East. Sales will be subject to local laws and jurisdictional restrictions.
Par whole life pays dividends linked to the performance of the insurer's participating fund, so the fund's investment approach drives long-term policy values. That puts the new fund's heavy use of private markets at the centre of any advisor recommendation.
Sun Life has moved steadily in this direction across its balance sheet. In an April credit report on Sun Life Financial, S&P noted that the group had strategically increased its allocation to private debt since the 2008 financial crisis, drawing on in-house expertise. The agency described the investment portfolio as diverse and well managed, with an average credit quality of A.
Private credit, infrastructure and real estate can offer higher returns than a bond-heavy par account, but they're less liquid and harder to value. Clients will want clear disclosure on the fund's target asset mix, how dividend scales will be set and how they will change if private market valuations fall.
The new fund also has no dividend history. Established offshore par products compete partly on decades of published dividend performance.
Until the subsidiary builds a record of its own, advisors will be comparing a projection against track records, and the group's credit strength and asset management capability will have to carry much of the case.
