Will Sun Life President Boscia Pay a Call on His Former Company?

Canadian life insurer Sun Life Financial is in the enviable position of having too much money and in need of something to do with it. So why not make a U.S. acquisition while the dollar is cheap?

Sun Life President Jon Boscia suggested as much at an analyst conference in New York last week according to Bloomberg News. In 2007, after serving a decade as CEO of Philadelphia-based Lincoln National, Boscia retired and then moved to Sun Life, the third largest Canadian life insurer a year later.

“In life insurance, I think we need an acquisition,” he told Bloomberg, and set a time frame of two years. While he declined to name takeover targets, Boscia was reportedly in talks early this year to buy the life insurance operations of Hartford Financial, which was so weak at the time that it subsequently took $3.4 billion of TARP money to prop itself up.

Hartford appears to be out of the woods. It hired a new chief executive, Liam McGee, who has been making noise about the new-found health of the life and property-casualty insurer. It’s unlikely he would have taken the job if McGee thought that half the company would be sold out from under him.

And there are other cheap insurance assets up for sale. Earlier this year MetLife was nosing around American International Group’s foreign life insurance operation, but the deal never made it up the church steps, let alone to the altar.

One obvious observation: Boscia knows Lincoln National inside out. While there he negotiated one of the biggest and, at the time, successful mergers with Jefferson-Pilot, a Greensboro, North Carolina-based life insurer. Lincoln, like Hartford, has seen its share of hard times, having also taken TARP money from the government, although not nearly as much as Hartford. And, earlier this year, it had to part with one of its crown jewels, Delaware Investments, its asset management company.

So, deal or no deal? Sun Life has doubled its cash over the last year to $11.8 billion Canadian, which is a bit more even in currently devalued U.S. coinage. Analysts say that Sun Life needs a bigger U.S. presence, particularly in insurance, even though a third of its revenue already comes from its southern neighbor.

And it would give Sun Life the chance to surpass its larger, but ailing, rival, Manulife, which is currently trying to raise capital - and aggravating shareholders in the process. As for Boscia, a successful acquisition could put him in the pole position to replace Sun Life CEO Donald Stewart.