UPDATE 1-Sun Life offers C$250 mln in pref shares

* To raise total of C$250 mln

* Offering follows news of fund family launch

TORONTO, May 13 (BestGrowthStock) – Sun Life Financial Inc (SLF.TO: )
said on Thursday it would raise C$250 million ($245 million) in
a new preferred share offering to bolster its Tier 1 capital.

Hours after announcing it was forming a fund company in
Canada and a new family of mutual funds, Canada’s No. 3 life
insurer said it would issue the preferred shares at a value of
C$25 each, raising gross proceeds of C$250 million.

Underwriters, led by Scotia Capital Inc, RBC Dominion
Securities Inc and TD Securities Inc, will have the option to
buy an additional C$50 million of the shares any time up to two
days before closing.

Buyers of the series will be entitled to receive
non-cumulative preferential fixed quarterly dividends for the
initial period ending June 30, 2015, payable in the amount of
C$0.271875 per share, to yield 4.35 percent annually. After
that date, the dividend rate will be reset every five years at
a level of 1.41 percent over the five-year Government of Canada
bond yield.

The issue is expected to close May 25.

Toronto-based Sun Life said net proceeds will be used for
general corporate purposes and are expected to qualify as Tier
1 capital.

Sun Life last week reported a higher-than-expected first
quarter profit (Read more your timing to make a profit.) as a rebounding economy buoyed insurance and
wealth management sales and rising stock markets lifted
investments. But Sun Life ended the quarter with less capital
than rival Manulife Financial Corp and analysts zeroed in on
the lifeco’s 210 percent capital ratio as a possible weakness
given impending changes in global regulatory requirements.

Canadian regulators require a minimum capital ratio of 150
percent, and anything above 200 percent was once considered a
gold standard. However, the ability of lifecos to absorb crises
like that of 2009 has meant capital is more scrutinized than
ever.

Guarding high capital levels slows earnings growth but puts
companies in good position to make acquisitions as the
insurance industry consolidates.

Sun Life said on Thursday it plans to increase its wealth
management presence in Canada with a new stand-alone mutual
fund company with a family of funds to be sold through Sun Life
Financial advisers.

Investing Analysis

($1=$1.02 Canadian)
(Reporting by Andrea Hopkins; editing by Peter Galloway)

UPDATE 1-Sun Life offers C$250 mln in pref shares