Sun Life Financial reportedly plans to sell
its British life insurance unit to avoid new capital requirements
for European insurers under the Solvency II regulatory regime.

Sky News reported the story and said Sun Life
has hired Morgan Stanley to auction the business, which could fetch
£1bn.

Sun Life Financial had 165 employees in its UK
office as at 31 December 2011. Its UK head office is based in
Basingstoke.

A spokesman for Sun Life Financial’s UK
business agreed there had been speculation about the insurer’s UK
operation, but said he was unable to comment on the
speculation.

Solvency II is a new European regulatory
regime designed to establish a revised set of EU-wide capital
requirements and risk management standards that will replace the
current solvency requirements.

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A milestone on the road to making Solvency II
a reality appeared to have been reached when the UK insurance
industry welcomed the decision by the European Parliament’s
Economic Affairs Committee (ECON) on 21 March 2012 to pass Solvency
II amendments – known as Omnibus 2 proposals – because they allow
for the continued use of matching premiums.

However, in spite of all the apparent progress
on Solvency II, Janine Hawes KPMG’s Solvency II director said the
provider was extremely disappointed by the decision on 27 March
2012 to delay the plenary vote on Omnibus 2 until 10 September.

Hawes said: “Clarity is now desperately needed
as to whether the firm compliance date of 1 January 2014 will
remain, which realistically means firms will have less than a year
between final requirements being known and compliance being
required, or whether we can now expect to see an announcement of a
year’s delay to 1 January 2015.”