Sun Life Financial’s acquisition of the employee benefits unit of Assurant is just the latest move in the insurer’s growth strategy for the U.S. market.

Sun has been strengthening its position in the U.S. market over the past 18 months, bringing in Dan Fishbein to lead its U.S. benefits business in April 2014 and hiring a new VP of distribution, Kevin Krzeminski, in February. The Assurant acquisition is the third leg of the company’s continued investment in the U.S. market, says Tucker Sharp, global chief broker officer with Aon Health.

“This opportunity to get them[selves] into the top six carriers with those coverages [life, disability, dental] is something I think Sun Life has been striving to do,” says Sharp. “And I think we’ll see more jockeying for position among some of those companies outside of the top three or four [carriers]. … Voluntary seems to be the holy grail in terms of getting scale in relatively high-margin products in the employee benefits space.”

Sun Life announced Wednesday it’s entered into an agreement to purchase the employee benefits unit of Assurant for a net investment of $975 million. The deal, subject to regulatory approvals, is expected to close by the end of the first quarter of 2016.

Also see: Fastest-growing ancillary carriers with over $500 million in revenue

“We’ve noted for some time we’d be interested in acquiring businesses in U.S. group [insurance] that provide greater scale or add to our existing capabilities,” said Dean Connor, president and chief executive officer of Sun Life Financial, during a conference call Thursday morning. “By acquiring the employee benefits business of Assurant, we will nearly double the business in-force in life insurance and disability, add a leading dental business to our suite of products and enhance voluntary capabilities.”

Sun Life ranked No. 9 on Employee Benefit Adviser’s list of fastest-growing ancillary carriers with over $500 million in revenue. Assurant, meanwhile, ranked No. 5 on EBA’s list of fastest-growing ancillary carriers with $100-$500 million in revenue.

Also see: Fastest-growing ancillary carriers with $100-$500 million in revenue

Sun Life’s acquisition of Assurant’s employee benefits business has two main implications for employers, says Sharp, including increased competition and access to bundled solutions.

“Employers can now expect more competitive life and disability and dental rates. That’s a good thing for employers to have another major player that has the scale and size to do that,” he says.

And with the greater depth in dental and disability the Assurant acquisition brings, Sun Life will be able to better bundle their products, which could be especially appealing for mid-size employers, says Sharp. Those mid-market employers may “now be able to do some one-stop shopping and get their dental and life insurance and vision and disability all with Sun Life.”

Sun Life added the U.S. group benefits space to its core growth strategy a few years ago “because it’s a relatively capital light business, with low-tail risk and re-priceable products,” said Connor.

The company is keen on growing its dental business, which up until now it has only been able to offer through partners. “Dental is an attractive market for us, with good [return-on-equity] potential and significant opportunity to cross-sell strong product to our existing and future customers,” said Fishbein, who also mentioned the deal’s potential to bring the company more business through brokers and private exchanges.

“Opportunities to acquire a group business are rare. … The combined businesses will increase the size of our in-force business to approximately $4 billion … this increased scale and breadth of products will give us an enhanced presence with our distribution partners, including both brokers and private exchanges,” said Fishbein, adding that dental is the second-most desired product, after medical, on private exchange platforms.

“This is an interesting deal and I actually think we’ll see some more of these kinds of things,” says Sharp.

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