David Friend, THE CANADIAN PRESS

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TORONTO - Sun Life Financial Inc. (TSX:SLF), one of Canada's largest insurance companies, is boosting its presence overseas with the acquisition of the United Kingdom operations of Lincoln National Corp. for about C$395 million.

The Toronto-based insurer will increase its business in Britain by about 60 per cent to C$19 billion through the transaction, Sun Life's chief executive Donald Stewart said Monday in a release.

It will also double the number of policies in force to 1.1 million.

Sun Life aims to complete the deal in the third quarter.

"The combined operation is expected to generate attractive returns and serve to position Sun Life for future growth in one of the world's largest life insurance markets," said Stewart.

"This focused transaction demonstrates our disciplined approach to acquisitions and to our business. Importantly, the transaction demonstrates our financial strength even during these turbulent times."

Sun Life Financial, which is one of Canada's most global insurance companies, also has operations in the United States, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda.

At the end of March, Sun Life had total assets under management of C$375 billion.

Lincoln Financial is the marketing name for Lincoln National Corp. (NYSE:LNC) and its affiliates. Based in the Philadelphia area, Lincoln Financial had assets under management of US$171 billion at March 31.

The latest transaction marks an approach that Sun Life plans to mirror in the foreseeable future, suggested Michel Leduc, vice-president of public and corporate affairs at the company.

"What we're really looking for is fit with our current businesses rather than looking at entering new businesses or new markets," he said in an interview.

The acquisition will also provide Sun Life with an estimated earnings per share growth of eight to 10 cents a share in 2010, while return on equity - a broad measure of financial efficiency - is estimated to increase by 0.2 per cent.

"We view this transaction as positive for Sun, but it is not a game changer," said Desjardins analyst Michael Goldberg in a note.

"It is instead a modest tuck-in that still leaves Sun with capacity if other opportunities arise. For Lincoln, it allows redeployment of capital from a non-strategic business."

Leduc suggested that Sun Life would be looking for "bolt-on" acquisitions in the United States focusing on areas like its employee group health benefits, mutual funds and especially retirement products.

"We see tremendous and significant opportunity there, particularly in the U.S.," he said.

Also Monday, Lincoln Financial said it would raise US$950-million in preferred stock as part of the Capital Purchase Program from the U.S. Treasury, and another $600 million in common shares and $500 million in debt.

Shares of Sun Life were down 97 cents to $30.43 in afternoon trading on the Toronto Stock Exchange.