Wednesday, March 28, 2007

Sun Life to Phase-Out Clarica Brand

  
Financial Post, Jonathan Ratner, 28 March 2007

Sun Life Financial Inc.’s decision to phase out its Clarica brand in favour of the Sun Life Financial name in Canada, will affect the company’s first quarter results.

Sun Life will incur asset write-downs in the range of $40-million to $50-million dollars, after tax, in the quarter, according to Desjardins Securities analyst Michael Goldberg. Another $15-million to $20-million in charges will come in the next 12 months for advertising, signage and other name-related changes.

“Management believes that the strategy will allow the company to realize greater economies of scale in marketing spending and reduce brand duplication in the Canadian market,” Mr. Goldberg said in a note to clients.

Despite lowering his earnings per share estimate for 2007 by 10¢ to $3.95, Mr. Goldberg maintained his ‘buy’ recommendation and $56 price target on Sun Life. This represents upside of roughly 6%.

Investment firm McLean Budden, which is jointly owned by Sun Life Assurance, will not be affected by the change.
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