Sun Life Financial Services of Canada Inc. is planning to enter U.S. bank-insurance distribution with a splash — by buying two major U.S. sellers of annuities through banks.

The Toronto insurer, which does not now distribute insurance through banks in the United States, agreed Thursday to pay about $1.7 billion in cash for Keyport Life Insurance Co. and Independent Financial Marketing Group. The seller is Liberty Financial Co. of Boston. The deal is to close in the third quarter.

Keyport and Independent Financial are Liberty Financial’s two major bank-insurance manufacturing and distribution subsidiaries.

The acquisitions should boost the U.S.-operations share of Sun Life’s net income — about half of last year’s $534.7 million total — to two-thirds, said C. James Prieur, president and chief operating officer of Sun Life Financial Services, which has $219.3 billion of assets under management.

“We feel very strongly that the bank channel is becoming a very effective way to sell fixed and variable annuities,” he said.

Mr. Prieur said that the amount of annuities now sold through banks shows that banks are a viable sales channel and should be explored further.

Bank sales of annuities rose 21% in last year, to $32 billion, according to Kenneth Kehrer Associates, Princeton, N.J.

Sun Life plans to use Independent Financial, a third-party marketer that specializes in sales through banks, to increase sales of its own investment and insurance products as well as those manufactured by Sun’s mutual fund subsidiary, Boston-based MFS Investment Management, Mr. Prieur said.

Keyport Life, an annuity company that sells through banks and broker-dealers, will remain a separate operation, he said. “They’ll deal with the banks they deal with,” he said.

He also said he would like to see Keyport broaden the product lines it distributes to include other annuities, including Sun Life products.

Independent Financial, based in Purchase, N.Y., was the largest third-party marketer of mutual funds and annuities through banks in 2000, according to Kehrer. Its sales of mutual funds and annuities rose 13% last year, to $3.1 billion, including $1.5 billion of variable annuities, up 0.7%. Sales of individual securities rose 12%, to $200 million.

Keyport was the seventh-largest bank seller of variable annuities and the fourth largest of fixed annuities, according to Kehrer, selling $740 million of variables, up 72%, and $1.4 billion of fixed, up 220.5%.

At Sun Life’s annual shareholder meeting in April, chairman and chief executive officer Donald A. Stewart said the company was looking to expand in the United States and Asia. The Liberty deal is just part of the plan.

“We want to be a top 10 player,” Mr. Prieur said. “If we’re going to growth from 18th to 10th, we have to grow both internally and through acquisitions.”

Len Savage, an analyst with Fox-Pitt, Kelton, called it “a very nice deal for Sun Life.”

“It gives them more scale in the annuity business, and diversifies their distribution more into the banks and brokerages,” Mr. Savage said.

In addition, he said, Sun Life’s plan to use these new distribution relationships to sell its own products is a good idea and could help it increase U.S. sales.

Goldman Sachs analyst Heather Wolf Mattes said, “I think Sun Life sees distribution through banks as a good add-on to its current distribution, which is really focused on the broker-dealer channel.”

She also sees it as a great opportunity for Sun Life to expand the distribution of its own products in this country. “That’s the synergy, if you will, on the distribution front,” she said.

Ms. Mattes said she expects Sun Life will continue to examine similar acquisition opportunities and further expand its presence here.

The deal would achieve half of Liberty Financial’s goal of selling itself. In November the company, which manages $63.7 billion of assets, retained Credit Suisse First Boston to help it find a buyer.

Porter Morgan, senior vice president of Liberty Financial, said it decided on a two-part strategy — to sell the insurance and annuity pieces now, to Sun Life, and the asset management business to another buyer.

Its majority shareholder, Liberty Mutual Insurance Co., which owns 71% of the stock, supports selling the businesses.

Liberty Financial’s asset management business includes several subsidiaries: Stein Roe & Farnham Inc., Colonial Mutual Funds, Independence Life & Annuity Co., Newport Pacific Management, Liberty Asset Management Co., Crabbe Huson Group, and Progress Investment Management.

“We received what we think is a solid offer from Sun Life for our annuity business and our bank marketing business,” he said. “We will continue with renewed effort to find a buyer for our asset management business. Hopefully, that will happen pretty quickly.”

Mr. Morgan declined to speculate on when Liberty would find a buyer for its remaining businesses. “Someone could show up today, or it may take months,” he said.

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