Life Insurance Industry Resilience: Sun Life and Manulife Report Strong Earnings
Canada’s two largest insurers, Sun Life Financial Inc. (SLF-T) and Manulife Financial Corp. (MFC-T), have demonstrated remarkable resilience, exceeding analysts’ profit expectations for the final quarter of 2025. This performance comes amidst ongoing U.S. trade wars and broader market volatility, showcasing the strength of the Canadian life insurance sector.
Sun Life’s Impressive Performance
Sun Life reported an “underlying” net income of $1.09 billion, or $1.96 per share, for the quarter ending December 31st. This represents a significant increase compared to the $965 million, or $1.68 per share, earned during the same period in 2024. The company’s success spans both its asset management divisions and individual and group life insurance sales.
Manulife’s Growth and Dividend Increase
Manulife also experienced substantial growth, with “core earnings” jumping to $2 billion, or $1.12 per share, compared to $1.91 billion, or $1.03 a year earlier. Adding to this positive outlook, Manulife announced a 10% increase to its dividend, now at 49 cents per common share. The company is also actively investing in sustainability initiatives, such as its partnership with veritree for a reforestation program.
Navigating Geopolitical Risks
Despite global economic uncertainties, Sun Life CEO Kevin Strain believes the geopolitical risks haven’t yet translated into significant economic impacts. He noted that inflation remains contained, equity markets have continued to grow, credit conditions are favorable, and interest rates are beneficial to the insurance industry. Strain highlighted the increasing international interest in collaborating with Canada, citing recent trade missions to Malaysia and Japan with Prime Minister Mark Carney and the Business Council of Canada.
Stock Performance and Market Reaction
Sun Life shares saw a 6.3% increase to $93.64 on Thursday, with a 10.5% rise over the past year. Manulife shares, however, experienced a 5.2% dip to $48.70, though they remain up 15.2% year-over-year. The decline in Manulife’s share price was attributed to unfavorable life insurance claims in the U.S., particularly among high-net-worth clients.
Shifting Investment Trends
Both insurers observed a trend of U.S. retail investors shifting funds out of U.S. equities and into more passive index funds, like exchange-traded funds (ETFs), and safer assets like cash. This shift was largely driven by actively managed funds being underweight in high-performing technology companies – often referred to as the “Magnificent Seven” (Apple, Amazon, Microsoft, etc.).
Great-West Lifeco’s Positive Results
Great-West Lifeco, the parent company of Canada Life, also reported strong fourth-quarter earnings, with profits reaching $1.2 billion, or $1.36 per share, up from $1.1 billion, or $1.20 a share, a year earlier.
These results underscore the overall health and stability of the Canadian life insurance industry, even in the face of global economic challenges. The sector continues to provide a sense of security for investors and individuals alike.
