In a remarkable display of resilience, Canada’s largest insurers, Sun Life Financial Inc. and Manulife Financial Corp., have surpassed analysts’ profit forecasts for the fourth quarter of 2025. As the industry demonstrates its robustness against ongoing U.S. trade tensions and fluctuating market conditions, both companies have reported significant profit gains, buoyed by robust asset management performance and strong sales in both individual and group life insurance.
Strong Earnings Reports
Sun Life has announced an ‘underlying’ net income of $1.09 billion, translating to $1.96 per share for the quarter ending December 31. This marks a notable increase from the $965 million, or $1.68 per share, recorded in the same quarter of 2024. Meanwhile, Manulife reported a core earnings surge to $2 billion, equivalent to $1.12 per share, compared to $1.91 billion, or $1.03 per share, a year earlier. In a further show of confidence, Manulife has increased its dividend by 10%, bringing it to 49 cents per common share.
Both firms reported figures that adjust for investment losses and other accounting nuances—Manulife refers to these as “core earnings,” while Sun Life labels its numbers as “underlying net income.” Analysts had anticipated earnings of $1.87 per share for Sun Life and $1.06 per share for Manulife, according to an RBC Capital Markets report.
Navigating Market Challenges
Despite the backdrop of heightened investor anxiety stemming from the U.S. trade war, Sun Life CEO Kevin Strain noted that geopolitical risks have yet to inflict significant economic damage on the broader market. “Inflation remains relatively stable despite tariffs, equity markets have shown growth, and interest rates are favourable for the insurance sector,” Strain remarked in an interview with The Globe.
Strain, whose role involves substantial international travel, has observed a growing interest globally in partnering with Canadian firms. He has participated in several trade missions, including a recent trip to Malaysia alongside Prime Minister Mark Carney and a separate visit to Japan with the Business Council of Canada. “We’re well received wherever we go,” he added.
Market Reactions and Share Performance
Following the positive earnings report, Sun Life’s shares experienced a surge of 6.3%, closing at $93.64, reflecting a year-on-year increase of 10.5%. Conversely, Manulife’s stock fell by 5.2% to $48.70, despite showing a 15.2% improvement compared to the previous year. The decline in Manulife’s share price was attributed to a drop in core earnings within its U.S. segment, which fell to US$229 million from US$294 million over the same period last year.
Manulife’s Chief Financial Officer, Colin Simpson, explained that this decline was largely due to unfavourable life insurance claims, particularly among high-net-worth clients. Despite the challenges in the U.S. insurance market, Simpson expressed optimism for recovery in 2026 and pointed out that insurance remains a reliable sector during turbulent times. “The industry has long been viewed as a safe haven,” he noted.
Shifts in Investment Preferences
Interestingly, both insurers have noted a trend where retail investors are pulling funds out of U.S. equities. Simpson indicated that this shift is largely due to actively managed funds being underweight in the ‘Magnificent Seven’—a term used to describe a group of high-performing technology stocks, including industry giants like Apple, Amazon, and Microsoft. This underperformance has prompted many retail investors to gravitate towards passive index funds and safer options, such as cash.
In addition to these reports, Great-West Lifeco, which owns Canada Life, also released its earnings for the fourth quarter, showing a profit of $1.2 billion, or $1.36 per share, up from $1.1 billion or $1.20 per share a year prior.
Why it Matters
The strong earnings reported by Sun Life and Manulife underscore the resilience of the Canadian insurance sector in the face of geopolitical and market uncertainties. As both companies navigate evolving market dynamics, their performance not only highlights their strategic adaptability but also reflects broader economic trends. This resilience is vital as it reassures investors and policyholders alike, demonstrating that the insurance industry continues to thrive, even in challenging times. With the ongoing global economic shifts, the responses of these insurers may set a precedent for how financial institutions can weather future storms.
