* Q3 loss C$0.25 per share vs loss C$0.71 yr-ago
* Loss driven by changes to actuarial assumptions
* Says 2010 income may be 33 pct lower than pre-crisis
* Maintains dividend (Adds details, outlook for normalized earnings, byline)
TORONTO, Nov 5 (Reuters) - Sun Life Financial Inc (SLF.TO) reported a net loss on Thursday due mostly to a change to the assumptions it uses to value its books, but cited underlying strength as it maintained its dividend payout.
Canada's No. 3 life insurer also said it believed 2010 earnings could be as much as 33 percent below what they were before the financial crisis sideswiped the industry, offering a much-sought-after view of what normalized income might be.
Sun Life said it had a net loss of C$140 million ($132 million), or 25 Canadian cents a share, for the third quarter. That compares with a net loss of C$396 million, or 71 Canadian cents a share, for the same quarter a year earlier.
The Toronto-based insurer said in August it would update its equity and interest rate-related actuarial assumptions used to value its variable annuities, segregated fund and some fixed annuities, so the one-time negative impact was expected.
"There is underlying strength in our business but we continue to face challenging economic headwinds," Chief Executive Donald Stewart said in a statement.
"Our Canadian business reflects a strong brand and distribution, our U.S. business continues to benefit from enhanced distribution and strong annuity sales, and we are well positioned in our international markets."
Sun Life maintained its quarterly dividend of 36 Canadian cents a common share, as expected. Rival Manulife Financial Corp (MFC.TO) shocked investors last quarter by halving its payout.
Sun Life said the implementation of changes to its assumptions reduced income by $513 million -- within the range it had provided in August. Reserve increases of C$194 million for downgrades on the company's investment portfolio also took a bite out of earnings.
The decreases were partly offset by reserve releases of C$161 million as a result of stock market gains.
But analysts have said they are trying to look through the fog of one-time charges and actuarial changes in the insurance industry to get a sense of where earnings will be when the lifecos emerge from the volatility of the financial crisis.
Sun Life's estimate of its 2010 "normalized" earnings did just that. The company said it expects earnings for the year ending Dec. 31, 2010, to be in the range of C$1.4 billion to C$1.7 billion -- well below the average annual operating earnings of C$2.1 billion notched from 2005 to 2007.
The company based its estimate on the expectation that interest rates and asset values will be lower and capital requirements and taxes will be higher, among other considerations.
"Going forward, earnings are expected to reflect today's lower asset levels and account values as well as higher risk management costs, potential volatility and uncertainty in capital markets, the expected higher levels of capital required by regulators, lower leverage, currency fluctuations and the potential for higher tax costs as governments around the world look to address higher deficits," the company said. ($1=$1.06 Canadian) (Reporting by Andrea Hopkins, editing by Gerald E. McCormick and Maureen Bavdek)