TORONTO Shares of Manulife Financial (MFC.TO) and Sun Life Financial, two of Canada's largest life insurers, jumped to multi-year highs on Thursday after the companies posted better-than-expected results on the back of stronger mutual fund sales and favorable market conditions.
Manulife stock jumped 3 percent and touched a 3-1/2 year high after the insurer reported a third-quarter core profit of 36 Canadian cents a share, which topped analysts' estimates by a penny a share.
"I thought it was a pretty good quarter... Sales trends, I thought, were pretty good across the board," said Tom Lewandowski, an analyst at Edward Jones.
Sun Life shares were up 2.4 percent and trading at a four-year high after the company reported late on Wednesday a profit from core continuing operations 69 Canadian cents a share, ahead of analysts' estimates of 64 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Both companies benefited from increasing exposure to wealth management revenues as well as from ongoing efforts to de-couple their performance from unpredictable stock and bond markets following heavy losses in the wake of the 2008 financial crisis.
Manulife, the country's biggest insurer, posted net income of C$1.03 billion ($989.01 million), or 54 Canadian cents a share, rebounding a from a year-earlier loss of C$211 million, or 13 Canadian cents a share.
The year-before loss was due to a C$1 billion charge resulting from the company's annual actuarial review, which took into account the impact of low bond yields on the company's insurance obligations.
Strengthening markets allowed Manulife to book a much smaller C$252 million loss from this year's review.
Wealth management revenues rose 34 percent to C$11.3 billion, while insurance sales rose 4 percent.
Besides its Canadian operations, Manulife owns U.S. insurer John Hancock and is growing in Asia, where it is present in about a dozen countries.
SUN LIFE ANNUITIES SALE
Wealth management revenues were also strong at Sun Life, contributing a 26 percent rise in premiums and deposits to C$32.9 billion.
The insurer sold its U.S. annuities business during the quarter to reduce its markets exposure.
Excluding a C$919 million loss on the sale and other items, Sun Life earned C$422 million, or 69 Canadian cents a share, down from a year-earlier C$459 million, or 77 Canadian cents a share.
Income was reduced by C$111 million due, in part, to assumption changes related to insurance contract liabilities. This item produced a year-earlier gain of C$164 million.
Shares of both companies have been on a roll since bottoming out amid heavy losses in late 2011. Shares of Sun Life have approximately doubled since then and were trading at C$36.22 at midday on Thursday, their highest point since August 2009.
Manulife shares, which have risen 89 percent in just under two years, touched C$19.34 on Thursday, their highest level since April 2010.
Manulife's recovering profit and share price have prompted questions about when the company might resume raising its dividend. It halved the payout in 2009.
Chief Financial Officer Steve Roder said, however, that uncertainty about accounting standards and the company's leverage ratio means shareholders will have to wait a bit longer.
"I don't think there's anything likely to happen in the short term," he told Reuters.
(Reporting by Cameron French; Editing by Peter Galloway)