By Nichola Saminather and Sohini Podder
(Reuters) - Canadian insurers Manulife Financial (NYSE:MFC) and Sun Life Financial (NYSE:SLF) narrowly beat quarterly earnings expectations on Wednesday, driven by strong growth in their asset management units, but Sun Life warned that the spread of the Omicron variant will impact first-quarter earnings.
Government stimulus and pandemic savings over the past year have sparked a boom in the wealth and asset management businesses of Canadian insurers, helping offset the impact of claims related to the COVID-19 pandemic.
The chief executive of Manulife, Roy Gori, said in an interview that during the quarter "Asia saw the challenges associated with ... COVID, but over the full year, it had a tremendous performance."
Manulife's 27% increase in global wealth and asset management earnings helped offset declines in profits in Asia, Canada and the U.S.
Core earnings in the three months through December rose to 84 Canadian cents per share, up 13.5% from a year earlier and compared with analysts' expectations of 82 Canadian cents per share, according to IBES data from Refinitiv.
Manulife, Canada's biggest life insurer, also saw new business growth across all markets.
"Manulife came in ahead of expectations on the back of ongoing growth in its Asia platform," Barclays (LON:BARC) analyst John Aiken said in a note. "The recovery in profitability from the third quarter, increase in its book value, and outlook for 2022 should help support its valuation moving forward."
Smaller rival Sun Life reported underlying profit that was largely in line with estimates, thanks to 15% growth in its asset management unit, to C$382 million. That, combined with increases in profits in Canada and Asia, helped offset a 51% decline in the U.S. business and lifted overall earnings 4%.
"The death rate in the working age-group was significantly higher in the fourth quarter in the U.S.," related to the Delta variant, CEO Kevin Strain told Reuters. "Omicron has high numbers of infections, which is becoming a higher number of hospitalizations and deaths, and we see Omicron having an impact on the first quarter."
Growth in Asia was partially offset by COVID-19-related mortalities of C$12 million, mostly in the Philippines.
Sun Life's underlying quarterly profit grew 4.2% to C$898 million from a year earlier, or C$1.53 per share, compared with analysts estimates of C$1.52 per share.
($1 = 1.2669 Canadian dollars)