WRAPUP-Wealth management drives Canadian insurance profits

Thu Feb 13, 2014 4:51pm EST
 
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* Canadian life insurers shifting business to wealth

* Fourth-quarter profits surge, Manulife misses estimates

* Shares mixed after strong gains last year

By Cameron French

TORONTO, Feb 13 (Reuters) - The profits of Canadian life insurers grew in the fourth quarter, as higher returns from growing wealth management units offset uneven insurance sales, highlighting a shift in business as the companies cut risk in the wake of the financial crisis.

Manulife Financial Corp, the country's largest insurer, posted a 20 percent rise in net profit for the fourth quarter on Thursday, while No. 3 player Sun Life Financial Inc said its profit from continuing operations more than doubled to C$571 million ($519.78 million).

Smaller Industrial Alliance Insurance and Financial Services Inc, the No.4 player in the market, posted a 26 percent rise in profit and boosted its dividend by 6 percent. Great-West Lifeco Inc, the second-largest insurer, said its profit doubled largely because of a litigation recovery.

For Manulife, core profit was driven by wealth sales that rose 15 percent to C$12.2 billion, while insurance sales in the quarter fell 32 percent to C$617 million.

"Insurance sales were down, largely because they're charging more for their policies, but wealth sales were way up," said Peter Routledge, an analyst at National Bank Financial.   Continued...