November 3, 2010 / 9:29 PM / 7 years ago

UPDATE 2-Stock rebound drives Sun Life to profit beat

* Q3 ADJ EPS C$0.79 vs EST C$0.61

* Revenue slides 12.5 pct to C$7.7 bln (Adds details, background, estimates)

By Cameron French

TORONTO, Nov 3 (Reuters) - Sun Life Financial (SLF.TO) reported a stronger than expected third-quarter profit on Wednesday, rebounding from a year-earlier loss on the back of strong equity markets and a growing asset base.

Canada's No. 3 insurer earned C$453 million ($449 million), or 79 Canadian cents a share, during the quarter. That compared with a loss of C$140 million, or 25 Canadian cents a share, in the year-before period.

Analysts polled by Thomson Reuters I/B/E/S had expected, on average, a profit of 61 Canadian cents per share.

"Improvements in equity markets and continued strong execution of our strategy resulted in solid earnings across major business lines and geographies compared to the same period last year," Sun Life Chief Executive Don Stewart said in a statement.

The Toronto-based insurer has extensive operations in Canada, the United States, and Asia. It competes with Manulife Financial (MFC.TO) and Great-West Lifeco (GWO.TO).

Revenue for the quarter dropped to C$7.7 billion from C$8.8 billion a year earlier, hurt by the strong Canadian dollar and a decrease in net investment income.

Surging stock markets during the quarter added C$156 million to the insurer's bottom line, while changes in assumptions on the company's obligation to shareholders added another C$49 million, it said.

Sun Life's assets under management rose by 10 percent to C$455 billion, on the back of strong equity markets and net sales of mutual and managed funds. Return on equity was 11.2 percent, compared with a return of negative 3.5 percent a year earlier.

The company's minimum continuing capital and surplus requirement ratio (MCCSR), a key measure of capital strength, was 208 percent at the end of the quarter, down from 210 percent on June 30, and from 221 percent at the end of 2009.

Sun Life announced last week it will sell its reinsurance business to Warren Buffett's Berkshire Hathaway (BRKa.N) in a deal that would have little impact on the insurer's bottom line, but would boost its MCCSR by 10 to 14 percentage points.

Sun Life's shares ended the session up 0.8 percent at C$28.79 on the Toronto Stock Exchange. The results were released after markets closed.

$1=$1.01 Canadian Reporting by Cameron French; editing by Rob Wilson

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