Wealth management fueling Canadian insurers’ growth

Three Canadian insurers that serve the U.S. market enjoyed significant earnings in the second quarter, fueled in large measure by the company’s growing wealth management business.

So concludes Moody’s Investors Service in a “Special Comment” on the three carriers: Manulife Financial, Sun Life Financial and Great-West Life. The report examines the financial results and impact on creditworthiness of initiatives undertaken by the companies.

In the second quarter, Sun Life’s report net income rose by 60 percent compared to the year-ago period, rising to $391 million from $244 million (in Canadian dollars). The other two carriers likewise enjoyed earnings in the second quarter as compared to the year-ago period: a positive $227 million versus a loss of $309 million for Manulife Financial; and $521 million versus $488 million for Great-West.

Moody’s credits the double-digit growth for all three life insurers’ wealth management businesses to increased investment activity among retail customers and to the companies’ robust investment performance.

“We expect Canadian consumers to regain their confidence as the economy continues to recover and to allocate more household resources towards retirement savings,” the report states. “Higher interest rates and reduced equity market volatility would further encourage investment activity and the growth of mutual fund [assets under management], a stable source of recurring earnings for the Canadian life insurers.”