Manulife Financial Corp. and Sun Life Financial Inc. both reported fourth-quarter earnings that beat analysts’ estimates even after paying out a combined $590 million to families of COVID-19 victims.

Claims such as dental limited by lockdown help firms pull through 2020

A pandemic that killed more than two million people and sickened over 100 million seems like a situation tailormade to wreak havoc on the companies meant to protect people’s finances against such circumstances. Instead, Canada’s largest life insurers emerged relatively unscathed.

Manulife Financial Corp. and Sun Life Financial Inc. on Wednesday both reported fourth-quarter earnings that beat analysts’ estimates, capping full-year profits that, by different measures, increased from 2019. Those results came even after the companies paid out a combined $590 million to families of COVID-19 victims.

Pandemic lockdowns and stimulus programs that sent markets higher helped insurers limit certain costs and fuelled profits in other business lines. Manulife and Sun Life, Canada’s largest life insurers by market value, also benefited from technology that helped them continue to sell policies. Even claims weren’t as catastrophic as might have been expected, Manulife chief executive officer Roy Gori said.

“In some markets, we saw some headwinds and challenges because of increased claims, and in others we saw benefits,” Gori said in an interview. “Netnet, we did not see a headwind from a morbidity and mortality perspective.”

For example, lockdowns meant to halt the spread of the virus dramatically reduced payouts for routine procedures like dental visits and physiotherapy sessions, helping counter many of the costs for COVID-related payouts.

Manulife paid out more than $390 million to families of people who succumbed to COVID-19, Gori said. Despite that, the Toronto-based company said net income rose 4.8 per cent to $5.87 billion last year. Fourth-quarter core earnings were little changed at $1.47 billion, or 74 cents a share. Analysts estimated 72 cents, on average.

Manulife shares rose 1.38 per cent to $24.94 at market’s close in Toronto, while Sun Life advanced 1.17 per cent to $62.46.

Sun Life, also based in Toronto, settled almost $200 million of COVID -related death claims. Reduced payouts in the annuity business countered some of that, CEO Dean Connor said.

“It was a negative, as you would expect,” Connor said in an interview. “But that’s what we’re in business for and we were proud to help those families.”

Sun Life saw a drop in shortterm disability claims because people weren’t able to get procedures like back surgeries that would have kept them out of work. Some longer-term claims stretched on because of the unavailability of treatment, Connor said.