A pandemic that killed more than 2 million people and sickened over 100 million seems like a situation tailor-made 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 (US$465 million) to families of COVID-19 victims.

Pandemic lockdowns and stimulus programs that sent markets higher helped insurers limit certain costs and fueled 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. “Net-net, 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 much of the costs for COVID-related payouts.

Coronavirus 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 2 per cent to $25.10 at 9:56 a.m. in Toronto, while Sun Life advanced 2.3 per cent to $63.18.

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 short-term 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.

While Sun Life reported a drop in full-year net income, the company’s underlying profit measure -- which excludes impacts from things like interest-rate changes and restructuring charges -- rose 5.1 per cent to $3.21 billion. Fourth-quarter underlying net income was $1.47 a share, topping analysts’ $1.39 average estimate.

Manulife and Sun Life both also got a lift from their wealth- and asset-management businesses, which benefited from 2020’s market volatility. Manulife’s insurance and wealth business across Asia, normalized for core investment gains, accounted for 41 per cent of earnings last year, up from 35 per cent in 2016, Gori said. That figure will grow to 50 per cent by 2025, he said.

Manulife saw net inflows of $8.9 billion for wealth- and asset-management last year, compared with a $900 million outflow in 2019. Sun Life saw net inflows of mutual, managed and segregated funds of $23.1 billion in 2020.

Great-West Lifeco Inc., another major Canadian life insurer, also posted fourth-quarter results on Wednesday that beat expectations. Adjusted earnings were 80 Canadian cents a share, compared with analysts’ 74-cent average estimate. Great-West shares rose 0.4 per cent to $30.86.

The crisis has changed people’s financial game plans in a way that may help the industry for some time, Manulife’s Gori said.

“The pandemic has really highlighted the importance of insurance protection and wealth management,” he said. “Folks have really come to appreciate the importance of having protection for these kinds of emergencies.”