LIFE INSURERS

Global stock markets rose sharply in the latter part of 2009. But will that be enough to outweigh the damage to Canadian life insurers from credit losses and the strong dollar?

Investors will get their answer Thursday, when the big three - Sun Life, Manulife and Great-West Lifeco - all report their fourth-quarter results. As usual, much of the focus falls on Manulife, the insurer most heavily exposed to equities. The company has said that a 10-per-cent improvement in stock markets would boost its bottom line by $1.3-billion, while Sun Life would gain $75- to $125-million. (The S&P/TSX index rose 3.1 per cent in the final three months of 2009, while the S&P 500 was up 5.5 per cent.)

"Equity market increases should positively impact earnings through improved fee income for all four lifecos and releases of reserves at Manulife and Sun Life," RBC analyst André-Philippe Hardy wrote in a note to clients.

Besides rising stock markets, slightly higher long-term interest rates and a lack of reserve charges should allow all of the insurers to get back into the black, "which is a significant improvement from the losses Manulife and Sun Life reported in the third quarter," said Mario Mendonca, an analyst at Genuity Capital Markets.

The consensus earnings-per-share estimates are 46 cents for Great-West Lifeco, 47 cents for Manulife, and 63 cents for Sun Life, but there's a wide range between analysts' lowest and highest estimates, signalling the difficulty in forecasting insurers' results. Lately, they've been full of surprises.