Canadian investors considering insurance stocks face a difficult choice between two industry giants. Both companies just reported their fourth-quarter 2025 earnings, and the numbers tell an interesting story about where each company stands.
Manulife (TSX: MFC) and Sun Life (TSX: SLF) present different approaches to the life insurance business. While both companies operate globally and offer similar products, their strategic priorities and financial performance present contrasting pictures for investors seeking to allocate capital.
The choice between these two stocks isn’t as simple as picking the one with better earnings. Each company has distinct strengths, weaknesses, and growth strategies that could appeal to different types of investors.
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Manulife delivers strong growth but faces U.S. headwinds
In 2025, Manulife grew core earnings per share by 8% year over year. The Toronto-based insurer generated $6.4 billion in cash remittances and returned $5.5 billion to shareholders through buybacks and dividends.
Manulife’s contraction service margin grew by double digits. In Asia, new business CSM was up over 20% for the sixth consecutive quarter.
However, core earnings in the U.S. were down 22% in Q4 due to unfavourable life insurance claims experience and lower investment spreads. The company also experienced volatility in its alternative long-duration assets (ALDA) portfolio, with a $232 million charge in the fourth quarter.
The TSX dividend-paying giant ended Q4 with a LICAT (life insurance capital adequacy test) ratio of 136%, which provides it with significant financial flexibility. It also announced a 10% increase in the dividend and a new share buyback program totaling 42 million shares.
Sun Life posts record RoE with balanced performance
Sun Life delivered underlying EPS growth of 12% for 2025, beating its medium-term target of 10%. It achieved an underlying return on equity (ROE) of 18.2% for the year, with fourth-quarter ROE hitting 19.1%.
Unlike Manulife, Sun Life saw strong performances across all business segments. Its Asia business delivered 50% year-over-year growth in protection sales, with Hong Kong sales more than doubling.
Sun Life reported a 17% price increase on renewal business for January 2026, positioning it well for improved margins. CEO Kevin Strain emphasized the company’s scale advantage: “We have the scale, the data and underwriting advantages that have helped us create a sustainable earnings business.”
The company’s asset management business exceeded its 2025 earnings target, generating $242 million compared to a $235 million goal set five years ago.
Sun Life is completing buyouts of its private asset managers, BGO and Crescent, in the first half of 2026, thereby deepening ownership and strengthening its alternative asset platform.
Sun Life ended the year with a LICAT ratio of 157%, significantly higher than Manulife’s, and generated $4.2 billion in organic capital.
Which insurance stock wins for investors?
The answer depends on what you value as an investor.
Sun Life offers higher profitability metrics, with its 18.2% ROE substantially ahead of Manulife’s 16.5% core ROE. The company’s medium-term target of a 20% ROE suggests room for expansion. Sun Life also maintained more consistent earnings across segments, avoiding the volatility Manulife experienced in the U.S.
Manulife trades at a lower valuation and could offer greater upside if it can resolve its U.S. challenges and maintain momentum in Asia. The company’s aggressive focus on artificial intelligence could drive future efficiency gains. CEO Phil Witherington said Manulife achieved 30% of its target to generate $1 billion-plus in AI enterprise value by 2027.
For income-focused investors, Manulife’s 10% dividend increase signals confidence in cash generation. For those prioritizing stability and consistent execution, Sun Life’s balanced performance across all segments and higher ROE make it attractive.
Both companies face macroeconomic uncertainty, but their diversified business models provide some protection. The final choice comes down to whether you prefer Manulife’s growth potential at a lower valuation or Sun Life’s proven execution and superior profitability metrics.
