BC-CANADA-INSURANCE/ (WRAPUP 1)

WRAPUP 1-Canada insurer results improve, miss expectations

+ Sun Life Q4 EPS C$0.52 vs C$0.23 yr-earlier

+ Manulife Q4 EPS C$0.51 vs yr-earlier share loss C$1.24

TORONTO(Reuters) - Two of Canada's biggest life insurers notched sharply higher quarterly profits Thursday, with stock market gains and stronger sales allowing them to end a tough year on a brighter note, but both missed market expectations and their shares tumbled in early trade.

Manulife Financial Corp , North America's largest life insurer, reported a profit of C$868 million ($819 million), or 51 Canadian cents a share, in the fourth quarter.

While that was a big improvement from the loss it reported for the year-earlier quarter, Manulife missed market expectations and its shares fell 1.7 percent to C$19.17 in early trade on the Toronto Stock Exchange.

Profit at Sun Life Financial, Canada's No. 3 lifeco, more than doubled in the final quarter of 2009, but the gain fell short of analysts' forecasts. Its shares fell 3.1 percent in early trade to C$30.39.

While the results of both companies were below expectations, they were in sharp contrast to those of a year earlier, when market turbulence and exposure to ailing equity and credit markets sideswiped profits.

Both Manulife and Sun Life reiterated forecasts for higher earnings in 2010 and they pointed to an improvement in return on equity, a key measure of profitability, as evidence they have turned the corner on the woes of 2008 and 2009.

Manulife Chief Executive Donald Guloien said ROE rose to 13.1 percent in the final quarter of 2009 and was at 5.2 percent for the year as a whole, up from 2.0 percent for 2008.

"While this is a significant improvement over last year, we are dedicated to very significant improvements in earnings and return on shareholders' equity over time," Guloien said in a statement.

Sun Life said net income surged to C$296 million, or 52 Canadian cents a share, in the fourth quarter, below the 65 Canadian cents a share expected by analysts, according to Thomson Reuters I/B/E/S.

While the profit was more than double the year-earlier income of C$129 million, or 23 Canadian cents a share, RBC Dominion Securities analysts said the lower-than-expected profit was slightly negative for the stock.

"There was a shortfall in expected profit, impact from new business and earnings on surplus, a good part of which we expect to turnaround in the first half of 2010," the analysts wrote in a note to clients.

Return on equity was 7.6 percent in the fourth quarter, up sharply from 3.3 percent a year earlier.

($1-$1.06 Canadian) (Reporting by Andrea Hopkins; editing by Peter Galloway)

REUTERS