Manulife (TSX:MFC) and Sun life (TSX:SLF) present different approaches to the life insurance industry. Although both companies operate globally and offer similar products, their strategic priorities and financial performance provide contrasting pictures for investors looking to allocate capital.
The choice between these two stocks isn’t as simple as choosing the stock with the better earnings. Each company has different strengths, weaknesses and growth strategies that may appeal to different types of investors.
Manulife is experiencing strong growth, but is facing headwinds in the US
In 2025, core earnings per share grew 8% year-on-year. The Toronto-based insurer generated $6.4 billion in cash transfers and returned $5.5 billion to shareholders through buybacks and dividends.
Manulife’s shrinking service margin grew by double digits. In Asia, new CSM production increased by more than 20% for the sixth quarter in a row.
However, US core earnings fell 22% in the fourth quarter due to adverse life insurance claims experience and lower investment spreads. The company also experienced volatility in its long-term alternative asset (ALDA) portfolio, with a charge of $232 million in the fourth quarter.
The TSX dividend-paying giant ended the fourth quarter with a LICAT (life insurance capital test) ratio of 136%, giving it significant financial flexibility. It also announced a 10% dividend increase and a new share buyback program for a total of 42 million shares.
Sun Life posts record RoE with balanced performance
Sun Life achieved underlying EPS growth of 12% through 2025, exceeding its medium-term target of 10%. It achieved an underlying return on equity (ROE) of 18.2% for the year, while its ROE in the fourth quarter was 19.1%.
In contrast to Manulife, Sun Life achieved strong performance across all business segments. The Asian business achieved 50% year-on-year growth in sales of protection products, with sales in Hong Kong more than doubling.
Sun Life reported a 17% price increase for its renewal business for January 2026, positioning the company for better margins. CEO Kevin Strain emphasized the company’s economies of scale: “We have the scale, data and underwriting advantages that have helped us create a sustainable profit business.”
The company’s asset management business exceeded its 2025 profit target, generating $242 million, compared to a $235 million target set five years ago.
Sun Life will complete buyouts of its private asset managers, BGO and Crescent, in the first half of 2026, deepening ownership and strengthening its alternative assets platform.
Sun Life ended the year with a LICAT ratio of 157%, significantly higher than Manulife, and generated $4.2 billion in organic capital.
Which insurance stocks are winning for investors?
The answer depends on what you value as an investor.
Sun Life offers higher profitability figures, with its ROE of 18.2% being substantially higher than Manulife’s core ROE of 16.5%. The company’s medium-term target of an ROE of 20% suggests room for expansion. Sun Life also maintained more consistent profits across all segments, avoiding the volatility Manulife experienced in the US
Manulife is trading at a lower valuation and could offer more upside potential if it can resolve US problems and maintain momentum in Asia. The company’s aggressive focus on artificial intelligence could yield future efficiency gains. CEO Phil Witherington said Manulife has achieved 30% of its target of generating more than $1 billion in AI business value by 2027.
For income-oriented investors, Manulife’s 10% dividend increase signals confidence in cash generation. For those who prioritize 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 ultimate choice comes down to whether you prefer Manulife’s growth potential at a lower valuation or Sun Life’s proven execution and superior profitability.
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