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Canada’s two largest insurers continue to feel the impacts of the pandemic after major outbreaks of COVID-19 put several key Asian markets into lockdowns and mortality rates from the virus spiked throughout the United States at the beginning of 2022.

Manulife Financial Corp. MFC-T saw its shares drop more than 10 per cent to $21.86 by end of day Thursday. It reported “core earnings” – an adjusted profit figure – of $1.5-billion, or 77 cents a share, for the first quarter of 2022. That was down from $1.6-billion, or 82 cents a share, a year earlier.

Sun Life Financial Inc., SLF-T which also released its first-quarter earnings this week, saw shares slightly decline by 2.5 per cent to $61.06 by end of day Thursday.

The insurer reported “underlying net income” – another adjusted figure – of $843-million, or $1.44 a share, for the first three months of the year. That was down from $850-million, or $1.45 a share, a year earlier.

Both insurers have been rapidly expanding their market shares in Asia in recent years, and both have been impacted for several quarters by the continuing spread of COVID-19 in various regions on the continent.

Manulife saw its core earnings in Asia decrease by 5 per cent, driven by lower new business volumes. The decreases were mainly in Hong Kong, but were also evident in several other markets in Asia that were under COVID-19 lockdown measures, as well as Japan.

Sales for Manulife’s Asian operations dropped to $1.04-billion in the first quarter of 2022, down 9 per cent from $1.28-billion in the same quarter last year.

During an earnings call, Manulife president and chief executive Roy Gori told analysts the impact was temporary, but that the insurer may not see an “immediate bounce back in one quarter.”

Of COVID-19 restrictions in Hong Kong, Mainland China and Vietnam, he said, “These containment measures have challenged the broader economy and the insurance industry as a whole.”

Mr. Gori said the company has seen recent signs of stronger customer demand as COVID-19 case counts decline. For example, he said, confirmed cases in Hong Kong had dropped from a peak of 77,000 daily to 300 daily as of May 1, and containment measures there began to relax in late April.

Sun Life, which operates in eight Asian countries, reported a drop of $161-million in profit for its Asian markets in the first quarter. That was down 19 per cent from $198-million in the first quarter of 2021. Asia accounts for about 16 per cent of Sun Life’s overall profits.

Sun Life CEO Kevin Strain told The Globe that the company has paid out about $1-billion in COVID-related claims globally since the onset of the pandemic in early 2020.

But he is optimistic the markets in Asia will turn around, because COVID lockdown measures have already been lifted in certain regions, including Hong Kong.

Sun Life also announced it will be expanding its relationship with CIMB Niaga in Indonesia, a bancassurance partner it began to work with in 2010. Under the new agreement, Sun Life will be the provider of insurance solutions to CMB Niaga customers through all channels starting in 2025.

Sun Life’s U.S. business reported underlying net income of $118-million, a 31-per-cent decline from a year prior. The decrease was driven largely by an uptick in the country’s COVID-19 mortality and morbidity numbers, which caused an increase in claims.

“We see COVID-related claims starting to come down – and we expect to see that trend continue into the second quarter,” Mr. Strain said. “The combination of the number of people who are vaccinated along with the number of people who have now had COVID is getting us closer to herd immunity.”

The president of Sun Life’s U.S. business, Dan Fishbein, told analysts external estimates are predicting about 30,000 total COVID-19-related population deaths in the U.S. in the second quarter – down from about 160,000 total deaths from the virus in the country in the first quarter.

“We should expect to see significant improvement in our mortality ... unfortunately, we don’t think that COVID is going away completely,” Mr. Fishbein said on the call. “And we do think there will be elevated mortality for a significant period of time. So we are building that into our pricing, which we started increasing at the end of last year. But it does take a full three years to cycle through the entire book of business.”

At both insurers, income from wealth management services offset some of the losses as investors in Canada and the U.S. continue to put money into savings.

Manulife saw a surge in its global wealth management business, with $6.9-billion in net flows for the quarter, compared to $1.4-billion for the same period in 2021. Sun Life’s asset management division reported net income of $302-million for the quarter, compared with $230-million last year.

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