In a commentary published Aug. 28, Morningstar DBRS noted that Canada’s Big Four lifecos – Manulife, Great-West Lifeco, Sun Life and iA Financial Group – performed well in the first half of 2025, despite ongoing uncertainty related to the tariff situation with the United States.

The ratings agency pointed out that “core earnings and return on equity are trending higher amid continued sales momentum in Asia. Thus far, trade uncertainty and geopolitical tensions have had limited impact on the sector while equity markets have turned more favorable after weaker conditions at the beginning of the year.” 

The commentary, signed by Patrick Douville, Vice President Global Insurance & Pension Ratings, and Marcos Alvarez, Managing Director Global Financial Institution Ratings, states that the big lifecos are continuing to “deliver steady growth, with demographic changes favoring asset management and other retirement-oriented products over traditional protection products.”

Morningstar DBRS also points out that the Asian market “remains a growth leader in 2025 relative to the more mature North American markets, driven by the expanding middle class while the weakness in real estate has benefitted alternative savings and retirement products such as those offered by life insurers.” 

Leadership changes 

Morningstar DBRS also underlines that the first six months of the year were marked by “a period of leadership transition in the industry” with new CEOs appointed at Manulife Financial (Phil Witherington) and Great-West Lifeco (David Harney).

“As both of the incoming CEOs were promoted into their respective roles and have extensive leadership experience, we do not expect substantial strategic shifts to arise from either transition,” states the commentary. 

U.S. strategies 

Morningstar DBRS says the U.S. market “remains a key area of differentiation for Canadian life insurers, with substantially different approaches to product and strategy.” Manulife is continuing “to optimize its U.S. operations” while Sun Life is “focusing on rate increases and improved profitability in group benefits. Great-West is “taking advantage of its scale in retirement services,” says the commentary. iA, meanwhile, “remains below its medium-term target of 20% of core earnings being generated by its U.S. business, which is unlikely to be achieved through organic growth.” 

Growth for Manulife and Sun Life “continues to be focused on Asia, as well as Wealth and Asset Management.” Their Asia focus will also increasingly differentiate these two lifecos from Great-West and iA “as they will be more and more affected by economic, demographic, and geopolitical conditions in Asia going forward,” underlines the ratings agency. 

Buybacks and dividends 

The commentary also notes that the lifecos excess capital generation “continues to be mainly allocated to share buybacks and dividend increases, with two relatively small merger and acquisition transactions being announced so far in 2025.” Manulife announced on Aug. 6 that it has signed an agreement to acquire 75 per cent of Comvest Credit Partners and iA Financial Corporation announced July 28 that it has entered into a definitive agreement to acquire RF Capital Group Inc. 

The commentary points out that the Big Four’s Life Insurance Capital Adequacy Test (LICAT) ratios remain strong “with new capital rules for segregated funds introduced in Q1 2025 having limited negative impacts.” 

Following their annual reviews, Morningstar DBRS confirmed its credit ratings for the Big Four with stable trends in 2025.