12:27 PM EDT, 05/02/2025 (MT Newswires) -- The Lifeco sector is characterized by strong levels of regulatory (and excess capital), low levels of balance sheet leverage and vastly reduced exposure to long-dated guarantee-rich product liabilities, notes National Bank.

In the near term, analyst Gabriel Dechaine sees headwinds emerging for the Wealth businesses that generate about 40% of earnings, and has trimmed his estimates accordingly. Dechaine also see a re-emergence of earnings volatility as a downside from the current situation, with reported EPS under IFRS 17 much less stable relative to core EPS as disclosed by each company (i.e., an average spread of ~25% this quarter).

"Longer term, we believe investors will question the attainability of new ROE targets for each company, with all aiming for the 17-20%+ range" Still, Dechaine stresses it is too early to throw these goals out the window, and he does not expect management teams to back away from them, either.

Top picks are Manulife Financial ( MFC ) and Sun Life Financial ( SLF ).

Canadian life insurers begin reporting first-quarter results May 7.

Price: 51.39, Change: -1.00, Percent Change: -1.90