Sun Life Financial Inc. raised its dividend today and reported a modest increase in fourth-quarter profit.

Sun Life increased its quarterly dividend on common shares to 36¢, up nearly 6% from 34¢ a share.

The Toronto-based life insurer said it earned $555 million or 97¢ a share, in the last quarter of 2007, up from $545 million, or 94¢ a share in the year-earlier period.

Analysts had predicted a slightly higher increase of $1.03 per share.

Operating earnings per share was 98¢, up from 94¢ in the equivalent period in 2006.

Operating return on equity was 14.3% in the quarter.

Sun Life said the strong Loonie since the fourth quarter of 2006 reduced operating earnings by $41 million or 7¢ per share during the quarter.

“The rapid appreciation of the Canadian dollar in the second half of 2007 created a significant headwind in the fourth quarter on both our top and bottom line,” said Rick McKenney, executive vice-president and CFO at Sun Life, in a morning conference call. “This is the largest currency impact we have experienced in any quarter since we became a public company in 2000.”

Full-year earnings were $2.22 billion, up from $2.09 billion in 2006.

Assets under management fell to $492 billion for the quarter, compared with $505 billion for the same quarter a year earlier. “While no insurance company will be immune to a difficult market and economic conditions, “ said McKenney. “We believe that our balance sheet and risk management capabilities will continue to allow us to weather periods of difficulty comparatively well.”