Sun Life Financial today reported a 12% drop in profit the second quarter ended June 30 due to weaker earnings at its U.S. insurance and asset-management businesses.

The life insurer said net income in for the quarter was $519 million, or 91¢ a share. That compares with $590 million, or $1.02 a share, in the 2007 period.

Return on equity fell to 12.9% in the quarter, from 14.5% a year earlier.

Earnings were also impacted by the strong performance of the Canadian dollar relative to foreign currencies, which reduced operating earnings by $17 million or 3¢ a share, the company said.

Sun Life cited several factors for the drop in earnings: a decline in U.S. equity markets, the unfavorable impact of interest rate movements and associated hedges, wider credit spreads and credit-related allowances on reserving requirements, and credit-related losses on asset sales in Sun Life Financial’s U.S. insurance business.

Sun Life’s U.S. profit fell 47% in the quarter to $83 million.

Earnings at MFS Investment Management, its U.S. asset-management unit, fell 18% to $56 million, primarily due to declining stock markets.

Earnings at Sun Life’s Canadian operations rose 6% to $296 million, mainly due to higher interest rates and equity markets, the company said.