Sun Life Financial Inc. reported a 25% jump in operating earnings in the second quarter thanks to improving stock markets and strong results from Canadian operations that helped counter the effects of a strong Canadian dollar and low interest rates in the United States.

Earnings, both on an operating and net basis, were $366 million for the quarter ended June 30, up from operating profits of $293 million a year ago. On a net basis, last year’s figure was $71 million, but it excluded $222 million of special items, primarily related to the $217-million of one-time restructuring charges taken in the second quarter of 2002. Without the charge, earnings were up $73 million, mainly thanks to an additional two months of earnings from the Clarica Life Insurance Co. business acquired in May 2002.

On a per-share basis the life insurance company said it earned 60¢ for the quarter this year. That compared with 59¢ operating earnings and 14¢ net earnings last year.

Revenues in the second quarter this year fell 4.3% to $5.6 billion.

Sun Life CEO Donald Stewart credited “excellent earnings” in the Canadian operations, rising equity markets and a rebound in earnings at mutual fund unit MFS Investment Management for the strong second-quarter results. “In Canada, the continued success of our integration efforts was reflected in stronger results across all of our major business lines,” he said in a release. “The impact of improved equity markets can be seen in the results for MFS, where earnings increased by 50% from the first quarter.”

But he noted that the U.S. annuities industry “continues to be challenging, due to the persistently low interest rate environment and volatile equity markets. However, in the second quarter management took action by introducing new fixed annuity products and lowering minimum interest rate guarantees. We expect the benefits of these actions to mitigate the impact of spread compression by the end of the year.”