TORONTO (Bloomberg) Sun Life Financial Inc., the first Canadian insurer to report quarterly earnings, said profit rose 15 percent to a record, topping analysts' estimates, as higher stock prices lifted asset-management fees.

Second-quarter net income climbed to C$590 million ($557 million) or C$1.02 a share, from C$512 million, or 88 cents, a year earlier, the Toronto-based insurer said yesterday in a statement. Revenue dropped 28 percent to C$4.5 billion because of lower returns on investment income.

Canada's third-largest insurer benefited from higher fund sales as the benchmark Standard & Poor's/TSX Composite Index climbed 5.6 percent during the quarter. Sun Life owns 36.5 percent of CI Financial Income Fund, the country's second- biggest mutual fund company, and has a stake in asset manager McLean Budden.

"Equity markets have been strong," said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.2 billion, including Sun Life shares. "When the markets go up, people usually put money into their mutual funds."

Excluding one-time costs related to scrapping the Clarica brand in Canada and buying the US group benefits unit of Genworth Financial Inc., profit was C$1.03 a share. That compares with the 96-cent-a-share median estimate of 10 analysts polled by Bloomberg.

Shares of Sun Life climbed 75 cents, or 1.5 percent, to C$49.80 at 9.40 a.m. in trading on the Toronto Stock Exchange, the biggest gain in more than two months.

Profit from Canadian insurance and asset management climbed 6 percent to C$280 million, boosted by sales of individual insurance and investment products. Mutual fund sales in Canada rose to an 11-year high in May, according to the Investment Funds Institute of Canada. Canada represented 48 percent of Sun Life's operating profit last year.

Earnings from MFS Investment Management, the company's Boston-based fund business, climbed 28 percent to C$68 million.

US insurance earnings surged 73 percent to C$156 million on higher sales of annuities and individual life insurance. Sun Life reported last month that gross sales of variable annuities in the US were at least $1 billion in the first five months of 2007, a 66 percent increase from the year-earlier period.

US insurance results were "well ahead of our expectations and one of the strongest quarters ever," UBS Canada analyst Jason Bilodeau wrote in a note to investors yesterday.

Sun Life raised its quarterly dividend 6.3 percent to 34 cents a share, the fourth increase in two years.