(Bloomberg) -- Manulife Financial, Canada’s largest insurer, posted earnings that met analysts’ expectations as gains in insurance and asset management were tempered by rising interest rates.

The Toronto-based company said second-quarter net income declined 36$ to $455 million, or 29 cents a share, according to a statement. Profit excluding some items was 44 cents a share, matching the average estimate of 13 analysts surveyed by Bloomberg.

“We continued to deliver robust growth in wealth management and life insurance,” CEO Donald Guloien said in the statement. “Net income, as a result of changes in interest rates, was lower than expected.”

Net income slipped as the company took a $276 million hit as its accounting assumptions were negatively impacted by a steepening yield curve, mainly in the U.S. The value of instruments in Manulife’s interest-rate swap program changes with swings in interest rates, according to Chief Financial Officer Steve Roder.

Higher interest rates tend to benefit insurers over time as they push up bond returns and the assets used to meet policy guarantees, while lower rates squeeze those returns.

Core earnings, which strips out the impact of interest rates, rallied 29% to $688 million, according to financial documents.

INSURANCE GAINS
Insurance products jumped 27% to $588 million with Asia, U.S., and Canada reporting sales increases. In Asia, benefits coverage sales rose 23% over the prior year with Japan sales contributing a record $1629 million. Canadian sales rose 28% to $126 million and the U.S. was up 2% to $90 million.

Wealth and asset management flows, which include mutual fund sales, pension plan deposits, and the fees for managing institutional assets, rose in each region. Assets flowing into the Asian unit more than doubled to $3.9 billion as Manulife started new fund products and benefited from “strong market sentiment.” They rose by $2.9 billion, or 64%, in Canada and rallied 11%, or $8.4 billion, in the U.S., according to financial documents.

The company’s overall assets also rose after the December acquisition of New York Life’s retirement services business. The life insurer now manages $673 billion as of June 30.

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