Three of Canada’s big insurance company’s reported improved earnings in the fourth quarter, helped by rising stock markets, but they cautioned the recovery will be slow.

“There are signs of improvement in the world economy, however credit markets are still feeling the effects of the worst recessionary period in 60 years and recovery in markets such as the United States remain fragile,” said Sun Life chief executive Donald Stewart on a conference call Thursday.

Sun Life reported a fourth-quarter profit of $296 million or 52 cents per diluted share on $5 billion in revenue and investment income. That compared with a profit of $129 million or 23 cents a share on $4.71 billion in revenue and investment income in the fourth quarter of 2008.

Despite the surge in profits, the figures came in below the average analyst estimate of 65 cents a share.

Sun Life’s return on equity was 7.6 per cent.

Manulife racked up an $868-million profit in the fourth quarter, that amounted to 51 cents per common share, on $6.97 billion in revenue and investment income. That compared with a year-earlier loss of $1.87-billion, or $1.24 per share, on $11.65 billion in revenue and investment income.

The average analyst estimate had been for earnings of 69 cents a share, according to Thomson Reuters.

Manulife chief executive Donald Guloien said while there are many promising signs of a recovery in the capital markets, it will be slow.

He added that the slow recovery in the rest of the world could represent growth opportunities for Canadian financial services companies.

“This is a terrific time for our companies to help our economy by taking advantage of the opportunities that are presented everywhere in the world,” he said.

Meanwhile, Great-West Lifeco Inc. (TSX:GWO) reported a fourth-quarter profit of $443 million, or 47 cents per share, for the quarter ended Dec. 31, compared with a loss of $907 million of $1.01 per share a year ago when the company took a $$2.18-billion charge to goodwill.

The average analyst estimate had been for earnings of 46 cents per share.

Revenue and investment income totalled $6 billion, down from $6.58 billion.

John Stephenson, a portfolio manager with First Asset Investment Management in Toronto said it’s a good time to buy shares in the Canadian insurers because the worst seems to be behind them.

They have improved their risk management practices since discovering they hadn’t reserved enough capital to pay out their guarantees when the equity markets tanked, he said.

“Now we’re in a situation where the market’s going to be choppy, no question about it, but they’ve been buffering themselves by boosting their reserves, so now they’re well capitalized to go into this next market cycle,” Stephenson said.

Stephenson said the Canuck companies are still trading higher than their U.S. counterparts, who are “virtually on their backs” due to the weak market there. He added that 2010 could be prime for mergers and acquisitions for the Canadian insurers.

“People have been looking for a recovery in these stocks sooner than it’s been happening…but long term, this is a really good time to buy these stocks.”

Shares of Sun Life lost 96 cents to close at $30.40 on the Toronto Stock Exchange on Thursday, while Manulife closed down 34 cents at $19.16.

Great-West shares closed up 27 cents at $26.77.