Sun Life Financial Inc. posted its third loss in five quarters after it increased reserves to protect against declining stock prices. The Canadian insurer expects to have profit before one-time items of as much as C$1.7 billion ($1.6 billion) next year.

The third-quarter loss was C$140 million, or 25 cents a share, compared with a loss of C$396 million, or 71 cents, a year earlier, the Toronto-based insurer said in a statement today. The company was expected to have a loss of 2 cents a share, the median estimate of nine analysts surveyed by Bloomberg News.

Canada’s third-biggest insurer said earnings were eroded by a C$513 million charge to reflect updated assumptions on interest rates and equity prices. The company also set aside C$194 million for downgrades on its investment portfolio.

“We continue to face challenging economic headwinds,” Chief Executive Officer Donald Stewart said in the statement.

Sun Life said in August it expected third-quarter costs of as much as C$550 million to reflect changes in interest rate and equity assumptions.

A year ago, Sun Life wrote down its debt holdings by C$636 million on losses tied to Lehman Brothers Holdings Inc., American International Group Inc. and Washington Mutual Inc.

Sun Life fell 12 cents to C$30.11 in trading yesterday on the Toronto Stock Exchange. The shares have risen 5.9 percent this year.

Profit from Canada surged 39 percent to C$219 million, as gains on the benchmark Standard & Poor’s 500 and S&P/TSX Composite indexes lifted asset-management fees.

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