TORONTO, July 30 (Reuters) - Canadian life insurers are set to see double-digit earnings decreases in the second quarter as the pandemic-induced economic slowdown ushered in decade-low interest rates and weighed on sales.

Analysts predict declines in underlying earnings per share of between 10% and 14% from a year earlier for the four major life insurers -- Manulife Financial, Sun Life Financial , Great-West Lifeco and IA Financial.

"Insurance companies keep a very large reserve of cash, and when interest rates are as low as they are... it obviously hurts them," said Allan Small, senior investment adviser at Allan Small Financial Group with HollisWealth.

The year-on-year declines are set to be the most since the first quarter of 2012, according to analysts.

IA Financial will report results on Thursday, followed by Great-West, Manulife and Sun Life on Aug. 4, 5 and 6 respectively.

Canaccord Genuity analyst Scott Chan wrote in a note that the industry is buffeted by lower interest rates, higher credit losses from corporate downgrades and the energy sector, resulting in a 14% year-on-year profit drop, despite strong wealth management performance.

Despite the headwinds, second-quarter profits are likely to be an improvement on the prior three months, of about 1%, Barclays analyst John Aiken said, helped by improved equity markets. Canaccord also expects a 1% profit increase from the prior quarter, and CIBC Capital Markets a 4.6% gain.

Canadian insurers could follow some of their U.S. counterparts, including Aflac Inc and Principal Financial in beating estimates, said Brian Madden, portfolio manager at Goodreid Investment Counsel, which holds Manulife shares.

But wealth management strength is "not likely to be enough to offset weak sales in the group insurance and group retirement segments," Madden, who expects earnings declines in the high-single-digits from a year ago, said. "When you're having bankruptcies and layoffs, and you're not adding a lot of employees, you're not buying a lot of new... plans." (Reporting By Nichola Saminather Editing by Alistair Bell)