Q3 2020 Sun Life Financial Inc Earnings Call
[music].
Good morning, Ladies and gentlemen, my name is Stephanie and I will be your conference operator today.
At this time I would like to welcome everyone to the Sun Life Financial Q3, 2020 financial results Conference call.
All lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session.
The host of the call will be lead Chalmers Senior Vice President head of Investor Relations and capital Management. Please go ahead Ms. talmers.
Thank you Stephanie and good morning, everyone welcome to Sun Life Financial earnings Conference call for the third quarter of 2020.
Our earnings release and slides for today's call are available on the Investor Relations section of our web site <unk>. Unlike dotcom.
We will begin today's presentation with an overview of our third quarter results by Dean Connor, President and Chief Executive Officer, I felt like financial following.
Following deans remarks, Kevin strain executive Vice President and Chief Financial Officer will present, the financial results for the quarter.
After the prepared remarks, we will move to the question and answer portion of the call.
Other members of management will also be available to answer questions on today's call.
Turning to slide two I draw your attention to the cautionary language regarding the use of forward looking statements and non IFRS financial measures, which form part of today's remarks as noted in the slides forward looking statements may be rendered inaccurate by subsequent events.
And with that I'll, now turn things over to Dean.
Thanks, Lee and good morning, everyone.
As the World continues to navigate through the challenges of this pandemic I want to express my deepest gratitude to our employees and advisors, who are there for each other and are there for our clients. So far this year, we have delivered more than $140 million in claims paid to the families of clients who have succumbed to cope with.
19, and paid millions more in pandemic related health claims.
We've delivered strong relative investment performance for clients and our clients client experience survey scores have increased again for the fourth consecutive year in part due to our outreach in response on COVID-19, it's.
It's times like these that remind us why we are in business and underscore the importance of what we do for clients.
Turning to slide four Q3 was a strong quarter reported net income was 750 million up 10% over the prior year, primarily from more favorable market related impacts, partially offset by reserve strengthening from assumption changes and management actions underlie.
Underlying net income of 842 million grew 4% over the third quarter of last year and underlying earnings per share grew 5% over the same period assets under management grew 12% to just under 1.2 trillion dollars.
We generated a strong underlying return on equity of 15.1% for the quarter the.
The light cat ratio at SLF is 144% a level well in excess of the supervisory minimum our capital and cash positions remain healthy and along with a low leverage ratio of 21.5% provide flexibility and opportunities for capital deployment.
On October 20, Onest, we announced our intention to acquire a majority stake in Crescent capital Group, a global alternative credit investment manager, primarily focused on below investment grade credit.
<unk> sale and fulfillment processes digitally resulting in a great experience for clients.
We also delivered another strong quarter in wealth and asset management growing sales, 28% over the prior year and that includes two major wins in our group retirement services in Canada, underscoring our position as the leading provider in this space and defined benefit solutions are pension risk transfer business.
We completed a $1.1 billion payout annuity sale, which was the largest single day annuity transaction by an insurer in Canada.
We also are assumed responsibility for the administration of one of the country's largest defined contribution plans Mcgill University with $1.7 billion of assets.
So unlike global investments are Canadian wealth management firm delivered 20% growth in retail net flows over the prior year a few weeks ago, we celebrated SL Gis 10th anniversary. It's a business. We started shortly after the global financial crisis to help Canadian spilled lifetime financial security and at the end of.
Q3, SL Gi had grown to nearly $31 billion in assets under management and it represents a growing source of earnings for sunlight, Canada.
The value of new business, which covers our insurance and wealth businesses, excluding asset management was up 4% driven mainly by higher sales volumes aided by Canadian group retirement services.
At MFS, we once again ended the quarter with net inflows, which totaled U S 4.5 billion driven by positive flows from U S retail and non U S retail distribution channels.
<unk> continues to deliver strong investment performance with 86%, 89% and 84% of U S. Retail assets ranked in the top half of their liberal categories over 10, five and three year periods respectively.
At SLC management, we completed the acquisition of the majority stake in infrared capital partners in the quarter, a global infrastructure in real estate investment manager net sales in SLC management, where $851 million an improvement from that outflows last quarter.
With the expected close of Crescent capital, we will have a compelling mix of solutions for clients, including real estate infrastructure equity investment grade fixed income and now alternative credit we started SLC management six years ago and have grown the business at a relatively fast clip to 106 billion.
Uh-huh AUM today, 145 billion pro forma crescent and a growing contributor to SLC enter sunlight.
So to conclude we delivered a strong third quarter on many fronts with notable achievements across all four pillars.
Looking ahead, the course and duration of the pandemic is of course uncertain.
But what's not uncertain is that we are well positioned to manage risk and grow the business.
We will use this time to continue to accelerate everything digital and continue to obsess about looking after our clients.
It's equally important that we look after each other.
As we said before.
Mental health has been a growing problem in society and the pandemic is only made it more challenging.
So as employers, we all need to help our people on this front and as a financial institution, we need to do our very best to help our clients.
And with that I will now turn the call over to Kevin strain, who will take us through the results.
Thanks, Dean and good morning, everyone trying to fight six sunlight continued to perform well during COVID-19, which is a testament to our strategy to derisk the business and to invest in technology, coupled with our track record of strong execution, we have strong financial results for the quarter, including for earnings row.
Offline growth and capital Ah reported EPS for Q3 was $1.28 of 11% over last year and a reported net income for Q3 was $750 million reported earnings were driven by strong underlying net income and favorable market related impacts.
Partially offset by unfavorable assumption changes in management actions.
Margaret related impacts were predominantly driven by interest rates and equity market growth, partially offset by the narrowing of credit spreads and changes in the fair value of investment properties, mostly from office and retail property valuations.
Underlying EPS $1 44 increased 5% over a strong Q3, and 2019 and underlying that income in the third quarter was $842 million driven by stronger results across all four business groups.
Growth is expected profit and new business gains positive claims experience and positive investment experience, where partially offset by lower earnings on surplus income and corporate results as the prior year results also benefited by.
Financial flexibility.
On October the first we issued $750 million of subordinated debt, which brings are pro forma leverage ratio 223, 5% and pro forma cash at the holding company to $3.2 billion.
Fuck value per share increased by 7% over the prior year to $38 17.
Reflecting reported net income foreign currency translation and accumulated other comprehensive income and net unrealized iaff's game.
Actually offset by dividends on common shares.
Slide seven shows business group performance on both are reported and underline net income basis for the quarter Canada's reported that income of $387 million increased 74% compared to the third quarter of 2019, driven by underlying net income market related impacts and favorable aqua in the quarter.
Underlying net income was $293 million, an increase of 9% from improvements in group benefits and strong expected profit growth.
The favorable results in group benefits were driven by lower disability claim volumes as well as pricing actions, we have taken to address increases in long term disability claims.
The U S had a net loss for the quarter for reported net income of $113 million, which was an improvement over the same period last year, reflecting less unfavorable assumption changes and improved market related impacts.
Underlying the income in the U S was in line with the prior year as favorable morbidity experienced in stock lost business growth and higher investing activity were offset by unfavorable mortality in the group benefits business and unfavorable expense experience and less favorable credit experience.
<unk> that income in our asset management business increased by 14% to $251 million, reflecting lower acquisition and integration costs offset by unfavorable fair value adjustments on MFS sure based payment award, reflecting mfs's growth in AUM.
Underlying net income increased by 17% to $294 million driven by higher average net assets at MFS and higher income at SLC management, partially offset by changes in returns on seed investments as MSM MFS had seen Gabe seed gains in the prior year, which did not repeat this year and therefore.
<unk> had seed losses in the third quarter related to certain real estate investments in Asia, We saw a highest underlying net income ever in the third quarter reported net income increased by $66 million to $236 million compared to the same period in 2019, mostly driven by favorable asthma.
Underlying net income increased to $164 million on lower new business strain, primarily in international hubs favorable expense experienced in business growth, partially offset by less favorable credit experience.
Our corporate segment, which includes the UK business reported a net loss of $11 billion for the quarter down from reported net income of $253 million in Q3 2019.
2019 reported net income benefited from favorable asthma in the UK.
On an underlying basis, the corporate segment had a net loss of $45 million in the quarter compared to underline net income of $17 million in the same period in 2019 the.
The prior year included the favorable impact on the resolution of tax matters, which was not repeated this year.
Other drivers of the year over year change included favorable credit experienced in the UK, partially offset by improved expense experienced in corporate support.
Slide eight provides an overview of the source of earnings against the challenging environment expected profit grew by 13% year over year with 13% growth in Canada, 15% in the U S and 17% in asset management, excluding asset management and the impact of currency expected profit grew by 8%.
In Asia expected profit grew by 4% as growth in the business of 10% was partially offset by higher planned regional office expenses we.
We had new business gains of $8 million during the quarter compared to strain of $22 million and the prior period. These gains were driven by repricing actions in Canada, and higher sales and repricing in our international hubs business in Asia <unk>.
Experienced losses in the quarter with $13 million, largely driven by unfavorable net market related impacts from the impact of narrowing credit spreads and lower appraisals of investment properties with partial offset from higher equity markets and interest rates.
Other experience items in the quarter included favorable morbidity experience in investing activity gains, partially offset by unfavorable mortality experience and use group benefits predominantly from COVID-19 related claims and unfavorable expense and other experience.
During the quarter, we undertook our annual review of assumption changes in management actions or asthma, which amounted to a pretax loss of $91 million or $53 million After tax Act.
<unk> and Q3 included negative updates to mortality assumptions and laps and other policyholder behavior reserves strengthening predominantly in the U S and and enforce management.
This was partially offset by favorable morbidity updates in Canada in the UK as well as favorable investment related assumption updates and other model enhancements.
Other than a source of earnings which amounted to a loss of $60 million includes the fair value adjustment of MFS share basis payment awards acquisition and integration costs and the impact of hedges and asphalt Canada that do not qualify for hedge accounting.
Brings on surplus declined year over year due to lower investment income and lower afm's gains with.
With the addition of new investment capabilities SLC, we expect there will be opportunities to enhance yields overtime and surplus.
Are effective tax rate on reported net income was 10.3%, reflecting tax exempt investment income on an underlying basis that.
Underlying that income basis, the effective tax rate was 17.5% in line with our expected range of 15% to 20%.
Slide nine shows a sales results by business group, which continued to show resilience despite restrictions related to COVID-19.
The Quartersaw continued push towards digital sales, which dean discussed earlier and the reopening in some markets of more traditional face to face sales for example, in Hong Kong, China, Vietnam and Malaysia.
Total company insurance sales were broadly in line with the third quarter of 2019, Canada insurance sales decreased by 28% as a result of lower sales and group benefits from lower cases coming to market on a constant currency basis use insurance sales increased by 24% driven by higher sales and all lines of business as our technology.
Solutions are gaining traction with employers.
Asia insurance sales were in line on a constant currency basis with the largest increases being an international hubs upset by decreases in the Philippines compared to the prior year.
While the Philippines remained in lockdown for much of the quarter sales more than doubled compared to queue to as advisors pivoted to digital tools.
Total company, well sales increased by $11.5 billion or 28%.
All sales in Canada increased by 65% driven by higher large case sales and both defined benefits and defined contribution plans age.
Asia, well sales increased by 7% on a constant currency basis, given by fixed income sales in India, partially offset by lower well sales in the Philippines.
Gross sales in our asset management businesses increased by 24% on a constant currency basis, largely from higher mutual and managed fund sales and MFS, partially offset by lower sales in SLC management.
MFS saw positive flows of U S dollars $4 5 billion this quarter driven by the seventh consecutive quarter of positive retail flows institutional clothes were negative in the quarter driven by client rebalancing.
Five new business in the quarter was $261 billion, an increase of 4% compared to the same period in 2019.
Mainly driven by volumes in particular from the Canada group retirement sales.
<unk> turn to slide 10 year to date expenses were up 3% on a constant currency basis, while controllable expenses increased by a modest 1% as we continue to drive expense disciplined across our businesses.
We also benefited from lower discretionary spend like travel and conference related costs due to COVID-19, while continuing to make investments in digital initiatives across the company.
As Dean mentioned on October 21, we announced our intention to acquire a majority stake in Crescent capital group, which we expect to close by the end of the year with the addition of Crescent SLC management now has a full suite of alternative investment offerings for our client across fixed income real estate infrastructure equity and alternative credit to that.
And we're pleased to announce that will be holding a virtual SLC management Investor day on March 18th 2021.
Where Steve feature in his leadership team will walk through our investment capabilities, our strategy and the alternative space and our aspirations for this business.
In summary, we had a strong quarter with solid results across each of our businesses. We continue to focus on making investments in our businesses to strengthen digital capabilities, helping us connect with clients and advisors globally. We're also focused on our M&A pipeline all the while maintaining a strong capital position with that I'll turn the <unk>.
Call back to Lee for the Q&A portion of the call.
Thank you Kevin.
And care that all participants have an opportunity to ask questions on getting a call at the pools limit yourself to one or two questions and then can we can't with any additional questions and right now.
Definitely the Prince Paul the participants Ah question.
Thank you.
The reminder, in order to ask an audio question. Please press star followed by the number one on your telephone keypad. Once again that is star one to ask a question.
And our first question will come from like Scott can of Canaccord Genuity.
Good morning.
My question is on MFS.
Really strong quarter.
Pretax operating margin of 40%.
Looking around to 2021 outside of a market factors, perhaps just an update on industry fee trends and if that is impacting MFS and also on expenses, which seemed to be well controlled in the corner.
Just a bit of an update there in terms of what you are seeing for next year.
Good morning, Scott's micro bears.
And yet.
So given them.
Guided over really over the last number of years around a margin than normal environments in the mid to high Thirty's. This quarter was a little higher than that.
Some of that due to some cost control that we took earlier in the year given with the market did early but.
But also things like travel entertainment are down given the poet. So some of that is probably not sustainable through the cycle. So we continue to think that mid thirties to high thirties range for the margin is what's probably sustainable in terms of fees. When you look at industry fees. They continue to come down 1% plus per annum. If you look across the industry.
We would expect the industry to continue to see that year on year really for for some period of time.
We've been fortunate that we've run fee erosion less than that in some of that is mix or institutional businesses has been in outflows, while a retail business has been solidly in inflows and so we've been outperforming the industry from a fee perspective, but we would stay with the guidance of anywhere from mid to high thirties through cycle.
Okay. Thank you very much.
Your next question is from the line of Gabrielle Duchaine with National Bank financial.
Good morning, just trying to ask you about the real estate.
Evaluation losses, six quarters in a row.
Seeing those.
Wondering if you could tell me what the.
And what impact that has on on your reserve assumption charge that might ensue and.
Maybe some sensitivity what if you were to reduce your real estate return assumption by 100 basis points or something about a big big number or or not.
Thanks, Gabe I'll turn the question that Kevin Morrissey on the actual best estimate and the real estate assumption and then maybe if Randy wants to add any detail on the performance of the real estate class. He can do that.
Yeah. Thanks for your question Gabriel It's Kevin Morris. So, yes, we have had a recent.
It has been unfavourable state returns longer term experience has been quite positive and remember further evaluation assumptions. This is this is a very long term assumption.
So far this year, we've certainly seen some impacting the pandemic there'll be with their city real estate portfolio.
Monitoring it longer term you think it's it's a little too early to conclude for the longer term assumption gave me somewhere where that's gonna go.
We still continue to view real estate very favorably from a relative value perspective, a special most low interest rate Uhm environ.
So in terms of the side.
We have disclosed.
The relative sensitivity of all of our assumptions for real estate.
I don't want to speculate on the size of a potential change as I said, you know a longterm experiences.
Continue to be favorable.
Continue to have confidence in our current assumption.
Okay.
Okay.
Yep.
Randy Brown I'll comment on yeah.
Real estate valuation for the quarter.
The valuations in their portfolio.
We're actually uhm, okay. They came out slightly positive actual.
Total ready to return.
Kevin said, they did underperform longer term assumptions the portfolio is highly diversified we're very comfortable with it.
<unk>.
Kevin mentioned, we're actually quite favorable I'm real estate as an asset class in the very low rate environment, you think the real rate of return available in real estate and other real assets.
In this environment will be quite attractive both for us and for others.
Alright. Thanks. My next question is on the group business and another quarter here where claims.
Claims experience has been positive.
I'm wondering to what extent the recent results have benefited from the government support programs and.
If maybe maybe looked at a different way, but this type of friend.
Friend the positive.
Claims trend.
That compel you to bacon.
Performance into your expected profit next year.
But because of I guess a comment on sustainability.
<unk> all asked shock and then Dan to comment on the first part of your question and then.
And then Kevin Morrissey to comment on the second part unexpected profit. Thanks.
Thanks.
Hi, <unk> yeah. Thank.
Thank you for the question.
As you say there is indeed, a lot of uncertainty out there what we saw.
With claims is a gradual ramp up through the corner.
I would say as we were ending the quarter the level of activity.
Was pretty well back to.
I'm all levels.
The fact that it gradually increased during the quarter of course has benefited for us.
I would say looking I have it's it's tough to predict Gabrielle that a second wave could.
Could be stronger than we think and it could impact.
Would also point out that.
The slower claims is uhm is favorable when we look at experience at the same time, you know that we have administrative service only business for you. So we call it.
And one of the things that means is is actually generate slower fees for us because.
The fees are off the volume off claims so it's a bit of a mixed picture there remains a fair bit about in terms of where we're going but that's obviously something we are watching closely yeah.
I'll turn it to them.
The same shock for the morbidity in the U S group business, there's a few different factors at play here.
The primary driver a favorable disability favorable morbidity experience for us in the quarter was in our stop-loss business and a fair amount of that was actually the emergence of experience from prior periods. So we can't really relate that to economic factors or or Covid.
At this point.
Our disability experience was generally in line with expectations.
So there's certainly may be some impact so far of the very strong support that have been provided to businesses in the U S. But.
But his jock said, it's a little difficult to.
To predict how that will emerge going forward.
Kevin.
Gabriel seven months you could you just clarify your question on.
The expected profit impact please.
I <unk> I guess it.
And Dan's question sort of answered it like whenever you see positive experience over an expedited period in group, especially the following year, you've kind of got into your expected processes.
Select some stuff that you view is.
More sustainable.
But maybe maybe not from the sounds of it.
Yes, I think that's right I think that's the right way to think about the cable that you expected profit does align with the pricing assumption so to the extent that we do make updates and changes as part of me those those assumptions it would be reflected in your expected profitable next year, but it really does align with price.
Constant changes.
Okay. Thank you.
Your next question is from the line of many ground me, what's close your bank.
Hi, Good morning, Uhm following up on the comment and I talked about the risk of a second wave that's in front of us I'm wondering if there's any actions you could take can sort of proactively to take risk off the table given that uncertainty and I'm thinking about building.
Building reserves in particular, and we heard from one of your parents yesterday about sort of a little bit more caution I'll look more cautious stance uhm as they look forward. So I'm just wondering if that's something that's on the table and why or why not so would you consider that.
Many I'll take I'll take the first shot at that and if if Randy wants to add some things are are others cat on the call.
If you look at COVID-19, and what's happening either one of the most important things we're doing as we as we talked about earlier is R pivot to everything digital and building a digital capabilities and we're seeing really good traction on that on the.
On the risk side.
We're well aware of the risks on.
Mortality and morbidity and you've seen the impact they've had on the results and we continue to look at that and manage that and as.
As we think about pricing actions and mix of business and those types of things and on the invested asset side. It's.
You are seeing lower and lower yields and as I mentioned earlier, one of the things that.
We can do is is.
With the addition of some really effective asset managers at a low yield environment, we can leverage SLC to drive yield up and we think that.
If you look at SLC the timing for adding these capabilities is perfect given the the environment that we're in right now and you heard Randy talk a little bit about that so we continue to run scenarios would continue to stress tests that the capital, but overall the businesses performing well and you can see that in the results. So far. This this this year. So I don't think there's any.
Nothing special we're doing outside of continuing to be good risk managers thinking about investments and how investments can perform in different scenarios and then building digital capabilities and many it's dean I would just add to kevin's comments as to build on that that in some ways. The most important things. We did we did several years ago, which was the derisk.
The asset portfolio Randy's talked about that before that set us up nicely coming into this pandemic. Obviously, we didn't know it was going to be a pandemic, but we were looking ahead thinking at some point his credit cycle had to turn for some reason and.
In hindsight I'm glad we took those derisking actions, we did that was the right time to do it.
The only other thing I would it's Kevin again, I'd add one more thing. The fact that we're geographically diverse beans that covid is having different impacts in different markets at different rates and that also benefits us.
Thank you.
Your next question is from the line of Dark on my Hayley with RBC capital market.
Alright. Thank you. Good morning first question is for Kevin strain you mentioned in Asia that expected profit was impacted by some planned expenditures can you maybe highlight how much that was and if.
That is expected to continue next quarter and it's of next year.
So the the way that we do our access Darcos Kevin.
After this pick up the way that we do are expected profit for corporate costs like the retail office is we put our planned expenses into the expected profit and the difference between the 10% return in the 4%.
For the bnb temperature and growth versus the 4% relates back to that in fact, those planned expenses because of a lot of different things good management, but.
Covid, reducing expenses and those types of things actually didn't happen and we saw a small positive but the number is it's less than 10.
And you see it it comes through the the.
The expense results as a positive and a negative this car. So I don't I don't see this necessarily reoccurring next year reset the plan for expenses.
The growth in.
Bnb in Asia from the businesses is largely consistent with the the growth we would expect to drive a 15%.
Earnings growth from from Asia. In fact, there was a headwind a small headwind in the 10% related to equity markets coming down so overall I'd say it's.
That that kind of gives you the perspective of where that lies sparkle.
And I just want to fly show.
Asia, a little more in terms of.
We all know that the Philippines inside of a bit of a a difficult run with covid you've done some work there on on digital so are we to expect that that should bounce back.
And and perhaps I would better than 10% EBIT growth with a whole segment into 2021.
Turn that to Leo.
Yeah.
Good morning, Dr. Currently are here so in the Philippines, what we seen as you can see from the numbers.
Sales were in fact down about 25% from last year's this quarter.
But if you look at sales this quarter compared to prior we.
Basically doubled sales compared to Q too.
The contact that you mentioned is very severe situation from a COVID-19 standpoint with probably one of the work health crisis in Asia and also one of the stricter movement.
Movement restriction environment in Asia, as well and so that's had material impact on sales, especially in a market where I.
If you look at our agency model and the culture.
Much based on relationships and human interaction.
So what you've seen over the course of the last quarter. The bounce back that we've had is.
Very much driven by a lot of actions we've taken because the brought environment is pretty much. The same we've driven a lot of.
Digital rollout.
Dean mentioned a few of them to for example, we've got digital point of sales capability across the market <unk> also rolled out.
Ritual capabilities on top of digital point of sale. So that means you can basically do things remotely with digital signatures and so on.
We've also.
Raised our medical limit through capabilities like room.
Remove medical exams that Dean was talking about and then we have also.
Really dialed up our reach out to client.
With things like webinar, which one of the positive byproduct of this whole thing is is with Webinars, we're actually reaching an order of magnitude more client and things like like education events.
So there's been there's been a lot of activity to overcome these movement restrictions that's creating some of this momentum.
More tangibly.
At an underlying activity level, what we're seeing is that the.
The activity ratio of our advisors is almost back to pre crisis level, but we are ying lower policy side.
And in my mind, that's reflecting the economic challenges of the market you've got significant unemployment.
<unk> got a lot of people across the Philippines, who have lost their jobs or at reduced.
Discretionary spend capabilities and so while we expect to see a continued rebound of our activities in the Philippines, We do expect significant headwind from from the economic situation and then also just the uncertainty with regards to future waves of COVID-19.
The situation hasn't really improved and.
Different parts of the Philippines, keep going back and forth between severe lockdown and slightly less lockdown, we don't anticipate that to get much better over the next couple of quarters. So we're optimistic about our own business momentum, but at the same time that we're just realistic about the significant headwinds there in terms of the continue.
You'd economic volatility and COVID-19 wave.
And just a point of clarification, the Philippines. When you make sales they are they predominantly new business gains.
Yeah Yeah.
There's material new business gains with ECF correct, Okay, great. Thank you very much.
Ah Darko just quickly Kevin I think I might've said bnb once by accident in there. So it's 10% expected pop expected profit growth from the businesses, 4% will include the regional office just to make sure it's clear for everybody.
Thank you.
Your next question is from the line of Doug Young HRT capital market.
Good morning, Uhm, a big picture and maybe this is for for cabinet.
There's a laundry list of things that that moved for you and against you I guess in the quarter and I'm not talking I'm talking from an underlying earnings perspective, not including Act ma'am.
And so I'm just trying to get a sense was there anything unusual this quarter that really seemed in your favor from.
Investment games or higher than normal.
The normal are favorable policyholder behavior expenses things that items that may or may not recur just trying to get a sense of when I look at the quarter is there anything really abnormal leaning one way or another.
Yeah. Thanks, Doug when you look at the notable items.
You can see that they were $35 million for the quarter and I think this is a good place to look for those sorts of unusual things.
From a notable items basis that that's that's right on or a quarter Rolling average. So I think it's roughly where do you expect to be higher from morbidity. This quarter, obviously at 65, and we had the mortality hit but on average it's right where we've been the last eight quarters and we had a tailwind last year from taxes.
Is that didn't reoccur this year, so I think as I look at it there's not.
A lot of noise per se and the results you've got a very sort of clean thing that there wasn't a lot of one time items here the improvement and morbidity as we've talked about is.
There is obviously some uncertainty whether it will continue to be as strong as it was this quarter, but overall it was a good quarter.
Okay.
Perfect and then just to us at U S.
Management I know Dean have asked you this before it.
It's another third quarter gone by and there's a fairly sizeable hit.
From my perspective.
Three years and you've lost money on this business from from that perspective.
And probably happens again this.
This year as well and so just trying to get a sense of why keep the business and I guess, you don't need the capital.
But it's a non core business causes a lot of noise just wanted to get another sense of your I would look for this business and plans for the business.
Oh.
Yeah. Thanks, Doug.
I would say that the work that we continue to do with the enforced management business in United States, which includes renewing reinsurance treaties restructuring the triple X structure as we did this quarter strengthening reserves for laps et cetera are things that have to get done whether we own the business or others on it so.
Our view has been we need to optimize this business for all the different dimensions expenses capital cash generation tax the role of reinsurance and of course being there for clients and.
Our focus has been how do we we have to deal with all the issues I just mentioned, but how do we also.
Make it a better business and improve it and so there's been a lot of progress. We've dealt we've talked before about some of the work we've done on strained your own life insurance cases slowly cases that we've made some great progress there. We've made good progress on expenses and so on all the other issues that as you pointed out have been headwinds are headwinds that.
We would somebody would have to have dealt with one way or the other.
So that's how we're thinking about it and will continue to optimize it and in that sense. That's the way we are thinking about our UK business as well, which is also closed but.
Lots of continue to see opportunity to optimize.
And are you that like.
Most of the big heavy lifting or you halfway through or even the <unk>.
Trying to get a sense.
Doug were never done.
Never done.
[laughter] I would I would just say as we look ahead, we continue to see opportunities to to optimize these clothes block businesses.
Okay. Thank you.
Your next question is from the line of David modem eaten with Evercore.
Hi, Good morning, I just have a question for Dan on the stop loss business in the U S and the competitive environment there.
There's been a number of of new entrants are planned new entrants in the market.
<unk>, a Swiss re in Google partnership.
And Zurich has also said they want to answer that business I guess.
You guys have been at it for awhile and people come and go in the market, but what's your view on the competitive nature of of the market and the stop loss business specifically.
Given these new entrants and how does that impact your view of your margin goals.
Sure It is.
Always been a highly competitive business and as you noted competitors do come and go and including go we've seen some leave the market.
It's obviously, a very attractive business. So it's attracting interest at all times, what I would say about the way we think about it is it's a business that is highly dependent on the skills.
Of the people the expertise and that's really what the brokers consultants and employers are looking for is it really excellent partner.
With people, who really understand in the business and how and can help them manage through it. So we believe we've got the best team we have the largest team in the industry, where the largest independent player and we back that up with the best talent and that will continue to be our differentiation at the same time. It is our intent to continue.
To expand the business to differentiate beyond core stop loss by helping our employer clients manage claims and share more effectively.
So look for more from us on that in the future. We already have good clinical capabilities in place, but we hope to to grow that overtime and then just as far as the current environment.
Remaining competitive, but reasonably rational and as far as the new entrants. Those are planned entrance, we haven't really seen them in the market yet at this point.
Okay, great that that's that's helpful.
And then if I could just shift to Asia and just a question currently Oh on the international hop sales so.
Another strong resolve this quarter and that contributed to a smaller new business drag and help total Asia sales state flat.
I know last quarter, there was some of the existing pipeline coming through.
Converting to sales so I'm I'm just wondering if you could talk about the dynamics of this quarter and specifically if you've been able to start replenishing that pipeline. So we don't see a big drop off in sales at some point once once a pipelines exhausted.
Thanks, David Good morning.
So.
We've international sales and international Hudson General.
You will recall that.
We we made a strategic priority for us in Asia.
In general we see.
We see strong demand.
In Asia for high net worth Ultra hand, it worth the state planning and tax planning.
<unk> solution.
And.
The result, we've made a number of big investment in this business, we did the restructuring creating international hubs.
Have been investing in the technology, we launched a new platform with new client portal and broker quarter, we've been in a waiting the products and so on so we think all of that is helping with the momentum of our business in a market that that's quite competitive and and argue that's explaining some of the continued.
Success of that business.
At the same time, obviously, we've got COVID-19, and I mentioned last quarter, we typically have a sales cycle of about six to 12 months.
<unk>.
And so as of Q2 hours, describing the strong results in saying that.
Those were probably sales that started somewhere in 2019 or early 2020.
That's still the pattern for us and so if you think about our sales in Q3 a lot of these would have started may be late 2019 or or some time in the start of the Covid way this year and as a result, if you think about our sales this quarter, there's still strong compared to last year.
But they're down compared to queue and.
And that in our mind reflect some of the headwinds related to COVID-19, and the challenges with travel restrictions in quarantine.
And so if you think about sales in this market going forward, we do feel very good about our competitive position beside the other insurance companies given all of the investments we've made and the capabilities. We built that I've described but if you think about the pipeline that the level of brokers.
We do think that that is shrinking and that as.
As we think about the next couple of quarters, you are basically you're going to see pipeline that started after the start of COVID-19 in Asia.
In the February March timeframe.
So so we've got two offsetting aspects that were expecting strong competitive capabilities on our side, but.
Smaller pipeline with brokers as a result of restrict travel restrictions in quarantine.
Okay, Great. That's that's helpful and if I could just follow up. So is this is this business I would think it's kind of hard to do.
On a virtual basis, but is is that something that you guys are are exploring because I know that low interest rates helps this business just from a premium financing standpoint, which I, which I understand is.
As a bigger component and and some of the high network sales, but are you guys are you guys exploring maybe more virtual.
Sales or or are there certain regulations that would prevent you from completing a virtual sale.
So.
I think there's a couple of aspects. This one is these are heavy planning oriented sale and.
Given the nature of the transaction, they're very advice intensive they tend to be face to face type of interaction.
So that's one aspect of just.
The business is transacted that said, we are evolving to reflect the current environment and we can conduct some of these.
Transactions, we mostly and so we have rolled out capabilities, including e-signature and dark you sign to enable remote remote sales of this business.
But just given the nature of the transaction.
Face to face that could evolve if the pressures of travel restrictions just continue.
Most of the.
Sure.
Got it thank you that makes sense.
Your next question is from the line of Palm holding let's CIBC.
Thank you good morning, two questions when I go back to the discussion on experience in Canada group benefits I guess disability in.
In particular, so it was positive.
Order, but what is the source of naked of experience last quarter. So I just wanted to better understand what's creating that volatility.
And what that might mean for future results, if we can make any and Frances.
John.
That question to you.
Thank you kind of him and Paul. Thank you for your question. So indeed, if you look at Q3.
This year versus Q3 last year, we had a.
Very good improvement in our experience.
It is driven predominantly by.
Visibility in group benefits O L O.
Take you back perhaps quickly Paul there are three key leavers here that are important in this business number one is what we call him, sometimes but it's really just the volume of cases that we get the.
The second one is recoveries always how quickly how many people we get back to.
Work from visibility.
And last is pricing and you've heard can you talk about that before we recognize early on last year actually then.
This business needs at reprise beauty price and we did that so if you. If you compare Q3. This year at the Q3 last year. The main driver of yet or the largest driver of you.
Is the volume it's the incidents.
We were not quite sure ball frankly, whether it's it's one data point or the start of a new trend that's kind of a tough one to call.
As you know we have had over the last few years.
Growing incidence level and mental health ending referred to that in his remarks.
Being a very important driver. So so we have positive experience or a favorable experience on him for them.
We are watching that closely as you can imagine to see whether continues arnon.
But that's really what is the the main driver for the Delta versus last year.
Got it that's helpful. Thank you.
And continuing with the group business and this question applies to both Canada and U S Q4 tends to be the peak quarter for.
For sales just.
That's a piece of the business that's been impacted by Covid. It seems like there's less less transaction activity, taking place and coffee industry. So would be helpful to get a view on what you're thinking with the pipeline looks like four Q.
Q for sales given the historical importance of that quarter for gaining new new business.
All it's Dean I'll just jump in here and say, we as you know we tend not to give forecasts looking forward for for sales numbers I think.
Dan described some pretty good sales momentum in the third quarter you saw that in the numbers.
But I I would prefer that we not get into the business of projecting sales forward.
It's not typically how we've done it so.
Maybe you could talk a little bit about the dynamics going into the quarter again with covid being somewhat disruptive to that to that market.
And do you want to just make some overall comments on how clients are thinking about this because obviously any any actions.
That we saw in the third quarter.
Instigated any sales activity were driven by client needs first and foremost.
Yeah, I think it's.
Our sales organization has really done a great job at adapting to this environment, we went 100% virtual literally overnight.
And as you saw a third quarter results were quite strong overall up 24%.
And up 40% in our.
Group businesses.
Up also in our stop-loss business.
So that's in reflective of their ability to react very well to this environment and to do this conduct a sales process and maybe more importantly, the entire case installation in enrollment process.
Percent virtually and very effectively and that's what clients are looking for right now.
It is true that there are fewer clients so.
So far during this pandemic in the marketplace.
Proposal activity is down across the industry, but our clothes ratios have been excellent because clients are coming to us for those digital in virtual capabilities and our ability to serve their needs.
In this unique way at this time.
So again.
Said, we wouldn't give forward looking information.
But we would certainly think that those capabilities will continue to be attractive in this environment.
That's helpful. Thank you.
Your next question is from the line of Nigel Desousa with Ferrets investment returns.
Oh. Thank you good morning, I had a two part question on how to think through the impact of the potential impact from a low rate environment.
So the first part is when I look at earnings on surplus that was negatively impacted this quarter from lower investment income. So is that mainly just quarterly noise that comes from.
Market volatility restarted reflective of being in the low.
Yielded environments in other words should we think of that as a one off or do you expect going forward that.
Although for longer yield environment will put some pressure.
On investment income and earnings on surplus.
It's Kevin Nigel you're absolutely right, we had a lower earnings and surplus just under $100 million and it did reflect the lower yield the afm's gains we had were $26 million and so there is some volatility that comes through NFS, but we are definitely seeing as we've.
Realign the portfolio. The last few years that we're getting lower investment income. It's one of the reasons I talked about the potential of leveraging SLC, which operates really well in a low yield environment and could potentially add some yield to the surplus but the big chunk of what you saw this quarter was the lower yield on our current invested ask.
We were lower on Hff's compared to Q3 last year, but I think the biggest pieces that that sort of lower yields were getting on our investment assets.
Okay. That's helpful Africa pivot off of that I think about the the product silent annuities business. So.
So in Canada annuity premiums were strong this quarter, but if we look ahead.
Could you speak to the challenges you potentially seeing for annuities as as positioning it as an attractive products and a low yield environment and you've already talked a bit and how you're looking to pick up yield on the asset side is that.
Those kind of hand in hand, there, where you're kind of.
January yielding the assets I'd also kind of support the annuity returns to make them attractive.
Jack why don't you take that.
Yeah. So.
Are you focusing Nigel on the group side of the business for the retail side of the business.
If it's possible to to be reached.
Comment on both would be helpful sure Okay.
Well, let me start.
Dean and Kevin both highlighted and they're opening remarks.
Uhm the largest annuity transaction then we have one.
At 1.1 billion and.
In the quarter as you can imagine we're quite pleased with that.
The business, although that can be lumpy and theirs.
She's analogy to ask.
What I would say, it's a little bit similar to what down set on stop loss. We are the market leader in that business, we've been for a number of years.
We have a very very strong team.
And place we've done some of the most complex innovative transactions so well.
Well that does mean.
We tend to pretty.
Pretty well see all the about if I can say that an exercise quite a bit of discipline them.
Oh, let me be selective where we want to thank her on either that or not.
The pipeline.
You might think that.
Low interest rates is having an impact there, but what things to happen on my Bill is.
Companies that and you were thighs liability.
And to start by being on what I would describe derisking path for awhile.
And what they'll do is they'll they'll move ourselves from.
What I would call growth.
Matching how sounds alright, so they tend to.
So be immunized, because as rates go down yes, the liabilities glove box, so so that yeah that portfolio.
And the real driver what's happening in that market.
Is really the funded Rachel.
Racial house, that's liability so I I'd say that.
That's one dynamic for those employers by the way our plan sponsors that.
You may have retained roadhouse asphalt ended up being hurt earlier in the year when covid it but as you know markets.
Ah recovered so there's still some some good opportunities. So if you look here today that markets. So far is that.
About the same size as it was in 2019 so.
As I said, we were think we're well positioned we've got a great team. We've identified this if you remember from yesterday last year.
Growth engine for Us this market certainly Nigel if you compare it to us and UK is much less mature there's a lot of runway and we think that the companies.
That are interested in Davis king their pension plans will continue to do so.
On the on the retail side, it's it's.
A different dynamic of course, it's.
Clients are coming up with a sense when they if you if you think of the.
Yeah accumulation phase and then people going into the accumulation, so there's more and more assets.
Looking for how to they accumulate an.
Annuities are an unimportant part of that they usually.
Fifth as part of a broader set of solutions.
We're continuing to see good numbers there.
Business that is quite competitive, it's very right dependence or the ability to win or not.
Is is very dependent on how competitive are your prices, but it's an important area for us and we continue to focus on it.
That because that'll help with that.
That's really helpful color. Thank you.
Your next question is from the line of Tom Mckennon with BMO capital.
Yeah. Thanks, good morning.
Talk a little bit more about it the earnings on the surplus and this leveraging of Slc's capabilities. Kevin. This is the lowest we've seen.
Earnings on surplus probably for like three years this might be the lowest quarter, we've seen for earnings on surplus here. So maybe.
As you leverage slc's capabilities, how should we be looking at earnings on surplus going forward.
How much of the surplus assets does S. L. C manage now and how much more are they going to manage going forward with this uhm leveraging you're talking about and if I look at S. L. C. It's largely real estate and some private debt and infrastructure does that mean, you'll be bringing.
More real estate into the surplus portfolio and is there any talk about having SLC manage any of the asset setback liabilities as well.
And I have a follow up after that thanks, okay. Okay. Thanks, Tom while SLC manages 100% of the assets and the and the surplus account.
But as you know, there's there's a mixture of assets there it's more related to some of the new capabilities were bringing in.
We will see opportunities to do seat investments inside of SLC and we've talked about that in the past, but there's also abilities to look at other sort of non fixed income pieces that we could put into surplus we'll do that over.
Over a number of years right on a fairly steady basis, so you'll see it as it as an emergency.
It will create some volatility first surplus earnings because of.
The difference in those those investments as we do it and will be kind of mindful of that.
As you as you know this is lower than it definitely related to the yields and the ability to do first gains and it's been in the past I do think that if you were thinking about a range.
We can we can continue to grow over 100.
Bringing in some of these additional assets over time that will build up that income.
Okay, but it will it.
It will it will add some volatility.
Yeah. So falling on that you said you were going to leverage their capabilities, but they're already managing 100% of the assets. So when you say yes.
Yet leverage the capabilities of the new the new the new businesses, we bought so infrared.
And.
For example, but also doing some additional things with Biggio is biggio expands its capabilities.
Okay is there any talk about having S O.
Those capabilities work their way into the assets that back.
Or liabilities are you going to try to work to bring in some more of those capabilities into those assets. So.
So they do manage some assets already that back liabilities and so you can think about.
Sophie broadly supporting both the liabilities when it meets the the investment objectives of.
And the cash flow needs of the policies, but also supporting surplus.
Okay. So I take it that the real estate that's on the books is largely SLC managed.
That's right.
Biggio would manage all of the real estate and it as you kind of crank up S. L sees capabilities and earnings on surplus are you trying to crank up their capabilities for the.
Assets that back liabilities as well.
We would be using them for we'll use the new asset classes when when it's appropriate to support liabilities if it if it matches the needs of the of the.
That particular segment and we'll also use it in surplus so yeah, Tom we would use it in both liabilities and in the Circus segment and in fact, we've got we are already using as you would know real estate backing liabilities as an example.
Okay. So just to close at it sounds like earnings on surplus could get bigger, but better but there could be more volatility associated with this new initiatives.
Yes, that's that's the way I would say it and it would happen overtime.
Okay. Thanks, and then the second question is really.
Maybe for Dean.
I think it sort of filled and what you need now with S. L C as far as I can gather with.
With Crescent and then getting infrared earlier, so I would say.
Maybe S L six.
You're you're finished with building out S. L C.
What are your next steps now you've got.
Always generate good excess capital you got fairly local leverage still have.
You still have ample excess capital what what are you looking at what are your <unk>, what kind of capabilities do you think you would need to fill.
Where do you see opportunities.
Yeah. Thanks, Tom So you're right Steve feature said, when we announced the Crescenta acquisition debt.
We've we've filled in the key pieces to the puzzle and we've got really now.
A really compelling set of offerings to clients and this low for longer lower for longer world within SLC and so we'll pass on on M&A in SLC on sizable M&A, we'll take a pause and and do as much as we can to leverage what we've.
Put together and to grow it.
When we look outside of the asset management pillar and by the way. We I should also say that you are not likely to see us acquire with MFS mfs's that scale already got terrific capabilities across equity some fixed income across retail institutional across geographies around the world.
And in a world that's consolidating asset management firms.
Which is you know tends to put money in motion.
When firms combined.
One of the things that MFS has been focused on is is trying to be a net beneficiary of that money in motion and in fact that's.
In part what's been driving some of the growth in sales in MFS, So you're not likely to see us acquire there when we look at Asia. Our story continues to be one of looking for opportunities across all of our markets in Asia and across different distribution channels. So we did the bank of deal with TP Bank at the start of this.
Year in Vietnam, that's gone extremely well, it's actually a head running ahead of our plans.
They're a very well run bank and they've.
The partnership is off to a great start so can we find more banker deals across Asia could we buy larger percentages of the businesses were already in with JV partners could we buy other insurance companies.
Or asset management businesses in Asia.
To to kind of.
Compliments, what we already have on the ground. So that's a set of opportunities and then Dan talked about in the U S looking for opportunities to extend our capabilities and stop loss to help employers.
Manage health claims to a better extent and we already have some of those capabilities, but we look for other opportunities there and in the group business again adjacent capabilities. The acquisition of Maxwell Health two years ago has proven in hindsight to be.
Very valuable in this covid world as we do enrollments virtually and Dan talked about the impact that his head on our sales. So we will continue to look for opportunities in the United States to extend what we do both in group benefits and and stop loss and then here in Canada, you saw us acquire.
A steak and dialogue, leading virtual healthcare provider too too.
Integrate that with our aluminum health platform, that's gone extremely well, we've signed up hundreds of thousands of Canadians onto that platform. Just again, we got lucky on timing because.
We did it in the middle of the second quarter, when Covid was really getting going and that's proven to be very valuable for our clients. So.
I'll stop there that's kind of takes you around the pillars. It gives you a sense of the kinds of things we're looking at.
Okay. Thanks for the color.
Your next question is from the line of Mario Mendonca of television Securities.
Good morning, I C. A R over so I'll try to be quick.
The growth and expected profit in both Canada and the U S has been running fairly hard over the last few quarters in the U S and the last two quarters when I look at businesses like this and I see growth like that I'm trying to disaggregate the growth into the two two broad points. One is just your organic growth in the business itself growing the assets growing to enforce.
And then secondarily all the management options that go along with that things like pricing and expenses can you help me make that disaggregation and expected profit growth in Canada, and the us the the more normal business versus all the other stuff you're doing.
Primary alternative Jacques and then Dan.
We'll add just one thing as as as I do that the if you look at the growth. There is a component that's related to expense reductions as well and that roughly runs probably about half for both of them, but I'll I'll pass it over to them to add some more color to that.
Okay. Thank you.
And thanks, Mario and I'll try to do a quick but it's.
Mine would what Kevin just set so first of all.
We're quite please at 13% and if you go back you you'll see that it's quite a number of quarters now, it's pretty well southern quarters in a row that we're growing looks like a coffin quite nicely.
What's happening in Canada, which were quite please about is is actually happening across all of our businesses. So it's not one business or two pulling pulling the rest.
And it's a lot of things like you know I talked about design minutes. It solutions, that's spelled G I.
Oh, It got momentum now and and growing earnings nicely and Ella and all this stuff that we're doing in digital.
To come back to your specific question on it it's pretty well in line with what kind of understand so you can think of it as half of it is coming from the sort of fundamental business growth and half of it is is the real expense discipline that we've been applying for the for the past couple of years and.
We've done that of course at the same time as freeing up.
Dollars to continue to invest in our strategic growth areas, but I think I'll get that it's about half and half of America.
That that over to you. Thanks.
Thanks, Jock and.
In the U S. The biggest contributors to expected profit growth right now have been our stop-loss business in full scope. So stop loss is adding to that in every dimension strong margins. Good renewals and of course substantial top line growth are full scope business is now making a nice.
<unk> as well, particularly as full scope has expanded into new product lines and then in our group business, we should start to see bigger contributions to expected profit in the future as we continue to manage down the expenses.
And build the scale in that business.
This is just put a final point on this if half is expense passes business growth and I and I say I start off with the notion that I believe business broke can continue.
At its current pace. It was it fair to say that eventually the expense benefits start to taper off over the next few quarters or year or so.
Various Kevin I think that's right I think you'd say that.
We still have some room on expense disciplined and those types of things, but over time as you.
Work your way through that slows down a bit and I was saying it was half in total across the both.
<unk> is a little bit less than half, but if you looked across the both of us about half in total.
That makes sense. Thank you.
Your next question is from the lines are completely with Dowling and partners.
Good morning, and thank you for taking my questions just a couple of questions.
To Dan.
Looking at the.
Top lifeful.
And as a group benefits in the U S. I understand what you can lay down in terms of yoga works for capability.
<unk> closed.
Transactions.
Do you see yourself.
In terms of deck offering is somewhat unique in the marketplace because definitely looking across the board.
S Group insurance players have seen topline pressure and much weaker sales and some lamps being able to deliver a you seem kind of something that is unique to some life.
Well, Thanks, Humphrey I think we do obviously not completely unique but as you pointed out many of our competitors saw significant decreases in sales in the third quarter and we saw a significant increase so I think our digital capabilities are meaningfully differentiated at this point and.
They're across a variety of areas you heard Dean mentioned Maxwell that's certainly helping us the enrollment in Maxwell has grown from 12000 employee lives to about 30000 during the year.
We've done 500 virtual enrollment meetings, which is 100% of them in the in the recent months, we've introduced a variety of new capabilities for doing enrollment meetings.
Across different platforms.
Including one on one meetings as well as group meetings and a number of other digital capability. So I think the broker community, which represents the employers has come to see us as a good home in this environment a good place.
Company that can deliver those kinds of services.
So I think we do we have developed some differentiation during this period of time.
On digital in virtual but lots of opportunity to grow that in the future.
And has this that like in terms of the marketplace count given this slowdown.
Okay.
Yes.
How's your purses to see Trent kind of over this period.
Yeah, our persistency has improved as I think it has for many because.
Some employers have decided to defer on looking for new benefits partners. During this period of time, so arbor's persistency.
Is definitely up a bit.
And then just one follow up question I think.
His remarks, you talked about from the end may perspective.
Jewish group benefits Youre looking potentially maybe adding some complimentary capabilities to stop loss like giving your business is pretty establish and then.
Major player in the marketplace.
The capabilities would you look to add full stop loss.
Yeah, I mean, I can't get overly specific but what I would say as we think of stop loss really as part of the overall health insurance ecosystem in the U S. And we are a partner now to employers representing about 5 million.
<unk> lives in the U S.
For their self insured health plans and historically our involvement in those health plans was primarily high clean risk protection, we've been expanding that out into helping them and their employees managed care navigate difficult situations and we do have a program called clinical 360, which.
Already does some really quite effective and helpful things in in that space, but we'd like to expand that more we'd like to step further into the healthcare space.
Providing care management navigation type services.
To the members we work with who are facing serious illnesses, because we think there's a real when when there for everybody.
We can help people get better outcomes and we can help employers manage their cost profile at the same time, because better outcomes almost always are less expensive.
So it's more adjacent features as opposed to looking animal scale correct.
I think that's the right way to think about it because we have a lot of scale.
We are the largest in the largest independent stop loss carrier and our sales are far above anybody else's. Each year. So we are continuing to build scale organically.
What we'd like to do is add capabilities, which would further differentiate us in the market.
That's helpful. Thank you.
At this time, we have no further questions I will turn things back to Miss Chalmers for closing remarks.
Thank you, Stephanie and I would like to thank all of our participants today and if there are any additional questions. We will be available. After the call should you wish to listen to the recording of this call. It will be available on our website. Later. This afternoon. Thank you and have a good day.
This concludes today's call.
Thank you.
You may now disconnect.
[music].
[music].
[music].