Q3 2020 Great-West Lifeco Inc Earnings Call
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Thank you for standing by this is the conference operator welcome.
Welcome to the Great West Life Go conference call I would now like to introduce.
Mr., Paul Mann, President and CEO of Great West Life go. Please go ahead.
Thanks very much.
Good afternoon, and welcome to Great West Life goes third quarter Twentytwenty Conference call I Hope you and your families are safe and healthy as we head into winter.
As we face a second call with wave in many jurisdictions, we continue to offer heartfelt. Thanks to all health care workers displayed such selfless courage drove this pandemic and.
Well the essential workers. Thank you for your tireless commitment as you show up to work each day to help keep our community is running smoothly.
There's an employees. Thank you for your ongoing efforts to serve our clients and deliver on our commitments as you balance and adapt to the many new challenges of daily life.
Joining me on today's call is gearing Nicholas <unk> Executive Vice President and Chief Financial Officer.
Again, I will deliver todays formal presentation also.
Also joining us on the call and available to answer your questions are David Harding, President and Chief operating Officer, Europe, partially well President and group had strategy investment reinsurance and corporate development.
Joe Mccallum, President and Chief operating Officer, Canada.
Murphy, President and Chief Executive Officer of empower retirement, and Barbara <unk>, President and Chief Executive Officer Putnam investments.
Before we start I'll draw your attention to our cautionary notes regarding forward looking information and non <unk> for EPS financial measures on slide to these.
These cautionary notes applies to today's discussion and presentation materials.
Moving to slide four you will see a high level summary of the key themes will cover today.
I would characterize our overall third quarter performance is excellent given our progress on multiple fronts.
First we made significant advances on our strategic priorities, including six transactions, either announced or closed to strengthen and accelerate growth in our portfolio also.
I'll speak more to these later in the presentation.
Second over the last few months, we've completed several successful debt issuances, raising almost $4 billion Canadian at historically low rates that enabled us to execute on these transactions and maintain our financial strength.
And third we delivered solid base earnings of $679 million in line with last year and strong net earnings of $826 million.
13% year over year.
We delivered on all these fronts, despite the ongoing impact of the pandemic over the past nine months.
These results are underpinned by the strong collaboration and focus across our management teams and our disciplined and diversified business model, which is exhibiting great resilience as the global pandemic continues to play out.
Now, let's turn to slide five for an overview of the third quarter results.
Basic EPS of 73 cents was steady year over year.
This result reflects strong momentum and capital in risk solutions in particular, and overall expected profit growth of 7%.
Offset by higher new business strain from lower sales and lower yield enhancement compared to Q3 2019.
Net earnings of 89 cents per share were up 13% year over year, mainly due to a $94 million after tax gain on the sale of Irish Progressive services International in Ireland.
I'd note that net earnings also included favorable market related impacts offset by personal capital and mass mutual acquisition related transaction costs.
Turning to slide six and seven I'll provide an overview of coal was 19 business impacts in the quarter and some color on our near term outlook.
Our diversified businesses have a long history of stability adaptability and competitiveness in the face of crisis unchanged like the current COVID-19 pandemic.
Turning to more recent pandemic impacts well there was a slowdown in common cases and fan favorite holidays over the summer months. The virus has since research and lock down that been restored in many jurisdictions outside.
As such we maintain a close watch on the situation and the majority of our 24000 global stop continued to work remotely.
Across life total fee income improved sequentially as the market recovery program from sharp declines early in the year and the average asset levels increased.
Expectations for fee income going forward, well depend on future market movements and levels of business activity.
Well, we continue to see cold weather related mortality increases across our business the bells nature of our insurance and longevity book greatly reduces the financial impact.
Looking at Canada, we saw a lower level of group disability claims terminations, partly due to more limited returned to work opportunities. We're focused on ensuring our disability claims management practices remain effective and disciplined in this environment and we're taking pricing action as needed.
Oh, the dental claims in Canada increased in the quarter, leading to an improvement in expense recoveries for administrative services only plans.
And the U.S. at Mpower, we've seen solid asset retention with most plan participants remaining invested we've also seen an increased interest in advisory and financial wellness offerings.
I'd also like to highlight the pandemic has not hampered our integration plans for personal capital the transaction closed in August and integration is underway and on track.
You can see a partial quarter of personal capital's results and performance metrics in our disclosures.
Finally, as Putnam seed capital gains in the second and third quarters more than offset first quarter losses.
Looking to Europe, there's potential for a rise in mortality with the second pandemic wave.
But we expect some offsetting impacts between our life and annuity businesses.
And while the return of walk down measures could slow down equity release mortgage valuations residential property values remain resilient.
Please turn to slide eight for an update on our invested assets portfolio.
While performance continues to be strong covenant related pressures exist and as such we are closely monitoring the portfolio.
Specifically, we are paying attention to investments more vulnerable to the pandemic stresses like real estate and office in particular.
First we'll look at the bond portfolio.
$133 million it represents 71% of our invested assets its diversified and high quality with 99% rated investment grade and 79% rated a or higher.
We've seen limited corporate bond downgrades within the portfolio to date.
The negative earnings impact from these downgrades was $9 million in the quarter and our holdings in this sector is most directly impacted by COVID-19 remain highly rated and closely monitored.
That said, we expect the downgrade cycle to continue over the medium term, but believe we are well positioned given our books high quality.
Next we will turn to our investors investment property portfolio.
Economic stresses continue to put pressure on businesses of all sizes.
Negative earnings impact from mortgage downgrades is based on our own internal reviews was $13 million in the quarter.
We received a modest number of requests for mortgage on rent payment deferrals.
Cumulative commercial mortgage loan deferrals was $1.1 million at the end of Q3, and we approved $4.4 million in quarter in quarter rent payment deferrals down from $5.2 million last quarter.
We continue to closely monitor our assets, but as Phil fiscal stimulus measures subside.
Our UK property related portfolio saw minimal impacts in the quarter, while some pressure is expected to persist in the real estate book, particularly in the office and retail sub sectors. We believe the portfolio's high quality diversified nature will help mitigate those pressures.
A good example is our retail portfolio, where grocers and distribution warehouses have been quite stable in this environment.
While we expect this economic dislocation to continue and associated risks will persist we are optimistic they will be manageable in the context of our total invested assets.
Please turn to slide nine where we'll be able to sales.
As outlined on slide six and seven COVID-19, lockdowns have affected market activity and slowed sales across many of our channels.
Impacts it varied by business unit, we're pleased to have seen some improvements in September the continued post quarter end.
And Canada following slower volumes in July August were starting to see our individual insurance application activity returning to pre commitment levels as we drive more sales through digital channels.
We're also benefiting from new product launches, including our newly rebranded and expanded mutual fund shelf, which are helping to boost individual wealth management sales.
Canadian group sales were lower in quarter with the offsetting impact of higher plan sponsor retention and lower end plan redemptions. As we look ahead, we see solid growth in quotation activity and a strong pipeline pipeline heading into 2021.
In the US sales were down 10% year over year, primarily due to low lower large capex plan sales and power.
This impact has been moderated by fewer plan terminations and sustained virtual sales activity.
Moreover, momentum is strong and the sales pipeline is robust with request for proposal activity higher than ever before.
Over the last 12 miles Sunpower is taken in approximately $110 billion, the U.S. and new client commitments, including news DC plans of all sizes, covering corporate government and not for profit employers.
Moving to Putnam, we saw sustained positive sales and net flows, particularly on the institutional side, we expect positive momentum in Putnam sales and net flows to continue on the back of strong investment performance for our clients.
US sales include a partial quarter for personal comfortable you'll find details in the appendix of the analysts slides and in the supplemental information package.
In Europe sales performance is varied by product line with the decline in sales year over year, reflecting lower retail wealth sales in the UK and Ireland and lower bulk annuity sales offset by stronger corporate wealth sales in Ireland.
Looking ahead pressure on the UK and Ireland retail wealth sales is expected to continue in Q4, while bulk annuity sales are expected to recover on the back of recent wins.
Finally, our capital in risk solutions business continues to have a strong pipeline with continuing strong demand for longevity and life capital solutions, and Europe and the us respectively.
Please turn to slide 10.
Overall legal fees were relatively steady year over year, but improved sequentially with higher average asset levels Turner.
Turning to the U.S. fees were up 5%, primarily due to participate growth at in power.
Our equity markets and the inclusion of personal capital, which added 3% to year over year growth.
Putnam fees were relatively steady year over year.
In Europe, and Europe fees were lower due to the sale as the UK legacy business and our revised reinsurance structure for their Irish health business, partly offset by higher management fees in Germany.
Next on Slide 11, we will look at expenses life's cooperating expenses in constant currency and excluding personal capital were up 2% year over year.
This reflects our focus on expense discipline in combination with with business growth and transaction costs and reinsurance.
I would also note that strategic and technology investments continued in Canada, well travel and training expenses remain low across all segments due to the pandemic.
Now I'll turn the call over to Gary to review the financial highlights Gary.
Thank you Paul starting.
Starting with slide 13 basic EPS of 73 cents was comparable to the prior year with strong business results in capital or risk solutions, and empower and favorable experience in Europe, offset by lower impacts around investment yield enhancement and new business primarily in Canada.
Net EPS of 89 cents was up 13% as positive net contribution from M&A activities and from actuarial reviews added to the base earnings.
On a segment basis, starting with Canada base earnings were 270 million compared to a very strong 355 million last year.
In Q3, 2019 yield enhancement added over 100 million to experience gains.
Unusually strong, whereas this quarter it was just over $30 million.
This will fluctuate from quarter to quarter, depending on investment opportunities.
The impact of new business swung from a gain last year, which included a large group annuity sale to a small negative this quarter as a result of lower interest rates and sales volumes in individual customer.
Underlying business performance remained very solid.
In the U.S. base earnings were up 5% year over year and how its base earnings increased 27% with strong investment experience and solid business growth.
Putnam's results were comparable to last year with gains on seed capital offset by higher expenses.
That us base earnings this quarter included personal capital, which recorded a net loss of 7 million. The supplemental information package introduces key metrics for personal capital and no to positive contribution prior to customer acquisition costs and financing.
This result was in line with our expectations as personal capital continues to invest in customer acquisition to fuel future growth.
In Europe base earnings were up 13% year over year favorable mortality and morbidity experience were partly offset by the lower impact of new business at the prior period included higher gains on bulk annuity sales currency.
Currency movements also had a positive impact on Europe's results.
Capital risk solutions again saw very strong year over year growth, particularly in longevity solutions.
Base earnings were up 81%, reflecting significant longevity, new business written over the past year plus gains on new business in this period.
Favorable longevity claims experience was partly offset by higher claims in the life reinsurance business.
Turning to slide 14.
This table.
The table on this slide is a reconciliation of base to net earnings highlighting the key items. So far in 2020 that are not included in base earnings.
Net earnings included a gain of $94 million on the sale of Irish aggressive services International limited and transaction costs of $31 million related to the recent use acquisitions as well as the positive contribution from actuarial reviews, which I'll come back to.
The market related impacts on liabilities were positive on continuing market recovery, albeit lower than we saw in the second quarter, which should see north American markets in particular recoup much of their late Q1 losses.
Please turn to slide 15 this.
This table shows segment and total life co net earnings results from a source of earnings perspective adjustments to get to base earnings are footnoted and the EPS. So we categories. As a reminder, the EPS we categories above the line are shown pre tax.
Expected profit was up 7% year over year with strong business growth, particularly in capital risk solutions and depreciation in European currencies.
New business strain was in line with prior quarter, but higher than prior year, which included the benefit of uptrend gains on bulk annuity sales in both you can Canada strain in Canada was impacted by the sharp drop in interest rates, which takes time to factor into repricing actions and lower sales.
New business strain was also higher in the U.S. as it now includes customer acquisition costs at personal capital for the first time.
Experience gains management actions and assumption changes contributed positively in the quarter and I'll cover these on the next slide.
Earnings on surplus contributed $8 million, which is down from the prior year, given the impact of lower yields and lower trading gains in period.
The effective tax rate on shareholder earnings was 5%, which is primarily we have reflection of the jurisdictional mix of income and.
On the non taxable gain on the disposition of Iris Progressive services.
Canada benefited by approximately 30 million following the resolution of certain historic tax matters, which is more of a onetime item.
The overall tax rate will continue to depend on the jurisdictional mix of earnings following us tax reform and reflecting the growth in our European and reinsurance businesses today's mix probably leads on average to a rate in the low double digits, but this will likely rise in future as the US segment continues to grow in the <unk>.
Feature on the back of recent acquisitions.
Please turn to slide 16.
These tables expand on the experience results as well as the management actions and changes in assumptions to highlight various items in the quarter.
Starting on the left yield enhancement continued to contribute positively although down from strong comparative periods, particularly in Canada.
I'd also call out there was a positive combined net impact of mortality longevity and morbidity.
In many cases it is difficult to determine what exactly is coping related versus other factors, but again, we benefit from a diversified book of business.
Expense variances reflect strategic projects spend as well as lower processing fees and expense recoveries on our admin services contracts given those lower transaction volumes.
Credit related impacts continue to be modest this quarter.
Looking at the right hand side, you see the net gain on sale and the U.S. acquisition related transaction cost noted earlier you can also see the net positive results of assumption changes in the period with largely offsetting impacts between longevity in life mortality and a pickup in the you asked on a review of economic assumptions.
Turning to slide 17, the Q3 book value per share of $22.57 was up 7% year over year and up 3% sequentially driven by retained earnings and currency translation.
The light cat ratio, but Canada life remained steady down 1% from Q2.
The one point reduction arises from there the increased capital requirements. Following a shift to a new most adverse like had interest rate scenario.
And assuming we stay in this same most adverse scenario the full impact will continue to be smoothed in over the next five quarters and largely offset normal growth levels that have typically been about 1% a quarter.
And just to note the life co cash of 1.5 billion is not included in the light cat ratio.
That concludes my formal remarks back to Paul.
Okay. Thanks Gerry.
Moving to slide 18 will briefly review empowers acquisition of mouse Mutuals retirement services business.
As noted on our September analyst call.
Where we unveiled the deal this 4.4 billion dollar Canadian acquisition aligns with empower strategic growth objectives strengthening companies number two position in the us retirement market and.
Mpower will also leverage newly acquired personal capital and its hybrid digital wealth platform to accelerate growth in retail wealth management across a larger combined business and.
In summary, the transaction presents significant expense on revenue synergies through empowered his proven track record of platform integration it enhances retails prospects and personal capital synergy opportunities across a larger business. It out of the business with a highly attractive margins and strong earnings and cash flow profile.
And it positions and power as a growth engine for life.
Upon close the combination will increase on power's participant base to $12.2 million and assets under administration to $834 billion on a fully synergized basis. Following integration. The US segment is expected to be 20% or more of life goes earnings.
Finally on slide 19, we provide a reminder of the strategic actions taken across the portfolio over the last quarter.
I want to close our formal remarks by highlighting the strategic backdrop to a number of these transactions from power beyond the scale and synergies of the massmutual deal plus the tuck in of the fifth third business, it's about leveraging personal capital to increase a digitally enabled wealth management platform to meet the needs over we're over.
12 million Americans.
For our Canadian operations, the Mckenzie GLC and Northleaf transactions are about access to stronger and more diversified asset and investment management solutions for both our wealth management channels and our general account back products.
To conclude these actions are focused on broadening and strengthening our businesses to accelerate growth in revenue EPS and shareholder value.
With that Ariel Please open the line to questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request if.
If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then Q2 during the question. Please press Star then one now.
Our first question comes from Tom Mackinnon of BMO capital. Please go ahead.
Yes, thanks very much good afternoon.
Yes, two questions one with respect to capital solutions segment.
Stronger than what we would have anticipated.
Is there anything happening in terms of.
The reinsurance business here that may have been driving that.
Hi.
We don't have any indication sales or anything like that what was driving the improvement in capital resolution.
How sustainable is that.
Tom I'll start off but I will quickly adopt arsenal Jamal who's who's responsible for that business.
Top on risk solutions, we've seen steady growth over the last number of years as we've strengthened the business expanded our footprint in terms of the.
Expert team we have there.
Actually the they're both expert there, but they're also very innovative out in the market looking to develop new solutions and then when you add that up with the current environment.
Were on the on the back of solvency two implementation in Europe, and another and environmental factors, where people are looking to secure their capital positions I think its a business thats kind of primed for growth right now given the things Weve done both internally, but also the things that are going on in the market. So I'll, let marshall speak a little bit more.
The where we're seeing the growth in its relative sustainability Arsenal.
Thanks, Paul So youre not going on Paul's comments, I would highlight that just over $30 million broken expected profit from the third quarter last year.
Third quarter results, so thats really demonstrating that the quality of the business and the growth that we see across all of our product lines, particularly longevity that Paul called out.
In addition to that the year ago quarter had a negative impact of any business, reflecting the transactions that we wrote in that quarter. In this year's quarter showed up favorable contribution from new business and then we also saw a meaningful reduction in experience losses from the third quarter last year to this call.
Order. So I think it's the expected profit growth that we would expect to continue depending on our risk appetite and the demand that we're seeing in the marketplace.
Then the impact of the business as well in particular to the transactions that we closed in a particular quarter, whether we end up with a small gain or a small loss. So sometimes that contributes to year over year and noise. So that's the extra color that I put on this quarter's financial results, but again, emphasizing that strong underlying growth in expected profit year over year.
Partial what do you think a normal run rate.
Mike would be in terms of expected profit growth.
It's very hard to put a run rate given that we have four different businesses and we are relying sort of on market demand and very disciplined.
Underwriting and preference in risk appetite control and all I can say is there is no reason for us not to be able to grow our nonutility business provide provided that the market is there might sort of double digit growth that we've experienced in the last little while and I think there's opportunities to grow.
Other parts of the reinsurance business also very very strong. So we expect to see strong growth going forward, but it's really hard to put a single number on the overall growth rate.
Okay. My follow up question is with respect to Mpower.
Vince fell quarter over quarter or about 3% I wonder what was driving that and well used to show kind of net cash flow associated with power.
We don't seem to have that anymore, maybe you can tell us what's been happening in terms of that low add empowered. Thanks.
Thanks, Tom I'm going to turn that one over to to add Murphy clearly any theres movement from quarter to quarter, especially when we are winning very large cases or potentially from time to time, where we might lose lose lose a particular case, but I'll, let ed give you a bit of insight into what happened in period end sort of the way the way we look.
Outflows.
Yes sure. Thank you Paul good afternoon, everyone.
In terms of participant growth a couple of factors. There one we did see a slowdown in sales cycle I think we talked about that previously due to co that so that certainly impacted sales I would say sales have been deferred it's more of a timing issue than anything else and then the other the other factor in terms of growth would be.
We saw a less new participants from existing clients than what we typically would have experience, which again I would attribute to the environment Kogut furloughs layoffs those types of things.
We expect that to come back as the economy starts to resume.
Back to it gets back to some point of normalcy in terms of flows what I would say was close.
We did see higher distributions than what we typically would see and again I think that was primarily participants looking to access dollars.
So we had more distributions during the last quarter.
But general flows if you look across the whole business were favorable in large part due to due to the market.
Yes.
Does that mean, if you don't get any mpower sales taxes.
The decline.
Quarter over quarter.
No no what.
What it means is.
You mentioned that there maybe some maybe some quarter, we did see a decline but that as Paul mentioned, if you look at what's happening is sales are being pushed out.
Into into into the future quarter, we have in our commitments are as high as they've ever been in terms of.
Contracts and commitments and the pipeline is as high as its ever been in history.
So.
That's that's the dynamic there and then the other factor as I mentioned is we just didn't see participant growth coming from the existing customer base.
Okay. So that means if you don't have any that means naturally you'll have a drop in the number of participants unless you have sale exactly.
Is that correct correct okay.
Okay, Yes.
And what would be just driving that.
Leaving plan people retiring et cetera is that.
Just the normal.
Migration of people.
Well, there there's that activity, but that Tom we generally see pretty good growth from our from our client base, where they're continuing to hire and or or new participants existing employees are enrolling in the plant.
And that's where we saw that sort of level off a bit and it's completely tied to its completely tied to the economy.
Okay. Thanks for that.
Thanks.
Our next question comes from Meny Grauman of Scotia Bank. Please go ahead.
Hi, good afternoon.
So Europe was a very resilient during the first lock down now we have a second locked down.
And I'm wondering is it safe to assume that we're likely to see the same kind of pace.
Forms or is any any reason to believe that this time will be a little bit differently are there any different dynamics that you see taking place in the European business right now because of the long term.
I'll start off on that many I'm not going to pass that on to David R&D, what I wouldn't say I'm not going to say this as more as a general rule I think.
Business is on the economies and governments in general have generally figured out how to manage through over the little bit better as we get into the second locked up sort of figure out ways to for example in our new digital ways of connecting with customers like a Great example, and I think David will probably go there, but if you think about property valuations for equity really.
As mortgages figured out ways to do those where you don't actually have to be doing it.
Physically on site so.
There's a number of different mechanisms, where I think as it organizations and sort of the market has figured out ways to drive things forward. So that I think expenses in reasonably good stead, but I think.
I'll, let David speak to perspectives on how he thinks this current lockdown will impact the business relative to the first lockdown David.
Yes, Thanks, Bob I'd agree with those comments so.
Second quarter two quarter three.
Hi, good.
Our economy in North America.
We experienced in Europe is much the same and.
So I don't think Thats.
A lot of times, we're seeing now.
James it's environments and personnel costs, we've been operating EPS from from quarter to quarter. Three so I would say our results can be volatile from quarter to quarter Bose I think and the business has adjusted that to say all the time, that's going to continue on trend under six months or so so we really see the next few quarters.
A continuation of what we've seen for the last few steps.
Steadily labs.
Arvind volatility.
If you go to predict but our best estimates and probably a continuation of that out two quarters.
Thanks for that.
Thanks, Matt.
Okay.
Once again, if you have a question. Please press Star then one our next question comes from Doug Young of diesel Gen capital markets.
Hi, Good afternoon, just starting on credit and maybe just a clarification when I look at your end DNA and page 13, 14, you closed down.
Downgrade, Dan impairments and the data that net impact on the common shareholders of 28 million, but on slide 16 post actually showing credit related to 14.
So just wondering to get a little clarity here whats the difference as part of that related to the release of asset default provisions or.
Why the difference yes.
That's a that's a good question for the actuary and the person responsible for the Sars running so over to you guys.
Yes, actually Doug I think you pretty much answered your own question there is.
So when we do the source of earnings display.
Thats, an experience gain or loss relative to the expected profit. So there is some amount to its a.
Poor credit experience already baked into expected profit as you say the best estimate released and so.
The source of earnings just shows the net impact so it's really a geography question where is the Mdna just shows the total amount.
Okay. So I'm thinking about the impact on earnings the EPS, So we should be thinking about.
If you think about the impact on earnings from a baseline of zero then it's the it's the total amount that is in the Mdna, if you're thinking of what's the variance from our expected profit then that's what the extra week out.
Okay that makes sense to me and then just on credit I mean, it clearly.
Clearly starting to see an impact from downgrades to 22 million at the absolute number can you talk a bit about the sectors and regions.
Sectors and in which regions you're starting to see all that is that more in Europe are you starting to scale it across North America.
And if you can talk maybe there was an impairment in the quarter, just hoping to get a little more detail on that.
Hey, Doug.
Went off to Robin Srivastava, who can take that Ron.
Thanks, Paul.
And thanks for the question, Doug So yes.
Yeah with respect to downgrade I'd say, what we've seen in Q3 is a bit muted versus what we saw in Q2 and even in Q1, so to the pace of downgrades have have de celebrated and I think that.
True across all regions.
Doesn't really do so whether it's been.
Probably more pronounced in the U.S. in Europe versus Canada, but generally speaking it's been across all regions that same trend.
And then in terms of sectors, it's the ones.
What you might imagine that would be at the most most impacted by the pandemic. So.
Leisure and hotels.
Travel real estate.
Those those have been the major sectors amongst others most impacted by the pandemic.
But the trend has been a decrease particularly.
Over Q3 versus Q1 in Q2.
Okay.
Okay.
And then just.
Again, Europe looks like the UK base earnings were down quite that bad 25% or so.
You talked about Canada.
Where the yield enhancement and base earnings is so significant last year. It came down quite significantly this year as being a driver there but in the UK was at a similar function.
Oh Thats very start off on that one and he may want to defer to David Hartley as well, but Gary yes.
I think the the first thing I noticed I did mention I think in the comment that we did point to bulk annuities in UK there were gains new business gains on bulk annuities in UK last year and they didn't rise this year and of course those are in base earnings.
And then the investment performance.
Recollection is it was it was down a bit in the UK as.
As well, but I think a lot of it was the.
I think they that's where we saw when we did our internal review Ron mentioned some of the the downgrades, but we didnt internal review on our mortgages and we lowered the ratings on a couple of that ourselves.
And those those were in the UK as well and now again those investment results would have flown through their experience gain. So you had a bit of those two things in the year over year that I think would have affected the Europe, sorry, the UK based earnings in particular.
Okay, yes that color.
Yes, and that's again as Gary and I think what you say in the disclosure documents that there is no limit just Q3 was quite strong last year. So we've shown good information on each quarter three results and into disclosure documents. So I think if you compare to UK around the average of all of the quarters, It's it's slightly below.
Got you see chart.
Sure the average of all the contracts, which has to do with just the lower annuity sales side.
Sorry, Bob just before investment takes area.
Okay, great. Thank you thanks, Doug.
Once again, if you have a question. Please press Star then one.
Okay.
This concludes the question and answer session I would like to turn the conference back over to Mr. men for any closing remarks.
Thank you operator.
Just to close them, what I would like to do is thank you everyone for participating today for your questions.
We look forward to connecting with you at the end.
Our Q4 reporting time and I really just wish you all a.
Safe and healthy end to the year and look forward to talking to you in and Twentytwenty one take.
Take care.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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