Q4 2021 Manulife Financial Corp Earnings Call

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Speaker 2: Good morning and welcome to the Manualized Financial Fourth Quarter and Full Year 2021 with

Good morning, and welcome to the Manulife financial fourth quarter and full year 2021 financial results Conference call. Your host for today will be Mr. Hong Kong. Please go ahead Mr. <unk>.

Speaker 3: Thank you. Welcome to the Manurex Earnings Conference call to discuss our fourth quarter and year-end 2021 financial and operating results. Our earnings release, financial statements, and related MVNA, statistical information package, and webcast slides for today's call are available on the investor relations section of our website at www.manurex.com. Turning to slide 4, we will begin today's presentation with an overview of our fourth quarter and year-end highlights, and an update on our strategic priorities by Roy Gory, our President and Chief Executive Officer.

Thank you welcome to minimize earnings conference call to discuss fourth quarter and year end 2021 financial and operating results.

Our earnings release.

Certain statements MD&A did the school information package and webcast slides for today's call are available on the Investor Relations section of our website at <unk> Dot Com <unk>.

Turning to slide four we will begin today's presentation with an overview of our fourth quarter and year end highlights and an update on our strategic priorities by Roy Gori, Our President and Chief Executive Officer. Following remarks Worthington I'll show you a privacy officer will discuss the company's financial and operating results.

Speaker 3: Following Roy's remarks, Phil Worthington, our Chief Financial Officer, will discuss the company's financial and operating results.

Speaker 3: After the remarks, we will move on to the live question and answer portion of the call. We ask each participant to adhere to a limit of two questions, including four questions. If you have additional questions, please reach out and we will do our best to respond to all questions.

After the prepared remarks, we will move onto a live question and answer portion of the call. We ask each participant to adhere to a limit of two questions.

Four questions. If you have it. This is a question. Please re queue and we dropped back to respond to all questions.

Speaker 3: Before we start, please refer to slide 2 for your caution on forward-looking statements, and slide 43 for your note on the non-GAAP and other financial measures used in this presentation.

Before we start please refer to slide two we caution on forward looking statements in slide 43, we note on a non-GAAP and other financial measures used in this presentation.

Speaker 3: Note that certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from what is stated. With that, I'd like to turn the call over to Roy Gorrie, our President and Chief Executive Officer. Roy. Thanks, Tom.

Certain material factors or assumptions are partly looking forward looking statements and actual results may differ materially from what is stated was that.

And I'd like to turn the call over to Roy Gori, Our President and Chief Executive Officer.

Thanks, Tom Thank you everyone for joining us today.

Speaker 4: Yesterday we announced our fourth quarter and full year 2021 financial results, and I'm incredibly proud about performance.

Yesterday, we announced our fourth quarter and full year 2021 financial results and I'm incredibly proud about the Poland.

Speaker 4: You'll see on slide six, we delivered record core earnings of $6.5 billion in 2021, a 26% increase from the prior year, with double digit growth in our global WAN business.

You'll see on slide six we delivered record core earnings of $6 5 billion in 2021 'twenty.

26% increase from the prior year with double digit growth in our total land business.

Speaker 4: And we also reported record net income of $7.1 billion, an increase of $1.2 billion over the prior year.

We also reported record net income of $7 $1 billion, an increase of $1 $2 billion over the prior year.

Speaker 4: We continue to focus on growing our customer base and serving our customers evolving needs better, which is evident in our new business value increase of 31% to $2.2 billion with double digit growth across all segments.

We continue to focus on growing our customer base and serving our customers evolving needs better.

It is evident in our new business value increase of 31% to $2 $2 billion with double digit growth across all segments.

Speaker 4: This was a particularly strong result given the COVID-19 restrictions in markets in which we operate in Asia, such as Vietnam and the Philippines.

This was a particularly strong result, given the COVID-19 restrictions in market in which we operate in Asia, such as Vietnam and the Philippines.

Speaker 4: In addition, NBD margin for Asia increased by 6.1 percentage points from the prior year, reflecting both benefits of scale and favorable product mix.

In addition in BP margin for Asia increased by six one percentage points from the prior year, reflecting both the benefits of scale and favorable product mix.

Speaker 4: In our global WAM business, we achieved strong net employees of $27.9 billion, triple the prior year level, primarily reflecting continued strong growth in our retail business across all geographies.

And our global land business, we achieved strong net inflows of $27.9 billion triple the prior year levels, primarily reflecting continued strong growth in our retail business across all geographies.

Speaker 4: 2021 was a record year for our retail wealth business, with net inflows of $29.2 billion.

21 was a record year for our retail wealth business with net inflows of $29 $2 billion.

Speaker 4: In addition, we delivered very strong remittances of $4.4 billion, a $2.8 billion increase from the prior year.

In addition, we.

We delivered very strong remittances of $4 $4 billion to $8 billion increase from the prior year.

Speaker 4: Turning to slide seven, 2021 was not without its challenges.

Turning to slide seven 2021 was not without its challenges. Despite the headwinds we generated strong growth on a full year basis.

Speaker 4: Despite the headwinds, we generated strong growth on a full year basis.

Speaker 4: Notably, when compared to pre-pandemic, our top-line growth and global WAMnet flows exceeded our 2019 results, demonstrating the long-term strength of our franchise.

Notably when compared to pre pandemic, our topline growth and global Wham net flows exceeded our 2019 results demonstrating the long term strength of our franchise.

Speaker 4: The diversity of our business was a crucial factor in delivering strong financial performance in 2021, as seen in our record core earnings and net income, as well as strong growth in our business.

The diversity of our business was a crucial factor in delivering strong financial performance in 2021.

As seen in our record core earnings and net income.

As well as strong growth in new business value.

Speaker 4: Our presence in 13 markets in Asia demonstrated the benefits of geographic diversification.

Our presence in 13 markets in Asia demonstrated the benefits of geographic diversification.

Speaker 4: as strong top-line growth in Hong Kong, Singapore and Vietnam balance the impacts of COVID-19 and regulatory changes in China, Japan and other emerging markets.

Our strong topline growth in Hong Kong, Singapore and Vietnam.

Once the impacts of Covid, 19, and regulatory changes in China, Japan, and other emerging markets.

Speaker 4: We also gained share in five markets during 2021.

We also gained share in five markets during 2021.

Speaker 4: Our US business drove continued sales momentum, with sales ahead of prior year in almost every major category. And we also reported record sales in our international business.

Our U S business growth continued sales momentum with south ahead of prior year in almost every major category and.

We also reported record sales in our international business.

Speaker 4: And Global YM, one of our growth engines, achieved double digit growth in earnings and tripled its net inflows.

And global wine one of our growth engines achieved double digit growth in earnings and tripled its net inflows.

Speaker 4: In the fourth quarter we announced a dividend increase of 5 cents per share, resulting in a total quarterly common share of a dividend of 33 cents per share or an 18% increase.

In the fourth quarter, we announced a dividend increase of five cents per share, resulting in a total quarterly common shareholder dividend of 33 cents per share or an 18% increase.

Speaker 4: This increase resumed our track record of sustained gradual dividend increases, which remains one of our top capital deployment priorities.

This increase resumed our track record of sustained gradual dividend increases, which remains one of our top capital deployment priority.

Speaker 4: We also recently launched a normal course issuer bid to repurchase up to 5% of outstanding common shares.

We also recently launched a normal course issuer bid to repurchase up to 5% of outstanding common shares.

Turning to slide eight.

Speaker 4: We are laser focused on delivering on our strategic priorities and the 2025 supplemental goals that we announced at our recent investor day. Our str SPECS just launched a pilot

We are laser focused on delivering on our strategic priorities and the 2025 supplemental goes that we announced at our recent Investor day.

Our results this year are a testament to that commitment.

Speaker 4: Our highest potential businesses accounted for 63% of total company core earnings in 2021.

Oh as potential businesses accounted for 63% of total company core earnings in 2021.

Speaker 4: And we're on track to achieve our target of two thirds by 2022. We aspire to have core earnings from the Asia region contribute 50% by 2025.

And we're on track to achieve our target of two thirds by 2022.

Glad to have core earnings from the Asia region contribute 50% by 2025.

Speaker 4: In 2021, amid the challenges of COVID-19 in select markets, core earnings from the Asia region contributed 39% of total company core earnings.

In 2021 would be the challenges of COVID-19 like market.

Core earnings from the Asia region contributed 39% of total company core earnings.

Speaker 4: We're scaling our business to grow across the diverse markets in Asia. For example, in December of 2021, we launched a 16-year exclusive bank insurance partnership with the Vietnam Bank, one of the largest financial institutions in Vietnam.

We're scaling our business to grow across the diverse markets in Asia.

For example in December of 2021, we launched a 16 year exclusive bancassurance partnership with <unk> Bank.

One of the largest financial institution in Vietnam.

Speaker 4: This partnership significantly enhances our distribution capability in Vietnam to offer a full suite of insurance, wealth and retirement solutions to a significant percentage of the Vietnamese population.

This partnership significantly enhances our distribution capability in Vietnam. So offer a full suite of insurance wealth and retirement solutions. So a significant percentage of the Vietnamese population.

Speaker 4: With this transaction, we also acquired Aviva Vietnam, which further enhances our scale in this important and growing market. I'll speak more on this exciting...

With this transaction, we also acquired a visa Vietnam, which further enhances our scale in this important and growing market.

I'll speak more on this exciting development in a moment.

Speaker 4: Our global WAN business expanded the retail product lineup beyond traditional mutual funds, with new, actively managed exchange traded funds in both Canada and the US.

Our global land business expanded the retail product lineup beyond traditional mutual funds with new actively managed exchange traded funds in both Canada and the U S.

Speaker 4: And we furthered our separately managed accounts offering in the US with each category generating over $1 billion in net inflows in 2021.

And we furthered our separately managed accounts offering in the U S with each category generating over $1 billion in net inflows in 2021.

Speaker 4: And in the US, we achieved record sales of products with the market leading John Hancock Vitality Plus feature.

And in the U S. We achieved record sales of products with a market, leading John Hancock vitality plus feature.

Speaker 4: We believe that our Vitality offering, which focuses on rewarding customers for healthy living, is not only the right solution, but resonates with customers as they focus more on wellbeing and improving quality of life.

We believe that our vitality offering which focuses on rewarding customers for healthy living is not only the right solution that resonates with customers as they focus more on wellbeing and improving quality of life.

Our ambition is to be a leader in our industry when it comes to digital capabilities and customer experience.

Speaker 4: Our ambition is to be a leader in our industry when it comes to digital capabilities and customer experience.

Speaker 4: And we're executing on our strategy to attract, engage, and retain customers by delivering an outstanding experience for every interaction.

We're executing on our strategy to attract engage and retain customers by delivering an outstanding experience.

Every interaction.

Speaker 4: During the year, we continue to make progress on our digital journey across all our operating sites.

During the year, we continue to make progress on our digital journey across all our operating segments.

Speaker 4: This played a significant role in our ability to listen to our customers, adapt and leverage our digital capabilities to better serve our customers across the globe.

Played a significant role now our ability to listen to our customers adapt and leverage our digital capabilities to better serve our customers across the globe.

Speaker 4: Our continued investments in digital enhancements have contributed to our significant net promoter score improvement.

Our continued investments in digital enhancements have contributed to a significant net promoter score improvements.

Speaker 4: In 2021, we achieved a score of plus 21.

In 2021, we achieved a score of plus 21.

Speaker 4: which is a 20 point improvement from the 2017 baseline. And a nine point improvement

She has a 20 point improvement from the 2017 baseline.

And a nine point improvement from 2020.

Speaker 4: In 2021, we achieved straight through processing of 82%.

In 2021, we achieved straight through processing of 82%.

Speaker 4: And we're on track to achieve our supplemental goal of 88% by 2025.

We're on track to achieve our supplemental goal of 88% by 2025.

Speaker 4: In Asia, EPOS, our digital onboarding app, is supporting our agents with faster, higher quality new business submissions.

In Asia E. Pos our digital Onboarding App is supporting our agents with faster higher quality new business submissions.

Speaker 4: Throughout the year, 82% of applications were submitted digitally, representing an increase of 22% year over year. And 79% of these applications were auto underwritten.

Throughout the year, 82% of applications were submitted digitally representing an increase of 22% year over year and.

79% of these applications where auto underwritten.

Speaker 4: In the US, we completed the iPipeline integration with the Jane H. Brokerage ER.

In the U S. We completed the ice pipeline integration with the J H brokerage yeah.

Speaker 4: This integration provides the majority of our regular distribution partners with access to next-generation sales tools and decreases the overall cycle time for applications submitted via this preferred channel by 49% year-over-year.

This integration provides the majority of our regular distribution partners with access to next generation sales tools and decreases the overall cycle time for application submitted by this preferred channel by 49% year over year.

Speaker 4: It also enabled access to over 250 firms, including a new partnership with Allstate, and it's more than 11,000 agents.

It also enabled access to over 250 funds, including a new partnership with both sides and it's more than 11000 agents.

These initiatives contributed to a 15 percentage point increase in overall, new business applications have been a digitally in 2021% to 71%.

Speaker 4: These initiatives contributed to a 15 percentage point increase in overall new business applications submitted digitally in 2021 to 71%.

Speaker 4: In our global WAN US retirement business, 88% of plan participants enrolling have adopted our new Digital Express enrolling capability that delivers a simple, fast and seamless way to enroll in their plans and benefit from access to personalized guidance.

And now goes away and U S retirement business, 88% of plan participants enrolling have adopted and use digital express enrollment capability.

Is it a simple Boston seamless way to enrolling that plane and benefit from access to personalized guidance.

Speaker 4: This resulted in an 11% increase in participation and six times the managed accounts conversion rate when compared to the previous enrollment process.

This resulted in an 11% increase in participation and six times the managed accounts conversion rate when compared to the previous enrollment process.

Turning to slide nine.

Speaker 4: We've now commenced our partnership with Vietnam Bank to establish an exclusive 16-year bank insurance partnership to better meet the growing financial and insurance needs of the Vietnam market.

We've now come in step partnership with <unk> Bank to establish an exclusive 16 year bancassurance partnerships to better meet the growing financial and insurance needs of the Vietnam market.

Speaker 4: and to make the lives of millions more Vietnamese better every day.

And to make the lives of millions more Vietnamese better every day.

Speaker 4: Vietnam Bank is one of Vietnam's largest financial institutions.

Decent bank is one of the Vietnam largest financial institutions.

Speaker 4: And this partnership provides us with exclusive access to more than 14 million customers.

And this partnership provides us with exclusive access to more than 14 million customers.

Speaker 4: through a network of over 150 branches and 1,000 transaction offices across 63 cities and province.

Through our network of over 150 branches and a thousand transaction offices across 63 cities and provinces.

Speaker 4: Farming with Beardsman Bank accelerates our growth trajectory in the region.

Partnering with visa and bank accelerate our growth trajectory in the region.

Speaker 4: further strengthening our leadership position in Vietnam's fast-growing market, and solidifying our position as a leader in insurance and wealth management.

Further strengthening our leadership position in Vietnam fast growing market.

Solidifying our position as a leader in insurance and wealth management.

Speaker 4: We expect the opportunities generated by this exclusive partnership to result in an immediate increase to our earnings in the first year.

We expect the opportunities generated by this exclusive partnership to result in an immediate accretion to our earnings in the first year.

Turning to slide 10.

Speaker 4: I want to take a few minutes to highlight our tremendous success story in Vietnam, even before this exciting new partnership.

I Wonder if I could few minutes to highlight a tremendous success story in Vietnam, even before this exciting new partnership.

Speaker 4: Our IPE sales and new business value have grown rapidly from 2017 to 2021, at a compound annual growth rate of 27 and 51% respectively.

Our I T cells, and new business value has grown rapidly from 2017 for 2021.

Compound annual growth rate of 27, and 51% respectively.

Speaker 4: These are impressive results considering the impact of COVID-19 restrictions during 2020 and 2021.

These are impressive results considering the impact of COVID-19 restrictions during 2020 and 2021.

Speaker 4: This tremendous growth was powered by a professional agency force and a market leading bank assurance distribution channel.

This tremendous growth was powered by our professional agency force and a market leading bancassurance distribution channel.

Speaker 4: that propelled our market rankings from number four in 2017 to the number one position which we've held since 2019.

That propelled our market ranking from number 42017, so the number one position, which we've held since 2019.

Speaker 4: Our Bank Assurance channel is anchored by our exclusive partnerships with Saigon Commercial Bank, Tech Home Bank and now, CSM Bank.

Our bancassurance channel is anchored by our exclusive partnerships recycle and commercial bank.

Take home Bank and now he has come back.

Speaker 4: which gives us access to 24 million bank customers.

Which gives us access to 24 million bank customers.

Speaker 4: Vietnam has significant growth potential, with one of Asia's highest GDP growth rates, a high proportion of working-age populations, and life insurance penetration rates that are well below other emerging and developed markets in Asia.

<unk> has significant growth potential with one of Asia's highest GDP growth rates, a high proportion of working age population and life insurance penetration rates that are well below other emerging and developed markets in Asia.

Speaker 4: Looking forward, our focus will be on further expanding and professionalizing our agency platform, CP and customer penetration with our bank partnerships, enhancing digital capabilities for key customer and distributor touchpoints, and finally, further automating processes to harness the benefits of our scale.

Looking forward, our focus will be on further expanding and Professionalizing Our agency platform C.

<unk> customer penetration without bank partnerships enhancing digital capabilities for key customer and distributor touch points and finally further automating processes to harness the benefits of our scale.

Speaker 4: Turning to Flight 11, expense efficiency is deeply embedded in our culture.

Turning to slide 11.

Efficiency is deeply embedded in our culture in.

Speaker 4: In 2021, our expense efficiency ratio improved by 4 percentage points, and we have achieved our target of less than 50 percent.

In 2021, our expense efficiency ratio improved by four percentage points.

And we've achieved our target of less than 50%.

Speaker 4: We remain focused on driving efficient growth and are committed to consistently achieving an expense efficiency ratio of less than 50% going forward.

We remain focused on driving efficient growth and are committed to consistently achieving an expense efficiency ratio of less than 50% going forward.

Speaker 4: while ensuring scalable growth, outstanding customer experience, and digital ways of working. Cool discussion.

While ensuring scalable growth.

Standing customer experience and digital ways of working.

Bill will discuss our progress in more detail.

Speaker 4: Turning to portfolio optimization, on a cumulative basis, we've freed up $6.3 billion of capital through various efforts across multiple legacy blocks.

Turning to portfolio optimization on accumulative basis, we freed up $6 $3 billion of capital through various efforts across multiple legacy blocks.

Speaker 4: And our commitment and focus on optimizing our long-term care and variable annuity businesses is as strong as ever.

And our commitment and focus on optimizing our long term care and variable annuity businesses is as strong as ever.

Speaker 4: And we aim to achieve our 2025 supplemental goal of reducing core earnings contributions from these businesses to less than 15% of total core earnings and would like to see this decline further to less than 10% with inorganic action.

And we aim to achieve our 2025 supplemental goal of reducing core earnings contributions from these businesses, but less than 15% of total core earnings and we'd like to see this decline further for less than 10% with inorganic actions.

Speaker 4: I'm pleased to report that in 2021, we reduced the core earnings contribution from our long-term care and variable annuity businesses to 20%, supported by the increasing contributions from our highest potential business.

I'm pleased to report that in 2021, we reduced the core earnings contribution from our long term care and variable annuity businesses so 20%.

Wanted by the increasing contributions from our highest potential businesses.

Speaker 4: In addition, we entered into an agreement in the fourth quarter to re-insure a significant portion of our legacy US thermal annuity block with venerable holding...

In addition, we entered into an agreement in the fourth quarter to reinsure, a significant portion of our legacy U S variable annuity book with Venerable Holdings, Inc.

Speaker 4: I'm pleased to confirm the transaction closed on February 1.

I am pleased to confirm the transaction closed on February 4th.

Speaker 4: and it's expected to result in approximately $2 billion of capital released in 2022.

And it's expected to result in approximately $2 billion of capital released in 2022.

Speaker 4: This transaction positions us well to achieve our 2025 Supplemental goal. I will go into a bit more detail.

This transaction positions us well to achieve our 2025 supplemental golf.

I am going towards more detail on this transaction in a minute.

Speaker 4: Our fifth priority is focused on our high-performing team.

Our fifth priority is focused on a high performing team.

Speaker 4: We recently completed our 2021 employee engagement survey and maintained a top quartile position ranking in the 86th percentile amongst global financial services and insurance peers.

We recently completed our 2021 employee engagement survey and maintained top quartile position ranking in the 86 percentile amongst global financial services and insurance piece.

Speaker 4: Also in October , Manuel Aspla's name was named the World's Best Employer by Forbes for the second year in a row.

Also in October Manulife was named a world's best employer by Forbes for the second year in a row.

Speaker 4: Turning to slide 12, I'm pleased with the successful completion of the USDA reinsurance transaction on February 1.

Turning to slide 12, I am pleased with the successful completion of the U S. VA reinsurance transaction on February one this.

Speaker 4: This transaction represents a significant milestone for manualx, greatly lowering our go-forward risk profile while reducing our exposure to the USDA-guaranteed value and net amount of risk.

This transaction represents a significant milestone for menu.

Greatly lowering our go forward risk profile, while reducing our exposure to the USDA guarantee value and net amount at risk.

Speaker 4: and it reduces our equity market sensitivity from our variable annuity guarantee by roughly 54%.

And it reduces our equity market sensitivity from our variable annuity guarantee by roughly 54%.

Speaker 4: We have unlocked significant shareholder value with an estimated $2 billion of expected capital relief.

We have unlock significant shareholder value with an estimated $2 billion of expected capital really.

Speaker 4: which includes an after-tax gain of approximately $750 million, validating the conservatism of our reserves.

Which includes an after tax gain of approximately $750 million.

Validating the conservatism of our reserves.

Speaker 4: This represents a strong multiple of more than 10 times only.

This represents a strong multiple of more than 10 times earnings.

Speaker 4: We plan to deploy a significant portion of the capital release to buy back common shares to utilise the impact of the transaction on Core EPS.

We plan to deploy a significant portion of the capital released to buyback common shades to neutralize the impact of the transaction on core EPS.

Speaker 4: We remain committed to optimizing our legacy portfolio, especially LTC and VA, and will continue to seek opportunities to reduce risk and unlock value.

We remain committed to optimizing our legacy portfolio, especially LCC and <unk> and we will continue to seek opportunities to reduce risks and unlock value.

Turning to slide 13.

Speaker 4: I'm incredibly proud of the way our colleagues around the world have continued to make decisions easier and lives better for our customers throughout 2021.

I'm incredibly proud of the way our colleagues around the world have continued to make decisions easier and lives better for our customers throughout 2021.

Speaker 4: We delivered record results in 2021, underpinned by double-digit growth in Asia and global WAN.

We delivered record results in 2021 underpinned by double digit growth in Asia and global win.

Speaker 4: We've commenced the 16-year bank assurance partnership with Vietnam Bank and acquired a visa in Vietnam, which further accelerates our growth in one of the most exciting markets in Asia.

We've commenced a 16 year bancassurance partnership with <unk> Bank, and a quite a veeva Vietnam.

Which further accelerates our growth.

One of the most exciting markets in Asia.

Speaker 4: While we've achieved our expense efficiency ratio target of less than 50%, we remain focused on driving efficient growth as we look forward.

While we've achieved our expense efficiency ratio target of less than 50%.

We remain focused on driving efficient growth as we look forward.

Speaker 4: We executed on optimizing our legacy business by completing the USDA reinsurance transaction which unlock value for shareholders.

We executed on optimizing our legacy business by completing the U S D a reinsurance transaction.

Which unlock value for shareholders and reduce risks.

Speaker 4: And we continue to deploy capital by increasing the quarterly dividend by 18% in the fourth quarter and commence shared buybacks under the recently launched NCIB program.

And we continue to deploy capital by increasing the quarterly dividend by 18% in the fourth quarter and commence share buybacks under the recently launched <unk> program.

Speaker 4: Our solid foundation, global presence, diverse business and continued strong execution...

Our solid foundation global presence diverse business and continued strong execution.

Speaker 4: uniquely positions us to succeed and deliver on our growth targets.

Uniquely positions us to succeed and deliver on our growth targets.

Speaker 4: Thank you. I'll hand over to Phil Witherington, who will review the highlights of our financial results. Phil.

Thank you I'll hand over to Phil Witherington, who will review the highlights of our financial results.

Yes.

Speaker 5: Thanks, Roy. Throughout 2021, we continued to execute on our strategic priorities, and we delivered strong operating and financial results with record core earnings and net income.

Thanks Roy.

Throughout 2021, we continued to execute on our strategic priorities and we delivered strong operating and financial results with record core earnings and net income.

Speaker 5: Our fourth quarter metrics were similarly impressive. I will highlight the key drivers of both our fourth quarter and full year performance with reference to the next few slides.

Our fourth quarter metrics were similarly impressive I will highlight the key drivers of both our fourth quarter and full year performance with reference to the next few slides.

Speaker 5: I'll start on slide 15. We generated strong core earnings of $1.7 billion in the fourth quarter of 2021, up 20% from the prior year quarter. This growth was driven by a number of factors.

I'll start on slide 15.

We generated strong core earnings of $1 $7 billion in the fourth quarter of 2021 up 20% from the prior year quarter.

This growth was driven by a number of factors.

Speaker 5: the recognition of core investment gains in the quarter.

The recognition of core investment gains in the quarter.

Net fee income from higher average AUM.

Our global land business.

Speaker 5: higher new business gains in the US and Canada.

And new business gains in the U S and Canada.

Speaker 5: a decrease in the corporate and other core loss which benefited from a lower cost of debt and higher investment income, and double digit enforced business growth in Canada and Asia.

A decrease in the corporate and other core loss, which benefited from a lower cost of debt and higher investment income.

And double digit in force business growth in Canada and Asia.

Speaker 5: These items were partially offset by unfavourable policyholder experience and lower net gains on seed money investment.

These items were partially offset by unfavorable policyholder experience and lower net gains on seed money investments.

Speaker 5: Net income attributed to shareholders of $2.1 billion in the fourth quarter was up 19% from the prior year quarter, reflecting growth in core earnings and gains from the direct impact of interest rates compared with losses in the prior year, partially offset by lower investment-related experience gains and lower gains from the direct impact of equity markets.

Net income attributed to shareholders of $2 $1 billion in the fourth quarter was up 19% from the prior year quarter, reflecting growth in core earnings and gains from the direct impact of interest rates compared with losses in the prior year, partially offset by lower investment related experience.

<unk> and lower gains from the direct impact of equity markets.

Speaker 5: of note, we recognize the gain of $226 million from investment-related experience in the fourth quarter of 2021, reflecting higher than expected returns on ALBA, primarily driven by fair value gains on private equity and infrastructure, as well as strong credit experience.

Of note, we recognized the gain of $226 million from investment related experience in the fourth quarter of 2021, reflecting higher than expected returns on older primarily driven by fair value gains on private equity and infrastructure as well as strong credit experience.

Speaker 5: These items were partially offset by the unfavorable impact of fixed income reinvestment activities, primarily driven by the acquisition of US Treasury bills.

These items were partially offset by the unfavorable impact of fixed income reinvestment activities, primarily driven by the acquisition of U S Treasury bills.

Speaker 5: $100 million of these gains were reported in core earnings as core investment gains, with the remaining $126 million reported outside of core earnings.

$100 million of these gains were reported in core earnings as core investment gains with the remaining $126 million reported outside of core earnings.

Speaker 5: The gain of $274 million from the direct impact of interest rates was due to the flattening of the yield curve in Canada and the U.S., as well as gains from widening corporate spreads in the U.S., partially offset by the realization of losses from the sale of AFS bonds.

The gain of $274 million from the direct impact of interest rates was due to the flattening of the yield curve in Canada, and the U S as well as gains from widening corporate spreads in the U S. Partially offset by the realization of losses from the sale of ISS bonds.

Speaker 5: The impact of equity markets in the quarter was the gain of $124 million.

The impact of equity markets in the quarter, there was a gain of $124 million.

Speaker 5: Slide 16 shows the performance of our ALTA portfolio by asset class since the acquisition of John Hancock 17 years ago.

Slide 16 shows the performance of our ultra portfolio by asset class since the acquisition of John Hancock 17 years ago.

Speaker 5: The average return of the overall portfolio during this period was 9.4%, outperforming our current best estimate long-term return assumption of 9.2%.

The average return of the overall portfolio. During this period was nine 4% outperforming our current best estimate long term return assumption of nine 2%.

Speaker 5: We're pleased with the strong performance of the portfolio in 2021, that not only recovered from prior year losses, but also contributed to the $1.25 billion of total investment-related experience gains over the past two years, which exceeded our core investment gains of up to $400 million per year, or $800 million over two years.

We're pleased with the strong performance of the portfolio in 2021 that not only recovered from prior year losses. This all.

<unk> contributed to the 125 billion.

Total investment related experience gains over the past two years, which exceeded our core investment gains of up to $400 million per year or $800 million over two years.

Speaker 5: Slide 17 shows our source of earnings analysis for the fourth quarter of 2021 compared to the prior year quarter.

Slide 17 shows our source of earnings analysis for the fourth quarter of 2021 compared to the prior year quarter.

Speaker 5: Expected profit on InForce increased 8% driven by InForce business growth in Canada and Asia.

Expected profit on in force increased 8% driven by in force business growth in Canada and Asia.

Speaker 5: New business gains increased 21% from the prior year period, driven by higher sales volumes and improved margins in the US segment from our domestic and international high net worth businesses.

New business gains increased 21% from the prior year period, driven by higher sales volumes and improved margins in the U S segment from our domestic and international high net worth businesses.

Speaker 5: higher sales volumes and favorable product mix in individual insurance in Canada.

Sales volumes unfavorable product mix in individual insurance in Canada.

Speaker 5: and higher sales volumes and the favourable impact of product re-pricing in Hong Kong.

And higher sales volumes and the favorable impact of product repricing in Hong Kong.

Speaker 5: This was partially offset by lower critical illness sales and margins in China, lower sales amid continuing COVID-19 restrictions and unfavorable product mix in Vietnam, lower Kohli sales in Japan, as well as lower sales volumes in several emerging markets that were impacted by COVID-19 containment measures.

This was partially offset by lower critical illness sales and margins in China lower sales amid continuing COVID-19 restrictions and unfavorable product mix in Vietnam, lower coli sales in Japan, as well as lower sales volumes in several emerging markets that were impacted by Covid nine.

<unk> containment measures.

Speaker 5: The experience loss in the quarter was primarily driven by unfavorable policyholder experience due to elevated mortality levels particularly in US life.

We experienced a loss in the quarter was primarily driven by unfavorable policyholder experience due to elevated mortality levels, particularly in the U S life.

Speaker 5: continued low lapse rates on North American protection products.

Continued low lapse rates on North American protection products.

Speaker 5: and a modest charge in Asia driven by unfavorable claims, partly due to COVID-19 and persistency losses.

And a modest charge in Asia, driven by unfavorable claims partly due to COVID-19, and persistency losses.

Speaker 5: Canadian group insurance was neutral, and long-term care policyholder experience was a modest gain.

Canadian Group insurance was neutral.

Long term care policyholder experience was a modest gain.

Speaker 5: Slide 18 shows the history of our policyholder experience excluding the charges related to hurricane Ida and the European floods in 2021.

Slide 18 shows the history of our policyholder experience, excluding the charges related to hurricane Ida and the European floods in 2021.

Speaker 5: The pandemic and related macroeconomic environment impacted our policyholder experience differently across product lines.

The pandemic and related macroeconomic environment impacted our policyholder experience differently across the product lines.

Speaker 5: the diversity of our businesses and our use of reinsurance provided an offset between these experiences and on a cumulative basis over 2020 and 2021 reduced the impact to a net charge of less than $30 million post-tax.

Diversity of our businesses and our use of reinsurance provided an offset between these experiences and on accumulative basis over 2020 in 2021 reduce the impacts to our net charge of less than $30 million post tax.

Speaker 5: Slides 19 and 20 show our earnings by segment and return on equity.

Slides 19, and 20 sure earnings by segment and return on equity.

Speaker 5: I will comment on the fourth quarter results compared with the prior year quarter.

Comment on the fourth quarter results compared with the prior year quarter.

Speaker 5: We delivered core earnings growth of 30% in our global WAN business, reflecting growth in net fee income, driven by higher average AUM that benefited from the favorable impact of markets and net inflows, as well as favorable business mix and higher tax benefits.

We delivered core earnings growth of 30% in our global wealth business, reflecting growth in net fee income driven by higher average <unk> that benefited from the favorable impact of markets and net inflows as well as a favorable business mix and higher tax benefits.

Speaker 5: Core earnings in Asia was consistent with the prior year as enforced business growth was offset by modestly unfavourable policyholder experience, which included COVID-19 related claims losses, lower new business gains and lower investment income on allocated capital.

Core earnings in Asia was consistent with the prior year as in force business growth was offset by modestly unfavorable policyholder experience, which included COVID-19 related claims losses, lower new business gains and lower investment income on allocated capital.

Speaker 5: Core earnings in Canada decreased by 9% as less favorable policyholder experience in group insurance, lower investment income on allocated capital, and the non-recurrence of a release of tax provision in the fourth quarter of 2020 were partially offset by higher expected earnings across all businesses and higher individual insurance sales.

Core earnings in Canada decreased by 9% as less favorable policyholder experience in group insurance lower investment income on allocated capital in the non recurrence of a release of tax provision in the fourth quarter of 2020 were partially offset by higher expected earnings across all business.

<unk> and higher individual insurance sales.

Speaker 5: Core earnings in the US increased by 1%, reflecting new business gains from higher sales and improved margins, partially offset by lower investment income on allocated capital, lower but still favourable long-term care policyholder experience and lower tax benefits.

Core earnings in the U S increased by 1%, reflecting new business gains from higher sales and improved margins, partially offset by lower investment income on allocated capital lower but still favorable long term care policyholder experience and lower tax benefits.

Speaker 5: The core loss in corporate and other improved by $217 million, primarily driven by the recognition of core investment gains in the quarter compared with nil core investment gains in the prior year quarter lower interest on allocated capital to operating segments.

The core loss in corporate and other improved by $217 million, primarily driven by the recognition of core investment gains in the quarter compared with no core investment gains in the prior year quarter.

Lower interest on allocated capital two operating segments.

Speaker 5: lower interest on external debt, and higher investment income and gains on sales of AFS equities.

Interest on external debt.

Higher investment income and gains on sales of <unk> equities.

Speaker 5: These gains were partially offset by the unfavorable impact of markets on seed money investments compared with gains in the prior year.

These gains were partially offset by the unfavorable impact of market some seed money investments compared with gains in the prior year.

Speaker 5: We delivered core ROE of 12.7% in the fourth quarter and 13% for 2021.

We delivered core ROE of 12, 7% in the fourth quarter and 13% for 2021.

Speaker 5: Turning to slide 21, which shows our new business value generation.

Turning to slide 21, which shows our new business value generation.

Speaker 5: In this uncertain environment, we have adapted to better serve our customers across the globe, resulting in the double-digit growth in our NBZ in 2021.

In this uncertain environment, we have adapted to better serve our customers across the globe, resulting in the double digit growth in our NBC in 2021.

Speaker 5: In the fourth quarter of 2021, we delivered new business value of $555 million, up 17% from the prior year quarter.

In the fourth quarter of 2021, we delivered new business value of $555 million up 17% from the prior year quarter.

Speaker 5: In Asia, NDV increased 11% from the prior year quarter, reflecting higher sales volumes, favorable interest rates, and disciplined expense management in Hong Kong, as well as favorable product mix in Asia other, partially offset by lower sales in Japan and China.

In Asia, NPV increased 11% from the prior year quarter, reflecting higher sales volumes favorable interest rates and disciplined expense management in Hong Kong.

Well as favorable product mix in Asia, other partially offset by lower sales in Japan and China.

Speaker 5: In Canada, NBV increased 26% from the prior year quarter, primarily due to higher margins in annuities and higher volumes in individual insurance.

In Canada, NBC increased 26% from the prior year quarter, primarily due to higher margins in annuities and higher volumes in individual insurance.

Speaker 5: In the US, NBV increased 51% from the prior year quarter, primarily driven by higher sales volumes and favorable product mix, notably from our international business, which is reported as part of the US segment.

In the U S NBC increased 51% from the prior year quarter, primarily driven by higher sales volumes and favorable product mix, notably from our international business, which is reported as parts of the U S segment.

Speaker 5: And on a full year basis, NBD grew as a double digit rate compared with both the prior year and the pre-pandemic level in 2019.

And on a full year basis NBC grew at a double digit rate compared with both the prior year and the pre pandemic level in 2019.

Speaker 5: Our Asia business generated the majority of total NPV of the company and delivered a growth of 27% in 2021 compared with the prior year, reflecting the diversity and distribution strength of our franchise, which also allowed us to gain share in various markets across the region.

Our Asia business generated the majority of total NPV of the company and delivered a growth of 27% in 2021 compared with the prior year, reflecting the diversity and distribution strengths of our fund size, which also allowed us to gain share in various markets across the region.

Slide 22 shows our Apu sales.

Speaker 5: In the fourth quarter of 2021, we delivered APE sales of $1.4 billion, a 5% increase from the prior year quarter.

In the fourth quarter of 2021, we delivered APE sales of $1 $4 billion, a 5% increase from the prior year quarter.

Speaker 5: Asia APE sales declined by 6%.

Asia <unk> sales declined by 6%.

Speaker 5: In Hong Kong, APE sales increased 11% despite the effect of COVID-19 containment measures that continued to constrain cross-border travel between Hong Kong and mainland China.

In Hong Kong <unk> sales increased 11%. Despite the effect of COVID-19 containment measures continued to constrain cross border travel between Hong Kong and mainland China.

Speaker 5: The increase in APE sales reflects strong growth in our bank channel and demand from mainland Chinese visitors throughout Macau.

The increase in AP sales reflect strong growth in our bank channel and demand from mainland Chinese visitors throughout Macau brunch.

Speaker 5: Asia other ATE sales were in line with the prior year quarter as expansion in the bank assurance channel was offset by lower agency sales which were adversely impacted by COVID-19 containment measures in markets such as Vietnam and the Philippines.

Asia other eight T cells were in line with the prior year quarter as expansion in the Bancassurance channel was offset by lower agency sales, which were adversely impacted by COVID-19 containment measures in markets, such as Vietnam and the Philippines.

Speaker 5: The growth in Hong Kong and overall stability of Asia other markets was more than offset by a 44% decline in Japan, Kohli sales reflecting a continuation of the trend seen in previous quarters.

The growth in Hong Kong, and overall stability of Asia. Other markets was more than offset by a 44% decline in Japan coli sales, reflecting a continuation of the trend seen in previous quarters.

Speaker 5: In Canada, APE sales increased by 20%, primarily driven by increased customer demand for our lower-risk segregated fund products and higher individual insurance sales.

In Canada, APE sales increased by 20%, primarily driven by increased customer demand for our lower risk segregated fund products and higher individual insurance sales.

Speaker 5: In the US segment, APE sales increased by 41% due to strong customer demand for our international high net worth solutions and our differentiated domestic product offerings, which include the John Hancock Vitality feature.

In the U S segment <unk> sales.

Sales increased by 41% due to strong customer demand for our international high net worth solutions and our differentiated domestic product offerings, which includes the John Hancock vitality feature.

Speaker 5: For 2021, overall AP sales grew at a double digit rate compared with the prior year and also exceeded the pre-pandemic level in 2019.

For 2021 overall AP sales grew at a double digit rate compared with the prior year and also exceeded the pre pandemic level in 2019.

Turning to slide 23, our.

Speaker 5: Turning to slide 23, our global WAN business continued to benefit from our geographic and line of business diversification as evidenced by strong net inflows of $8.1 billion and gross flows of $36 billion in the fourth quarter.

Global <unk> business continued to benefit from our geographic and line of business diversification as evidenced by strong net inflows of $8 1 billion and gross flows of $36 billion in the fourth quarter.

Speaker 5: In retail, net inflows were $7.5 billion compared with net inflows of $3.6 billion in the prior year quarter.

In retail net inflows was seven 5 billion compared with net inflows of $3 $6 billion in the prior year quarter.

Speaker 5: The increase reflects strong intermediary sales and higher institutional model allocations in the US, as well as higher gross flows in Japan and China.

The increase reflects strong intermediary sales and higher institutional model allocations in the U S as well as higher gross flows in Japan and China.

Speaker 5: Institutional asset management net inflows were $1.6 billion compared with net inflows of $1 billion in the prior year quarter.

Institutional asset management net inflows were $1 $6 billion compared with net inflows of $1 billion in the prior year quarter.

Speaker 5: The increase was driven by lower redemptions in timberland and real estate mandates, partially offset by lower gross flows in fixed income mandates.

The increase was driven by lower redemptions in timberland and real estate mandates, partially offset by lower gross flows in fixed income mandates.

Speaker 5: During the fourth quarter, we continued building out our private markets business with the successful fundraising of approximately $7 billion on two funds with commitments from both third-party investors and Manulife's general account.

During the fourth quarter, we continued building out our private markets business with the successful fund raising of approximately $7 billion on two funds with commitments from both third party investors and Manulife General account.

Speaker 5: Approximately one quarter of the fundraising from third-party investors has been deployed and reflected in our AUM with the remainder to be deployed over the next several years.

Approximately one quarter of the fundraising from third party investors, who is being deployed and reflected in our U M with the remainder to be deployed over the next several years.

Speaker 5: In retirement, net outflows were $1 billion compared with net outflows of $1.8 billion in the prior year quarter. The reduction in net outflows was driven by higher gross flows across all geographies, reflecting higher growth in new planned sales and member contributions partially offset by higher planned redemption.

In retirement.

Flows were $1 billion compared with net outflows of $1 $8 billion in the prior year quarter.

The reduction in net outflows was driven by higher gross flows across all geographies, reflecting higher growth in new pump sales and member contributions partially offset by higher upon redemptions.

Speaker 5: Close to $0.6 billion of the retirement outflows were captured in our retail net inflows as we rolled over planned participants to our retail platform.

Close to <unk> $6 billion of the retirement outflows were captured in our retail net inflows as we rolled out the plan participants to our retail platforms.

Speaker 5: We continued to see strong net inflows in the Hong Kong NPF business, retaining our number one market rank by assets under management and net flows.

We continued to see strong net inflows in the Hong Kong NPS business, retaining our number one market bank by assets under management and net flows.

Speaker 5: Overall, GlobalWAM's average AUMA increased by 17% in the fourth quarter, compared with the prior year quarter, driven by the favourable impact of markets and higher net inflows.

Overall global ones average AUM increased by 17% in the fourth quarter compared with the prior year quarter, driven by the favorable impact of markets and higher net inflows.

Speaker 5: Turning to slide 24, net fee income yield remains resilient, reflecting our diversified business mix. And our core EBITDA margin increased 70 basis points, driven by a combination of higher net fee income, operational benefits from increased scale, and continued disciplined expense management.

Turning to slides 24.

Net fee income yield remains resilient, reflecting our diversified business mix.

Our core EBIT margin increased 70 basis points, driven by a combination of higher net fee income operational benefits from increased scale and continued disciplined expense management.

Speaker 5: Turning to slide 25. In 2021, we achieved annual savings of $100 million, resulting from the restructuring announced in the first half of the year.

Turning to slides 25 and.

In 2021, we achieved annual savings of $100 million, resulting from the restructuring announced in the first half of the year.

Speaker 5: Our culture of expense efficiency has resulted in a modest growth of 5% in core general expenses in 2021, which was far outpaced by the 25% increase in pre-tax core earnings.

Our culture of expense sufficiency has resulted in a modest growth of 5% and core general expenses in 2021, which was far outpaced by the 25% increase in pretax core earnings.

Speaker 5: This contributed to a 4 percentage point decrease in our expense efficiency ratio to 48.9% in 2021. And as Roy mentioned, we have achieved our target of less than 50%.

This contributed to a four percentage point decrease in our expense efficiency ratio to 48, 9% in 2021 and as Roy mentioned, we have achieved our target of less than 50%.

Speaker 5: We remain focused on driving efficient growth and are committed to consistently achieving an expense efficiency ratio of less than 50%, with scalable operations to support growth and digital tools to provide an outstanding customer experience.

We remain focused on driving efficient growth and are committed to consistently achieving an expense efficiency ratio of less than 50% with scalable operations to support growth and digital tools to provide an outstanding customer experience.

Speaker 5: Turning to slide 26, we continue to maintain a strong balance sheet and capital position.

Turning to slide 26, we continue to maintain a strong balance sheet and capital position.

Speaker 5: We have $27 billion of capital above the supervisory target, and our LICAT ratio of 142% is strong.

We have $27 billion of capital above the supervisory target and our line count ratio of 142% is strong.

Speaker 5: The 4 percentage point increase compared with the third quarter was driven by a net capital issuance and favorable market movements primarily from lower risk-free rates.

The four percentage point increase compared with the third quarter was driven by a net capital issuance and favorable market movements, primarily from lower risk free rates.

Speaker 5: Our financial leverage ratio increased 0.3 percentage points driven by the net capital issuance, largely offset by growth in retained earnings and an increase in the value of AFS debt securities.

Our financial leverage ratio increased <unk> three percentage points driven by the net capital issuance largely offset by growth in retained earnings and an increase in the value of <unk> debt securities.

Speaker 5: I would note that we have recently announced our intention to redeem $725 million of preferred shares. The impact of these redemptions will be reflected in the LICAT and leverage ratios for the first quarter of 2022.

I would note that we have recently announced our intention to redeem $725 million of preferred shares.

The impact of these redemptions will be reflected in the light cat and leverage ratios for the first quarter of 2022.

Speaker 5: Adjusted for these redemptions, the pro forma like at and leverage ratios would be 141% and 25% respectively.

Adjusted for these redemptions, the pro forma like cat and leverage ratios would be 141% and 25% respectively.

Speaker 5: Turning to slide 27 and our financial performance for the fourth quarter and full year 2021.

Turning to slide 27, and our financial performance for the fourth quarter and full year 2021.

Speaker 5: As mentioned, in 2021, we delivered double digit net income, core earnings, NBV and APE sales growth and achieved strong net inflows in our global WAN business.

As mentioned in 2021, and we delivered double digit net income core earnings NPV and AP sales growth and achieved strong net inflows in our global wealth business.

Speaker 5: Our strong balance sheet, as evidenced by our like-at and leverage ratios, provides us with financial flexibility to deliver on our strategic and capital deployment priorities.

Our strong balance sheet as evidenced by a light cat and leverage ratios provides us with financial flexibility to deliver on our strategic and capital deployment priorities.

Speaker 5: remittances increased by $2.8 billion to a total $4.4 billion in 2021, with positive contributions across all geographies.

Remittances increased by $2 8 billion to a total of $4 $4 billion in 2021 with positive contributions across all geographies.

Speaker 5: We continue to execute on our capital deployment priorities, including a strong track record of delivering progressive dividend increases.

We continued to execute on our capital deployment priorities, including a strong track record of delivering progressive dividend increases.

Speaker 5: We're pleased to have made an 18% increase in our quarterly common share dividend in the fourth quarter, which combined the annual increase for 2021 with an accelerated annual increase for 2022.

We're pleased to have made an 18% increase in our quarterly common share dividend in the fourth quarter, which combined the annual increase for 2021 with an accelerated annual increase for 2022.

In addition, we will be deploying capital to buying back shares under the recently launched and CIB program of up to 5% of outstanding common shares to generate shareholder value and to neutralize the impact on core EPS from the U S. P. A reinsurance transaction.

Slide 28 outlines our medium term financial targets and recent performance.

Speaker 5: Slide 28 outlines our medium-term financial targets and recent performance.

Speaker 5: We're pleased with our strong results in 2021, which met or exceeded most of our medium-term targets.

We're pleased with our strong results in 2021, which met or exceeded most of our medium term targets.

Speaker 5: Core EPS growth of 18% exceeded our target, while core ROE was in line with target, and the dividend payout ratio remains within our target range.

Core EPS growth of 18% exceeded our target while core ROE was in line with target on the dividend payout ratio remains within our target range.

Speaker 5: The leverage ratio was modestly above target, but would be at 25% after adjusting for the announced preferred share of them.

The leverage ratio was modestly above target, but it would be at 25% after adjusting for the announced preferred share redemptions.

Speaker 5: This concludes our prepared remarks. Operator, we will now open the call to questions.

This concludes our prepared remarks, operator, we will now open the call to questions.

Thank you, we'll now take questions from the telephone lines. If you have a question and you're using a speaker phone. Please lift your handset before making your selection. If you have a question. Please press star one on your devices keypad.

Speaker 2: We will now take questions from the telephone lines. If you have a question and are using a speakerphone, please hit your handset before making your selection.

Speaker 2: If you have a question, please press star one on your device's keypad. To cancel the question, please press star two on your device's keypad.

Cancel the question Please press star two.

Speaker 2: Please press star 1 at this time if you have a question. There will be a brief pause for participants register. Thank you for your...

Please press star one at this time, if you have a question there'll be a brief pause for participants register thank you for your patience.

Speaker 2: My first question is from Scott Chan from Canaccord Genuity. Please go ahead.

And the first question is from Scott Chan from Canaccord Genuity. Please go ahead.

Oh, Thank you very much good morning.

Speaker 5: So just on the rate environment, a lot has changed over the last two, three months in terms of the future market pricing, both in the US and Canada. I think five rate hikes for both in 2022 is consensus. And I guess that's the negative impact for the Y-Cat ratio. Can you kind of talk about and remind us kind of the puts and takes or positives on the changing rate environment that we could see this year?

So first on us from the rate environment, a lot has changed over the last two three months in terms of the futures market pricing.

Both in U S and Canada, I think five rate hikes for both in 2022.

As consensus.

That's not the negative impacts of lifetime ratio can you kind of talk about and remind us kind of the puts and takes are positives on the on the changing rate environment that we could see this year.

Speaker 4: Thanks for that question. Scott, Roy Gorey here. I'll start and I'll ask Phil to chime in with some thoughts from his perspective. Obviously, higher inflation often translates into higher interest rates and that is generally a positive for our organization. I remind everyone that a 50 basis point increase in fixed income market yields translates into a positive PV improvement of $1.85 billion in embedded value.

Yes. Thanks for that question, Scott Roy Gori here, I'll start and I'll ask bill to chime in but some thoughts from his perspective.

Obviously higher inflation and often translates into higher interest rates and that is generally positive for our organization and I'll remind everyone that a 50 basis point increase in fixed income market yields translates into a positive improvement of $1 8 billion.

The embedded value.

Speaker 4: Now, clearly there are some puts and takes and the negatives of higher inflation is that you have higher costs and expenses. But for our organization, we've been very focused on driving the benefits of scale and digitizing our business, which has translated into us improving our efficiency quite significantly over the last few years and achieving our less than 50% efficiency target in 2021, which we believe again will be a tailwind for us as we look to 2022 and beyond.

Clearly there are some puts and takes in the negative.

Higher inflation is that you have higher costs and expenses, but for our organization. We have been very focused on driving the benefits of scale and digitizing our business, which has translated into whilst improving our efficiency quite significantly over the last few years and achieving our less than 50% efficiency target in 2021, which we believe the game will be.

Halloween for us as we look to 'twenty two and beyond.

Speaker 4: So again, there are puts and takes, but I would just generally conclude that higher rates are a positive. For us, they're a bit of a tailwind. There are some aspects of our business where higher rates will create some headwinds, but we have flexibility as it relates to driving scale through expenses or price changes to offset those. And generally, we think that that's a positive for us. But still, you may want to supplement.

So again, there are puts and takes but I would just generally conclude that fire Reits are a positive for us they were a bit of a tailwind there are some aspects of our business where higher rates.

Will create some headwinds, but we have flexibility as it relates to driving scale through expenses or price changes to offset those and generally we think that that's that's a.

It's a positive for us, but bill you may want to supplement.

Speaker 5: Sure, thanks Roy and thanks for the question, Scott. The only point that I would supplement there is that whether rates go up or go down, much of our portfolio is now either participating or passed through. And what that means is that we are to some extent insulated from the liability impact. We are able to share that with.

Sure. Thanks, Troy and thanks for the question Scott the other point that I would supplement that with is that when rates go up we will go down much of our portfolio is now either participating or pass through and what that means is that we are to some extent insulated.

From the liability liability impact, where we're able to share that with our policyholders and in some cases. The same is true with inflation as well and we do see that that correlation between interest rates and inflation, that's what's playing out in the current environment.

Speaker 6: policyholders. And in some cases the same is true with inflation as well and we do see that correlation between interest rates and inflation, that's what's playing out in the current environment.

Speaker 5: Okay, and just my second question, if I look at manualized bank earnings, it was down for the first time in a while, I think it was down quarter by quarter in 17% year over year, where we see all bank earnings being positive in this environment. So I see the assets were up quarter by quarter, but just wondering if there was any drivers of that net income decline that you can call out.

Okay.

My second question, if I look at Manulife Bank core earnings.

It was down for the first time in a while I think it was down quarter over quarter and 17% year over year, while we see all things earnings positive in this environment. So I see the assets were up quarter over quarter, but just wondering if there was any drivers of that are net income decline that you can call out.

Speaker 7: Hi, Scott, it's Mike Doughty. On the bank, there was in Q4 of last year, there was an accounting policy change.

Yeah, Hi, Scott, it's Mike that would be on.

The bank there was in the Q in Q4 of last year, there was a accounting policy change, which.

Speaker 7: which didn't reoccur this year. So that was primarily the drop in the fourth quarter. Over the course of the year, the bank actually did grow. That was largely driven by the release of credit provisions that we had set up in the previous year, some equity gains that we got off of good markets, and then offset by the net interest compression that we experienced during 2021.

Didn't reoccur this year, so that was primarily the drop in the fourth quarter over the course of the of the year. The bank actually did grow that was largely driven by.

The release of credit provisions that we had set up in the previous year. Some equity gains have you got off of good markets and then offset by the net.

Net interest compression that we experienced during 2021.

Got it thanks for that.

Yeah.

Speaker 2: The next question is from Manny Gromin from Scotia Capital.

Thank you. The next question is from many Raman from Scotia Capital. Please go ahead.

Speaker 3: Hi, good morning. A little bit of a bigger picture question. There's been a lot of ink spilled over the last little while on Hong Kong population declines there, brain drains, expats leaving, locals fleeing. I'm just wondering, obviously, you know, this market very, very well. It's an important market for you. What's your perspective there and the impact, the potential impact on your business?

Hi, good morning, a little bit of a bigger picture question Theres been a lot of ink spilled over the last little while on <unk>.

Hong Kong population declines there brain drain expats, leaving local sleep I'm. Just wondering obviously you know this market very very well, it's an important market for you what's your perspective there.

The impact or the potential impact on your business there.

Speaker 8: Thanks for the question, Mani. This is Anil Bhadwani here.

Thanks for the question Manny This is another advantage.

Speaker 8: If you look at our Hong Kong business, it has been exceedingly resilient and strong.

Hum.

If you look at our Hong Kong.

It has been exceedingly resilient and strong despite some of the challenges and you can go back to.

Speaker 8: despite some of the challenges and you can go back to 2019. And if you look at our last 17 quarters, we have been able to deliver positive co-learning growth in Hong Kong.

2019.

And if you look at our last 17 quarters, we have been able to deliver positive core earnings growth in Hong Kong all year for the last 17 quarters and even if you want to kind of simply look at our quarter four earnings.

Speaker 8: year on year for the last 17 quarters. And even if you were to kind of simply look at our quarter four earnings in Hong Kong, all for that matter, full year earnings in Hong Kong.

In Hong Kong, all product might affiliate earnings in Hong Kong, we were able to deliver 17% growth on the back of a 32% new business value growth in that market. This is pretty much got it underscores a few things one.

Speaker 8: We were able to deliver 17% growth on the back of a 32% new business value growth in that market.

Speaker 8: This pretty much kind of underscores a few things. One.

Speaker 8: It underscores the quality of our franchise and the way we have been investing in expanding our distribution, our digital and our people capabilities.

Underscores the quality of our franchise and the baby has been investing in expanding our distribution, our digital and our people capability. It also kind of underscores our execution capabilities and as a consequence of that and Phil mentioned that in his opening remarks, we have been able to gain market share.

Speaker 8: It also kind of underscores our execution capabilities and as a consequence of that.

Speaker 8: Phil mentioned that in his opening remarks, we have been able to gain market share.

Speaker 8: for consecutive years in this important market. Our drivers, our agency now stands at over 11,600. Our partnership with DBS and brokers have never been stronger. And we feel very confident that Hong Kong is well positioned to be able to navigate some of the headwinds as we have demonstrated now for our portfolio.

Four consecutive years.

Important market.

Drivers beat our agency now stands at $11 six or 11600, a partnership with DBS and brokers have never been stronger and we feel very confident that Hong Kong is well positioned to be able to navigate some of the headwinds as we have demonstrated now for quite a few years.

Speaker 8: Additionally, Hong Kong will benefit from the opening of borders and with the greater velocity of mainland Chinese visitor customers as well as initiatives like GBA. That's going to result into further acceleration of the movement of resources and capital and Hong Kong and Macau, where we have a very strong distribution, we are likely to benefit from that.

Additionally, Hong Kong will benefit from the opening of borders and with a greater velocity of mainland Chinese visitor customer.

Well as initiatives like DBA, that's dollar results into further acceleration of the movement of resources and capital in Hong Kong and Macau, there being path.

Very strong.

Distribution, we are likely to benefit from from from that.

Speaker 3: Thanks for that. And maybe just as a related question, just if you could update us on the COVID environment in the Asia region, how you're seeing that play out in terms of your business. We're seeing obviously lockdowns in Hong Kong intensify. I'm just wondering if you go across your key markets, are there any areas where we should expect an improvement in Q1 in particular?

Thanks for that and then maybe just as a related question just if you could update us on the.

The COVID-19 environment.

The Asia region, how youre seeing that play out in terms of your business.

We're seeing obviously lockdowns in Hong Kong intensify I'm just wondering if you go across your key markets are there any areas, where we should expect an improvement in Q1 in particular.

Speaker 8: Thanks for the question once again, Mani. So, as I said, our results have been quite resilient and we have been working with the backdrop of COVID now for a couple of years. And in light of that, our results both in quarter four as well as for the full year 2021 has been quite resilient.

Sure. Thanks for the question once again 90 so.

As I said, our results have been quite resilient and we have been working with.

The backdrop of Covid and I'll put a couple of years and in light of that our results are bought in quarter four as well as for the full year to anybody one has been quite resilient now obviously.

Speaker 8: Now obviously the onset of Omicron kind of creates a bit of uncertainty and that makes it a little bit hard for us to kind of predict given the fact that it's unknown as to how the spread as well as the containment measures are going to pan out in the different geographies.

The onset of Omicron I've got a ph.

A bit of uncertainty and that makes it a little bit hard for us to kind of predict given the fact that it's unknown as to how the spread as well as the containment measures are going to pan out in the different geography, but what our sense has been is the diversified nature of our markets, that's really been a source of strength.

Speaker 8: But what our strength has been is the diversified nature of our market that's really been a source of strength for us and a key contributor to the way we've been able to navigate some of the headwinds over the last couple of years.

And a key contributor to the way, we have been able to navigate some of the headwinds over the last.

Over the last couple of years, so that might going to pose a challenge to put us in the short term, but given the secular trends given the under penetration in Asia. The demand for protection and retirement products is quite undeniable and again, given our market leading positions in many of the significant geography, we are very well positioned to be able to.

Speaker 8: So this might can pose a challenge or two for us in the short term, but given the secular trends, given the underpenetration in Asia, the demand for protection and retirement products is quite undeniable. And again, given our market leading positions in many of the significant geographies, we are very well positioned to be able to address that opportunity.

To address that opportunity.

Speaker 7: Hey, Manny, it's Paul Lorenz here. I just wanted to add a couple of comments from the global wealth and asset management side because while Anil had commented from an insurance perspective, our platforms that we have in Asia have really been able to kind of weather through the COVID impact. We haven't seen a material impact on our wealth and asset management business and the flows have been quite strong even with just because of the digital platforms we have there and the reach.

Hey, Matt its tolerance here I just I just wanted to add a couple of comments from the global wealth and asset management side, because while Neil had commented from an insurance perspective, our platforms that we have in Asia have really been able to kind of weather through the COVID-19 impact we haven't seen a material impact on our wealth and asset management business and the flows have been quite quite strong even with.

Just because of the digital platform, we have there and the reach and to your first question from a retirement perspective, we haven't seen a material impact at all from the immigration concerns that you mentioned, nor do we expect it to have an impact on our retirement business. In fact 2021 was our best year ever our flows and AUM increased year to date versus prior year. They were both.

Speaker 7: And to your first question from a retirement perspective, we haven't seen a material impact at all from the immigration concerns that you mentioned, nor do we expect it to have an impact on our retirement business. In fact, 2021 was our best year ever. Our flows in AUM increased.

Speaker 7: year-to-date versus prior year. They were both faster than the market. Our NetFlow market share was 48%.

Faster than the market, our net flow market share was 48%.

Speaker 7: and our markets, our AUM market share was 27%, which was up from 24.6 the year before. So we actually think we're really well positioned particularly as immigration picks up.

And our markets are AUM market share was 27%, which was up from $24 six the year before so we actually think we're really well positioned particularly as immigration.

Pick that.

Speaker 3: up and comes back Kong that we've got just such a great franchise there that will benefit over time.

Nothing comes back Kong that we've got such a great franchise, there that will benefit over time.

Got it thank you Paul.

Speaker 2: The next question is from Humphrey Lee from Dowling and Partners. Please go ahead. Yep, left.

Thank you. The next question is from Humphrey Lee from Dowling and partners. Please go ahead.

Speaker 4: Good morning and thank you for taking my questions. To stay with the question with Paul, looking at the global WAM, retail flows were really strong. This is actually surprising given many of your asset manager peers have sizable outflows due to rebalancing. I was just hoping if you can provide a little bit more color in terms of the geographies and the products that you're getting the inflows and how should we think about the outlook for 2022.

Good morning, and thank you for taking my questions.

With a question with Paul I looked.

Looking at the global Wham retail Fools were really strong. This is actually surprising given many of your asset manager peers has sizable outflows due to rebalancing I was just hoping if you can provide a little bit more color in terms of the geographies and the products that youre getting the inflows.

How should we think about the outlook for 2022.

Speaker 7: Yeah, thanks Humphrey and it's Paul here. Yeah, we're really pleased with the flows of the continued momentum. We've been driven for the business and you mentioned retail. I'll start with that. We had 7.5 billion in flows in retail. A lot of that growth was driven by pretty much all regions contributed to the strength. I'll start with the US though. The US definitely was the biggest contributor with their sixth consecutive quarter of positive net flows.

Yeah. Thanks Humphrey, it's Paul here, Yeah, we're really pleased with the flows of the continued momentum we had been driven for the business and you mentioned retail I'll start with that we had $7 5 billion of inflows in retail a lot of that growth was driven by pretty much all regions contributed to the strength I'll start with the U S. So the U S definitely was.

The biggest contributor was our sixth consecutive quarter of positive net flows what we're seeing there.

Speaker 3: What we're seeing there is continued strength into our fixed income franchise, particularly core fixed income. We also saw a rotation to value last year and we have a very strong lineup as it relates to some of our value focused equity funds and so we're benefiting from that.

<unk> strength into our fixed income franchise, particularly core fixed income. We also saw rotation to value last year, and we have a very strong lineup as it relates to some of our value value focused equity funds and so we're benefiting from that Canada continues to drive.

Strong net flows for the franchise, we've got a very strong performing platform. There I think we've been recognized three years in a row with the top performing fund platform.

In Asia, we saw very strong growth as I, just mentioned, particularly in the retail platform relative to our size last year are flows that are net flows in Asia relative to our AUM I think we're close to 40%. So we saw very strong flows in Asia across the board just in terms of what's selling and some of those outside of the U S. We've got pretty pretty balanced franchise and <unk>.

Uh huh.

So as you would've seen in the asset mix, we have seen started to see more equity flows and balanced flows and you would see that through the change in our asset mix from from about a year ago. So we feel really good about just the strength of the retail franchise. Our overall performance in our distribution reach and then the fact that the contributions coming from all three.

Speaker 4: And you would see that through the change in our asset mix from about a year ago. We feel really good about

Speaker 7: just the strength of the retail franchise, their overall performance and our distribution reach, and then the fact that the contribution's coming from all three.

The only other comment worth noting until mentioned that's because we shared this at Investor Day is we also had some success in our private markets business on our institutional channel in the fourth quarter with with the closing of two funds are annualized infrastructure fund to private equity many life co investment partners fund too.

Speaker 9: with the closing of two funds, our manualized infrastructure fund too, and a private equity manualized co-investment partners fund too.

Speaker 9: Again, not all of those flows are reflected. About a quarter of that is reflected in the AUM, so we do expect that if that money gets invested in the coming years, that will also show up. We're feeling really good just about the diversification of our business by channel, by platform, the broad base of what we have to offer to investors and the overall quality of the investment performance that the teams deliver.

And again not all of those flows are reflected about a quarter of that is reflected in AUM. So we do expect as that money gets invested in the coming years that will also show up. So we're really feeling really good just about the diversification of our business by channel by platform. The broad base of what we have to offer to investors in the overall quality of the investment performance of the teams deliver.

Speaker 4: The 40% of AUM inflows in Asia was really, really impressive. I guess it's a result of adding distribution channel or what's the driver for getting that level of input?

Oh the 40%.

AUM inflows in Asia was really really impressive I guess.

As a result of adding distributional channel or what was the driver for getting that level of inflows.

Speaker 9: Yes, so it's a combination of just continued expansion in terms of the types of products and distribution rates that we have, but we are seeing really strong progress through our digital platforms. We launched a digital platform called iFunds in Asia and a number of markets, and that's leveraging our insurance segment distribution, our life agents, but it's a complete end-to-end digital platform for consumers to access.

Yes. So it's a combination of just continued expansion in terms of the types of products and distribution reach that we have but we are seeing really strong progress through our digital platforms. We launched a digital platform called I funds in Asia in a number of markets and Thats leveraging our insurance segment distribution, our life agents, but it's a complete end to end digital.

That form for consumers to access our our lineup there and it integrates the advisor into that process and we're seeing some really solid growth in a number of markets in an area. We continue to invest in.

Speaker 9: our lineup there and it integrates the advisor into that process and we're seeing some really solid growth in a number of markets in an area we continue to invest in.

Got it thank you.

Thank you. The next question is from Doug Young from Deutsche Bank Capital markets. Please go ahead.

Speaker 2: The next question is from Doug Young from Desjardins Capital Market.

Hi, Good morning, just back to EMEA I think two areas, where you've had some weakness in Asia, Japan, and China, and I think both related to regulatory changes that have occurred over the last little while so what I'm, hoping to get a sense just an update in.

Speaker 4: Hi, good morning. Just back to Neil. I think two areas where you've had some weakness in Asia is Japan and China. And I think both related to regulatory changes that have occurred over the last little while. So what I'm hoping to get us into some updates.

Speaker 10: in terms of the launch of new products in Japan as a result of the change around the Koli product.

In terms of the.

Launch of new products in Japan, as a result of the change around the coli product.

Speaker 10: And in China, just some of the changes that have made around the regulatory side that have impacted sales and core earnings. Can you give us a bit of an update with where you stand, like what inning are we in in terms of turning

In China, just some of the changes that have made around the regulatory side that have impacted sales and core earnings can you give us a bit of an update where you stand like what inning are we in in terms of turning those around.

Speaker 8: Great question and I'll be happy to answer that and thanks for that. Let me start with Japan first.

Great question and I'll be happy to answer that then thanks for that let me start with Japan, Florida.

Speaker 8: As we have indicated in the past, our primary focus in Japan has been on imports and on expense efficiency. And you've kind of seen that translated.

As we have indicated in the past our primary focus in Japan has been on imports and on expense efficiency and you've got a theme that translated to a 9% core earnings growth in quarter four in Japan and for the full year a growth of 7% we have directed our resources.

Speaker 8: to a 9% core earnings growth in Japan and for the full year, a growth of 7%. We have directed our resources to some of the high-growth markets, for example, in Asia Other. Asia Other today contributes to 36% of our core earnings as opposed to 16% of our core earnings back in 2015.

Some of our high growth markets for example in Asia, Other and Asia. Other did it contribute to 36% of our core earnings as opposed to 16% of our core earnings back in 2015.

Speaker 8: On an ongoing basis, our emphasis in Japan will be value maximization to our focus on enforce and expense efficiency. And we will finally also be making efforts to change our product mix away from Coley to drive better product mix on other wells and retail. And again, we are starting to see significant progress on that in Japan.

On an ongoing basis, our emphasis in Japan will be a value maximization.

We're focused on in force and expense efficiency and be able to finally also we are making efforts to change our product mix away from quarterly.

To drive better better product mix on other balance and retail and again they are starting to see significant progress on that in Japan with respect to China. So China, we delivered 12% growth on sales and 14% on new business value and given the backdrop of what you mentioned.

Speaker 8: With respect to China, so China, we delivered a 12% growth on sales and 14% on new business value.

Speaker 8: And given the backdrop of what you mentioned, the regulatory changes as well as COVID, we thought that was a very creditable performance. There are a few things going on in China. And again, on the regulatory front, there are a couple of things that we are obviously navigating. So a second is gotten question asked about the

Regulatory changes as well at school that we thought that was a very creditable.

Creditable performance.

Few things going on in China, and again on regulatory front. There are a couple of things that we had obviously navigating to firstly on account of the regulatory changes that impacted the critical illness product that was announced in quarter one of last year.

Speaker 8: On account of the regulatory changes that impacted the critical illness product that was announced in CODA1 up last year, the industry has seen a contraction of demand on critical illness and that has led to a different product mix.

Industry has seen a contraction of demand on critical illness, and that has led to a different product mix.

Speaker 8: which obviously has a knock-on impact then on new business gain as well as on a new business value. And while we believe that these changes are good for the sustainable growth, they do require a bit of an adjustment in the shorter term. What we are also witnessing in China is a very strong growth on retirement needs that will go and sit on top of some of the protection needs that we believe will rebound in the medium term.

Obviously, it has a knock on impact been on new business gain.

Ads on our new business value and while we believe that these changes are good for the sustainable growth. They do require a bit of an adjustment in the in the southern what we are also witnessing in China is a very strong growth on the Dod must meet that would go and sit on top of some of the protection need that.

We believe the rebound in the medium.

Medium term the second piece of change that you see in China is.

Speaker 8: The second piece of change that we are seeing in China is the regulators are getting increasingly focused on driving quality agency distribution.

The regulators are getting increasingly focused on driving quality agency distribution and that is squarely in line with the way.

Speaker 8: And that is squarely in line with the way we would like to grow our distribution. So just to kind of give you a stack, the industry is witnessing a decline of roughly about 30 to 35% on agency.

We would like to go on this.

Distribution, so just to kind of give you a stat. The industry is seeing a decline of roughly about 30% to 35% on agency. In contrast to that we are witnessing a 15% decline and I think as the market evolves and we make the necessary adjustment I think quality distribution is going to afford us.

Speaker 8: In contrast to that, we are witnessing a 15% decline.

Speaker 8: And I think as the market evolves and we make the necessary adjustments, I think quality distribution is going to hold us in good stead for quality growth in China. Now we have access to 52 cities across 15 provinces.

Yes.

In good stead.

Our quality growth.

In China, we have access to 52 cities across 13 provinces, we have a very strong joint venture partner the Underpenetrated in China, and the secular trends that will be positive to drive growth. So yes in the medium term, we believe that China will still remain on accelerators of growth for us as we transition to the new.

Speaker 8: We have a very strong joint venture partner. The under-penetration in China and the secular trends will be positive to drive growth. So yes, in the medium term, we believe that China will still remain an accelerator of growth for us as we transition to the new landscape in that market.

Landscape in that market.

Speaker 10: So it sounds like China has kind of hit the inflection point. Maybe my question around Japan is Japan turning into a closed block? Is that the way to think of it? I don't know if that's for you Anil or for Roy.

So it sounds like China has kind of hit the inflection point, maybe my question around Japan is Japan, turning into a closed block is that the way to think of it I don't know if that's for you aneel or for.

For ROI.

Speaker 8: So I'm going to start off and then I'll ask Roy to add his comment. So we believe that our focus is going to be, as I said, on driving a different product.

So I'm going to start off and then.

I'll ask <unk> to add his comments, we believe that our focus is.

Going to be as I said on driving a different product mix.

Speaker 8: So if you want to kind of go a year back, only about 50% of the sales.

So if you want to kind of lower back call. It about 50% of the sales mix clearly is not less than 10% of our sales mix now what this does is it also helps us improve our new business value margin, which you can see in our portfolio.

Speaker 8: Koli is now less than 10% of a sales mix. Now what this does is it also helps us improve our new business value margin, which you can see in our waterfall results in Japan.

<unk> results in Japan on top of that as I said, our efforts of import management as well as expense efficiency is resulting into the core earnings growth that we have.

Speaker 8: On top of that, as I said, our efforts of import management as well as expense efficiency is resulting into the core earnings growth that we are witnessing. But we feel that in Japan, we also have an opportunity to drive a product mix with a higher margin away from CoLE as opposed to what we have been doing in the past.

But we feel that in Japan, we also have an opportunity to drive our product mix with a higher margin based on quality as opposed to what we had been doing in the past right yes.

Speaker 4: Yeah, I'll just add, Doug, that Japan is clearly still a very important market for us and a market that provides a lot of opportunities. The third largest insurance market in the world. We've operated the market for a long period of time which is a very important market for

Yes, I would just add Doug that Japan is clearly still a very important market for us and a market that provides a lot of opportunities third largest insurance market in the world. We are operating in the market for a long period of time, which has allowed us to establish a really strong incredible brand and over the years, we've improved our margins quite considerably as Aneel high.

Speaker 4: allowed us to establish the really strong, incredible brand. And over the years, we've improved our margins.

Speaker 4: quite considerably. As Anil highlighted, there are some regulatory pivots that we're navigating. We see them as short-term from a headwind perspective and in the medium to longer term, we still feel very positive about the opportunities that Japan represents.

There are some regulatory pivots that we're navigating we see them as short term from a headwind perspective.

The medium to longer term, we still feel very positive about the opportunities that Japan represents that Neil highlighted we're going to continue to focus on driving maximum value, which is focused on profitability, but we still see lots of upside in new business and we're making some pivots given the coli changes that we think are going to help us actually navigate.

Speaker 4: you know, we're going to continue to focus on driving maximum value, which is focused on profitability. But we still see lots of upside in new business and we're making some pivots given the callee changes.

Speaker 4: that we think are going to help us actually navigate.

Speaker 4: quite well. And I just one point on China, I think Anil hit the nail on the head. You know we do feel good about the changes, the regulatory changes that are being implemented there. You think that they will enable a more sustainable growth in the future. We've been very focused on quality of our products and quality of our distributed.

<unk> quite well and I was just just one point on China, I think until we hit the nail on the head we do feel good about the changes the regulatory changes that are being implemented there do you think that they will enable a more sustainable growth into the future. We've been very focused on quality of our products and quality of our distributed.

Speaker 4: So this is a good thing. Some short term headwinds there, but in the medium to long term we feel again very positive and you've seen that despite...

So this is a good thing some short term headwinds there, but in the medium to longer term, we feel again very positive and you've seen that despite the challenges of Covid and regulation change in 2021 Asia through its diversity has still been able to demonstrate outperformance and we quite frankly growing share in most of our markets, which I think is a whole lot.

Speaker 4: the challenges of COVID and regulation change in 2021, Asia through its diversity still being able to demonstrate our performance and we've quite frankly grown sharing most of our markets which I think is a hallmark to highlight the strength of our business. Good, thank you.

Mark.

To highlight the strength about our business.

Okay. Thank you.

Thank you. The next question is from Tom Mackinnon from BMO capital markets.

Please go ahead.

Speaker 10: Yeah, just a question with respect to the remittances. Up considerably in 2021 versus the 2020 and, you know, versus the trends we saw even prior to 2020. Kind of maybe comments as to what drove that, geographies, any details there, and how we might see that continuing, especially given that interest rates continue to rise. Thanks.

Yeah, just a question with respect to the remittances up considerably in 2021.

Versus the 2020 and versus the trends we saw even prior to 2020.

Kind of maybe comment as to what drove that.

Geographies any.

Any details there and how we might see that continuing especially given that interest rates continue to rise. Thanks.

Speaker 6: Great, thank you, Tom. This is Phil. And you're right, it's certainly a strong year for amissances, $4.4 billion. And what that reflects is really strong underlying business performance combined with a favorable macroeconomic environment.

Great. Thank you Tom this is Phil.

You're right, it's certainly a strong year for our businesses for $4 million and what that reflects is really strong underlying business performance combined with a favorable macroeconomic environment.

Speaker 6: You asked about the sources of remittances. They do come from all of our geographies and material contributions from all of our geographies. I think what's particularly topical is if we reflect back...

Asked about the sources of remittances they didn't come from all of our geographies and material contributions from all of our geographies and I think what's particularly topical is if we reflect back.

Speaker 6: on a year ago, go back to 2020. That's the period when we had injected capital into Asia. What we've seen in 2021 is that trend reverse where Asia continues its historic trend of being a net remitter to the group. And just to put a number on that given your question, the remittances...

On a year ago go back to 2020, that's a period when we had injected capital into Asia. What we've seen in 2021 is that trend reverse where Asia continues its historic trend of being a net remittance to the group and just to put a number on that given your question the remittance.

Is that coming from Asia in 2021 nine.

Speaker 6: that came from Asia in 2021 were $900 million. And that's very much within the range of what I've seen happen in recent years from Asia. And of course, it is a wide range because of the sensitivity of a number of Asia local bases to interest rates. But I think that's a very good example of what

<unk> $900 million and that's very much within the range of what I've seen happen in recent years from Asia and of course, it is a wide range because of the sensitivity of.

A number of.

Asia local basins to interest rates, but I think that's more of a normalized environment for Asia. The remainder of the remittances are really coming from a balance of U S and Canadian geographies.

Speaker 6: more of a normalized environment for Asia. The remainder of the remittances are really coming from the balance of our US and Canadian geographies.

Speaker 6: When I think about that $4.4 billion and the future.

When I think about that $4 4 billion in the future.

Speaker 6: Although it's a great result, it's not out of line with the range that we've seen in previous years. I think it was 2018, I recall we delivered $4 billion off remittances.

Although it's a great result, it's not out of line with the range that we've seen in previous years I think it was 2018 I recall, we delivered $4 billion of remittances.

Speaker 6: But I do remain somewhat optimistic about remittances in the medium term. And a couple of reasons for that. One is that we know higher interest rates are a tailwind for remittances from Asia. But then also as we spoke about at Invest Today.

I do remain somewhat optimistic about remittances in the in the medium term and a couple of reasons for that one is that we know higher interest rates are a tailwind for us.

Essence is from Asia, but then also as we spoke about at Investor Day.

Speaker 6: when we look at our embedded value, and in particular the PVIF within our embedded value and the translation of that PVIF to net...

When we look at it.

Our embedded value and in particular, the PPI within all of that is volume and the translation of that <unk>.

Two.

Net assets to cash there is.

Speaker 6: There is a really favorable trend that we're looking at there. We're looking at about half of our PVIF being realized as cash over the next 10 years. So that provides confidence in our emissions power in the medium term and therefore the progressive dividend policy.

A really favorable trends that we're looking at that looking at about half about <unk> being realized as cash over the next 10 years. So that that provides confidence in our replacement power in the medium term and therefore, the progressive dividend policy.

Okay. Thanks.

Speaker 2: Thank you. The next question is from Gabriel Deschenes from National Bank Financial.

Thank you. The next question is from Gabriel <unk> from National Bank Financial. Please go ahead.

Speaker 11: Good morning. First question on the buyback. I'm sure the technical reason probably tied to the VA transaction there, but there's a little bit delay in terms of getting approval for the buyback. And, you know, having said that, are you, I haven't seen any January data, but you're committed to doing the full 3%, maybe not the full 5% of your capacity and buybacks this year?

Good morning first question on the buyback I'm not sure that technical reason, probably tied to the b.

Transaction, there, but the little bit delayed in terms of getting approval for the buyback and now having said that.

Our U I haven't seen any January data, but you're committed to doing the full 3% maybe not the full 5%.

Of your capacity your buybacks this year.

Speaker 6: Thanks, Gabriel. This is Phil. So we were really pleased to announce on the 1st of February the completion of the VA transaction. And on the same day we announced the approval of the launch of the NCIB following the approvals for that. So I think that's all very much routine. And we were really

Thanks, Gabriel this is Phil.

We were really pleased to announced on the first of February the completion of the <unk> transaction and on the same day, we announced the approval.

Of the launch of the NCI be following the approvals for that so I think that so very much routine and we're going to.

Speaker 6: really happy to have approval for a 5% program or up to 5% program.

Really happy to have.

We have approval for our 5% program of up to 5% program.

Speaker 6: As is normal with buybacks and NCIDs, we will report our progress as we go through this in a routine manner, but also as a quarterly process, we'll transparently share with this group in this forum what our progress is. I just highlight that when we...

As is normal with buybacks then Cib's, we will report our progress as we go through this.

And a routine manner, but also also on a quarterly is of course the process. We will transparently show with this group in this forum, what our progress is but I'll just highlight that when we announced the transaction.

Speaker 6: announced the VA transaction 15th of November .

So November one of the very important priorities was to neutralize the EPS impact from that transaction and I think that's a very important baseline for CIB. So that we can.

Speaker 6: One of our very important priorities was to neutralize the EPS impact from that transaction. I think that

Speaker 6: a very important baseline for the NCIB so that we, you know, to neutralize the EPS impact of that transaction it would be approximately 3%.

Neutralize the EPS impact of that transaction it would be approximately 3% of the of the CIB.

Speaker 6: of the NCIB. The dollar cost of that, of course, will depend upon what the price of the shares are at the time that we repurchase them.

The cost of that of course will depend upon what the.

Rice of the shares at the time that we purchased them.

Speaker 11: Congrats on the progress towards that efficiency ratio target, 49%. But you're still, and I look at the notes of financials here, you're running at an expense overrun for a number of years now. A, can you quantify how much...

Right.

And then on the expenses.

Congrats on the progress of our tours that efficiency ratio target 49%.

But you still have a look at my notes of the financials here Youre running at a expense overrun for a number of years now.

Could you quantify how much that represents as a drag on your earnings the expense.

Speaker 11: that represents as a drag on your earnings, the expense experience loss, I suppose. And then...

Experienced loss I suppose.

And then what do you need to do to eliminate it.

Speaker 11: you need to do to eliminate it? Is it the longer term efficiency ratio target? When does that go away?

You know longer term, especially.

What's the ratio target.

When does that go away.

Now in house.

Speaker 6: Thanks, Gabriel. This is Phil again. And you're right to call out the favorable outcome on expense efficiency ratio. We have hit that 50% threshold, the target that we set ourselves early in 2018. But it doesn't mean that we're done with respect to expense efficiency. You do highlight maintenance expenses and the overrun there. I will point out that...

Thanks, Gabriel this is Phil again.

You're right to call out the favorable outcome on expense efficiency ratio, we have hit that 50% threshold. The target that we set ourselves early in 2018, but it doesn't mean that we've done with respect to expense sufficiency do highlight maintenance expenses and the overrun there.

I will point out that within maintenance expenses. We do include in that classification entity sustaining costs, which are not necessarily cost that should be allocated to our underlying businesses as well as the.

Speaker 6: Within maintenance expenses, we do include in that classification entity sustaining costs, which are not necessarily costs that should be allocated to our underlying businesses, as well as the...

Speaker 6: cost of certain components of our Asia regional office, which doesn't necessarily again flow through to each of our businesses. Many of those costs or some of those costs are strategic in nature. But over the course of the coming years, we will continue to focus on expense efficiency. I do think there is further opportunity for us. When you look at the jaws that we're being able to create, the jaws between cost growth and Tutu Client.

The cost of certain components of our Asia Regional office, which doesn't necessarily again flow through too.

To each of our businesses many of those costs. So some of those costs us strategic in nature, but over the course of the coming years, we will continue to focus on expense efficiency and I do think there is further opportunity for us and when you look at the the jaws that we're being able to create the tools between cost growth.

Yes.

<unk> core earnings if there is a substantial.

Speaker 6: there is a substantial gap and that I think does speak to the discipline that we've exercised in recent years so there's certainly more value to be generated there.

But I think it does speak to the discipline that we've exercised in recent years. So there's certainly more value to be generated there.

Speaker 11: Is there an expense overrun figure or something you can quantify? Do I just look at that overhead allocation?

The book.

Expense overrun figure or something you can quantify that they'll just look about overhead.

The allocation.

Or is it smaller.

That's something I'll have to take away and get back to you on Gabriel.

Okay.

Thank you happy new year.

Thank you.

The next question is from Paul Holden from CIBC. Please go ahead.

Thank you good morning.

So I want to go back a little bit to the discussion on potential risks related to inflation I guess.

In particular, what that might mean for the long term care.

Business some of your competitors in that business have flagged.

Cost completion as a potential risk to.

Assumptions and reserving so just wondering how you're thinking about that.

Thanks, Paul Steve Finch here, and I'd start by saying that overall I've got confidence that our LTC reserves remain appropriate in aggregate with sufficient levels of conservatism.

Speaker 3: here and I'd start by saying that overall I've got confidence that our LTC reserves remain appropriate in aggregate with sufficient levels of conservatism.

Speaker 12: You know, we've seen through the pandemic, we've actually booked gains. Your question is more on what trends might we see in the future. And, you know, certainly inflation is in the news, you know, broadly. And cost of care inflation is a question out there.

We've seen through the pandemic, we've actually booked gains Youre question is more on what trends might we see in the future.

And certainly inflation is in the news.

Broadly and cost of care inflation has a question out there. So what we do reflect inflation of cost of care in our long term assumptions.

Speaker 12: So we do reflect inflation of cost of care in our long-term assumptions. And this is one of the trends that could impact long-term care over time. So if we saw higher cost of care, that would result.

And this is this is one of the trends trends that could impact long term care over time. So if we saw higher cost of care that would result in.

Speaker 12: higher cost if it's higher than our assumptions. We would and we could request appropriate rate increases to offset that.

Higher cost if it's higher than our assumptions.

We would and we could.

Request appropriate rate increases to offset that.

Speaker 12: And as you've seen, we have a really strong track record of achieving rate increases as of investor day. Middle of last year, we disclosed that we had achieved $9 billion of present value of rate increases, so we feel good about that. The other thing I point out is that...

And as you've seen we have it.

A really strong track record of achieving rate increases as of Investor day.

All of last year, we disclosed that we had achieved 9 billion U S dollars of present value of rate increases. So we feel good about that the other thing I'd point out is that there are I think there's the potential for.

Speaker 12: There are, you know, I think there's the potential for headwinds like inflation, but there's the potential for tailwinds as well from some of the other trends that we're seeing in long term care. You know, for instance, what we've seen through the pandemic is...

Headwinds like inflation, but there is the potential for tailwind as well from some of the other trends that we're seeing in long term care for.

For instance, what we've seen through the pandemic is one hesitancy to receive care, but what we've seen is a shift in site of care from.

Speaker 12: well, one, a hesitancy to receive care, but what we've seen is a shift in site of care from from facility care towards home care and home care is on average about 30% less expensive than facility care.

From facility care towards home care and home care is on average about 30% less expensive than facility care.

Speaker 12: So if that trend were to continue, that would be a tailwind. So I'm just sort of flagging the fact that there are, you know, uncertainty around what trends we'll see post-pandemic, but I think there could be pluses and minuses along with our ability to re-rate. Understood. That's helpful context. Thanks for that. And then second question.

So if that trend were to continue that would be a tailwind. So I'm just sort of flagging. The fact that they are.

Uncertainty around what trends, we'll see post pandemic, but I think there could be pluses and minuses, along with our ability to re rate.

Understood that's helpful context, thanks for that.

And then.

Second question it's.

And that's related to interest rate impacts I think you've made it clear that your.

Effectively immunized and four.

And then I think you've suggested that on new business because of the proportion of par and pass through also largely.

Agnostic to rates, but my question.

<unk> would be related to earnings on surplus that's maybe one.

One area of the P&L.

Still great sensitive maybe you can just give us some.

Color there in terms of what higher rates Mike.

Four.

Run rate earnings on surplus.

Speaker 6: Thanks to the question for maybe I start on that one and hand over to Scott who manages the portfolio.

Thanks for the question, Paul maybe I'll start on that one and hand over to Scott who manages the portfolio.

Speaker 6: So as you've probably seen in the results 2020 compared to 2021, we've seen a decline in earnings on surplus. And really what that is triggered by is the lower rate environment that we've seen in 2020 giving rise to a reset of our iOS allocations to segments.

So as you.

What we've seen in the results in two.

2020, compared to 2021, we've seen a decline in earnings on surplus and really what that is triggered by is the lower rate environment that we've seen in 2020, giving rise to a reset.

<unk> allocations to segments.

Speaker 6: that takes place at the beginning of each year. And that's why you see the run rate that's allocated to segments go down year on year 2020 compared to 2021 because we set those rates at the beginning of the year and the decline in rates happened during 2020. Now the extent to which the lower interest rates actually flow through to a lower yield depends upon how much turnover there is in the portfolio.

It takes place at the beginning of each year and that's why that's why you see the run rate it sounds like going to two segments go down year on year 2020, compared to 2021, because we set those rates at the beginning of the year and the decline in rates happened during 2020 that the extent to which.

The.

Lower interest rates actually flow through to a lower yield dependent upon how much turnover there is in the portfolio.

Polio.

Speaker 6: And in 2020, we had realized some gains on the AFS portfolio that sits in surplus, and that lowered the yield for 2021. So I think where we look from here in terms of how that very stable portfolio, you know, how much of the higher rate environment flows through to yield, it would really depend upon how much turnover there is in that portfolio. But Scott, I don't know whether you would like to comment further on that. smell

And in 2020, we had.

Realized some gains on the <unk> portfolio that sits in surplus.

The lower the yield for 2021.

So I think when we look from here in terms of how that very stable portfolio.

Much of the higher rate environment that flows through to yield that would really depend upon how much turnover. There is in that portfolio, but Scott I don't know, whether you would like to comment further on that.

Speaker 7: Sure, just briefly, I think that's all correct, Phil.

Sure just briefly I think that's that's all correct Phil.

Speaker 9: You know, our surplus portfolio is fairly long. And as you point out, Paul, our, you know, accounting earnings are pretty well hedged to higher rates going forward. But we do have a fairly long AFS bond portfolio to hedge.

Yeah.

Our surplus portfolio is fairly long.

And as you pointed out Paul R.

Accounting earnings are pretty well hedged to higher rates going forward.

But we do have a fairly long bond portfolio to hedge the economics beyond the accounting and since it's since it's fairly long it doesn't on its own turnover very rapidly. So yes higher rates will ultimately increase surplus earnings, but unless we're actively turning over the portfolio you're in the <unk>.

Speaker 9: the economics beyond the accounting. And since it's fairly long, it doesn't on its own turn over very rapidly. So yes, higher rates will ultimately increase surplus earnings. But unless we're actively turning over the portfolio, in the short term, you're not going to sell.

Short term youre, not youre not going to see much.

Got it thank you.

Speaker 2: The next question is from David Motomadon from Evercore ISI.

Thank you. The next question is from David Moulton Madden from Evercore ISI. Please go ahead.

Speaker 4: Hi, good morning. Just a question, Phil, you talked about within the $4.4 billion of remittances, $900 million of that came from Asia. Could you just share the other pieces of that, how much came from the US and how much of that came from Canada?

Hi, good morning.

Just a question Phil you talked about within the $4 4 billion of remittances $900 million of that came from Asia.

Could you just share the <unk>.

Other pieces of that how much came from the U S and how much of that came from Canada.

Speaker 6: Yep, David, this is Phil. So, broadly speaking, $2 billion was Canada and that was supported by a favorable macroeconomic environment. The balance was the US.

Yes, David this is Phil.

Broadly speaking $2 billion was kind of doing that was supported by a favorable macroeconomic environment. The balance was the U S.

Speaker 4: Got it. Thanks. And how much of that from the U.S. was coming from the VA book that has since been reinsured?

Got it thanks, and then how much of that from the U S was coming from the VA book that has since been reinsured.

Speaker 6: Roughly speaking, it was equivalent to the level of profitability. So, you know, in the order of 130, 140 million US dollars as a ballpark.

So roughly speaking it was equivalent to the level of profitability. So.

On the order of $130 million to $140 million in U S dollars as a ballpark.

Speaker 13: Okay, great. That's helpful. And then maybe a bigger picture question for Roy. You know, obviously good to see the VA transaction.

Okay, Great that's helpful.

And then maybe a bigger picture question for Roy.

Obviously, good to see the VA transaction.

Speaker 13: And, you know, good to see the offsetting, the dilution from that or neutralizing the impact of the loss earnings from that.

And good to see the offsetting the dilution from that are neutralizing the impact of the lost earnings from that.

Speaker 13: uh with the the ntib i guess i'm wondering

With the NCI B I guess I'm wondering.

Speaker 13: just overall how you're thinking of M&A and specifically the JV in China and if that's something you're considering taking up your share in. A few of your peers HSBC and Allianz they got approval to go up to 100%.

Just overall, how you're thinking of M&A and specifically.

The the JV in China, and if Thats something you are considering taking up your share in.

A few of your peers HSBC and Allianz Se got approval to go up to 100% of their China JV is in the last few months and Chubb also said theyre going to buy up to close to 90% of their China JV.

Speaker 13: of their China JVs in the last few months and Chubb also said they're going to buy up to close to 90% of their China JV. So I'm wondering is that something you guys are thinking about as well?

So I'm wondering is that something that you guys are thinking about as well.

Speaker 4: Yeah, thanks for the question, David. I think firstly you're right in highlighting our USDA transaction. It's something that we're very proud of executing and completing that deal. We think it's a great transaction, frees up $2 billion worth of capital and the after tax gain of $750 million or 10x earnings.

Yes, thanks for the question David.

I think firstly, you're right in highlighting USPI transaction, it's something that we're very proud of executing and completing that deal.

We think it's a great transaction freed up $2 billion worth of capital and the after tax gain of $750 million.

<unk> earnings I think really goes to the heart of demonstrating the conservatism of our assumption. So we really feel very proud of that transaction and frosty in CIB was about ensuring that we could deploy the capital that we've freed up there to make sure that we are driving value for shareholders. We're in a very strong capital position Phil.

Speaker 4: I think really goes to the heart of demonstrating the conservatism of our assumptions. So we really feel very proud of that transaction. And for us, the NCIB was about ensuring that we could deploy the capital that we freed up there to make sure that we are driving value for shareholders. We're in a very strong capital position. Phil highlighted that earlier in the presentation. And that puts us in a position where we have significant flexibility.

Highlighted that earlier in the presentation and that puts us in a position where we have significant flexibility at the same time, we don't need M&A to deliver against our medium term goals as it relates to earnings which is I think an enviable position to beam, having said that we will opportunistically look to deploy capital where it can make sense.

Speaker 4: At the same time, we don't need M&A to deliver against our medium-term goals as it relates to earnings, which is, I think, an enviable position to be in. Having said that, we will opportunistically look to deploy capital where it can make sense, beyond buybacks and obviously increasing our dividends.

Beyond buybacks, and obviously, increasing our dividend we did that through the acquisition of the Aveva book in Vietnam, We did it through the Bancassurance agreement with DSM Bank in Vietnam. The extension about Banca partnership with Don them on as well is another good example of that and clearly for Us Asia and Wham.

Speaker 4: We did that through the acquisition of the Aviva book in Vietnam. We did it through the bank insurance agreement with Vietnam Bank in Vietnam. The extension of our bank partnership with Dynamo, as well as another good example of that. And clearly for us, Asia and WAM are areas where inorganically we would continue to look to deploy capital. So if the opportunity is right and if we can demonstrate

Areas, where inorganically, we would continue to look to deploy capital if the opportunity is right and if we can demonstrate the value accretion to <unk>.

Speaker 4: the value accretion. It's easy to announce a transaction. It's another thing to make sure you're creating value from it. Now, specifically to China, we've been in China for a long period of time, both throughout JZ with Sinochem on the insurance side and with Titer on the wealth and asset management front. As Anil highlighted earlier, we feel very optimistic about the opportunity that China represents and we would look to continue to grow.

<unk> transaction, it's another thing to make sure you're creating value from it that specifically to China, we've been in China for a long period of time, both throughout JV with <unk> on the insurance side and with tighter on the wealth and asset management firm.

And Neil highlighted earlier, we feel very optimistic about the opportunity that China represents.

And we would look to continue to grow our business.

Speaker 4: our businesses organically there. And if the opportunity is present to grow inorganically, we would definitely look at that. At the same time, I would not underestimate the power and value of having a strong partner like we do with Sinochem in China. It's an incredibly valuable asset for us as we navigate, obviously, the local changes and regulatory new ones.

Businesses organically, there and if the opportunity is present to grow Inorganically, we would definitely look at that at the same time.

I would not underestimate the power and value of having a strong partner like we do with <unk> in China, It's an incredibly valuable asset for us as we navigate obviously.

The local changes in regulatory nuances, so that's a valuable asset and again the partnership we have with Sun. It can be tremendous wanted contributed to the success we've had in China over the year, but if there was an opportunity to increase our <unk>.

Speaker 4: So that's a valuable asset and again the partnership we have with Soner can be a tremendous one that's contributed to the success we've had in China over the years. But if there was an opportunity to increase our stake we definitely look at that and yeah I'll probably leave it at that but thank you for the question though.

We definitely look at that and.

I'll probably leave it at that but thank you for the question Doug.

Thank you.

Thank you. The next question is from Merrill Mendonca from TD Securities. Please go ahead Marc.

Speaker 10: I want to go back to the interest rate discussion. You'll recall that in Q1 21, now you guys book value per share was down sequentially over 6% and the like that came under pressure when the yield curve steepened and rates moved higher. Now a big portion of that related to your AFS portfolio.

Good morning, I want to go back to the.

The interest rate discussion youll recall that in Q1, 'twenty, one and annualized book value per share was down sequentially over 6% and the like that came under pressure when the yield curve steepened and rates moved higher now.

A big portion of that related to your <unk> portfolio is there.

Speaker 10: Is there anything that the company has done?

Anything that the company has done since Q1, 'twenty, one that would mitigate that effect going forward specifically, if we do get a big move in the long end again because of interest rate increases of the shorthand, if we get that sort of a parallel shift could.

Speaker 12: since Q1 21 that would mitigate that effect going forward.

Speaker 4: Specifically, we do get a big move in the long end again.

Speaker 12: because of interest rate increases of the short end, if we get that sort of parallel shift.

Speaker 10: Could we be facing that same predicament where MCC, sorry, the Lycat comes down fairly meaningfully and book value for share declines sharply? Is that scenario still possible for anyone?

Could we be facing that same predicament, where MCC sorry, the leichhardt comes down fairly meaningfully and book value per share declined sharply that that scenario is still possible for that.

Speaker 6: Hey, Mary, this is Phil. Maybe I might start by touching on the AFS portfolio and then hand over to Steve to talk about the steepening and flattening of the curve. And from the AFS portfolio, we haven't made any significant changes to that portfolio since during the course of 2021. So about 80% of the AFS portfolio is in the AFS portfolio. So from the AFS portfolio, we haven't made any significant changes to that portfolio since the beginning of 2021. So from the AFS portfolio, we haven't made any significant changes to that portfolio since the beginning of 2021.

Hey, Mary.

This is Phil maybe I can start by touching on the <unk> portfolio, and then hand over to Steve to talk about.

The statement and flattening of the curve.

ASX portfolio, we haven't made any significant changes to that portfolio since <unk> during the course of 2021.

About 80%.

Speaker 6: of our service portfolio is held in long AFS bonds. Scott touched on that earlier. And we like that for a couple of reasons. One is that the investing in US treasuries allows us to go long in that portfolio, of course, without credit risk. But we also like the liquidity of that portfolio. And it does form an important part of our overall risk management program.

Hum.

This portfolio is held in long.

Scott touched on that earlier.

We like that for a couple of reasons one is that the investing in U S. Treasuries allows us to go long in that portfolio of course without credit risk, but we also like the liquidity of that portfolio.

It does form an important part of our overall risk management program.

Speaker 6: The movement in value of that portfolio is the inverse of the impact of rates on our liabilities.

The movement in the value of that portfolio is the inverse of that.

The impact of rates on our liabilities.

Speaker 6: And it doesn't create income statements.

It doesn't create income statement.

Speaker 6: volatility in itself because of course it's an AFS portfolio so it would be upon realization games and lots of flow through but where it does create some

Volatility in itself because of closest in Iff's portfolio. So it would be upon realization of gains and losses flow through but where it does create some.

Speaker 6: volatility as you saw it, but value per share, but also in the capital ratio.

Volatility has as you saw at book value per share, but also in the capital ratio.

Speaker 6: However, when we do look forward to IFRS 17 implementation, one thing that we do expect is that we'll see

However, when we do look forward to.

<unk> 17 implement implementation one thing that we do expect is that we'll see less variability in the capital ratio as a result of this fact.

Speaker 6: less variability in the capital ratio as a result of this factor. So we, you know, clearly there's a lot of moving parts. There's more to come on IFRS 17, but we think that that is something that will be less less accused in the future. Steve, would you like to comment further?

So clearly there's a lot of moving parts there is more to come on <unk>, but we think that that is something that will be less.

Les accused in the future as Steve would you like to comment further.

Speaker 12: Yeah, thanks, Phil. I think that that last point was a key one. The other is that the sensitivity that we had in the LIHCCAD ratio to a rise in interest rates back in terms of what we saw in the last year.

Yes, Thanks, Phil I think that last point because it was a key one the other is that the sensitivity that we had in the light cat ratio to a rise in interest rates.

Back in terms of what we saw in Q1 and that was a 7% change in the light cat ratio sensitivity back in Q1, 2021 that has dropped due to rates too.

Speaker 12: that was a 7% change in the LIHTCAT ratio sensitivity back in Q1 2021. That has dropped due to rates.

Speaker 12: moderate changes in the hedging program to only 4% now. So almost a 50% reduction in the sensitivity is something I wanted to highlight.

Moderate changes and hedging program to only 4% now so almost a 50% reduction in the sensitivity is something I wanted to highlight as well.

Speaker 10: If I could just follow up on that one thing about the available for sale portfolio. Phil, you said that they offer like a good offset or maybe let's call it a hedge against changes in the value of the liability or the reserves. The reason I found that one, that explanation, it was odd to me is that these available for sale security support surplus. They're in surplus.

If I could just follow up on that one thing about the available for sale portfolio. Phil you said that they offer.

Like I did offset or maybe let's call. It a hedge against changes in the value of the liability or the reserves. The reason I found that once that that explanation. It was odd to me is that these available for sale securities support surplus they are in surplus so.

Speaker 10: Why are they relevant then to the liabilities? I would have thought that the liabilities have their own assets matched against them. So what was that reference to the FS portfolio offsetting changes in the value of the liability?

Why are they relevant then to the liabilities I would've thought that the liabilities have their own assets matched against them. So what was that reference to.

<unk> portfolio of.

Setting changes in the value of the liability.

Speaker 6: Thanks, Mario. I'll make a start. Scott may wish to comment on this, but to the extent we have various options in terms of how we manage interest rate risk. One option is...

Thanks, Mario I'll make a start Scott that you wish to comment on this but to the extent we have various options in terms of how we manage interest rate risk one option is.

Speaker 6: the assets directly backing the liabilities, including the extent to which we hedge. The other option is how we utilize the surplus portfolio. And we have chosen to utilize the surplus portfolio to manage overall interest rate risk within the entity. Another option would, of course, be to do more hedging within the liability segment, but this is currently where we are. And Scott, I don't know whether you'd like to comment further.

The assets directly backing the liabilities, including the extent to which we hedge the other option is how we utilize the surplus portfolio and we have chosen to utilize the surplus portfolio to manage overall interest rate risk within the entity.

Other option would of course be to do more hedging within the liability segment, but this is currently where we are and Scott I don't know whether you'd like to comment further.

Speaker 9: Sure, I just point out that hedging interest rate risk at a life insurance company is pretty complicated. There's a lot of competing objectives. We're trying to...

Sure I, just point out that hedging interest rate risk at a life insurance company is pretty complicated there's a lot of competing objectives.

We're trying to.

Speaker 7: reduce the the accounting, the quarterly accounting noise. And as I think you know, the accounting is very sensitive to interest rates.

Reduce the accounting the quarterly accounting noise and as I think you know the accounting is very sensitive to interest rates and current.

Speaker 7: current IFRS poor but not completely. You know we have the URR out there which is an indication that there is more sensitivity to interest rates. So if we put all our hedges, our economic hedges in the liability segment.

Iron ore, but not completely we have <unk> out there, which is an indication that.

There is more sensitivity to interest rates. So if we put all our hedges are economic hedges and the liability segments and we do use both cash instruments and derivative instruments there.

Speaker 7: and we do use both cash instruments and derivative instruments there, that would flow through to the accounting and we would really be over hedged from an accounting perspective. So as Phil pointed out, by putting those hedges in surplus and AFFs, that

That would flow through to the accounting and we would really be over hedged from an accounting perspective, so as pointed out by putting those hedges and surplus NFS.

That.

Speaker 7: you know, does not flow through to the accounting results, but is the economic hedge that we're looking for, which is, which is frankly, really important. I mean, we saw this in the pandemic when rates went way down. You know, currently people are talking about rates going up, but bad things happen in the world. Rates go down. You know, we feel it's, it's very important part of our risk management exercise to, to be as economically hedged as.

That.

Does not flow through to the accounting results, but what is the economic hedges that were looking for which is which is frankly really important I mean, we saw this in a pandemic when rates went way down.

People are talking about rates going up but bad things happen in the world rates go down we feel it's very important part of our risk management exercise too to be as economically hedged as we can be.

Speaker 4: My second question is about IFRS 17. I think there have been a number of occasions on calls like this where I think, still, and why you folks have said.

Okay. My second question is about <unk> 17, I think there have been a number of occasions on calls like this where I think Phil and Roy you folks have said Hey, This ISI 17, its accounting you don't say just accounting, but you do highlight that it really it affects the timing and the emergence of profitability, but it really doesn't affect us.

Speaker 4: Hey, this IFRS 17 is accounting. You don't say just accounting, but you do highlight that it really, it affects the timing and the emergence of profitability, but it really doesn't affect the value or the economics of the company. Now the iipment is a CB callokane strategy that lets you be in a place with a protocol that makes sense for you, but can even beitory connected orcules for you Use the

Value or the economics of the company now.

I always sort of not in agreement when I hear that except now that I've read what you've included in your MD&A about <unk> 17, specifically the company makes reference to things like possibly changing reinsurance.

Speaker 12: sort of not an agreement when I hear that, except now that I read what you've included in your MD&A about IFRS 17 specifically, the company makes reference to things like possibly changing reinsurance.

Speaker 4: What else do you say? Reinsurance, hedging strategies, investment portfolio. Now if you start making changes of that nature, then it really does have a meaningful economic effect on the company. So help me reconcile those two messages. One is accounting versus two, it's gonna change the way you operate your business.

What else do you say reinsurance hedging strategies investment portfolio now if you start making changes of that nature. Then it really does have a meaningful economic effects on the company. So help me reconcile those two messages one is accounting versus two it's going to change the way you operate your business.

Speaker 6: Thanks, Mario, for raising the IFRS 17 topic. This is Phil again. I will specifically address your question in a moment.

Thanks, Mario for raising the <unk> topic. This is Phil again.

Specifically address address your question in a moment, but.

Speaker 6: Given that we've raised IFRS 17, I would like to acknowledge the interest that you and the broader analyst community and shareholder group have and the demand for more information. We do continue to work through the implementation. We're making good progress, and we look forward to sharing more directional information with you later this year. Now, specifically on your point that you picked up on our risk management disclosures in the NDNA.

Given that we've raised on it for 17 I would like to acknowledge the interest that you and the board.

Analyst community and shareholder group has in the demand for more information, we do continue to work through the implementation, we're making good progress and we look forward to sharing more directional information with you.

This year.

Specifically on your point that you picked up on our risk management disclosures in the MD&A.

Yes.

Speaker 6: The IFRS 17 is a significant accounting change. And while that doesn't directly impact the economics of our business or the way in which we manage the business, I think it does highlight areas that where there may be opportunities to optimize under a particular framework. And the

The.

<unk> is a significant accounting change.

It doesn't directly impact the economics of our business. So the way in which we manage the business I think it does highlight areas, where there may be opportunities to.

Optimize under a particular framework.

No.

Speaker 6: potentially greater flexibility to make changes in certain areas. But that doesn't mean we plan to do so. It just highlights that this different accounting regime may provide a different perspective in certain elements of how we manage the business. I don't see those as material changes to our business.

Does that potentially greater flexibility to make changes in.

Certain certain areas, but that doesn't mean, we plan to do so it just highlights that.

Accounting regime may.

It provides a different perspective in certain certain elements of how we manage the business, but I don't see those as material changes to our business.

Speaker 6: When I think about...

When I think about.

Okay.

Speaker 6: earnings in an IFRS 17 environment. One thing that

Earnings in our first 2017 environment, one thing that we.

Speaker 6: that we do highlight in those risk management disclosures is the potential for variability, but I do want it to be balanced.

Do highlights in those risk management disclosures is the potential for variability, but I didn't want to be balanced and say that as well as the potential for variability. There's also potential for greater stability and then I have 117 environment and that comes from the fact that for example, new business gains won't be a feature of.

Speaker 6: and say that as well as the potential for variability, there's also potential for greater stability in an IFRS 17 environment. And that comes from the fact that, for example, new business gains won't be a feature of earnings, they'll be outside of earnings. And also changes in non-economic assumptions will be recorded.

Earnings that'll be outside of earnings and also changes in noneconomic assumptions will be recorded.

Speaker 6: not, well the bulk of which would be recorded in the CSM, to the extent there is CSM available, and interest rate movements would be recorded principally in the within OCI or CSM.

Not that where the bulk of which would be recorded in the CSM, but to the extent there is CSM available and interest rate movements would be recorded.

Principally in the.

Okay.

OCI or CSM.

Speaker 6: reflecting the fact that we are considering adopting the OCI option. So I don't think IFR 17 is all bad news, but we'll have to provide an update, more of an update as we go through the course of 2022.

Reflecting the fact that we are considering adopting the OCI options. So I don't think I have heard 17 diesel bad news, but we will have to provide an update more of an update as we go through the course of 2022.

Speaker 4: Yeah, I want to chime in as well, Mario. We definitely stand by our view that the economic fundamentals of our business don't change after an accounting transition like this. It is a huge accounting change both for our industry and it's one that's been in the making for many, many years. And it would be silly to assume that there wouldn't be tweaks or modifications to the way we execute as a result of it, but that would be significant in my mind.

Yes.

Well Mario.

Definitely Spain boy Bellevue that economic fundamentals of the business don't change our offer in accounting.

<unk> like this it is a huge accounting change both for our industry and it's one that's really been making for many many years and it would be silly to assume that there wouldn't be tweaks and modifications to the way we execute as a result of it but that would be a significant in <unk>.

Hi, Mike.

Speaker 4: And I do feel that there are a lot of positives that will come from Hyper-S

And I do feel that there are a lot of positives that will come from $5 70 to be perfectly Frank focus on new business on CSM and the growth of CSA or a fast growing insurance company like ALS is a really big positive. The fact that new business gains are going to be capitalizing earnings, but rather capitalized DSM and then emphasize we think.

Speaker 4: for a fast growing insurance company like ours is a really big positive.

Speaker 4: The fact that new business gains aren't going to be capitalised into earnings, but rather capitalised into CSM and then amortised, we think that is a positive, like investment in new crappy things like on demand

That is a positive like investment earnings. So we will in due course provide much more information around the implications of <unk> of our business and the outlook.

Speaker 4: So we will in due course provide much more information around the implications of IFRS 17 to our business and the outlook. But we feel that there are many positives that come with IFRS 17 that we'll be able to share in more detail at a future point in time. Okay, thank you.

But we feel that.

There were many positives that come with <unk> for 17 that will be able to share in more detail.

Point in time.

Okay. Thank you very much for that appreciate it.

Speaker 2: The next question is from Lamar Persaud from Cormark Securities.

Thank you. The next question is from Nomura Prasad from <unk> Securities. Please go ahead.

Speaker 12: Yeah, thanks. Good morning. Just thinking about ROE, if you get to your core earnings targets from the highest potential businesses at 75% and Asia to 50%, what could the ROE look like in that scenario out to 2025? I guess where I'm going with this...

Yeah. Thanks, good morning.

Just thinking about Roe.

Yet to your core earnings targets from the highest potential businesses, and 75% and Asia, 50%, what could that what could the ROE can look like in that scenario up to 2025, I guess, where I'm going with this is.

Speaker 12: If I look at all your targets, efficiency, portfolio optimization, and growth in high potential businesses all together, at 13% for 2021, it's not the first time manualized has hit that ROE level. And I guess the bottom line messaging that you're trying to convey isn't that you're going through all this effort to just end up at 13%. So anything you could speak to breaking out of that 13% range would be helpful.

If I look at all your targets efficiency portfolio optimization and growth in high potential businesses altogether.

13% for 2021, it's not the first time annualized.

ROE level and I guess, the bottomline messaging that you're trying to convey isn't it and you're going through all this effort to just end up at 13%. So anything you could speak to breaking out of that 13% range would be helpful. Thanks.

Yeah.

Speaker 4: Yeah, this is Roy. Let me start and I'll ask Bill to chime in with any supplementary thoughts. But you're absolutely right. As we focus on portfolio optimization and bring up capital, of those businesses that are generating returns that are less than the company average.

Yes.

As Roy let me start and the oil spill chime in with any supplementing supplementary so youre absolutely right as we focused on portfolio optimization and freeing up capital.

Those businesses that are generating returns that are less than the company average that is a tailwind to our elite for us and as you highlight is we continue to grow Wham in Asia, where the ROE.

Speaker 4: That is a tailwind to ROE for us. And as you highlighted, we continue to grow WAM in Asia where the ROEs are significantly higher than our average. We're gonna start to see an improvement, a consistent improvement in the ROE of our company. So yes, we feel really very optimistic about the outlook as it relates to return on equity, both through the combination of growth and acceleration of our fast-growing businesses.

Significantly higher than our average we're going to start to see an improvement a consistent improvement in the ROE of our company.

So yes, we feel really very optimistic about the outlook as it relates to return on equity.

Through the combination of growth and acceleration of our fast growing businesses.

Speaker 4: as they generate higher ROE, but also through the inorganic actions that we've been driving to reduce the capital that's being allocated towards lower ROE.

Is that generate high Roe.

But also through the inorganic actions that we've been driving.

<unk> reduced our capital.

That's being allocated towards.

ROE businesses, and that's only reinforced throughout portfolio optimization and in force efforts.

Speaker 4: And that's only reinforced through our portfolio optimization and in force.

Speaker 4: So we are optimistic at this point in time, we're really not prepared to provide new targets as it relates to ROE, but in due course, that's something that we'll certainly consider. Yeah.

We are optimistic at this point in time, we're really not prepared to provide new targets as it relates to the ROE, but in due course, that's something that we'll certainly consider.

Yes. This is Phil just to add.

Speaker 6: We did subtly change our 13% target. So we introduced the 13% target in the beginning of 2018, but we did make a subtle change to that to put a plus onto it since then, reflecting the fact that there is upside. And when we think about the other three spots we'd created tested till May so in understanding that the netaic goes from 0 to Pictures to Minecraft the Xi is mainly a possibility our shoot is just as important as possible.

We did suddenly change.

13% target. So we introduced the 13% target in the beginning of 2018, but we did make the subtle change to that to put a plus onto it. Since then reflecting the fact that there is upside and when we think about <unk> in particular.

Speaker 6: In particular, Roy talked about Asia and GWAN, but we look at the expected returns on new business in Asia. It's in excess of 20%, so that's certainly a tailwind to ROE over the long term, and it's upside that 13% figure.

Roy talked about Asia, and <unk>, but when you look at the.

The expected returns on new business in Asia.

<unk> in excess of 20%. So that's certainly a tailwind to our ROE over the long term and those upsides that 13% figure.

Speaker 12: Okay, thanks. And would it be fair to suggest that as you guys move through the IFRS 17 implementation, you're going to revise these targets?

Okay, Thanks, and what would it be fair to suggest that.

As you guys move through the <unk> 17 implementation youre going to revise these targets.

Speaker 6: This is Phil again, Lamar. That's a great question. As we proceed through the IFRS 17 implementation and share more directional information with you, what we intend to do as part of that is really look at the key metrics.

This is silica and Lamar that's a great question as we proceed through the <unk> 17 implementation and.

Sure more directional information with you what we intend to do as part of that is really look at.

The key metrics.

Speaker 6: core earnings and other KPIs that are relevant in an IFRS 17 environment, share with you how we look at defining those metrics and also indicate what we think that would mean in terms of medium-term financial operating guidance.

Core earnings in other Kpis that are relevant for US 17 environment share with you. How we look at defining those metrics and also indicate what we think that would mean in terms of medium term financial operating guidance.

Speaker 6: And I think this is, ROE is one that's very relevant under IFRS 17. So we will provide updates on that. More to come.

And I think this is ROE is one that's very relevant.

For 2017, so we will provide updates on that more to come.

Great. Thanks.

Thank you. The next question is from Nigel D'souza from Veritas investment Research. Please go ahead.

Speaker 2: The next question is from Nigel de souusa, from veryryy houses: investment.

Speaker 10: Thank you. Good morning. I have a few questions for you on policyholder experience if you could bear with me. The first was on the lapse rates in the quarter. You noted lower lapse rates in North America. And I was wondering if that could perhaps signal a structural shift in lapse rates. Have your customers changed how they value insurance benefits provided by policy given the experience of the COVID-19 pandemic and if lower lapse rates are a possibility.

Thank you good morning, I have a few questions for you on policyholder experience. If you could bear with me. The first was on the lapse rates in the quarter. You noted lower lapse rates in North America, and I was wondering if that could perhaps signal a structural shift in lapse rates have your customers changed how they value.

Insurance benefits provided by policies given the experience with the COVID-19 pandemic and its lap if lower lapse rates are a possibility.

Speaker 10: How would that translate into policyholder experience and the potential impact for light cataract?

How would that translate into policyholder experience and the potential impact to like cat ratio.

Speaker 12: Thanks, Lamar. It's Steve Finch here. So you're right. What we saw when the pandemic started was we saw customers valuing their insurance benefits. And we saw a reduction in lapse rates on protection products in North America by about 20% in 2020.

Thanks Lamar.

Steve Finch here. So you are right what we saw when the pandemic started was we see we saw customers valuing their insurance benefits and we saw a reduction.

A reduction in lapse rates on protection products in North America by about 20%.

Speaker 12: It is my expectation that over time these lapse rates will trend back to pre-pandemic levels. We saw, you know, it's a different shock to the system, but we saw in the global financial crisis a similar phenomenon where customers sort of rethought what their priorities were, but lapse rates did trend back.

It is my expectation that over time, these lapse rates will trend back to pre pandemic levels.

We saw a different shock to the system, but we saw in the global financial crisis at <unk>.

Emily phenomenon, where customers sort of rethought, what their priorities were but lapse rates did trend back to pre pandemic levels. So that that's certainly the expectation I think we'll need the pandemic to be more in the in the rearview mirror not in the news every day.

Speaker 12: pandemic levels. So that's certainly the expectation. I think we'll need the pandemic to be more in the rearview mirror, not in the news every day. We can't say when that'll be, but that's clearly the expectation.

Got it.

We can't say when that'll be but that's that's clearly the expectation we will monitor the trends closely.

Speaker 10: The second question I experienced was long-term care. I believe that was a modest gain this quarter. So the question really is on mortality and the hedge of long-term care. Are there different levels of vaccination rates in your long-term care policy block versus your U.S. life policy block? So in other words, will long-term care continue to be an effective hedge on long-term care?

That's helpful and the second question experience was a long term care I believe that was a modest gain this quarter.

So the question really is on mortality in the hedge of long term care are they different levels of vaccination rates in your long term care policy block versus your U S life policy block. So in other words will long term care continues to be an effective hedge on.

Speaker 10: mortality experience due to COVID-19 and how you see that playing out over the next few weeks.

Mortality experience due to COVID-19, and how you see that playing out over the longer term.

Speaker 12: Yeah, thanks, Lamar. The short answer is yes, we do expect the diversification benefits to continue.

Yes, Thanks Lamar.

Short answer is yes, we do expect the dip.

Versification benefits.

Two to continue to continue.

Hi.

<unk>.

So what we've seen over the course of the pandemic, we saw significant gains in in LTE.

Speaker 14: So what we've seen over the course of the pandemic, we saw significant gains in

Speaker 14: in LTC at the start of the pandemic as the older age population was adversely impacted. We have seen that come back a little bit over time. But the expectation is that we will continue to see those mortality diversification benefits. We have seen it. If you look at our MDNA, we provide a mortality sensitivity and that clearly demonstrates the importance of

LTC at the start of the pandemic as the older age population was was adversely impacted.

And we've seen that kind of come back a little bit over time.

But the expectation is that we will continue to see those mortality diversification benefits.

We've seen if you look at our MD&A, we actually provide a mortality sensitivity and that clearly demonstrates the the mortality benefit side.

Speaker 14: mortality benefits, diversification benefits that we see over time. And Nigel, my apologies. I was responding to the wrong name, my apologies.

Diversification benefits that we see over overtime and Nigel Myer My apologies.

I was responding to the wrong name my apologies no.

Speaker 10: No problem. Lamar's a smart guy, so I'll take that as a compliment. The last question is morbidity and, you know, could you maybe shed some light on how morbidity might play out because of the COVID-19 pandemic? There's, there's growing evidence of long COVID and increased morbidity in the US, especially in the unvaccinated population.

No problem or is it more of a smart guy so I'll take that as a compliment.

The last question is morbidity and.

Sure.

Could you maybe shed some light on how morbidity might play out because of the COVID-19 pandemic, there's growing evidence of long COVID-19 and increased morbidity in the U S, especially Indian vaccinated population and how does that play out for you because when I look at your disclosures you are more sensitive to morbidity.

Speaker 10: And how does that play out for you? Because when I look at your disclosures, you are more sensitive to morbidity, assumption changes, but is that due to long-term care policy-holder exposure, or is that your overall policy-holder exposure?

It changes it changes, but it is that due to long term care policyholder exposure or is that where your overall policy holder exposure.

That that exposure that you are flagging is too that exposure is to long term care.

Speaker 14: that exposure is to long-term care. When I think about sort of long COVID,

When I think about sort of long COVID-19 .

Right.

Speaker 14: We're certainly tracking what the impacts could be over time on mortality. And as we just discussed, we have seen those benefits of diversification is still flagged. Since the pandemic started, policyholder experience has varied quarter to quarter, but those diversification benefits have been there. 27 million post-tax charge over the course of two years.

We're certainly tracking what the impacts could be over time on mortality and as we just discussed we have si.

We have seen those those benefits of diversification as Phil flagged since the pandemic started.

Policyholder experience has varied quarter to quarter, but those diversification benefits had been there $27 million post tax.

<unk> over the course of two years.

Speaker 14: And then we talked earlier in the call about what we might see in terms of long-term trends. It's really too early to say what morbidity trends might be in the long term. There could be some tailwinds, there could be some headwinds, and we'll have to track that carefully over time.

And then we talked to earlier in the call about what we might see in terms of long term trends its really two or is it too early to say what morbidity trends might be in the long term there could be some tailwind there could be some headwinds and we'll have to track that.

Our fleet over time.

Okay. That's it for me thank you.

Thank you.

Speaker 2: There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Cohen.

There are no further questions registered at this time I'd like to turn the meeting back over to Mr. Kum.

Speaker 3: Thank you, operator. We will be available after the call if there are any more questions. Have a good day, everyone.

Thank you operator.

It will be available after the call. If there are any follow up questions have a good day everyone.

Speaker 2: Thank you. The conference has now ended. Please disconnect your lines at this time. And thank you for your participation.

Thank you.

Conference has now ended please disconnect your lines at this time and thank you for your participation.

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Speaker 15: I don't want to get the motor. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't be ashamed. Don't if they were not, that we'd always do not get lost.

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