Q4 2021 Great-West Lifeco Inc Earnings Call

Thank you for standing by this is the conference operator, welcome to the Great West Life Co fourth quarter 2021 results Conference call I would now like to turn the conference over to Mr. Paul men, President and CEO of Great West Lifeco. Please go ahead.

Speaker 1: standing by. This is the conference operator. Welcome to the Great West Life Co. fourth quarter 2021 results conference call. I would now like to turn the conference over to Mr. Paul Min, President and CEO of Great West Life Co. Please go ahead.

Thank you Ariel good afternoon, and welcome to Great West Life goes fourth quarter 2021 Conference call. We hope you and your families are safe and healthy joining me on today's call is Garry Michalis Executive Vice President and Chief Financial Officer, and together, we will deliver today's formal presentation also joining us on the call and available to answer.

Speaker 2: Thank you Ariel. Good afternoon and welcome to Great West Life Go's fourth quarter 2021 conference call. We hope you and your families are safe and healthy.

Speaker 2: Joining me on today's call is Gary McNicholas, Executive Vice President and Chief Financial Officer and together we will deliver today's formal presentation.

Your questions are David Harney, President and Chief operating Officer, Europe , Arsenal, Jamal, President and group head strategy investments reinsurance and corporate development.

Speaker 2: Also joining us on the call and available to answer your questions are David Harney, President and Chief Operating Officer, Europe . Arshile Jamal, President and Group Head, Strategy, Investment, Reinsurance and Corporate Development. Jeff McCowan, President and Chief Operating Officer, Canada. Ed Murphy, President and Chief Executive Officer, Empower. And Bob Reynolds, President and Chief Executive Officer, Putnam Investments.

Mccollum, President and Chief operating Officer, Canada.

Murphy, President and Chief Executive Officer, empower and Bob Reynolds, President and Chief Executive Officer of Putnam investments.

Before we start although your attention to our cautionary notes regarding forward looking information and non <unk> financial measures on slide two.

Speaker 2: Before we start, I will draw your attention to our cautionary notes regarding forward-looking information and non-IFRS financial measures on slide 2. These apply to today's discussion and presentation materials. Please turn off the recording. Thank you.

These apply to today's discussion and presentation materials.

Please turn to slide four.

Great West life co continued its positive momentum in 2021 and delivered strong results during a year when we made significant advances on our value creation priorities.

Speaker 2: Great West Life Co. continued its positive momentum in 2021 and delivered strong results during a year when we made significant advances on our value creation priorities.

Full year 2021 base earnings of $3 $3 billion and basic EPS of $3 51 increased 22% over 2020.

Speaker 2: Full year 2021 base earnings of $3.3 billion and base EPS of $3.51 increased 22% over 2020. In a rapidly changing world, Great West Life Co. once again demonstrated its strength and ability to adapt. I thank my colleagues across the organization for their contributions and dedication to our customers amid continuing pandemic challenges.

In a rapidly changing world great West Lifeco once again demonstrated its strength and ability to adapt I. Thank my colleagues across the organization for their contributions and dedication to our customers' admit continuing pandemic challenges.

The 2021 results reflects strong organic growth the benefits of recent acquisitions and disciplined capital deployment.

Speaker 2: The 2021 results reflect strong organic growth, the benefits of recent acquisitions, and disciplined capital deployment.

Guided by our value creation priorities, we've made great progress across our businesses.

Speaker 2: Guided by our value creation priorities, we made great progress across our businesses. In the U.S., Empower reached an agreement to acquire the retirement services business of Prudential Financial, which we expect to close early in the second quarter of 2022.

In the U S. Empower reached an agreement to acquire the retirement services business of Prudential financial which we expect to close early in the second quarter of 2022.

Like the mass mutual transaction, Prudential, a greater skill synergies and capabilities further reinforcing empowers leadership position in the U S retirement market and growth opportunities in the broader U S wealth management market.

Speaker 2: Like the Mass Mutual Transaction, Prudential will add greater scale, synergies, and capabilities, further reinforcing Empower's leadership position in the U.S. retirement market and growth opportunities in the broader U.S. wealth management market.

The integrations of mass mutual in personal capital has been an important focus over the past year.

Speaker 2: The integrations of mass mutual and personal capital have been an important focus over the past year.

Empowers expertise as an integrator is proving out as we deliver on expense synergies maintain high client retention and see how see healthy asset growth and empowers D C and retail wealth management business as well.

Speaker 2: Empower's expertise as an integrator is proving out as we deliver on expense synergies, maintain high client retention, and see healthy asset growth in Empower's DC and retail wealth management businesses.

We also extended personal capitals digital advice capabilities with the launch of a new personalized digital experience.

Speaker 2: We also extended Personal Capital's digital advice capabilities with the launch of a new personalized digital experience.

This experience is being rolled out across the empower platform and now available to over 2 million plan participants the new online tool illustrates the person's unique financial picture and office users financial wellness guidance and advice.

Speaker 2: This experience is being rolled out across the Empower platform and now available to over 2 million plan participants.

Speaker 2: The new online tool illustrates a person's unique financial picture and offers users financial wellness guidance and advice.

It is one step in our longer term strategy to be a primary provider of lifetime financial wellness support and services to the millions of Americans, who have retirement plans with empower.

Speaker 2: It is one step in our longer-term strategy to be a primary provider of lifetime financial wellness support and services to the millions of Americans who have retirement plans within power.

In Canada, we saw strong topline growth in 2021 and expanded our group customer business with the acquisition of claim secure adding one point to 5 million plan members and increasing access to the Tpa and Tpa services market.

Speaker 2: In Canada, we saw strong top line growth in 2021 and expanded our group customer business with the acquisition of Claim Secure, adding 1.25 million plan members and increasing access to the TPA and TPP services market.

Canada life finished the year strong when it was awarded the federal government health care benefits plan the.

Speaker 2: Canada Life finished the year strong when it was awarded the federal government health care benefits plan, the single largest group plan in Canada. When implemented in 2023, we'll be supporting the well-being of an additional 1.5 million Canadians. I congratulate Jeff McCowan and his team for this historic win.

The single largest group plan in Canada.

When implemented in 2023.

We'll be supporting the wellbeing of an additional $1 5 million Canadians I congratulate Jeff Macau and his team for this historic win.

And Europe Irish life continued to expand its footprint in Ireland with acquisitions like Ark life, and our joint venture investment with Allied Irish Bank.

Speaker 2: In Europe , Irish life continued to expand its footprint in Ireland, with acquisitions like ArtLife and our joint venture investment with Allied Irish Bank.

We also continued to leverage our recent smaller acquisitions of brokers and advisors to expand in wealth management.

Speaker 2: We also continue to leverage our recent smaller acquisitions of brokers and advisors to expand in wealth management.

In Germany, where we have a strong position in retail pensions sold through brokers. Our recently launched digital servicing platform gives us the ability to grow our stake in the developing group group pensions market in Germany.

Speaker 2: In Germany, where we have a strong position in retail pensions sold through brokers, a recently launched digital servicing platform gives us the ability to grow our stake in the developing group pensions market in Germany.

Our capital and risk solutions business entered into new reinsurance markets in Japan, and Israel. This year, while continuing to partner and provide bespoke solutions to existing clients in North America and Europe .

Speaker 2: Our capital and risk solutions business entered into new reinsurance markets in Japan and Israel this year while continuing to partner and provide bespoke solutions to existing clients in North America and Europe . And across the company, we employed our ESG investment expertise to develop and launch new ESG product portfolios at Putnam, Panagora and Canada Life.

And across the company, we employed our ESG investment expertise to develop and launch new ESG product portfolios at Putnam, Pandora and I'm kind of a life.

We also continued to expand our access to alternative investment capabilities through north leaf and the recently established strategic partnership with regard holdings.

Speaker 2: We also continue to expand our access to alternative investment capabilities through Northleaf and the recently established strategic partnership with Cigar Holdings.

Together, our focused value creation priorities and disciplined execution against those priorities have led us to meet or exceed medium term financial objectives in 2021.

Speaker 2: Together, our focused value creation priorities and disciplined execution against those priorities have led us to meet or exceed medium-term financial objectives in 2021. Please turn to slide 5.

Please turn to slide five.

This slide outlines our three three medium term financial objectives and tracks our performance on a one year and three year basis I'm pleased with our strong performance against all three measures.

Speaker 2: This slide outlines our three medium-term financial objectives and tracks our performance on a one-year and three-year basis.

Basic EPS growth of 22% in 2021, and 13% compounded growth over the last three years exceeded our 8% to 10% objective, reflecting solid organic growth.

Speaker 2: I'm pleased with our strong performance against all three measures. Base EPS growth of 22% in 2021 and 13% compounded growth over the last three years exceeded our 8 to 10% objective, reflecting solid organic growth, a healthy rebound from COVID impacts in 2020, and a strong contribution from the mass mutual acquisition.

The rebound from Covid impacts in 2020, and a strong contribution from the mass mutual acquisition.

Based on ROA of 14.6% reflects a shift in our mix towards more capital late group and wealth management businesses in recent years.

Speaker 2: Base ROE of 14.6% reflects a shift in our mix towards more capital light group and wealth management businesses in recent years.

And our dividend payout ratio of 51, 4% in 2021 was within our target range of 45% to 55%.

Speaker 2: And our dividend payout ratio of 51.4% in 2021 was within our target range of 45% to 55%.

Please turn to slide six.

Our fourth quarter saw strong overall results based earnings were 825 million and net earnings were $765 million.

Speaker 2: Our fourth quarter saw strong overall results. Base earnings were $825 million and net earnings were $765 million. Base EPS of 89 cents was up 11% year over year.

Basic EPS of <unk> 89 cents was up 11% year over year.

The year over year growth reflects strong organic growth the achievement of synergies and solid performance in acquired businesses, along with the benefit of higher market values.

Speaker 2: The year-over-year growth reflects strong organic growth, the achievement of synergies, and solid performance in acquired businesses, along with the benefits of higher market value.

Net earnings of 82 per share were down 16, 16% year over year.

Speaker 2: Net earnings of $0.82 per share were down 16% year-over-year. You'll recall Q4 2020 included two large positives, the revaluation of a U.S. deferred tax asset and the net gain on the sale of GLC.

You'll recall Q4 2020 included two large positives there.

The revaluation of U S deferred tax asset and the net gain on the sale of J L. C.

This quarter, we recognized additional contingent considerations given the strong performance of the personal capital acquisition and a number of smaller wealth acquisitions in Ireland.

Speaker 2: This quarter we recognized additional contingent considerations given the strong performance of the personal capital acquisition and a number of smaller wealth acquisitions in Ireland.

It impacts net earnings in period, it represents significant additional value being created for the future from these acquisitions.

Speaker 2: While it impacts net earnings in period, it represents significant additional value being created for the future from these acquisitions.

Please turn to slide seven.

Ananda saw strong sales momentum in all business segments and product types in the fourth quarter total sales were up 31% year over year with enhanced digital sales capabilities and insights from artificial intelligence supporting these strong results.

Speaker 2: Canada saw strong sales momentum in all business segments and product types in the fourth quarter. Total sales were up 31% year-over-year, with enhanced digital sales capabilities and insights from artificial intelligence supporting these strong results.

In addition, the significant federal government plan when that I noted earlier, which is actually not reflected in these numbers, Canada led the market in the group life and health sales both in quarter and for the full year.

Speaker 2: In addition, the significant federal government plan win that I noted earlier, which is actually not reflected in these numbers, Canada led the market in the group life and health sales both in quarter and for the full year. Momentum in the business has returned to pre-quarter.

Momentum in the business has returned to pre pandemic levels.

We also introduced product enhancements, including yesterday's segue funds and expanded agent amount limits for simple protect our online insurance application.

Speaker 2: We also introduced product enhancements, including ESG SEG funds, and expanded age and amount limits for Simple Protect, our online insurance application. And over 4,000 financial advisors in our Advisor Solutions Network now have access to a new digital financial planning platform, improving advisor and customer experience.

And over 4000 financial advisors, and our advisor solutions networks now have access to a new digital financial planning platform, improving advisor and customer experience.

Please turn to slide eight.

Empower saw continued strong momentum with assets under administration, excluding personal capital up 21% to $1 one trillion dollars.

Speaker 2: And power saw continued strong momentum with assets under administration excluding personal capital up 21% to $1.1 trillion.

Large plans coupled with strong growth in retail wealth management drove the year over year increase in sales.

Speaker 2: Large plans coupled with strong growth in retail wealth management drove the year-over-year increase in sales.

Empower IRA assets were up 49% to U S 24 billion, while personal capital assets were up 41% U S $23 billion.

Speaker 2: And power IRA assets were up 49% to US$24 billion, while personal capital assets were up 41% to US$23 billion.

Noted earlier, our mouse neutral in personal capital integration programs are progressing well and on schedule.

Speaker 2: As noted earlier, our mass mutual and personal capital integration programs are progressing well and on schedule.

We've achieved U S $80 million in annual pretax run rate cost synergies to date for mass mutual.

Speaker 2: We've achieved U.S. $80 million in annual pre-tax run rate cost synergies to date for MassMutual. We remain on track to achieve our target of $160 million by the end of 2022 and are pleased with Empower's performance on all key metrics, including AUA and participant growth, retail asset growth, and our underlying earnings momentum.

Remain on track to achieve our target of $160 million by the end of 2022 and are pleased with empowers performance on all key metrics, including anyway, and participant growth retail asset growth and our underlying earnings momentum.

Turn to slide nine.

Putnam's AUM was up U S.

$11 billion year over year to $202 billion sales increased 7%, reflecting strong institutional sales growth.

Speaker 2: Platinum's AUM was up U.S. $11 billion year-over-year to $202 billion. Sales increased 7%, reflecting strong institutional sales growth. Net flows were flat, with outflows in lower-fee fixed-income products offset by improved flows in higher-fee equity products.

Net flows were flat with outflows in lower fee fixed income products offset by improved flows in higher higher higher fee equity products.

Both trends are consistent with the broader market and resulted in a modest increase in Putnam average fee rate.

Speaker 2: Both trends are consistent with the broader market and resulted in a modest increase in Putnam's average fee rate.

Continued strong investment performance as demonstrated by four and five star Morningstar ratings on 25 funds and over 80% of fund assets performing at levels above the Lipper median on both a three and five year basis.

Speaker 2: Putnam's continued strong investment performance is demonstrated by 4- and 5-star Morningstar ratings on 25 funds and over 80% of fund assets performing at levels above the Lipper median on both a 3- and 5-year basis.

Please turn to slide 10.

In Europe , we saw continued strong growth in equity release mortgages in the quarter and closed three U K bulk annuity deals totaling.

Speaker 2: In Europe , we saw continued strong growth in equity-released mortgages in the quarter and closed three UK bulk annuity deals, totaling $320 million Canadian.

$320 million Canadian.

Sales were up 28% year over year, largely driven by international bond sales in the U K and retail pension sales in Ireland and finally you asked.

Speaker 2: Wealth sales were up 28% year-over-year, largely driven by international bond sales in the UK and retail pension sales in Ireland. And finally, assets under administration across Europe continue to increase, with positive net flows in both wealth and investment-only mandates.

Assets under administration across Europe continue to increase with positive net flows in both wealth and investment only nine days.

Please turn to slide 11.

And our capital and risk solutions segment expected profit rose, 2% year over year with growth in structured life and longevity portfolio's results were muted by the negative impact of a stronger U S. Dollar as noted on the slide.

Speaker 2: In our capital and risk solution segment, expected profit rose 2% year over year with growth in structured life and longevity portfolios. Results were muted by the negative impact of a stronger U.S. dollar as noted on the slide.

We were pleased that our structured solutions and longevity pipelines are both strong as we move forward into 2020 two.

Speaker 2: We're pleased that our structured solutions and longevity pipelines are both strong as we move forward into 2022.

Like the industry, we continue to see Covid related adverse experience in U S. Traditional life that was improved from the prior quarter and with that I'll turn the call over to Gary to review the financial highlights Gary.

Speaker 2: Like the industry, we continue to see COVID-related adverse experience in U.S. traditional life that was improved from the prior quarter. And with that, I'll turn the call over to Gary to review the financial highlights. Gary?

Thank you Paul.

Please turn to slide 13 overall.

Overall as Paul noted we were very pleased with the financial results. This quarter. In addition to highlighting the strong momentum we see across the business. The results also reflect the strategic deployment of capital in the past year.

Speaker 3: Thank you Paul. Please turn to slide 13. Overall, as Paul noted, we were very pleased with the financial results this quarter. In addition to highlighting the strong momentum we see across the business, the results also reflect the strategic deployment of capital in the past year.

Compared to the prior year base EPS of <unk> 89 cents was up 11% and 14% in constant currency given the strengthening of the Canadian dollar.

Speaker 3: Compared to the prior year, base EPS of $0.89 was up 11% and 14% in constant currency, given the strengthening of the Canadian dollar.

The increase was due to several factors, including broad based business growth higher stock market levels and the significant acquisitions in the last year.

Speaker 3: The increase was due to several factors, including broad-based business growth, higher stock market levels, and the significant acquisitions in the last year. Notwithstanding continued adverse U.S. life claims experience in the Capital and Risk Solutions Reinsurance Business Unit, the strength in base earnings was evident across the segments, reflecting very solid fundamentals and a diversified book of business.

Notwithstanding continued adverse U S life claims experience in the capital and risk solutions reinsurance business unit.

The strength in base earnings was evident across the segments, reflecting very solid fundamentals and a diversified book of business.

Starting with Canada base earnings were 317 million down 9% from an exceptionally strong Q4 last year.

Speaker 3: Starting with Canada, base earnings were $317M, down 9% from an exceptionally strong Q4 last year.

This performance was good with expected profit up 4% and insurance experience, particularly health and disability producing a solid gain.

Speaker 3: Business performance was good, with expected profit up 4%, and insurance experience, particularly health and disability, producing a solid gain.

Canada also saw a strong contribution from yoga enhancement activity in the quarter.

In the U S base earnings were up significantly year over year with strong organic growth at empower and the inclusion of the mass mutual business. This year.

Speaker 3: Canada also saw a strong contribution from youth enhancement activity in the quarter.

Speaker 3: In the U.S., base earnings are up significantly year over year with strong organic growth at Empower and the inclusion of the mass mutual business this year.

The acquired Massmutual business continued to perform well, although down from the last couple of quarters due to one time reporting to ups.

Speaker 3: The acquired MassMutual business continued to perform well, a low down from the last couple of quarters due to one time reporting true ups.

The business added 55 million Canadian or 44 million U S dollars in U S dollars.

Speaker 3: The business added $55 million Canadian or $44 million U.S. in U.S. dollars.

[noise] debase earnings, including expense synergies and strong fee income.

Note. This includes financing costs and amortization of intangibles.

Speaker 3: to base earnings, including expense synergies and strong fee income. Note this includes financing costs and amortization of intangibles.

On an annualized run rate basis, 80 million U S. A bit targeted 160 million pre tax expense synergies have been achieved thus far.

Speaker 3: On an annualized run rate basis, $80 million U.S. of the targeted $160 million pre-tax expense synergies have been achieved thus far.

<unk> retention to date has also been strong and integration activity is on track to complete later this year.

Speaker 3: Customer retention to date has also been strong and integration activity is on track to complete later this year.

Personal capital continues to invest in new copper customer acquisition to fuel growth and profitability and recorded a base loss of USD 6 million.

Speaker 3: Personal Capital continues to invest in new customer acquisition to fuel growth and profitability, and recorded a base loss of US$6 million, in line with expectations.

In line with expectations.

The in force book of business continues to generate profits and net asset growth has exceeded initial expectations. This welcome growth in turn triggers the additional contingent purchase consideration recorded this quarter.

Speaker 3: The in-force book of business continues to generate profits, and net asset growth has exceeded initial expectations. This welcome growth, in turn, triggers the additional contingent purchase consideration recorded this quarter.

On the integration front as Paul noted the rollout of the personal capital digital capabilities to the broader empower client base is successfully underway with over 2 million plan participants now having access to enhance user experience.

Speaker 3: On the integration front, as Paul noted, the rollout of the personal capital digital capabilities to the broader Empower client base is successfully underway with over 2 million plan participants now having access to the enhanced user experience.

Looking at empower excluding mass Vito in personal capital base earnings were up smartly year over year as a result of strong organic growth higher markets and the continued expansion of the empower IRA rollover business.

Speaker 3: Looking at Empower excluding mass mutual and personal capital, base earnings were up smartly year over year as a result of strong organic growth, higher markets, and the continued expansion of the Empower IRA rollover business.

On a sequential basis empower base earnings declined 117 million U S for 145 million U S driven by seasonal expenses and several one time items, which combined totaled approximately 22 million U S. After tax.

Speaker 3: On a sequential basis, MPower base earnings declined US$117 million from US$145 million, driven by seasonal expenses and several one-time items, which combined total approximately US$22 million after tax.

Allowing for this empower base earnings were broadly in line with the past couple of quarters closer to a more normalized earnings run rate.

Speaker 3: Allowing for this, MPower base earnings were broadly in line with the past couple of quarters, closer to a more normalized earnings run rate.

Putnam's results increased year over year with higher fee revenues from higher average AUM and a onetime tax benefit partly offset by lower net investment income on seed capital Mark to market losses and reduced performance fees. This period.

Speaker 3: Putnam's results increased year-over-year, with higher fee revenues from higher average AUM and a one-time tax benefit, partly offset by lower net investment income on seed capital mark-to-market losses, and reduced performance fees this period.

A small number of products drove the year over year decline in both performance fees and net investment income with stronger calendar year performance in 2020 compared to 2021.

Speaker 3: A small number of products drove the year-over-year decline in both performance fees and net investment income, with stronger calendar year performance in 2020 compared to 2021.

In Europe base earnings increased 9% year over year, 14% in constant currency U.

Speaker 3: In Europe , base earnings increased 9% year-over-year, 14% in constant currency.

U K base earnings benefited from new business gains on the large bulk annuity sales reported in Q3.

Speaker 3: UK-based earnings benefitted from new business gains on the large Volcanudi sale reported in Q3, strong yield enhancement and a favourable tax impact.

Strong yield enhancement and a favorable tax impact Ireland base earnings increased 8% year over year with higher fee income and positive health and disability experience more than offsetting adverse life claims and base earnings in Germany were steady.

Speaker 3: Ireland-based earnings increased 8% year-over-year, with higher fee income and positive health and disability experience more than offsetting adverse life claims. And base earnings in Germany were steady.

And capital risk solutions, the reinsurance business continues to grow including the expansion into newer markets during the year, notably, Japan and Israel.

Speaker 3: In capital risk solutions, the reinsurance business continues to grow, including the expansion into newer markets during the year, notably Japan and Israel.

U S life games, where again elevated in line with the industry and we continue to hold a provision for additional excess claims in the near term.

Speaker 3: U.S. lifegames were again elevated, in line with the industry, and we continue to hold a provision for additional excess claims in the near term.

In contrast, with the U S experience mortality rates have been less impacted recently by Covid in the U K and Netherlands, and as a result, we did not see the offsets in the longevity business this quarter.

Speaker 3: In contrast with the U.S. experience, mortality rates have been less impacted recently by COVID in the U.K. and Netherlands, and as a result, we did not see the offsets in the longevity business this quarter.

At the life co level notwithstanding the growth in base earnings net EPS of <unk> 82.

Speaker 3: At the LIFCO level, notwithstanding the growth in base earnings, net EPS of $0.82 fell 16% from Q4 2020, primarily due to the two large non-recurring gains last year, as Paul noted earlier, and whereas this quarter we recognized additional contingent consideration resulting from the success of recent acquisitions.

About 16% from Q4 2020, primarily due to the two large nonrecurring gains last year as Paul noted earlier.

Whereas this quarter, we recognized additional contingent consideration, resulting from the success of recent acquisitions.

Turning to slide 14, we can see the impact of various excluded items, which net to a minus 60 million. Overall. These are predominantly acquisition related covered earlier and and actuarial liability related which I will describe.

Speaker 3: Turning to slide 14, we can see the impact of various excluded items, which net to minus $60 million overall. These are predominantly acquisition-related, covered earlier, and actuarial liability-related, which I'll describe further in the upcoming slide.

Further in the upcoming slides.

Turning to slide 15, and 16. These next two slides highlight the source of earnings first from a base earnings perspective, and then a net earnings perspective, and I'll focus my comments on slide 16, the net earning sources sorts of Soe display with a reminder, that the amounts above the line are pretax.

Speaker 3: Turning to slides 15 and 16, these next two slides highlight the source of earnings, first from a base earnings perspective, and then a net earnings perspective, and I'll focus the comments on slide 16, the net earnings source for SOE display, with a reminder that the amounts above the line are pre-tax.

First expected profit was up 16% year over year, notwithstanding some currency pressure with the euro down 7% year over year in the U S dollar down 3%.

Speaker 3: First expected profit was up 16% year over year, notwithstanding some currency pressure with the euro down 7% year over year and the US dollar down 3%.

Mass mutual was not in Q4, 2020, but added $73 million this quarter.

Even before that addition expected profit was up 7% or 10% on a constant currency basis.

Speaker 3: MassMutual was not in Q4 2020, but added $73 million this quarter.

Speaker 3: Even before that addition, expected profit was up 7% or 10% on a constant currency basis.

We are seeing a 39% increase at empower coming from strong organic business growth and fee income benefits from higher market levels.

Speaker 3: We are seeing a 39% increase at Empower coming from strong organic business growth and fee income benefits from higher market levels.

Canada was up 4% and the Europe and capital risk solutions segments grew more modestly given currency headwinds.

Speaker 3: Canada was up 4%, and the Europe and capital risk solution segments grew more modestly given currency headwinds.

Moving to new business Inbox I'll call out a couple of points.

In the U S. We saw an increase in the non deferrable acquisition costs as a result of strong sales and adding mass vitro new business. This year.

Speaker 3: Moving to new business impacts, I'll call out a couple of points.

Speaker 3: In the U.S., we saw an increase in the non-deferrable acquisition costs as a result of strong sales and adding mass retail new business this year.

In the U K building on the large bulk annuity sale last quarter and smaller ones. This quarter. The investment team was able to secure attractive backing assets producing a pretax gain of $26 million, which offset non deferrable acquisition costs in the wealth business in Ireland and the UK.

Speaker 3: In the UK, building on the large bulk annuity sale last quarter and smaller ones this quarter, the investment team was able to secure attractive backing assets, producing a pre-tax gain of $26 million, which offset non-deferrable acquisition costs on the wealth business in Ireland and the UK.

Capital and risk solutions reverted to more modest new business impacts this quarter compared to an outsized gain last quarter and outstanding stream a year ago.

Speaker 3: Capital risk solutions reverted to more modest new business impacts this quarter, compared to an outsized gain last quarter and an outsized strain a year ago. Single large reinsurance transactions can cause new business impacts to fluctuate from period to period in this segment.

Single large reinsurance transactions can cause new basis impacts to fluctuate from period to period in this segment.

Experienced gains contributed positively in the quarter and I'll cover these in more detail on the next slide along with the actuarial basis changes.

Speaker 3: Experience gains contributed positively in the quarter, and I'll cover these in more detail in the next slide, along with the actuarial basis changes.

Certainly UK property related experience gains are reflected in the actuarial liabilities and as such are excluded from base earnings. This.

Speaker 3: Note, certain UK property related experience gains are reflected in the actuarial liabilities and as such are excluded from base earnings.

This accounts for the difference between the experience gain lines between bass and bass Soe and net <unk> on these two slides.

Speaker 3: This accounts for the difference between the experience gain lines between base SOE and net SOE on these two slides.

Earnings on surplus of minus $36 million is down 6% down from positive 6 million last year, primarily due to seed capital losses at Putnam this quarter compared to strong seed capital gains in Q4, 2020, plus increased financing costs in respect to the advanced funding of the plan Prudential retirement business.

Speaker 3: Earnings on surplus of minus $36 million is down from positive $6 million last year, primarily due to seed capital losses at Putnam this quarter compared to strong seed capital gains in Q4 2020, plus increased financing costs in respect to the advanced funding of the planned Prudential Retirement Business Acquisition.

Acquisition.

No $14 million up to 36 relates to lost consolidation accounting, which is reversed below the line in Noncontrolling interest and it has no bottom line impact.

Speaker 3: Note $14 million of the $36 relates to lost consolidation accounting which is reversed below the line in non-controlling interest and it has no bottom line impact.

The effective tax rate this quarter was 9% on base shareholder earnings and 10% on net earnings primarily reflecting the jurisdictional mix of earnings and tax tax exempt investment income and the release of certain tax provisions.

Speaker 3: The effective tax rate this quarter was 9% on base shareholder earnings and 10% on net earnings, primarily reflecting the jurisdictional mix of earnings and tax-exempt investment income and the release of certain tax provisions.

By way of comparison, the effective tax rate on base earnings in Q4, 2020 was 13%.

Speaker 3: By way of comparison, the effective tax rate on base earnings in Q4 2020 was 13%.

Turning to slide 17, these tables expand on the experience results as well as the management actions and changes in assumptions to highlight virus items in the quarter some of which we've touched on already.

Speaker 3: Turning to slide 17, these tables expand on the experience results as well as the management actions and changes assumptions to highlight virus items in the quarter, some of which we've touched on already.

As shown in the chart on the left you have enhancement continued to contribute positively, particularly in Canada this quarter.

Speaker 3: As shown in the chart on the left, yield enhancement continued to contribute positively, particularly in Canada this quarter. We continue to originate a steady volume of equity-relief mortgages in the UK on a solid residential property backdrop.

We continue to originate a steady volume of equity release mortgages in the U K on a solid residential property backdrop.

The net impact of mortality longevity morbidity was modestly negative this period due to the combination of Covid related claims in U S life reinsurance and U K and Irish group life offset by positive experience of disability and health again, reflecting the benefits of a diversified book of business.

Speaker 3: The net impact of mortality, longevity and morbidity was modestly negative this period due to the combination of COVID-related claims in U.S. life reinsurance and U.K. and Irish group life offset by positive experience in disability and health, again reflecting the benefits of a diversified book of business.

Credit related impacts were positive this quarter as our high quality investment portfolio continues to perform well with minor ratings changes and a recovery in previously impaired assets contributing to an experience gain.

Speaker 3: Credit-related impacts were positive this quarter, as our high-quality investment portfolio continues to perform well, with minor ratings changes and recovery in previously impaired assets contributing to an experience gain.

The expense variance variances shown here reflects the strategic project costs and some seasonal and one time expense items I'll review expenses in more detail in the next slide.

Speaker 3: The expense variances shown here reflect strategic project costs and some seasonal and one-time expense items. I'll review expenses in more detail in the next slide.

The chart on the right details the major basis changes with a positive impact from changes in the economic assumptions used in liability modeling, primarily interest risk and benefits inflation provisions in the European business and modest adjustments in other areas.

Speaker 3: The chart on the right details the major basis changes, with a positive impact from changes in the economic assumptions used in liability modelling, primarily interest risk and benefits inflation provisions in the European business, and modest adjustments in other areas.

Moving to slide 18, this slide highlights operating expenses by segment.

Speaker 3: Moving to slide 18, this slide highlights operating expenses by segment. Expenses are up year over year, as expected, given the increase in business, both organically and through M&A, and we also saw a bump in expenses sequentially, largely related to normal seasonality and some one-time items.

<unk> are up year over year as expected given the increase in business, both organically and through M&A and we also saw a bump in expenses sequentially largely related to normal seasonality and some onetime items in.

In Canada expenses were up 4% year over year, reflecting increased sales activity and sub advisory expenses related to the GLC Mackenzie transaction.

Speaker 3: In Canada, expenses were up 4% year-over-year, reflecting increased sales activity and sub-advisory expenses related to the GLC McKenzie transaction.

On a sequential basis, Canada, Canada's expenses were higher in part due to seasonality as well as technology investments supporting growth.

Speaker 3: On a sequential basis, Canada's expenses were higher in part due to seasonality as well as technology investment supporting growth.

In the U S. The masks retooled acquisition added 105 million to expenses in the quarter and excluding mass each over U S expenses were up 6% year over year.

Speaker 3: In the U.S., the mass mutual acquisition added $105 million to expenses in the quarter. And excluding mass mutual, the U.S. expenses were up 6% year over year.

The sequential increase in U S expenses was partly due to one time expenses in Q4, and the normal seasonality and certain expense items that empower these.

Speaker 3: The sequential increase in U.S. expenses was partly due to one-time expenses in Q4 and the normal seasonality in certain expense items that empower.

These items equated to more than half the increase while the rest was related to strong sales and business growth.

Speaker 3: These items equated to more than half the increase, while the rest was related to strong sales and business growth.

In Europe expenses increased 13% year over year, mainly due to acquisition related costs in Ireland and strategic investments in the UK and Germany.

Speaker 3: In Europe , expenses increased 13% year-over-year, mainly due to acquisition-related costs in Ireland and strategic investments in the UK and Germany.

The increase in Europe's expenses on a sequential basis was amplified by the one time pension curtailment gain of $55 million that we called out for Ireland last quarter.

Speaker 3: The increase in Europe's expenses on a sequential basis was amplified by the one-time pension curtailment gain of $55 million that we called out for Ireland last quarter.

In capital and risk solutions expense growth is aligned with growth in the business and expansion into newer markets.

Speaker 3: In capital and risk solutions, expense growth is aligned with growth in the business and expansion into newer markets.

Please turn to slide 19.

The Q4 book value per share of $24 71.

It was up 8% year over year, primarily driven by increased retained earnings given the solid results in each of the past four quarters.

Speaker 3: Q4 book value per share of $24.71 was up 8% year-over-year, primarily driven by increased retained earnings given the solid results in each of the past four quarters.

Currency translation in OCI has been a headwind this year with the strengthening Canadian dollar, but this has been offset by the pension OCI given the increase in interest rates.

Speaker 3: Currency translation in OCI has been a headwind this year with the strengthening Canadian dollar, but this has been offset by the pension OCI given the increase in interest rates.

The light cat ratio of Canada life remained strong at 124% up one point compared to last quarter. Given continued solid earnings net of dividends. In addition candidate lives move to a new most adverse like cat scenario in Q4.

Speaker 3: The LICAT ratio at CADLIFE remained strong at 124%, up 1 point compared to last quarter, giving continued solid earnings net of dividends. In addition, CADLIFE moved to a new, most adverse LICAT scenario in Q4. This nullified the downward impact of the prior scenario this quarter, and is expected to lead to an increase of 1 point per quarter for the next five quarters as this change is smoothed in over time.

This notified the downward impact of the prior scenario this quarter and is expected to lead to an increase of one point per quarter for the next five quarters. As this change is smoothed in overtime.

Lastly, I would note that life co cash, which is not included in the light cat ratio ended the quarter at six.

Speaker 3: Lastly, I'd note that Lifeco Cash, which is not included in the LICAT ratio, ended the quarter at $0.6 billion, unchanged from last quarter. Back to you, Paul.

6 billion unchanged from last quarter back to you Paul.

Thank you Gary Please turn to slide 20.

Well.

I'll close.

Formal comments by saying that we're pleased with our topline and bottom line momentum across Lifeco as we leverage our investments in organic and M&A enabled growth.

Speaker 2: I'll close our formal comments by saying that we're pleased with our top-line and bottom-line momentum across Lifeco as we leverage our investments in organic and M&A-enabled growth.

Looking ahead, we remain confident in our ability to deliver on our medium term financial objectives as we work to successfully integrate acquired businesses and execute against our value creation priorities.

Speaker 2: Looking ahead, we remain confident in our ability to deliver on our medium-term financial objectives as we work to successfully integrate acquired businesses and execute against our value creation priorities.

When he believes us to create sustainable value for shareholders. We must also be committed to responding to the needs of all stakeholders.

Speaker 2: We believe that to create this sustainable value for shareholders, we must also be committed to responding to the needs of all stakeholders. It's with this mindset that we're developing and implementing strategies in support of the environment, diversity, equity, inclusion, and sustainability across our organization.

With this mindset that we are developing and implementing strategies in support of the environment diversity equity and inclusion and sustainability across our organization.

This work enabled us to make the commitment to achieve net zero greenhouse gas emissions by 2050.

Speaker 2: This work enabled us to make a commitment to achieve net zero greenhouse gas emissions by 2050.

We look forward to sharing more on this initiative and announcing interim targets later this year.

Speaker 2: We look forward to sharing more on this initiative and announcing interim targets later this year.

That concludes my formal remarks Ariel please open the line for questions.

Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.

Speaker 2: That concludes my formal remarks. Ariel, please open the line for questions.

Speaker 1: Thank you. We will now begin the question and answer session.

Speaker 1: To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2.

If youre using a speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two we will pause for a moment as callers join the queue.

Our first question comes from many Grumman of Scotiabank. Please go ahead.

Hi, Good afternoon, Gary you referenced good retention at mass mutual and I'm wondering if you have any more.

Speaker 1: Our first question comes from Manny Grauman of Scotiabank. Please go ahead.

Speaker 3: hi good afternoon uh... gary you reference good retention uh... at mass mutual and i'm wondering if you have uh... any more uh... numbers for us is related to retention anything you can provide uh... many of them many of all of them uh...

The numbers for us related to retention anything you can provide.

My name is Paul jump in on that.

We won't get all I'm going to.

I'll turn that over to Ed Murphy to talk about where we're at from a retention perspective.

Speaker 2: We won't get, I'm gonna turn that over to Ed Murphy to talk about where we're at from a retention perspective. The reality is we look at retention across a range of different segments, but we're performing actually at or better across those segments, and I'll let Ed provide a little bit more.

The reality is when you look at retention across a range of different segments, but we're performing actually at or better across across those segments and I'll, let ed provide a little bit more color.

Yeah.

Sure. Thanks, Paul Thank you.

<unk>.

Yes to Paul's point, we feel really good about where we are we've we've transitioned.

Speaker 2: Sure. Thanks, Paul. Yep. Thank you. Yeah, to Paul's point, we feel really good about where we are. We've transitioned three waves of clients over to our platform. The fourth wave will transition over next weekend. There's a total of eight waves, so we expect to complete the transition in the early fourth quarter of 2022.

Three waves of clients over to our platform. The fourth wave will transition over next weekend. There was a total of eight waves. So we expect to complete the transition in the early fourth quarter of 2022.

But we're running we're running at or ahead of plan in terms of both asset retention client retention and revenue retention.

Speaker 3: But we're running at or ahead of plan in terms of both asset retention, client retention and revenue retention.

Just a follow up so in terms of the waves that you mentioned I would assume that you're kind of halfway there is that right. So.

Speaker 3: Just a follow-up, so in terms of the wave that you mentioned, I would assume that you're kind of halfway there, is that right?

Just given your comments before.

I would say, yes, many I would say, we're not halfway there halfway there in terms of the number of waves, but.

Speaker 3: given your comments before? No, I would say, yeah, Manny, I would say we're not halfway there. We're halfway there in terms of the number of waves. But as you would probably expect, we tend to start off with the smaller, less complex waves and build up.

As you would probably expect we tend to start off with the smaller less complex waves and buildup.

Towards the larger more complex waves in the latter part of the transition program.

Speaker 4: towards the larger, more complex waves in the latter part of the transition program.

Got it makes sense and then.

Switching gears.

There was some discussion.

Speaker 3: God, it makes sense. And then, just switching gears, there was some discussion in terms of the shift in mix of putting them away from fixed income into higher earning equity products. And I'm just wondering, as you kind of look at what's happening early in Q1, do you still see that trend?

In terms of the shifting mix at Putnam away from fixed income into higher earning equity products and I'm just wondering.

As you kind of look at what's happening early in Q1 do you still see that trend.

What do you expect going forward and what are the implications for <unk>.

Performance at Putnam, given that shift that you're seeing.

Speaker 3: what you expect going forward and what are the implications for uh... performance uh... at putnam given that shift in your

So I'll start off with that one Randy and then im going to turn it to Bob So.

And in my opening comments, we're really pleased with Putnam's fund performance for its clients.

Speaker 2: So, I'll start off with that one, Manny, and then I'm going to turn it to Bob. So, as I outlined in my opening comments, we're really pleased with Putnam's fun performance for its clients.

And you know you'll see that in the Morningstar ratings issue that in the Lipper results and that manifests itself, obviously an attractive.

Speaker 2: uh... and you know you you see that in the morning star ratings you see that in the grand liver uh... results and that manifest itself obviously in the attractive fun uh... declines and what we've seen this you know uh... strength in that and equity flows and i think that's an industry phenomenon but in particular i think part of it is experiencing that and i'll let bob speak to sort of uh... his outlook

Clients and what we've seen is.

Strength in the equity flows and I think that's an industry phenomenon, but in particular I think putnam as it is experiencing that and I'll, let Bob speak to sort of his outlook Bob.

Yeah, I think when you look at 2021, we did have positive equity flows in all channels.

Speaker 5: Yeah, I think when you look at 2021, we did have positive equity flows and all.

And as Paul said it was due to performance we have.

25, okay great.

Speaker 5: And as Paul said, it was due to performance. We have 25, 26 four and five-star funds, and a large majority of the five-star funds are in the equi side. So thus far this year, again, in all channels, even though we're.

26, four and five star funds.

The majority a large majority of the five star funds are in the equity side. So.

Thus far this year again in all channels, even though were.

In early February we do have positive flows in.

Equities, so that has continued.

Speaker 5: In early February , we do have positive flows and also some equities, so that has continued.

Okay. Thank you very much.

Thanks Bonnie.

Our next question comes from Gabrielle Duchaine of National Bank Financial. Please go ahead.

Speaker 1: Our next question comes from Gabrielle Duchesne of National Bank Financial. Please go ahead.

Good afternoon, I'm going to ask this in a layman's way, but I know the yield enhancement numbers.

Speaker 2: Good afternoon. I'm going to ask this in a, you know, layman's way, but I know the yield enhancement numbers.

There are a handful that are found to lehman, but.

100, and some odd million.

Speaker 2: That doesn't sound too layman, but a hundred and some odd million, that's a typical figure for you. What would that number look like under IFRS 17?

Our typical figure for you what would that number look like under Ias 17.

Gabriel it's one that I will definitely pass onto Gary I think it's a bit more complex.

Speaker 2: That, Gabrielle, is one that I will definitely pass on to Gary. I think it's a bit more complex. A lot of it will depend on the geography and nature, but I'll let Gary provide you with some context.

Lot of it will depend on the geography in nature, but I'll, let Gary provide you with some context.

Yeah.

Thanks, Paul so.

The short answer is don't know exactly what it looked like.

Speaker 3: Yeah, thanks Paul. So, the short answer is, I don't know exactly what it will look like, and the reason I say that, Gabriel, is that, as

And the reason I say that.

Gabriel is that as.

Depending on the type of approach you're used to discounting your liabilities. This.

Speaker 3: Depending on the type of approach you use to discounting your liabilities, IFRS 17 speak it's top-down or bottom-up, you'll get a different treatment and we'll have different approaches across our various portfolios. I think at a high level we'll see it reduce, that we would expect to see, but we wouldn't expect to see the impact. It won't be called yield enhancement, but the same type of...

<unk> 17 speak it's top down or bottom up you, you'll get a different treatment and will have different approaches across our various portfolios. So I think at a high level, we will see it reduce our that that we would expect to see but we wouldn't expect to see a see the impact that won't be called yield enhancement, but the same type.

Of.

You impact would happen right.

The the way the U.

Any asset trading will flow through discount rate, so you'll see a number it would be somewhere in between these type of typical numbers you're right. This is a this is in our sort of typical range you'd likely see something in between the two it won't go away completely but it will certainly diminish in some portfolios because the way were going to discount liabilities hopefully that helped as well.

Speaker 3: your impact would happen just by the way any asset trading will flow through discount rates. So you'll see a number, it will be somewhere in between these type of typical numbers. You're right, this is in our sort of typical range. You'd likely see something in between the two. It won't go away completely, but it will certainly diminish in some portfolios because the way we're going to discount liabilities. Hopefully that helps. Well, in between the two ways, something like now and in between what?

And between the two why he said something like now in between what the.

So I'll just say in between zero and and where we are today. So it doesn't go away completely but it will reduce.

Speaker 3: So I'm just saying, in between zero and where we are today. So it doesn't go away completely, but it will reduce.

Got it.

Okay.

Yes.

Point I'd make is if you look at the trajectory of our business and sort of where our growth is right now you are seeing.

Speaker 2: The other point I'd make is if you look at the trajectory of our business and sort of where our growth is right now, you're seeing very strong growth in obviously our group retirement and a lot of our wealth management businesses.

Strong growth in our obviously, our group retirement and a lot of our wealth management businesses. So we're seeing a shift in our mix to businesses, where yield enhancement hasn't historically featured and so obviously, there's sort of no quote unquote change on change there that would be impacted so as the business shifts into as we're seeing.

Speaker 2: so we're seeing a shift in our mix to businesses where yield enhancement hasn't historically featured and and so obviously there's sort of no quote-unquote change on change there that would be impacted so you know as business shifts into as we're seeing the high growth and empowerment in our wealth management businesses

The high growth in empower and our wealth management businesses.

Constructive yielding harmony.

Enhancement would typically not be featured a strong one.

Speaker 2: That construct of yield enhancement would typically not be as featured strongly.

We've known each other long enough you can call me Gabe by the way.

The other question.

Speaker 6: Yeah, we've known each other long enough. You can call me Gabe, by the way. The other question, the group business.

The group group business.

It's come up a lot today.

I mean, theres a lot of our stuff are happening.

Speaker 6: It's come up a lot today and in the past. I mean, there's a lot of, uh, stuff, uh, you know, happening in that business or in society or.

Happening in that business or in society or.

More broadly.

The outlook of that business I'm just.

Wondering how you view the lay of the land land in terms of actions you've taken to re price the book, which may have predated COVID-19 .

Speaker 6: more broadly that affects the outlook of that business.

Speaker 6: wondering how you view the lay of the land in terms of actions you've taken to reprice the book, which may have predated COVID.

And.

Businesses that are probably looking to extend coverage or buying more probably more coverage of the competitive action for talent and then.

Speaker 6: and businesses that are probably looking to extend coverage or buy more coverage as a competitive action for talent. And then

The.

Once rates and duration of claim issues and you know our cost of medical care.

Speaker 6: the, you know, incidence rates and duration of claim issues and, you know, cost of medical care. And on the Hedwin side, those three in particular, medical care and cost of claim, and, sorry.

On the headwind side, those three particular medical care and cost of claim and Oh sorry.

The duration of claim and incidence rates are there any better.

Percolating that we should be aware of as we look towards the full year outlook here.

Speaker 6: duration of claim and incidence rates. Are there any that are...

Speaker 6: kind of percolating that we should be aware of as we look towards the full year outlook here.

So gabe.

They're.

Very good.

I would say theres sort of asked two questions there.

Speaker 2: So, Gabe, and see I said it right there, I would say there's, you sort of asked two questions there. What is the upside and why do we like the business and then I think you're asking about downside sort of more technically as we think about claims incidents and claims termination rates and the like. Let me talk at a high level about our views on the group business and I think it actually extends beyond group benefits and into group retirement, especially when you talk about the competition for

On the upside.

Why do we like the business and then I think you are asking about downside sort of more technically as we think about claims incidence and claims termination recently, let me talk at a high level about our views on the group business at all I think it actually extends beyond group benefits, an intergroup retirement, especially when you talk about the competition.

For talent and the importance of having high quality benefits for People's financial security or health security. So fundamentally that is.

Speaker 2: and the importance of having high quality benefits for people's, you know, financial security or health security. So fundamentally that is, we think, is a critically important part of why this is a very attractive business for us. So I'd say that if you think about the fundamentals, the fundamentals of people saving for retirement, the fundamentals of people wanting to have benefits.

When you think is a critically important part of why this is a very attractive business for us. So I would say is if you think about the fundamental the fundamentals of our people saving for retirement the fundamentals of people wanting to have benefits that when we look at those businesses.

Through a broader loans when we say these are business is actually where we have millions of client relationships and a lot of the things that we're traditionally delivered via face to face advice or over the phone or an employee meetings on the lake are moving to digital and when you take the power of a personal capital.

Speaker 2: Then we look at those businesses through a broader lens and we say, these are businesses actually where we have millions of client relationships.

Speaker 2: And a lot of the things that were traditionally delivered via, you know, face-to-face advice or over the phone or in employee meetings and the like, are moving to digital. And when you take the power of a personal capital type platform, or you take the power of our plan member as customer digital solutions in Canada, those relationships...

For them or you take the power of our planned remember as customer and digital solutions in Canada, those relationships the value of those relationships.

Can go a lot farther in terms of actually building.

Speaker 2: the value of those relationships uh... can go a lot farther in terms of actually building uh... an actual retail client based through digital means i think it's very powerful we look at that business and the and uh... we do think people will be raising the bar for benefits from the standpoint of uh... you know competing for talent and i think that goes to us making sure that we're focused there

Actual retail client base through digital means and so I think it's a very powerful so when you look at that business and we do think people will be raising the bar for benefits from the standpoint of <unk>.

Competing for talent and I think that goes to us making sure that we're focused there.

And so I think that's really important for us.

The second part in terms of our views on claims management I mean, our performance has been very strong through the period and I think that goes I know you just talked about it at a general level goes back to our discipline in pricing our discipline in underwriting and actually our discipline and claims management, making sure that we're really taking care of the claimant and taking care of the.

Speaker 2: And so I think that's really important for us.

Speaker 2: the second part in terms of you know our views on claims management i mean our performance has been very strong through the period and i think that goes back to just talk about it at a general level goes back to our discipline

Speaker 2: in pricing our discipline and underwriting and actually our discipline in claims management making sure that we're really taking care of the claimant and taking care of the company and i think uh... you know it it's really been a strength of ours and this applies not just to the canadian book of business it's the UK you know um... life and income benefit business it's the irish life uh... irish life business on the group side but i'll let jeff mccown provide a bit of context on his perspective on the business and in particular his perspective on you know our performance right now and and outlook for things like uh... you know claims incidents and the like

A company and I think you know, it's really been a strength of ours and this applies not just to the Canadian book of business, It's the U K.

LIFO income benefit business since the Irish life.

Average life business on the group side, but I'll, let Jeff Macau and provide a bit of context.

On his perspective on the business and in particular his perspective on our performance right now.

Look for things like claims.

Claims incidents in the late <unk>.

Thanks, Paul and I'm going to go with Gabe Gabriel.

Speaker 7: Joe?

Maybe just to build on the call points, if I could.

Speaker 6: Thanks, Paul. And I'm going to go with Gabe, Gabriel.

Speaker 6: Maybe just to build on Paul's points, if I could, Gabe.

<unk> talked about our expansion with members across Canada, and so the claim secure addition.

Speaker 6: You know, Paul talked about our expansion with members across Canada, and so the Claims Secure addition brings 1.2 million Canadians for us to tell our story to. In addition to why we're quite bullish on this market is, it opens up the third-party admin market or the third-party payer market that we would have a relatively lower share in the Canadian market.

Brings one to $1 2 million Canadians for us too.

Tell our story to in addition to why we are quite bullish on this market as it opens up the third party admin market of the third party payer market that we would have a relatively lower share in the Canadian market and so there's lots of growth there for us. So that tells us that we expect to have.

Speaker 6: And so there's lots of growth there for us. So that tells us that we expect to have.

Large growth in that and I can already say.

Claim secured has come on board that we've been successful in a number of cross sell opportunities and there's many more. So this is opening a lot of room, we touched on the government of Canada brings us $1 5 million Canadian that was important for us to tell our story. The other thing is why we are quite bullish on this business is that.

Speaker 6: a large growth in that and I can already say in the since Claim Secure has come on board that we've been successful in

Speaker 6: a number of cross-sale opportunities and there's many more, so this is opening a lot of room. We touched on the Government of Canada that brings us 1.5 million Canadians. That was important for us to tell our story. The other thing is why we're quite bullish on this business is that

The relationship between the group retirement market in the group life and health market as one Canada life.

Speaker 6: The relationship between the group retirement market and the group life and health market has won Canada life. We've moved very aggressively to a single sort of entry point and the opportunities between those businesses is really significant and that's one of the reasons we had record sales.

<unk> very aggressively to a single sort of entry point and the opportunities between those businesses is really significant and thats. One of the reasons, we had record record sales in 'twenty, one in that business and quickly I'll just conclude both comments on disciplined management I mean, this has been a hallmark of Canada life for years and so from a <unk>.

Speaker 6: 21 in that business. And quickly, I'll just conclude Paul's comments on discipline management. I mean, this has been a hallmark of Canada life for years. And so from a disability perspective, we know this business well, we manage it well. We placed adjustments in pricing well before COVID came through. We continue to monitor that aggressively. And so, you know, we really know this business and have been putting through the appropriate.

<unk> ability perspective, we know this business, while we manage it well.

We placed adjustments.

Adjustments in pricing well before Covid came through we continue to monitor that aggressively and so we really know this business and have been putting through the appropriate.

Rate adjustments to get the appropriate margins as we go through.

Alright.

Speaker 6: rate adjustments to get the appropriate margins as we go through.

Just a.

Simplify it but the you.

Although the morbidity trend and kind of I think tied mostly to the group has been positive or neutral over the past few quarters is that do you think that's sustainable for the rest of the year or the two that we have ahead of us.

Speaker 6: And just to, you know, simplify it, but the, you know, the morbidity trend, and I think tied mostly to the group, has been, you know, a bit positive and neutral over the past few quarters. Do you think that's sustainable for the rest of the year, or the 2022 that we have ahead of us?

Well I would say youre right Gabe that we had kind of a life have enjoyed very good morbidity.

Speaker 6: Well, I would say you're right, Gabe, that we at Canada Life have enjoyed very good morbidity and mortality, I might add. We enjoyed a good year in 21. This business is a, it takes about a year to get through the pricing, and so that we did put pricing adjustments through in 21, so we're fully loaded as we enter into 22, and that should provide us good safety as we move through 22.

And mortality I might add.

We enjoyed a good year in 'twenty one.

This business is a.

It takes about a year to get through the pricing and so that we did put pricing adjustments through in 'twenty. One. So we're fully loaded as we enter into 'twenty, two and that should provide us a good safety as we move through 'twenty two.

Great.

Are you okay on that one because I wanted to come back.

Speaker 2: Can I, are you okay on that one? Because I wanted to come back to the yield announcement point. Just one of the points, and Gary just sent me a note, I wanted to put a fine point.

0.1 of the points Gary.

I wanted to put a fine point on it when you think about yield enhancement.

There is no change in the economics of the business. What we're talking about is the we're just talking about the incidence of when earnings occur so rather than the front ending or some front timing that you would have in terms of yield enhancement, what youre going to see that is spread out over.

Speaker 2: When you think about yield enhancement, there's no change in the economics of the business.

Speaker 2: What we're talking about is the, we're just talking about the incidence of when earnings occur. So, rather than the front-ending or some front-ending that you would have in terms of yield enhancement, what you're going to see that is spread out, you know, over the broader life of the contract. So, as we think about value creation and taking steps to...

The broader life of the contract so as we think about value creation, and taking steps to enhance yield to try to drive either stronger pricing or drive stronger returns. It's all there. It's just a question of incidents. So I don't want you to go away thinking that there is a determination of value creation the value is there.

Speaker 2: enhance yield to drive either, you know, stronger pricing or drive stronger returns. It's all there. It's just a question of the incidence.

Speaker 2: So, I don't want you to go away thinking that there is a diminution of value creation. The value is there.

It's just part of the learning process I appreciate all the answers.

Speaker 6: It's just part of the learning process. I appreciate all the answers. Thanks.

Our next question comes from Tom Mackinnon of BMO capital. Please go ahead.

Speaker 1: Our next question comes from Tom McKinnon of BMO Capital, please go ahead.

Yeah, Thanks, very much and good afternoon.

Gary.

Go to slide 13.

Speaker 8: Yeah, thanks very much, and good afternoon. Gary, maybe if we go to slide...

You kind of stable tax items mentioned in there.

If you can may be with each one of those are.

Speaker 8: kind of favorable tax items mentioned in there. If you can maybe highlight what each one of those are.

Putnam and in Europe and in capital.

And how much they were.

Speaker 8: Putnam, and then in Europe , and in Capital and Risk Solutions, and how much they were.

And I have follow up.

Tom Let me just start off.

Well certainly go to that detail and Gary can probably can take you through some of it but it might be worthwhile to get into a one on one if you want to get into.

Speaker 2: uh... you know that the problem is that often uh... what what will certainly go to that detail and they can probably can take it to some of it but you know it might be worthwhile to get into a one-on-one if you want to get into a lot of detail

Lot of detail suffice it to say.

This quarter.

A tax.

Speaker 2: suffice it to say uh... you know this quarter a uh... tax you know uh... a tax rate as gary outlined in that not nine percentage range compared to thirteen percent a year ago

<unk> trend as Gary outlined in that 9% ish range compared to 13% a year ago. So it was a number of onetime items and we continue to view that that low teens rate is kind of what the normalized rate as we actually do see that normalized rate likely grew.

Speaker 2: So there's a number of one-time items, and we continue to view that that low teens rate is kind of what the normalized rate is. We actually do see that normalized rate likely growing over time, because a lot of our growth, as you'll have noted, is in the U.S. jurisdiction, where there's a slightly higher tax rate. So right now, we still are quite confident that, you know, our view of a low teens tax rate is sort of where we're at right now, probably a little bit of lift as we look forward. But Gary can provide a little bit of context around the details.

Growing over time, because a lot of our growth.

Of note. It is in the U S jurisdiction, where there's a slightly higher tax rate. So right. Now we still are quite confident that our view of a low teens tax rate is sort of where we're at right now probably a little bit of lift as we look forward but.

<unk> can provide a little bit of context around the details.

Sure.

Sure Yeah I think.

Tom as Paul said, we can go into further details offline if need be but at.

Speaker 3: Perry? Sure, yeah.

At a high level.

Speaker 3: common and as Paul said we can go into further details offline if need be but at a high level.

There's a lot of there's a lot of moving parts of the year end tax true ups as you can imagine.

Speaker 3: There's a lot of moving parts to the year-end tax drops, as you can imagine. In terms of the ones we're calling out, ballparking for, say, Europe and capital risk solutions is probably in the $20 million for each of those range, and actually the overall for life goes probably in that sort of range.

In terms of the the ones who are calling out.

Sure.

Bowl parking for say Europe , and capital resolution is probably in the $20 million for each of those range and actually the overall for LIFO is probably in that sort of <unk>.

Call it around 40 million ballpark for the overall the amount at local level, what you saw in <unk>.

Speaker 3: probably call around $40 million ballpark for the overall amount at LIVECO level. What you saw in the U.S., Putnam picked up I think just over $20 million, but there was an offset, there was negative items in the corporate section there, so I think the net in the U.S. was actually very small, and Canada I think was a small going slightly the other way. They had a higher tax rate this year than last year.

In the U S. Putnam that picked up I think just over $20 million, but there was a there's an offset.

There was a.

Negative items in the corporate section there. So I think the net in the U S, which is exactly very small in Canada I think it was a.

Small growing slightly the other way they had a higher tax rate this year than last year. So, it's probably $40 million overall and I'd call out the 220 million bits in Europe , and reinsurance, but theres a bit of geography in the U S. And then Canada, if anything a little bit of pressure on the tax rate. So that gives you a high level.

Speaker 3: It's probably $40 million overall, and I'd call out the $220 million bids in Europe and reinsurance.

Speaker 3: There's a bit of geography in the U.S. and then Canada, if anything, a little bit of pressure on the tax rate, so that gives you a high level.

That's very helpful.

Empower.

You look quarter over quarter assets went up 5% I think participants are up.

Speaker 8: No, that's very helpful. Now, the Empower, you know, you look at...

The earnings the base earnings were down 20% quarter over quarter.

Speaker 8: were up, yet the earnings, the base earnings were down 20% quarter over quarter. You mentioned something about seasonality of expenses.

You mentioned something about seasonality of expenses.

Not sure what some of the other things were contributing to that but I'm not sure. How we should be looking at a run rate it would be <unk>.

Speaker 8: I'm not sure what some of the other things were contributing to that, but I'm not sure how we should be looking at a run rate, should it be related more to the third quarter or the fourth quarter.

Related more to the third quarter or the fourth quarter.

Help us understand that.

So Tom I'll start off there and then I'll, let Gary provide a little bit of context around the seasonality and one time items. So we launched into this.

Speaker 2: to help us understand that. Yeah. So, Tom, I'll start off there, and then I'll let Gary provide a little bit of context around the seasonality and one-time items. So, you know, we launched into this...

Obviously empower has been in strong organic growth mode. We've seen the benefits of mouse neutral coming on stream early in the year and Theres been a lumpiness as the benefits come on stream, but also the fourth quarter typically has some seasonality and things like customer mailings and the like that are quite different so.

Speaker 2: Obviously, Empower has been in strong organic growth mode. We've seen the benefits of Mass Mutual coming on stream early in the year. And there's a bit of lumpiness, you know, as the benefits come on stream. But also, the fourth quarter typically has, you know, some seasonality in it, things like customer mailings and the like that are quite different.

The reality is as we look at the trajectory.

We look at the trajectory of the business those those sort of second and third quarter results are more indicative of the way, we think about the results, but I'll, let Gary provide a little more color there.

Speaker 2: The reality is as we look at the trajectory of the business, those sort of second and third quarter results are more indicative of the way we think about the results, but I'll let Gary provide a little more color there.

Sure sure. Thanks, I actually bought you went where I was if you look at the second and third quarter, they're pretty consistent results and that's probably closer to what you see in the run rate that you mentioned, Paul the expenses and some of the onetime items that there is there is a seasonality to it and that's you've got 13 million people you've got a lot of year end package.

Speaker 3: If you look at the second and third quarter, there were pretty consistent results and that's probably close to what you see in the run rate. You mentioned, Paul, the expenses and some of the one-time items. There is a seasonality to it. You've got 13 million people, you've got a lot of year-end packages, a lot of print and postage and that adds up when you've got such a large participant base.

There's a lot of printing postage.

Jeff when you've got such a large participant base.

There were some onetime cost them.

Penalties or a break fee or a major technology contract change.

Speaker 3: The worst-in-one-time cost and penalties are a major technology contract change.

There were some true ups on the massmutual accounting for certain fees and commission so.

Speaker 3: There were some true ups on the mass mutual accounting for certain fees and commissions. And frankly of course we do true ups or variable comp at year end and as you've seen all year end powers had a fantastic year so we would have accrued something for that as well.

And frankly of course, we do our true ups or variable comp at year end and as you've seen all year empower has had a fantastic year. So we would recruit something for that as well. So you do have those those expenses and I think you can see it in the in.

In the appendix if you look at how the expenses grew a quarter over quarter youll compared to how it was running the rest of the year. So that gives you some idea of this quarter in particular.

Speaker 3: You do have those expenses and I think you can see it in the appendix if you look at how the expenses grew quarter over quarter compared to how it was running the rest of the year. So that gives you some idea of this quarter in particular.

Okay. So it sounds like it's more of a real number it's just the seasonality of the expenses.

Speaker 8: Okay, so it sounds like it's more of a real number. It's just the seasonality of your expenses are just higher in the fourth quarter. Is that fair to say?

Margins higher in the fourth quarter or is that is that fair to say.

Yes.

Some one time items.

We wouldn't have necessarily major software.

Speaker 3: Yeah, that and some one-time items. We wouldn't have necessarily major software costs on contract changes or these mass mutual accounting corrupts. That's a function of it being the first year of the transaction. So that was less the seasonality.

Costs.

Contract changes or are these.

Mass mutual accounting true ups, that's a function of it being the first year of the transaction.

So those are that was less of the seasonality.

Okay.

And the last one is I think you mentioned $28 million and the other experience gains.

I don't remember it was but.

Speaker 8: you mentioned $28 million in the other experience gain. I don't remember what it was, but maybe it's more of a one-time. I think it's on page...

Is it more of a one time I think it's on page.

17 of your slides.

More of a one time or how should we be thinking about those things going forward.

Speaker 8: 17 of your slides. Is that more of a one-timer? How should we be thinking about those things going forward?

Yes.

Yes.

If you don't mind, Paul I'll, just take that one.

Those.

Those are typically just a collection and they they would typically be a onetime items. Some of them are irregular he might have policyholder behavior that it fluctuates around a bit.

Speaker 3: Yeah, I'll, if you don't mind, Paul, just take that one.

Speaker 3: Those are typically just a collection and they would typically be a one-time item. Some of them are regular, you might have a pulse sort of behavior that fluctuates around a bit. These ones were a net positive, but that really is just a collection of odds and ends that aren't notable enough or of wide enough interest, so I would tend to think of those as one-time.

These ones are a net positive but that that really is.

Just a collection of our bonds and ends that don't aren't notable enough or are winding up interest. So I would tend to think of those as onetime.

In each individual one there could be a variety, but the actual other could be plus or minus but it's typically a smaller number.

Speaker 3: In each individual one, there could be a variety, but the actual other could be plus or minus, but it's typically a smaller number.

And sorry, just to squeeze one last quick one.

Glad you picked up is that an Asl plan like is there any capital really needed for that or is that just strictly seeking income.

Speaker 8: Oh, and sorry, just to squeeze one last quick one, the government plan you picked up, is that an ASO plan? Like, is there any capital really needed for that, or is that just strictly CNB?

One is to just just O&M described the nature of that plant.

Speaker 2: That one is to Jeff. Jeff, do you want to describe the nature of that plan?

It's a it's a 12 year contract.

With approximately I think its something.

Speaker 6: It's a 12-year contract with approximately, I think it's something close to $26 or $28 billion on a fee basis, ASO fees, we collect fees on that, and July 1, 2023.

Close to 26 or $8 billion.

On a fee basis, ASO fees, we collect fees on that and and.

July one 2023.

Is there any way you can tell us what you think the additional fees would be associated with this.

Tom I think it would be early it's early days for us to do that I mean, we're working through August .

Speaker 8: Is there any way you can tell us what you think the additional fees would be associated with?

Speaker 2: tom uh... i think the early early days for us to to do that i mean we're working through you know we obviously when you have a uh... piece of business like this you do it to to make sure that it's going to be economically attractive over the long uh... over the long term nearly going we gotta bring it on on stream but uh... you know we're going to be working hard through this period with increased automation digitization so at the end of the day we view that as something that will have potential but then growing potential the more we automate

Obviously, when you're out a piece of business like this you do it to make sure that it's going to be economically attractive over the long over the long term in the early going we've got to bring it on stream but.

We're going to be working hard through this period with increased automation digitization. So at the end of the day.

We view that as something that will have potential within growing potential the more we automate.

Yeah.

Awesome.

Yes that would be fair Paul.

Does that how did you win that was that competitive bid.

Speaker 6: Yeah, it is ASL and yeah, that would be fair, Paul.

Hmm.

Yes.

You described Tom there was you have sort of the <unk>.

Two key measures we cannot go into clearly we cannot tell you about.

Speaker 2: Yeah, Jeff, why don't you describe that. There's, Tom, there's sort of two key measures. We cannot go into, clearly we can't tell you about, you know, others that would have participated in the competition, but we can tell you about, you know, what are the things that are important to a large client like that, and the way we thought about it. So you really can't...

Others have participated in the competition, but we can tell you about.

One of the things that are important to a large client like that.

The way, we thought about so you really can't.

We really shouldnt get into the details of that but suffice it to say at the end of the day.

Speaker 2: we really shouldn't get into the details of that but suffice to say at the end of the day uh... service is going to be critical right

Service is going to be critical right.

So.

Jeff was there anything in there.

Yeah.

And you can disclose.

Speaker 2: so so uh... you know that there is a good that you could you can just let me know if you have

Jeff.

I think we wouldn't want to go too far of course, it was a public bid and.

We were successful and I don't think I would feel comfortable getting into some of the details.

Speaker 6: I think we wouldn't want to go too far, of course. It was a public bid and we were successful. I don't think I would feel comfortable getting into some of the details at this point, but it was very much a public bid. Delighted to win the plan. It's going to give us lots of horsepower, lots of brand recognition, and allow us to employ our strategies more broadly, whether picking up new accounts or just brand recognition and technology enhancements in the marketplace.

At this point, but it was very much a public bid.

To win the plan, that's going to give us lots of horsepower lots of brand recognition and allow us to employ our our strategies more broadly whether picking up new accounts or just brand recognition and technology enhancements in the marketplace.

Now congrats on winning that.

Plan and thanks for taking my time.

Thank you Doug.

Speaker 8: No, congrats on winning that plan and thanks for taking my time.

Our next question comes from Doug Young of Desjardins Capital markets. Please go ahead.

Speaker 1: Our next question comes from Doug Young of Desjardins Capital Markets. Please go ahead.

Yeah.

Hi, Good afternoon, just a few hopefully follow up questions here on the massmutual all of the sequential decline in earnings contribution Gerry is that the $22 million that you talked about in your prepared remarks.

Speaker 4: Hi, good afternoon. Just a few, hopefully, follow-up questions here. On the Mass Mutual, the sequential decline in earnings contribution, Gary, is that the $22 million that you talked about in your prepared remarks? That was the one-time impact? Did I catch that right or was I wrong? Yeah, Gary, you could go to that one.

That was the one time impact.

Did I catch that right or was I wrong.

Gary you can you can go to that one.

Yes.

I was just calling out the seasonal and onetime items worth about 20 million U S of and that's most of the sequential decline.

Speaker 3: Yeah, I was just calling out the seasonal and one-time items were worth about $20 million U.S. and that's most of the sequential decline.

And that seasonal that's what you described is that the breaking of the taxis or that's.

That's what I say seasonal and one time it sort of two categories.

Speaker 3: And that's seasonal, that's what you described. Like, is that the breaking of the tech fees, or what? That's what I say, seasonal and one-time. It's sort of two categories. Oh, okay. You get some seasonality in Q4, and then there were some just one-time items that ... What's the one-time item?

Can you get some seasonality in Q4, and then there were some one time items.

What is the one in the same quarter.

What is the one time item.

Can you quantify that.

Speaker 4: What's the one-time item? Well... Can you quantify that?

Okay.

So the seasonal as things that would be typical that would repeat in another.

Speaker 2: So the seasonal is things that would be typical that would repeat in another, in future quarters.

Future quarters, the business of a contingent of all one time as things like break fees on a contract or truing up on our on our incentive compensation, because we have very very strong growth and success and empower this year and then a third a third factor I think Gary outlined is that we are in the initial.

Speaker 2: the business will continue to evolve. One time is things like break fees on a contract or truing up on our incentive compensation because we had very, very strong growth and success and empower this year. And then a third factor I think Gary outlined is that we're in the initial phases of working with MassMutual on that. So we had some true ups on sort of the annual, overall annual results on some fees that are back and forth between MassMutual. So all of those things are one time in nature.

Working with massmutual enough. So we had some true ups.

On sort of the annual overall annual results on some fees that are back and forth between mass mutual so all of those things are onetime in nature.

Yeah, just I guess I'm just wondering what the dollar like how much of that $20 million was one time. So if I can kind of triangulate back to what the contribution was excluding that.

Speaker 4: Yeah, just and I get that. I'm just wondering what the dollar like how much of that 20 million was one time. So if I can kind of triangulate back to what the contribution was excluding that.

Gary do you have that.

I'd say broadly it's.

Probably half and half of those amounts.

Speaker 3: I'd say broadly, it's probably half and half of those amounts. Off the top of my head, maybe a little more on the one. No, it's probably about half and half.

That'd be my off top they had maybe a little more on the one now it's probably about half an hour.

Yes.

That doesn't have to be exactly precise but the.

And then I'm just wondering can you quantify maybe you have and maybe I haven't seen and quantify what the impact from Covid wise this quarter and I know it probably is more related to <unk> business in the reinsurance side, but just curious as if you quantified that.

Speaker 4: That doesn't have to be exactly precise. And then I'm just wondering, can you quantify, maybe you have and maybe I haven't seen it, quantify what the impact from COVID was this quarter? And I know it probably is more related to Arshil's business in the reinsurance side, but I'm just just curious as if you

Yeah, So Doug.

A high level, if you think about COVID-19 .

There is positive.

Speaker 2: Yeah, so Doug, at a high level, if you think about COVID, it's you know, there's positive and negative impacts. We've seen a real recover from COVID as the economy has grown. And we talked about sales results.

And negative impacts we have seen a real recover from COVID-19 as economies grow and we've talked about sales results of the two broad areas.

I guess shouldn't be thinking about would be.

Mortality and.

Speaker 2: But the two broad areas where the, you know, I guess you'd be thinking about would be mortality and and.

Of note in mortality.

Life mortality and maybe I'll, let garry start off at a higher level because it sort of when you think about this it's not all in <unk>.

Speaker 2: you know a new mortality and and uh... like mortality and they don't want to restart off at a high level because it's sort of when you think about this it's not all in our schools uh... uh... mandate we've got all the results of our commercial businesses

That also exists in some of our commercial businesses and then.

Perhaps I'll pass that over to <unk>.

<unk> for a bit of context on the capital and risk solutions business Gary.

Speaker 2: And then perhaps I'll pass that over to...

Speaker 2: to our offer of the context on the capital and resolutions

Sure. Thanks, Paul.

I think at the highest level I mean, we do call out in our on our slides I think it's a.

Speaker 3: Sure, thanks Paul. I think at the highest level, I mean we do call out on our slides, I think it's slide 17, where we have the additional detail and experience gains and we show in there the mortality, longevity, the morbidity, like all the health and dental disability, all of that rolled in together. And my comment there would be

Slide 17, where we are we have the additional detailed experience gains and we show in there.

The mortality longevity morbidity like called health and dental disability, all all of that rolled in together and my comment there would be.

The sum of those is basically they're all offsetting I mean, there was a very small net negative.

Speaker 3: The sum of those is basically, they're all offsetting. I mean, there's a very small net negative. And the reason I call that out is it is very difficult to say exactly what's COVID related, what's not, you know, what's a regular fluctuation. We've attributed the vast majority of these fluctuations to COVID. You can see it in extra mortality in the US life reinsurance.

And the reason I call out or is it is very difficult to say exactly what is COVID-19 related what's not what's irregular fluctuation. We've attributed the vast majority of these are these fluctuations to COVID-19 you can see it in extra mortality in the U S life reinsurance you can see it in some of the.

Some of the favorable.

Morbidity, we might see from less utilization of certain health care services and embarrassed.

Speaker 3: You can see it on some of the favorable morbidity we might see from less utilization of certain healthcare services in various segments.

Segments.

And obviously some of it comes down to are things like prices. So it is tough to know exactly which is COVID-19 not but when we look at it altogether. Our sense is that we're basically balancing out across the mall, but it was it was higher in the life side I think just to give a ballpark it was probably.

Speaker 3: and obviously some of it comes down to our things on prices so it's it is

Speaker 3: Tough to know exactly which is COVID and not, but when we look at it all together, our sense is that we're basically balancing out across them all. But it was higher in the life side, I think, just to give a ballpark, it was probably.

In the 48 million and 40% to $45 million of pre tax on the life mortality side.

Speaker 3: uh... in the uh... forty a million forty to forty five million a pre-tax on the life mortality side uh... and then uh... offsetting impacts in the other areas so that gives you a bit of a bit of an idea

And then offsetting impacts in the other areas. So that gives you a bit of a bit of an idea.

Okay.

And then maybe just lastly, the expected profit growth in Europe in Crs was just lower than what I would've expected and it sounds like FX was that was a bit of a contributor.

Speaker 4: And then maybe just lastly, the expected profit growth in Europe and CRS was just lower than what I would have expected, and it sounds like FX was a bit of a contributor, but growth has been fairly strong in terms of sales. Is there something else that I'm just technically, methodically not thinking of in terms of why we wouldn't be seeing better expected profit growth in Europe and CRS?

Growth has been fairly strong in terms of sales is there something else that I'm just technically.

<unk> not thinking of in terms of why we wouldn't be seeing better expected profit growth in Europe and Crs.

Yeah, Gary I'll, let you take that one.

No I think.

Obviously, we did go through a very a.

Very good period.

Speaker 3: No, I think obviously we did go through a very good period of growth and a number of those large transactions were on the longevity side and they were in Euros and as I mentioned during the comments, the Euro was down 7% Euro a year, so those expected profits as they come off those contracts are certainly down.

Growth in a number of those.

Large transactions were on the longevity side.

And they were in euros.

As I mentioned during the comments the euro was down 7% year over year so that.

Those expected profits as they come off those contracts are certainly down.

And then.

We didn't have a lot of longevity new business in 2021, there werent as many as many transaction I mean, you also could comment more on this I think the pipeline is strong coming into 2022, but there are less deals done so we werent.

Speaker 3: And then, we didn't have a lot of longevity new business in 2021, there weren't as many transactions. I mean, you are so could comment more on this, I think the pipeline is strong coming to 2022, but there were less deals done. So we weren't...

A big book of annuity business longevity business does run off Thats the nature of it. It runs off every year, we didn't really replenish much in 2021, so again that would have a bit of a dampening impact on your on your expected profit, but still it went up notwithstanding the FX. So I think it's a it's it is good.

Speaker 3: A big book of annuity business, longevity business does run off, that's the nature of it. It runs off every year. We didn't really replenish much in 2021. So again, that have a bit of a dampening impact on your.

Speaker 3: on your expected profit but still, it went up notwithstanding the effect so I think it is good steady growth in re-insurance.

Growth in our reinsurance.

And have you given Europe in Crs expected profit growth on a constant currency basis. If you did I apologize it catch it but if you have it handy that would be helpful.

Speaker 4: And have you given Europe and CRS expected profit growth on a constant currency basis? If you did, I apologize I didn't catch it, but if you have it handy, that would be helpful.

I don't actually have it handy, but we could do a follow up if that helps okay.

Thank you very much I appreciate it. Thank you thanks, Doug.

Speaker 3: I don't actually have it handy, but we could do a follow-up if that helps.

Speaker 4: Thank you very much. I appreciate it. Thank you. Thanks, Doug.

Our next question comes from Paul Holden of CIBC. Please go ahead.

Speaker 1: Our next question comes from Paul Holden of CIBC. Please go ahead. Thanks. Good afternoon. A few questions for you.

Thanks, Good afternoon, a few questions for you.

First related to empower and the competitive pricing environment in that market.

Know that over the years, it's been a fairly competitive market just wondering with all the consolidation that's taken place, including empower has a consolidator has that settled down.

At all.

Does price become more stable than.

Put another way.

Good good question, Paul and Thats, one that I can definitely speak to us.

Sure.

Speaker 2: Good question, Paul, and that's one that Ed can definitely speak to, Ed.

Thank you Paul.

The market remains very price competitive however, you have firms like us and others that.

Speaker 4: Thank you, Paul. I'd say the market remains very price competitive. However, you have firms like us and others that

<unk> invested a lot in the infrastructure and our value proposition and as such.

Speaker 4: have invested a lot in the infrastructure and in our value proposition and as such.

We can and have been able to command a premium in the market.

And continue that and obviously, we're continuing to grow the business organically at two to three times the rate of the market.

Speaker 4: You know, we can and have been able to command a premium in the market and, you know, and, and continue to, and obviously we're continuing to grow the business organically at two to three times the rate of the market.

As measured by net participant growth.

<unk>.

I don't know if its a leveling off yet per se, but there's definitely less choice in the market and I think for a premier provider like us it puts us in a very good position.

Speaker 4: as measured by net participant growth. So I don't know if it's a leveling off yet per se, but there's definitely less choice in the market. And I think for a premier provider like us, it puts us in a very good position.

To capture the economics and the value for the service that we're providing.

Speaker 4: to capture the economics and the value for the service that we're providing.

Thank you for that.

Second question is.

Two.

Canada individual insurance sales, so they were up 3% year over year, but if I look at the.

Two competitors that also reported results their growth rates were much higher so I'm just wondering if you have any color there.

Do you think gross differential is related to any differences in product mix or if there was anything going on in the distribution side that might explain some of the difference as well.

Okay.

Paul I'm going to pass that one to Jeff, but suffice it to say.

We're always very much focused on balancing trying to has achieved strong sales growth broadening the customer base, but also really good disciplined about making sure that we're participating in the parts of the market and in the product areas, where it's going to be quote unquote win win win win for us because it is good economic outcomes good for <unk>.

Speaker 2: Paul, I'm going to pass that one to Jeff, but suffice it to say, we're always very much focused on balancing, you know, trying to achieve strong sales growth, broadening the customer base, but also really good discipline about making sure that we're participating in the parts of the market and in the product areas.

Speaker 2: where it's going to be quote-unquote win-win-win. Win for us, you know, because it's good economic outcomes, good for the customer because we've got strong products, and good for the sales force because we're you know giving them products that we're fully committed to. So you know as we look at the year, we actually executed on our plan as we uh... we were happy with the results of our plan, and Jeff can provide a little bit more color relative to you know what was behind that growth rate. Jeff?

The customer because we've got strong products and good for the Salesforce, because we're giving them products that we are fully committed to so.

We look at the Euro we actually executed on our plan as we.

We were happy with the results of our plant and Jeff can provide a little bit more color relative to.

What was behind that growth rate.

Yes, Thanks Paul.

So it's a good call out I mean, we did.

21, ending quarter overall.

Speaker 6: So it's a good call out, I mean we did 21 and in quarter overall was an exceptional sales year for us at Canada Life.

It was an exceptional sales year for us in Canada life.

<unk>.

On life insurance, and specifically as you called out the 3%.

We look upon this business on the long term, so we really want to strike a nice balance between the price discipline.

Speaker 6: on on life insurance in specifically as you called out the three percent

Speaker 6: You know, we look upon this business on the long term, so we really want to strike a nice balance between the price discipline, risk selection, market share, sales volume, and so in year and in quarter, I mean, we had a strong year in our flagship product in participating life insurance.

Risk selection market share sales volume in and so.

In in year end and quarter I mean, we had a strong year.

Our flagship product in participating life insurance, we did take action in some of our other products on a pricing basis to look at this on a longer term basis. So.

Speaker 6: We did take action in some of our other products on a pricing basis to look at this on a longer term basis. Our reach into distribution is strong. We had strong growth year over year in all of our channels.

Our reach into distribution is strong we had strong growth year over year in the in all of our channels.

I would say that.

On the term side in UL side, we took some pricing actions or things on the long term, we were pleased with our with our partner.

Speaker 6: On the term side and UL side, we took some pricing action to think on the long term. We were pleased with our par sales, which were higher than 3%, and we're looking for growth in 2022 in this line. Great. And then one last question for me related to capital.

Sales, which were higher than 3% and we're looking for growth.

And 22 in this line.

Okay, Great and then one last question for me.

<unk> to capital and the interest rate scenario switch. So have you disclosed you can add roughly one point to my cat each of the next five quarters.

And then my estimates would suggest you're going to add close to another one point from regular organic capital generation. So let's call. It 10 points being added to like that over the next year and a half.

How do you think about that additional capital flexibility.

Gain now sort of what are the priorities.

Do you think about that like do you have to keep a question.

The interest rate scenarios, which goes the other direction again.

Do you get more aggressive with DRAM levering on the acquisitions, you've done and just broad thoughts on how you are thinking about that capital flexibility.

I'll start off with that one Paul so so and you are correct.

Those would be the what we'll call them the capital strengthening.

Speaker 2: Yeah, I'll start off with that one, Paul. So, so you're correct. Those would be the, you know, we'll call them the capital strengthening. And I'd say that first and foremost, I'd say, as we, you know, build up more firepower, I think deleveraging is for sure a priority for us. I think deleveraging gives us a lot of flexibility and freedom as we think about next steps on growth. So, you know, the

First and foremost I'd say.

<unk>.

Buildup more firepower I think deleveraging is for sure a priority for US I think deleveraging gives us a lot of flexibility and freedom as we think about.

Next steps on growth so.

So thats kind of number one that's number one on our mind.

When do we get more and more aggressive.

Speaker 2: So that's kind of number one, that's number one on our mind. You know, would we get more aggressive or less aggressive? We're not actually that concerned about a scenario switch. You know, the steps we've taken we think are pretty solid. So we'll look at that capital as a source of strength ultimately to be, you know, used in an effective way. As I said, first and foremost, deleveraging, but after that, it's about opportunity. And that's the mindset we've got.

Or less aggressive.

We're not actually that concerned about the scenario switch.

The steps we've taken we think are pretty solid.

Well look at that capital as a source of strength ultimately to be used in an effective way as I said first and foremost deleveraging, but after that it's about opportunity and thats. The mindset, we have got.

Thank you that's helpful. That's it for me.

Our next question comes from Nigel D'souza of Veritas investment Research. Please go ahead.

Speaker 1: Our next question comes from Nigel D'Souza of Veritas Investment Research. Please go ahead.

Thank you good afternoon, I actually had a follow up question on the <unk>.

Interest rate scenario impact of light cat.

Speaker 4: Thank you, good afternoon. I actually had a follow-up question on the interest rate scenario impact of LICAS.

Can you give us some color on what would actually just even hypothetically drive the interest rate scenario switch in and if that isn't likely to that should we interpret it as.

Speaker 4: you give us some color on what would actually just even hypothetically drive a interest rate scenario switch? And if that isn't likely, should we interpret it as

The sensitivity like at higher rates, which I think is three percentage points for 50 basis points parallel increase should we just interpret it as.

Speaker 4: The sensitivity of LIHCAP from higher rates, which I think is 3 percentage points for 50 basis points, parallel increase, should we just interpret it as that capital benefit offsetting what could be rising long-term yields over the coming months?

That capital benefit offsetting what could be a rising long term yields over the coming months.

Ill, let Gary answer that one just to make sure that we've got the geography of the numbers there right Gary.

Speaker 2: I'll let Gary answer that one, just to make sure that, you know, we've got the geography of the numbers there right, Gary.

Yes.

You're actually reading that correctly.

Yeah.

Speaker 3: Yeah, you are, you're actually reading that correctly that, you know, the.

Yes.

If you do indeed see a rising a rising interest environment I think we put the sensitivity in our in our materials, that's where you've got the three points from the $50 price.

Speaker 3: If you do indeed see a rising interest environment, I think we put the sensitivity in our materials. That's where you've got the three points from the 50 BIP rise. So yeah, you'd see that. In terms of scenarios, which it would take, I think it would take a combination of a fairly sharp decline in rates and, you know...

And that so.

So you'd see that in terms of scenarios, which.

It would take.

It would take a combination of Ah.

A fairly sharp decline in rates and yields.

No changes to our approach in.

Obviously, we can especially in our rates or they don't seem to be going down that rapidly at the moment, but obviously the world could change, but certainly our <unk> approach here.

Speaker 3: you know, changes to our ALM approach. And, you know, obviously we speculated our rates, they don't seem to be going down that rapidly at the moment, but obviously the world could change, but certainly our ALM approach, we're not planning on changing that. So as I said, don't see the scenario switch being very likely.

We're not planning on changing that so that's where I say I don't see the scenario switch being very likely and that's getting picking up a point every quarter and in addition to our regular retained earnings growth I'll certainly.

Speaker 3: and that's picking up a point every quarter in addition to our regular retained earnings growth.

It gives us some protection against just line count for the whole industry has a natural.

Speaker 3: I will certainly give us some protection against just like that for the whole industry has a natural bit of a headwind when interest rates are rising.

A bit of a headwind when interest rates are rising.

And a quick clarification on that this <unk> 17 impact this dynamic at all.

Speaker 4: And a quick clarification on that, does IFRS 17 impact this dynamic at all?

Harris to yes, sorry in terms of.

Obviously, the first thing I'd say is on iron for 17.

Industry and ourselves, but obviously is active part of this the industry are working with RSP just to make sure. There's no unintended consequences on the move to <unk>.

Speaker 3: The first thing I'd say is on IFRS 17, the industry and ourselves, which is an active part of this, the industry are working with OSFI just to make sure there's no unintended consequences on the move to IFRS 17. OSFI have indicated they are looking to keep the capital regime neutral in terms of both the level of transition and also looking at potential volatility as well.

<unk> 17, Osophy have indicated they are looking to keep the capital regime neutral.

And in terms of both the <unk>.

<unk> transitioned and also looking at potential volatility volatility as well. So I think there's nothing directly tied to <unk> 17 and <unk>.

Speaker 3: I think there's nothing directly tied to IFRS 17 and AFS.

It's really.

Obviously visa and the impacts will be depending on where obviously you finalize it but certainly also be looking to keep the iron for 17 is a neutral transition so I don't I would.

Speaker 3: You know, obviously the end impacts will be depending on where OSCE finalizes it, but certainly OSCE will be looking to keep IFRS 17 as a neutral transition. So I don't, I wouldn't foresee that changing the earlier narrative.

We foresee that changing the earlier narrative.

Okay. That's helpful and apologize if I missed this but any color on the specific actions you took to pick up or enhance our yield.

Speaker 4: Okay, that's helpful. And apologies if I missed this, but was any color on the specific actions you took to pick up or enhance yield and

In Canada.

Any color there on how you achieve it.

Speaker 4: Canada, any color there on how you achieved it? Gary, over to you.

Jerry over to you.

Yes.

As are we.

We have a certain I'll call it modest.

No reinvestment assumptions in our and somebody in our actuarial liabilities and what.

Speaker 3: We have a certain, I'll call it modest, reinvestment assumptions in our actual liabilities.

We used that number I mean, there's a variety of investments we would have gone into but one of the ones I think I called out in the in the speaking notes or Paul might have is.

Speaker 3: There's a variety of investments we would have gone into, but one of the ones I think I called out in the speaking notes, or Paul might have, is that we do use, on a swap basis, the equity-release mortgages are a good source of alternative assets. They have good long duration, so they're very effective at backing longer-duration liabilities.

That we do use on the swap basis. The equity release mortgages are a good source of alternative assets. They have good long duration. So there they are very effective at backing longer duration liabilities.

And they come with attractive spreads as an alternative asset class so and.

When we swap them from from Sterling into Canadian tobacco Canadian liabilities.

Speaker 3: And they come with attractive spreads as an alternative asset class, and when we swap them from sterling into Canadian, to back our Canadian liabilities.

There's benefits there as well so those have been that's probably the one I'd call out it's been a very effective.

Speaker 3: there's benefits there as well. That's probably the one I'd call out. It's been a very effective trade for us where we've picked up some value. That's one of the big contributors to Canadian yield enhancement.

Trade for Us, where we felt we picked up some value subsequent center one of the big contributors to Canadian yield enhancement.

Okay that makes sense that's it for me. Thank you.

Thanks Nigel.

Our next question comes from Darko <unk> of RBC capital markets. Please go ahead.

Speaker 1: Our next question comes from Darko Mihilic of RBC Capital Markets. Please go ahead.

Hi, Thank you I just wanted to take you back to earnings and surplus for a moment.

Just wanted to make sure I understand.

Speaker 4: Hi, thank you. I just want to take you back to Earnings and Surplus for a moment. I just want to make sure I understand.

The impact wont hit this quarter.

Ultimately what I'm looking for is a simple way to think of what a more normalized level would be I think you said there was a 14 million dollar impact.

Speaker 4: the impact that hit this quarter. And ultimately what I'm looking for is a better way to think of what a more normalized level would be. I think you said there was a $14 million impact. I think you called it a.

I think you called it a.

I was checking my notes or sometimes a scribble.

Lost formulation.

Speaker 4: I was checking my notes here. Sometimes I scribble a lot of information. Right. Okay. And, and what else there was seed capital losses. I mean, is there any way you can sort of help me walk me through that? The math behind how we got to the negative 36, or maybe you can just talk generally about what a, what a more normal run rate would be for earnings and surplus. Uh, either way, I'm just looking for like the breakdown of what, what causes it to go, um, worse than last quarter.

Right.

Oh.

But.

Global seed capital losses, I mean is there any way you can sort of help me walk me through the.

The math behind how we got to a negative 36 or maybe you can just talk generally about what a more normal run rate would be for earnings and surplus.

Either way I'm, just looking for like the breakdown of what will cause them to go.

Worse than last quarter.

Gary I'll, let you.

Take that obviously I will start out with talking about the offset to some of that.

Speaker 2: Yeah, Gary, I'll let you take that. Obviously, we'll start out with the talking about the offset to some of that in the last consolidation. So over to you, Gary.

And the last consolidations over to you Gary.

Yes.

That's I'll call. It a currently call it a quirk in the accounting regime, it's not our own are not our own making this is where depending on certain of the funds, where we have seed capital depending on our percentage of the fund we have to consolidate the entire fund and then we back it out again.

Speaker 3: Yeah, I'll kindly call it a quirk in the accounting regime, it's not our own making. This is where, depending on, in certain of the funds where we have seed capital, depending on our percentage of the fund, we have to consolidate the entire fund and then we back it out again.

We had some seed capital losses, our share we keep and then the $14 million represented.

Speaker 3: So we had some seed capital losses, our share we keep, and then the 14 million represented other losses for all the other people in the various funds that were involved.

Other losses.

Losses for all the other people in the in the various funds that were involved.

Is this just a mark to market, obviously, rather than the realized gain the vast majority is mark to market, but that just comes out of Noncontrolling interest. So that's $14 million Youre right you remember the number otherwise it would've been minus 22, and really what goes into surplus capital for us.

Speaker 3: It's just a mark to market, obviously, rather than a realized gain, the vast majority is mark to market, but that just comes out in non-controlling interest. So that's $14 million, you're right, you remember the number, otherwise it would have been a minus $22 million, and really what goes into surplus capital for us...

In addition to the visa seed capital Mark to market, but what goes in there are the largest things overall are the financing costs and that would have risen since last year, because obviously, we've pre funded some of the Prudential acquisition financing.

Speaker 3: In addition to these seed capital mark to market, but what goes in there are the largest things overall are the financing costs.

Speaker 3: And that would have risen since last year because, obviously, we've pre-funded some of the prudential acquisition financing.

So you've got acquisition costs and then you've just got the.

Other other invested assets in in surplus.

Speaker 3: So you've got acquisition costs and then you've just got the other invested assets in surplus.

We would have had.

Also going through here from time to time or when you crystallized gains in other comprehensive income so you have.

Speaker 3: We would have had also going through here from time to time are when you crystallize gains in other comprehensive income, so you crystallize some unrealized gains by trading the assets in surplus. We've talked about that in the past.

You crystallize some unrealized gains finally trading the assets in surplus we've talked about in the past we had very little this year, we've had higher amounts of that in the past.

If you look at it certainly if you look at the full year, we would have had more of that in 2020 and that typically occurs when interest rates are falling you end up getting mark to market gains on fixed income and as you trade those set of assets you can basically harvest to realize those gains and they come through the P&L. So that wasn't much of a feature in 'twenty two.

Speaker 3: We had very little this year. We've had higher amounts of that in the past. I think if you look at, certainly if you look at the full year, we would have had more of that in 2020. And that typically occurs when interest rates are falling. You end up getting mark-to-market gains on fixed income. And as you trade those assets, you can basically harvest or realize those gains and they come through the P&L.

One compared to because we have rising rates, but it was in 2020, but really it's it's.

Speaker 3: So that wasn't much of a feature in 2021 compared to because of rising rates, but it was in 2020. But really, it's the run rate income on your various surplus assets.

The run rate income on your various surplus assets.

Don't have a yield.

But it's the run rate and then the financing costs and their pre tax financing comps there. So.

Speaker 3: you know a number of them don't have a yield but it's the run rate income and then the financing cost and their pre-tax financing cost there so uh... you know those are uh...

Those are.

So overall those are often larger than as it's not unusual to have them larger than the other surplus income so something in that.

Speaker 3: those are often larger than, it's not unusual to have them larger than the other surplus income. So something in very low numbers or even negative is not that unusual. Okay. I think that helps.

Very low numbers or even negative is not that unusual.

Okay, I think that helps.

Wanted to follow up on <unk> question.

With respect to the yield enhancement.

I just wanted to make sure that I heard you correct.

Speaker 4: I just wanted to make sure that I heard you correct.

Yeah.

You were talking about the entire net investment results being lower than the yield enhancement. In fact, what you were referencing was if you do something like an equity release mortgage the net impact on the net investment result would be milder than the current yield enhancement did I hear that is that the way I should interpret what you said.

Speaker 4: you were not talking about the entire net investment result being lower than the yield enhancement. In fact, what you were referencing was if you do something like an equity-released mortgage, then that impact on the net investment result would be milder than the current yield enhancement. Did I hear that? Is that the way I should interpret what you said?

That is an excellent way, we get the same value over time, but right now a portion of it would be more recognized upfront and less later on and then the new regime youll recognize the spread more evenly over the over the life of the asset. So it is you've interpreted it correctly.

Speaker 3: That is an excellent way. We get the same value over time, but right now a portion of it would be more recognized upfront and less later on, and then the new regime, you'll recognize the spread more evenly over the life of the asset. So you've interpreted it correctly.

Okay, great. Thank you for that and then just as a follow on to that then.

I know you are running a parallel system what is it.

Speaker 4: Okay, great. Thank you for that. And then just as a follow on to that, then, I know you're running a parallel.

What is your plans kind of release of information around some of these things like.

Speaker 4: What is your planned release of information around some of these things like the investment result, earnings power, or transition?

Like the investment result earnings power transition.

<unk>.

Well I'm not I'm not thinking that it's going to be all held until Q3, and then theres going to be some massive big reveal.

Speaker 4: I'm not, I'm not, I'm not thinking that it's going to be all held.

Supporting that you'll start to release some information as we get it to us or if.

Speaker 4: until Q3, and then there's going to be some massive big reveal. I'm anticipating that you'll sort of release some information as you get it to us. Have you guys thought about that at all, or what's on your mind with respect to releasing or informing us of some of the major things with respect to IFRS 17?

Have you guys thought about that at all or what's on what's.

What's on your mind with respect to releasing or informing us of some of the major things with respect to <unk> 17.

Gary do you want to start there.

Sure Yeah, I think I believe we've had a quite a number of conversations internally about.

Speaker 3: Sure. Yeah, I think we've had quite a number of conversations internally about, you know, as we get closer, we haven't, you know, in terms of the actual parallel runs, obviously we will be running comparative quarters during 2022, but that hasn't kicked off yet. So as we

As we get closer I mean, we haven't.

In terms of the actual parallel runs obviously, we will be running a comparative quarters during 2022, but that hasn't it hasn't kicked off yet.

So as we get.

Get closer and start finalizing our policies and feel we can give them.

Better better directed at least directional information and our neighbors to look out.

Speaker 3: get closer and start finalizing our policies and feel we can give.

Speaker 3: better direction, at least directional information and areas to look at.

Whether it's.

I think people have a pretty good education on it but I think we can clarify exactly how it might apply to us and we do we don't see a big Bang approach on that we do see a.

Speaker 3: Whether it's broader, I think people have a pretty good education on it, but I think we can clarify exactly how it might apply to us. We don't see a big bang approach on that. We do see having some dialogues, some one-on-one dialogues, some disclosures on our calls that will give directional information, and that will come out through the year rather than all at once. So you're right, we aren't planning an all-at-once big bang.

Having some some dialogues some one on one dialog some some disclosures on their calls that will give a directional information and that will.

Through the year, rather than all at once so you're right. We are planning an all at once big thing.

Hello, There obviously the final published results will be that's a different matter, but at least to get so we're not looking to surprise anyone here.

Speaker 3: Although, obviously, the final published results will be, that's a different matter. But at least to give, so we're not looking to surprise anyone here.

Hi, Paul.

I'm just I'll just grouping it into sort of three buckets of concern right. The first bucket is.

Speaker 4: OK, and I and I'm just I'm just grouping it into sort of three buckets of concern, right? The first bucket is.

Transitioning pop on balance sheet.

The second impact is anything if anything on logcap.

Speaker 4: transition impact on balance sheet. The second impact is anything, if anything on like that. And the third is earnings power. Which of those three buckets do you think you're better prepared to talk about earlier? And what do you think you have to wait until far later in the process?

Florida's earnings power, which of those three buckets do you think you're better prepared to talk about.

Earlier, and what do you think you have to wait until.

Later in the process.

I would say.

Darko.

Is that all entered woven.

They're interwoven for sure and we're still continuing as an industry to work with us on how this will play out with like a relative to volatility so.

Speaker 2: Dargo, the reality is they're all interwoven, you know, they're interwoven for sure, and we're still continuing as an industry to work with OSFI on how this will play out with LICAT relative to volatility, so it's hard to sort of...

It's hard to sort of.

Describe one of those as being locked down before the others because of that but Gary you may you might want to provide a different perspective.

Speaker 2: describe one of those is being locked down before the others because of that but there you may have you know you might want to provide a different perspective

No no I think youre right Theres certainly yeah, there's definitely can actually between the money. You'll be example, I think most people use is the contractual service margin coming out of retained earnings on transition there'll be some aspect to that and that will also feed into.

Speaker 3: No, I think you're right Bob, there's definitely a connection between the money. The example that I think most people use is the contractual service margin coming out of retained earnings on transition, there'll be some aspect to that and that will also feed into the income as it gets re-amortized.

The income as it gets re amortize back into earnings. So they are definitely connected and you are right.

Ourselves and the industry not only working with all speed, which I mentioned earlier, but also working with the rating agencies just to make sure. It's it's well handled.

Speaker 3: So they're definitely connected, and you're right, it's ourselves and the industry, not only working with OSPI, which I mentioned earlier, but also working with the rating agencies just to make sure it's well handled. If we stand back from it, the economics of the business aren't changing, it's an accounting transition.

We stand back from it the economics of the business aren't changing it.

As an accounting transition and so we need to make sure that it lands appropriately and we get to and we think that buying the right education. We can we can assist all the various stakeholders in that.

Speaker 3: and so we need to make sure that it lands appropriately and we think that by the right education we can assist all the various stakeholders in that.

Okay, great. Thank you I.

Appreciate that.

Great.

This concludes the question and answer session I would like to turn the conference back over to Mr. Mann for any closing remarks.

Speaker 1: This concludes the question and answer session. I would like to turn the conference back over to Mr. Mann for any closing remarks.

Thank you Ariel well again as always we appreciate your time and your questions and your interest and we actually really look forward to connecting with you. All in early may for our Q1 reporting and our annual meeting.

Speaker 2: Well, again, as always, we appreciate your time and your questions and your interest. And we actually really look forward to connecting with you all in early May for our Q1 reporting and our annual meeting. And from there, we wish you a healthy and great first quarter.

From there we wish you a healthy and a great first quarter.

Yes.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Speaker 1: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

[music].

No.

[music].

Speaker 9: ? ? ? ? ? ? ? ?

Yes.

[music].

Yeah.

[music].

Okay.