Q3 2023 Sun Life Financial Inc Earnings Call

November 14, 2023

Good morning, and welcome to the Sun Life Financial Q3, 2023 Conference call. My name is the Lam and I'll be your conference operator today.

All lines have been placed on mute to prevent any background noise. The wholesale the call is David Garg Senior Vice President Capital Management and Investor Relations. Please go ahead Mr. Garg.

Thank you and good morning, everyone welcome to Sun Life's earnings call for the third quarter of 2023, our earnings release and the slides for today's call are available on the Investor Relations section of our website at Sun life Dotcom.

We will begin today's call with opening remarks from Kevin strain, President and Chief Executive Officer.

Following Kevin Magic thing Executive Vice President and Chief Financial Officer will present, the financial results for the quarter.

After the prepared remarks, we will move to the question and answer portion of the call.

Other members of management are also available to answer your questions. This morning.

I draw your attention to the cautionary language regarding the use of forward looking statements and non <unk> financial measures, which form part of today's remarks.

As noted in the slides forward looking statements may be rendered inaccurate by subsequent events.

And with that I will now turn things over to Kevin.

Thanks, David and good morning, everyone turning to slide four we delivered good performance during the quarter, reflecting our diversified business mix, our focus on execution and the continued importance our clients put on health and financial security, we achieved solid underlying earnings for the quarter of $930 million maintaining steady growth.

Year to date, our positive results. This quarter are attribute to good performance in our Canadian group and wealth businesses higher fee related earnings and asset management and favorable growth in Asia individual protection business.

Sun Life, Canada achieved strong earnings this quarter up 15% from the prior year driven by strong investment results and improved disability experience sunlight Asia also had strong third quarter results driven by individual insurance sales, which were up 60% year over year.

In Hong Kong sales were four times higher than the prior year and over 50% higher than the previous quarter supported by strong performance across our business our distribution channels.

Earnings were down 19% from the prior year in our Sun life <unk> business largely due to lower dental results. This was driven by faster than expected state Medicaid redetermination associated with the end of the public health emergency as well as continued investment in the advantage dental plus business.

Our total <unk> assets under management now sit at 134 trillion up 6% over last year.

In our asset management pillar, MFS and SLC continue to perform well despite challenging market conditions SLC management fee related earnings increased 17% driven by higher AUM, reflecting strong capital raising and deployment across the platform and the AAM acquisition.

MFS maintained healthy margins net outflows were driven by industry conditions on.

On a year to date basis defined contribution sales at MFS were up 14% compared to the prior year due to strong placement on consultant adviser and record keeping platforms driving approximately $3 billion.

In net inflows.

We maintained an underlying ROE of 17, 7% this quarter approaching our medium term financial objective of 18% plus reflecting our disciplined capital management and sustained emphasis on capital light businesses. Further we maintained strong capital position with a light cat ratio of 147% for the quarter.

We also announced a <unk> <unk> increase to our quarterly commentary dividend and were active on our share buyback program, demonstrating our commitment to returning capital to shareholders.

Turning to slide five two years ago, we introduced our client impact strategy focus on six key areas, including people and culture financial discipline digital leadership distribution excellence sustainability, and our strong and trusted brand.

All areas that we believe are critical to delivering on our purpose to help clients achieve lifetime financial security and live healthier lives.

Over the past few months, we've refreshed our strategy to highlight our focus on trusted brand and our core values carrying authentic bold inspiring and impactful and we link sustainability to our culture.

Further we sharpened the emphasis of our strategic imperatives to highlight the importance of deeper client relationships thinking and acting more like a digital company on leasing our talent and culture strategy and delivering value from our past M&A.

All with the goal of realizing our ambition to be one of the best asset management and insurance companies in the world.

Turning to slide six we continue to execute on our client impact strategy as demonstrated by several key business initiatives delivered this quarter.

Improving access to care and helping clients live healthier.

Live healthier lives remains a top priority for us and we are continuing to expand our health oriented businesses in multiple markets.

This quarter, we were selected to move forward in the final stages of contract negotiations with the government of Canada to be the administrator of the Canadian dental care plan, which will provide access to dental care for Canadians in need.

Due to the plan up to 9 million additional Canadians will have access to dental care. We're excited for the opportunity to expand our role in Kansas health ecosystem and to leverage the deep knowledge from our U S. <unk> business to get a positive impact in our home market in.

In the U S. We established a preferred partnership with optimism to make specialty drugs more accessible and affordable for our stop loss members. The new program will improve how specialty drugs are administered for members, while also managing rising health care costs.

We are also continuing to make it easier for clients to access care and benefits through digital channels.

In October we completed the acquisition of dialogue, Canada, leading virtual health and wellness provider.

Dialog provides access to quality high touch care to 50000 organizations, representing nearly $2 8 million clients in Canada and internationally.

<unk> will play a key role in delivering on our purpose for clients.

As an example, we're dialogue is having an impact beyond Canada last week, we launched the sunlight held 360 app in the U S. A digital front door to health and wellness support and resources for stop loss members, including direct access to health navigator powered by Pinnacle care advisers.

The App was developed by dialog in collaboration with the U S and and offers our U S members the chance to enable access to valuable tools to manage and improve their health and.

In Asia, we increased our strategic investments in bowtie, Hong Kong's first virtual insurer with a leading market share of approximately 30% in Hong Kong direct sale channel together sunlight from both higher committed to making insurance affordable and accessible in our Asia markets.

Across the organization, we are doing more to think and act like a digital company. One example of this is that we are experimenting with several generative AI projects, including in our contact centers and we were one of the first two pilot Amazon bedrock on AWS, we are focused on opportunities to enhance our client impact through technologies like Gen AI.

We're expanding our distribution capabilities through strategic partnerships and investments to deepen our impact this quarter marked the start of our 15 year exclusive bancassurance partnership with <unk> Bank in Hong Kong, which had a strong start from a sales perspective in October SLC management entered into a strategic partnership with Scotiabank.

To distribute our alternative investment capabilities to the Canadian retail market through Scotia Global wealth management.

This partnership Canadian High net worth investors will gain access to our world class alternative investment capabilities. This strategic.

Vic partnership coupled with our recent acquisition of advisor asset management, or AAM positions us well to meet the growing demand for alternatives.

We have assets through high net worth investors.

We continue to strengthen distribution across Sun life, our affiliates and strategic partnerships to meet the investment needs of our clients.

We also continue to support the communities in which we operate in Canada, we expanded our partnership with spirit, North a national charitable organization committing $1 million in funding over three years to deliver physical health programs and address health inequities and underserved indigenous communities. We know this partnership will not only make a positive.

Impact on the physical health of youth, but also have a tremendous impact on their emotional and mental health too.

This quarter <unk> management provided another round of funding against its $110 million commitment to support 24 first nations communities with connections to the provincial electricity grid.

To improve the quality of life of the residents and eliminate thousand tonnes of annual greenhouse gas emissions.

Finally, I wanted to discuss a new role we have recently created over the past few years, we've seen the success and importance of strategic partnerships on business growth and on delivering on our purpose. We are also seeing more opportunities to leverage partnerships for all of our business lines globally.

To that end, we've created the new role of Vice chair of strategic partnerships reporting to me to leverage our global partnerships opportunities that are in front of us.

I have asked Ingo Johnson to take on this role Ingrid his wealth of experience in global relationships.

In her relationship management skills her work and supporting several Asia strategic partnerships combined with her many years of P&L leadership makes her an ideal leader to take on this executive role in.

In the interim Chris way manage it and I, along with Ingersoll Port will provide guidance and leadership to our team in Asia as I conduct a search for the new President of Asia, which I expect to announce over the next month or so.

Despite a challenging external environment, our diversified mix of business continues to perform well driven by our strategy and our people and culture.

We remained focus on our purpose and executing our strategy and this focus has served us well as we delivered positive results in the quarter with that I'll now turn the call over to manager.

Thank you Kevin and good morning, everyone. Let's begin on slide eight which provides an overview of our third quarter results. We are pleased with our business results. This quarter underlying net income of $930 million and underlying earnings per share of $1 59 were in line with prior year results, excluding the impact from the sale of the UK business.

Underlying ROE of 17, 7% with strong underpinned by our diverse and attractive businesses and wealth and asset management group of health and protection and individual protection.

<unk> asset management underlying earnings comprised 44% of total Q3 underlying earnings are up 9% from the prior year.

This was driven by higher investment income, reflecting volume growth and higher yields as well as an increase in fee related earnings and our asset management businesses.

Group Health and protection businesses comprised 27% of Q3 underlying earnings and grew 1% year over year strong revenue growth across all group businesses and better disability experience in Canada was largely offset by less favorable experience in the U S.

Individual protection earnings comprised 29% of underlying earnings and declined 3% year over year, driven by the sale of our UK business and lower investment results in the U S largely offset by strong business growth in Asia.

New business GSM of $370 million more than doubled from the prior year, reflecting strong sales results in Hong Kong International High net worth and Canada.

Total CSM grew 11% year over year, primarily driven by organic CSM growth, reflecting strong sales results.

Reported net income for the quarter was $871 million up from $111 million in the prior year.

The difference between underlying and reported earnings this quarter of $59 million largely reflects a top up and the SLC put liability dental <unk> integration costs and amortization of intangibles, partially offset by favorable market related impacts and positive akamai.

The favorable market related impact was primarily driven by interest rates, partially offset by unfavorable real estate experience.

The favorable impact from interest rates this quarter was largely due to a less inverted yield curve.

As we discussed last quarter, given our current positioning as the yield curve normalizes, we expect to see favorable industry related market impacts and reported net income.

Real estate experience reflects a relatively fought returned the current quarter versus our long term expectations of approximately 2% per quarter. We.

We are long term investments investors in real estate and continue to view this asset class as a key component of our diversified investment portfolio.

Over the last 10 years, our North American real estate portfolio has generated annualized total returns of over 9% well above our current long term expectations.

In Q3, we also conducted our annual actuarial review of assumptions and method changes.

This review resulted in a relatively neutral impact of positive $35 million to report net income and negative $43 million pretax to CSM.

Our balance sheet and capital position remains strong this provides us with financial flexibility to execute on attractive business opportunities and resilience to absorb potential impacts for volatile market conditions.

As I left like kind of a 147% declined one point from the prior quarter, our strong organic capital generation was offset by capital deployment.

Capital deployments in the quarter that to a four point decline in Leichhardt driven by net sub debt redemption of 500 million repurchase of two 8 million shares and the close of the dosing Bancshares agreement.

Holdco cash remains strong at $1 4 billion and our leverage ratio remains low at 22%. We continue to expect strong capital generation of 25% to 30% 30% of underlying earnings over the medium term after payment of common share dividends and investments in organic business growth.

Now, let's turn to our business group performance, starting on slide 10 with MFS.

MFS underlying net income of U S $207 million was down 2% from the prior year as an increase in variable compensation was partially offset by higher <unk> and increased investment income.

Reported net income of <unk> $212 million was down 12% year over year, driven by the fair value change in shares owned by MFS management.

AUM of 556 billion was down 6% from the prior quarter driven by declines in global equity markets and net outflows and pre tax net operating margin of 41% was in line with the prior year.

Retail net outflows were <unk> $3 7 billion in institutional and retail and institutional outflows were $5 6 billion driven by the continued impact of higher interest rates on active management flows MFS.

MFS continues to outperformance peers with lower relative net outflows.

Turning to slide 11, SLC management generated fee related earnings of $68 million up 17% year.

The increase reflects good capital raising and deployment of capital into fee, earning AUM over the past year as well as the <unk> acquisition.

Underlying net income of $53 million was up $25 million.

It was up from 25 million last year, driven by higher fee related earnings a lower tax rate and the non recurrence of onetime expenses.

Reported net loss at SLC management was $16 million, primarily driven by an increase in the liabilities to buy out the remaining ownership in SLC affiliates.

We undertake a detailed review of the estimate liabilities in the third quarter of the year and this quarter's results reflect a top of a $42 million.

Capital raising of $3 2 billion increased over the prior quarter driven by strong demand for public tech as SLC fixed income and for real estate debt at <unk>.

Total AUM of $219 billion was up 5% year over year. This includes $21 billion that is not yet earning fees. Once invested these assets are expected to generate annualized fee fee revenue of more than $180 million.

Turning to slide 12, Canada underlying net income of $338 million was driven by strong disability experience and higher investment income reported net.

Net income of $365 million was up year over year due to favorable market related impacts.

Wealth and asset management underlying earnings were up 14% an increase in investment income from higher volumes and yield group.

Group Health and protection underlying earnings increased 33% driven by favorable disability experience, reflecting higher margins and lower claims as we continue to realize the benefits of our management and pricing actions.

Individual protection was modestly lower year over year on lower investment contribution.

Both group and individual businesses posted strong sales growth group sales were up 4% on higher health sales, while individual sales were up 24% due to higher par lifestyles.

Turning to slide 13 U S underlying net income of USD $140 million was down 19% from last year, while our reported net income of $105 million was up 9% year over year.

Group Health and protection underlying earnings were down year over year of strong revenue growth was more than offset by less favorable experience.

Dental results. This quarter included the impact from Medicaid Redetermination and startup costs from the expansion of advantaged dental plus practices the.

The industry is anticipate the wind down of the public health emergency that was established during COVID-19 and the related impact from Medicaid Redetermination.

While the pace of rollout some redetermination has been faster than our assumptions, we expect the total impact on membership and revenues remained largely in line with our expectations.

For Q3, this led to lower volumes and higher loss and expense ratios.

Looking forward, we expect the incremental revenues from our sales pipelines to more than offset the impact from the Medicaid Redetermination process. Therefore, we expect good revenue growth in 2024.

We remain very pleased with the performance of the <unk> acquisition.

We are a leading player in the industry have strong business momentum are on track with our integration milestones and are confident that we will achieve our synergy targets.

The group benefits business had strong revenue growth driven by solid premium growth higher fee income and good margins.

This offset by less favorable morbidity experience.

S morbidity experienced in the quarter remained favorable reflecting strong group disability in stop loss results, partially offset by unfavorable dental experience.

Individual protection results declined year over year, reflecting investment contributions, reflecting lower investment contributions this quarter.

U S group sales of 179 to 179 million were down 36% year over year, reflecting lower dental Medicaid sales, which are lumpy in nature as they are linked to the timing of government contracts, partially offset by higher commercial dental sales.

Slide 14 outlines Asia's results for the quarter.

Underlying net income of $166 million was up 7% year over year on a constant currency basis.

Reported net income of $211 million was well above underlying income largely largely reflecting favorable interest related market impacts and positive akamai.

New business DSM for Asia was very strong at $238 million up 193% from the prior year.

Individual protection earnings were up 25% year over year on a constant currency basis, reflecting business growth from strong sales over the past year improved mortality improved mortality and contributions from our joint ventures.

Individual protection sales were up 57%, primarily driven by strong sales growth in Hong Kong and high net worth.

Hong Kong sales also benefited from the strong start of our bancassurance agreement with dosing.

In closing we are pleased with our results this quarter.

We maintained strong sales momentum and individual protection.

We generated very strong new business CSM and total CSM CSM is up 11% year over year.

Group results in both Canada, and the U S continued to benefit benefit from our leading capabilities and proactive management actions, which drove favorable experience.

Our asset management businesses continue to deliver good long term investment performance and are well positioned for growth as markets normalize our capital position is strong and we continue to generate peer leading Roe.

With that I'll turn the call back to David for Q&A.

Thank you mandate to help ensure that all our participants have an opportunity to ask questions. This morning, Please limit yourself to one or two questions and then re queue with any additional questions I will now ask the operator to poll the participants.

Thank you Sir.

As a reminder to ask a question you will need to press star one on your telephone.

Your question. Please press star one again.

Please standby, while we compile the Q&A roster.

And I show. Our first question comes from the line of Tom Mackinnon from BMO capital. Please go ahead.

Yes, thanks very much good morning.

First question is just with respect to the.

<unk> being better than anticipated and you had mentioned four points.

Would have heard it.

From net debt and some.

Other deployments buybacks does same thing.

So.

But like Cat was actually only down.

One point quarter over quarter. So are we to sort of infer that there could have been at least.

You mentioned strong capital generation as it looked like it's probably in the areas.

Three points or so of capital.

Leichhardt capital that was attributable to capital being generated in the quarter.

And if so it seems to be a little bit better than you were 25% to 30%.

Kind of a medium term target and I have a follow up thanks.

So good morning, Thomas mentioned.

As I mentioned my prepared remarks, our general view is that over the medium term, we expect to generate 25% to 30% of underlying earnings as organic capital and that really reflects the portfolio of attractive capital light businesses that we've built over time.

Now that amount will bump around quarter over quarter, depending on things like new levels of business and as well as market conditions and Youre correct for this for the current quarter, we had about three <unk> points or approximately $600 million of organic capital generation in the quarter and that was above our target that I mentioned previously and that was really driven by good underlying.

Earnings in group Health and protection in Asia individual protection solid asset management earnings as well as strong new business CSM. So overall, we feel very good about the capital generation this quarter.

And that $600 million before payment of the common dividend correct.

Yes.

Yeah, Okay, and then just as a follow up for Kevin I think in your prepared markets.

Remarks, Kevin you mentioned.

Changes in management with respect to Ingrid responsibilities to did I hear that correctly.

I'm just wondering.

Asia is on fire here in terms of some of your great sales in CSM growth and why make a change in management there.

You did hear correctly and Tom we increasingly see partnerships being an important part of what we're trying to do globally and creating those connections and Ingrid is well suited for that.

Asia is on fire and our intention is to keep it on fire and to keep it moving in the right direction you would've seen that I mentioned that that Chris mentioned and I will be leaning into Asia over the next few weeks as we get ready to appoint a successor to Ingrid there Chris is based in Singapore. So he is going to be looking after the <unk>.

As in countries. He also sits on our joint venture Board in China. So he is going to be leaning into China emerge. It is on our joint venture Board in India, and taking responsibility for India and in the interim and then.

I spent many years in Asia, not just running Asia, but as CFO and now as CEO and I'll be leading into our hubs business, which is Hong Kong, Singapore Bermuda.

As well as the regional office and we're working with Ingrid on that so I don't think that this is going to.

Slow us down at all in fact, it's about accelerating the company's growth.

Two global partnerships, but also in Asia.

I'm sorry, Tom just on your previous question.

The $600 million was net of dividends just to just to confirm that.

Yes, yes, that's right, yes, correct, yes.

If we wanted to look at.

Before payment.

And it would've been higher I assume correct exactly right, yes, okay. Okay, great and then sorry just.

Is that look internal or external in terms of someone too.

Takeover and.

For all of our senior roles, we do succession planning and we have a list of both internal and external candidates and as I said I expect to have announcement in the next month or so there is an advantage to Asia from an internal candidate because knowing sun life and understanding our footprint understanding Asia is an advantage, but we always look at.

Internal and external and try to attract the best candidate you should you should hear from us in about a month or so.

Okay. Thanks.

Thank you.

And I show. Our next question comes from the line of Gabriel <unk> from National Bank Financial. Please go ahead.

Hey, good morning, I wanted to revisit this.

Dental.

The redetermination of Medicaid recipients.

You said a couple of things one but.

Roll off is taking place at a faster pace than you expected it to.

As that's happening.

Causing higher expenses I guess those are processing, those or something maybe delve into a bit more of what's behind that and why you think things will maybe stabilize or get better because.

I'm just looking at the sales number.

Sure.

<unk> over $100 million over the past four quarters and then fell.

Fell off a cliff for $4 million and I'm wondering how that is expected to rebound in the next few quarters going to look like for profitability in this business.

As you can.

Sure. Good morning, It's Dan let me kind of walk through the.

The whole story of the.

Re determinations with the end of the public health emergency.

A reminder, during COVID-19.

The federal government instituted a public health emergency and one of the impacts of that was that people could not be dis enrolled from Medicaid during that period of time. The public health emergency ended on may 11th and that freed up the states who have the responsibility for enrollment to re certify a redetermination.

And who is eligible we and most of the industry had estimated about 12% of existing Medicaid membership would roll off as a result of that process over a 24 month period, our latest estimate which is consistent with industry estimate is for about 13.5% of membership to roll off so.

Close to that original but at a much faster pace roughly over a 12 or 13 months period.

In fact, we think the redetermination will be complete or largely complete by June 1st of next year.

And Yeah go ahead.

No no go ahead.

I guess my second question I'm going to hold off on that but.

Okay.

You had asked what's the outlook, especially considering sales in.

Also what the impact was on the other on loss ratios and expense ratios.

So it's worth commenting that membership has come all that just gives us a higher expense ratio not necessarily higher expenses.

There are some higher expenses in the quarter that are related to investments, we've been making in the new advantaged channel plus factor.

Practices.

But since the membership comes off or is coming off more quickly the expenses don't come off.

Quite as quickly. We also have seen some modest loss ratio pressure not surprisingly the members who come off through the redetermination tend to be lower utilizing members than members who are staying on but thats, obviously, a temporary impact.

Just in terms of looking forward a couple of important things to note here since the acquisition, which was June of last year.

Dental business has sold about $600 million in new business about $400 million of that is from seven large Medicare and Medicaid sale.

None of that premium as yet on the books that premium will come on the books in 2024.

Anticipated during the first three quarters of 2024 and that 400 million in premium is larger than the amount of premium that we expect to be associated with all of the dis enrollment. So we do have a bit of a timing challenge obviously with the dis enrollment happening more quickly.

Then the new business coming on and more quickly than.

Than anticipated so there could be some challenge around that over the next three quarters, but.

But at the end of that transition the business should actually be larger than it was and in addition, there is a very large pipeline.

Of opportunities beyond the sales that have already occurred.

Okay.

Sure.

Sort of I guess.

I guess the next few quarters Youll see maybe similar to this quarter, but then gradually maybe Q2 Q3 next year starting to go in the other direction in terms of.

Our net sales.

And.

<unk>.

Premiums.

Well in terms of premium yes. The next three quarters, we would see the other half of the membership that's associated with the Redetermination caught them off but we would also see that $400 million in new business start to come on our specialty first quarter of next year.

In addition, it's also worth noting that the third quarter of any year is the worst quarter for seasonality in other words, the highest utilization quarter largely related to his getting dental care right before school start that's been a very.

Long standing pattern.

So and there were also some one time accounting true ups in contractual true ups in the quarter.

So we would expect those things not to recur.

So from a revenue perspective, I would agree with your comment from an earnings perspective, we would hope that the.

Next quarters would be better.

Thank you.

Gabe, it's Kevin I might just add that nothing is nothing has changed our thesis on the <unk> acquisition. We knew that these the public health emergency was going to end and there was.

These people were going to be falling off of the the membership in fact as Dan said the sales is ahead. So if we think about our M&A thesis.

Nothing has changed our thought process on that and in fact, we think it could be a little bit better in the integration continues to go well, so yes, youre seeing some lumpiness in the quarter, but.

We still expect that to quest to perform as we expected it to.

Thank you.

And I show. Our next question comes from the line of mini ground <unk> from Scotiabank. Please go ahead.

Hi, good morning.

Kevin I wanted to follow up on your discussion of partnerships.

It sounds like the thesis there.

Changed a little bit for the positives and maybe sharpens I'm just.

It could provide a little more insight in terms of in terms of that whether my impression is correct and then a follow up on that.

No.

Well.

We have a lot of.

It's around the world that linked into our joint venture partners, which are significant in India, and China, our bancassurance relationships our relationships with different banks.

We also have a few opportunities that we continue to sort of push on and look at it in terms of partnerships and having a senior person who thinks globally about that we think is going to be a benefit to our to our strategy and if you think about how quickly the world is changing in different areas, having these partnerships and understanding how to leverage them.

We see being important to the strategy and Ingrid is a great fit for that as I said in my opening remarks.

And is this a signal in terms of capital deployment.

Its sick areas should we expect to see more.

They're a change that youre seeing.

I wouldn't take it as a signal of capital deployment I would take it as a signal of us leveraging.

The relationships, we have and the opportunities that we see in front of us.

Got it and then if I could just ask a question on Asia, just in terms of Hong Kong specifically.

Very strong sales and I'm just wondering if you could maybe disaggregate.

How much of that contribution from the new bank assurance deal.

How much of that is from the mcd market specifically.

Yes, many anchors on the line so I am going to let her into the Hong Kong question.

Okay. Thanks, Kevin Thanks, Randy.

We are delighted that Hong Kong, it really was a standout quarter sales strongly up fourfold and interestingly strongly outpacing the market in the first six months.

In fact, as our A&D tasteful one is externally with the voluntary ethylene with mainland China, the significant demand and strong momentum generally, but the fact that we've outpaced the market shows that we also had significant internal readiness that we have been focusing on over the last few years.

And then number that as it relates to our client value proposition that we've invested in safety as you point out around that distribution.

Emphasize all aspects of distributions that surround our broker relationships that we broadened and deepened agency teams, including focus on Mci last call I mentioned beautiful clients, saying, so that development instance that choice and we're seeing a lot of activity through that and then dusting is our fifth quarter.

Activate today exclusive bank relationship and we've seen strong sales to that which we haven't disclosed separately.

So that's on the distributions on products, we continue to be leaders in innovation and the X gene incorporating some of the.

The ESG concepts that could be relevant for <unk>.

And how important it is T J.

And then the.

It passed and most important into brand conscious Asia is investing in our brand and we expect it in August that we were in the top five of brands.

In Hong Kong, alongside a number of leading brand.

The thing about <unk> 10, we had at the <unk>.

Competitors.

So that part of the reason why we are shifting in Asia, and so to give you things pre pandemic MTI was around 10%.

Sales in Hong Kong today.

At roughly 30% so that's a three fold increase.

I might just add.

Let me just reiterate that in Hong Kong you saw combination is Ingrid mentioned of our investments in agency and growth there our investment in dosing and it's off to a great start it started selling on July the first big bulk of the sales, though were through the broker channel and that's been driven by mainland Chinese visitors, but all.

<unk> Leverages, our knowledge of the high net worth business out of Bermuda. So there is a combination of things that are happening in Hong Kong that are driving those good sales and I think that's a good thing to see that balanced growth across agency brokerage and our new bancassurance relationships. So we're seeing it in all three areas in Hong Kong the team's doing a <unk>.

Good job there.

Thanks, so much.

Thank you.

And I show. Our next question comes from the line of Mario Mendonca from TD Securities. Please go ahead.

Good morning, Dan could you help me understand the Redetermination, a little better I understand where it how it can affect your premium growth in dental and in fact that as well.

Described in your supplement in your MD&A I am not sure I understand how the redetermination.

<unk> experienced gains in this segment, which I think you offered the Redetermination was one of the factors that drove.

<unk> gains to be down.

Noticeably on a year over year basis. So help me understand that dynamic a little better the experience line in the context of the Redetermination.

Sure Good morning, and hopefully this will answer it.

The loss ratio.

Does experience some pressure from the Redetermination because the people who are being distant enrolled tend to be lower utilized or is than the people who stay on the books what happened. During COVID-19 was a lot of people who might even have had gotten other coverage through getting employment remained on the books because nobody.

It could be just enrolled so we did anticipate and we are seeing some modest loss ratio impact from the dis enrollment of those lower utilizing members and then of course there is also just fewer.

Members, which puts a little pressure on the expense ratio as well.

So.

Your.

Outlook for the next few quarters than.

And I appreciate that there are a lot of moving parts. There are plenty of things could change, but just focusing on this Medicaid redetermination you would expect the experience to be a little modest experience gains may be even some modest losses relative to what we've had in the past because of this dynamic referring to and then.

Would you then expect experience to improve again.

Sometime in 2020 for once the Redetermination has run its course.

Yes, so a couple of key factors. There one is we built some impact on the loss ratio into the experience plan. So we would only see pressure on the experienced gains if that if that impact was bigger than what we anticipated.

And so we think we've built in the right amount, but of course, we could always be a little bit off there. Another very important point is 80% of our Medicaid contracts re price where are available for renegotiation of pricing in one way or another.

During the next 12 months.

Generally the states have been very cooperative wanting to make sure that the loss ratios on this business stay within a target range. So.

So if they see that the loss ratio is moving in the wrong direction generally they've been very amenable to some renegotiation there, but in many ways the loss ratio as a short term commitment in these contracts because they do tend to get reset right. Now we don't think Thats, a big issue, but if it did become an issue.

We would have an opportunity to address that.

And so you would expect to see as this process completes and the business resets you would also expect to see the loss ratio revert to historical norms.

Thank you again.

Okay.

Thank you.

And I show. Our next question comes from the line of Doug Young from Desjardins. Please go ahead.

Hi, good morning, just add quickly.

<unk> U S. Redetermination. So just forget about that what was dental experience in the quarter was in line with expectations or was it adverse or better than expected just trying to get a sense of like excluding this noise what the underlying experience trend has been.

Yes. So there were several things that happened all at once in this quarter if.

If you compare either to the same quarter last year or even to the prior quarter.

It's about those were similar quarters. The variance is about half these factors related to the end of the public health emergency the Redetermination. So mostly revenue and then some as I've mentioned some loss ratio.

Loss ratio pressure the other half are.

Accounting and contractual true ups for.

For example, we aligned account some accounting practices.

Post acquisition.

There is the seasonality impact, but third quarter is always the worst for seasonality or the highest for utilization.

And then there were some unique investments in the advantaged demo plus business, we've been opening new practices, especially in Texas. So half of it was in those categories and half is related to the public health emergency.

Okay, and so there wasn't anything from a loss ratio perspective, it seems like it's just more.

Of course outside of the Redetermination.

Yes, I mean thats why.

Obviously some of those things are nonrecurring, which is good news.

But yes, there was nothing fundamental about the business in fact, as Kevin mentioned, we remain very optimistic about the dental business as I mentioned there is another $400 million of business sold that's yet to go on the books, a great pipeline, we're meeting or exceeding all of the integration synergy targets.

<unk>.

With the business and the performance of the business is actually really strong and we would expect it to meet or exceed our acquisition expectations.

Okay.

And then just a question on the App.

I guess, mark Kevin warranty, but I just want to understand.

And the lapse impact on reported earnings but also on the CSM.

And I guess.

Yeah.

A little bit about what drove this.

I guess the way I think of lots is always typically goes through the CSM, but there wasn't earnings hit as well this quarter and so I don't know if that was just because lapse was going through on days, where there was no CSM just hoping to understand what really drove the negative labs.

Okay.

Yes. Thanks for that question, Doug This is Kevin Morrissey.

For the.

The general model method, where we have individual wealth and protection products normally changes and lapse assumptions do go through the CSM. So thats kind of a normal place you would see them how's.

However, we did have some impacts related to a block in Asia, The international business, where we updated some of the financial risk assumptions. It was related to lapse, but it was specific to the yield curve inversion and because financial risk assumptions on the GSM.

Method.

That does go through net income so it's a bit of a unique circumstance where.

When you have these types of products normally it goes it goes through CSM is as you said.

CSN has been depleted that is not the case.

In this case, it's really specific to that financial risk assumption that was updated.

That was part of the overall lapse assumption set.

That's clear and then just on that last.

That went through the CSM and Pakistan if that were the main drivers there.

Yes, sure so on the CSM.

The lapse impact as noted was significantly negative there was really two sources and we saw.

The.

The reductions in CSM, both in Canada, and Asia in Canada, There were two product groups that were impacted.

Was term products, where renewals were lower than expected and in some of the lap support of Universal life products. The lapses were lower than expected as well. So we had some reductions CSM there from Canada and in Asia, We updated the Vietnamese.

Lapse assumption for that business, you've heard us talk about low persistency as part of our <unk> review this year.

We fully reflected the current level of experience interact update.

Despite the fact, we are taking actions to improve persistency. We felt it was prudent to fully reflect our current levels of first year lapses in the act Mark date, and so there was a reduction to the CSM in Asia from that component as well.

I appreciate the color. Thank you.

Yeah.

Thank you.

And I show. Our next question comes from the line of Paul Holden from CIBC. Your line is open.

Thank you good morning.

First question is related to the real estate experienced during the quarter.

I'm wondering if you can give us.

Sure.

An update on how much you've changed cap rate.

On average across the board.

Year to date.

And if you're expecting potentially more.

Movement going forward on real estate valuations.

Sure. Thank you for the question Paul It's Randy Brown.

So we look at several measures when looking at changing valuations on real estate. So let me start kind of overall.

With the comment that the total return on the real estate portfolio was essentially flat this quarter.

<unk> were down by less than 1%.

And largely offset by income.

So the negative that you've seen as management mentioned is the difference between the long term expected return and the actual economic for China in the quarter.

But.

Spansion also set a real estate portfolio has outperformed our long term expectations and so we remain.

Quite comfortable with the assumption.

So in terms of specifically on your question, we look at cap rates, but we'll also look at yield.

Cap rate being more of a spot measuring youll being more of a life of the property and so we've seen 25% to 50 basis point increases.

In cap rates and 50% to 75 basis point increases in yields.

In the portfolio.

So we have.

Frankly fared better than the broader market because of the very significant repositioning that I had mentioned on prior calls.

So we were well positioned for this type of market with significant overweight relative to the opportunity set and industrial.

And residential and much lower allocations to two office and retail.

Got it thanks for that and then a question for Dan.

At this time of year, you might give us a little bit of an update or your thoughts around.

The upcoming.

Pricing or negotiations for stop loss in U S group benefits.

Given it's been a pretty strong quarter for the quarter strong year for margins are you seeing increased competition or I guess really what is your view for 2024.

Pricing renegotiations.

Yes. Thank you we're in the midst of the selling season for really all our products, but especially for stop loss. This is like the playoffs and the Super Bowl rolled into one.

Most of the sales occurred during the fourth quarter and we're actually quite optimistic about the outlook, we've been holding to our pricing.

You've seen the loss ratio normalize back towards our pricing targets as we've signaled for quite a while that that would happen.

And we are seeing some intensified competition as we wish.

It seems that especially this time of year.

But our team is performing quite well and we're optimistic about sales results for the quarter, while holding to our pricing targets.

Got it okay. Thanks for that.

Thank you.

And I show. Our next question comes from the line of Nigel D'souza from Veritas investment Research. Please go ahead.

Thank you. Good morning, My first question was on the other expenses.

Online both in Canada, and Asia have noticed.

That expense line.

Meaningfully.

And there was a step up this quarter, just wondering what's driving higher expenses in both those segments.

Was there any outliers or.

Nonrecurring items, we should be aware of.

Yeah.

Yes.

Good morning, Nigel its mandate.

Overall the.

Corporate expenses other on a quarter over quarter basis are relatively flat.

On a year over year basis, we have seen an increase and there's a couple of factors that are driving that so the first one is just the increase in sort of compensation, both relative to wage inflation and also higher incentive comps in the two businesses that you mentioned, Canada and Asia as we've talked about earlier have had very strong results this quarter.

For the year to date, and then as Kevin mentioned and as <unk> mentioned, we're also continuing to invest in these businesses. So that's also reflected in there, but then as you as we've talked about you've seen higher revenues related to those expenses.

Okay. That's helpful.

And then the second question was on your.

Actuarial review of this quarter.

And wondering if you could provide some color on what.

What experience.

And then Mick.

Incorporated into our assumptions versus long term trend and maybe a bit more on morbidity because I think you'd noted.

A favorable morbidity.

In the U S and unfavorable morbidity, Canada and.

An experienced this quarter was actually I think favorable and unfavorable in the U S. So just wondering if you could unpack how much of.

Experience.

Has has kind of been an input into those updates and what hasn't.

Thanks for that question, Nigel it's kind of more so on the first one the pandemic experience I would categorize it as saying we fully reflected all the pandemic experience.

In our evaluation assumptions in our updates and so that's really specific to each of the local jurisdiction. So we took a look at the experience how relevant it is and whether it's appropriate or not too.

<unk> included directly in the update so for example, where we had in some of our annuity segment's some higher death rates.

Spike up as part of the pandemic, we did not project that to continue going forward.

In some of the life insurance businesses, where it was fairly benign. We did we did incorporate that in your experience studying just became part of our regular update so I would say, it's fully reflected where appropriate and again, we always we always take a very conservative bias on that not wanting to.

Be overly aggressive with regard to with regard to that.

Your second question around morbidity.

Maybe I'll start by making a couple of comments when we update our assumptions. We always include three different perspectives. When we are setting our new assumptions. The first is the longer term average of the historical performance the second being the trend in the third the future outlook.

You mentioned, the morbidity specifically in Canada, and the U S and that has been positive it's been positive in the quarter.

And.

When we're looking at the update as noted there was strengthening some strengthening done in Canada I would describe it is fairly modest in the update this year. However that does reflect a longer term time horizon. So that's a five year historical average.

And necessarily linked with a direct line with the experience in the last couple of quarters. So it's a much longer term perspective on that that being said the experiencing Canada over the last two quarters has been positive I'd say it was a bit elevated probably in this quarter for Canada.

A bit higher than we would normally expect but again the trend line has been good.

The experienced update there was a much longer term. So if we do have that that short trend line continues then that then we would.

To see favorable results going forward.

Yes, okay that makes sense thanks for that.

Thank you.

And I show. Our next question comes from the line of Lamar Prasad from core Mark. Please go ahead.

Thanks, I just wanted to get closer to this medical our Medicaid Redetermination.

Given that.

It was mentioned that over 50% of the Redetermination are in now some of the new Medicaid.

Sales coming in two.

2024.

Q3, being our seasonally high quarter for claims so would it be fair to suggest that this quarter was the trough for dental earnings.

I think thats a reasonable.

Comment of course, we can never know for sure, but I think thats the way we look at it too that there were some one time events.

Plus we're at.

We've had a lot of the redetermination without the new business, yet coming on the books, which is really more of a timing issue.

I think in terms of.

Thinking about looking at one quarter versus a longer period of time.

Year to date, our underlying net income is up 33% and sales are up 44% and that may actually be a better indication of the way to look at things than just the standalone quarter, especially with some of these onetime events.

Okay. That's fair and then just turning over to <unk> I guess, you guys called out.

Unusually low tax rate, so maybe starting on what drove that and what's the reasonable tax rate moving forward and then beyond the tax rate is this quarter's result, inappropriate run rate for earnings moving forward.

Hi, Steve Peacher, Thanks for the question.

Off the top of my head I don't have I can't answer the.

The kind of the good run rate tax rate.

Question play, but we can get back to you on that.

It was around I would say that.

Certainly bolstered underlying net income for the quarter by.

Seven $8 million.

In terms of run rate earnings I think if you look at like if you look at the financial supplement where we when you see the quarterly results.

Management fees have been growing every quarter, because <unk> has been growing.

As Kevin mentioned in his comments.

We have a significant portion of our AUM is in commitments that when we've gotten commitments from investors and we haven't yet invested the money. So we havent started earning fees that.

That's been committed but not invested as around $21 billion.

No.

We definitely think that the trend in earnings in both revenue and earnings is up.

And as we and we think still are.

Feel like we are on target to hit our Investor day targets. So.

Well I would say this is a representative quarter, we think the trend in earnings and revenues are going.

Okay. Thanks, that's it for me.

Thank you.

And I show. Our next question comes from the line of Tom Mackinnon from BMO capital. Please go ahead.

Yeah. Thanks, just on the meta Medicaid.

Termination.

The total net premiums annualized for that business when you are.

Prior to that I guess that may 11th date kind of where do they sit now as well.

Yes, I don't I don't have that off hand, what I can say is that Medicaid does represent more than 80% of the total revenue within the dental business.

And the.

You can also see if you look at the premium revenue for the quarter versus the prior quarter, some decline and that would basically all be from the Medicaid business.

Okay.

Yes, so if I take 80% of your total dental net premiums.

Annualized and then I take 13% of that.

And then I take that as a percentage of your total net premiums.

Both group benefits plus dental.

Less than 5%.

Total net premiums.

And we can certainly follow we can follow up with some more specifics there, but yes, the 5% would be about the way the way to think about it.

Just a caution the membership numbers and the premiums are not exactly the same.

Okay.

Alright. Thanks.

Thank you.

We have no further questions at this time and I'll turn things to Mr strain.

Okay.

Thank you operator, I wanted to end the call by recognizing that the wildly celebrations began on Sunday in India and around the world I want to take a moment to say happy Diwali to our employees our colleagues and partners around the world who are celebrating Diwali celebrates the triumph of light over darkness, good over evil in the human ability to overcome whatever.

Youre facing at Sun life, we celebrate that resilience.

<unk> deep of Ali happy Diwali, and with that I'll turn the call back to David.

Thank you Kevin. This concludes today's call a replay of the call will be available on the Investor Relations section on our website. Thank you and have a great day.

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Good morning, and welcome to the Sun Life Financial Q3, 2023 Conference call. My name is <unk> and I'll be your conference operator today.

All lines have been placed on mute to prevent any background noise. The wholesale the call is David Garg Senior Vice President Capital Management and Investor Relations. Please go ahead Mr. Garg.

We will begin today's call with opening remarks from Kevin strain, President and Chief Executive Officer.

Following Kevin Magic thing Executive Vice President and Chief Financial Officer will present, the financial results for the quarter.

After the prepared remarks, we will move to the question and answer portion of the call.

Other members of management are also available to answer your questions. This morning.

I draw your attention to the cautionary language regarding the use of forward looking statements and non <unk> financial measures, which form part of today's remarks.

As noted in the slides forward looking statements may be rendered inaccurate by subsequent events.

And with that I will now turn things over to Kevin.

We achieved solid underlying earnings for the quarter of $930 million, maintaining steady growth year to date. Our positive results. This quarter are attribute to good performance in our Canadian group and wealth businesses higher fee related earnings and asset management and favorable growth in Asia individual protection business.

In Hong Kong sales were four times higher than the prior year and over 50% higher than the previous quarter supported by strong performance across our business our distribution channels.

Earnings were down 19% from the prior year in our sunlight <unk> business largely due to lower dental results. This was driven by faster than expected state Medicaid redetermination associated with the end of the public health emergency as well as continued investment in the advantage dental plus business.

Our total sof assets under management now sit at 134 trillion up 6% over last year.

In our asset management pillar, MFS and SLC continue to perform well despite challenging market conditions.

<unk> management fee related earnings increased 17% driven by higher AUM, reflecting strong capital raising and deployment across the platform and the AAM acquisition.

MFS maintained healthy margins net outflows were driven by industry conditions on a year to date basis defined contribution sales at MFS were up 14% compared to the prior year due to strong placement on consultant adviser and record keeping platforms driving approximately $3 billion U S. In net inflows.

We maintained an underlying ROE of 17, 7% this quarter approaching our medium term financial objective of 18% plus reflecting our disciplined capital management and sustained emphasis on capital light businesses. Further we maintain a strong capital position with a light cat ratio of 147% for the quarter.

We also announced a <unk> <unk> increase to our quarterly commentary dividend and were active on our share buyback program, demonstrating our commitment to returning capital to shareholders.

Turning to slide five two years ago, we introduced our client impact strategy focused on six key areas, including people and culture financial discipline digital leadership distribution excellent sustainability, and our strong and trusted brand.

All areas that we believe are critical to delivering on our purpose to help clients achieve lifetime financial security and live healthier lives.

Further we sharpened the emphasis of our strategic imperatives to highlight the importance of deeper client relationships.

Thinking and acting more like a digital company on leasing our talent and culture strategy and delivering value from our past M&A.

All with the goal of realizing our ambition to be one of the best asset management and insurance companies in the world.

Turning to slide six we continue to execute on our client impact strategy as demonstrated by several key business initiatives delivered this quarter.

Improving access to care in helping clients live healthier live healthier lives remains a top priority for us and we're continuing to expand our health oriented businesses in multiple markets.

This quarter, we were selected to move forward in the final stages of contract negotiations with the government of Canada to be the administrator of the Canadian dental care plan.

Which will provide access to dental care for Canadians in need.

Due to the plan up to $9 million additional Canadians will have access to dental care. We're excited for the opportunity to expand our role in Kansas health ecosystem and to leverage the deep knowledge from our U S. Dental quest business to get a positive impact in our home market in.

In the U S. We established a preferred partnership with optimistic to make specialty drugs more accessible and affordable for our stop loss members. The new program will improve how specialty drugs are administered for members, while also managing rising health care costs.

We are also continuing to make it easier for clients to access care and benefits through digital channels.

In October we completed the acquisition of dialogue, Canada's leading virtual health and wellness provider.

<unk> provides access to quality high touch care to 50000 organizations, representing nearly $2 8 million clients in Canada and internationally.

<unk> will play a key role in delivering on our purpose for clients.

As an example, we're dialogue is having an impact beyond Canada last week, we launched the Sun life's held 360 app in the U S. A digital front door to <unk>.

And wellness support and resources for stop loss members, including direct access to health navigator powered by Pinnacle care advisers.

The App was developed by dialog in collaboration with the U S and and offers our U S members the chance to enable access to valuable tools to manage and improve their health and.

October SLC management entered into a strategic partnership with Scotiabank to distribute our alternative investment capabilities to the Canadian retail market to Scotia Global wealth management.

Through this partnership Canadian high net worth investors will gain access to a world class alternative investment capabilities.

This strategic partnership coupled with our recent acquisition of advisor asset management or AAM positions us well to meet the growing demand for alternatives.

We have assets to high net worth investors.

We continue to strengthen distribution across Sun life, our affiliates and strategic partnerships to meet the investment needs of our clients.

We also continue to support the communities in which we operate in Canada, we expanded our partnership with spirit, North a national charitable organization committing $1 million in funding over three years to deliver physical health programs and address health in equities in underserved indigenous communities. We know this partnership will not only make a positive.

Impact on the physical health of youth, but also have a tremendous impact on their emotional and mental health too.

This quarter <unk> management provided another round of funding against its $110 million commitment to support 24 first nation communities with connections to the provincial electricity grid.

To improve the quality of life of the residents and eliminate thousand tonnes of annual greenhouse gas emissions.

Finally, I wanted to discuss a new rule, we have recently created over the past few years, we've seen the success and importance of strategic partnerships on business growth and on delivering on our purpose. We are also seeing more opportunities to leverage partnerships for all of our business lines globally.

To that end, we've created the new role of Vice chair of strategic partnerships reporting to me to leverage the global partnerships opportunities that are in front of us.

I've asked Ingo Johnson to take on this role Ingrid.

<unk> wealth of experience in global relationships.

In the interim Chris way manage it and I, along with <unk> support will provide guidance and leadership to our team in Asia as I conduct a search for the new President of Asia, which I expect to announce over the next month or so.

Despite a challenging external environment, our diversified mix of business continues to perform well driven by our strategy and our people and culture.

We remain focused on our purpose and executing our strategy and this focus has served us well as we delivered positive results in the quarter with that I'll now turn the call over to manager.

Underlying ROE of 17, 7% with strong underpinned by our diverse and attractive businesses and wealth and asset management group of health and protection and individual protection.

<unk> asset management underlying earnings comprised 44% of total Q3 underlying earnings were up 9% from the prior year.

This was driven by higher investment income, reflecting volume growth and higher yields as well as an increase in fee related earnings and our asset management businesses.

New business GSM of $370 million more than doubled from the prior year, reflecting strong sales results in Hong Kong International High net worth and Canada.

Total CSM grew 11% year over year, primarily driven by organic CSM growth, reflecting strong sales results.

Reported net income for the quarter was $871 million up from $111 million in the prior year.

The difference between underlying and reported earnings this quarter of $59 million largely reflects a top up and the SLC put liability that the quest integration costs and amortization of intangibles, partially offset by favorable market related impacts and positive akamai.

Favorable market related impact was primarily driven by interest rates, partially offset by unfavorable real estate experience.

The favorable impact from interest rates this quarter was largely due to a less inverted yield curve as.

As we discussed last quarter, given our current positioning as the yield curve normalizes, we expect to see favorable industry related market impacts and reported net income.

Real estate experience reflects a relatively fought return in the current quarter versus our long term expectations of approximately 2% per quarter.

We are a long term investment investors in real estate and continue to view this asset class as a key component of our diversified investment portfolio.

Over the last 10 years, our North American real estate portfolio has generated annualized total returns of over 9% well above our current long term expectations.

In Q3, we also conducted our annual actuarial review of assumptions and method changes. This review resulted in relatively neutral impacts of positive $35 million to report net income and negative $43 million pre tax to CSM.

As I left like kind of a 147% declined one point from the prior quarter, our strong organic capital generation was offset by capital deployments.

Capital deployments in the quarter that to a four point decline in Logcap driven by net sub debt redemption of 500 million repurchase of two 8 million shares and the close of the dosing <unk> agreement.

<unk> remained strong at $1 4 billion and our leverage ratio remains low at 22%.

We continue to expect strong capital generation of 25% to 30, 30% of underlying earnings over the medium term after payment of common share dividends and investments in organic business growth.

Now, let's turn to our business group performance, starting on slide 10 with MFS.

MFS underlying net income of U S $207 million was down 2% from the prior year as an increase in variable compensation was partially offset by higher <unk> and increased investment income.

Reported net income of <unk> $212 million was down 12% year over year, driven by the fair value change in shares owned by MFS management.

AUM of 556 billion was down 6% from the prior quarter driven by declines in global equity markets and net outflows and pre tax net operating margin of 41% was in line with the prior year.

Retail net outflows were U S $3 7 billion in institutional.

In retail and institutional outflows were $5 6 billion driven by the continued impact of higher interest rates on active management flows MFS continues to outperform its peers with lower relative net outflows.

Turning to slide 11, SLC management generated fee related earnings of $68 million up 17% year.

The increase reflects good capital raising and deployment of capital into fee, earning AUM over the past year as well as the AAM acquisition.

Underlying net income of $53 million was up $25 million.

It was up from 25 million last year, driven by higher fee related earnings a lower tax rate and the non recurrence of onetime expenses.

Reported net loss at SLC management was $16 million, primarily driven by an increase in the liabilities to buy out the remaining ownership in SLC affiliates.

We undertake a detailed review of the estimate liabilities in the third quarter of the year and this quarter's results reflect the top of a $42 million.

Capital raising of $3 2 billion increased over the prior quarter driven by strong demand for public Tech <unk> fixed income and for real estate debt at Biggio.

Total AUM of $219 billion was up 5% year over year. This includes $21 billion that is not yet earning fees. Once invested these assets are expected to generate annualized for your fee revenue of more than $180 million.

Turning to slide 12, Canada underlying net income of $338 million was driven by strong disability experience and higher investment income reported net.

Net income of $365 million was up year over year due to favorable market related impacts.

Wealth and asset management underlying earnings were up 14% on increased investment income from higher volumes and yield group.

Individual protection was modestly lower year over year on lower investment contribution.

Both group and individual businesses posted strong sales growth group sales were up 4% on higher house sales, while individual sales were up 24% due to higher <unk> sales.

Turning to slide 13 U S underlying net income of U S $140 million was down 19% from last year, while our reported net income of <unk> $105 million was up 9% year over year.

Group Health and protection and underlying earnings were down year over year of strong revenue growth was more than offset by less favorable experience.

Dental results. This quarter included the impact from Medicaid Redetermination and startup costs from the expansion of advantaged dental plus practices the.

The industry is anticipate the wind down of the public health emergency that was established during COVID-19 and the related impact from Medicaid Redetermination.

While the pace of rollout some redetermination has been faster than our assumptions, we expect the total impact on membership and revenues remained largely in line with our expectations.

For Q3, this led to lower volumes and higher loss and expense ratios looking forward, we expect the incremental revenues from our sales pipelines to more than offset the impact from the Medicaid Redetermination process. Therefore, we expect good revenue growth in 2024.

We remain very pleased with the performance of the <unk> acquisition.

We are a leading player in the industry have strong business momentum are on track with our integration milestones and are confident that we will achieve our synergy targets.

The group benefits business had strong revenue growth driven by solid premium growth higher fee income and good margins.

This offset by less favorable morbidity experience.

U S morbidity experienced in the quarter remained favorable reflecting strong group disability in stop loss results, partially offset by unfavorable dental experience.

Individual protection results declined year over year, reflecting investment contributions, reflecting lower investment contributions this quarter.

U S group sales of 179 million to 179 million were down 36% year over year, reflecting lower dental Medicaid sales, which are lumpy in nature as they are linked to the timing of government contracts, partially offset by higher commercial dental sales.

Slide 14 outlines Asia results for the quarter.

<unk> net income of $166 million was up 7% year over year on a constant currency basis.

<unk> net income of $211 million was well above underlying income largely largely reflecting favorable interest related market impacts and positive aqua.

New business DSM for Asia was very strong at $238 million up 193% from the prior year.

Individual protection sales were up 57%, primarily driven by strong sales growth in Hong Kong and high net worth.

Hong Kong sales also benefited from the strong start of our Bancassurance agreement with <unk>.

In closing we are pleased with our results this quarter.

We maintained strong sales momentum and individual protection.

We generated very strong new business CSM and total CSM CSM is up 11% year over year.

Group results in both Canada, and the U S continue to benefit benefit from our leading capabilities and proactive management actions, which drove favorable experience.

Our asset management businesses continued to deliver good long term investment performance and are well positioned for growth as markets normalize our capital position is strong and we continue to generate peer leading Roe.

With that I'll turn the call back to David for Q&A.

Thank you Sir.

As a reminder to ask a question you would need to press star one on your telephone.

Your question. Please press star one again.

These standby, while we compile the Q&A roster.

And I show. Our first question comes from the line of Tom Mackinnon from BMO capital. Please go ahead.

Yes, thanks very much good morning.

First question is just with respect to the.

The leichhardt being better than anticipated and you mentioned four points.

Would have heard it.

From net debt and some other.

Other deployments buybacks the same thing.

So it's.

But like Cat was actually only down.

One point quarter over quarter. So are we to sort of infer that there could have been at least to me.

<unk> strong capital generation does it look like it's probably in the areas you know.

Three points or so of capital like.

<unk> capital that was attributable to capital being generated in the quarter.

If so it seems to be a little bit better than you were 25% to 30%.

Kind of medium term target and I have a follow up thanks.

So good morning, Thomas mentioned right as I mentioned in my prepared remarks, our general view is that over the medium term, we expect to generate 25% to 30% of underlying earnings as organic capital and that really reflects the portfolio of attractive capital light businesses that we've built over time now.

Now that amount will bump around quarter over quarter, depending on things like new levels of business and as well as market conditions and Youre correct for this for the current quarter, we had about three <unk> points or approximately $600 million of organic capital generation in the quarter and that was well above our target that I mentioned previously and that was really driven by good underlying.

And that $600 million before payment of the common dividend correct then right.

Yes.

Yeah, Okay, and then just as a follow up for Kevin I think in your prepared markets.

Remarks, Kevin you mentioned.

Changes in management with respect to Ingrid responsibilities to did I hear that correctly.

I'm just wondering.

Asia is on fire here in terms of some of your great sales in CSM growth and why make a change in management there.

You did hear correctly and Tom we increasingly see partnerships being an important part of what we're trying to do globally and creating those connections and Ingrid is well suited for that.

Jay is on fire and our intention is to keep it on fire and to keep it moving in the right direction you would've seen that I mentioned that that Chris mentioned and I will be leaning into Asia over the next few weeks as we get ready to appoint a successor to Ingrid there Chris is based in Singapore. So he is going to be looking after the <unk>.

Zane countries. He also sits on our joint venture Board in China. So he is going to be leaning into China manage it is on our joint venture Board in India, and taking responsibility for India and in the interim and then.

I spent many years in Asia, not just running Asia, but as CFO and now as CEO and I'll be leading into our hubs business, which is Hong Kong, Singapore Bermuda as.

As well as the regional office and we're working with incurred on that so I don't think that this is going to.

Slow us down at all in fact, it's about accelerating the company's growth.

Two global partnerships, but also in Asia.

I'm sorry, Tom just on your previous question.

The $600 million was net of dividends just to just to confirm that.

Yes, yes, that's right, yes, correct, yes, so if we wanted to look at.

Before payment of the dividend it would've been higher I assume then correct exactly right, yes, okay. Okay, great and then sorry just.

Is that look internal or external in terms of someone too.

Takeover and yet for all of our senior roles, we do succession planning and we have a list of both internal and external candidates and as I said I expect to have announcement in the next month or so there is an advantage to Asia from an internal candidate because knowing sun life and understanding our footprint to understanding Asia.

As an advantage, but we always look at both internal and external and try to attract the best candidate you should you should hear from us in about a month or so.

Okay. Thanks.

Thank you.

And I show. Our next question comes from the line of Gabriel <unk> from National Bank Financial. Please go ahead.

Hey, good morning, I wanted to revisit this.

Dental.

The redetermination of Medicaid recipients.

You said a couple of things one that the roll off is taking place at a faster pace than you expected it to.

That's happening it's.

Causing higher expenses I guess is there.

Assessing those or something maybe delve into a bit more.

What's behind that and why you think things will maybe stabilize or get better because I'm just looking at the sales number.

You are.

Averaging over $100 million over the past four quarters and it fell.

Fell off a cliff for $4 million and I'm wondering how that is expected to rebound in the next few quarters could look like for profitability in this business.

As you can.

Sure. Good morning, It's Dan let me kind of walk through.

The whole story of the <unk>.

Redetermination with the end of the public health emergency and just as a reminder, during COVID-19.

The federal government instituted a public health emergency and one of the impacts of that was that people could not be dis enroll from Medicaid during that period of time, but a public health emergency ended on may 11th and that freed up the states who have the responsibility for enrollment to re certify a re determine.

Who is eligible we and most of the industry had estimated about 12% of existing Medicaid membership would roll off as a result of that process over a 24 month period, our latest estimate which is consistent with industry estimate is for about 13.5% of membership to roll off so pretty close.

Most of that original but at a much faster pace roughly over a 12 or 13 months period.

In fact, we think the redetermination will be complete or largely complete by June 1st of next year.

So it's largely the acceleration that has been the difference here and so far as of October about half of those Redetermination. We believe have occurred so we're about halfway through that process, but we have about three more quarters, where that will be happening.

And yes go ahead.

No no go ahead.

No no no.

I guess my second question I'm going to hold off on that but.

Okay.

You would ask what's the outlook, especially considering sales and also what the impact was on the other.

Loss ratios and expense ratios.

So it's worth commenting that membership has come all that just gives us a higher expense ratio not necessarily higher expenses there.

There are some higher expenses in the quarter that are related to investments, we've been making in the new advantaged dental clubs.

Practices.

But since the membership comes off or is coming off more quickly the expenses don't come off.

Just in terms of looking forward a couple of important things to note here since the acquisition, which was June of last year.

The dental business has sold about $600 million in new business about $400 million of that is from seven large Medicare and Medicaid sale.

None of that premium as yet on the books that premium will come on the books in 2024.

Then the new business coming on and more quickly than.

Than anticipated so there could be some challenge around that over the next three quarters, but.

But at the end of that transition the business should actually be larger than it was and in addition, there is a very large pipeline.

Of opportunities beyond.

The sales that have already occurred.

Okay.

Yes.

Sort of I guess.

I guess the next few quarters Youll see maybe similar to this quarter, but then gradually maybe Q2 Q3 next year starting to go in the other direction in terms of.

Net sales in.

And.

Premiums.

Well in terms of premium yes. The next three quarters, we would see the other half of the membership that's associated with the Redetermination.

But we would also see that $400 million in new business start to come on especially first quarter of next year.

In addition, it's also worth noting that the third quarter of any year is the worst quarter for seasonality in other words, the highest utilization quarter largely related to kids getting dental care right before school start that's been a very.

Long standing pattern.

So.

And there were also some one time accounting true ups in contractual true ups in the quarter.

So we would expect those things not to recur so.

So from a revenue perspective, I would agree with your comment from from an earnings perspective, we would hope that the.

Next quarters would be better.

Thank you.

Gabe, it's Kevin I might just add that nothing is nothing has changed our thesis on that <unk> acquisition. We knew that these are the public health emergency was going to end and there was.

These people are going to be falling off of the the membership in fact as Dan said the sales is ahead. So if we think about our M&A thesis.

Nothing has changed our thought process on that in fact, we think it could be a little bit better in the integration continues to go well, so yes, youre seeing some lumpiness in the quarter, but.

We still expect dent to quest to perform as we expected it to.

Right.

Thank you.

And I show. Our next question comes from the line of mini Grumman from Scotiabank. Please go ahead.

Hi, good morning.

Kevin I wanted to follow up on your discussion of partnerships.

It sounds like the thesis there.

Is changed a little bit for the positives and maybe sharpens I'm, just hoping you could provide a little bit more insight in terms of in terms of that whether my impression is correct.

And then a follow up on that.

Well, we have a lot of.

It's around the world that linked into our joint venture partners, which are significant in India, and China, our bancassurance relationships our relationships with different banks.

We also have a few opportunities that we continue to sort of push on and look at in terms of partnerships and having a senior person who thinks globally about that we think is going to be a benefit to our to our strategy and if you think about how quickly the world is changing in different areas, having these partnerships and understanding how to leverage them.

We see being important to the strategy and Ingrid is a great fit for that as I said in my opening remarks.

And is this a signal in terms of capital deployment in this.

Sick areas should we expect to see more there.

Change that you're signaling that I wouldn't take it as a signal of capital deployment I would take it as a signal of us leveraging.

The relationships, we have and the opportunities that we see in front of us.

Got it and then if I could just ask a question on Asia, just in terms of Hong Kong specifically.

Very strong sales and I'm just wondering if you could maybe disaggregate.

How much of that is the contribution from the new bancassurance deal.

How much of that is from the CV market specifically.

Yes, <unk> on the line, so I'm going to let her into the Hong Kong question.

Thanks, Kevin and thanks Danny.

We are delighted that Hong Kong, clearly was a standout quarter sales strongly up fourfold and interestingly strongly outpacing the market in the first six months.

<unk> is there any tasteful one is externally with the board are reacting with mainland China, the significant demand and strong momentum generally, but the fact that we've outpaced the market shows that we also had significant internal readiness that we have been focusing on over the last few years.

And a number of those relate to our client value proposition that we've invested in safety as you point out around that distribution.

Emphasized all aspects of distributions that surround our broker relationships definitely.

We broadened and deepened agency teams, including focus on Mci last call I mentioned beautiful clients, saying to that development instance, that choice and we're seeing a lot of activity through that and then dusting is our fifth quarter, we activated our exclusive bank relationship and we're seeing strong sales through that.

<unk>, which we haven't disclosed separately so.

So thats on the distribution on products, we continue to be leaders in innovation and exiting incorporating some of the the ESG concepts directly relevant for <unk>.

And how important it is to the climate ethics and then the third part and also important in the brand conscious Asia is investing in our brand and we are excited in August that we were in the top five of bran in Hong Kong alongside a number of leading brands.

And my about 10 10.

Other competitors.

That's part of the reason why we are shifting in Asia, and so I think.

Dave you're saying pre pandemic MTI was around 10% of sales in Hong Kong today standing at roughly 30%.

A three fold increase.

I might just I.

But also leverages, our our knowledge of the high net worth business out of Bermuda. So theres a combination of things that are happening in Hong Kong that are driving those good sales and I think that's a good thing to see that balanced growth across agency.

Brokerage and our new bancassurance relationships. So we're seeing it in all three areas in Hong Kong, the team's doing a great job there.

Thanks, so much.

Thank you.

And I show. Our next question comes from the line of Mario Mendonca from TD Securities. Please go ahead.

Good morning, Dan could you help me understand the Redetermination, a little better I understand.

How it can affect your premium growth in dental and in fact that as well.

Described in your supplement in your MD&A I am not sure I understand how the redetermination.

Impacts experienced gains in this segment, which I think you offered at the Redetermination was one of the factors that drove.

Experience gains to be down noticeably.

Noticeably on a year over year basis. So help me understand that dynamic a little better the experience line in the context of the Redetermination.

Sure Good morning, and hopefully this will answer it.

<unk>.

The loss ratio.

Does experience some pressure from the re determinations, because the people who are being distant enrolled tend to be lower utilized. There is then the people who stay on the books what happened during Covid was a lot of people who might even have had gotten other coverage through getting employment remained on the books because nobody.

It could be dis enrolled so we did anticipate and we are seeing some modest loss ratio impact from the dis enrollment of those lower utilizing members and then of course. There is also just fewer <unk>.

Members, which puts a little pressure on the expense ratio as well.

So.

Your.

Outlook for the next few quarters then.

I appreciate that there are a lot of moving parts. There are plenty of things could change, but just focusing on this Medicaid redetermination you would expect the experience to be a little modest experience gains may be even some modest losses.

Relative to what we've had in the past because of this dynamic you're referring to and then.

Would you then expect experience to improve again.

On time in 2020 for once the Redetermination has run its course.

Yes, so a couple of key factors. There one is we built some impact on the loss ratio into the experience plan. So we would only see pressure on the experience gains if that if that impact was bigger than what we anticipated.

And so we think we built in the right amount, but of course, we could always be a little bit off there. Another very important point is 80% of our Medicaid contracts re price where are available for renegotiation of pricing in one way or another.

During the next 12 months.

Generally the states have been very cooperative wanting to make sure that the loss ratios on this business stay within a target range.

We would have.

An opportunity to address that.

And so you would expect to see as this process completes and the business resets you would also expect to see the loss ratio or revert to historical norms.

Thank you again.

Okay.

Thank you.

And I show. Our next question comes from the line of Doug Young from Desjardins. Please go ahead.

Hi, good morning, just to add quickly.

Excluding the U S. Redetermination. So just forget about that what was dental experience in the quarter was in line with expectations or was it adverse or better than expected just trying to get a sense of like excluding this noise. The underlying experience trend has been.

Yes. So there were several things that happened all at once in this quarter if.

If you compare either to the same quarter last year or even to the prior quarter.

It's about those were similar quarters.

The variance is about half these factors related to the end of the public health emergency the Redetermination. So mostly revenue and then some as I've mentioned some loss ratio.

Loss ratio pressure the other half are some accounting and contractual true ups.

For example, we aligned account some accounting practices.

Post acquisition.

There is the seasonality impact the third quarter is always the worst for seasonality or the highest for utilization.

And then there were some unique investments and the advantage dental plus business, we've been opening new practices, especially in Texas. So half of it was in those categories and half is related to the public health emergency.

Okay, and so there wasn't anything from a loss ratio perspective, it seems like it's just more.

Of course outside of the Redetermination.

Yes, I mean, that's why.

Obviously some of those things are nonrecurring, which is good news.

<unk> pipeline, we're meeting or exceeding all of the integration and synergy targets.

The momentum with the business and the performance of the business is actually really strong and we would expect it to meet or exceed our acquisition expectations.

Okay.

And then just a question on the act.

Greg, It's mark Kevin warranty, but I just want to understand.

And the lapse impact on reported earnings but also on the CSM in.

And I guess yeah.

Can you talk a little bit about what drove this.

I guess the way I think of lots as always.

Typically goes through the CSM, but there wasn't earnings hit as well.

This quarter and so I don't know if that was just because labs was going through on businesses, where there was no CSM just hoping to understand what really drove the negative labs.

Yes.

Yes. Thanks for that question, Doug This is Kevin Morrissey.

Right.

The general model method, where we have individual wealth and protection products normally changes in lapse assumptions do go through the CSM. So thats kind of the normal place you would see them.

And because of financial risk assumptions on the GSM.

Method.

That does go through net income so it's a bit of a unique circumstance where.

When you have these types of products normally it goes it goes through CSM is as you said.

CSN has been depleted that is not the case in this in this case, it's really specific to that financial risk assumption that was updated.

That was part of the overall lapse assumption set.

Well, that's clear and then just on that last chart.

That went through the CSM and packet then about what were the main drivers there.

Yes, sure so on the CSM.

The lapse impact as noted was significantly negative there was really two sources and we saw the.

The.

The reductions in CSM, both in Canada, and Asia in Canada, There were two product groups that were impacted.

Was term products, where renewals were lower than.

And then expected and in some of the lap support of Universal life products. The lapses were lower than expected as well. So we had some reductions CSM there from Canada and in Asia, We updated the Vietnamese lap.

Lapse assumption for that business, you've heard us talk about low persistency as part of our <unk> will review this year.

We fully reflected the current level of experience interact update.

I appreciate the color. Thank you.

Yeah.

Thank you.

And I show. Our next question comes from the line of Paul Holden from CIBC. Your line is open.

Thank you good morning.

First question is related to the real estate experienced during the quarter.

I'm wondering if you can give us.

<unk>.

An update on how much you've changed cap rate.

On average across the board.

Year to date.

And if you're expecting potentially more.

Movement going forward on real estate valuations.

Sure. Thank you for the question Paul It's Randy Brown.

If we look at several measures when looking at changing valuations on real estate. So let me start kind of overall.

With the comment that the total return on the real estate portfolio was essentially flat this quarter.

Valuations were down by less than 1%.

And largely offset by income.

So the negative that you've seen as management mentioned is the difference between the long term expected return and the actual economic return on the quarter.

But.

Spansion also set our real estate portfolio has outperformed our long term expectations and so we remain.

Quite comfortable at the assumption.

So in terms of specifically on your question, we look at cap rates, but we'll also look at yields.

Cap rate being more of a spot measuring youll being more of a life of the property and so we've seen 25% to 50 basis point increases.

In cap rates and 50% to 75 basis point increases in yields.

In the portfolio.

So we have.

Frankly fared better than the broader market because of the very significant repositioning that I had mentioned on prior calls.

So we were well positioned for this type of market with significant overweight relative to the opportunity set and industrial.

And residential and much lower allocations to two office and retail.

Got it thanks for that and then a question for Dan.

At this time of year, you might give us a little bit of an update or your thoughts around.

The upcoming.

Pricing or negotiations for stop loss in U S group benefits.

It's been a pretty strong quarter, four or quarter strong year for margins are you seeing increased competition or I guess really what is your view for 2024.

Pricing renegotiations.

Yes. Thank you we're in the midst of the selling season for really all our products, but especially for stop loss. This is like the playoffs and the Super Bowl rolled into one.

Most of the sales occurred during the fourth quarter and we're actually quite optimistic about the outlook, we've been holding to our pricing.

You've seen the loss ratio normalize back towards our pricing targets as we've signaled for quite a while that that would happen.

And we are seeing some intensified competition, which always seems to happen, especially this time of year.

But our team is performing quite well and we're optimistic about sales results for the quarter, while holding to our pricing targets.

Got it okay. Thanks for that.

Thank you.

And I show. Our next question comes from the line of Nigel D'souza from Veritas investment Research. Please go ahead.

Thank you. Good morning, My first question was on the other expenses.

Online both in Canada, and Asia have noticed.

That expense line.

Meaningfully.

And there was a step up this quarter, just wondering what's driving higher expenses in both those segments.

Was there any outliers or.

Nonrecurring items, we should be aware of.

Hi.

Yes.

Good morning, Nigel its mandate.

Overall the.

Corporate expenses other on a quarter over quarter basis are relatively flat.

Okay. That's helpful.

And then the second question was on your.

Actuarial review this quarter.

And wondering if you could provide some color on what.

<unk> experienced in the pandemic.

Yes.

Your assumptions versus long term trend and maybe a bit more on morbidity because I think you'd noted.

A favorable morbidity.

In the U S and unfavorable morbidity in Canada and.

And the experience this quarter was actually I think favorable and unfavorable in the U S. So just wondering if you could unpack how much of.

The experience.

Has has kind of been an input into those updates and what hasn't.

Thanks for that question, Nigel it's kind of more so on the first one the pandemic experience I would categorize it as saying we fully reflected all the pandemic experience.

<unk> included directly in the update so for example, where we had in some of our annuity segment's some higher death rates.

Spike up as part of the pandemic, we did not project that to continue going forward.

In some of the life insurance businesses, where it was fairly benign. We did we did incorporate that in your experience selling just became part of our regular update so I would say, it's fully reflected where appropriate and again, we always we always take a very conservative bias on that not wanting to.

Be overly aggressive with regard to with regard to that.

Your second question around morbidity.

Maybe I'll start by making a couple of comments when we update our assumptions. We always include three different perspectives. When we're setting our new assumptions. The first is the longer term average of the historical performance the second being the trend in the third the future outlook.

You mentioned, the morbidity specifically in Canada, and the U S and that has been positive it's been positive in the quarter and.

And it won't necessarily linked with a direct line with the experience in the last couple of quarters. So it's a much longer term perspective on that that being said the experiencing Canada over the last two quarters has been positive I'd say it was a bit elevated probably in this quarter for Canada.

A bit higher than we would normally expect but again the trend line has been good.

The experience update there was a much longer term. So if we do have that that short trend line continue then than we would.

To see favorable results going forward.

Yes, okay that makes sense thanks for that.

Okay.

Thank you.

And I show. Our next question comes from the line of Lamar Prasad from core Mark. Please go ahead.

Thanks, I just wanted to close the loop on this medical our Medicaid Redetermination.

Given that.

It was mentioned that over 50% of the Redetermination are in now some of the new Medicaid sales coming in two.

2024 in Q3 being our seasonally high quarter for claims would it be fair to suggest that this quarter was the trough for dental earnings.

I think thats a reasonable.

Comment of course, we can never know for sure, but I think thats the way we look at it too that there were some one time events.

Plus we're at in a in a sense, we've had a lot of the redetermination without the new business, yet coming on the books, which is really more of a timing issue.

I think in terms of.

Thinking about looking at one quarter versus a longer period of time.

Year to date, our underlying net income is up 33% and sales are up 44% and that may actually be a better indication of the way to look at things than just the stand alone quarter, especially with some of these onetime events.

Okay. That's fair and then just turning over to <unk> I guess, you guys called out an unusually low tax rate. So maybe starting on what drove that and what's a reasonable tax rate moving forward and then beyond the tax rate is this quarter's result, an appropriate run rate.

For earnings.

Going forward.

Hi, Steve Peacher, Thanks for the question.

Off the top of my head I don't have I can't answer that.

The kind of the good run rate tax rate.

Question play, but we can get back to you on that.

It was around I would say that.

Certainly bolstered underlying net income for the quarter by.

Seven $8 million.

In terms of run rate earnings I think if you look at like if you look at the financial supplement where we when you see the quarterly results.

Management fees have been growing every quarter, because <unk> has been growing.

As Kevin mentioned in his comments.

Ranch that we have a significant portion of our AUM is in commitments that when we've gotten commitments from investors and we haven't yet invested the money. So we havent started earning fees that AUM, that's been committed but not invested as around $21 billion.

So we definitely think that the trend in earnings in both revenue and earnings is up.

And as we and we think still are.

We are on target to hit our Investor day targets. So.

Well I would say this is a representative quarter, we think the trend in earnings and revenues are growing.

Okay. Thanks, that's it for me.

Thank you.

And I show. Our next question comes from the line of Tom Mackinnon from BMO capital. Please go ahead.

Yes. Thanks.

On the meta Medicaid Redetermination.

The total net premiums annualized for that business when you are.

Just prior to that I guess that may 11th date kind of where do they sit now.

As well thanks.

Yes, I don't I don't have that off hand, what I can say is that Medicaid does represent more than 80% of the total revenue within the dental business.

And the <unk>.

You can also see if you look at the premium revenue for the quarter versus the prior quarter, some decline and that would basically all be from the Medicaid business.

Okay.

Yes, so if I take 80% of your total dental net premiums.

Annualized and then I take 13% of that.

And I take that as a percentage of your total net premiums.

Both group benefits plus dental.

Less than 5%.

Total net premiums.

And we can certainly follow we can follow up with some more specifics there, but yes, the 5% would be about the way the.

The way to think about it.

Just a caution the membership numbers and the premiums are not exactly the same.

Okay.

Alright. Thanks.

Thank you.

We have no further questions at this time and I'll turn things to Mr strain.

Okay.

Thank you operator, I wanted to end the call by recognizing that Diwali celebrations begin on Sunday in India and around the world I want to take a moment to say happy Diwali to our employees our colleagues and partners around the world who are celebrating Diwali celebrates the triumph of light over darkness, good over evil and the human ability to overcome.

Whatever you were facing at Sun life, we celebrate that resilience huge deep of Ali happy Diwali, and with that I'll turn the call back to David.

Thank you Kevin. This concludes today's call a replay of the call will be available on the Investor Relations section on our website. Thank you and have a great day.

Q3 2023 Sun Life Financial Inc Earnings Call

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