Q4 2023 Sun Life Financial Inc Earnings Call

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Cherie: Good morning and welcome to the Sun Life Financial Q4 2023 conference. My name is Cherie, and I will be your conference operator. Our minds have been placed on you to prevent any bad... The host of the call is David Garg, Senior Vice President, Capital Management and Investment. Please go ahead, Mr. Garth.

Sherry: Good morning, and welcome to the Sun Life Financial Q4, 2023 Conference call. My name is Sherry and I will be your conference operator today.

Speaker Change: Lines have been placed on mute to prevent any background noise.

Speaker Change: Thank you and good morning, everyone.

David Garg: Thank you, and good morning everyone. Welcome to Sun Life's earnings call for the fourth quarter of 2023. Our earnings release and the slides for today's call are available in the investor relations section of our website at sunlife.com. We will begin today's call with opening remarks from Kevin Strain, President and Chief Executive Officer. Following Kevin, Manjit Singh, 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.

Speaker Change: Welcome to Sun Life's earnings call for the fourth 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.

Speaker Change: I'll begin today's call with opening remarks from Kevin strain, President and Chief Executive Officer.

Manjit Singh: Following Kevin Manjit Singh Executive Vice President and Chief Financial Officer will present, the financial results for the quarter.

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

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

David Garg: Other members of management are also available to answer your questions this morning. Turning to slide 2, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events. And with that, I'll turn it over to Kevin.

Speaker Change: Turning to slide two I draw your attention to the cautionary language regarding the use of forward looking statements and non iron for rest of the financial measures, which form part of today's remarks.

Speaker Change: As noted in the slides forward looking statements may be rendered inaccurate by subsequent events and with that I'll turn it over to Kevin.

Kevin Strain: Thanks, David, and good morning, everyone. On slide four, we delivered strong performance during the fourth quarter, contributing to strong full-year results for 2023. Our results show the strength and resilience of our business mix and the positive impact we're having on our clients. We achieved strong underlying earnings of $983 million, up 10% year-over-year. Our strong results were broad-based, with strength in Canada, U.S., and SOC management. The underlying ROE of 18.4% this quarter is above our medium-term financial objective of 18% plus, reflecting our strong earnings and disciplined financial management. In addition, we maintained a strong capital position with an SLS-NICAT ratio of 149%.

Kevin: Thanks, David and good morning, everyone turning to slide four we delivered strong performance during the fourth quarter contributing to strong full year results for 2023.

Kevin: Our results show the strength and resilience of our business mix and the positive impact we're having on our clients. We achieved strong underlying earnings for the quarter of $983 million up 10% year over year. Our strong results were broad based with strength in Canada U S and that's we'll see management.

Kevin: Underlying ROE of 18, 4% this quarter is above our medium term financial objective of 18% plus reflecting our strong earnings and disciplined financial management.

Kevin: We maintained a strong capital position with an asset light cat ratio of 149% our results reflect exceptional individual protection sales and good momentum in our group health and protection businesses in the fourth quarter strong group health and protection sales were driven by both our Canadian and U S group businesses in Canada.

Kevin Strain: Our results reflect exceptional individual protection sales and good momentum in our group health and protection businesses in the fourth quarter. Strong group health and protection sales were driven by both our Canadian and U.S. group businesses. In Canada, sales were up 63% year-over-year, largely due to higher large-case sales, and in the U.S., both dental and health and risk solution sales were strong. This quarter, DentalQuest was awarded two new Medicaid dental benefits contracts in two states, and commercial dental sales increased 55 percent over the prior year.

Kevin: Those were up 63% year over year, largely due to higher large case sales and then the U S. Both dental and health and risk solutions sales were strong this.

Kevin: This quarter <unk> was awarded two new Medicaid dental benefits contracts in two states and commercial dental sales increased 55% over the prior year.

Kevin Strain: The dental business has recorded more than U.S. $650 million in sales since the closing of the DentalQuest acquisition on June 1, 2022. Individual protection sales were driven by strong performance in Asia, with sales up 49% year-over-year. International high net worth sales were two times higher than the prior year, and Hong Kong sales were four times higher. Our Hong Kong sales growth reflected our diversified mix of high-performing, quality-focused distribution channels, including our broadened broker network and new agency teams focused on mainland Chinese individuals and our bank insurance partnership with Daqing Bank. Canadian individual protection sales were up 23% year-over-year, driven by higher third-party sales.

Kevin: Rental business has recorded more than U S $650 million in sales since the closing of the dental Quest acquisition on June 1st 2022.

Kevin: Dividual protection sales were driven by strong performance in Asia with sales up 49% year over year International High net worth sales were two times higher than the prior year in Hong Kong sales were four times higher our Hong Kong sales growth reflected our diversified mix of high performing quality focused distribution channels, including our <unk>.

Kevin: 100, and broker network and New agency teams focused on mainland Chinese individuals and our bancassurance partnership with <unk> Bank.

Kevin: Canadian individual protection sales were up 23% year over year, driven by higher third party sales.

Kevin Strain: Wealth sales and asset management growth flows were up in the quarter, with the Canadian business up 32% due to higher individual wealth and defined benefit sales. SLC demonstrated strong capital raising, closing the year with $177 billion in fee-earning AUM, up 8% over the prior year. SLC also won the 2023 CIO's Industry Innovation Award for Prior Credit. MFS experiences outflows, primarily driven by industry conditions. During the year, MFS became the ninth largest fund group in the U.S. retail mutual fund industry based on AUM.

Kevin: Wealth sales in asset management gross flows were up in the quarter with the Canadian business up 32% due to higher individual wealth and defined benefit sales.

Kevin: <unk> demonstrated strong capital raising so it was in the year with $177 billion in fee, earning AUM up 8% over the prior year.

Kevin: <unk> also won the 2023 Cio's industry innovation awards for private credit.

Kevin: MFS experienced outflows, primarily driven by industry conditions during the year MFS became the ninth largest fund group for the U S retail mutual fund industry based on AUM and next month MSP that celebrates their 100th anniversary congratulations to micro bears and our colleagues at MFS on this milestone keeping.

Kevin Strain: And next month, MFS celebrates its 100th anniversary. Congratulations to Mike Roberge and our colleagues at MFS on this milestone. Keeping with MFS, I want to recognize their recent leadership announcement with Mike Robert set to become Executive Chair of MFS on January 1, 2025 and Ted Maloney to take on the role as their CEO. Ted has been with MFS for almost 20 years and is currently their Chief Investment Officer. Congratulations to both Mike and Ted. Turn to slide 5.

Kevin: With MFS I want to recognize their recent leadership announcements with micro bearish set to become executive chair of MFS on January 1st 2025, and 10 below need to take on the role.

Kevin: T O.

Kevin: Todd has been with MFS for almost 20 years and is currently their chief investment officer, Congratulations to both Mike and Todd turning to slide five our full year 2023 result were driven by similar factors as seen during the fourth quarter underlying net income increased 11% to $3 $7 billion supported by growth across all businesses.

Kevin Strain: Our full year 2023 results were driven by similar factors as seen during the fourth quarter. Underlying net income increased 11% to $3.7 billion, supported by growth across all businesses. Underlying ROE of 17.8% was also strong. Total assets under management reached $1.4 trillion in 2023, demonstrating the resilience of our business in a challenging environment. Turn to slide 6. This quarter, we delivered on several key business initiatives that helped drive our client impact strategy forward. Providing access to care and helping clients live healthier lives remains a top priority.

Kevin: Underlying ROE of 17, 8% was also strong.

Kevin: Total assets under management reached one four trillion dollars in 2023, demonstrating the resilience of our business in a challenging environment.

Kevin: Turning to slide six this quarter, we delivered on several key business initiatives that helped drive our client impact strategy forward.

Kevin: <unk> access to care in helping clients live healthier lives remains a top priority we remain a leader in health benefits and services in Canada, and the U S and are increasingly leveraging digital partnerships to support our clients help journeys. This.

Kevin Strain: We remain a leader in health benefits and services in Canada and the U.S. and are increasingly leveraging digital partnerships to support our client health journey. This quarter, we finalized a contract with the Government of Canada to be the administrator of the Canadian Dental Care Plan, which will provide access to dental care for up to 9 million additional Canadians. We also completed the acquisition of Dialog, Canada's premier virtual health care and wellness platform. And finally, in Canada, we completed a minority investment in Tillway, a virtual pharmacy offering increased choice and convenience for our clients. In the U.S., we successfully launched the pilot of Sun Life Health 360, an app built using Dialog's flexible digital engagement platform as a front door to health and wellness support. It's an example of how we are leveraging our strategic capabilities across markets to create value for our clients and advancing how we think and act more like a digital company. Through this pilot, over 62,000 members now have access to Sun Life Health 360, bridging the gap in accessing care and helping facilitate better health outcomes.

Kevin: This quarter, we finalized the contract with the government of Canada to be the administrator of the Canadian dental care plan, which will provide access to dental care for up to 9 million. Additional Canadians. We also completed the acquisition of dialogue Canada's Premier virtual health care and wellness platform and finally in Canada, We completed our minority investment in <unk>.

Kevin: Our virtual pharmacy, offering increased choice and convenience for our clients.

Kevin: In the U S. We successfully launched the pilot of sunlight held 360 and have built using dialogues flexible digital engagement platform as a front door to health and wellness support.

Kevin: It's an example of how we are leveraging our strategic capabilities across markets to create value for our clients and advancing how we think and act more like a digital company.

Kevin: Through this pilot over 63000 members now have access to Sun life's held 360, bridging the gap and accessing care and helping facilitate better health outcomes.

Kevin Strain: We're continuing to roll out the platform to more members and further enhancing the app by enabling access to programs focused on kidney, joint, and muscle conditions, among others. We continue to expand our distribution capabilities and product suite to support our clients in achieving life confidence with security. During the quarter, we formed a securities investment dealer, Sun Life Canada Securities, having received regulatory approval from the Canadian Investment Regulatory Organization. We anticipate an operational launch later this year.

Kevin: We're continuing to roll out the platform to more members and further enhancing the app by enabling access to programs focus on kidney joint and muscle condition among others.

Kevin: We continue to expand our distribution capabilities and product suite to support our clients in achieving lifetime financial security during the quarter, we formed a securities investment dealer Sun Life, Canada Securities, having received regulatory approval from the Canadian investment regulatory organization, we anticipate an operational launch later this year or expand it.

Kevin Strain: Our expanded offerings in Sun Life Canada securities will broaden access to wealth solutions to help clients achieve lifetime financial security. SOP Management recently announced a strategic relationship with Scotiabank to distribute our alternative investment products to the Canadian retail market through Scotiaglobal Wealth Management. This relationship will provide Canadian high-net-worth investors with access to our world-class alternative investment capabilities. In Singapore, we launched a new indexed universal life product providing high-net-worth clients with a dynamic balance between long-term protection and growth and the flexibility to customize premium payments and investment allocations. This product has been well received by the market. We're doing more to think and act like a digital company, harnessing the power of generative AI. We're testing and learning with several Gen-AI experiments across the organization, balancing innovation while managing risk. This quarter, we launched a new Gen-AI-powered tool that helps developers write and test code more efficiently.

Kevin: Offerings, and Sun Life, Canada Securities will broaden access to wealth solutions to help clients achieve lifetime financial security.

Kevin: So see management recently announced a strategic relationship with Scotiabank to distribute our alternative investment products to the Canadian retail market through Scotia Global wealth management. This relationship will provide Canadian high net worth investors with access to a world class alternative investment capabilities.

Kevin: In Singapore, we launched our new indexed Universal life products, providing high net worth clients, a dynamic balance between long term protection and growth and the flexibility to customize premium payments and investment allocations. This product has been well received by the market.

Kevin: We're doing more to think and act like a digital company harnessing the power of generative AI, we're testing and learning with several Jenny I experiments across the organization balancing innovation, while managing risk. This quarter, we launched a new Gen. AI powered tool that helps developers right and test code more efficiently.

Kevin Strain: The tool was launched to over 2,000 employees, and we're seeing positive gains from the first group of adopters, enabling the delivery of new digital experiences for our clients. In the U.S., GEN-AI is helping improve productivity in our call centers by analyzing and summarizing calls and delivering insights on clients' top concerns. We're excited about the potential GEN-AI has to help create more exceptional client experiences and improve workplace productivity. Finally, we continue to be recognized for our progress in sustainability and our inclusive culture. Sun Life was recognized by Corporate Night as being among the Global 100 most sustainable corporations in the world for the 15th consecutive year and the 6th consecutive year as the top grants insurance company in North America.

Kevin: Two of US wants to over 2000 employees and we're seeing productivity gains from the first group of adopters, enabling delivery of new digital experiences for our clients.

Kevin: In the U S. G&A is helping improve productivity in our call centers by analyzing and summarizing calls and delivering insights on clients top concerns. We're excited about the potential Jedi I has to help create more exceptional client experiences and improved workplace productivity.

Kevin: Finally, we continue to be recognized for our progress in sustainability and our inclusive culture.

Kevin: Wife was recognized by corporate Knights as being among the global 100, most sustainable corporations in the world for the 15th consecutive year and the sixth consecutive year as the top ranked insurance company in North America. Additionally.

Kevin Strain: Additionally, Sun Life received numerous employer recognitions in 2023, including being certified as a great place to work in several key markets. SLC Management was also named the Best Places to Work in Money Management for the 4th year in a row by Pensions and Investments. We are pleased to receive these recognitions, as they reflect our inclusive culture and our commitment to our people. Turning to slide 7, we remain confident in the resilience of our strategy and our ability to execute on our strategy. In 2024, we'll be focused on taking the next step in our digital development, advancing how we think and act like a digital company. This means building on the strong foundation we have built over the last four years under our digital enterprise program, where we have been modernizing our tech stack and building our agile working model.

Kevin: Additionally, Sun life received numerous employer recognitions in 2023, including being certified as a great place to work in several key markets.

Kevin: Management was also named 2023 best places to work in money management for the fourth year in a row by pensions and investments. We're pleased to receive these recognitions as they reflect our inclusive culture and our commitment to our people.

Kevin: Turning to slide seven what do you mean, we remain confident in the resilience of our strategy and our ability to execute on our strategy in 2024 will be focused on taking the next step in our digital development advancing how we think and act like a digital company. This.

Kevin: This means building on the strong foundation, we have built over the last four years under our digital Enterprise program, where we have been modernizing our tech stack and building our agile working model 2024 will see us continue to evolve towards thinking and acting more like a digital company, including building out new apps and new features on existing apps to <unk>.

Kevin Strain: 2024 will see us continue to evolve towards thinking and acting more like a digital company, including building out new apps and new features on existing apps to support our clients' financial security and healthy living. We will also continue to look for and execute on synergies between Asset Management and Insurance, building on the strong capabilities at SLC and MFS. We've built a strong health business in Canada and the U.S. and will continue to deepen the impact we have on client health, and we will accelerate our momentum in Asia, focusing on building quality distribution and strong execution. Finally, we will continue to evolve our culture towards bolder thinking, driving a bias for action, and delivering on results. In closing, I'd like to wish our Asian colleagues around the world good health, happiness, and prosperity as they celebrate the Lunar New Year over the next few days and welcome the Year of the Dragon. Gung hay fat choy, gung chee pat sai, chuk mung nam moy for all of those that are celebrating their New Year.

Kevin: Port, our clients' financial security and healthy living.

Kevin: We will also continue to look for and execute on synergies between asset management and insurance building on the strong capabilities at SLC and MFS, we've built a strong health business in Canada, and the U S and we'll continue to deepen and impact we have on clients' health and we will accelerate our momentum in Asia focusing on building quality.

Kevin: Distribution and strong execution. Finally, we will continue to evolve our culture towards Boulder thinking driving a bias to action and delivering on results.

Speaker Change: In closing I'd like to wish our Asian colleagues around the world Good health happiness and prosperity as they celebrate lunar new year over the next few days and welcomed the year of the Dragon Gung Ho Fat Choi <unk> Si Chuck among them away for all of those that are celebrating their new years I'd also like to recognize black history month, where we are.

Speaker Change: We're we're celebrating the outstanding contributions and achievements of black individuals who have made a positive impact in our communities. It is important to continue to build a more inclusive culture for everyone.

Speaker Change: And I'd like to share a final note that this will be manage its last call as our chief financial Officer.

Speaker Change: As you all know merger will be taken on the role of President of our Asia business starting in March.

Kevin Strain: I'd also like to recognize Black History Month, where we are celebrating the outstanding contributions and achievements of black individuals who have made a positive impact in our communities. It's important to continue to build a more inclusive culture for everyone. And I'd like to share a final note that this will be Manjit's last call as our Chief Financial Officer. As you all know, Manjit will be taking on the role of President of our Asia business starting in March.

Speaker Change: And yet on behalf of all suddenly first congratulations on your new appointment, we're looking forward to working with you in your new capacity and continue to see great things coming out of Sun life Asia, and with that I will turn the call over to manage it who will walk us through the fourth quarter financial results. Thank.

Manage: Thank you, Kevin and good morning, everyone.

Manage: Let's begin on slide nine which provides an overview of our fourth quarter results. We delivered strong results. This quarter as underlying net income of $983 million and underlying earnings per share of $1 68 were up 10, and 11% respectively.

Manage: This was driven by strong performance in U S and Canada as well as resilient asset management earnings.

Manjit Singh: Manjit, on behalf of all Sun Lifers, congratulations on your new appointment. We're looking forward to working with you in your new capacity and continuing to see great things coming out of Sun Life Asia. And with that, I will turn the call over to Manjit, who will walk us through the fourth quarter financial results. Thank you, Kevin, and good morning, everyone.

Manage: We are pleased that our underlying ROE of 18, 4% across the 18% Mark this quarter.

Manage: Our peer leading ROE is driven by our attractive mix of businesses across wealth and asset management group health and protection and individual protection.

Manage: Wealth and asset management comprised 40% of our Q4 underlying earnings are up 7% from the prior year.

Manjit Singh: Let's begin on slide nine, which provides an overview of our fourth quarter results. We delivered strong results this quarter, as underlying net income of $983 million and underlying earnings per share of $1.68 were up 10 and 11 percent, respectively. This was driven by strong performance in the U.S. and Canada, as well as resilient asset management earnings. We are pleased that our underlying ROE of 18.4% crossed the 18% mark this quarter. A Peer-Leading ROE is driven by our attractive mix of businesses across Wealth and Asset Management, Group Health and Protection, and Individual Protection. Wealth and Asset Management comprised 40% of Q4 online earnings, or up 7% from the prior year.

Manage: This was driven by higher asset management fee related earnings and higher investment income, reflecting volume growth and increased yields.

Speaker Change: Group Health and protection businesses comprised 40%, 34% of underlying earnings and grew 14% year over year.

Speaker Change: Results were driven by good sales growth improved disability experience and higher investment contribution partially offset by lower dental earnings.

Speaker Change: Individual protection comprised 26% of underlying earnings and increased 23% from last year. This was driven by business growth and higher investment earnings partially offset by the sale of the sunlight U K business.

Speaker Change: New business CSM at $381 million was up 51% from the prior year, reflecting strong sales in Asia and Canada.

Speaker Change: For the full year, we added over $1 billion of new business CSM.

Speaker Change: Reported net income for the quarter was $749 million $234 million lower than underlying earnings.

Speaker Change: The difference between underlying and reported net income was driven by acquisition related costs amortization of intangibles and unfavorable market related impacts.

Manjit Singh: This is driven by higher asset management fee-related earnings and higher investment income reflecting volume growth and increased yield. Group health and protection businesses comprise 44% of underlying earnings and a group 14% year over year. Results were driven by good sales growth, improved disability experience, and higher investment contribution, partially offset by lower dental earnings. Individual production comprised 26% of underlying earnings and increased 23% from last year.

Speaker Change: Market related impacts, primarily driven by negative interest rates negative interest rate experienced reflecting lower rates and unfavorable real estate experience.

Speaker Change: Real estate experience reflects modestly negative total returns in the current quarter versus our long term expectations of approximately 2%.

Speaker Change: We are long term investors and continue to view real estate as a key component of our diversified investment portfolio.

Speaker Change: Over the last 10 years, our North American real estate portfolio has generated annualized total returns in excess of our current long term assumptions.

Speaker Change: Our balance sheet and capital position remains strong this provides us financial flexibility to support attractive organic and inorganic business opportunities.

Manjit Singh: This is driven by business growth and higher investment earnings, partially offset by the sale of Sun Life UK. New business CSM of $381 million was up 51% from the prior year, reflecting strong sales in Asia and Canada. For the full year, we added over a billion dollars of news business CSM. Reporting your income for the quarter was $749 million, $234 million lower than underlying earnings. The difference between underlying reporting and income was driven by acquisition-related costs, amortization of intangibles, and unfavorable market-related impacts. Market-related impacts are primarily driven by negative interest rate experience reflecting lower rates and unfavorable real estate experience.

Speaker Change: Turn capital to shareholders and maintain resilience to absorb potential impacts from volatile market conditions.

Speaker Change: S. L. I fly cut of 149% increased two points from the prior quarter, primarily driven by strong organic capital generation.

Speaker Change: Capital generation in the quarter before payment of dividends with just over $1 billion, reflecting good business results and favorable capital impacts from lower interest rates.

Speaker Change: Book value per share increased 2% quarter over quarter Holdco cash remains strong at $1 6 billion and our leverage ratio remains low at 21, 5%.

Speaker Change: Now, let's turn to our business group performance, starting on slide 11 with MFS MFS.

Speaker Change: MFS net underlying income of USD $191 million was down $11 million or 5% from the prior year, reflecting higher expenses, partially offset by higher M&A and increased investment income.

Manjit Singh: Realistic experience reflects markedly negative total returns in the current quarter versus our long-term expectations of approximately 2%. We are long-term investors that continue to view real estate 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 in excess of our current long-term assumptions. Our balance sheet and capital position remain strong. This survives as a financial effectively to support attractive organic and inorganic business opportunities, return capital to shareholders, and maintain resilience to absorb potential impacts on volatile market conditions. SLS YCAT of 149% increased two points from the prior quarter, primarily driven by strong organocapillar generation.

Speaker Change: Reported net income of U S 183 million was down 18% year over year, driven by the fair value changes in shares owned by MFS management.

Speaker Change: Pre tax net operating margin of 39% remained resilient.

Speaker Change: AUM if U S 599 billion was up 43 billion from the prior quarter driven by market appreciation, partially offset by net outflows of $11 2 billion.

Speaker Change: MFS investment performance was strong over 95% of fund assets ranked in the top half of their respective Morningstar categories for both five and 10 year performance.

Speaker Change: Short term performance was impacted by the significant outperformance of a small group of equities relative to MFS is broader core and growth oriented strategies.

Speaker Change: Turning to slide 12, SLC management generated underlying net income of $70 million up from $48 million last year, driven by higher fee related earnings and higher seed investment income.

Speaker Change: Fee related earnings of $92 million were up 26% year over year.

Speaker Change: The increase reflects strong capital raising and deployment of capital into fee, earning AUM over the past year as well as the ADM acquisition.

Manjit Singh: Total capital generation in the quarter, before payment of dividends, was just over a billion dollars, reflecting good business results and favorable capital impact from lower interest rates. Book value per share increased 2% quarter over quarter. Total cash remains strong at $1.6 billion, and our leverage ratio remains low at 21.5%. Now, let's turn to our business group performance, starting on slide 11 with MFS. MFS Net Underlying Income of U.S. $191 million was down $11 million or 5% from the prior year, reflecting higher expenses, partially offset by higher ANA, and increased investment income. Reporting that income of U.S. $183 million was down 18% year-over-year driven by the fair value changes in shares owned by MFS Managers.

Speaker Change: Reported net income was $47 million up $29 million year over year, largely due to growth in underlying earnings.

Speaker Change: Capital raising a $5 5 billion increased over the prior quarter driven by demand for public debt and associate fixed income and strong fund raising at biggio for the full year SLC management raised $13 1 billion of capital totaled.

Speaker Change: Total AUM of $223 billion was up $13 billion from the prior year.

Speaker Change: Turning to slide 13, Canada underlying net income of $350 million was driven by strong growth across all businesses reported net.

Speaker Change: Net income of 3300 $48 million was in line with underlying earnings as unfavorable market related impacts and acquisition related expenses were largely offset by favorable lacma.

Speaker Change: Wealth and asset management underlying earnings were up 28% year over year on increased investment income from higher volumes and yields.

Manjit Singh: Free Tax Net Operating Margin, 39% Remaining Residual, AUM of US $599 billion was up $43 billion from the prior quarter, driven by market appreciation partially offset by a net outflow of $11.2 billion. MFS investment performance was strong; over 95% of fund assets ranked in the top half of the respective Morningstar categories for both 5 and 10 year performance. Short-term performance is impacted by the significant outperformance of a small group of equities relative to MFS's broader core and growth-oriented strategy. Transition to slide 12, SLC management generated an underlying net income of $70 million, up from $48 million last year, driven by higher fee-related earnings and higher seed investment income. Re-related earnings of $92 million were up 26% year-over-year.

Speaker Change: Group Health and protection on underlying earnings increased 56% year over year, reflecting business growth and improved disability experience driven by higher margins lower claims volumes and shorter claim durations.

Speaker Change: Individual protection earnings were up 9% year over year on higher investment earnings, partially offset by unfavorable mortality experience.

Speaker Change: Both group and individual protection businesses posted strong sales growth.

Speaker Change: <unk> sales were up 63% on higher large case sales, while individual sales were up 23% to your higher power lifestyles.

Speaker Change: Turning to slide 14 U S underlying net income of U S $187 million was up 8% from last year.

Speaker Change: Reported net income of USD $77 million includes unfavorable asthma negative market related impacts and the acquisition related expenses.

Speaker Change: Group Health and protection underlying earnings were down from the prior year driven by door lowered dental results, partially offset by growth in group benefit earnings.

Speaker Change: Our group benefit businesses benefited from strong revenue growth driven by good sales and disciplined pricing higher investment returns and improved mortality experience, partially offset by less favorable morbidity experience compared to the prior year.

Manjit Singh: The increase reflects strong capital raising and deployment of capital into peer-earning AUM over the past year, as well as the AAM acquisition. Reporting net income was $47 million, up $29 million year-over-year, largely due to growth and underlying earnings. Capital raising of $5.5 billion increased over the prior quarter, driven by demand for public debt at Associated Fixed Income and strong fundraising at BGO. For the full year, SLC management raised $13.1 billion of capital.

Speaker Change: U S morbidity experienced in the quarter remained favorable in stop loss and group disability, partially offset by unfavorable dental experience.

Speaker Change: U S group sales of $932 million were up 4% year over year, driven by strong stop loss sales. We are pleased with this performance. During this important part of our annual sales cycle.

Speaker Change: Lower dental results were driven by the impact of Medicate re determinations on member count, which which drove lower dental premiums and higher loss ratios.

Speaker Change: Looking forward, we expect the added revenue from train train three sales as well as our current sales pipelines to more than offset the impacts from the Medicaid redetermination process driving good dental revenue and earnings growth in 2024.

Manjit Singh: Total AUM of $223 billion was up $13 billion from the prior year. Turning to slide 13, Canada's underlying income of $315 million was driven by strong growth across all businesses, reporting that income of $348 million was in line with underlying earnings as unfavorable market-related impacts and acquisition-related expenses were largely offset by favorable ACMA. Wealth and Asset Management Underlying Earnings were up 28% year-over-year on increased investment income from higher volumes and yields. Group health and protection underlying earnings increased 56% year-over-year, reflecting business growth and improved disability experience driven by higher margins, lower claims volume, and shorter claim duration. Individual protection earnings were up 9% year-over-year, and higher investment earnings were partially assessed by unfavorable mortality experience.

Speaker Change: Individual protection results increased year over year, reflecting the inclusion of our legacy UK business and better mortality experience.

Speaker Change: Slide 15 outlines <unk> results for the quarter.

Speaker Change: Underlying net income of $143 million was up 5% year over year on a constant currency basis.

Speaker Change: Normalizing for the impact of insurance experience Asia results were in line with the prior quarter, reflecting good core business fundamentals fundamentals.

Speaker Change: Reported net income of $44 million includes unfavorable market impacts, partially offset by favorable tax benefits.

Speaker Change: We continue to see good sales momentum in Hong Kong was it with sales up four times, the every year and high net worth where sales grew 88%.

Speaker Change: The strong sales results also drove new business CSM of $223 million up 82% from the prior year.

Speaker Change: Overall, we closed the year on a high note we delivered year over year underlying earnings growth of 10% generated peer leading underlying ROE of 18, 4%. We maintained an excellent capital position had strong sales momentum in both our individual protection and group health and protection businesses and our asset management businesses were resilient.

Manjit Singh: Both group and individual protection businesses posted strong sales growth. Group sales were up 63% due to higher large case sales, while individual sales were up 23% due to higher par life. For instance, slide 14, U.S. underlying net income of U.S. $187 million was up 8% from last year, although reporting that income of U.S. $77 million includes unfavorable asthma, negative market-related impacts, and acquisition-related expenses. Group health and protection underlying earnings were down from the prior year, driven by lower dental results, largely offset by growth in group benefit earnings.

Speaker Change: Delivering steady contribution in a challenging environment.

Speaker Change: Looking ahead, we are optimistic that our strong fundamentals and focus on execution will help carry our strong performance into the new year.

Speaker Change: In closing as Kevin noted this will be my last call as CFO I would like to thank my finance team for all their tremendous support over the past three years in my tenure as CFO I would also like to thank our investors and analysts for your thoughtful engagement now I'll turn the call over to David for Q&A.

David: Thank you manage it 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.

David: Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question Press Star One again, one moment for our first question.

Manjit Singh: Our group benefit businesses benefited from strong revenue growth driven by good sales and disciplined pricing, higher investment returns, and improved mortality experience, partially offset by less favorable morbidity experience compared to the prior year. U.S. morbidity experience in the quarter remains favorable in soft loss and group disability, while it has step-by-step unfavorable dental experience. U.S. group sales of 932 looms were up 4% year-over-year, driven by strong stop-loss sales. We are pleased with this performance during this important part of our annual sales cycle. Lower dental results were driven by the impact of Medicaid redeterminations on member count, which drove lower dental premiums and higher loss ratios.

Speaker Change: That will come from the line of Manny Grumman with Scotiabank. Your line is open.

Manny Grumman: Hi, Good morning wanted to ask about the impact of real estate this quarter and just see.

Manny Grumman: Whether the impact was concentrated in any particular geography or property type.

Manny Grumman: Many thank you for the question, it's Randy Brown.

Speaker Change: <unk>.

Randy Brown: A decrease in the valuation of real estate I would say, it's primarily office and worse in the U S than other areas.

Manjit Singh: Looking forward, we expect the added revenue from 2020 pre-sales, as well as our current sales pipelines, to more than offset the impact of the Medicaid redetermination process, driving good dental revenue and earnings growth in 2024. Individual protection results increase year over year, reflecting the inclusion of our legacy UK business and better mortality experience. Slide 15 outlines ACO's results for the quarter, underlying that income of $143 million was up 5% year-over-year on a constant currency basis. Normalizing for the impact of insurance experience, ASA's results were in line with the prior quarter, reflecting good core business fundamentals. Reported net income at $44.9 includes unfavorable market impacts, partially offset by favorable tax benefits.

Speaker Change: And.

Speaker Change: What we're seeing is.

Speaker Change: Actually pretty healthy for the market.

Speaker Change: We're getting.

Speaker Change: The difference between buyers and sellers with these valuation write downs closing that gap, which is leading to the beginning of actually a functioning market again, because we had seen a dearth of activity.

Speaker Change: You need that activity.

Speaker Change: To get the market back to balance so I would say primarily office and primarily U S. But it was also in.

Speaker Change: In Canada as well Additionally, as we talked about in priors.

Speaker Change: We are seeing reevaluation in things like industrial and multifamily as well simply a delayed response to the increase in interest rates. So we've seen the.

Manjit Singh: We continue to see good sales momentum in Hong Kong with sales up four times every year and high net worth where sales grew 88%. The strong sales results also drove new business CSM of $223M, up 82% from the prior year. Overall, we closed the year on a high note.

Speaker Change: The underlying metrics change and adjust and this was.

Speaker Change: This was something that had been signaled broadly in the real estate markets.

Speaker Change: And then just as a follow up I mean, it looks like the drag is getting bigger. So I'm wondering I think you touched on it but just if you could provide maybe some outlook or guidance in terms of how reasonable is it to assume that.

Manjit Singh: We delivered year-over-year underlying earnings growth of 10%, generated peer-leading underlying ROE of 18.4%, we maintained an excellent capital position, had strong sales momentum in both our individual protection and group health and protection businesses, and our asset management businesses were resilient, delivering steady contribution in a challenging environment. Looking ahead, we are optimistic that our strong fundamentals and focus on execution will help carry our strong performance into the new year. In closing, as Kevin noted, this will be my last call as CFO.

Speaker Change: Those impacts have peaked for you.

Speaker Change: Maybe start there if you get some thoughts on that because definitely looks like it's the impact is getting bigger quarter to quarter here in terms of the drag.

Speaker Change: Sure. Thank you.

Speaker Change: So the expectation is you saw the very rapid increase in interest rates that really peaked.

Speaker Change: In this summer.

Speaker Change: And so the decrease in valuations in Q3 and Q4 as a result of the increase in rates.

Manjit Singh: I'd like to thank my finance team for all their tremendous support over the past three years during my tenure as CFO. I would also like to thank our investors and analysts for your thoughtful engagement. Now, I will turn the call over to David for Q&A. Thank you, Manjit.

Speaker Change: It's quite logical the expectation is.

Speaker Change: That real estate prices will continue to normalize for the first half of 2024.

David Garg: 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 pull this participant. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, press star 118.

Speaker Change: But I do want I do want to remind people we are.

Speaker Change: Long term holder or typical hold period is 10% to 20 years in the portfolio. We're a cash buyer. So we have absolutely no pressure to sell.

Speaker Change: So we can weather situations like this and actually benefit from them.

Speaker Change: Caves us opportunities to go into the market and.

Randy Brown: One moment for our first question. That will come from the line of Manny Grauman with Scotiabank. Your line is open. Hi, good morning. I wanted to ask about the impact of real estate this quarter and just see whether the impact was concentrated in any particular geography or property type. www.sunlife.com Many thanks for the question. It's Randy Brown.

Speaker Change: And by things that we think could be really attractive long term.

Speaker Change: Values as Mandy said, we have we have outperformed our long term expectations over the last decade.

Speaker Change: So it's an asset class that is important to our big global diversified.

Kevin Strain: Asset holding high quality it has in place and it is performing well over the long run and we think it's it will continue to do so.

Randy Brown: The decrease in the valuation of real estate, I would say, primarily office, and worse in the US than other areas. And, um, what we're seeing is actually pretty healthy for the market because we're getting the difference between buyers and sellers with these valuation write-downs, closing that gap, which is leading to the beginning of actually a functioning market again because we've seen a dearth of activity. You need that activity to get the market back to balance. So I would say primarily office space and primarily U.S., but it was also in Canada as well.

Speaker Change: So just just to follow up on that in terms of your outlook for offsets U S office specifically.

Speaker Change: Like have you made a determination your view.

Speaker Change: The valuation pressure as temporary and its not.

Speaker Change: Let's say structural is that something that you're kind of willing to to say that's what we believe here.

Randy Brown: Just thoughts on how structural the revaluation is specifically for maybe the hardest hit.

Randy Brown: Additionally, as we talked about in previous reports, we are seeing revaluation in things like industrial and multi-family as well, simply a delayed response to the increase in interest rates. So we've seen the underlying metrics change and adjust, and this was something that had been signaled broadly in the real estate market. And then just as a follow-up, it looks like the drag is getting bigger, so I'm wondering, and I think you touched on it, but just if you could provide... www.sunlife.com www.sunlife.com. How reasonable is it to assume that these organizations? Thank you very much.

Speaker Change: Pretty types that you hold.

Randy Brown: Yes, the <unk>.

Speaker Change: Office sector in particular, I think is a bit structural for a while as a result of the change in working dynamics work from the office or work from home.

Randy Brown: <unk> during Covid, we are seeing a gradual return to office across industry, but I don't think we ever get.

Randy Brown: Back to four or five days a week in the office across all sectors that would populate office space.

Randy Brown: Thank you. Thanks. Happy Sunday! Happy Sunday! Happy Sunday! Happy Sunday! Happy Sunday! Happy Sunday!

Randy Brown: So I think that piece of it is what I would call it.

Speaker Change: Temporary structural but over time, the economy is growing and demand for office space will rise and so you need to have that.

Randy Brown: Peace for you. There are, Thank you for your thoughts on that. It definitely looks like the impact is getting bigger quarter to quarter. Carter, thank you. The expectation is that you saw the very rapid increase in interest rates that really peaked in the summer, and so the decrease in valuations at 2.3 and 2.4 as a result of the increase in rates is quite logical. The expectation is that real estate prices will continue to normalize for the first half of 2024 and then stabilize, but I do want to remind people, you know, we are a long-term holder. Our typical hold period is 10 to 20 years in the portfolio. We're a cash buyer, so we have absolutely no pressure to sell, so we can weather situations like this and actually benefit from them because it gives us opportunities to go into the market and buy things that we think could be really attractive long-term values.

Randy Brown: Transfer.

Randy Brown: Current holders, who may need less space to new owners that are growing.

Speaker Change: So if you take an intermediate to long term view on office, we think there will be opportunity is actually to do quite well in office, but not yet.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you one moment for our next question.

Randy Brown: And that will come from the line of Thomas Mackinnon with BMO capital. Your line is open.

Thomas Mackinnon: Yes, thanks, very much I guess, the first question and maybe it's for Kevin This.

Speaker Change: This is manage its last call and I think within five weeks he is going to be.

Thomas Mackinnon: In Asia. So just if you can update us as to how the search for his replacement is coming along and a follow up thanks.

Randy Brown: As Manjit said, we have outperformed our long-term expectations over the last decade. So it's an asset class that is important to our big, global, diversified asset holding of high quality. It has a place in it, it's performing well in the long run, and we think it will continue to do so. Just to follow up on that, in terms of your outlook for offices, U.S. offices... Have you made a determination, your view? Evaluation pressure is temporary, and it's not.., www.sunlife.com how structure, The revaluation is specifically for maybe the hardest.., www.sunlife.com Yeah, the office sector, in particular, I think it is a bit structural for a while as a result of the change in working dynamics, work from the office or work from home. During COVID, we are seeing a gradual return to the office across industry, but I don't think we ever get back to work five days a week in the office across all sectors that would populate office space.

Thomas Mackinnon: Yeah.

Kevin: Sure, Thanks, Tom and I want to say again that.

Randy Brown: I want to thank management for his leadership as the as the CFO of the past three years have guided us through the <unk> 17 project, which was one of the biggest projects. The company has ever done and in the end of Covid and he has built a really strong partnership at Sun life, including in Asia. So I think he's going to do a great job in Asia and I'm looking forward to working with him as the press.

Randy Brown: In our Asia business.

Kevin: You know it manage it will be the CFO until mid March when he takes over.

Randy Brown: As the head of Asia, we've already begun interviewing both internal and external candidates, we're seeing some really great people and once we finished our search will have an announcement on the new CFO.

Kevin: Okay.

Speaker Change: And just I guess, a follow up would be with respect to the capital generation I think.

Randy Brown: So I think that piece of it is what I would call temporary and structural, but over time, the economy is growing, and demand for office space will rise, and so you need to have that transfer from current holders who may need less space to new holders that are growing. So if you take an intermediate to long-term view of office, we think there will be opportunities to do quite well in office, but not yet. Thank you. Bye. Bye.

Kevin: Match. It you said it was over a $1 billion before payment of dividends and that's about.

Randy Brown: About a 100% of your underlying earnings seems to be stronger than what you've kind of outlined as your medium term guidance, what was driving that to be better than this quarter and if you can comment about.

Kevin Strain: Thank you. One moment for our next question, and that will come from the line of Thomas McKinnon with BMO Capital. Yeah, thanks very much. I guess the first question, maybe, is for Kevin. This is Manjus Black Collin.

Kevin Strain:

Thomas McKinnon: It may be utilization of the buyback you've been quiet with respect to that.

Thomas McKinnon: Guess, maybe had some some new material nonpublic info on a CFO change and maybe that's what stopped you from buying back in the quarter, but.

Kevin Strain: Page 1, Sure. Thanks, Tom. And I want to say again that I want to thank Manjit for his leadership as the CFO for the past three years. He guided us through the IFRS 17 project, which was one of the biggest projects the company ever did at the end of COVID. And he's built a really strong partnership at Sun Life, including in Asia. So I think he's going to do a great job in Asia.

Kevin Strain: What are your thoughts on that just given the good capital generation. Thanks.

Speaker Change: Good morning, Tom So I'll take the first part of your question and then hand it over to Kevin for the buyback question. So as you noted we have a very strong capital position with 149% and again that represents our strong save a strong mix of.

Kevin Strain: And I'm looking forward to working with him as the president of the Asia business. As you know, Manjit will be the CFO until mid-March when he takes over as the head of Asia. We've already begun interviewing both internal and external candidates. We're seeing some really great people.

Kevin Strain: Capitalized businesses.

Kevin Strain: Over the medium term, we expect to generate capital between 75, and 85% of Uni and Thats before dividends and after funding organic investments.

Kevin Strain: And once we've finished our spirits, we'll have an announcement about the new CFO. Okay. Okay.

Manjit Singh: I guess the follow-up would be, with respect to the capital generation, I think... Billion dollars. Payment as dividends, and that's about 100% of your underlying... www.sunlife.com, Kind of outlined as your medium-term guidance, what was driving that to be better in this quarter? And if you can comment about... www.sunlife.com Guess, maybe, huh? and non-public, www.sunlife.com dot com, www.sunlife.com Good morning, Tom.

Manjit Singh: And what that translates to is roughly one to two points.

Manjit Singh: Per quarter on average and as you noted every quarter that might bump around a little bit this quarter was a little bit higher than that and the main reason for that was in addition to strong business capital generation. We also saw some favorable capital impacts from market movements, primarily driven by the lower rate environment.

Manjit Singh: So I'll turn it over to Kevin on the buyback, Thanks mentioned and Tom.

Manjit Singh: As you know our.

Manjit Singh: On buybacks has a lot of factors, including where we are on M&A and.

Manjit Singh: So, I'll take the first part of your question and then hand it over to Kevin for the buyback question. So, as you noted, we have a very strong capital position at 149%, and again, that represents our strong mix of capitalized businesses. Over the medium term, we expect to generate capital between 75% and 85% of Juni, and that's before dividends and after funding organic investments. And what that translates to is roughly one to two points per quarter on average, and as you noted, every quarter that might bump around a little bit.

Kevin Strain: Also looking at things like non material public information as you mentioned they could change in the CFO, we expect to execute on our buyback and we intend to start purchasing once the blackout period, and so I think it's our intention on buyback hasn't changed and that just gets reflected in terms of what's happening in total around the company.

Kevin Strain: Okay. Thanks.

Speaker Change: Thank you one moment for our next question.

Manjit Singh: And that will come from the line of Gabriel Duchaine with National Bank Financial Your line is open.

Kevin Strain: Hi, Good morning, I did want to revisit the CRE thing just the Angola one.

Manjit Singh: This quarter was a little bit higher than that, and the main reason for that was, in addition to strong business capital generation, we also saw some favorable capital impacts from market movements primarily driven by the lower rate environment. I'll turn it over to Kevin on the buyback. Thanks, Magic.

Kevin Strain: And I think Randy confirm that none of your properties are levered. So you are full.

Manjit Singh: Theres no mortgages on the properties.

Kevin Strain: And then the other.

Kevin Strain: Aspect of the commercial real estate exposure the mortgage book itself, where youre. The lender just want to confirm there were no losses.

Kevin Strain: And Tom, as you know, our decision on buybacks has a lot of factors, including where we are on M&A and also looking at things like non-material public information, as you mentioned, like a change in the CFO. We expect to execute on our buyback, and we intend to start purchasing once the blackout period ends. So I think our intention for the buyback hasn't changed, and it just gets reflected in terms of what's happening in total around the company. Okay, thanks. Thank you. One moment for our next question, and that will come from the line. Gabriel Desane with National Bank Financial. Your line is open. Hey, good morning.

Gabriel Desane: If there were or where do we see that particularly.

Gabriel Desane: Or would it just go through investment experience.

Kevin Strain: Yeah.

Gabriel Desane: Thank you Gabriel Randy again in terms of the real estate equity portfolio. You are correct. We don't we don't lever. We do have one exposure to a fund in Asia, because in Asia, They can't own U S property directly.

Gabriel Desane: So it's in the form of a REIT and the REIT has moderate leverage lower than the industry, but moderate leverage that's really the only place where.

Randy Brown: I do want to revisit the CRE thing, just a different angle. One, and I think Randy confirmed that, none of your properties are levered. So you're, you know, full; there are no mortgages on these big properties. And then the other aspect of commercial real estate exposure is the mortgage book itself, where you're the lender. I just want to confirm there are no losses. And if there were, would you see that disposed of distinctly?

Randy Brown: With respect to CML, we had.

Randy Brown: One small losses came through rounding.

Speaker Change: Rounding error.

Randy Brown: Other than that we have no arrears.

Randy Brown: Okay.

Randy Brown: From a yes already mentioned.

Randy Brown: Or would it just go through investment expansion? Thank you Gabriel. Randy again. In terms of the real estate equity portfolio, you are correct. We don't borrow.

Randy Brown: Other part of it yes. So gave on your on your second part of the question. If we didn't have any kind of impairments that would come through our credit experience in the <unk>.

Randy Brown: We do have one exposure to a fund in Asia because in Asia, they can't own U.S. property directly, so it's in the form of a REIT, and the REIT has moderate leverage, lower than the industry but moderate leverage; that's really their only place. With respect to CML, we have one small log seeking through a rounding error, and other than that, we have no weirs. Okay. And from a... Yeah, sorry.

Randy Brown: Okay.

Speaker Change: Okay got it and then well.

Randy Brown: Yes.

Randy Brown: Asia.

Randy Brown: New home, so no big region obviously.

Randy Brown: Sales growth looked really good this quarter, but.

Randy Brown: 6% earnings growth not really what people expect from us.

Randy Brown: Yeah.

Randy Brown: I know your management team spent a fair bit of time.

Randy Brown: Traveling in the region over the past quarter.

Randy Brown: And I just wanted to get a sense for.

Manjit Singh: What are what your perspective is on the business today.

Manjit Singh: Manjit, I guess you can answer the other part of that. Yeah. So, Gabe, on your second part of the question, if we did have any kind of impairments, that would come through our credit experience fund in the DOE. Okay. Got it. And then... Ava is in your new home soon, a big reason, obviously.

Speaker Change: Fixes needs to be made where you need to reinvigorate the franchise needs to be reinvigorated are there any particular problem areas, maybe Vietnam, some lapse issues going on there.

Manjit Singh: Sales growth looks really good this quarter, but 6% earnings growth is not really what people expect from that business. I know your management team spent a fair bit of time... I've traveled the region over the past quarter, and I just want to get a sense for, you know, what your perspective is on the business today, what fixes need to be made, where you need to reinvigorate, which franchises need to be reinvigorated, any particular problem areas, maybe Vietnam, I hear there are lots of issues going on there, just maybe some broad strokes and where you think that the business is headed and how you're Thanks for your question, Gabe.

Speaker Change: Maybe some broad strokes.

Speaker Change: Where do you think the division inside of them.

Speaker Change: Are you going to push in that direction.

Speaker Change: Thanks for your question Gabe. So overall I think if I step back and then we have a tremendous franchise in Asia. You know one of the great things about Sun life as we have been in in Asia, very long time, and we've built strong roots. There. We've got an amazing group of people that work there and we have excellent partners that we have in each one of our jurisdictions in terms of individual businesses I mean, those things would have been.

Speaker Change: So over time, there our Hong Kong business, our international high net worth business as you heard on the call are doing extremely well and there are a few places like Vietnam.

Speaker Change: That are going through a downturn right now, but we have a strong franchise. We have good people and we have a good plan and I expect that to turn around.

Kevin Strain: So, overall, I think if I step back, and we have a tremendous franchise in Asia, and one of the great things about Sun Life is we've been in Asia for a very long time, and we've built strong roots there. We've got an amazing group of people that work there, and we have excellent partners that we have in each one of our jurisdictions. In terms of individual businesses, I mean, those things will ebb and flow over time. There are the Hong Kong business, our international high-network business, as you heard in the call, is doing extremely well, and there are a few places like Vietnam that are going through a downturn right now, but we have a strong franchise, we have good people, and we have a good plan, and I expect that to turn around.

Kevin Strain: Okay.

Kevin Strain: David It's Kevin it's Kevin I might just add you had mentioned the quarter and I just wanted to point out that.

Kevin Strain: Overall, I view Asia is having a good quarter was a little bit behind our average of $150 million per year or per quarter for the year, but we also saw good growth in this we saw good growth in the CSM and we saw strong sales. So I think that those two things have to be looked at together and if you actually if you look at the.

Kevin Strain: The business growth for the quarter was $47 million, which was quite quite significant and one of the things that I look at is the expected insurance earnings which grew quite nicely over the year to $150 million in the quarter. So while the quarter may be a little bit behind are sort of 150 that we've run rate per quarter. This year, it's I would say that <unk>.

Kevin Strain: This is Kevin. I might just add. You mentioned the quarter, and I just wanted to point out that overall, I view Asia as having a good quarter. It was a little bit behind our average of $150 million per year, or per quarter for the year, but we also saw good growth in this, we saw good growth in the CSM, and we saw strong sales. I think that those two things have to be looked at together, and if you actually look at the business growth for the quarter, which was $47 million, which was quite significant, and one of the things that I look at is the expected insurance earnings, which grew quite nicely over the year to $150 million in the quarter. So while the quarter may be a little bit behind our $150 million that we run rate per quarter this year, I would say that overall, it's Okay, and longer term, you've just got to build scale, sell more products, and build up the import side. That's really the name of the game.

Kevin Strain: Raul it's still good results.

Speaker Change: Okay and is it really.

Kevin Strain: Longer term, it's you just got to build scale sell more product buildup. The enforced that's really the name of the game.

Speaker Change: We've been building out our distribution strength in each of the markets. We've entered into a number of new bank assurance deals. We've been focused on building out agency at broker relationships I mentioned earlier, the Hong Kong sales in the work we've been doing with mainland Chinese individuals and driving flows there. So it's about focusing on.

Kevin Strain: The client getting the right product and distribution and focusing on the quality of the distribution that we've been building out those capabilities and.

Kevin Strain: Yes.

Kevin Strain: Our thesis continues we've talked about 15%.

Kevin Strain: You know, we've been building out our distribution strength in each of the markets. We've entered into a number of new bank insurance deals. We've been focused on building out agency and broker relationships. I mentioned earlier the Hong Kong sales and the work we've been doing with mainland Chinese individuals and driving flows there. So it's about, you know, focusing on the client, getting the right product and distribution, and focusing on the quality of the distribution.

Kevin Strain: Both from Asia.

Kevin Strain: That's kind of what we look to and expecting over the medium term.

Speaker Change: Okay. Thank you.

Speaker Change: One moment for our next question.

Kevin Strain: That will come from the line of Doug Young with Jay Jordan <unk> capital markets. Your line is open.

Speaker Change: Hi, good morning, maybe I'll stick with Asia.

Kevin Strain: Two part question.

Kevin Strain: It looked like one of the drivers.

Kevin Strain: And we've been building out those capabilities. And yeah, our thesis continues. We've talked about 15% growth from Asia. And that's kind of what we look to and expect over the medium term. Okay, thank you.

Kevin Strain: The underlying earnings not really expanding the way people thought was.

Kevin Strain: Expense experience I think was part if there is a bit of lapse in there, but just maybe you can talk a bit about the negative experience.

Dove Young: This quarter what were the driver is more temporary and then obviously.

Steve Feature: We'll take one moment for our next question, and that will come from the line of Dove Young with Desjardins Capital Markets. Your line is open. Good morning. Maybe I'll stick with Asia.

Dove Young: What we're seeing so far this year.

Dove Young: Some fairly material pullback in equity markets in China, and Hong Kong in.

Jacques: I guess a two part question. It looks like one of the drivers of the underlying Ernie's not really expanding the way people thought was, Thanks for watching, www.sunlife.com. This quarter, you know, what were the drivers? Careers, and then, you know, obviously, Ecosystems Group. Doug, it's Kevin.

Jacques: There is an element of your Asia business that.

Dove Young: Is exposed to two equity market just trying to get a sense of maybe you can map that it was a little bit how to think about that.

Jacques: Equity market, new mint and the implications for your business in Asia.

Jacques: Okay.

Kevin Strain: Doug It's Kevin So I would start by saying that I noted the strong business growth of $47 million and you're right to point out that that was offset by experienced losses in those experience losses were roughly one third from policyholder behavior, one third from expenses and one third from other items. The expenses were a mix of things including AIP.

Kevin Strain: So, I would start by saying that I noted the strong business growth of $47 million. But you're right to point out that that was offset by experience losses. And those experience losses were roughly one-third from policyholder behavior, one-third from expenses, and one-third from other items. The expenses were a mix of things, including AIP, some project spend, and some investment we made in the brand, which we think are all good things. So, that's part of it. On policyholder behavior, there was a mixture of things happening in Hong Kong where we were seeing conversion of our term products into more permanent products. And on that conversion, we experienced a lapse loss, in essence.

Kevin Strain: Some projects spanned some investment we made in brand, which we think are all good things.

Kevin Strain: So that's part of it on the policyholder behavior. It was a mixture of things happening in Hong Kong, where we were seeing conversion of our term products.

Kevin Strain: Into more permanent products sit on that conversion, we experience up a lapse loss in essence, but to offset that we see growth in the CSM when theyre going into the into the new product and we did see a little bit of a lapse in other parts of the Albion, but.

Kevin Strain: But to offset that, we see growth in CFM when they go into the new product. And we did see a little bit of a lapse in other parts of the ASEAN. But, you know, it was a mixture of things.

Kevin Strain: It was a mixture of things and I think that overall I still come back to what I said to gave that if you look at where we're at in the mixture of the business growth.

Kevin Strain: And I think that overall, I still come back to what I said to Gabe that if you look at where we are in the mixture of business growth being offset by some of these experience things that were kind of a mixture of multiple pieces. If I step back and look at your question around equity performance, we have a fairly small exposure to China. I mean, our business in China is a joint venture with Everbright Group that we own 25% of. It's not a major piece of our income or how we look at Asia.

Kevin Strain: Being offset by some of these experienced things that were kind of a mixture of multiple pieces.

Kevin Strain: If I step back and look at your question around equity performance, we have a fairly small exposure to China I mean, our business in China is a joint venture with Everbright group that we owned 25% of its not a major piece of the income or how we look at Asia. We think long term, it's got great potential and we liked.

Kevin Strain: We think, long term, it's got great potential, and we like the relationship with Everbright. But, you know, it's a smaller piece of our business in Asia. And in Hong Kong, you saw the growth we've had during the year. We continue to build out our capabilities. We're the third largest MPF, and we have a significant client base there that we think we can leverage, and we've been building out our access to mainland Chinese individuals coming into Hong Kong to purchase both insurance and health products.

Kevin Strain: Our relationship with Everbright, but.

Kevin Strain: It's.

Kevin Strain: It's a smaller piece of our business in Asia and in Hong Kong you saw the growth we've had during the year. We continue to build out capabilities. We're the third largest MTF and we have significant client base. There that we think we can leverage and we've been building out our access to mainland Chinese.

Kevin Strain: Individuals' coming into Hong Kong to purchase both insurance and health products and I would say that while there is some equity exposure, particularly in the <unk> business I think the broader fundamentals of the distribution capabilities that we're building out.

Kevin Strain: And I would say that while there is some equity exposure, particularly in the MPF business, I think the broader fundamentals of the distribution capabilities that we're building out more than offset that, and you'll see that during the quarter. I appreciate it, and then just a second, maybe on FLC I don't have to use that, but you know, I did see a bit of a step-up in outflows quarter over quarter, and I guess more what I'm looking for is what mandates, The Capital Generation was strong, and Net Inflows were good, but you are seeing a bit of a step-up in outflows, but just trying to get Well, Doug, it's Steve Feature.

Steve Feature: More than offset that and you see that during the quarter.

Kevin Strain: I appreciate that and then just second maybe I'll ask Steve, but I did see a bit of a step up in <unk>.

Steve Feature: Flows quarter over quarter, and I guess what.

Steve Feature: What I'm looking for is what mandates.

Steve Feature: Obviously, the capital generation was strong and net inflows forget.

Steve Feature: But you are seeing a bit of a step up in <unk>.

Steve Feature: Close, but just trying to get a sense of where youre seeing like what mandates are you seeing net inflows wet mandate, so youre seeing some net.

Steve Feature: Just to get a broad sense of that.

Steve Feature: Yes, Doug it's Steve feature thanks for the question.

Steve Feature: Thanks for the question. You know, a lot of our products, especially in real estate, infrastructure, and private credit, are enclosed in funds where, you know, you really don't see outflows. So when we've seen outflows, it's really been from our fixed income clients who normally take money out or give us that money based on their own operating needs. And we, I would say, on our outflows, we really haven't seen any unusual spikes. And we, you know, knock on wood, really have seen very low outflows due to investment performance. It's usually due to the operating needs of the client.

Steve Feature: A lot of our products, especially in.

Steve Feature: Real estate and infrastructure and private credit are in closed end funds, where you you really don't see outflows.

Steve Feature: We've seen outflows, it's really been from our fixed income clients, who normally take money out or give us back money based on their own operating needs and we I would say on our outflows, we really haven't seen any unusual spikes in <unk>.

Steve Feature: Knock on wood really have seen very low outflows due to investment performance, it's usually due to the operating needs of the client.

Steve Feature: In terms of where we've seen inflows, you know, one aspect of the FFP platform now is pretty diversified across asset classes. So 2023 was a tough year to raise money in real estate, you know, as you might expect just given the rise in interest rates, but it was a good time to raise money in fixed income.

Steve Feature: In terms of where we've seen inflows.

Steve Feature: One aspect of the SLC platform now, it's a pretty diversified across asset classes. So.

Steve Feature: 2022 was a tough year to raise money in real estate.

Steve Feature: As you might expect given the rise in interest rates, but it was a it was a good time to raise money in fixed income. So we raised over 5 billion this year.

Steve Feature: So we raised over $5 billion this year in our fixed income asset, you know, investment rate fixed income. We raised money in credit capital and private credit, you know, which is an area that people are very interested in. And so I think that, you know, the diversity of the platform helps us there.

Steve Feature: In our fixed income asset investment grade fixed income, we raised money at Crescent capital in private credit.

Steve Feature: Which is an area that people are very interested in.

Steve Feature: And so I think that the.

Steve Feature: Diversity of platform helps us there.

Steve Feature: And I just point out, you know, we ended the year on a strong quarter. I think we had $5.6 billion in fundraising. And for the full year, if you look at C-Earning AUM, our net inflows were about $14 billion. Please hit the color.

Steve Feature: I just put out we ended the year on a strong quarter I think we had $5 6 billion of.

Steve Feature: <unk>.

Steve Feature: Fundraising and for the full year, if you look at fee, earning AUM, our net inflows were about $14 billion.

Speaker Change: I appreciate the color. Thank you.

Michael Barish: One moment for our next question, and that will come from the line of Mario Mendonca. Security, your line is open. Good morning. I just want to go through a couple of questions that are already in the app.

Speaker Change: And one moment for our next question.

Michael Barish: And that will come from the line of Mario Mendonca with TD Securities. Your line is open.

Mario Mendonca: Good morning, I, just want to go through a couple of questions that already and asked first on Asia. How would you characterize the spending the additional spending would you characterize it as.

Michael Barish: First on Asia, how would you characterize this spending, the additional spending? Would you characterize it as spending in support of new things, like better sales and better earnings going forward? Or is this, would you say it's more related to regulatory spending, infrastructure, compliance, and controls? How would you describe that increased spending? There's a mixture of both, Mario.

Michael Barish: Spending in support of new like better sales on them.

Michael Barish: Better earnings going forward or is this would you say its more related to.

Michael Barish: Regulatory spending infrastructure compliance controls how would you describe that increased spending.

Michael Barish: There is a mixture of both Mario there as part of it's to do with the we increased our brand spend and we think that that will pay dividends over the long term brand is an important fact.

Kevin Strain: There's part of it to do with increasing our brand spend, and we think that that will pay dividends over the long-term. Brand is an important factor in Asia, as you know. And there were other things that were, there were some IFR 17 costs in the quarter and some of those types of things. I'd say most of it, though, is related to trying to position ourselves for growth. We'll quickly on the buyback. Kevin, you referred to, you said a number of factors to drive your feelings about buybacks, but you specifically referred to M&A as one thing. Maybe is there anything more you want to highlight there?

Kevin Strain: Factor in in Asia, as you would know and there is other things that were there was some I FY 2017 costs in the quarter and some of those types of things I would say most of it though is related to trying to position ourselves for growth.

Kevin Strain: Okay.

Kevin Strain: Quickly on the buyback I think Kevin you referred to you said a number of factors could drive.

Kevin Strain: Our feelings about buybacks, but you specifically referred to M&A as one thing. So maybe do you want is there anything more you want to highlight there and then secondarily does.

Kevin Strain: And then secondarily, does valuation, like given where the stock trades right now, entrench your thinking about the pace of buybacks? So there's a few things that we would look at. Obviously, if we're looking at a big M&A in this material, that would exclude us. But we also look at M&A just from the factor of, what do we have in our pipeline and what do we expect to need in terms of driving the M&A aspirations that we have? So I think M&A is pretty evident, and we've sort of run with this across multiple quarters, and over a long period of time, we look at that M&A pipeline and where we are, and also it would impact if there was a material M&A that we were looking at. So I think that, of course, price is one of the factors that we would consider and look at. We look at sort of the expectations and some of those types of things. That's also one of the factors that goes into our calculations. All right, real quickly. Yeah, please. Was someone there?

Kevin Strain: Does valuation like given where the stock trades right now does that enter into your thinking about the pace of buybacks.

Kevin Strain: So theres a theres a few things that we would look at obviously, if we're looking at a big M&A and Thats material that would exclude US. We also look at M&A just from the factor of what do we have in our pipeline and what do we expect to be to need in terms of driving the M&A.

Kevin Strain: Aspirations that we have so I think M&A is a.

Speaker Change: It was pretty evident we've sort of run with this.

Kevin Strain: Across multiple quarters and over a long period of time, we look at the M&A pipeline and where we're at and and also it would impact if there was a material M&A that we were looking at so I think that.

Kevin Strain: We also of course prices one of the factors that we would consider and look at we look at sort of.

Kevin Strain:

Speaker Change: The expectations on some of those types of things.

Kevin Strain: That's also one of the factors that goes into our calculation.

Kevin Strain: Alright.

Kevin Strain: Quickly.

Speaker Change: Yes. Please.

Michael Barish: Where are you cut out, Mario? Oh, sorry. How about now? Can you hear me okay?

Speaker Change: With some on there.

Speaker Change: Sorry, you cut out Mario Alright.

Mario: Alright, how about now can you hear me okay, yes.

Michael Barish: Yeah, let's go back to MFS for a moment. So the outflows obviously accelerated. I was a little surprised considering how strong market conditions were, but there was a comment there that the environment remains challenging for all US asset managers. Given what the market did in the quarter and the direction of interest rates, I would have thought there would be some flows into MFS. And then, Secondly, on MSS, we've now seen four consecutive quarters of negative operating leverage. Is there something you can do on the expense side given this new environment? Hey, good morning, Mario.

Mario: Yes, you are fine now yeah, let's go back to MFS for a moment so the outflows.

Michael Barish: Obviously accelerated I was a little surprise, considering how strong market conditions were but there was a comment there that the environment remained challenged challenging for all U S asset managers.

Michael Barish: Given where the market did in the quarter and the direction of interest rates I would've thought there'd be some flows into into faster than.

Michael Barish: Secondary secondarily on MFS, we've now seen four consecutive quarters of negative operating leverage is there something you can do on the expense side given this new environment.

Michael Barish: Hey, good morning, Mario with micro bearish.

Michael Barish: It's Michael Barish. On flows, you know, it just continues to be, if you look at what's happening in the industry, clients continue to be comfortable sitting on cash. Our biggest competition currently is cash. And irrespective of what the market has done to date, historically, what gets cash off the sidelines is central banks in the U.S., the Fed beginning to cut rates, and cash yields come down, and clients tend to then migrate to broader investment products. And so we would expect that to happen. The market's got the Fed twice for the second quarter of this year, and, you know, hopefully that's when you'll see industry flows turn. You know, our share of active outflows last year for the year was actually less than our share of assets under management. So, as painful as it was, we actually picked up a share last year. And as Kevin mentioned earlier, we actually moved from 10th to 9th largest player in the industry last year. And so, you know, I think we're, you know, we're just like everybody else.

Michael Barish: Inflows just continues to be if you look at what's happening in the industry.

Michael Barish: Clients continue to be comfortable sitting on cash our biggest competition. Currently is is cash and irrespective of what the market has done to date historically, what gets the cash off the sideline as central banks in the U S. The fed beginning to cut rates and cash yields come down and clients tend to then.

Michael Barish: Great to broader investment products and so we would expect that to happen the market got the fed price for second quarter of this year and hopefully thats when youll see industry flows turn our share of active outflows last year for the year was actually less than our share of assets under management. So as painful as it was we actually pick.

Michael Barish: Sure last year and as Kevin mentioned earlier, we actually move from 10 to ninth largest player in the industry last year and so.

Michael Barish: I think we're.

Michael Barish: We're like everybody else, we're waiting for investors to migrate back into the market broadly in terms of operating leverage.

Michael Barish: Assets, given where <unk> been over the last couple of years theres going to be some negative leverage as part of that I would say is that as we're thinking about the business last year, we actually selectively took up head count in areas, where we're trying to grow we've talked about growth in fixed income growth in non U S retail.

Michael Barish: We're waiting for investors to migrate back into the markets broadly. In terms of operating leverage, you know, assets, given where ANA has been over the last couple of years, there's going to be some negative leverage as part of that. I would say as we thought about the business last year, we actually selectively took up headcount in areas where we're trying to grow. We've talked about growth in fixed income, and growth in non-U.S. retail. We took up our technology spending.

Michael Barish: We took up our technology spending we think that is an opportunity to differentiate our client offering and our ability to because we're at scale to invest in the business differentiate over the next few years and we think it would be wrong not to overreact to shorter term.

Michael Barish:

Michael Barish: What sort of headwinds in the marketplace and focus on those things that we think will drive flows over the next three and five years, we recently announced that we're going to launch active Etfs in the U S and so we're trying to identify areas of the market, where we think we grow we think we can invest we think we can differentiate and ultimately.

Michael Barish: We think that was an opportunity to differentiate our client offering and our ability to, because we're at scale, to invest in the business and differentiate over the next few years. And we think it would be wrong now to overreact to shorter-term headwinds in the marketplace and focus on those things that we think will drive flows over the next three and five years. We recently announced that we're going to launch active ETFs in the U.S., and so we're trying to identify areas of the market where we think we can grow, we think we can invest, we think we can differentiate, and ultimately build a lot of brand loyalty. That's helpful, thank you. www.sunlife.com. One moment for our next question. Okay.

Michael Barish: Build a lot of brand loyalty with clients.

Michael Barish: That's helpful. Thank you.

Michael Barish: Yeah.

Speaker Change: Thank you one moment our next question.

Michael Barish: And that will come from the line of Paul Holden with CIBC. Your line is open.

Speaker Change: Thank you good morning.

Michael Barish: First question is for Dan.

Michael Barish: A number of moving pieces going on with the U S group business, maybe an update on your expectations for Redetermination in Paas over the next couple of quarters.

Michael Barish: And when should the strong sales results start to overwhelm that.

Dan Fischbein: And that will come from the line of Paul Holden with CIBC. Your line is open. First question is for Dan, the number of increases going on with the US group business, maybe an update on your expectations for redetermination impact over the next couple of quarters. And when should the strong fail to resolve start to overwhelm that, when should that, Hey, Paul. This is Dan Fischbein.

Speaker Change: <unk> dental earnings.

Dan Fischbein: In fact higher.

Dan Fischbein: Hey, Thanks, Paul This is Dan Fishbein, yes.

Paul Holden: Yes, great question about the Medicaid Redetermination.

Dan Fischbein: As I'm sure you've noted from our comments Medicaid Redetermination have been both faster and more significant than I think anybody had anticipated as of the end of the year, we've had about 12% of our dental Medicaid membership.

Dan Fischbein: Yeah, great question about the Medicaid redeterminations. As I'm sure you've noted from our comments, Medicaid redeterminations have been both faster and more significant than I think anybody had anticipated. As of the end of the year, we had about 12% of our dental Medicaid membership move off the rolls due to the redeterminations. Our latest prediction is that this will be completed by July, by definition, and by that time, about 17% of the starting Medicaid membership will have been disenrolled. This has obviously happened over a fairly lengthy period of time.

Dan Fischbein: Move off the rolls due to the Redetermination. Our latest prediction is that this will be completed by July by definition and by that time about 17% of the starting Medicaid membership.

Dan Fischbein: They have been enrolled this is happens obviously over a fairly lengthy period of time. It started last may and during that time. We've also had quite a significant amount of sales both in Medicaid and other parts of the dental business in fact since the acquisition through the end of 2023, the dental business has made.

Dan Fischbein: It started last May, and during that time, we've also had quite a significant amount of sales, both in Medicaid and other parts of the dental business. In fact, since the acquisition through the end of 2023, the dental business has made $650 million in new sales, including $423 million last year. Virtually, or most, the vast majority of that $423 million was not on the books as of the end of 2023. So, that will be coming on board as we move through the first portions of 2024. In addition, there are significant other sales that are close to closing. So, on balance, when you layer in the disenrollments but also the new sales, we expect dental revenue to grow in 2024 as compared to 2023. And there was a question on SLC, I want to follow up on that, and it was regarding the... Solar Regeneration Project. Hopefully, maybe he can give us a little bit of a foreword.

Dan Fischbein: $650 million in new sales, including $423 million last year virtually or most the vast majority of that $423 million was not on the books as of the end of 2023, so that will be coming onboard as we move through the FERC portions of 2024.

Dan Fischbein: In addition, there are significant other sales that are close to closing so in balance when you layer in the dis enrollment, but also the new sales.

Dan Fischbein: We expect the dental revenue to grow in 2024 as compared with 2000 Twenty's duration.

Speaker Change: Great. Thank you for that.

Dan Fischbein: And then there was a question on <unk> I want to follow up on that and it was regarding <unk>.

Dan Fischbein: Forward.

Dan Fischbein: Clothes and gave a little bit of a historical perspective, hoping maybe you can give us a little bit of a forward outlook. There in terms of your expectation or fund raising in 2024.

Steve Feature: Foundation. Sun Life Financial. Thanks for the question. You know, we're optimistic as we look at the coming year. We think our total fundraising last year was just over $13 billion, which was lower than we expected when we entered the year last year. We expect it could be meaningfully higher this year for a couple of different reasons. One is that it looks like the headwind from interest rates, like Robert mentioned in the public markets, is hopefully moderating. But also part of our fundraising in the given year is which funds, what do we have on our schedule in terms of fundraisers? We've got a couple big fundraisings coming up at Crescent with products where they're on their fourth or ninth version of the products with a lot of installed investors that we would expect to reinvest. So that will help us this year too.

Speaker Change: Yes. Thanks for the question, we're optimistic as we look at the coming year.

Steve Feature: I think our total fundraising last year was just over $13 billion, we would.

Steve Feature: Which was lower than we expected when we entered the year last year, we expect to be it could be meaningfully higher this year for a couple of different reasons. One is it looks like the the <unk>.

Steve Feature: Headwind from interest rates micro bearish mentioned in the public markets hopefully is moderating, but also part of our fundraising any given year's which funds what do we have on our schedule in terms of fund rates as we've got a couple of big Big Fundraisings coming up at Crescent with products, where they are on their fourth our ninth version of the product with a lot of installed <unk>.

Steve Feature: <unk> that we would expect to reinvest so that'll help us this year, we've got a number of funds.

Steve Feature: We've got a number of funds at BGO that we're raising money for, et cetera, so we think the environment should be helpful, and we've got some big fundraising coming up, so we're optimistic. One moment for our next question, and that will come from the line of Darko Mihelic.

Darko Mihelic: <unk> that we're raising money for et cetera. So we think the environment should.

Darko Mihelic: Be helpful and we've got some big fundraising coming up so we're optimistic about the coming year.

Darko Mihelic: Okay. Thank you.

Darko Mihelic: And one moment for our next question.

Darko Mihelic: And that will come from the line of Darko <unk> with RBC capital markets. Your line is open.

Nandith: RBC Capital Markets, your line is now open. Hi, thank you. I have two quick modeling questions.

Darko Mihelic: Alright. Thank you I have two quick modeling questions. Just if you can give an outlook for 2024 for the corporate segment.

Jacques: Just if you can give an outlook for 2024 for the corporate segment, just in terms of sort of an expected loss run rate, that would be very helpful. And my second question is really easy. I'm just looking at your supplemental in Canada. And essentially, what I'm looking at is the expected earnings on short-term group business because the growth there has been very high.

Jacques: Just in terms of the sort of an expected loss run rate that would be very helpful. And my second question is really easy I was just looking at your supplemental in Canada.

Jacques: And essentially what I'm looking at is the expected earnings on short term group business.

Jacques: Growth there has been very high I Wonder if you can just give us.

Jacques: I wonder if you can just give us some reasons for it, maybe an outlook for the growth there in that particular line. And this is line number three in your supplemental on page.., www.sunlife.com Good morning, Darko. It's Nandith.

Nandith: Some reasons for it maybe an outlook for.

Nandith: The growth there in that particular line on this line number three.

Nandith: In your supplemental on page <unk> Excel spreadsheet opens I think English law and I'm talking about it's exceeded premium growth and so I'm just wondering.

Nandith: So, I'll take the corporate item. So, I think on the corporate item, we've talked about, you know, on average, that corporate would have a loss of around $100 million. That's kind of where we've been trending, and I think that's around where we'll tend to go. Your question on short-term business is actually predominantly related to premium growth. There can be some volatility in that line depending on the actual level of sales and, in particular, the profitability of those cells and then the impact on reserving, so it's predominantly premium growth. You should expect her to continue.

Nandith: How we should be thinking about that specific line item for the Canada business. Thanks.

Mandates: Good morning, Darko its mandates so I'll take the corporate items. So I think on the corporate item we've talked about.

Nandith: On an average that corporate would have a loss of around $100 million thats kind of where we've been trending and I think that's around where about trend for next year.

Nandith: Okay.

Nandith: Yes, and Jonathan Darko.

Nandith: Alright.

Nandith: A question on short term business.

Nandith: Actually predominantly related to premium growth.

Nandith: There can be some volatility in that line, depending on the actual level of scale and in particular.

Nandith: Profitability of those sales.

Nandith: And then the impact on the reserving.

Nandith: Predominantly premium growth.

Nandith: You should expect that to continue.

Jacques: Okay, but just to be clear, I mean the premium growth is no longer close to the growth in this wine item. So, you're just suggesting it's sort of a business mix. Is that the better answer, or did I correct my thinking? Yeah, it's more linked to the profitability of those cells, and some of them may be cutting more, so you want to give more details there.

Jacques: Okay, but just to be clear I mean, your premium growth is nowhere close to the growth in this line item. So you are just suggesting it's sort of business mix is that the better answer.

Jacques: Maybe correct my thinking on that.

Jacques: Yes, it's more linked to the profitability of those sales.

Jacques: Maybe Kevin Morris do you want to.

Jacques: Give more details there.

Jacques: Yeah, Darko, as Kevin was saying, maybe just to elaborate a bit, you know, part of what I'd say the fundamental piece is what's driving that growth is the size of the business, as Jacques mentioned. There's also a second piece related to that short-term business. Under IFRS 17 accounting, if the business is onerous, you do have to reflect the loss up front, and you do reflect it in that line.

Jacques: Just to elaborate a bit part of what I would say the fundamental pieces whats driving that growth is the size of the business as Jacques mentioned, there's also a second piece related so that short term business under the <unk> <unk>.

Jacques: <unk> 17, accounting if the business is onerous.

Jacques: You have to reflect a loss upfront and we do reflected in that line. So from time to time some of the business.

Jacques: So from time to time, some of the business related to the profitability business that comes on, you can have some short-term volatility in that line, and we saw a bit of that as explaining the quarter-over-quarter variance there. Okay, and is that expected to persist? In other words, less onerous sales are expected to persist for 2024? Yeah, I would say that is our outlook, but I think from time to time, depending on the environment and the competition, you may see a bit of volatility there, but the outlook is, I think, in line with what you described. Okay, thanks very much. One moment for our next question, and that will come from the line of Lamar Persaud with Cormark. Your line is open.

Lamar Persaud: Related to the profitability of the business that comes on you can have some short term volatility in that line and we saw a bit of that is explaining why the quarter over quarter variance there. Okay and is that expected to persist in other words less onerous sales are expected to persist for 2024.

Lamar Persaud: Yes, I would say that.

Jacques: That is our outlook, but I think from time to time, depending on the environment and the competition you may see a bit of volatility there but.

Lamar Persaud: The outlook is I think in line with what you described yes.

Lamar Persaud: Hey, thanks very much.

Lamar Persaud: And one moment our next question.

Lamar Persaud: And that will come from the line of Nomura Prasad with core Mark Your line is open.

Michael Barish: Thanks for taking my question. I want to kind of come back to the answer on NSF from Mario, www.sunlife.com. Is this something special that really drove the movement to cash this quarter? I would have thought that rotation would have played out in a bigger way as interest rates were moving much higher, not necessarily in Q4. So could you help me understand the timing of the outflows?

Speaker Change: Yes, thanks for taking my question.

Speaker Change: Wanted to kind of come back to the answer.

Michael Barish: MFS to Mario's flows question, maybe for Mike is there something special that really drove that move into cash this quarter I would've thought that rotation will have played out in a bigger way as interest rates start moving much higher not necessarily in Q4. So could you help me understand the timing of the outflows.

Michael Barish: I'm just having a hard time understanding why the pickup and the outflows in Q4 versus, say, earlier in Q4. Yeah, Lamar, if you look at industry data, we saw redemption rates, what we've seen throughout the year are that sales rates across the industry were relatively, very low relative to what we see in typical cycles. So sales rates had come down, redemption rates had normalized from 2023 when you had the move down in the markets, and then there was a bunch of tax losses going on in the fourth quarter of last year. What we saw after the fourth quarter was actually, redemption rates spiked for the industry again. So sales rates were low, and redemption rates spiked.

Michael Barish: Just having a hard time understanding why the pickup in <unk>.

Michael Barish: The outflows in Q4 versus say earlier on in 2023.

Michael Barish: Yes.

Michael Barish: If you look at industry data, we saw redemption rates, what we had seen throughout the year of sales rates across the industry were relatively we're very low relative to what we see in typical cycles. So sales rates has come down redemption rates had normalized from 2023. When you had the move down in the markets and then it was there was a bunch of tax loss.

Michael Barish: Selling in the fourth quarter of last year.

Michael Barish: What we saw happened in the fourth quarter is actually a redemption rates spiked for the industry against those sales rates were low and redemption rates spike so whether it was client taking tax loss selling reallocating to other asset classes and actually not putting net new money into investment products and so it's not an MFS specific issue is what we're seeing happen in the industry and the.

Michael Barish: So whether it was clients taking tax off selling, reallocating to other asset classes, and actually not putting that new money into investment products. And so it's not an NFS-specific issue; it's what we're seeing happen in the industry. And the firms that we work with, the brokerage firms we went to, they're clearly trying to get cash off the sidelines as well for their clients, and we're working with them to begin to get, hopefully migrate, that cash out, but we have yet to see that happen, particularly in retail. Okay, that's helpful.

Michael Barish: <unk> that we work with the brokerage firms who want to they are clearly trying to get their cash off the sidelines as well for their clients and we're working with them to begin to get to hopefully migrate that cash out, but we have yet to see that happen, particularly in the retail channel.

Speaker Change: Okay. That's helpful. Thank you and then I just want to come back to an earlier question.

Randy Brown: And then I just want to come back to an earlier question on real estate and the outlets going forward. So continuing normalization in the first half of 2024 and then kind of stabilizing. What interest rate assumption are you baking in there? Are you assuming any cuts?

Randy Brown: On real estate and the outlook going forward so.

Randy Brown: Normalization in the first half of 2024, and then kind of stabilizing what interest rate assumption are you baking in there or are you assuming any cuts what if we see some cuts into summer and fall.

Randy Brown: What if we see some cuts in the summer and fall? How do you think real estate will do? www.sunlife.com. Thank you for the question, Mark. It's Randy.

Randy Brown: How do you think real estate you lost.

Randy Brown: Thank you for the question Larry It's Randy.

Randy Brown: What we've seen is the stabilization of rates, and that's healthy for the real estate market. If you look at forward pricing in the bond market, the market is expecting Fed cuts. But what you've heard signals from the Fed is higher longer, unless there's a disaster.

Randy Brown: What we've seen is the stabilization of rates and that's healthy actually for the real estate market.

Randy Brown: If you.

Randy Brown: If you look at forward pricing in the bond market market is expecting fed cuts.

Randy Brown: But what <unk> heard signals from the fed is higher longer and.

Randy Brown: Yes, there is a disaster not in March then you have an election later in the year. So it creates a fairly narrow window for them to make a big move.

Randy Brown: Then you have an election later in the year. So it creates a fairly narrow window for them to make the big move. I'm assuming that a stable rate allows people to readjust, and that's part one. Part two is the change in valuations, as I talked about earlier, is actually quite healthy for the market because it reduces that bid-offer gap, and you start to see transactions. And once you start to see transactions, and we are starting to see them, that then puts the real estate into a stronger set of hands, and that's also positive. So I don't think we need rates to drop a lot to start to see some stability. We just have to make sure they don't rise significantly from here. Our expectation and the expectation of the market is that we've probably seen peak rates, in that the Central Bank will begin to cut rates at some point here, which will also be supported by real estate valuation.

Randy Brown: So.

Randy Brown: Assuming stable rates.

Randy Brown: Allows people to readjust and that's part one part two is it change in valuations as I talked about earlier is actually quite healthy for the market because it reduces that bid offer gap.

Randy Brown: And you start to see transactions and once you start to see transactions and we are starting to see them.

Randy Brown: That then puts a real estate into stronger set of hands and that's also positive. So I don't think we need rates to drop a lot.

Randy Brown: To start to see some stability.

Randy Brown: We just have to make sure they don't rise significantly from here our expectation the expectation of the market is that we've probably seen peak rates in that.

Randy Brown: Central banks will begin to cut rates at some point here, which will.

Randy Brown: Also be supported for real estate valuations.

Steve Feature: Thanks, that's it from me. One moment for our next question, and that will come from the line of Nigel D'Souza with Veritas Investments. Thank you, good morning.

Nigel D'Souza: Thanks, that's it from me.

Nigel D'Souza: And one moment our next question.

Steve Feature: Okay.

Nigel D'Souza: And that will come from the line of Nigel D'souza with Veritas investment Research. Your line is open.

Steve Feature: A couple of follow-up questions. For me, the first on SLC, I believe you had some C investments this quarter. Just wondering if you could tell us what that was on a post-tax basis, trying to get a sense of the growth and underlying. You will be here, excluding those games, and perhaps even while you're operating more.

Speaker Change: Thank you good morning, a couple of follow up questions.

Steve Feature: First on <unk> I believe you had some seed investments.

Steve Feature: This quarter, just wondering if you could pause.

Steve Feature: Tell us what that was on a post tax basis trying to get a sense of the growth in underlying income.

Steve Feature: Year over year.

Steve Feature: Yeah, yeah, Nigel, thank you for the question, Steve. Yeah, we did, you know, in terms of our earnings profile. Maybe a quick comment first. You know, most of our business is very steady quarter to quarter. We get paid financial fees on the assets we manage, and it's very predictable. But then, in any given quarter, our earnings can be impacted by some things that probably once is the wrong term, but episodic might be the right term. And an example would be mark-to-market gains, hopefully gains, but could be losses on feed. It could be catch-up fees. When we have a closing on a fund, we earn catch-up fees. It could be credit interest.

Steve Feature: I think those gains and perhaps even while the operating margins would be faced with that.

Speaker Change: Yes, Nigel Thank you for the question Steve.

Steve Feature: We did in terms of our earnings profile, maybe a quick comment first most of our business is very steady quarter to quarter.

Steve Feature: We get page management fees on the assets, we manage and it's very predictable, but then in any given quarter. Our earnings can be impacted by some things that probably one time is the wrong term, but episodic might be the right term and that we had an example would be mark to market gains hopefully gains, but could be losses on seed could be catch up fees. When we have a closing.

Steve Feature: On a fund where you are in catch up fees could be carried interest we think we'll see more of that going forward.

Steve Feature: We think we'll see more of that going forward. And from time to time, you have some tax movement some way or the other. In this quarter, we had $70 million of underlined net income, as reported. And I'd love to say that that is the new run rate.

Steve Feature: So from time to time, we have some tax movements, one way or the other in this quarter, we had $70 million of underlying net income.

Steve Feature: As was reported and I'd love to say that that is the new run rate. We did have some things break our way. So we did have some mark to market gains there in the quarter. We also had some catch up fees related to a biggio fund that was being raised in Asia. So if youre asking me kind of where do I think our core earnings rate is.

Steve Feature: You know, we did have some things break our way, so we did have some mark-to-market gains there in the quarter. We also had some catch-up fees related to a BGO fund that was being raised in Asia. So if you'd ask me kind of where our core earnings rate is on underlying income net income there, I would say it's around, well, like $50 million-ish and moving up.

Steve Feature: On underlying income Sniveling today, I would I would say, it's around more like $50 million ish and moving up.

Steve Feature: So we did have some things move our way positively. Okay, that's helpful. And then, if I could just quickly follow up on the unbearable kind of experience in Canada. Could you remind me again what exactly you spoke about? The unfavorable credit experience. We had one particular loan in the UK where the borrower ran into difficulties across the broader portfolio, so they defaulted on several things.

Steve Feature: So we did have some things move our way positively this quarter.

Steve Feature: Okay. That's helpful. And then if I could just quickly follow up on the unfavorable credit experience in Canada could you remind me again, what exactly drove that.

Steve Feature: This quarter.

Steve Feature: Favorable.

Steve Feature: Yes, hi, its Randy sorry, I had trouble hearing that the unfavorable credit experience we had.

Steve Feature: One particular loan.

Steve Feature: In the U K, where the borrower ran into difficulties across the broader portfolios have defaulted on on several things.

Steve Feature: And I.

Unnamed Speaker: And I view it as idiosyncratic, not representative of the larger portfolio, to promote the end of life. Yeah, put it into context. It's about, you know, 15 basis points on the whole on the portfolio. And could you remind me which segment that was recognized under? Canada. Okay, great. That's it for me.

Unnamed Speaker: I view it as idiosyncratic not representative of the larger portfolio.

Unnamed Speaker: To put it into context, yes, it's put it into context, it's about 15 basis points.

Unnamed Speaker: On the whole on the portfolio.

Speaker Change: Okay, and sorry, if could you remind me which segment that was.

Speaker Change: Recognize lender.

Unnamed Speaker: Canada.

Speaker Change: Okay, Great. That's it for me thank you.

Speaker Change: Thank you one moment for our next question.

Steve Feature: Thank you. One moment for our next question. And we do have a follow-up question from Thomas McKinnon with CMO Capital. Your line is open.

Thomas McKinnon: And we do have a follow up question from Thomas Mackinnon with BMO capital. Your line is open.

Jacques: Yeah, thanks very much. Just a follow-up question here with the good morbidity, have. Help us understand... What is contributing to this? How much would it be in sort of the company's hands to be able to have continued... For more information, visit www.sunlife.com. More on me Strong and poignant, some context around that and how... Transcribed by https://otter.ai, Tom, it's Kevin, and it hits differently by market.

Speaker Change: Yes, thanks very much it's a follow up question here with the.

Jacques: Good more ability experience you continue to have here.

Jacques: Just to understand do you.

Jacques: What has contributed to this do you how much would it be in sort of the companys hands to be able to have.

Jacques: Continued.

Jacques: Morbidity experience like claims management and good underwriting or do you think it's more a function of just a strong employment market.

Jacques: Some context around that and how.

Jacques: What's your outlook for this trend just given it's been pretty favorable in the past.

Jacques: So I'm going to speak to Canada, and Dan will speak to the U.S. Yeah, thanks, Kevin, and thanks, Tom. You know, obviously, we're pleased about the results there, and as I outlined before, Tom, there are really three levers that are impacting the insurance experience. The first one, and we do have control over this, are the pricing decisions that we make. And you might recall back in 2019, we started seeing that the elevated experience would continue, a lot of it driven, by the way, by mental health issues. And we took action pretty early, and we wanted our pricing to be in line with the expected experience. So that's definitely contributing. The other factor, the second lever, is the volume of disability cases that come to us. And we've mentioned, for example, the economy and employment levels, but... It's something that we don't actually control very much, or if at all.

Speaker Change: Tom It's Kevin and it hits differently by by market. So John is going to speak to Canada, and Dan will speak to the U S.

Dan Fischbein: Yes, thanks, Kevin and thanks.

Dan Fischbein: Obviously, we were pleased about the results there.

Dan Fischbein: Potline before Tom.

Dan Fischbein: There are really three levers that are impacting the insurance experience. The first one and we do have control over it is or the pricing decisions that we made.

Dan Fischbein: You might recall back in 2019.

Jacques: <unk> seeing.

Jacques: The.

Dan Fischbein: Elevated experience would continue.

Dan Fischbein: Driven by the way by mental health issues.

Dan Fischbein: We took actions pretty early.

Dan Fischbein: One is our pricing to be in line with expected experience.

Dan Fischbein: That's definitely contributing.

Dan Fischbein: The other factor the second lever is the volumes there.

Dan Fischbein: Disability cases that come to us.

Dan Fischbein: And you've mentioned for example, the economy and employment levels.

Dan Fischbein: It's something that we don't.

Dan Fischbein: Totally control very much.

Dan Fischbein: If at all and the third one is the duration.

Jacques: And the third one is the duration of disability cases. And to a certain extent, I would say, we do have an element of control. I mean, some of it is a bit outside our control, but, you know, our disability case managers are handling these cases very well, and to the extent we're able to reduce duration, that helps. One example I would give you is that we offer something called the Mental Health Coach, and we've noticed that when people are using the Mental Health Coach...

Jacques: Visibility cases.

Jacques: And then I would say.

Jacques: So certain extent, we do have an element of control I mean, some of it is a bit outside our control but.

Jacques: Visibility case managers are handling these cases very well.

Jacques: To the extent, we're able to reduce duration that helps. One example, I would give you is we offer something called the mental health coach.

Jacques: We've noticed.

Jacques: Yeah.

Jacques: People are using the mental health coach.

Jacques: They've got both lower and shorter durations of disability. So, it's a complex environment, if you like, and we watch this very, very carefully all the time, particularly where we need to take pricing action, because we see that as something that we need to adjust on a dynamic basis. I hope it helps them in this situation in Canada. And this is Dan Fishbein.

Dan Fishbein: Got both lower and shorter durations.

Jacques: Visibility so it's a complex environment if you like.

Dan Fishbein: We watch this very very carefully all the time, particularly where we need to take pricing action because we see that that's something that we need to adjust on a dynamic basis I.

Jacques: I hope it helps on the situation in Canada.

Jacques: And this is Dan fishbein like Jacques I'll give a three part answer breaking it into the three businesses, where we have morbidity.

Dan Fischbein: Like Jacques, I'll give a three-part answer, breaking it down into the three businesses where we have morbidity. First, a comment on the dental business morbidity. We are seeing the loss ratio go up there related to Medicaid redeterminations because the leavers have a lower level of utilization than the stayers, so that is part of the pressure that we are seeing. I think in the disability business, very much like what Jacques was saying, a fair amount of this is the way we're managing claims, the way we're helping people get back to work. And we have seen favorable disability for five to six quarters. In the immediate prior quarter, compared to the same quarter the prior year, you may not see that because we had an exceptionally strong quarter for morbidity in the fourth quarter of 2022. Overall, we're seeing favorable disability results and experience.

Dan Fischbein: First a comment on the dental business morbidity, we are seeing the loss ratio go up there related to the Medicaid redetermination because the leavers have a lower.

Dan Fischbein: Level of utilization than the stairs. So that is part of the pressure that we're seeing.

Dan Fischbein: I think in the disability business very much like what Jack was saying.

Dan Fischbein: A fair amount of this is the way, we're managing claims where we're helping people get back to work and we have seen.

Dan Fischbein: Favorable disability for five to six quarters.

Dan Fischbein: In the immediate prior quarter compared to the same quarter. The prior year, you may not see that because we have an exceptionally strong quarter for morbidity in the fourth quarter of 2022, but overall, we're seeing favorable disability.

Dan Fischbein: <unk> and experience and in the stop loss business, we actually have seen some increase in the loss ratio are therefore, a reduction in.

Dan Fischbein: And in the stop-loss business, we actually have seen some increase in the loss ratio, or, therefore, a reduction in morbidity results. Now, we expected that, and, of course, we said that would happen as we moved back from the impacts of COVID towards our pricing loss ratio. But we view that as something that's being managed to be a soft landing. In fact, in 2023, the stop-loss loss ratio went up by only 90 basis points. And we might have projected more than that, to be honest.

Dan Fischbein: In morbidity results.

Dan Fischbein: Now we expected that and of course, we said that would happen as we move back from the impacts of COVID-19 towards our pricing loss ratio, but we view that as something that's being managed to be a soft landing in fact in 2023 the stop loss.

Dan Fischbein: Loss ratio went up by only 90 basis points, and we might have projected more than that to be honest.

Dan Fischbein: But we continue to take a very disciplined approach to pricing, while at the same time still supporting record sales. And so we see that loss ratio likely to continue to move toward pricing targets, but at a measured pace. Okay, thanks for that. We have no further questions at this time. I will turn things back to Mr. Glark for closure.

Speaker Change: But we continue to take a very disciplined approach to pricing while at the same time still supporting record sales.

Speaker Change: And so we see that loss ratio likely to continue to move towards pricing targets, but.

Speaker Change: A measured pace.

Mr. Glark: Okay. Thanks for that.

Mr. Glark: We have no further questions at this time I will turn things back to Mr. Clarke for closing remarks.

Mr. Glark: Thank you, Operator. This concludes today's call. A replay of the call will be available in the Investor Relations section of our website.

Speaker Change: Thank you operator. This concludes today's call a replay of the call will be available on the Investor Relations section on our website.

Operator: Thank you, and have a great day. This concludes today's program. Thank you all for participating. You may now disconnect.

Operator: Thank you and have a great day.

Operator: This concludes today's program. Thank you all for participating you may now disconnect.

Operator: Yeah.

Operator: [music].

Operator: Yes.

Operator: Yeah.