Q4 2023 Great-West Lifeco Inc Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the Great-West Lifeco 4th Quarter 2023 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad.

Thank you for standing by this is the conference operator, welcome to the Great West Life Co fourth quarter 2023 results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation there'll be an opportunity for analysts to ask questions to join the question.

You you May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero I would now like to turn the conference over to Mr. Paul men, President and CEO of Great West Lifeco. Please go ahead.

Paul Mann: Should you need assistance during the conference call, you may signal an operator by pressing star, then 0. I would now like to turn the conference over to Mr. Paul Mann, President and CEO of Great-West Lifeco. Please go ahead. Thanks, Ariel. Good afternoon, and welcome to Great-West Lifeco's fourth quarter and year-end 2023 conference call. Joining me on today's call is Gary McNicholas, Executive Vice President and Chief Financial Officer. And also joining us on the call and available to answer your questions are Jeff McAllen, President and COO, Canada; Arshil Jamal, President and Group Head, Strategy Investments, Reinsurance, and Corporate Development; Raman Srivastava, Executive Vice President and Global Chief Investment Officer; David Harney, President and COO, Europe; and Ed Murphy, President and CEO, Empower. I've asked David Harney and Ed Murphy to deliver part of I'll now draw your attention to our cautionary notes regarding forward-looking information and non-GAAP financial measures and ratios on slide two. These cautionary notes apply to the information we will discuss during the call today. Please turn to slide 4.

Paul Men: Thanks, Cheryl good afternoon, and welcome to Great West <unk> fourth quarter and year end 2023 conference call joining.

Paul Men: Joining me on today's call is Garry Nicholas Executive Vice President and Chief Financial Officer, and also joining us on the call and available to answer your questions are Joseph Mcmullen, President and C O Canada.

Paul Men: Jamal President and group head strategy investments reinsurance and corporate development.

Robyn serve us Devault executive Vice President and Global Chief Investment Officer, David Harney, President and C. L O Europe, and Ed Murphy, President and CEO of empower.

Paul Men: I've asked David Harney, and Ed Murphy to deliberate part of our formal presentation to highlight significant milestones in their segments.

Paul Men: I'll now draw your attention to our cautionary notes regarding forward looking information and non-GAAP financial measures and ratios on slide two these cautionary note supply to the information we will discuss during the call today. Please.

Paul Men: Please turn to slide four.

Paul Mann: Building on our strong earnings trajectory through 2023, we delivered excellent results this quarter. We're thrilled to close the year with record-based earnings in the fourth quarter and back-to-back quarters with record-based EPS. Our focus strategy, supported by disciplined execution and trusted brands, continues to deliver strong performance against our value creation agenda, including our medium-term financial objectives. We have strong momentum across our value drivers. Of note, our wealth and retirement businesses remain a point of particular strength, together generating $30 billion in positive net flows this year.

Paul Men: Building on our strong earnings trajectory through 2023, we delivered excellent results this quarter.

Paul Men: We're thrilled to close the year with record base earnings in the fourth quarter and back to back quarters with record base E. P. S.

Paul Men: Our focused strategy supported by disciplined execution and trusted brands continues to deliver strong performance against our value creation agenda, including our medium term financial objectives.

Paul Men: We have strong momentum across our value drivers of note our wealth and retirement businesses remain a point of particular strength together generating $30 billion in positive net flows this year.

Paul Mann: At Empower, we crossed the $1 billion Canadian base earnings mark, exceeding the objective we set at the beginning of 2023. The actions we've taken to reposition the portfolio and enhance capital efficiency are supporting both our near-term and long-term growth. On January 1st, we completed the sale of Putnam Investments to Franklin Templeton.

Paul Men: At empower we crossed the $1 billion Canadian base earnings Mark exceeding the objective we set at the beginning of 2023.

Paul Men: The actions, we've taken to reposition the portfolio and enhanced capital efficiency are supporting both our near term and long term growth.

Paul Men: On January 1st we completed the sale of Putnam investments to Franklin Templeton.

Paul Mann: This combination furthers our strategy of building strategic partnerships with best-in-class asset managers to support our customers and clients. The transaction was executed on attractive terms, and Gary will share more on this later in the presentation. In Europe, we closed to new business for our subscale onshore wealth business and reinsured a large block of annuity business to improve capital efficiency. David Harney will take you through these actions and provide a strategic update on Europe following my comments. Please turn to slide 5.

Paul Men: This combination furthers our strategy of building strategic partnerships with best in class asset managers to support our customers and clients.

Paul Men: The transaction was executed on attractive terms and Gary will share more on this later in the presentation.

Paul Men: In Europe, we closed to new business for our subscale onshore wealth business and reinsured, a large block of annuity business to improve capital efficiency.

Paul Men: David Harney will take you through these actions and provide a strategic update on Europe. Following my comments.

Speaker Change: Please turn to slide five.

Paul Mann: Our fourth quarter results close an outstanding year across Lifeco. Base earnings of $3.7 billion and base EPS of $3.94 both increased 11% over the prior year. Base ROE increased to 17%, up nearly a full percentage point over the prior year, and book value per share also increased. Our capital position remains strong, with a solid and stable LICAT ratio. Our leverage ratio decreased to 30% following the repayment of 100 million in short-term U.S. dollar debt related to the prudential acquisition and repayment of a 500 million euro bond. Please turn to slide 6.

Speaker Change: Our fourth quarter results closed an outstanding year across lifestyle.

Speaker Change: Base earnings of $3 $7 billion and base EPS of $3 94.

Speaker Change: Both increased 11% over the prior year base.

David Harney: Base ROE increased to 17% up nearly a full percentage point over the prior year and book value per share also increased.

David Harney: Our capital position remains strong with a solid and stable like cat ratio, our leverage ratio decreased to 30%. Following the repayment of $100 million in short term U S dollar debt related to the Prudential acquisition and repayment of a 500 million eurobond.

David Harney: Please turn to slide six.

Paul Mann: Our repositioning portfolio continues to support strong performance against our medium-term financial objectives. We delivered at or above these objectives on a one- and five-year basis. Base EPS growth of 11% exceeded our target range of 8% to 10% over both time periods.

David Harney: Our reposition portfolio continues to support strong performance against our medium term financial objectives, we delivered at or above these objectives on a one and five year basis base EPS growth of 11% exceeded our target range of 8% to 10% over both time periods base Roe of <unk>.

Paul Mann: With a base ROE of 17% and a dividend payout ratio of 53% in 2023, we're within our target range. Please note that we've shown a two-year average base ROE of 16% in the five-year column, as there are no applicable IFRS 17 figures for the prior years. Our focus on disciplined capital allocation across our three value drivers leaves us well positioned for continued strong growth. Please turn to slide 7.

David Harney: 17% and a dividend payout ratio of 53% in 2020 three we're within our target ranges.

David Harney: Please note that we've shown a two year average base ROE of 16% in the five year column as there are no applicable <unk> 17 figures for the prior year years.

David Harney: Our focus on disciplined capital allocation across our three value drivers leaves us well positioned for continued strong growth. Please.

David Harney: Please turn to slide seven.

Paul Mann: We've seen tremendous performance in our Empower business. And over the next few months, we'll take the final steps in the integration of Prudential's retirement business. So it's a good time to take a closer look at how we've repositioned our U.S. business for growth today and into the future. In 2018, Lifeco had three distinct businesses in the U.S.

David Harney: We've seen tremendous performance in our empower business over the next few months, we will take the final steps in the integration of Prudential's retirement business. So it's a good time to take a closer look at how we've repositioned our U S business for growth today and into the future.

David Harney: In 2018 life co had three distinct businesses in the U S. While each business had strong teams and capabilities they were subscale.

Paul Mann: While each business had strong teams and capabilities, they were sub-scale. One of our core Lifeco strategies has been to build large businesses with strong organic growth potential. This drove our decision to increase focus on the anticipated consolidation of the U.S. retirement market. Over the last five years, we've undertaken multiple transactions to position Empower with the scale and capabilities to drive long-term sustainable growth for Lifeco. An early step was the divestiture of our individual life insurance and annuity business in 2019, freeing up capital and sharpening our focus on empowered growth.

David Harney: One of our core lifestyle strategies has been to build scale businesses with strong organic growth potential.

David Harney: This drove our decision to increase focus on the anticipated consolidation of the U S retirement market.

David Harney: Over the last five years, we've undertaken multiple transactions to position in power with the scale and capabilities to drive long term sustainable growth for lifestyle.

David Harney: An early step was the divestiture of our individual life insurance and annuity business in 2019.

David Harney: Freeing up capital and sharpening our focus unempowered growth.

Paul Mann: The acquisition of the retirement businesses of MassMutual and Prudential significantly expanded Empower's retirement scale and capabilities. Together, these acquisitions, along with Empower's market-leading organic growth, have positioned us as the second-largest workplace retirement plan provider in the United States. And the 2020 edition of Personal Capital introduced new capabilities that supported the launch of Empower Personal Wealth. This business extends Empower's reach from the workplace to where it now has the potential to serve the wealth management needs of millions of Americans while in plan, after rollover, or through direct-to-consumer relationships outside Empower, establishes a strong partnership with the combined Putnam-Franklin organization and provides an even sharper focus on Empower' There's a lot of excitement about the future of Empower, and Ed will provide an update later in the presentation. Please turn to slide 8.

David Harney: Acquisition of the retirement businesses of Massmutual, and Prudential significantly expanded empowers retirement scale and capabilities.

David Harney: Together these acquisitions, along with empowers market, leading organic growth have positioned us as the second largest workplace retirement plan provider in the United States.

David Harney: And the 2020. Our addition of personal capital introduced new capabilities that supported the launch of empower personal wealth.

David Harney: This business extends empowers reach from the workplace to wear now has the potential to serve the wealth management needs of millions of Americans well in plan after rollover or through direct to consumer relationships outside empower.

David Harney: So.

<unk> established a strong partnership with the combined Putnam Franklin organization and provides an even sharper focus unempowered next phase of growth.

David Harney: There's a lot of excitement about the future of empower and Ed will provide an update later in the presentation.

Speaker Change: Please turn to slide eight.

Paul Mann: In Canada, we made great progress against our strategic objectives in workplace and wealth this quarter. Group life and health premiums were up 22% year over year due to the addition of the public service health care plan, as well as strong organic growth in our existing books. These results reflect our leading position in the group life and health market in Canada. In group retirement, we saw solid growth over the last year due to net inflows and the impact of positive equity markets. We remain focused on strategies to enable capital light growth, including continued improvement in plan member rollover asset retention. In individual wealth, the completed acquisitions of Investment Planning Council and Value Partners increased individual wealth assets to over $100 billion at the year-end.

Speaker Change: In Canada, we've made great progress against our strategic objectives, and workplace and wealth this quarter.

Speaker Change: Group life and health premiums were up 22% year over year due to the addition of the public service health care plan as well as strong organic growth in our existing book.

Speaker Change: These results reflect our leading position in the group life and health market in Canada.

Speaker Change: In group retirement, we saw solid growth over the last year due to net inflows and the impact of positive equity markets. We remain focused on strategies to enable capital light growth, including continued improvement in plan member rollover asset retention.

Speaker Change: In individual wealth the completed acquisitions of investment planning Council and value partners increased individual wealth assets to over 100 billion at year end.

Paul Mann: These additions establish Canada Life as a leading non-bank wealth manager in Canada and position our business for stronger growth and performance going forward. However, in insurance and annuities, our CSM declined year over year, largely due to amortization and insurance experience. As we previously noted, we continue to approach non-participating insurance with a focus on customer value balanced with pricing discipline, and we do not consider CSM to be a key growth metric. Please turn to slide 9.

These additions established Canada life is a leading non bank wealth manager in Canada and position our business for stronger growth and performance going forward.

Speaker Change: And insurance and annuities, our CSM declined year over year, largely due to amortization and insurance experience. As we've previously noted we continue to approach Nonparticipating insurance with a focus on customer value balanced with pricing discipline, and we do not consider CSM to be a key growth metric.

Speaker Change: Please turn to slide nine our.

Paul Mann: Our capital and risk solutions business continues to play a complementary role and create value for the portfolio. Our reinsurance business provides diversification benefits and continues to be a source of steady, stable returns and cash generation. Earnings on short-term business increased 25% over the prior year, reflecting growth in the structured business.

Speaker Change: Our capital and risk solutions business continues to play a complementary role and create value for the portfolio.

Speaker Change: Our reinsurance business provides diversification benefits and convenience continues to be a source of steady stable returns and cash generation.

Speaker Change: Earnings on short term business increased 25% over the prior year, reflecting growth in the structured business.

David Harney: Please note that this business is accounted for on the PAA basis, which does not impact CSM. In addition, while the market for longevity reinsurance remains very competitive, we completed a new longevity reinsurance transaction agreement covering £1 billion of pension liabilities with an insurance company in the UK. Capital and risk solutions continues to see solid new business momentum and will maintain discipline as we leverage our strong capabilities to support existing client relationships and identify value-creating opportunities to grow in new markets. And with that, I'll now turn the call over to David Harney to provide an update on Europe. David

Speaker Change: Note that this business is accounted for on the P. E P. A a basis, which does not impact C. S M.

Speaker Change: In addition, while the market for longevity reinsurance remains very competitive we completed a new longevity reinsurance transaction agreement covering 1 billion pounds of pension liabilities with an insurance company in the U K.

Speaker Change: Capital and risk solutions continues to see solid new business momentum and we'll maintain discipline as we leverage our strong capabilities to support existing client relationships and identify value creating opportunities to grow in new markets and with that I'll now turn the call over to David Harney to provide an update on Europe David.

David Harney: Thank you, Paul. Please turn to slide 11. Our businesses in Europe maintained positive momentum in the quarter with solid top-line and bottom-line growth. Group insurance premiums, wealth and retirement assets, and CSM had year-over-year growth in the mid-teens. This performance reflects strong market positions for our different product lines and the stable nature of financial necessities like group benefits, annuities, and retirement savings. Group benefits and retirement savings also continue to be supported by strong employment and wage inflation in our three markets.

David Harney: Paul Please turn to slide 11, our business is in Europe maintained positive momentum in the quarter with solid topline and bottom line growth group insurance premiums ladson retirement assets and C S and had year over year growth in the mid teens.

David Harney: This performance reflects strong market positions for our different product lines and the stable nature of financial necessities like group benefits annuities and retirement savings.

David Harney: Benefits and retirement savings also continues to be supported by strong employment and wage inflation in our treaty markets.

In one place we saw a strong organic growth again in group life and health in both the UK and Ireland. We are one of the leading providers of group rates kind of fits in the U K and the market leader in Ireland Irish pension Sands were also strong where again, we are the market leader.

David Harney: In the workplace, we saw strong organic growth again in group life and health in both the UK and Ireland. We are one of the leading providers of group risk benefits in the UK and the market leader in Ireland. Irish pension sales were also strong, where we are again the market leader. We achieved good growth in wealth, which is reflected in positive net inflows for the quarter and throughout the year. We expect this solid performance to be further strengthened as we continue to build out our wealth strategy in Ireland under the Unio brand and through our joint venture with Allied Irish. Within insurance and risk solutions, we see continued strong individual annuity sales in the UK supported by higher interest rates, and we have improved our competitive position in the bulk annuity market. These sales, in addition to a gain from re-insuring an existing block of UK annuities, helped drive CSM growth of 17% year over year. Please turn to slide 12, Europe Actions to Enhance Returns.

David Harney: We achieved good growth in wealth, which is reflected in positive net inflows for the quarter and throughout the year. We expect a solid performance to be further strengthened as we continue to build out our web strategy in Ireland under the <unk> brand and through our joint venture with Allied Irish banks.

David Harney: But in insurance and risk solutions, we see continued strong individual annuity sales in the U K supported by higher interest rates and we have improved our competitive position and the bulk annuity market.

David Harney: He says in addition to again from reinsurance and existing block of U K annuities helps drive CSM growth of 17% year over year.

David Harney: Please turn to slides 12, Europe actions to enhance returns.

David Harney: Our broad product offering and to strongly growing Irish economy, and targeted product offerings in the UK and Germany make our businesses in Europe, while plans for sustainable long term growth.

David Harney: Our broad product offering in the strongly growing Irish economy and targeted product offerings in the UK and Germany make our businesses in Europe well-placed for sustainable long-term growth. We have taken numerous actions during 2023, which will further strengthen our European business. In the fourth quarter, we took several deliberate actions which we believe will position us for enhanced capital return and earnings growth. We completed the sale of a portfolio of Irish life policies from our previous distribution agreement with Allied Irish Banks to AIB Life.

David Harney: We have taken numerous actions during 2023, which will further strengthen our European businesses.

David Harney: In the fourth quarter, we took several deliberate actions, which we believe will position us for enhanced capital return to earnings growth.

David Harney: We completed the sale of a portfolio of Irish life policies from our previous distribution agreement with Allied Irish banks, two AIB lives. This AD scans at the joint venture and accelerates its tied to profitability.

David Harney: This adds scale to the joint venture and accelerates its time to profitability. In the UK, we announced the closure of our onshore wealth business to new business, where we lacked a meaningful presence. We have taken cost actions across our markets to improve our cost profile, and we completed an external reinsurance placement of a block of annuity business in the UK, consistent with our focus on cash generation and improving capital returns. These actions followed earlier announcements in 2023, including the sale of our onshore UK individual protection business, where again, we did not have the scale to compete; the combination of our advisory businesses in Ireland and the launch of our new wealth brand, Unio. Unio is performing strongly, and sales have increased 20% year over year. We have also launched our joint venture, AIB Life, successfully replacing our prior distribution agreement with Allied Irish.

David Harney: In the U K, we announced it's always all of our onshore wealth business to new business, where we lost a meaningful presence we have taken cost actions across our markets to improve our cost profile.

David Harney: And we completed an external reinsurance placement of a block of annuities business in the UK.

David Harney: To put our focus on cash generation and improving capital returns.

David Harney: These actions followed earlier announcements in 2023, including the sale of our onshore U K individual protection business, where again, we did not have the scale to compete the combination of our advisory businesses in Ireland and the launch of our new <unk> <unk>.

David Harney: <unk> is performing strongly and say is it increased 20% year over year.

We also launched our joint venture AIB life successfully refinancing our prior distribution agreement with Allied Irish banks.

David Harney: AIB Life is also performing very well and has already reached the same level of sales as our prior distribution. These actions, alongside the Quarter 4 actions, are expected to enhance earnings in Europe over the medium term. I'll now turn the call over to Ed Murphy to discuss Empower. Thank you, David, and good afternoon, everyone. Please turn to slide 14.

David Harney: AIB life is also performing very well and has already reached the same level of sands as our prior distribution agreements.

These actions alongside the quarter four actions are expected to enhance earnings in Europe over the medium term.

David Harney: I'll now I turn the call over to Ed Murphy to discuss the empower results.

Ed Murphy: Thank you David and good afternoon, everyone.

Ed Murphy: Please turn to slide 14.

Ed Murphy: We delivered a strong quarter at Empower with positive cash flows and strong organic growth across both workplace and personal wealth. This continues an extended period of growth that has been our hallmark since the launch of Empower. In Workplace Solutions, we continue to earn new business, capitalizing on our market position with a differentiated offer in the retirement services space. Defined contribution plan assets were up 17% year-over-year to $1.5 trillion.

Ed Murphy: We delivered a strong quarter at empower with positive cash flows and strong organic growth across both workplace and personal wealth.

This continues an extended period of growth that has been our hallmark since the launch of empower.

Ed Murphy: In workplace solutions, we continue to earn new business capitalizing on our market position with a differentiated offer in the retirement services space.

Ed Murphy: Defined contribution plan assets were up 17% year over year to one five trillion.

Ed Murphy: This reflects positive cash flows and the benefits of higher markets, both in the quarter and for the full year. Participants grew 3% year-over-year, with organic growth at 4%. Partially offset by expected attrition from the Prudential book. In our core market, I should note, and these are plans under $75 million, we had a record year with sales exceeding $10 billion. A key ingredient to our continued success in the workplace is our ability to create effective partnerships between Empower and the financial advisory community. Last week, a key trade publication, Plant Advisor, published survey results showing Empower achieved top rankings in more than half of the surveyed categories, including value for price, online tools, analytics, quality, and service.

Ed Murphy: This reflects positive cash flows and the benefits of higher markets, both in quarter and for the full year.

Ed Murphy: Participants grew 3% year over year with organic growth at 4%.

Partially offset by expected attrition from the Prudential book.

Ed Murphy: In our core market I should note and these are plans under $75 million, we had a record year with sales exceeding 10 billion.

A key ingredient to our continued success in the workplace is our ability to create effective partnerships between empower and the financial advisory community.

Ed Murphy: Last week, a key trade publication plan advisor.

Ed Murphy: Published survey results showing empower has achieved top rankings in more than half of the survey categories, including value for price online tools analytics quality and service.

Ed Murphy: Empower personal wealth saw strong organic growth. This was the first year of operations as a combined business as we brought personal capital and the existing empower retail business together and we couldnt be more pleased with the performance assets under administration was up 31% year over year in sales.

Ed Murphy: Empower personal wealth saw strong organic growth. This was the first year of operations as a combined business, as we brought personal capital into the existing Empower Retail business together. And we couldn't be more pleased with the performance. Assets under administration were up 31% year-over-year, and sales were 13% higher.

Ed Murphy: 13% higher.

Ed Murphy: We've been the beneficiary of both strong net inflows and positive markets. Ours is a challenger brand, and we continue to develop this business and are extremely excited about the prospects moving forward. We are making terrific progress with the integration of Prudential. Our team is highly skilled in this area as we work towards completing the integration program. Our team brings a deep commitment to both delivering quality and achieving our synergy goals. As a result, the retention levels of the Prudential business remain above original expectations.

We've been the beneficiary of both strong net inflows and positive markets.

Ed Murphy: Ours is a challenger brand and we continue to develop this business and are extremely excited about the prospects moving forward.

Ed Murphy: We're making terrific progress with the integration of Prudential. Our team is highly skilled in this area as we work towards completing the integration program. Our team brings a deep commitment to both delivering quality and achieving our synergy goals.

Ed Murphy: The retention levels of the Prudential business remain above original expectations. This includes assets participants and revenue retention.

Ed Murphy: This includes assets, participants, and revenue retention. We have achieved run rate cost synergies of U.S. $80 million at the end of 2023, with two-thirds of the remaining U.S. $100 million of cost synergies expected to benefit in 2024. Please turn to slide 15.

Ed Murphy: We have achieved run rate cost synergies of U S $80 million at the end of 2023.

Ed Murphy: With two thirds of the remaining U S $100 million of cost synergies expected to benefit 2024.

Ed Murphy: Please turn to slide 15.

Ed Murphy: As Paul articulated we've been on a deliberate strategy to focus efforts on building a scaled profitable presence in the U S retirement and wealth management markets.

Ed Murphy: As Paul articulated, we've been on a deliberate strategy to focus efforts on building a scaled, profitable presence in the U.S. retirement and wealth management market. I wanted to provide you an overview of how our businesses have delivered and a view of our combined momentum into the future. The bolstering of our Empower franchise with three acquisitions has given us both scale in terms of overall market share as well as enhanced capabilities to deliver market-leading growth. Since 2014, we've migrated 48,000 plans and 6.7 million participants with a balance to the Empower platform from 10 legacy systems.

Ed Murphy: I wanted to provide you an overview of how our businesses have delivered and a view of how our combined momentum into the into the future.

Ed Murphy: The bolstering of our empower franchise with three acquisitions has given us both scale in terms of overall market share as well as enhanced capabilities to deliver market leading growth.

Ed Murphy: Since 2014, we migrated 48000 plans and $6 7 million participants with a balance to the empower platform.

Ed Murphy: From 10 legacy systems.

Ed Murphy: In addition, thanks to the personal capital acquisition, 18 million planned participants now have access to an improved digital experience. This work has led to a doubling of assets and participants since 2020, driving material-scale benefits and strengthening Empower's position as the second-largest retirement services provider in the United States. Today, we serve the needs of 18.5 million individuals and administer more than 1.5 trillion in assets. The U.S. retirement market continues to be fragmented with subscale players. We believe the market will continue to consolidate and that Empower is well positioned to take advantage of a consolidation as a key player at scale and with a track record of strong execution in this space. Please turn to slide 16.

Ed Murphy: In addition, thanks to the personal capital acquisition 18 million plan participants now have access to an improved digital experience.

Ed Murphy: This work has led to a doubling of assets and participants since 2020, driving material scale benefits and strengthening of powers position as the second largest retirement services provider in the United States.

Ed Murphy: Today, we serve the needs of $18 5 million individuals and administer more than 1.5 dollars trillion in assets.

Ed Murphy: The U S retirement market continues to be fragmented with subscale players. We believe the market will continue to consolidate and then empower is well positioned to take advantage of a consolidation as a key player at scale and with a track record of strong execution in this space.

Ed Murphy: Please turn to slide 16.

Ed Murphy: Our scale has contributed to delivering organic net flows in our defined contribution business that have averaged 4% annually. In the context of an industry that's experiencing net outflows, we are taking market share from competitors. Empower is committed to the retirement services market. Our investments in technology and added capabilities demonstrate our commitment, one that is recognized by both customers and intermediaries alike.

Ed Murphy: Our our scale has contributed to delivering organic net flows in our defined contribution business that have averaged 4% annually and.

Ed Murphy: In the context of an industry that's experiencing net out floor flows we are taking market share from competitors.

Ed Murphy: Empower is committed to the retirement services market, our investments in technology and added capabilities demonstrate our commitment.

Ed Murphy: One that is recognized by both customers and intermediaries alike.

Ed Murphy: We believe this is a critically important factor in our continued growth. On the personal wealth side, following the acquisition of personal capital in 2020 and with continued focus and investment since then, net flows have grown strongly, averaging 21% annually, while wealth clients are up 268%, or a CAGR of 54% over the three-year period. This impressive performance is a testament to Empower's personal wealth offering of a powerful and unique digital experience coupled with human advice. As we move into 2024, we are pleased with our market position and look to capitalize on the investments we've made over the last few years. Please turn to slide 17.

We believe this is a critically important factor in our continued growth.

Ed Murphy: On the personal wealth side following the acquisition of personal capital in 2020, and with continued focus and investments. Since then net flows have grown strongly averaging 21% annually, while wealth clients are up 268% or a CAGR of 54% over the three year period.

Ed Murphy: This impressive performance is a testament to empowers personal wealth offering.

Ed Murphy: <unk> unique digital experience coupled with human advice.

Ed Murphy: As we move into 2024, we are pleased with our market position and look to capitalize on the investments we've made over the last few years.

Ed Murphy: Please turn to slide 17.

Ed Murphy: With this combination of increased scale and growth, base earnings have grown by four times in three years, and base ROE has doubled. This includes the remaining synergies we expect to deliver in 2024 from the Prudential transaction. The capital deployed in recent years to drive this growth is paying off in earnings and ROE growth. Further, the U.S. segment has funded approximately 50% of the total acquisition price of personal capital, mass mutual, and prudential financials.

Ed Murphy: With this combination of increased scale and growth base earnings have grown by four times in three years and base. Our OE has doubled. This includes the remaining synergies we expect to deliver in 'twenty 'twenty four from the Prudential transaction.

The capital deployed in recent years to drive this growth is paying off.

Ed Murphy: In the earnings and ROE growth.

Ed Murphy: Further the U S segment has funded approximately 50% of total acquisition price of personal capital Massmutual and Prudential financial.

Gary McNicholas: This includes Associated Finance. If Putnam proceeds are included, it's two-thirds. This is further demonstration of the strong capital allocation decisions Paul shared with you earlier in the presentation. I'm truly excited for what the future holds as we continue to build the Empower franchise and long-term sustainable growth in the U.S. I'll now turn the call over to Gary to review the financial results. Thank you, Ed. Please turn to slide 19.

Ed Murphy: <unk> associated financing if Putnam proceeds are included it.

Ed Murphy: It's two thirds this.

Ed Murphy: This is further demonstration of the strong capital allocation decisions Paul shared with you earlier in the presentation.

Ed Murphy: I'm truly excited for what the future holds as we continue to build the empower franchise and long term sustainable growth in the U S.

Ed Murphy: I'll now turn the call over to Gary to review the financial results.

Gary: Thank you Ed.

Gary: Let's turn to slide 19.

Gary McNicholas: ACPS of $1.04 was up 8% from Q4 2022, driven by strong performance across the segments, with Canada, the U.S., and CRS all showing double-digit increases year-over-year. As shown by the top two rows in the chart on the right, this balanced performance across segments was a continuation of what we saw in Q3, and, in fact, it has been a consistent theme in our results throughout 2023. Quarter over quarter, base earnings increased 2%, primarily a result of more favorable insurance experience and higher net fee and spread income, partially offset by expenses, credit impacts, and a higher marginal tax rate. In Canada, base earnings of 301 million were up 16% year-over-year, driven by strong group disability results and higher investment earnings, partially offset by higher drug claims and expenses as well as a higher tax rate this year.

Gary: A C. P. S at $1.04 was up 8% from Q4 2022, driven by strong performance across the segments with Canada. The U S and Crs all showing double digit increases year over year.

Gary: As shown by the top two rows in the chart on the right. This balanced performance across segments was a continuation of what we saw in Q3 and in fact, it has been a consistent theme in our results throughout 2023.

Gary: Quarter over quarter base earnings increase was up 2%, primarily result of more favorable insurance experience and higher net fee and spread income, partially offset by expenses credit impacts and a higher marginal tax rate.

Gary: In Canada base earnings of $301 million were up 16% year over year, driven by strong group disability results and higher investment earnings, partially offset by higher drug claims and expenses as well as a higher tax rate this year.

Gary McNicholas: In the U.S., base earnings of $261 million were up $46 million year-over-year, or 21%, benefiting from the markets and continued strong organic growth that empowers. On the revenue side, there was growth in asset-based fee income from the higher-average equity markets and increases in other participant transaction-based fee income based on growth and volume. On the expense side, results now reflect the full mass mutual synergies, and we are on track to deliver the remaining targeted synergies on the prudential business in Q2 2024. Base earnings were impacted this quarter by a commercial mortgage credit impairment, which somewhat dampened what was otherwise continuing strong growth. In Europe, base earnings were down 17% year-over-year.

Gary: In the U S base earnings of $261 million were up 46 million year over year or 21% benefiting from markets and continued strong organic growth at empower.

Gary: On the revenue signed there was growth in asset based fee income from the higher average equity markets.

And increases in other participant transaction based fee income based on growth and volume.

Gary: On the expense side results now reflect the full mass mutual synergies and we are on track to deliver the remaining targeted synergies under Prudential business in Q2 2024.

Gary: Base earnings were impacted this quarter by our commercial mortgage credit impairment, which somewhat dampened what was otherwise continuing strong growth.

Gary: In Europe base earnings were down 17% year over year improvements in insurance experience higher surplus income and benefits from currency were more than offset by lower trading gains than we saw last year.

Gary McNicholas: However, improvements in insurance experience, higher surplus income, and benefits from currency were more than offset by lower trading gains than we saw last year. Q4 2022 benefited from significant trading gains as accumulated spread assets were allocated to in-force business, whereas this quarter, newly sourced spread assets were deployed against another strong quarter of individual and bulk annuity sales. This new business contributes to CSM growth in Europe, which David noted earlier; however, unlike trading gains, the CSM growth is amortized into earnings over time rather than being reported as a gain in the quarter. The Capital and Risk Solutions Segment. CRS had another strong quarter with base earnings up 30% year-over-year. We continued to see strong organic business growth, particularly in the structured reinsurance portfolio, contributing to the earnings uplift. In addition, there were favorable claims developments on the previous year's P&C catastrophe events, partially offset by unfavorable U.S. life reinsurance mortality experiences. Turning to net earnings, overall net EPS from continuing operations was $0.80 per share.

Gary: Q4, 2022 benefited from significant trading gains as accumulated spread assets were allocated to enforce business, whereas this quarter newly source spread assets were deployed against another strong quarter of individual and bulk annuity sales.

Gary: This new business contributes to CSM growth in Europe, which David noted earlier, however, unlike trading gains the CSM growth is amortized into earnings over time, rather than being reported as a gain in quarter.

The capital and risk solutions segment.

Gary: E. R. S had another strong quarter with base earnings up 30% year over year, we continued to see strong organic business growth, particularly in the structured reinsurance portfolio contributing to the earnings uplift. In addition to a favorable claims development from the previous year's P&C catastrophe events, partially offset by unfavorable.

Gary: U S life insurance mortality experience.

Gary: Turning to net earnings overall net EPS from continuing operations was <unk> 80 per share the GAAP to base earnings is primarily due to market related experience net EPS was up 55% from last year, driven by higher base earnings and a lower impact from market related items and I'll cover market later on next slide so.

Gary: Turning to slide 'twenty. This table shows the reconciliation from base to net earnings net.

Gary McNicholas: The gap to base earnings is primarily due to market-related experience. Net EPS was up 55% from last year, driven by higher base earnings and a lower impact from market-related items. And I'll cover market-related issues on the next slide. So turning to slide 20, this table shows the reconciliation from Bayston et al. Net earnings from continuing operations were $743 million, and within the excluded items, there were two areas that drove most of the result.

Net earnings from continuing operations were $743 million and within the excluded items. There were two areas that drove most of the result, the first is market experience relative to expectations.

Gary: As noted on our Q2 and Q3 2023 earnings calls. These are typically items that we would expect to oscillate around zero over longer periods.

Gary: They will vary quarter to quarter, we have added disclosure into our materials. This quarter. So that the impacts can be tracked more readily overtime and by subcategory public equity real estate and interest rates.

Gary McNicholas: The first is market experience relative to expectation. As noted on our Q2 and Q3 2023 earnings calls, these are typically items that we would expect to oscillate around zero over longer periods, although they will vary quarter to quarter. We have added disclosure into our materials this quarter so that the impacts can be tracked more readily over time and by subcategory, public equity, real estate, and interest rates. For the two years, on an IFRS 17 basis, the overall net impact has actually been positive, with the benefit from higher interest rates being only partly offset by the related pressure that higher rates have had on real estate valuation. This quarter, the negative market experience was primarily driven by decreases in interest rates in Canada and the U.K. and lower real estate valuations in our Canadian and U.K. property portfolios.

For the two years under 90 for a 17 basis. The overall net impact has actually been positive with the benefit from higher interest rates being only partly offset by the related pressure that higher rates have had on real estate valuations.

Gary: This quarter the negative market experience was primarily driven by decreases in interest rates in Canada, and the U K and lower real estate valuations in our Canada and U K property portfolios. These impacts were partially offset by higher than expected returns on our public and private equity portfolio that are primarily in the Canada segment.

Gary: I would highlight that although the decrease in interest rates was a drag on net earnings the overall impact of interest rates on our light cat ratio was positive.

Gary: The impacts to net earnings and on a light cat ratio are in line with our expectations and driven by conscious decisions in our a L. M approach, an accounting policy choices as we moved into <unk> 17 and nine.

Gary: The second area relates to deliberate actions, we took within the quarter to reposition our businesses in Europe as outlined by David earlier with the impacts of rising in both management actions and business transformation costs.

Gary McNicholas: These impacts are partially offset by higher-than-expected returns on our public and private equity portfolio, which is primarily in the Canada sector. I would highlight that although the decrease in interest rates was a drag on net earnings, the overall impact of interest rates on our LICAT ratio was positive. The impacts on net earnings and on our LICAT ratio are in line with our expectations and driven by conscious decisions in our ALM approach and accounting policy choices as we moved into IFRS 17 and 9. The second area relates to deliberate actions we took within the quarter to reposition our businesses in Europe, as outlined by David earlier, with the impacts arising from both management actions and business transformation costs. The net impact from the European actions was a positive $78 million, supported by the gain on the sale of an enforced book of policies from Irish Life into the joint venture with AIB Life, which helps bring the joint venture more rapidly to scale.

Gary: The net impact from the Europe actions was a positive 78 million supported by the gain on sale of an in force book of policies from Irish life into the joint venture is AIB light, which helps bring the joint venture more rapidly scale.

This helped to offset restructuring and other costs.

Gary: In addition, an external reinsurance transaction for a block of in force U K annuities was completed on attractive terms. However, similar to new business gains the gain on the transaction goes into CSM and will come into earnings over time.

Gary: The remaining items excluded from base relate primarily to the amortization of acquisition related finite life intangibles, which we expect to persist over the medium term.

Gary: Turning to slide 21.

Gary: In the top row are the drivers of earnings table, you can see expected insurance earnings of $743 million up 6% year over year due to business growth, particularly in short duration.

Gary McNicholas: This helped offset restructuring and other costs. In addition, an external reinsurance transaction for a block of Enforce UK annuities was completed on attractive terms. However, similar to new business gains, the gain on the transaction goes into CSM and will come into earnings over time. The remaining items excluded from the base relate primarily to the amortization of acquisition-related finite life intangibles, which we expect to persist over the medium term. Turn to slide 21.

Gary: Renewable contracts like group insurance, and the structured reinsurance portfolio and Crs.

Gary: The overall insurance result of $854 million was up 27% year over year and these are pre tax numbers just as a reminder.

Gary: Driven by favorable insurance experienced this quarter.

Gary: There were strong morbidity gains in Canada, and the U K and favorable claims development in P&C, partly offset by continuing unfavorable mortality experience within the U S life reinsurance portfolio.

Gary: The net investment result of $212 million was down 20% year over year.

Gary McNicholas: In the top row of the driver's earnings table, you can see expected insurance earnings of $743 million, up 6% year-over-year due to business growth, particularly in short-duration renewable contracts like Group Insurance and the Structured Reinsurance Portfolio in CRS. The overall insurance result of $854 million was up 27% year over year, and these are pre-tax numbers just as a reminder. This quarter was driven by favorable insurance experience. There were strong morbidity gains in Canada and the U.K. and favorable claims developments in P&C, partly offset by continuing unfavorable mortality experience within the U.S. life reinsurance portfolio. The net investment result of $212 million was down 20% year-over-year.

Gary: This was mainly driven by lower trading activity impacts in Europe, which as mentioned earlier had recorded large gains in the prior year and a more normal quarter. This this time.

Gary: And an increase in credit charges. These were partly offset by the benefit of higher interest rates on surplus earnings that we've seen throughout the year.

Gary: Net fee and spread income related to our non insurance businesses were up 17% year over year supported by higher equity markets. Most of this result is driven by empower as noted earlier, we benefited from asset based and transaction based fee streams for this business. While also benefiting from the realization of acquisition related synergies.

Gary: Non directly attributable and other expenses were up 8% relative to the prior year due to business growth and higher variable compensation expenses related to the strong performance of the GW <unk> stock price.

Gary: The effective tax rate this quarter was 16% on base shareholder earnings, reflecting the jurisdictional mix of earnings including the growing U S contribution and then they're very limited impact of onetime tax items.

Gary McNicholas: This was mainly driven by lower trading activity impacts in Europe, which, as mentioned earlier, had recorded large gains in the prior year and a more normal quarter this time, and an increase in credit charges. These were partly offset by the benefit of higher interest rates on surplus earnings that we've seen throughout the year. Net fee and spread income related to our non-insurance businesses was up 17% year-over-year, supported by higher equity markets.

Gary: Overall, we achieved record base earnings of 971 million a reflection of continued strong results across all the segments.

Gary: Turning to slide 22, the book value like Cat ratio return on equity and financial leverage numbers are shown on an <unk> 17 basis.

Gary: The Q4 2023 book value per share of $24 26 was up 4% year over year and 1% from last quarter driven by the growth in retained earnings.

Gary McNicholas: Most of this result is driven by Empower. As noted earlier, we benefited from asset-based and transaction-based fee streams for this business, while also benefiting from the realization of acquisition-related synergies. Non-directly attributable and other expenses were up 8% relative to the prior year due to business growth and higher variable compensation expenses related to the strong performance of the GWO stock price. The effective tax rate this quarter was 16% on base shareholder earnings, reflecting the jurisdictional mix of earnings, including the growing U.S. contribution, and the very limited impact of one-time tax items.

Gary: It is also worth highlighting that our book value per share has steadily grown since the move to higher for 17 and is now only 2% below the $24 71 level pre transition.

Gary: July cat ratio of 128% was the same as the prior quarter and down slightly from the prior year as.

Gary: As noted on our Q3 2023 call the closing of the investment planning Council transaction. In Q4, 2023 was expected to reduce the ratio by about three points. However, this impact was largely offset by the capital savings from the external reinsurance as part of the repositioning their balance sheet.

Gary McNicholas: Overall, we achieved record-based earnings of $971 million, a reflection of continued strong results across all the segments. Turning to slide 22, the book value, the LICAP ratio, return on equity, and financial leverage numbers are shown on an IFRS 17 basis. Q4 2023 book value per share of $24.26 was up 4% year over year and 1% from last quarter driven by the growth in retained earnings. It is also worth highlighting that our book value per share has steadily grown since the move to IFRS 17 and is now only 2% below the $24.71 level pre-transition. The LICAP ratio of 128% was the same as the prior quarter and down slightly from the prior year.

Gary: Strong base earnings have continued to support our we were the result of 16, 6% this quarter, which is well in the upper half of our medium term objective, 16% to 17%.

Gary: Financial leverage reduced to 30% on the growth in equity and the payment of 100 million U S. U S dollars to fully pay down the short term debt facility that had funded part of the Prudential transaction.

If we turn to slide 23, there are a couple of factors I'd like to call out that will have an impact on 2024 earnings. The first is the Putnam transaction, which closed on January one.

Gary: The transaction resulted in a modest gain which will be recorded in the Q1 2024 results. The proceeds from the disposition along with the remaining assets will remain part of the U S segment business along with empower.

Gary McNicholas: As noted on our Q3 2023 call, the closing of the Investment Planning Council transaction in Q4 2023 was expected to reduce the ratio by about three points. However, this impact was largely offset by the capital savings from external reinsurance as part of the repositioning of the balance sheet. Strong base earnings have continued to support ROE with a result of 16.6% this quarter, which is well in the upper half of our medium-term objective of 16-17%. Financial leverage reduced to 30% on the growth in equity and the payment of 100 million U.S. dollars to fully pay down the short-term debt facility that had funded part of the Prudential transaction. If we turn to slide 23, there are a couple of factors I'd like to call out that will have an impact on 2024 earnings. The first is the Putnam transaction, which closed on January 1st.

Gary: The impact on base earnings for empower is expected to be approximately 75 million Canadian after tax coming primarily from the expected return on the Franklin Templeton chairs, which will support regulatory capital.

Gary: Bear in mind these shares will be mark to market each quarter. So this will add some volatility to the net earnings result.

Gary: And the second I'd like to point out is the introduction of the OECD global minimum tax in 2024.

Gary: Given our current mix of business. The additional taxes are expected to have an approximate 3% impact on base earnings OSB equal with about two thirds of the impact of rising in capital and risk solutions and about one third of the impact in the Europe segment. It is not expected to impact Canada or the U S.

Gary: And taken together. These two matters are expected to have only a modest impact and will not influence our business plans or our growth objectives and with that I'll turn the call back to Paul for closing Thanks, Gary Please turn to slide 25.

Gary McNicholas: The transaction resulted in a modest gain, which will be recorded in the Q1 2024 results. The proceeds from the disposition, along with the remaining assets, will remain part of the U.S. segment business along with Empower. The impact on base earnings for NPower is expected to be approximately $75 million Canadian after-tax, coming primarily from the expected return on the Franklin Templeton shares, which will support regulatory capital.

This quarter also marks a leadership transition as we welcome John Nielsen as Chief Financial Officer for Bruce Moran, President and Chief Operating Officer, Canada, and David Harney with expanded responsibilities for our capital and risk solutions segments. In addition to his current role leading our European segment.

Gary: I would like to personally thank Gary Mec, Nicholas Jeff Macoun inertial jamaal for their dedicated contributions to our company's success over the respective careers each spanning multiple decades.

Gary McNicholas: Bear in mind, these shares will be marked to market each quarter, so this will add some volatility to the net earnings results. And the second thing I'd like to point out is the introduction of the OECD Global Minimum Tax in 2024. Given our current mix of business, the additional taxes are expected to have an approximate 3% impact on base earnings, all SBE equal, with about two-thirds of the impact arising in capital and risk solutions and about one-third of the impact in the Europe segment.

Gary: Looking ahead, we remain focused on delivering growth and strong shareholder returns across our three value drivers, particularly in workplace and wealth.

Gary: We are pleased to introduce the base earnings growth objective for empower of 15% to 20% for 2024. This will be supported by unlocking value from the Prudential integration and continued strong organic growth and empower personal wealth.

Gary: Echo Ed's remarks, we are very excited about our prospects in the U S retirement and wealth markets.

Gary McNicholas: It is not expected to impact Canada or the U.S. And taken together, these two matters are expected to have only a modest impact and would not influence our business plans or our growth objectives. And with that, I'll turn the call back to Paul for closing. Thanks, Gary. Please turn to slide 25.

Gary: To close out our formal comments, we are reconfirming, our medium term objectives and are pleased to announce that our board has approved a dividend increase of 7% or a quarterly dividend of <unk> $55 five per share.

Speaker Change: And with that I will ask <unk> to please open the line for questions.

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

Paul Mann: This quarter also marks a leadership transition as we welcome John Nielsen as Chief Financial Officer, Fabrice Morin as President and Chief Operating Officer, Canada, and David Harney with expanded responsibilities for our capital and risk solution segment, in addition to his current role leading our European segment. Additionally, I'd like to personally thank Gary McNicholas, Jeff McCown, and Arshil Jamal for their dedicated contributions to our company's success over their respective careers, each Looking ahead, we remain focused on delivering growth and strong shareholder returns across our three value drivers, particularly in workplace and wealth. We're pleased to introduce a base earnings growth objective for empower of 15 to 20% for 2024. This will be supported by unlocking value from the prudential integration and continued strong organic growth to empower personal wealth.

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

Speaker Change: Our first question comes from Gabriel <unk> of National Bank Financial. Please go ahead.

Gabriel: Hi, Good afternoon, I just wanted to talk first about the Europe segment.

Gabriel: And just to confirm that reinsurance transactions already done and it's a sea of it's M. A C. S M and future earnings is the impact right correct.

Speaker Change: That is correct Gabe.

Speaker Change: Okay.

Speaker Change: Then more broadly you listed a bunch of actions you've taken to improve performance in this segment in your slide you say medium term can you.

Speaker Change: Can you give me any oh, I mean, I'm thinking that means two or three years down the road, we'll see the uplift maybe sooner.

Speaker Change: Can you give me any specifics a number of specific numbers like Oh.

Paul Mann: To echo Ed's remarks, we are very excited about our prospects in the U.S. retirement and wealth markets. To close out our formal comments, we're reconfirming our medium-term objectives and are pleased to announce that our board has approved a dividend increase of 7%, or a quarterly dividend of 55.5 cents per share. And with that, I will ask Ariel to please open the line for questions. Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star, then one on your telephone keypad.

Speaker Change: If there's you combine some businesses amongst other things.

Speaker Change: You know what kind of cost saves you're expecting about these actions.

Speaker Change: Or anything else a numbers related.

Speaker Change: Gabe let me just position it at a high level and then I'll turn that over to.

Gabe: To David earnings. So if you think about what we've been doing in the U S. It was all about you know back.

Gabe: Bakken areas. So we could focus in areas, where we had what we believed the skill and strategic advantage to have a winning hand, and that's frankly the actions that David has been taking working with the UK and other teams there and.

Operator: You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. Our first question comes from Gabrielle Deschain of National Bank Financial. Please go ahead. Hi, good afternoon.

Gabe: Ultimately, it's also been looking to optimize our capital structure, because you know the strength of any of our businesses is not just about earnings growth. It's also about cash generation. So those are the two drivers the decisions and I'll, let I'll, let David provide a little bit of color David Yes, So suppose maybe to get some guidance like overall the constitution.

Gabrielle Deschain: Just wanted to talk first about the Europe segment and just to confirm that the reinsurance transaction is already done, and it's in the CSM, and future earnings are the impact, correct? That is correct, Gabe. Okay, then more broadly, you listed a bunch of actions you've taken to improve performance in the segment, and your slides say medium term. Can you give me any, I mean, I'm thinking that means two, three years down the road, we'll see the uplift, maybe sooner. Can you give me any specifics, a number of specific numbers, like if there's a, you know, you've combined some businesses amongst other things and, you know, what kind of cost savings you're expecting from these actions or anything else, really?

David Harney: Europe, whether it's <unk> and CSM and if you look at our <unk> results for 2023.

David Harney: Our performance on base earnings since he has had wanted to be in line with expectations.

David Harney: Overall in Europe, we're really happy with the macro position with very broad position in Ireland desktop enemy is performing strongly and meet targeted product positions down into UK and Germany.

David Harney: Happy with both but as Paul said that like we're focused on having meaningful positions in all of our product lines and then we're focused on cash generation as well. So I think these combination of actions that I outlined that.

David Harney: That will continue at the topline growth that we're seeing in Europe, possibly to a Bachelor feature to the bottom line.

The cash generation. So I think if you take our aggregates base earnings position overall of 2023, you'll see growth or we expect growth on into 2024, and then beyond that.

Paul Mann: Gabe, let me just position it at a high level, and then I'll turn that over to David Harney. So, if you think about what we've been doing in the U.S., it was all about, you know, putting back in areas where we could focus on areas where we had what we believed the skill and strategic advantage to have a winning hand. And that's, frankly, the actions that David has been taking working with the U.K. and other teams there. And ultimately, it's also been looking to optimize our capital structure because, you know, the strength of any of our businesses is not just about earnings growth; it's also about cash generation. So those are the two drivers of the decisions, and I'll let David provide a little bit of color. David?

David Harney: Another way to think about it gave us that we've pulled back in a few areas that.

David Harney: And we've kind of doubled down on businesses, where we believe there is strong growth and so with sort of less capital exposed as we were going to be able to drive this.

David Harney: Off of the same sort of base will have the same similar growth to what we've seen through 2023 going forward.

Speaker Change: Gotcha, no I'm moving to empower.

Speaker Change: For the full year organic earnings growth rate.

Speaker Change: Quite sure what it was but the you know.

Speaker Change: Q4 was about 18%.

Speaker Change: And you know upper end of that 15% to 20% target range.

Speaker Change: Your line this time a year ago.

Speaker Change: Where are you now looking in the year ahead, you've got the synergies that are expected.

David Harney: Yeah, so I suppose maybe to give some guidance, like, overall, the Constitution of Europe will feed into base earnings and CSM, and if you look at our sort of aggregate results for 2023, our performance on base earnings and CSM would have been in line with expectations. And like, overall, in Europe, we're pretty happy with the macro position. We have a very broad position in Ireland, that economy is performing strongly, and we've targeted product positions into the U.K. and Germany, and we're happy with those. But as Paul said, then, like, we're focused on having meaningful positions in all of our product lines, and then we're focused on cash generation as well. So I think these combination of actions that I outlined will continue the top-line growth that we're seeing in Europe, which will lead to a better feed-through to the bottom line and to cash generation.

Speaker Change: We expect to fully realize the.

Speaker Change: You expect a similar year.

Speaker Change: Of growth for our manpower.

Speaker Change: When you do that you delivered both here.

Speaker Change: Yeah. So alternative to Gabe makes a couple of comments at a high level and then I'll turn it over to Ed to add some color as you'll recall last year.

Ed Murphy: We have deployed significant capital and.

Speaker Change: We did want to provide some insight into our expectations and we set out an expectation of 15% to 20% growth in base earnings and the reality that we grew both base earnings.

Ed Murphy: By a 21% in the year, so we kind of outperformed the top end of that expectation.

Ed Murphy: As we move into 2024, we're setting the same expectation that same corridor of 15% to 20% and obviously that's taken into account you know healthy equity markets and a stable interest rate environment, but the reality is the engine is working like it. If you really think about what this is this is not just a roll up where we are.

David Harney: So I think if you take our aggregate base earnings position overall for 2023, you'll see growth on that, or we expect growth on that, into 2024 and then beyond that. Yeah, and another way to think about it, Gabe, is that we've pulled back in a few areas, and we've kind of doubled down on businesses where we believe there's strong growth. And so with sort of less capital exposed as we're going to be able to drive this, you know, off of the same sort of base, we'll have the same growth similar to what we've seen through 2023 going forward. Gotcha.

There were accounting for synergies, we are driving organic growth that's organic growth as Ed said growing R. R.

Ed Murphy: Find contribution recordkeeping business at a rate of 4% of opposite of market Thats shrinking and then driving a very high rate of retail growth Ed do you want to add some more color to that.

Ed Murphy: I think there he might be on mute I wonder are you on mute.

Ed Murphy: Off now [laughter].

Paul Mann: Now moving to Empower, the full-year organic earnings growth rate, I'm not quite sure what it was, but you know, Q4 was about 18%, and the upper end of that 15% to 20% target range you outlined this time a year ago. Looking ahead, you've got the synergies that you expect to fully realize. Do you expect a similar year of growth from Empower to what you delivered this year? Yeah, so I'll turn it over to Gabe, I'll make a couple of comments at a high level, and then I'll turn it over to Ed to add some color.

Ed Murphy: No I would concur with Paul's remarks, I mean, we see a lot of demand.

Ed Murphy: On the sales side the pipeline is very significant so I think in terms of organic growth.

Ed Murphy: We're very very well positioned in both segments, both workplace and in personal wealth and then as you referenced we've got the synergies that are playing through and we're really seeing strong expense discipline across the business. So I think youre going to continue to see strong operating leverage in the business and.

Ed Murphy: We're comfortable with the way we're positioned right now.

Speaker Change: Okay great.

Speaker Change: Ed I was just Gonna said it also be fair to say that you know what.

Where the wealth business is proving its way and this is early innings in the wealth business. So we're you know we're in the early stages of growing that business. So you know we're gonna have to continue to work that in but as you can see theres been real growth coming out of that.

Paul Mann: As you recall last year, we had deployed significant capital, and we did want to provide some insight into our expectations, and we set out an expectation of 15 to 20% growth in base earnings. And the reality is that we grew base earnings by 21% in the year, so we kind of outperformed the top end of that expectation. As we move into 2024, we're setting the same expectation, that same corridor of 15 to 20%, and obviously, that's taking into account healthy equity markets and a stable interest rate environment. But the reality is, the engine is working.

Speaker Change: Well, we've talked about the organic side of thing.

Speaker Change: That's gonna add to that or.

Speaker Change: I was just going to comment on on the personal wealth side that we're still we're still building out capabilities, we're still investing and you can see the results very very strong here and we're off to a very good start this year. So.

Speaker Change: That's still very much an investment business. We've added we added over 500 people in the business in 2023.

Paul Mann: If you really think about what this is, this is not just a roll-up where we're accounting for synergies. We are driving organic growth. It's organic growth, as Ed said, growing our defined contribution record-keeping business at a rate of 4% to offset a market that's shrinking and then driving a very high rate of retail growth. Ed, do you want to add some more color to that? Absolutely. I think it's there; he might be on mute.

Speaker Change: Over 1000 advisors, we're going to continue to invest and grow we see tremendous demand there.

Speaker Change: And then did you have a question on the acquisition side.

Speaker Change: Yeah, Yeah, you read my mind, Oh, you got a 30% leverage ratio with the top of the house Putnam proceeds were.

Speaker Change: Stuffed into the.

Speaker Change: No the Piggy bank of a U S subsidiary and Oh I got off the obvious M&A question I'm sure. Your appetite is whetted I'm just wondering a are you seeing opportunities to pick up.

Ed Murphy: I wonder, Eddie, are you on mute? Yes, mute. I'm off now. But no, I would concur with Paul's remarks. I mean, we see a lot of demand on the sales side. The pipeline is very significant. So I think in terms of organic growth, we're very, very well positioned in both segments, both workplace and personal wealth. And then, as you referenced, we've got the synergies that are playing through, and we're really seeing strong expense discipline across the business. So I think you're going to continue to see strong operating leverage in the business, and we're comfortable with the way we're positioned right now. Okay, good.

Speaker Change: That is great I love your description there at all I'll start off and then you can you can weigh in.

Speaker Change: Youre right.

Speaker Change: Where the leverage ratio is now so we're sort of back into our target kind of operating range I wouldn't say, we've stuff those proceeds quite into the Piggy bank, we're still holding a significant position that we think is very attractive and in Franklin Templeton and the combined Putnam Franklin Templeton business, but the reality is we are reestablishing what.

Speaker Change: You might refer to as firepower and.

Speaker Change: We absolutely believe that the U S market is one of the areas, where we see the potential for deploying more capital and I think in Ed's comments, you've talked about you know the market continues to be there.

Paul Mann: Ed, I was just going to say that the wealth business is proving its worth, and this is the early innings of the wealth business, so we're in the early stages of growing that business, so we're going to have to continue to work that, but as you can see, there's been real growth coming out of that. Well, we've talked about the organic side of things. Oh, is that going to add to that, or not?

Speaker Change: There is some sub skill.

Speaker Change: Competitors and so Ed maybe you can just talk about you know.

Ed Murphy: How are you thinking about it now I will say the team there and we kind of joke about it a bit but it's no joke they've delivered three significant acquisitions. So we might want to give them a month, the rest or something but.

Ed Murphy: I was just going to comment on the personal wealth side that we're still building out capabilities, we're still investing, and you could see the results. A very, very strong year, and we're up to a very good start this year. So that's still very much an investment business. We've added over 500 people to the business in 2023. We have over 1,000 advisors.

Ed Murphy: At the same time, it's also.

Ed Murphy: It is.

One of the things I'd like to add to speak to is the muscle we have built and its really Ed and his team have built to execute successfully on acquisitions. So why don't you speak to that at maybe in a bit about you.

Ed Murphy: No.

Ed Murphy: The attractiveness of the market.

Speaker Change: I know you won't name names, but just.

Ed Murphy: We're going to continue to invest and grow. We see tremendous demand there. And then did you have a question on the acquisition side? Yeah, you read my mind. You got a 30% leverage ratio at the top of the house. The Putnam proceeds were stuffed into the, you know, the piggy bank of the U.S. subsidiary. And, you know, I've got to ask the obvious M&A question. I'm sure your appetite is whetted.

Speaker Change: Just the relative attractiveness of going sure.

Speaker Change: Go ahead.

Speaker Change: [laughter] thing.

Speaker Change: Thanks, Paul.

Paul Men: So just just in terms of the the talent side of it I'll just make a quick statement. There you know when we bought the Jpmorgan business back in 2014 2015 with that transaction came tremendous domain expertise and so a lot of that talent and then of course, we've added talent from the subsequent transactions have remained with us. So we've got really.

Gabrielle Deschain: I'm just wondering, are you seeing opportunities pick up? That is great. I love your description there.

Paul Men: Strong expertise around M&A and these are really complex transactions too.

Paul Mann: Ed, I'll start off, and then you can weigh in. I think you're right. We like where the leverage ratio is now, so we're sort of back into our target kind of operating range. But I wouldn't say we've stuffed those proceeds quite as much into the piggy bank. We're still holding a significant position that we think is very attractive in Franklin Templeton and the combined Putnam-Franklin-Templeton business, but the reality is we are reestablishing what you might refer to as firepower.

Paul Men: Complex.

Paul Men: Systems to integrate.

But we have a really good team that is highly motivated and incredibly effective in doing it and so I'm confident that we can we can rise to the challenge as we go forward and then to Paul's point. The market is so fractured and theres. So many subscale players and you know.

Paul Men: I think our strategy is to be opportunistic.

Paul Men: We're probably the only strategic buyer in this space and in the defined contribution space and so we're going to really get a good look at anything and everything that comes to market.

Paul Mann: And we absolutely believe that the U.S. market is one of the areas where we see the potential for deploying more capital. And I think in Ed's comments, you talked about the market continuing to be, there are some subscale competitors. And so Ed, maybe you can just talk about, you know, how you think about it. Now, I will say to the team there, and we kind of joke about it a bit, but it's no joke.

Paul Men: We'll make that assessment and we'll make that determination whether it makes sense for US is the timing right does it add talent does it add capabilities does it add scale in a way that benefits the business and then the only other comment I would make is.

Paul Men: Again, we're very much.

Paul Men: Focused on the task at hand, with personal wealth, but I see tremendous opportunities to grow that business inorganically as well, whether it's on the product side or on the distribution side. So it's really sort of both lines of business that will continue to evaluate.

Paul Mann: They've delivered three significant acquisitions, so we might want to give them a month of rest or something, but at the same time, one of the things I'd like Ed to speak to is the muscle we have built. And it's really Ed and his team that have built to execute successfully on acquisitions. So why don't you speak to that, Ed, maybe, and a bit about, you know, the attractiveness of the market? And I know you won't name names, but just the relative attractiveness of the market. Go ahead, name, name.

Paul Men: Inorganic opportunities as we move forward.

Speaker Change: Thank you.

Speaker Change: That's good.

Speaker Change: Our next question comes from Doug Young of <unk> capital markets. Please go ahead.

Speaker Change: Yeah.

Doug Young: Hi, Good afternoon, just gave it back to yourself on on Europe, and I see the restructuring that you had laid out.

Doug Young: I guess I'm more curious about the plans for for Germany, because I do believe it's a broker distributed kind of second fund types of business. You can correct me if I'm wrong I'm not sure you have scale just trying to understand the strategy. There are you investing more streamlining.

Ed Murphy: Yeah, well, thanks. Thanks, Paul. So, just in terms of the talent side of it, I'll just make a quick statement there.

Ed Murphy: When we bought the J.P. Morgan business back in 2014-2015, with that transaction came tremendous domain expertise. And so, a lot of that talent, and then, of course, we've added talent from the subsequent transactions, have remained with us. So, we have really strong expertise around M&A. These are really complex transactions and complex systems to integrate, but we have a really good team that is highly motivated and incredibly effective at doing it.

Doug Young: And you know.

Doug Young: What's really the opportunity.

Doug Young: In that market for sure.

Doug Young: Last.

Speaker Change: Yes, I'd say in Germany, like we saw market share bus, it's very big markets are actually reasonable scale like we have 600 pads.

Speaker Change: And our customers.

Speaker Change: And that's across set the pension savings profit there on the protection products and so we're very happy with us like we've invested quite a loss in Germany over the last few years just on the systems development. So we have a very good platform there.

Speaker Change: That's harder to accident service scores that with gas you rice our business. There is true it's true it's a broker Marcus and there's an annual independent survey there every year and we've been either our top or in the top three and that for the last 10 years or so.

Ed Murphy: And so, I'm confident that we can rise to the challenge as we go forward. And then, to Paul's point, the market is so fractured. There are so many subscale players, and I think our strategy is to be opportunistic.

Ed Murphy: We're probably the only strategic buyer in the space, in the defined contribution space. And so, we're going to really get a good look at anything and everything that comes to market, and we'll make that assessment, and we'll make that determination whether it makes sense for us. Is the timing right? Does it add talent?

Speaker Change: Pretty confident about our position there and it is something that would be thinking the best advice and more this year just talked about are to grow with the opportunities there and what's the best way forward on it but with very good platform Our foundation in Germany.

Speaker Change: Yeah, Doug It's Paul I think you know as we look at it.

Paul Men: We started off I would call it as a challenger brand.

Ed Murphy: Does it add capabilities? Does it add scale in a way that benefits the business? And then, the only other comment I would make is, again, we're very much focused on the task at hand with personal wealth, but I see tremendous opportunity to grow that business organically as well, whether it's on the product side or on the distribution side. So it's really sort of both lines of business that we'll continue to evaluate inorganic opportunities as we move forward. Thank you. Thanks, Gabe. Our next question comes from Doug Young of Desjardins Capital Markets. Please go ahead. Hi, good afternoon.

Paul Men: A funny expression, though because.

Paul Men: Canada and you know the country, Canada is very favorably viewed and through German you know the German nations is that they they love, Canada and I think that's really served us very well as a brand as we've grown.

Paul Men: But to David's point, it's kind of a focused strategy as you said and where we think about diversification. So is the diversification of their channels of the diversification different products.

Paul Men: Because you know you don't want to sort of be too concentrated but having said that if you narrowly define the market as the broker you know.

Paul Men: In distribution, we actually have a pretty meaningful share we matter and that's why you sort of show up as a one or two when brokers are assessing who are the best providers in the market.

Paul Men: Yeah.

And Paul what is the return or David What's the return you get on that business is that.

Speaker Change: In line with your target.

You can quantify that that'd be great what's the opportunity.

Doug Young: Just, David, back to yourself on Europe, and I see the restructuring that you have laid out. I guess I'm more curious about the plans for Germany, because I do believe it's a broker-distributed kind of seg fund type of business. You can correct me if I'm wrong. I'm not sure you have scale.

Speaker Change: Yeah, our returns there I'll go down the R&D in line with targets. So we have to scan like we've been there for 20 years with 600000 customers. So we have to scan already to our current charters with Germany. So we're delivering on those.

Speaker Change: Okay.

Speaker Change: And then second can you see in the supplemental we actually get the breakdown of the earnings by country. So you'll see you'll see a continued strong contribution from Germany.

David Harney: Just trying to understand, you know, the strategy there, are you investing more in streamlining, and what's really the opportunity in that market for Great-West? Yeah, say in Germany, like we bought market share, but it's a very big market. So actually, a reasonable scale, like we've 600,000 customers, and that's across the pension savings product there and the production products. And so we're very happy with that. Like, we've invested quite a lot in Germany over the last few years, just in systems development. So we have a very good platform there. And that's sort of reflected in the service scores that we get. You're right.

Speaker Change: Okay, Great and then just maybe on empower.

Speaker Change: And I got the earn base earnings growth and whatnot, but I think the base ROE is 11, 6%.

Speaker Change: Yeah, what I guess question for you at or Paul.

Speaker Change: What should that be and how long does it get.

Speaker Change: It would take to get there.

Speaker Change: So I'll start off and Gary might want to kick me under the table or whatever here who's nearby but.

Speaker Change: You know, we put we deployed a lot of capital. So now as Ed said, we've you know broadly if you think about the proceeds reinvested sort of pay it's paying for its paying its way and so if you know once we have applied the pru synergies into our sort of anticipated growth objectives for next year, we're going to be pushed.

David Harney: Our business there is through the broker market. There's an annual independent survey there every year, and we've been either top or in the top three in that for the last 10 years.

Speaker Change: And Gary into well.

Gary Mec: Well up in the 13 14 range I would think that's the important thing and then if you sort of think of another year it'll be back it'll be in line with Ah So give it a year or two and then it'll be in line with our overall our medium term objective for ROE and that was really the play. The play was you deploy the capital, but if always deploy.

David Harney: So we're pretty confident about our position there. And it is something we'll be thinking a bit about more this year just on what the growth opportunities there are and what the best way forward on it is. But we have a very good platform or foundation in Germany. Yeah, Doug, it's Paul.

Gary Mec: <unk> was a roll up strategy.

Paul Mann: I think, you know, as we look at it, we started off, I'd call it a challenger brand, kind of a funny expression though, because Canada, then, you know, the country Canada is very favorably viewed through German, you know, the German nation's eyes; they love Canada. And I think that's really served us very well as a brand as we've grown. But to David's point, it's kind of a focus strategy, as you said, and we think about diversification. So is the diversification other channels? Is the diversification different products? Because, you know, you don't want to sort of be too concentrated.

Gary Mec: It's not the same as deploying it into a strategy and a business that has underlying organic growth in the core and then the significant extension growth through retail so.

Gary Mec: We've seen a significant move in ROE over a short period of time and you'll continue to see that row, moving you know with some pace over the next couple of years.

Gary Mec: So it will you know it's it's a business really if you think about its capital signature that should be.

Gary Mec: A reasonably high our OE business.

Gary Mec: Okay and then just just lastly on the investment side you had an impairment on your U S office exposure in the commercial mortgage book All your U S office exposure is in the mortgage it's not investment properties, which I guess comes with a bit of a different dynamic.

David Harney: But having said that, if you narrowly define the market as the broker, you know, pension distribution, we actually have a pretty meaningful share. We matter. And that's why you sort of show up as a one or a two when brokers are assessing who are the best providers in the market. And Paul, what's the return? Or David, what's the return you get on that business? Is that, you know, in line with your target? Can you quantify that? It'd be great.

Can you talk a bit about just and I'm isolating for just the U S office, but they are talking about the LTV the average maturity of the Bakken.

Gary Mec: And what how much of your provision for that for that book already and NDS foresee any further headwinds obviously extremely topical today I'm sure.

Gary Mec: I'm going to defer that one right over to Roman Roman yeah.

Roman: Thanks for the question. So I guess, maybe I'll take the second part of that first in terms of the headwinds I think one of the major headwinds not just for office, but in general it's been rates as Gary alluded to earlier. So one of the things. We are seeing is a stabilization in rates, which I think will be helpful. I think to higher rental yields that we're seeing given the move in rates, thus far will be helpful.

David Harney: What's the opportunity? Yeah, returns there are good and are in line with targets. So I said, we have to scale. Like we've been there for 20 years with 600,000 customers. So we have to scale already to earn money. You'll see in the supplemental, we actually gave a breakdown of the earnings by country. So you'll see, you know, you'll see a continued strong contribution from Germany. Okay, great. Then just maybe on Empower, and I get the earn base earnings growth and whatnot, but I think the base ROE is 11.6%. You know what? I guess, question for you, Ed or Paul, you know, what should that be and how long does it take to get there? So I'll start off, and Gary might want to kick me under the table or whatever.

Roman: On your specific question with respect to office I think the headwinds do still exist in office, we did take a write down as you mentioned in Q4.

Roman: I would say was a bit unique but more idiosyncratic. This particular, one versus general book that we have in U S office. It was our one of our largest markets.

Roman: It was sort of a unique situation I'm not saying, we couldnt have more but we wouldnt expect any sort of future impacts.

Roman: Impacts to be as large of an individual basis as this particular one.

Roman: So as you'll note in the appendix the ltvs, while they've crept up a little bit we're still below 70% LTV on our U S office loan book, we have good debt service coverage.

Paul Mann: He's nearby, but you know, we put in a lot of capital, so now, as Ed said, we've, you know, broadly, if you think about the proceeds, you know, reinvested, sort of, it's paying for it, it's paying its way. And so, once we've applied the PRU synergies and our sort of anticipated growth objectives for next year, we're going to be pushing Gary into... We're well up in the 13-14 range, I would think. 13-14.

Roman: And we've noted this before but the maturity profile extends out so we do have some benefit of maturing loans over the course of the next three or four years. So it's not all concentrated in this year or next year. So I think theres. Some headwinds you know we like our position I think we have good <unk> and this was a bit of an idiosyncratic event.

Roman: But the overall portfolio in Q4, but as you said you could we could still feel a bit of action.

Roman: <unk> action into next year, but we wouldn't see you know you.

Paul Mann: And then, if you sort of think of another year, it'll be back, it'll be in line with, so, you know, give it a year or two, and it'll be in line with our overall medium-term objective for ROE. And that was really the play. The play was, you deploy capital, but if all we deployed it for was a roll-up strategy, it's not the same as deploying it into a strategy in a business that has underlying organic growth in the core and then this significant extension growth through retail. So, you know, we've seen a significant move in ROE over a short period of time, and you'll continue to see that ROE moving at some pace over the next couple of years.

Roman: You know the type of impact we saw this past quarter, we wouldn't expect that.

Roman: Are there significant provisions already our allowances backing that book or is this one of the first kind of.

Roman: Bill.

Speaker Change: I don't know if you can quantify that.

Speaker Change: I'll, let garry speak to that but there is no provision, we specifically set up for that you would set up a provision at the moment in time when you actually knew the harm was there like in other words, it was happening and you're in negotiations with your counterparty, but other than that Gary Yeah, I mean the.

Gary Mec: We've taken the impairment on this one.

Gary Mec: There's very little in the way of provisions I think in our expected credit loss model that the numbers are.

Gary Mec: Immaterial.

Gary Mec: First nine so.

Gary Mec: It's we just don't have a lot.

Paul Mann: So it'll, you know, it's a business really, and if you think about its capital signature, that should be, you know, a reasonably high ROE business. And just lastly, on the investment side, you know, you had an impairment on your U.S. office exposure in the commercial mortgage book. You know, all your U.S. office exposure is in the mortgage. It's not investment properties, which I guess comes with a bit of a different dynamic. Can you talk a bit about just, and I'm isolating for just the U.S. office book, but talk about the LTV, the average maturity of the book, and

Gary Mec: So that's in this category.

Speaker Change: Okay. Thank you.

Manny Grumman: Our next question comes from many Grumman of Scotiabank. Please go ahead.

Manny Grumman: And just another question on Europe, just following up in terms of the actions you've taken to enhance returns do you expect to take any more actions.

Manny Grumman: In the coming quarters, this quarter or in the coming quarters or as to the best of your knowledge.

Speaker Change: All done.

Many Grumman: Many no as a matter of fact, you know one of the things we were very focused on was doing a deep dive on the portfolio.

Raman Srivastava: And how much have you provisioned for that book already? And do you foresee any further headwinds? Obviously, very topical today. Sure. I'm going to defer that one right over to Raman.

Something that David led over the last year, we were looking at opportunities to really strengthen that part of the business. We took the actions. We did there was sort of the setting ourselves up for you know expense some expense reductions some disposition.

Gary McNicholas: Yeah, thanks for the question. So, I guess maybe I'll take the second part of that first. In terms of the headwinds, I think one of the major headwinds, not just for office, but in general, has been rates, as Gary alluded to earlier.

Many Grumman: Disposition as we said are stepping away from a business and obviously the disposition of the <unk> business. For example, but did you see anything else on the horizon did not like the two products, where we didn't have meetings a position. We've taken actions. This year. So Paul talked about gave an edge up on tough so I hope to get some time off that's on this chart.

Raman Srivastava: So, 1 of the things we are seeing is a stabilization in rates, which I think will be helpful. I think the higher rental yields that we're seeing, you know, given the moving rates thus far will be helpful. On your specific question with respect to office, I think the headwinds do still exist in office. We did take a write-down. I'd say it was a bit unique, a bit more idiosyncratic, this particular one versus the general book that we have.

Speaker Change: Uh huh.

Speaker Change: And then just looking ahead you offered up a growth objective of 15 to 20 per cent for empower in 'twenty 'twenty four but.

Speaker Change: For the European business, what would that be for for 2024.

Raman Srivastava: I'm not saying we couldn't have more, but we wouldn't expect any sort of future impact to be as large on individual businesses. So, as you'll note in the appendix, the LTVs, while they've crept up a little bit, we're still below 70% in our U.S. office. We have good debt service coverage. We've known this before, but the maturity profile extends out, so we do have some benefits. 304-U-S-E-O-N-I-C-K-U-S-E-O-N-I-C-K-U-S-E-O-N-I-C-K-U-S-E-O-N-I-C-K-U-S-E-O-N-I-C-K, www.great-westlife.com So, I think there's some head But, as you said, we could still feel a bit of, you know, action into next year, but we wouldn't see, you know, the type of impact we saw this past quarter. We wouldn't expect that.

Speaker Change: Yeah, Yeah. So we're not we're not providing guidance on that as you. If you think about the actions we took in in Europe.

Speaker Change: We're really in the process of reshaping that portfolio.

Speaker Change: It's kind of a managed growth, we're really thinking of managed growth across our portfolios in Canada. As you know, we're really focused on investing in the highest growth opportunities, we see that in the wealth space. So to a large extent, we see those businesses continuing to drive forward as kind of on a momentum basis that they've had.

Speaker Change: But with discipline on making sure that we are kind of doubling down in the areas, where we see the highest growth and so at this stage, we will provide that overall, 8% to 10% overall guidance supported by the strong empower growth and supported by other businesses that we fundamentally believe in and that prove that.

Gary McNicholas: Yeah, are there significant provisions already or allowances backing that book, or was this one of the first kind of, I don't know if you can quantify that. I'll let Gary speak to that, but there's no provision we specifically set up for that. You would set up a provision at the moment in time when you actually knew the harm was there?

Speaker Change: Create value for us and the value is not just you know I'm always I always remind our team if you've got a business that's delivering you know.

Speaker Change: 5% growth, but you know 80 or 90% cash generation. It feeds a lot of cash into the into the system, allowing us to think about reinvesting in higher growth areas. So we like businesses that have that maybe arent into the high double digit growth that deliver cash because you can create a lot of shareholder value.

Gary McNicholas: Like, in other words, it was happening, and you were in negotiations with your counterparty. But other than that, Gary? Yeah, I mean, we've taken the impairment on this one.

Gary McNicholas: There's very little in the way of provision. I think in our expected credit loss model, the numbers are immaterial under IFRS 9. We just don't have a lot that's in this category. Okay, thank you. Our next question comes from Manny Grauman of Scotiabank. Please go ahead.

Speaker Change: By leveraging cash into growth opportunities.

Speaker Change: Alright, thanks for that Paul.

Speaker Change: Yeah.

Speaker Change: Our next question comes from Tom Mackinnon with BMO capital. Please go ahead.

Manny Grauman: Just another question on Europe, just following up on the actions you've taken to enhance returns. Do you expect to take any more actions in the coming quarters, this quarter or in the coming quarters? Or, to the best of your knowledge, is this all done?

Tom Mackinnon: Yeah, Thanks, very much and good afternoon, and just to start saying congratulations to Gary on an excellent career I can of life and all the best going forward and to you our Shaw as well.

Tom Mackinnon: Question with respect to the $75 million as show on Slide 23.

Paul Mann: Many know, as a matter of fact, one of the things we were very focused on was doing a deep dive on the portfolio, something that David led over the last year. We were looking at opportunities to really strengthen that part of the business. We took the actions we did.

Speaker Change: The Franklin Templeton shares I assume this is the the.

Speaker Change: The assumed increase in the value of your four 9% ownership.

David Harney: There was sort of setting ourselves up for expense, some expense reductions, some dispositions, as we said, are stepping away from a business and, obviously, the disposition of the AIB business, for example, but do you see anything else on the horizon, David? No, like the two products where we didn't have a meaningful position, we've taken action this year. So, Paul talked about giving Ed a month off, so I'm hoping... I'll be off as well.

In our Franklin stock. So I think that 75, correct me if I'm wrong does that this is not equity accounted for your just assuming the value of your 4.9% ownership is going to grow at an 8% per annum rate going forward and if it doesn't you're going to pick up that difference.

Speaker Change: Net earnings is that correct, yes.

Speaker Change: So I'll, let Gary.

Gary Mec: I'll, let garry shape.

Paul Mann: Looking ahead, you offered up a growth objective of 15-20% foreign power in 2024, but, for the European business, what would that be for? We're not providing guidance on that. If you think about the actions we took in Europe, we're really in the process of reshaping that portfolio. So it's kind of managed growth; we're really thinking of managed growth across our portfolios in Canada. As you know, we're really focused on investing in the highest growth opportunities. We see that in the wealth space.

Gary Mec: What the actual component parts of the of the broadly 8% is and then sort of what's the how does it play out if we.

Gary Mec: Fall short or for that matter, if we outperform because you know you know markets are have done doing quite well so.

Gary Mec: Both sides of that so Gary overdue and Tom you got basically you're on the right track, we're treating it the same as we treat our other non fixed income investments and for that we actually use a basket right across the different asset classes and across the different geographies. So we just use.

Paul Mann: So to a large extent, we see those businesses continuing to drive forward kind of on the momentum basis that they've had, but with discipline on making sure that we are kind of doubling down in the areas where we see the highest growth. And so at this stage, we'll provide that overall eight to 10% overall guidance, supported by the strong Empower growth and supported by other businesses that we fundamentally believe in and that create value for us. And the value is not just, I always remind our team, if you've got a business that's delivering 5% growth but 80 or 90% cash generation, it feeds a lot of cash into the system, allowing us to think about reinvesting in higher growth areas. So we like businesses that maybe aren't into that high double-digit growth that delivers cash, because you can create a lot of shareholder value by leveraging cash into growth opportunities. Great, thanks for that! Our next question comes from Tom McKinnon of BMO Capital. Please go ahead.

Between eight 9% for the whole lot. So frankly would be treated in but that's a mix, though as you said it could be eight or is actually just a little bit north of that and then.

Gary Mec: What are you buying go that includes a dividend yield that I think is around 4%. These haven't booked this week, but it's in that sort of 4% range. So there's a there's a dividend yield on it and then theres a theres going to be some some growth on top of that through the year and then any mark to market will just go through each quarter.

Speaker Change: Mm Hmm okay.

Speaker Change: The mark to market doesn't impact <unk>, it's in the U S and it'll have a very limited impact on RPC.

Speaker Change: Great crush.

Speaker Change: A question for David then with respect to Europe.

Speaker Change: Two things here, we're seeing some pretty good net.

David Harney: Spread income I think.

David Harney: You know were up like over 30% year over year, we almost doubled.

Our 30% top 23 versus 2022, and we almost doubled every year in the quarter.

David Harney: I'm not sure if it's a bump up in assets is driving that if you can just give what is driving that and the sustainability of that.

David Harney: And then if you could talk to the sustainability of your good a track record you've had at least over the last two quarters ending in experience gains.

Tom McKinnon: Yeah, thanks very much and good afternoon, and I just want to start saying congratulations to Gary on an excellent career at Canada Life and all the best going forward, and to you Arshile as well. Question with respect to the $75 million you show on slide 23 relating to the Franklin Templeton shares. I assume this is the assumed increase in the value of your 4.9% ownership. I think that 75% is not equity accounted for. You are just assuming the value of your 4.9% ownership is going to grow at an 8% per annum rate going forward?

David Harney: Insurance experience gains, which I believe are largely in your group businesses there so.

David Harney:

If you could elaborate on those two things.

David Harney: Over to you David Yeah, and Yeah first of all on the insurance. The insurance experience has been that goes again this quarter, that's mostly undergrad <unk> business in the UK. So that's that's what's feeding through into the us and the fee income and I, let Gary sorry to follow up on it because you know we're seeing good top line growth and then just in good growth markets.

David Harney: So that would that would feed into some of the fee income.

Speaker Change: But I think the other driver of fee income David as net flows I mean, the one thing that's featured in our European businesses. I think you were sharing this with another group earlier was consistent quarter after quarter after quarter of positive net flows.

Gary McNicholas: And if it doesn't, you're going to pick up that difference in net earnings, is that correct? Yeah, so I'll let Gary explain what the actual component parts of that broadly 8% are and then sort of how it plays out if we fall short or, for that matter, if we outperform. Because you know, markets have been doing quite well, so there's both sides of that. So Gary, over to you.

Speaker Change: And it's been really really strong performance do you want to comment on that yeah, I suppose slide 11 shows the Florida business Scott Great centers.

Gary McNicholas: Yeah, and Tom, you're basically on the right track. We're treating it the same as we treat our other non-fixed income investments, and for that, we actually use a basket rate across the different asset classes and across the different geographies. So we just use a rate between 8% and 9% for the whole lot. So Frank will be treated in with that same mix, so as you've said, it will be 8% or actually just a little bit north of that.

Speaker Change: Group.

David Harney: Group rates book.

David Harney: Sure.

David Harney: Insurance and annuity books that book growing plus the west at Western asset management and they work plans for retirement savings like they had been in Nash and so for each of the four quarters all of our 2023, So I think those as inflows combined.

David Harney: With the market growth as <unk> mentioned.

David Harney: And a word of advice though, that includes dividend yield that I think is around 4%. These haven't. The market doesn't impact LICAX, it's in the U.S., and it will have a very limited impact on RBC. Great. Question for David, then, with respect to Europe.

David Harney: Gary to join Us.

Speaker Change: And also in this line, it's not all about the asset base fees. There is we have international pooling arrangement on a group side. So there is pooling income and I think that incomes in quite strong this year.

Speaker Change: The only other thing I would add.

Speaker Change: Okay. Thank you.

Speaker Change: And then on the Canadian side I think what we've seen is.

David Harney: Two things here. We're seeing some pretty good net fees and spread income. I think we're up over 30% year-over-year. We almost doubled.

Speaker Change: If you're looking at the short term earnings that U X are earnings from short term insurance contracts.

David Harney: Thank you. Thank you, year and a quarter. I'm not sure if it's bump-up anastasis driving that.

Speaker Change: That number seems to be if I looked at as a percentage of the.

Speaker Change: Our group life and health book.

David Harney: What is driving that and the sustainability of that? And then, if you can talk about the sustainability of your... The track record you've had, at least over the last two quarters... Insurance experience gains, which I believe are largely businesses there. Elaborate on those two things, please.

Speaker Change: It's down around it it's looking at it's like around five to five 5% of our that book and it's traditionally its been over six is there something different that happened.

Speaker Change: Of late.

Speaker Change: Gary just thoughts on that one yet just I'd have to dig in and we could if we could have a follow up on it but.

Speaker Change: We have added a lot to the size of the book with the federal plan and yet you're not going to be seeing an earnings contribution from that.

David Harney: Thanks. Now, over to you, David. Yeah, first of all on the insurance, so insurance experience has been good again this quarter. That's mostly on the group risk business in the UK, so that's what's feeding through into that. The fee income, I might let Gary sort of follow up on a bit, but you know, we're seeing good top-line growth and then there's been good growth in markets this year, so that would feed into some of the fee income. Yeah, but I think the other driver of fee income, David, is net flows. I mean, the one thing that's featured in our European businesses, and I think you were sharing this with another group earlier, was consistent quarter after quarter after quarter positive net flows, and it's been a really strong performance. Do you want to comment on that?

At this early date, so I think that's because that's really a big.

Speaker Change: Of course, the to the bottom of that whereas you wouldn't have seen the fee income rise. That's the first one that comes top of mind I'm not sure if that explained the full chain.

Speaker Change: I wanted to get the earnings contribution from that plant right away. If you added to the premium you're not you're not getting any earnings on it. Despite the fact that you booked it as premium.

Jeff: Tom It's Jeff.

Tom Mackinnon: It is profitable on a longer term basis it's.

Tom Mackinnon: And we've priced it that way and as you know, it's it's really increased the topline it's taken our enforced from I believe thats around 12 billion to <unk> overall, we've grown that book from 12, one to about 14 eight but it is it is profitable and it will help us with scale on a longer term basis.

David Harney: Yeah, like I suppose slide 11 shows the four different business categories, so there's the group risk book and the insurance insurance and annuity books, so they're both growing, but the wealth and asset management and the workplace retirement savings have been in net inflow for each of the four quarters over 2023, so I think those net inflows, combined with the market growth, are feeding through. Also, in this line, it's not all about asset-based fees. We have international pooling on our group side. So there is pooling income, and I think that income is quite strong this year. This is the only other thing I'd add.

Tom Mackinnon: And our entire book so it is it will be profitable sort of it's starting in the fourth fifth year.

Tom Mackinnon: Yes, the profit this year.

A fair bit of Buildout and implementation in the early phases.

It's a contract where.

Tom Mackinnon: I'll hold that for over 10 years is that a 12 year yeah.

Tom Mackinnon: At least that 10.

Speaker Change: 10 to 12 years, Tom should we expect that to be quite a long term contract.

Tom Mackinnon: Okay. Thanks, and then the final thing is insurance experience gains in Canada, probably long term disability related how sustainable are.

Tom Mackinnon: Are there we had great momentum last two quarters and this how sustainable is this any comments there.

Tom Mackinnon: I'll start off by saying something really nice about Jeff because I do believe this but it actually carried on previous leaders.

Tom McKinnon: Okay, thanks. And then, on the Canadian side, I think what we've seen is... If you're looking at the short-term earnings from short-term insurance contracts, that number seems to be, if I look at it as a percentage of the group life and health book, down around, it's looking at it's like around five to five and a half percent of that book, and it traditionally has been over six. Is there something different that has happened of late?

Tom Mackinnon: Canadian operations on group used to run group.

That business is run with a lot of discipline nuts disciplined about pricing discipline about claims management.

Speaker Change: For sure. We've we've had our moments where you get a little bit challenged with an economic environment, but the reality is what youre seeing is the discipline of staying on top of pricing and staying on top of claims or just you want to speak to that.

Gary McNicholas: Gary, do you have thoughts on that one? Yeah, I'd have to dig in, and we could have a follow-up on it. But we have added a lot to the size of the book with the federal plan, and yet you're not going to be seeing an earnings contribution from that at this early date. So I think that's because that's really a big push to the bottom of that, whereas you wouldn't have seen the income rise. That's the first one that comes to the top of mind.

Speaker Change: Thanks for calling that out Tom I mean, most recently certainly in quarter, we've had low incidents.

Tom Mackinnon: And we've had higher terminations and but as we outlined on these calls you know we're very very active on our pricing on this book, whether it be small medium or large. So this has been a hallmark of our success in terms of where we've looked at this business. We're very selective when we go after business and we're very careful on and looking at retaining business. So.

Jeff McAllen: I'm not sure if that would explain the full change. You wouldn't get the earnings contribution from that plan right away. If you add it to the premium, you're not getting any. Please see the complete disclaimer at www.sites.google.com or at www.sites.google.com. Tom, it's Jeff.

Tom Mackinnon: Certainly you know we've had a number a number of quarters in a row, where we've had strong support but we're always looking hard at at the pricing in our selection.

Speaker Change: One other thing I might add and we don't speak to it that much but you know disability claims management services, which is not just about paying claims it's about helping people get back to productive work is so fundamental and I would say you know well I think all carriers kind of do that today, we would have been one of the earlier adopters of that it's one of the things.

Paul Mann: It is profitable on a longer-term basis, and we've priced it that way. And as you know, it's really increased the top line. It's taken our in-force from, I believe that's around $12 billion to $14. Overall, we've grown that book from $12.1 to about $14.8.

Speaker Change: Actually we ported over to the U K the U K introduced into their income protection book and employers want that and employees want that they want that opportunity to get back to a productive lifestyle. So I think if you can couple discipline with you know in pricing and claims management, including that those disability management.

Jeff McAllen: But it is profitable, and it'll help us with scale on a longer-term basis and our entire book. So it will be profitable sort of starting in the fourth, fifth year. Yeah, there's a fair bit of build-out and implementation in the early phases. It's a contract where, you know, we'll hold that for over 10 years. Is that a 12-year?

Jeff McAllen: Yeah, for at least 10 to 12 years, Tom, so we expect that to be quite a long-term contract. Okay, thanks. And then the final thing is the insurance experience gains. Canada, probably long-term disability-related, how sustainable? We've had great momentum in the last two quarters of the year. But how sustainable is this? Well, I'll start off by saying something really nice about Jeff, because I do believe this, but he's actually carried on from previous leaders of Canadian Operations and Group. He used to run Group.

Speaker Change: It's a real win win.

Speaker Change: I was just going to add Tom.

Speaker Change: Our our disability business is a fair bit different than our competitors were to Paul's point, we have regional.

Speaker Change: Disability management office is all across Canada. So when we are trying and are successful and rehabbing people back in the market. It's done on a regional basis. So this has been a significant a hallmark of our success in our disability management.

Paul Mann: That business is run with a lot of discipline. That's discipline about pricing, and discipline about claims management. For sure, we've had our moments where we get a little bit challenged by an economic environment, but the reality is what you're seeing is the discipline of staying on top of pricing and staying on top of claims. Jeff, do you want to speak to that? Yeah. Thanks for calling that out, Tom.

Great. Thanks for the color.

Speaker Change: Once again, if you have a question. Please press Star then one our next question comes from Nigel D'souza of very tough investment research. Please go ahead.

Nigel D'Souza: Good afternoon. Thank you for taking my question I wanted to touch on spec.

Jeff McAllen: I mean, most recently, certainly in the quarter, you know, we've had low incidents, and we've had higher terminations. But as we've outlined on these calls, you know, we're very, very active on our pricing on this book, whether it be small, medium, or large. So this has been a hallmark of our success in terms of where we've looked at this business. We're very selective when we go after business, and we're very careful when we look at retaining business.

Nigel D'Souza: Expected investment.

Nigel D'Souza: Earnings this quarter and declined quarter over quarter trying to get a better understanding of what drives that how much of that line is being driven by income versus.

Nigel D'Souza: Fixed income assets outright.

Is that a run rate alright, alright.

Nigel D'Souza: Thanks, Nigel I'm going to turn that one to Gary Gary Yeah sure.

Nigel D'Souza: Right.

Gary Mec: If I look at the the last couple of quarters like Q2 was 80 Q3 was 83.

Paul Mann: So certainly, you know, we've had a number, a number of quarters in a row where we've had strong support. But, you know, we're always looking hard at the pricing and our selection. Yeah. One other thing I might add, and we don't speak to it that much, but Disability Claims Management Services, which is not just about paying claims, it's about helping people get back to productive work, is so fundamental. And I would say, you know, while I think all carriers kind of do that today, we would have been one of the early adopters of that.

Gary Mec: This quarter was a little bit down I think that's that's really just a little bit of noise in there a lot of what youre, what youre getting here is you get the the credit provision release, you've got the excess of.

Gary Mec: What we've assumed and if our returns over fixed income and that hasn't really moved a bunch of it moved down a little bit because it said at the start of the quarters and it's and so the rates have come up in Q3. So that was if that was a little bit down, but I would think given the current environment that something in that 70, 580 80 range as is.

Jeff McAllen: It's one of the things we actually ported over to the UK that the UK introduced into their income protection book. And employers want that, and employees want that. They want that opportunity to get back to a productive lifestyle.

Gary Mec: This is what I've been putting in and it might move around a little bit and some noise quarter to quarter, but in this environment, it's probably in that range.

Speaker Change: Okay, and just one clarification I think you mentioned credit provision releases that investment or is that too credit experience.

Jeff McAllen: So I think if you can couple discipline with, you know, in pricing and claims management, including those Disability Management Services, it's a real win-win. I was just going to add, Tom, and our disability business is a fair bit different from our competitors where, to Paul's point, we have regional disability management offices all across Canada. So when we are trying and are successful in rehabbing people back into the market, it's done on a regional basis. So this has been a significant hallmark of our success in our disability management. Great, thanks for the color.

That is that comes through as a as an unwind of the unwind of the discount rate on the liabilities because the assets are earning more discount rate on the liabilities because they've got they've got allowance for credit and the asset returns.

Speaker Change: The assets, you're just starting more than the liability unwind right in that so that gap comes through.

Speaker Change: Got it got it and then just a minor follow up on.

Speaker Change: The office exposure.

Speaker Change: The LTE that you disclosed a little bit below 7% is that based on appraisals at the fiscal.

Speaker Change: Fiscal year end and.

Nigel D'Souza: Once again, if you have a question, please press star then 1. Our next question comes from Nigel D'Souza of Veritas Investment Research. Please go ahead.

Speaker Change: Any color on the LTV alone.

Speaker Change: They've caused that negative credit this quarter, what was that what was sitting at fire too.

Speaker Change: You bet.

Nigel D'Souza: Good afternoon. Thank you for taking my question. I wanted to touch on investment earnings this quarter and declines quarter over quarter. I'm trying to get a better understanding of what drives that, how much of that line is being driven by fixed income versus non-fixed income assets and outreach. Is that a run rate for, Thanks, Nigel. I'm going to turn that one to Gary.

Speaker Change: Credit loss.

Okay.

Speaker Change: I missed the later part of what you said, there, but I'll, let Robyn go he may have caught that.

Robyn: So I think the general answer to your first part of your question. There. The Ltvs are regularly updated based on.

Robyn: The latest financials, we get the latest appraisals, we get so that's the reason you've seen it creep up over the quarters as you know as we reevaluate the properties you see basically property values coming down and Ltvs creeping up.

Gary McNicholas: Yeah, sure. If I look at the last couple of quarters, Q2 was 80, Q3 was 83, this quarter is a little bit down. I think that's really just a little bit of noise in there.

Robyn: That particular, one we this one is.

Robyn: Good move because of the decline in the office valuation. So we don't give too many details on that particular loan itself, but I will say the LTV moved higher.

Higher given the decline in the valuation of the property.

Nigel D'Souza: A lot of what you're getting here is the credit provision release; you get the excess of what we've assumed on NFI returns over fixed income. That hasn't really moved much. It moved down a little bit because it's set at the start of the quarters, and rates have come up in Q3, so that was a little bit lower. But I would think, given the current environment, that something in that 75-80 range is what I'd be putting in, and it might move around a little bit with some noise quarter to quarter, but in this environment, it's probably in that 80.

Speaker Change: Alright, I guess, what I'm really getting at here is I.

Speaker Change: Are you seeing a disconnect between the appraisal value and in fact that.

Speaker Change: And the realized market values.

Speaker Change: I don't know how big that gap.

Speaker Change: Is because that's really where the loss experience come through.

Speaker Change: Right there.

Speaker Change: Right No I don't think we're at a disconnect I mean again. These are these are regularly updated appraisals and valuations and.

Speaker Change: So that's what's being reflected in the Ltvs.

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

Speaker Change: Thanks Nigel.

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

Paul Holden: Thank you afternoon.

Paul Holden: The first question the bigger picture question, you've talked a lot about capital optimization on this call and I guess over the last couple of years.

Gary McNicholas: And just one clarification. I think you mentioned credit provision release. Is that investment earnings, or is that through credit?

Paul Holden: Is there much more to do as you kind of look about look across the.

Nigel D'Souza: That is, that comes through as an unwind of the discount rate on the liabilities because the assets are earning more on the liabilities because they've got an allowance for credit in the asset returns. So, the assets are just earning more than the liability unwind rate in that. So that gap comes through. Got it, got it.

Folio of assets and liabilities, you hold or you pretty much near the end of that story.

Paul Holden:

Speaker Change: I'll start and maybe I'll, let Gary at a bit of color Paul It's a good question.

Speaker Change: I don't think you ever get to end of the game on that and part of the reason why is because we've been at.

Raman Srivastava: And then just a minor follow-up on the office exposure. The LCD that you disclosed is a little bit below 7%. Is that based on appraisals at the fiscal year-end? And any color on the LTV of the loan that did cause that negative credit experience this quarter? What was it sitting at prior to realizing that credit loss? Okay, I missed the latter part of what you said there, but I'll let Raman go. He may have caught that.

Speaker Change: Not just about optimizing the capital structure back in your liabilities, it's actually reshaping your portfolio. So if you think about the actions we took in the U K were you know moving away from certain types of businesses that had a certain capital requirement behind them. Similarly, you think about in the U S where you move away from individual.

Speaker Change: You know insurance and annuity liabilities and we're growing in.

Raman Srivastava: Yeah, so the general answer to your first part of the question there: the LTVs are regularly updated based on the latest financials we get, the latest appraisals we get. So that's the reason you've seen it creep up over the quarters as we re-evaluate the properties. Basic property values. The particular one we, you know, this one is, it did move because of the, you know, decline in office valuation. So we don't give too many details on the particular loan itself, but I will say the LTI is higher given the decline in the valuation.

Speaker Change: A more capital light space. So as we shift the portfolio. Then you then you sort of a Ah.

Speaker Change: Tandem act or sometimes a follow on act is to think about optimizing capital and then the other aspect of that would be you know as we've applied different asset classes as solutions and in particular, you know the team did a lot of very good work as we transition through our first 2017 to capital optimized in the.

Raman Srivastava: But I guess what I'm really getting at here is, are you seeing a disconnect between the appraisal value and what it can transact at and the realized market values? Is there any comment on how big that gap is? Because that's really where the loss experiences come through.

Speaker Change: First of the shift.

Speaker Change: <unk> from IR for us for the nine and 17. So you got all those moving parts. So as we continue to take action in our businesses, we will find opportunities to optimize capital I think theres no doubt.

Speaker Change: And as we continue to source more you know higher risk return based assets, then we will be applying those through through optimization as well anything you'd add Gary or Roman yeah. Just on just on the one of the strategies. We're using this goes back to the optimization of our diet for a 2017, we have now.

Nigel D'Souza: There's a disconnect. Right? No, I don't think we're at a disconnect. I mean, again, these are regularly updated appraisals and valuations. So that's what's being reflected in the, Okay, that's it for me. Thank you.

Paul Holden: Thanks, Nigel. Our next question comes from Paul Holden of CIBC. Please go ahead.

Speaker Change: Our full year two to observe and obviously, we have the comparative periods, but this is what I'll call. This was the live here and I'd just say that I think are at a high level. Our island choices have worked out the way we expected them to.

Paul Mann: Thank you, Ashton. First, a bigger picture question. You've talked a lot about capital optimization on this call and, I guess, over the last couple of years. Is there much more to do as you kind of look across the broad portfolio of assets and liabilities you hold or are you pretty much near the end of that story? I'll start.

Speaker Change: Our capital and our net earnings volatility balanced out and we kept a light cat ratio with a very good level very stable through the year. So at that level and I just reiterate what you said, Paul but that has to be constantly looked at in terms of.

Paul Mann: Maybe I'll let Gary add a bit of color. Paul, it's a good question. I don't think you ever get to the end of the game on that.

Speaker Change: In terms of the book of.

Business to make sure you maintain that stability and maybe Rama might talk to the asset classes like public and private equity I believe though some of those examples yes, I'd say just to pick up on your comment there in terms of we did see some stability from the private markets, both equity and credit, especially in 'twenty. Two when you start a lot of volatility in the public markets. Some of the stability came through in our.

Paul Mann: And part of the reason why is that we've been, it's not just about optimizing the capital structure, backing your liabilities; it's actually reshaping your portfolio. So if you think about the actions we took in the UK, we're moving away from certain types of businesses that had a certain capital requirement behind them. Similarly, you think about in the U.S., where you move away from individual and insurance and annuity liabilities, and we're growing in a more capital-light space. So as we shift the portfolio, then you're sort of a tandem act or sometimes a follow-on act to think about optimizing capital. And then the other aspect of that would be as we've applied different asset classes as solutions. And in particular, the team did a lot of very good work as we transitioned through IFRS 17 to capital optimize in the context of the shift from IFRS 4 to 9 and 17. So you get all those moving parts.

Speaker Change: Earnings from the private markets and I think just as we continue to.

Speaker Change: Evaluate the opportunities it's continuous process, so as the markets move and as opportunity shift will continue to shift and Thats worked well so far we imagine it will continue to work well.

Speaker Change: And on that asset side, you know the transaction we did.

Staked in north leaf the transaction, we did take a stake in regard the latest transaction to combine Putnam with Franklin into established partnership there gives us an asset sourcing capability that again, we can think about optimization with a different pool of assets again.

Gary McNicholas: So as we continue to take action in our businesses, we will find opportunities to optimize capital. I think there's no doubt about that. And as we continue to source more higher-risk return-based assets, then we'll be applying those through optimization as well. Anything you'd add, Gary or Raman?

Speaker Change: That's well matched relative to our you know our risk return expectations.

Speaker Change: And a follow on to that is it reasonable to expect that you find those ways to continue to optimize capital in the assets over time that that could give you a path to an even higher ROE target again overtime, but.

Gary McNicholas: Yeah, just on one of the strategies we're using, this goes back to the optimization around IFRS 17. We've now had a full year to observe, and obviously, we have the comparative periods, but this is what I'll call the live year. And I just say that, at a high level, our ALM choices have worked out the way we expected them to. Our capital and net earnings volatility balanced out, and we kept the like-hat ratio at a very good level and very stable through the year. So at that level, and I just reiterate what you said, Paul, but that has to be constantly looked at in terms of the book of business to make sure you're maintaining that stability. And maybe Raman could talk about asset classes like public and private equity, some of those examples.

Speaker Change: Yeah, I would say yeah. That's that's that is our goal our goal as a management group is to.

Speaker Change: It has to be thinking about.

The types of businesses, we want to be in the right assets and optimization and you know our goal is to not just grow earnings is to grow that is to think about a higher Roe and ultimately a higher or Roe target.

Speaker Change: Okay.

Speaker Change: [noise] Havent talked too much about capital and risk solutions.

Speaker Change: This call.

Speaker Change: A lot of that business is now on short term insurance contracts, which obviously reprice more frequently so maybe give us a little bit of an update on recent repricing margin expectations.

Speaker Change: And also a view on sort of.

Speaker Change: I work on sales potential across the different product lines. There just to give us a flavor of what we might expect in 2024 from CRF.

Gary McNicholas: Yeah, I'd say, just to pick up on your comment there in terms of, we did see some stability from the private markets, both equity and credits, especially in 22 when you saw a lot of volatility in the public markets. Some of that stability came through in our earnings from the private markets. And I think just as we continue to evaluate the opportunities, it's a continuous process. So as the markets move and as opportunities shift, we'll continue to adjust, and that's worked well so far. We've had a lot of good results. Yeah, and on that asset side, you know, the transaction we did to take a stake in Northleaf, the transaction we did to take a stake in Cigard, the latest transaction to combine Putnam with Franklin and to establish partnership there, gives us an asset sourcing capability that, again, we can think about optimization with a different pool of assets.

Speaker Change: So Paul I'm glad you asked the question because it's our shows last call where he'll be taking those questions and I know I want your guests the opportunity to speak to this because it's something he's super passionate about or husband and something that has really helped to build so our shall overdue. Thanks. Paul. So you you have observed.

Speaker Change: A small shift in the mix of our reinsurance SAP business results. So you know at the beginning of last year, we were pretty much 50, 50 between short term business and the longer term business that feeds through risk adjustment and CSM and then certainly the opportunities in that marketplace over the last 18 to 24 months have really been much more on this.

Gary McNicholas: Again, that's well-matched relative to our, you know, our risk return expectation. And as a follow-on to that, is it reasonable to expect, as you find those ways, to continue to optimize capital and assets over time? that that could give you a path to an even higher ROE target, again, over time. Yeah, I would say yes, that is our goal. Our goal as a management group is to be thinking about the types of businesses we want to be in, the right assets, and optimization. And, you know, our goal is to not just grow earnings; it's to think about a higher ROE and, ultimately, a higher ROE target. I haven't talked too much about capital and risk solutions on this call. A lot of that business is now on short-term insurance contracts, which obviously reprice more frequently.

Speaker Change: Structured side not only in the U S, where we continue to grow and deploy capacity, particularly on the health insurance side and on the fixed indexed annuity side, but we've also seen a number of transactions in Europe around the mass lapse and then we've expanded into Asia Pacific and South Korea and into Israel.

We've seen really good growth in that short term as we continue to build in the U S. And then expand that capability into new markets in Europe and into Asia.

Speaker Change: Longer term businesses I'd be still optimistic over the medium term, but in this environment, particularly on the longevity side. We've just been I think a little bit more cautious than our peers about updating our long term view on mortality improvements post COVID-19. So we're just being that a little bit more cautious both in our reserving and in our pricing.

Gary McNicholas: So maybe give us a little bit of an update on recent repricing margin expectations and also a view on sort of the outlook on sales potential across the different product lines there, just to give us a flavor of what we might expect in 2024 from CRS. So Paul, I'm glad you asked the question because it's Arshil's last call where he'll be taking those questions. And I know he'll get an opportunity to speak about this because it's something he's super passionate about or has been and something he's really helped to build. So Arshil, over to you.

Speaker Change: But even there at the end of the year, we did close a longevity swap transaction in the U K that has added a little bit to CSM and a little bit more to that.

Speaker Change: Adjustments. So I think we will see some rebound in the contribution for some of those longer term businesses, but again, we'll be very very disciplined and we really like the position that we're in both in the U S and in those other markets and we really think we can continue to drive growth in reinsurance, but in line with the overall company's risk appetite in line with.

Arshil Jamal: Thanks, Paul. So you have observed sort of a small shift in the mix of our reinsurance business results. So at the beginning of last year, we were pretty much 50-50 between short-term business and the longer-term business that feeds through risk adjustment and CSM. And then certainly, the opportunities in the marketplace over the last 18 to 24 months have really been much more on the structured side, not only in the US, where we continue to grow and deploy capacity, particularly on the health insurance side and on the fixed index annuity side, but we've also seen a And then we expanded into the Asia Pacific and South Korea and into Israel.

Speaker Change: The growth that we're seeing in the other businesses so yeah.

Speaker Change: We've had a great running reinsurance and I know it won't continue but maybe at a slightly lower rate than we've seen over the last two or three years, but it's still terrific market opportunity.

Speaker Change: That's great I'll leave it there thank you very much.

Speaker Change: Thanks, Paul.

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

Madden: Thank you Ariel.

Mr. Madden: Like to thank everyone, who has joined us on the call today and I. Thank the analysts for their questions.

Paul: I'll just reiterate that we remain confident in our business trajectory.

Arshil Jamal: So we've seen really good growth in the short term as we continue to build in the US and then expand that capability into new markets in Europe and Asia. On the longer-term businesses, I'd still be optimistic over the medium-term, but in this environment, particularly on the longevity side, we've just been, I think, a little bit more cautious than our peers about updating our long-term view on mortality improvements post-COVID. So we're just being that little bit more cautious, both in our reserving and in our pricing, but even at the end of the year, we did close a longevity swap transaction in the UK that has added a little bit to CSM and a little bit more to the risk adjustment.

Mr. Madden: Glad that we were able to engage all of our leaders around the globe and participating today and I have to tell you. We're very excited for the year ahead as we deliver for all stakeholders and with that I'll say that we look forward to reconnecting with you in may when we present, our Q1 results and have a great rest of your day take care.

Speaker Change: This brings to a close today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.

Speaker Change: Yeah.

Speaker Change: [music].

Arshil Jamal: So I think we will see some rebound in the contribution for some of those longer-term businesses, but again, we'll be very, very disciplined. We really like the position that we're in, both in the US and in those other markets, and we really think we can continue to drive growth in reinsurance, but in line with the overall company's risk appetite, in line with the growth that we're seeing in the other businesses. So we've had a great run in reinsurance, and I know it will continue, but maybe at a slightly lower rate than we've seen over the last two or three years, but still a terrific market opportunity. That's great. I'll leave it be.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Paul Mann: Thank you very much. Thanks, Paul. This concludes the question and answer session. I would like to turn the conference back over to Mr. Mann for any closing remarks. Thank you, Ariel.

Speaker Change: Yeah.

Paul Mann: Well, I'd like to thank everyone who's joined us on the call today and thank the analysts for their questions. I'll just reiterate that we remain confident in our business trajectory. I was glad that we were able to engage all of our leaders around the globe in participating today. And I have to tell you, we're very excited for the year ahead as we deliver for all stakeholders. And with that, I'll say that we look forward to reconnecting with you in May when we present our Q1 results and have a great rest of your day. Take care, conference call. You may disconnect your lines. Thank you for participating and have a pleasant day. ?? ?? ?? ?? ?? ?? ?? ?? by TravelPod member caro The Great-West Lifeco by TravelPod member caro Great-West Lifeco by TravelPod member caro www.globalonenessproject.org www.great-westlife.com, Great-West Lifeco Inc, www.great-westlife.com, ?? ?? ?? ??

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