Q2 2024 Manulife Financial Corp Earnings Call

August 8, 2024

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Speaker Change: This conference is being recorded so it's culture, it's always you see.

Speaker Change: Please standby your meeting is about to begin please be advised that this conference call is being recorded good morning, ladies and gentlemen, welcome to the Manulife financial second quarter 2020 for Finance results Conference call.

Speaker Change: I would like to turn the meeting over to Mr. Hong Kong. Please go ahead. Thank you Carl.

Hong Kong: Thank you welcome to my last earnings conference call to discuss the second quarter and year to date 2024 financial and operating results our earnings materials, including the webcast slides for today's call are available on the Investor Relations section of our website.

Speaker Change: Tom.

Speaker Change: Before we start please refer to start two for a caution on forward looking statements and slide 35 on a non-GAAP financial measures used in this presentation.

Unknown Executive: Note that certain material factors assumptions are applied in making forward these statements, and actual results may differ materially from what is stated. Turning to slide four. Roy Gori, our President and Chief Executive Officer, will begin today's presentation with a highlight of our second quarter and year-to-date 2024 results and a strategic update. After their prepared remarks, we'll move to the live Q&A portion of the call.

Speaker Change: Certain material factors or assumptions applied in making these statements and actual results may differ materially from what is stated.

Unknown Executive: Certain material factors assumptions were applied in making four of these statements, and actual results may differ materially from what is stated. Turning to slide four. Roy Gori, our President and Chief Executive Officer, will begin today's presentation with a highlight of our second quarter and year-to-date 2024 results and a strategic update. Following Roy's remarks, Colin Simpson, our Chief Financial Officer, will discuss the company's financial and operating results in more detail. After their prepared remarks, we'll move to the live Q&A portion of the call. With that, I'd like to turn the call over to Roy Gori, our President and Chief Executive Officer. Roy.

Speaker Change: Turning to slide four.

Speaker Change: Our president and Chief Executive Officer will begin today's presentation with highlights from our second quarter and year to date 'twenty 'twenty four results illustrated.

Speaker Change: Putting words remarks, Colin Simpson, our Chief Financial Officer will discuss the company's financial and operating results in more detail.

Speaker Change: After their prepared remarks, we will move to the Q&A portion of the call.

Speaker Change: With that I'd like to turn the call over to Roy Gori, Our President and Chief Executive Officer right.

Roy Gori: Thanks, Hung, and thank you, everyone, for joining us today. Starting on slide six.

Roy Gori: Thanks, Sean and thank you everyone for joining us today.

Colin Simpson: Starting on slide six.

Unknown Executive: We recently hosted our Investor Days in Hong Kong and Jakarta in late June, and it was truly a pleasure to have so many of you join us to hear how we're raising the bar at Manulife.

Roy Gori: We recently hosted our Investor Days in Hong Kong and Jakarta in late June, and it was truly a pleasure to have so many of you join us to hear how we're raising the bar at Manulife. There are a few key takeaways that are worth recapping here.

Colin Simpson: We recently hosted our Investor days in Hong Kong and Jakarta in late June.

Colin Simpson: And it was truly a pleasure to have so many of you join us to hear how we're raising the bar annualize.

Colin Simpson: There are a few key takeaways that are worth recapping here.

Roy Gori: The first is that we've gone from being a high-risk, low-ROE business in 2017 to a lower-risk and high-ROE business today. Second, we remain uniquely positioned to capitalise on the megatrends that are shaping the global economy, such as the growing middle class in Asia, an expanding global retirement gap, and the dramatic digitization of the consumer.

Colin Simpson: First is that we've gone from being a high risk low our OE business in 2017 to a lower risk and higher ROE business Tonight.

Second we remain uniquely positioned to capitalize on the mega trends that are shaping the global economy.

Colin Simpson: A growing middle class in Asia, and expanding global retirement gap and the dramatic digitization of the consumer.

Roy Gori: Third, as a result of our strategy and discipline execution, we announced ambitious but achievable new targets and a clear path for achieving them. These include increasing our core ROE target from 15% plus to 18% plus and introducing a cumulative remittances target of $22 billion plus both by 2027. By delivering on these targets, we will further solidify Manulife as a high-growth, high-return, and high-cash generation company. To achieve that, we know we must double down on execution, which takes me to slide 7.

Colin Simpson: Good as a result of that strategy and disciplined execution, we announced ambitious but achievable targets and a clear path for achieving them.

Colin Simpson: These include increasing our core or we target from 15% plus 18% plus and introducing accumulative remittance target of $22 billion plus both by 2027.

Colin Simpson: By delivering on these targets, we will further solidify manulife is a high growth high return and high cash generation company.

Colin Simpson: To achieve that we know we must double down on execution, which takes me to slide seven.

Roy Gori: You can see that we've maintained our momentum and delivered another set of strong results for the second quarter. APE sales increased 17%, led by strong growth in Canada and broad-based growth in Asia, with both segments contributing to new business CSM growth of 6%. Core earnings increased 6% while Asia and global WAM generated very strong growth of 40% and 23%, respectively. However, this was somewhat offset by the impacts of a higher effective tax rate related to Global Minimum Taxes or GMT as well as lower core earnings due to our recent reinsurance transactions with Global Atlantic and RGA.

Colin Simpson: You can see that we've maintained our momentum and delivered another set of strong results for the second quarter.

Colin Simpson: <unk> sales increased 17% led by strong growth in Canada, and broad based growth in Asia with both segments contributing to new business PSM growth at 6%.

Colin Simpson: Core earnings increased 6%, while Asia, and global wind generated very strong growth of 40% and 23% respectively.

Colin Simpson: This was somewhat offset by the impact of a higher effective tax rate related to global minimum taxes or GMT.

Colin Simpson: As well as lower core earnings due to our recent reinsurance transactions with gold with Atlantic <unk> G. I.

Roy Gori: As a reminder, these transactions will free up $2 billion of capital, which we have committed to return to shareholders through our current NCIB program. And consequently, we ramped up our share buybacks during the quarter. And I would highlight that we have now decided and plan to buy back the maximum amount of shares allowed through our current NCIB program. As we highlighted at Invest Today, execution in Asia and global WAM will be critical to achieving our expanded 18% plus core ROE target by 2027. Before I pass it over to Colin, I'd like to take a moment to thank Scott Hartz, who has decided to retire in October after a 40-year career with Manulife.

Roy Gori: As a reminder, these transactions will free up $2 billion of capital, which we have committed to return to shareholders through our current NCIB program. And consequently, we have ramped up our share buybacks during the quarter. And I would highlight that we have now decided and plan to buy back the maximum amount of shares allowed through our current NCIB program. With the recent increase in our share price, this would represent over $3 billion that we plan to return to shareholders, which would entail a further acceleration of buybacks in the second half of the year.

Colin Simpson: As a reminder, these transactions will free up $2 billion of capital, which we committed to return to shareholders through our current NCI B program.

Colin Simpson: And consequently, we ramped up our share buybacks during the quarter.

Colin Simpson: And I would highlight that we have now decided and plan to buy back the maximum amount of shoes allowed throughout current in CIB program.

Colin Simpson: With the recent increasing their share price. This would represent over $3 billion that we plan to return to shareholders, which would entail a further acceleration of buybacks in the second half of the year.

Roy Gori: Share buybacks have contributed to core EPS growth of 9% or 12% excluding the impact of GMT and core ROE expanding 20 basis points to 15.7%. Finally, we maintained a solid balance sheet with a strong like-hat ratio and generated double-digit book value and adjusted book value growth while returning significant capital to shareholders over the past year.

Colin Simpson: Share buybacks have contributed to core EPS growth of 9% or 12%, excluding the impact of GNC and.

Cora: Cora are we expanding 20 basis points to 15, 7%.

Colin Simpson: Finally, we maintained a solid balance sheet with a strong like cat ratio and generated double digit book value and adjusted book value growth, while returning significant capital to shareholders over the past year.

Cora: Turning to slide eight.

Roy Gori: As we highlighted at Investiday, executing in Asia and global WAM will be critical to achieving our expanded 18% plus core ROE target by 2027. It's encouraging to see that we're delivering on our strategy and, in turn, reshaping our earnings profile. In Asia, we're driving broad-based sales growth, with the majority of our markets generating double-digit growth in year-to-date AP sales, new business CSM, and new business value. Importantly, we're also driving margin growth, higher productivity, and efficiency improvements, all of which contribute to our ambition of delivering high quality, sustainable growth.

Cora: As we highlighted at Investor day, executing in Asia, and global win will be critical to achieving our expanded 18% plus core ROA target by 2027.

Cora: It's encouraging to see that we're delivering on our strategy any ton reshaping our earnings profile.

Cora: In Asia, we're driving broad based sales growth with the majority of our markets generating double digit growth year to date I T cells, you business, CSM and new business value.

Cora: Importantly, we're also driving margin growth high productivity and efficiency improvements all of which contribute to our ambition of delivering high quality sustainable growth.

Roy Gori: And in Global WAM, we've seen strong asset growth, which reflects a combination of favourable market impacts, net inflows, and the CQS acquisition. Supported by Discipline Expense Management, this has contributed to a significant expansion in our core EBITDA margin, which is up 240 basis points from the prior year. I've commented before that given our scale, we can be judicious on M&A opportunities, and our recent acquisition of CQS was no exception.

Cora: And in global when we've seen strong asset growth, which reflects a combination of favorable market impacts net inflows and the <unk> acquisition.

Cora: Supported by disciplined expense management. This has contributed to a significant expansion in our core EBITDA margin.

Cora: She is up 240 basis points from the prior year.

Cora: I've commented before that given our scale, we can be judicious on M&A opportunities and our recent acquisition of seek U S with no exception uptick.

Roy Gori: After closing the acquisition earlier in the quarter, we leveraged CQS's capabilities with the successful launch of a multi-asset credit fund in U.S. retail. Our focus execution is driving strong core earnings growth, and as you can see, these high-return businesses are contributing to a growing share of our core earnings. Before I pass it over to Colin, I'd like to take a moment to thank Scott Hartz, who has decided to retire in October after a 40-year career with Manulife.

Cora: After closing the acquisition earlier in the quarter, we leveraged C qs's capabilities with the successful launch of our multi asset credit fund and U S retail.

Cora: I'll focus execution is driving strong core earnings growth and as you can see these high return businesses are contributing to a growing share of that core earnings.

Roy Gori: In that time, Scott has held a range of leadership roles, including leading the investment team since 2010 and being appointed chief investment officer in 2019. On behalf of the team at Manulife, I want to thank Scott for his investment expertise, his partnership and counsel over the years, and, most importantly, his friendship. I'm sure you'll all join me in wishing him the best in his retirement.

Speaker Change: Before I pass it over to Colin I'd like to take a moment to thank Scott Hartz, who has decided to retire in October after a 40 year career with Manulife.

Speaker Change: In that time, Scott has held a range of leadership roles, including leading the investment team since 2010 and being appointed Chief investment Officer in 2019.

Colin Simpson: On behalf of the team at Manulife I want to thank Scott for his investment expertise is partnership and counsel over the years and most importantly his friendship.

Speaker Change: I'm sure you'll all join me in wishing him the best in your retirement.

Colin Simpson: While Scott is on the call with us today, we're also joined by his successor, Trevor Creel, who was appointed Chief Investment Officer and Head of the General Account Organisation, effective August 1st. In his nearly 30 years with Manualised, Trevor has held a number of leadership roles across the organization, including working closely with Scott in the general account organization over the past decade. We're fortunate to have such a strong successor ready to step in. And with that, I'll hand it over to Colin to review the highlights of their financial results. Colin. Thanks, Roy.

Speaker Change: While Scott is on the call with US today. We're also joined by his successor trigger Creel, who was appointed Chief investment Officer and head of the General account organization effective August 1st.

Trigger Creel: He has nearly 30 years with Manulife triggers held a number of leadership roles across the organization, including working closely with Scott in the general account organization over the past decade.

Speaker Change: We're fortunate to have such a strong success of ready to step in.

Speaker Change: Now with that I'll hand, it over to Colin to review the highlights of the financial results Colin.

Colin Simpson: The momentum in our financial performance continues. I will dive into a little more detail on the course's results before the Q&A. I'll start with our top line on slide 10. Our APE sales increased 17% from the prior year, reflecting strong growth in our Asia and Canada segments. In Asia, we generated higher sales across multiple markets, in particular Hong Kong and Japan, although we did see lower sales in mainland China following the record-high second quarter sales in 2023. Meanwhile, in Canada, we had higher large case group insurance sales.

Colin Simpson: Thanks, Alright, the momentum in our financial performance continues I will dive into a little more detail on the quarters results before the Q&A.

Colin Simpson: I'll start with our top line on slide 10.

Unknown Executive: Our APE sales increased 17% from the prior year, reflecting strong growth in our Asia and Canada segments. In Asia, we generated higher sales across multiple markets, in particular Hong Kong and Japan, although we did see lower sales in mainland China following the record-high second quarter sales in 2023. Meanwhile, in Canada, we had higher large case group insurance sales.

Colin Simpson: Sales increased 17% from the prior year, reflecting strong growth in our Asia, and Canada segments in Asia, we generated higher sales across multiple markets in particular, Hong Kong and Japan, Although we did see lower sales in mainland China. Following the record high second quarter sales in 2023, while in Canada, we had.

Speaker Change: Higher large case group insurance sales.

Colin Simpson: Strong sales contributed to a solid increase in new business CSM of 6% and another quarter of double-digit growth in new business value of 23%. Global WAM saw net inflows of $0.1 billion, mainly reflecting the strength in our institutional business, offset by outflows in our retirement business. These results really demonstrate the strength of our diversified global portfolio of businesses in driving growth. Turning to slide 11, which shows the growth in our profit metric.

Colin Simpson: Our strong sales contributed to a solid increase in new business CSM of 6% and another quarter of double digit growth in new business value of 23%.

Colin Simpson: Global one saw net inflows of $1 billion, mainly reflecting the strength in our institutional business offset by outflows in our retirement business.

Unknown Executive: These results really demonstrate the strength of our diversified global portfolio of businesses in driving growth. On slide 12, you can see we grew our adjusted book value per share by 15% from the prior year quarter to $33.96, even after returning a significant amount of capital to shareholders over the past year. This continued our track record of steady growth in our book value, together with our CSM, which is a store of future earnings.

Colin Simpson: These results really demonstrate the strength of our diversified global portfolio of businesses and driving growth.

Colin Simpson: Turning to slide 11, which shows the growth in all profit metrics.

Colin Simpson: Core EPS increased 9% as we grew core earnings and continued buying back shares. However, I should note that the newly enacted Global Minimum Tax Act in Canada reduced core earnings for the quarter, and core EPS would have grown 12% excluding this impact. During the quarter, our core ROE was 15.7%, up 20 basis points from the prior year. Execution in Asia and Global WAM, our highest return businesses, will be key levers to achieving the updated core ROE target. And I'll touch on performance in these businesses shortly.

Colin Simpson: Core EPS increased 9% as we grew core earnings and continued buying back shares.

Colin Simpson: I should note that the newly enacted global minimum tax audits in Canada reduce core earnings for the quarter and core EPS would have grown 12% excluding this impact.

Colin Simpson: During the quarter, our core ROE was 15, 7% up 20 basis points from the prior year.

Colin Simpson: Execution in Asia, and global one our highest return businesses will be key leaders to achieving the updated core or we targets and I'll touch on performance in these businesses shortly.

Colin Simpson: On slide 12, you can see we grew our adjusted book value per share by 15% from the prior year quarter to $33.96, even after returning a significant amount of capital to shareholders over the past year. This continued our track record of steady growth in our book value, together with our CSM, which is a store of future earnings. Bringing you back to our core earnings results on slide 13, I'd like to call out some of the highlights of the drivers of earnings analysis presented relative to the prior year quarter.

Colin Simpson: On Slide 12, you can see we grew our adjusted book value per share by 15% from the prior year quarter to $33.96. Even after returning a significant amount of capital to shareholders over the past year.

Colin Simpson: This continued our track record of steady growth in our book value together without CSM, which is a store of future earnings.

Colin Simpson: Free box all core earnings results on slide 13, I'd like to call out some of the highlights of the drivers of earnings analysis presented relative to the prior year quarter.

Colin Simpson: The first point to highlight is that we continue to see the benefits of business growth with strong growth in core net insurance service results in Asia and Canada, and we have also generated an improved insurance experience. Secondly, our core net investment result had a modest decrease of 1% as business growth was more than offset by lower investment spread. Our expected credit loss, or ECL, was roughly neutral this quarter, and this strong result was primarily driven by the regular update to our model parameters, reflecting the benign corporate credit environment, which largely offset staging impacts on a few bonds in our portfolio.

Colin Simpson: The first point to highlight is that we continue to see the benefits of business growth with strong growth in core net insurance service results in Asia, and Canada, and we also generated improved insurance expense.

Colin Simpson: Secondly, our core net investment resource had a modest decrease of 1% as business growth was more than offset by lower investment spreads.

Speaker Change: Unexpected critical so ECL was roughly neutral this quarter and this strong result was primarily driven by the regular updates so a muddle parameters, reflecting the benign corporate credit environment, which largely offset staging impacts on a few bonds in our portfolio.

Colin Simpson: In the bottom half of the table, you will see that Global WAM continued to be a notable contributor to the results, generating higher net fee income from average AUMA growth and expanding our margin. However, we had a decline in other core earnings that partially offset these positive results, which included higher workforce-related costs. A growing proportion of our earnings is coming from the core net insurance service result versus the core net investment result and higher global WAM earnings.

Colin Simpson: In the bottom half of the table you will see that global web continue to be a notable contributor to the results generating higher net fee income from average AUR Ma growth and expanding our margin.

Colin Simpson: Lastly, we had a decline in other core earnings that partially offset these positive results, which included higher workforce related costs.

Unknown Executive: A growing proportion of our earnings is coming from the core net insurance service result versus the core net investment result and higher global WAM earnings. In addition, the recent reinsurance transaction with Global Atlantic impacted core earnings by $25 million across multiple lines of the DOE. Finally, we reflected a catch-up of $44 million related to retroactive GMT impacts on our first quarter results in non-core earnings this course. The overall increase in sales contributed to 10% and 19% growth in our value metrics, new business, CSM, and MBB, respectively.

Colin Simpson: A growing proportion of our earnings are coming from the Cold net insurance service result versus the core net investment results and higher global one earnings. This is part of our roadmap towards an 18% plus core Roe.

Colin Simpson: This is part of our roadmap towards an 18% plus core ROE. The impact of GMT was a $46 million charge in our core earnings for the quarter, adding just over two percentage points to our effective tax rate. We are reporting the impact of GMT in the corporate and other segments as GMT has not been enacted in all the jurisdictions in which we operate. More information on the impact of GMT is available in the appendix. In addition, the recent reinsurance transaction with Global Atlantic impacted core earnings by $25 million across multiple lines of the DOE. Now on to slide 14.

Colin Simpson: The impacts of GMT was a $46 million charge and our core earnings for the quarter, adding just over two percentage points, so effective tax rate.

Colin Simpson: We are reporting the impact of GMT and the corporate and other segments as G. M. T was not an accident all the jurisdictions in which we operate.

Colin Simpson: More information on the impact of the GMT is available in the appendix.

Colin Simpson: In addition, the recent reinsurance transaction with global Atlantic impacted core earnings by $25 million across multiple lines of the Joey.

Colin Simpson: During the quarter, we saw a non-core charge of approximately $300 million of realized losses from assets disposed as part of the Universal Life Reinsurance Transaction in Canada with RGA, which is in line with previous disclosure. As many of you know, there was an offsetting change in OCI, neutralizing the impact on book value from this chart. While the portfolio continued to generate a positive return in the quarter, lower than expected returns on ULDA resulted in a $450 million charge. This was mainly driven by the underperformance of our private equity portfolio, in part due to the impact of higher interest rates on valuations.

Colin Simpson: On to slide 14.

Colin Simpson: During the quarter, we saw a non core charge of approximately $300 million of realized losses from assets disposed is parts of the universal life reinsurance transaction in Canada with O J, which is in line with previous disclosure.

Colin Simpson: As many of you know there was an offsetting change in OCI neutralizing the impact on book value from this charge.

Colin Simpson: While the portfolio continued to generate a positive return in the quarter lower than expected returns on older resulted in a $450 million charge. This was mainly driven by the underperformance of our private equity portfolio in part due to the impact of higher interest rates on valuations.

Colin Simpson: We also saw ongoing pressure on commercial real estate, though we continue to see sequential improvement with a relatively modest loss, representing the smallest charge we've reported over the past eight quarters. This was partially offset by a $143 million gain, largely due to the favorable impact of interest rate movements on derivatives outside of hedge accounting relationships. Finally, we reflected a catch-up of 44 million dollars related to retroactive GMT impacts on our first quarter results in non-core earnings this course.

Colin Simpson: We also saw ongoing pressure on commercial real estate, though we continue to see sequential improvement with a relatively modest loss representing the smallest charge we've reported over the past eight quarters.

Colin Simpson: This was partially offset by a 143 million again, largely due to the favorable impact of interest rate movements on derivatives outside of hedge accounting relationships.

Colin Simpson: Finally, we reflected a catch up of $44 million related to retroactive GMT impacts on our first quarter results in non core earnings this quarter.

Colin Simpson: Now we'll cover the segment view of our results in the next few slides, starting with Asia on slide 15. Our Asia segment continues to generate strong growth in both top and bottom line metrics. APE sales increased 7% from the prior year quarter, primarily driven by growth in Japan, on the back of strong market performance generating higher sales on maturing wealth products, and Hong Kong, supported by increased sales through our agency and bank assurance channels, though these results were partially offset by lower sales in a few other markets in Asia, particularly in mainland China, following strong prior year sales, as I noted earlier.

Colin Simpson: Now I will cover the segment view of our results in the next few slides starting with Asia on Slide 15.

Colin Simpson: Our Asia segment continued to generate strong growth in both top and bottom line metrics AP sales increased 7% from the prior year quarter, primarily driven by growth in Japan on the back of strong market performance generating highest sales are maturing wealth products and Hong Kong supported by increased sales through our agency and bancassurance channels.

Colin Simpson: These results were partially offset by lower sales and a few other markets in Asia, particularly mainland China. Following strong prior year sales as I noted earlier.

Colin Simpson: The overall increase in sales contributed to 10% and 19% growth in our value metrics, new business, CSM, and MBB, respectively. We delivered 40% core earnings growth as we benefited from higher expected earnings on insurance contracts, favorable claims experience, and higher expected investment income. We saw notable growth from our largest in-force business, Hong Kong, as well as Japan. Moving over to Global WAN's results, slide 16. We reported $0.1 billion of net inflows for the quarter. We continue to generate strong net inflows in our institutional business, which included positive contributions from CQS. But this was largely offset by a large case of plan redemption in U.S. retirement.

Colin Simpson: The overall increase in sales contributed 10% and 19% growth in our value metrics, new business CSM and N V B respectively.

Unknown Executive: We delivered 40% core earnings growth as we benefitted from higher expected earnings on insurance contracts, favorable claims experience, and higher expected investment income. Moving over to Global WAMS results on slide 16, let's now move to our balance sheet on slide 19. This puts us comfortably below our target ratio of 25%.

Colin Simpson: We delivered 40% core earnings growth as we benefited from higher expected earnings on insurance contracts favorable claims experience and higher expected investment income.

Colin Simpson: We saw notable growth from our largest enforced business Hong Kong as well as Japan.

Colin Simpson: Moving over to global one's results on slide 16.

Colin Simpson: We reported point $1 billion of net inflows for the quarter, we continued to generate strong net inflows in our institutional business, which included positive contributions from <unk>, but this was largely offset by a large case plan redemption and U S retirement.

Colin Simpson: While net inflows were largely neutral this quarter, global WAM delivered core earnings growth of 23% supported by higher average AUMA, which increased 13% from the prior year quarter. We continue to generate positive operating leverage, evidenced by our strong core EBITDA margin expansion, which grew 170 basis points from the prior quarter and drove our core earnings growth. Moving over to Canada, on slide 17, we delivered another strong quarter of new business metrics.

Colin Simpson: While net inflows were largely neutral this quarter global Wham delivered core earnings growth of 23% supported by higher average <unk>, which increased 13% from the prior year quarter.

Colin Simpson: We continued to generate positive operating leverage evidenced by our strong core EBITDA margin expansion, which grew 170 basis points from the prior year quarter and drove our core earnings growth.

Colin Simpson: Bringing over to Canada on Slide 17, we delivered another strong quarter of new business metrics AP sales increased 61% from the prior year quarter led by group insurance, which delivered higher sales across all markets and benefited from a large case sale.

Colin Simpson: AP sales increased 61% from the prior quarter, led by group insurance, which delivered higher sales across all markets and benefited from a large case sale. This was also the main contributor to our double-digit growth in new business value. Core earnings grew by a strong 7% in Canada, primarily driven by business growth in group insurance and affinity markets. We also saw favorable retail claims experience in individual insurance, but this was somewhat offset by lower investment spread.

Colin Simpson: This was also the main contributor to a double digit growth in new business funding.

Colin Simpson: Core earnings grew by a strong 7% in Canada, primarily driven by business growth in group insurance and affinity markets.

Colin Simpson: We also sold favorable retail claims experience in individual insurance, but this was somewhat offset by lower investment spreads.

Colin Simpson: On to slide 18, which shows our U.S. segment's results. In the U.S., we saw lower sales of protection insurance products, which modestly drove down APE sales, though this was partially offset by continued demand from affluent customers for accumulation products. The decline in new business CSM was due to product mix as well as the impact of higher interest rates. Core earnings decreased 11% from the prior quarter, which reflects more unfavorable net insurance experience, as well as an unfavorable variance from the recent reinsurance transaction with Global Atlantis.

Colin Simpson: Onto slide 18, which shows our U S segment's results in the U S. We saw lower sales of protection insurance products, which modestly drove down a P cells.

Colin Simpson: This was partially offset by continued demand from iPhone customers full accumulation products the.

Colin Simpson: The decline in new business CSM was due to product mix as well as the impact of higher interest rates.

Colin Simpson: Core earnings decreased 11% from the prior quarter, which reflects more unfavorable net insurance expense as well as an unfavorable variance from the recent reinsurance transaction with global Atlantic.

Colin Simpson: Let's now move to our balance sheet on slide 19. In the second quarter, our Likert ratio remained strong at 139%, which was $24 billion above the supervisory target ratio. Our financial leverage ratio continues to support our financial flexibility at 24.6%, or 24% including the impact of the announced redemption of subordinated debentures. This puts us comfortably below our target ratio of 25%.

Colin Simpson: Let's now move to our balance sheet on slide 19.

Colin Simpson: In the second quarter, a light cat ratio remained strong at 159%, which was $24 billion above the supervisory target ratio.

Colin Simpson: Our financial leverage ratio continues to support our financial flexibility at 24, 6% or 24%, including the impact so the announced redemption of subordinated debentures. This puts us comfortably below our target ratio of 25%.

Colin Simpson: During the second quarter, we've also increased the pace of our share buybacks, and together with dividends and share buybacks, we returned approximately $1.4 billion of capital to shareholders. And, as Roy mentioned earlier, we are committed to buying the maximum 90 million common shares through the current NCIB program, representing a capital return of more than $3 billion based on the current share price. And finally, moving to slide 20, which summarizes how we're tracking against our medium-term targets, including the new and updated targets we presented at our on-desk today.

Colin Simpson: During the second quarter. We've also increased the pace of share buybacks and together with dividends and share buybacks, we returned approximately $1 $4 billion of capital to shareholders.

Colin Simpson: And as Roy mentioned earlier, we are committed to buying the maximum 90 million common shares through the current N CIB program, representing a counselor sun.

Roy Gori: More than $3 billion based on the current share price.

Speaker Change: And finally, moving to slide 20, which summarizes how we're tracking against our medium term targets, including a new and updated targets, we presented at Investor day.

Colin Simpson: As you can see from our year-to-date results, we are showing momentum towards our new core ROE and expense efficiency targets and are continuing to deliver on our remaining medium-term targets. We also generated 44% of earnings from the Asia region and increased our contribution from our highest potential businesses to 70%.

Speaker Change: As you can see from our year to date results, we are showing momentum towards our new core ROE and expense efficiency targets and are continuing to deliver on our remaining medium term targets.

Colin Simpson: We also generated 44% of earnings from the Asia region and increased our contribution from our highest potential businesses, 70% <unk>.

Colin Simpson: Looking ahead, all of these factors reinforce my confidence in our ability to raise the bar on financial performance. This concludes our prepared remarks. Before we move to the Q&A session, I would like to remind each participant to adhere to a limit of two questions, including follow-ups, and to recur if they have additional questions. Operator, we will now open the call to questions.

Colin Simpson: Looking ahead all of these factors reinforce my confidence in our ability to raise the bar on financial performance.

Colin Simpson: This concludes our prepared remarks.

Speaker Change: Before we move to the Q&A session I would like to remind each participant to adhere to a limit of two questions, including follow ups and to reach you. If they have additional questions. Operator, we will now open the call to questions.

Operator: Thank you. We will now take questions from the telephone lines. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time by pressing star 2. Please press star 1 at this time. If you have a question, there will be a brief pause while participants register. Thank you for your patience. And the first question is from Meny Grauman from Scotiabank. Please go ahead.

Operator: Thank you. We will now take questions from the telephone lines. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time by pressing star 2. Please press star 1. At this time, if you have a question, there will be a brief pause for participants to register. Thank you for your patience. And the first question is from Meny Grauman from Scotiabank. Please go ahead.

Speaker Change: Thank you, we'll now take questions from the telephone lines. If you have a question. Please press star one on your devices keypad you Mcafee a question at any time by pressing Star King. Please press star one at this time, if you have a question there'll be a brief pause for participants register thank you for your patience.

Colin Simpson: And the first question is from many Goldman from Scotiabank. Please go ahead.

Meny Grauman: Hi, good morning. We've talked about older returns in the past, but I wanted to revisit it in the context of what we saw this quarter. The older charge widened in Q2, and now we're seeing eight consecutive quarters of older charges. So I'm wondering, when we look at that, should we be concerned with that and specifically the deterioration in the charge this quarter? Colin, you touched on that a little bit in terms of the composition. I'm just wondering how to view those fact patterns in terms of where the oldest is going and over that period of basically two years.

Manny Goldman: Hi, Good morning, we've talked about all the returns in the past, but I wanted to revisit it.

Speaker Change: In the context of <unk>.

Speaker Change: What we saw this quarter the ALDA charge widened in Q2 and now we're seeing eight quarters in a row.

Speaker Change: All of their charges so I'm wondering.

Speaker Change: When you look at that should we be concerned with that and specifically the deterioration in.

Speaker Change: In the charge this quarter, calling you touched on it a little bit in terms of the competition I'm just wondering how do you view that.

Speaker Change: Those facts patterns in terms of where the oldest is going in over that period of basically two years.

Scott Hartz: Sure, many. Hi, it's Scott Hartz.

Speaker Change: Sure many hi, it's Scott Hartz I'll start by.

Scott Hartz: I'll start by looking at the quarterly results for everyone. I think the good news in the quarter was that the real estate headwinds continued to diminish. You know, as interest rates have stabilized here, we saw in the first quarter that the underperformance versus long-term assumptions come down a bit. We had about a $200 million loss on our real estate portfolio in the second quarter that continued to decline down to less than $150 million. So, that that is playing out as we expected, and we would expect that to continue to improve in the next quarter.

Speaker Change: Looking at the quarterly results for all that.

Speaker Change: I think the good news in the quarter was that the real estate headwinds continued to diminish.

Speaker Change: You know as interest rates have stabilized here, we saw in the first quarter of the underperformance versus long term assumption has come down a bit we had about a 200 million dollar loss.

Colin Simpson: Loss on our real estate portfolio in the second quarter that continued to decline down to less than 150 million. So that that is playing out as we expected we would expect that to continue to improve in the out quarters.

Scott Hartz: You know, the rest of the Alda portfolio was less less good. We have six different Alda categories, and in a normal quarter, some will exceed their long-term expectations, and some will underperform. This was a quarter where every category underperformed. Our private equity portfolio, historically, has been a very good performer over the last three, five, and 10 years. It's been the best performing all category, and it's far exceeded its long-term expectations.

Scott Hartz: You know, the rest of the ALDA portfolio was less less good. We have six different ALDA categories, and in a normal quarter, some will exceed their long-term expectations, and some will underperform. This was a quarter where every category underperformed. For most of them, it was idiosyncratic factors on a couple of investments that didn't perform well, and none of those categories was a particularly large number, but they do add up. They don't give me concern on future returns. I don't see a read-through going forward.

Colin Simpson: You know the rest of the ALDA portfolio was less worse. Good you know we have six different alder categories and in a normal quarter. Some will exceed their long term expectations and Sun will underperform. This was a quarter where every category underperformed for.

Colin Simpson: For most of them. It was idiosyncratic factors on a couple of investments that didn't perform well and you know when none of those categories was a particularly large number but they do add up they don't give me concern on future returns I don't see a read through going forward I would say the one category that did stand out.

Scott Hartz: I would say the one category that did stand out where there was pressure sort of across the board was the private equity portfolio. Our private equity portfolio has historically been a very good performer over the last three, five, and 10 years. It's been the best performing category in all, and it's far exceeded its long-term expectations. So again, I think in the medium term going forward and long-term, I feel good about that portfolio. But It was a bit of a rough quarter.

Colin Simpson: There there was a pressure sort of across the board was in the private equity portfolio.

Colin Simpson: Our private equity portfolio historically has been a very good performer over the last three five and 10 years, it's been the best performing all of the category and it's far exceeded its long term expectations. So again I think in our in the medium term going forward and long term feel good about that portfolio, but it was it was a bit of a <unk>.

Scott Hartz: So again, I think in the medium term going forward and long-term, I feel good about that portfolio. But it was a bit of a rough quarter. Although the private equity portfolio did have a slightly positive return, it was well below the long-term expectation, and it's a fairly sizable portfolio. So it created the largest loss within all the portfolios. So what was going on there?

Colin Simpson: Last quarter, although the private equity portfolio did have a slightly positive return it.

Scott Hartz: Although the private equity portfolio did have a slightly positive return, it was well below the long-term expectation, and it's a fairly sizable portfolio, so it created the largest loss within all the portfolios. So what was going on there?

Colin Simpson: It was well below the long term expectation and it's a fairly sizable portfolio. So it created the largest loss within me the ALDA portfolio. So so what was going on there.

Scott Hartz: Unlike real estate, where it's really long-term rates that matter, those are the discount rates that get into valuations. For private equity, the portfolio companies underlying those funds finance themselves with floating rate debt. So short rates really matter for that portfolio, and short rates have been up for a while, and that has pressured private equity returns, but there had been an expectation last year, I think, that the Fed would lower rates this year quite a bit, and as you know, valuations will reflect sort of the outlook for short rates, and I think this year the economy was really strong. Those expectations got pushed out quite a bit, and that weighed on valuations.

Speaker Change: Unlike real estate, where it's really long term rates that matter those are the discount rates to get into valuations for for private equity a.

Colin Simpson: Portfolio companies underlying those funds finance themselves with floating rate debt. So short rates really matter for that portfolio in short rates had been up for a while and it has pressured the private equity returns, but there had been an expectation last year I think that the fed would lower rates this year quite a bit and as you know.

Colin Simpson: Valuations will reflect sort of the outlook for short rates and I think this year.

Scott Hartz: The economy was really strong, so those expectations got pushed out quite a bit, and that weighed on valuations. Looking forward for the private equity portfolio, I think as short rates come down, and I think we're now in a position where we're expecting them once again to come down pretty sharply going forward, that will be positive. As you know, these returns on private equity are lagged a quarter, so our second-quarter results reflect first-quarter valuations.

Colin Simpson: You know the economy was really strong those expectations got pushed out quite a bit and that weighed on valuations. So you know looking forward for the private equity portfolio I think as short rates come down and I think we're now in a position where we're expecting them once again to come down pretty sharply going forward that will be part.

Scott Hartz: Looking forward for the private equity portfolio, I think as short rates come down, and I think we're now in a position where we're expecting them once again to come down pretty sharply going forward, that will be positive. As you know, returns on private equity are lagged a quarter, so our second-quarter results reflect first-quarter valuations. The second quarter, I would say, which will get reflected in our third-quarter results, not much had changed in the second quarter, so that probably will continue to weigh a bit on the third-quarter results, but then I expect, as we see the cuts coming, that private equity results will resume their good performance going forward.

Colin Simpson: For us.

Colin Simpson: As you know I think these court. These these returns on private equity are lagged a quarter. So our second quarter results reflect first quarter valuations. The second quarter, I would say, which will get reflected in our third quarter results you know.

Scott Hartz: The second quarter, I would say, which will get reflected in our third-quarter results, not much changed in the second quarter, so that probably will continue to weigh a bit on the third-quarter results, but then I expect, as we see the cuts coming, that private equity results will resume their good performance going forward. Yeah, thanks, Scott. Thanks, Manny. Thanks for the question. So just a couple of things that I would add to what Scott had said.

Speaker Change: Not much has changed in the second quarter. So.

Colin Simpson: Probably will continue to weigh a bit on the third quarter results, but then I expect is as we see the cuts coming that you.

Colin Simpson: You know private equity results will resume their good performance going forward.

Trevor Creel: And Trevor, is there anything you'd like to add to that? Yeah, thanks, Scott. Thanks, Manny. Thanks for the question. So just a couple of things that I would add to what Scott had said. You know, given the market-to-market nature of Alda, I think the recovery is obviously not going to proceed, you know, in a straight line; we will have variability, there'll be positives, positives, and negatives, you know, quarter to quarter.

Speaker Change: And is there anything you'd like to add to that.

Trevor Creel: And then I think the second thing I would say, just to remind you something that we've said in the past, which is that the higher discount rates that are now priced into our real estate and other real estate, and other real asset valuations give us confidence, more confidence in achieving our expected returns over the medium to long term.

Scott Hartz: You know, given the market-to-market nature of Alda, I think the recovery is obviously not going to proceed, you know, in a straight line; we will have variability; there'll be positives, positives, and negatives, you know, quarter to quarter. And then I think the second thing I would say, just to remind you something that we've said in the past, which is that the higher discount rates that are now priced into our real estate and other real estate, and other real asset valuations give us confidence, more confidence in achieving our expected returns over the medium to long term.

Speaker Change: Yeah. Thanks, Scott Thanks, Mike. Thanks for the question. So just a couple of things that I would add to what Scott had said you're not given the mark to market nature of all the I think the recovery is obviously not going to proceed in a straight line, we will have variability there'll be positive as positives or negatives quarter to quarter.

Speaker Change: And then I think the second thing I would I would say just to remind you of something that we've said in the past, which is at the higher discount rates at all now priced into our real estate and other real estate real asset valuations I think give us confidence more confidence in achieving our expected returns over the medium to long term.

Unknown Executive: Thanks for that detail. Just as a follow-up on the private equity portfolio, have you made any or are you contemplating making any more fundamental changes to this private equity portfolio, or is it just really a function of just

Meny Grauman: Thanks for that detail, just as a follow-up in terms of the private equity portfolio. Have you made any or are you contemplating making any more fundamental changes to this private equity portfolio, or is it just really a function of just, You know, letting maybe rate expectations filter through and just waiting, or is there something more fundamental in the portfolio that's not working as well as you like that requires any sort of adjustment to that performance? Now, we do expect it.

Speaker Change: Thanks for that detail just as a follow up in terms of the private equity portfolio.

Speaker Change: Have you made any are you contemplating making any more fundamental changes to private.

Speaker Change: The private equity portfolio or does it just really a function of just.

Speaker Change: Letting maybe rate expectations filter through and gets waiting or is there something more fundamental in the portfolio that's not <unk>.

Speaker Change: Working as long as you liked it requires any sort of adjustments to that portfolio.

Unknown Executive: We do expect rates to come down, short rates to come down, for the portfolio to perform very well. One thing I would say is that, because it has been such a strong performer over the last five years, it has grown to a fairly large size.

Scott Hartz: Now, we do expect as rates come down, short rates to come down, for the portfolio to perform very well. One thing I would say is that, because it has been such a strong performer over the last five years, it has grown to a fairly large size.

Speaker Change: Now, we do expect as rates to come down short rates to come down for the portfolio performed very well one thing I would say is because it has been such a strong performer over the last five years. It has grown to a fairly large size. So we've been investing in it takes a while to get this money invested you make a commitment it gets invested over five years, we have a number of years ago.

Unknown Executive: So we've been investing, and it takes a while to get this money invested. You make a commitment, and it gets invested over five years. A number of years ago, we really reduced our commitments there. So I think the portfolio as a percent of our ALDA will probably decline going forward.

Scott Hartz: So we've been investing, and it takes a while to get this money invested. You make a commitment, and it gets invested over five years. A number of years ago, we really reduced our commitments there. So I think the portfolio, as a percent of our ALDA, will probably decline going forward.

Please stand by, your meeting is about to begin. Please be advised that this conference call is being recorded.

Speaker Change: We really reduced our commitments there so I think the.

Speaker Change: The portfolio as a percent of our alder will probably decline going forward.

Roy Gori: Good morning, ladies and gentlemen. Welcome to the Manulife Financial, second quarter. Thank you. Welcome to Manulife's earnings conference call to discuss our second quarter and year-to-date 2024 financial and operating results. Our earnings materials, including webcast slides for today's call, are available on the infestrelation section of our website at Manulife.com. Before we start, please refer to site two for a caution of poor looking statements and site 35 for a note on a non-gab and other financial measure used in this presentation.

Speaker Change: Thank you.

John Aiken: The next question is from John Aiken from Jeffreys. Please go ahead.

Speaker Change: The next question is from John Aiken from Jefferies. Please go ahead.

Unknown Executive: Good morning. We're not necessarily on the quarter.

John Aiken: Good morning, Roy. Not necessarily on the quarter, but...

John Aiken: Hi, good morning.

John Aiken: Not necessarily on the quarter, but with DBS announcing the CEO succession I have to ask the painfully obvious stupid question, but does this have any impact on your expectations for the relationship between the two of you and then more importantly does manulife have a relationship.

Roy Gori: I have to ask the painfully obvious stupid question, does this have any impact on your expectations for the relationship between the two of you? And, more importantly, does Manulife have a relationship with the incoming CEO? Yeah, John, thank you for the question. We don't see this as having an impact on our relationship.

Speaker Change: With the incoming CEO.

Speaker Change: Yeah, John Thank you for the question.

Speaker Change: We don't see this as having an impact on our relationship we've got a deep partnership with DBS. One that we're very proud of and one that we showcased at our Investor Day recently that you were at.

Roy Gori: We've got a deep partnership with DBS, one that we're very proud of, and one that we showcased at our investor day recently, which you were at. Obviously, we're also very proud of the partnership that we have with the senior leadership team, and that extends beyond Piyush. In fact, Sushant was a key part of the leadership team that signed our agreement with DBS and Manulife back in 2017. I personally spent a lot of time with her at that time, locking in that deal and that transaction and agreeing the way that we would move forward.

Speaker Change: Clearly, where we're obviously very proud of the partnership that we have with the senior leadership team and that extends beyond <unk> in fact, sushi and was a key part of the leadership team that actually signed our agreement with DBS of Manulife backing in our 2017.

Roy Gori: Thank you. [inaudible] As a reminder, these transactions will free up two billion dollars of capital, which we committed to return to shareholders through our current NCIB program. And consequently, we ramped up our share buybacks during the quarter. And I would highlight that we have now decided and plan to buy back the maximum amount of shares allowed through our current NCIB program. With the recent increase in our share price, this would represent over three billion dollars that we plan to return to shareholders, which would entail a further acceleration of buybacks in the second half of the year.

Speaker Change: And I personally you know spend a lot of time with her at that time locking in that deal in that transaction and agreeing the way that we would move forward. So we're obviously happy that Ah full portion and are delighted that he's happy to announce his retirement, but we're equally proud of the relationship that we have with DBS and it extends beyond piyush to Sue Shannon.

Roy Gori: So, we're obviously happy for Piyush and delighted that he's happy to announce his retirement, but we're equally proud of the relationship that we have with DBS, and that extends beyond Piyush to Sushant and the broader team there at DBS. Fantastic. Thanks, Roy. I'll call you.

Speaker Change: And the broader team there at the UBS.

Speaker Change: Fantastic, Thanks, I'll re queue.

Dean: Thank you Dean.

Paul Holden: Your next question is from Paul Holden from CIBC. Please go ahead.

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

Paul Holden: Hi, thanks. Good morning. The first question is related to the GMT.

Paul Holden: Thanks. Good morning first question is related to the G. M. T. I mean transparent that it was totally absorbed in corporate and all the business segments, but I guess my question is.

Paul Holden: I mean, transparent that

Paul Holden: It was totally absorbed by corporate, not the business segments, but I guess my question is, of the 46 million in GMT this quarter, how much would have been allocated to Asia if legislation had been enacted there? And the second part of the question is, is there any visibility on a timeline on when it may get enacted in key countries in Asia? I guess that'd be Hong Kong and maybe Singapore.

Paul Holden: Of the 46 billion in GMT this quarter, how much would have been allocated to Asia.

Speaker Change: Legislation has been enacted there and the second part of the question is is there any visibility on timeline on when it make it an asset in key.

Speaker Change: Countries in Asia, I guess, I'd be Hong Kong, and maybe Singapore.

Colin Simpson: Hey, John. It's Colin here. Thanks for the question. So of the $46 million, $30 million is allocated to the Asia segment. So it's roughly two-thirds Asia, one-third G1. We do believe Hong Kong will adopt the Pillar 2 tax rules in 2025, so we expect that tax charge to be passed through to the segments next year. But until that happens, we'll keep it a company. So wait and see on that basis. But it's very much within our expectations.

Colin Simpson: Hey, John. It's Colin here. Thanks for the question. So of the $46 million, $30 million is allocated to the Asia segment. So it's roughly two-thirds Asia, and one-third GWAM. We do believe Hong Kong will adopt the Pillar 2 tax rules in 2025, so we expect that tax charge to be passed through to the segments next year. But until that happens, we'll keep it at corporate. So we wait and see on that basis. But it's very much within our expectations. Okay, thanks for that. And then the second question, also related to Asia, if I look at it, and you do.

Colin Simpson: Hey, John It's Colin Thanks for the question so of the $46 million $30 million is allocated to the Asia segments. So it's roughly two thirds Asia segments. One third G. One we do believe Hong Kong will adults, but for the two tax rules in 2025, so we expect that tax charge to be passed through to.

Dean: This segments.

Dean: Next year reporting, but until that happens will keep it at culprits, so wait and see on that basis, but it's very much within our expectations.

Colin Simpson: Paul, I might just add that Asia's contribution, year-to-date contribution of earnings, as at Q2 was 44%, and that includes both insurance and wealth. When we pro rata the impact across the geographies and a portion of that GMT that's attributed to Asia, it takes our contribution from 44% down to only 43%. So we don't see this as a significant and material adjustment to our earnings contribution by segment. Okay, thanks for that. And then the second question, also related to Asia. If I look at

Dean: I'm, Paul I might just add that Asia's contribution EBITDA contribution of earnings as that Q2 was 44% and that includes both insurance and wealth.

Speaker Change: When we pro rata the impact across the geographies and a portion.

Speaker Change: G M T. That's attributed to Asia to Asia. It takes out contribution from 44% down to only 43%. So we don't see this as a significant and material adjustment to our earnings contribution by segment.

Speaker Change: Got it okay. Thanks for that.

Speaker Change: And then second question also related to Asia, if I look at.

Paul Holden: Insurance experience, and again, you'd be transparent on this, but if I look at total experience, including both you know and CSM impacts, there was no year-over-year improvement. In fact, it was almost exactly the same number. I think how you've allocated it between P&L and CSM has changed. So maybe you can walk us through sort of what's happening in experience in Asia, if there has been any sort of improvement in those unfavorable experience items from last year, and why the allocation between P&L and CSM has changed this year. Thank you. Sure, thanks. It's

Unknown Executive: insurance experience and again you'd be transparent on this but if I look at total experience including both you know and CSM impacts there was no year-over- year improvement in fact it was almost exactly the same number I think How you've allocated it between P&L and CSM has changed, so maybe you can walk us through sort of what's happening in experience in Asia, if there has been any sort of improvement in those unfavorable experience items from last year and why the allocation between P&L and CSM has changed.

Speaker Change: Insurance experience and again you'd be transparent on this but if I look at total experience, including both P&L and CFM impacts there was no year over year improvement in fact was almost exactly the same number I think.

Roy Gori: Share buybacks have contributed to core EPS growth of 9%, or 12% excluding the impact of GMT. And core ROE expanding 20 basis points to 15.7%. Finally, we maintained a solid balance sheet with a strong like at ratio and generated double digit book value and adjusted book value growth while returning significant capital to shareholders over the past year.

Speaker Change: But how you've allocated between P&L on CFM has changed so maybe you can walk us through sort of.

Speaker Change: What's happening in experience in Asia. If there has been any sort of improvement in those haddon favorable experience items from last year and why the allocation between P&L on CFM has changed this year. Thank you.

Steve: Sure, thanks. It's Steve here.

Steve: I'll, I'll take that. So the drivers of the experience in Asia were the quarter and then relative to the prior year. In the quarter, we saw some, some claims gains in both Vietnam and Japan. And that's what you're seeing in the P&L. And then what's going through the CSM primarily is a continuation of some adverse persistency results, primarily in Vietnam, to smaller degrees and lapse impacts in Singapore.

Steve: Sure, thanks. It's Steve here.

Dean: Sure. Thanks, it's Steve here I'll I'll take that.

Roy Gori: Turning to slide 8. As we highlighted at invest today, executing in Asia and global WAM will be critical to achieving our expanded 18% plus core ROE target by 2027. It's encouraging to see that we're delivering on our strategy and in turn reshaping our earnings profile. In Asia, we're driving broad base sales growth with the majority of our markets generating double digit growth in year-to-date AP sales, new business CSM, and new business value.

Dean: The drivers of the experience in Asia for the quarter, and then relative to prior year in the quarter. We saw some some claims gains in.

Steve: I'll, I'll take that. So the drivers of the experience in Asia were the quarter and then relative to the prior year. In the quarter, we saw some, some claims gains in both Vietnam and in Japan, and that's what you're seeing in the P&L. And then what's going through the CSM primarily is a continuation of some adverse persistency results, primarily in Vietnam and, to a smaller degree, some lapse impacts in Singapore. In Vietnam, this resulted from some of the broader-based industry macro challenges.

Dean: In both Vietnam and in Japan, and that's what you're seeing in that in the P&L.

Dean: And then b, what's going through the CSM, primarily is a continuation of some adverse persistency results primarily in a in Vietnam to a smaller degree some laps.

Steve: In Vietnam, this resulted from some of the broader-based industry macro challenges. We saw modest improvement in in Q2 on Vietnam persistency. And we do have a clear line of sight to improvement over the second half of the year on that front as, you know, as things have stabilized and begun to move in a positive direction there. So we feel pretty good about the outlook. And so, if I remember correctly, wasn't that persistency issue in Vietnam, didn't that flow through P&L a year ago, period? No, it would have been through CSM. Okay.

Roy Gori: Importantly, we're also driving margin growth, higher productivity, and efficiency improvements, all of which contribute to our ambition of delivering high quality, sustainable growth. And in global WAM, we've seen strong asset growth which reflects a combination of favorable market impacts, net inflows, and the CQS acquisition. Supported by discipline expense management, this is contributed to a significant expansion in our core EBITDA margin, which is up 240 basis points from the prior year. I've commented before that given our scale, we can be judicious on MNI opportunities.

Dean: Impacts in Singapore, and Vietnam. This resulted from some of that the broader based industry macro challenges.

Dean: We have we saw modest improvement in Q2 on the Vietnam Persistency and we do have clear line of sight to our improvement over the second half of the year on that front as you know as things have stabilized and begin to.

Unknown Executive: We saw modest improvement in Q2 on the Vietnam persistency front, and we do have a clear line of sight to improvement over the second half of the year on that front, as you know, as things have stabilized and begun to move in a positive direction there. So we feel pretty good about the outlook.

Dean: To move in a positive direction there so we feel pretty good about the outlook.

Speaker Change: And sorry, if I remember correctly it was about persistency of share in Vietnam didn't that flow through P&L.

Dean: In the year ago period.

Speaker Change: No it would have been through CSM, okay. Okay. Thank.

Roy Gori: And our recent acquisition of CQS was no exception. After closing the acquisition earlier in the quarter, we leverage CQS's capabilities with the successful launch of a multi-asset credit fund in U.S, retail. Our focus execution is driving strong core earnings growth. And as you can see, these high return businesses are contributing to a growing share of our core earnings.

Speaker Change: Thank you for that.

Speaker Change: Thank you.

Gabriel Dechaine: The next question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Speaker Change: The next question some Gabriel <unk> from National Bank Financial Please go ahead.

Gabriel Dechaine: Good morning. Nothing too complicated here.

Gabriel: Oh, good morning, nothing too complicated here.

Speaker Change: Well flows.

Speaker Change: Uh huh.

Speaker Change: As of I've already mentioned it in your opening remarks, but I saw Canada, a big outflows in our retail business is that tied to the higher capital gains inclusion rates that became effective for you about the quarter people get them, although they're fun before before that St.

Roy Gori: Before I pass it over to Colin, I'd like to take a moment to thank Scott Hartz, who has decided to retire in October after a 40-year career with manualise. In that time, Scott has held a range of leadership roles, including leading the investment team since 2010, and being appointed Chief Investment Officer in 2019. On behalf of the team at manualise, I want to thank Scott for his investment expertise, his partnership and council over the years, and most importantly, his friendship. I'm sure you'll all join me in wishing him the best in his retirement.

Gabriel Dechaine: In the wealth flows, I'm sorry if I've already mentioned it in your opening remarks, but I saw Canada had big outflows in the retail business. Is that tied to the higher capital gains inclusion rate that became effective at the end of the quarter? People getting out of their funds before that change?

Gabriel: Yeah. Thanks, Gabriel its a its tolerance here yeah that was an impact for the industry. We did see elevated redemptions coming through with the Canada retail business ahead of that capital gains inclusion rate. It wasn't unique to us we have since seen those redemption rates moderate. So we would expect that to kind of moderate go forward and then just looking at the Canada region. There was also.

Paul Lorentz: Yeah, thanks, Gabriel. It's Paul Lorentz here.

Paul Lorentz: Yeah, that was an impact for the industry. We did see elevated redemptions coming through the Canada retail business ahead of that capital gains inclusion rate. It was unique to us.

Paul Lorentz: We have since seen those redemption rates moderate, so we would expect that to kind of moderate going forward. And then, just looking at the Canada region, there was also a large case redemption in there that gave results for the quarter. That was a remaining redemption from a large client announced in Q1, but that was quite material. It was $1.8 billion for the quarter.

Speaker Change: A large case redemption in there that is skewing the results for the quarter that was remaining redemption from a large client announced in Q1, but that was quite material was there was 1.81 billion for the quarter. So when you actually factor those two and we're quite optimistic the other thing I would say just in terms of Canada. Specifically is we're seeing a lot of advisor new advisor interest in our.

Roy Gori: While Scott is on the call with us today, we're also joined by a successor, Trevor Creel, who was the point-to-chief investment officer and head of the General Account Organization, effective August 1st. In his nearly 30 years with Manulife, Trevor has held a number of leadership roles across the organization, including working closely with Scott in the general account organization over the past decade. We're fortunate to have such a strong successor ready to step in.

Paul Lorentz: So when you factor those two in, we're quite optimistic. The other thing I would say, just in terms of Canada specifically, is we're seeing a lot of new advisor interest in our wealth platform. We made an investment earlier this year, and the pipeline for advisors that are interested in joining in the second half of the year is quite strong. So we're quite optimistic as we look forward to the Canadian market.

Speaker Change: Our wealth platform, we made the investment earlier this year and the lifeline fertilizers that are interested in joining in the second half of the year is quite strong. So we're quite optimistic as we look forward for the Canadian market.

Colin Simpson: Now with that, I'll hand it over to Colin to review the highlights of our financial results.

Paul Lorentz: Okay, great. Thanks, Paul.

Speaker Change: Okay great.

Paul Holden: Thanks, Paul.

Gabriel Dechaine: Question on the tax rate guidance, so the 17 to 23% is a very wide range, so, you know, wherever you end up on that spectrum could have a pretty meaningful impact on the quarter, any given quarter. I mean, I can come up with my own answers here to how you end up at the low end or high end, you know, more growth in Canada and the US versus Asia. I mean, is there anything else that could cause that to swing around a lot? And I guess, if Asia is going to continue to grow at maybe not the rates we saw this quarter but higher than anywhere else, should we be biased towards the low end as we're forecasting?

Colin Simpson: Colin, thanks Roy. The momentum in our financial performance continues. I will dive into a little more detail on the course's results before the Q&A. I'll start with our top line on slide 10. Our AP sales increased 17% from the prior year, reflecting strong growth in our Asia and Canada segments. In Asia, we generated higher sales across multiple markets, in particular Hong Kong and Japan, although we did see lower sales in mainland China following the record high second quarter sales in 2023.

Speaker Change: Question on the tax rate guidance, so that 17% to 23%. It's a very wide range. So you know wherever you end up on that spectrum could could have a pretty meaningful.

Speaker Change: Meaningful impact on the quarter.

Speaker Change: Any given quarter.

Speaker Change: I can come up with my own answers here through how you end up at the low end or high end, you know more growth in Canada and U S versus Asia.

Speaker Change: I mean is it.

Speaker Change: Is there anything else that could cause but but the swing around a lot and I guess, if Asia is kind of continue to grow maybe not at the rates. We saw this quarter, but higher than anywhere else should we'd be biased towards the lower end as we're forecasting.

Colin Simpson: While in Canada, we had higher large-case group insurance sales. Our strong sales contributed to a solid increase in new business CSM of 6%, and another quarter of double-digit growth in new business value of 23%. Global WAM saw net inflows of $0.1 billion, mainly reflecting the strength in our institutional business, offset by outflows and our retirement business. These results really demonstrate the strength of our diversified global portfolio of businesses in driving growth.

Colin Simpson: Hey Gabe, it's Colin again. Yeah, I think you've nailed it really. As Asia becomes a bigger proportion of our earnings, we could see some of the lower tax jurisdictions contribute to a lower overall tax rate. And as has been noted already, we are at the low end of the range, actually below the 17 to 23% this quarter, but we're up 2% from the 14% we reported last quarter. So we are staying close to the low end, and we expect to continue that way. But, as you noted, if Canada and the US grow earnings more, you would expect to see the

Speaker Change: Hey, Gabe its Colin again, yeah, you've I think you've nailed it relates as Asia becomes a bigger proportion of our earnings we would see some of the lower tax jurisdictions contribute to a lower overall tax rates.

Speaker Change: And as you would you and as has been noted already we order at the low end of the range that you were below the 17% to 23% this quarter, but that's we're up 2% from the 14% we reported last quarter. So we are staying close to the low end of me expect to continue that way, but as you as you noted if Canada and the U S core earnings more you would expect to see.

Colin Simpson: Turning to slide 11, which shows the growth in our profit metrics. Core EPS increased 9% as we grew core earnings and continued buying back shares. I should note that the newly enacted Global Minimum Tax Act in Canada reduced core earnings for the quarter, and core EPS would have grown 12% excluding the simpats. During the quarter, our core ROE was 15.7% up to 20 basis points from the prior year. Execution in Asia and Global WAM, our highest return businesses will be key levers to achieving the updated core ROE targets and our touch and performance in these businesses shortly.

Speaker Change: See that rates go up.

Gabriel Dechaine: Any technical like I mean, I don't know if there's any other factors that play in the geography. It really isn't, Gabe. No, it's quite straightforward. Okay, great. Enjoy the rest of your summer.

Speaker Change: Technical I mean, I don't know if there's any other factors that play a lot of other than the geography and the amount of they really don't get okay no.

Unknown Executive: The amount of them really aren't gay okay, no it's quite quite straightforward Okay, great. Enjoy the rest of your summer.

Speaker Change: It's quite it's quite straightforward.

Speaker Change: Okay, great and enjoy the rest of your summer.

Speaker Change: You too.

Tom Mackinnon: Thank you. The next question is from Tom MacKinnon from BMO Capital Markets. Please go ahead.

Operator: Thank you. The next question is from Tom MacKinnon from BMO Capital Markets. Please go ahead.

Speaker Change: Thank you. The next question is from Tom Mackinnon from BMO capital markets. Please go ahead.

Tom Mackinnon: Yeah, thanks. Good morning. Question with respect to Asia, looking at APE for Asia Other, continues to be kind of sluggish, down 5%, and I think year to date, maybe up just modestly. One thing I did note, though, is the number of agents you have in Asia Other, kind of running flat for several quarters in a row and then up 9% quarter over quarter in the second quarter of this year. So what's going on there?

Tom Mackinnon: Yeah. Thanks, good morning.

Tom Mackinnon: A question with respect to Asia looking at AP for Asia. Other continues to be kind of sluggish down, 5% and I think year to date.

Tom Mackinnon: Up just modestly.

Speaker Change: One thing I did note, though is the number of agents you have in Asia other kind of running flat for several quarters in a row, and then up 9% quarter over quarter and in the second quarter of this year. So is what's happening there are you.

Colin Simpson: Bringing you back to our core earnings results on slide 13, I'd like to call out some of the highlights of the drivers of earnings analysis presented relative to the prior year quarter. The first point to highlight is that we continue to see the benefits of business growth with strong growth in core net insurance service results in Asia and Canada, and we also generated improved insurance experience. Secondly, our core net investment result had a modest decrease of 1%, as business growth was more than offset by lower investment spreads.

Tom Mackinnon: Are you beefing up the sales force here in Asia other to try to? How should we be thinking about those sales going forward, and how should we be thinking about them in light of this increase in the number of agencies?

Speaker Change: Beefing up the sales force here in Asia other to try to.

Speaker Change: It help rebound some of these are some of the Asia. Other a P E and how should we be thinking about those sales going forward and how should we be thinking about them in light of this increase in the number of agents.

Phil: Great. Thank you for the questions, Tom. This is Phil.

Speaker Change: Great. Thank you for the question. So this is Phil.

Colin Simpson: Our expected credit loss or ECL was roughly neutral this quarter, and this strong result was primarily driven by the regular update to our model parameters, reflecting the benign corporate credit environment, which lies the offset staging impacts on a few bonds in our portfolio. In the bottom half of the table, you will see that Global WAM continued to be a notable contributor to the results, generating higher net fee income from average AUM acreage, and expanding our margins.

Phil: So I'll start actually by highlighting that it's been a really strong quarter for our Asia business. Our core earnings are up 40%, we've seen growth in NPV of 19% and that comes from a mix of both volume growth with 7% growth in IP sales and margin enhancements across multiple markets not something.

Phil: So, I'll start by highlighting that it's been a really strong quarter for our Asia business. Our core earnings are up 40%. We've seen growth in NBV of 19%, and that comes from a mix of both volume growth with 7% growth in APE sales and margin enhancements across multiple markets. Now, Tom, you picked up in your question the modest decline in APE sales in our other Asia segment. And Colin touched on this briefly in his opening remarks, but what's happening there is that we've seen strong growth across multiple markets in the other emerging Asian subregion.

Speaker Change: You picked up on your question on the modest decline in a P E sales in our Asia other segments and it's Colin touched on this briefly in his opening remarks, but what's happening there is that we've seen strong growth across multiple markets in other emerging the other emerging Asia subregion.

Colin Simpson: Lastly, we had a decline in other core earnings that partially offset these positive results which included higher workforce related costs. A growing proportion of our earnings are coming from the core net insurance service result versus the core net investment result and higher verbal wire earnings. This is part of our road map towards an 18% plus core ROE. The impacts of GMT was a $46 million charge in our core earnings for the quarter, adding just over two percentage points to our effective tax rate.

Phil: But what's happened is that we've seen a moderation of sales growth in China. And recall the history here: in the second quarter of 2023, we had a tripling of sales in mainland China as the borders with the rest of the world reopened, and consumer sentiment was very strong. This year, we've seen a slight pullback in that, a 20% decline in sales in China, and that's had the effect of moderating other Asian sales.

Speaker Change: But what's happened is that we've seen a moderation of sales growth in China and recall the history here is in the second quarter of 2023, we'd seen a tripling of sales in mainland China as the borders with the rest of the world Reopens and consumer sentiment was very strong this year, we've seen a slight pull back.

Colin Simpson: We are reporting the impact of GMT in the corporate and other segments, as GMT was not inactive in all the jurisdictions in which we operate. More information on the impact of GMT is available in the appendix. In addition, the recent re-insurance transaction with global Atlantic impacted core earnings by $25 million across multiple lines of the DOE.

Speaker Change: Not a 20% decline in sales in China, and that's had the effect of moderating the Asia other sales, but I do remain our confidence in the prospects for our other Asia markets individually and collectively you also touch Tom on our agent numbers and we have seen an improvement in.

Phil: But I do remain confident in the prospects for our other Asian markets individually and collectively. You also touched on our agent numbers, and we have seen an improvement, an increase in agent numbers, particularly from our emerging markets during the second quarter. But I do want to highlight that our focus is not really on the number of agents. It's on the quality and the productivity of agents, right? I won't dwell too much on the sort of 9% quarterly-on-quarter increase that you referenced.

Speaker Change: Increase in agent numbers, particularly from our emerging markets during the second quarter, but I do want to highlight our focus is not really on the number of agents. It's on the quality and the productivity of agents. So I won't dwell too much on sort of the 9% quarter on quarter increase that you reference.

Colin Simpson: On to slide 14. During the quarter, we saw a non-core charge of approximately $300 million of realized losses from assets disposed as part of the universal life for insurance transactions in Canada with RGA, which is in line with previous disclosure. As many of you know, there was an offsetting change in OCI, neutralizing the impact and book value from this charge. While the portfolio continued to generate a positive return in the quarter, lower than expected returns on older resulted in a $450 million charge.

Phil: Our focus is really on driving productivity of agents, driving value for both customers and employees. And when I look at the results for the second quarter, I believe they support the messages that we delivered at Investor Day with high quality, sustainable growth and a 19% improvement in new business value. And when I think about the future, the quarters ahead, I also remain confident about the prospects. We've seen very strong performance across multiple markets in Asia in the second quarter.

Speaker Change: Our focus is really on driving productivity of agents driving value for both customers and manulife and when I look at the results in the second quarter I believe it supports the messages that we delivered at Investor day with high quality sustainable growth.

Colin Simpson: This was mainly driven by the underperformance of our private equity portfolio, in part due to the impact of higher interest rates on valuations. We also saw ongoing pressure on commercial real estate, though we continue to see sequential improvement with the relatively modest loss, representing the smallest charge we've reported over the past eight quarters. This was partially offset by a $143 million gain largely due to the favorable impact of interest rate movements under rooters outside of hedge accounting relationships. Finally, we reflected a catch up of $44 million related to retroactive GMT impacts on our first quarter results in non-core earnings this quarter.

Speaker Change: 19% improvement in new business value and when I think about the future that the quarters ahead. I also remain confident about the prospects we've seen very strong performance across multiple markets in Asia in the second quarter.

Unknown Executive: Okay, thanks. And then a quick follow-up here with respect to the LAPS experience in the U.S. continuing to be a negative here. How should we be thinking about that going forward, especially as we move into your third quarter?

Tom Mackinnon: Okay, thanks. And then a quick follow-up here with respect to the LAPS experience in the U.S. continuing to be a negative here. How should we be thinking about that going forward, especially as we move into your third quarter? Reserve Review with respect to that aspect. Yeah, thanks, Tom.

Speaker Change: Okay. Thanks, and then a quick follow up here with respect to the lapse experience in the U S. Continuing to be a negative here, how should we be thinking about that going forward, especially as we move into your third.

Speaker Change: Third quarter Reserve review with respect to that aspect.

Colin Simpson: Now we'll cover the segment view of our results in the next few slides, starting with Asia on slide 15. Our Asia segment continued to generate strong growth in both top and bottom line metrics. AP sales increased 7% from the prior year quarter, primarily driven by growth in Japan on the back of strong market performance generating higher sales on maturing wealth products and Hong Kong, supported by increased sales through our agency and bank assurance channels.

Steve: Yeah, thanks, Tom. It's Steve. I'll, I'll take that one. So, as you noted, we did see a continuation of lapse losses in the US. That's been, you know, since the pandemic, as I've noted before. But we saw a drop in lapse rates across many product lines.

Steve: So, as you noted, we did see a continuation of lapse losses in the US. That's been, you know, since the pandemic, as I've noted before, we saw a drop in lapse rates across many product lines. In similar product lines in Canada, those lapse rates have trended back to pre-pandemic levels, but it's been a much slower process in the U.S. We've seen some trending back, but not on all products and not all the way.

Steve: Yeah, thanks, Tom. It's Steve. I'll, I'll take that one.

Speaker Change: Yeah. Thanks, Tom It's Steve I'll take that one so as you noted we did see a continuation of a lapse losses in the U S. That's been since the pandemic as I've noted before we saw a drop in lapse rates across many product lines in a similar.

Speaker Change: Lines in Canada, those lapse rates have trended back to pre pandemic levels, but it's been a much slower process in the U S. We've seen some trending back but not on all products and not all the way I. I've also commented before you know with respect to how you think about the.

Colin Simpson: Though these results are partially offset by low sales in a few other markets in Asia, particularly in mainland China following strong prior year sales as I noted earlier. The overall increase in sales contributed to 10% and 19% growth in our value metrics, new business CSM and MBB respectively. We delivered 40% core earnings growth as we benefited from higher expected earnings on insurance contracts, favorable claims experience and higher expected investment income. We saw a noticeable growth from our largest enforced business, Hong Kong, as well as Japan.

Steve: I've also commented before, you know, with respect to how you think about the Q3 assumption review. I'll note that when we transitioned to IFRS 17, last year, we stopped providing detailed guidance at Q2, so you'll get the full disclosure at Q3. But in terms of thinking about how we're looking at this, we're very comfortable with the ultimate lapse rates. Those are very low, and that's not what's causing the issues here.

Speaker Change: The Q3 assumption review in which I'll note, we when we transition to <unk> 17.

Speaker Change: Last year, we stopped providing detailed guidance at Q2, so you'll get the full disclosure of Q3.

Speaker Change: But in terms of thinking about how we're looking at this.

Speaker Change: You know, we're we're very comfortable with the ultimate lapse rate. So those are very low and that's not what's causing the issues here.

Steve: It's more the intermediate durations on protection products and some higher lapse rates in early durations due to the economic environment. You know, we'll take all the data, you know, into account as we review the lapse rates, but what I can say is, you know, on the overall review, you can expect, as usual, some pluses and minuses. So that's how I think you should be thinking about that right now.

Speaker Change: It's more of the intermediate durations on protection products and some higher lapse rates in early durations from the economic environment and we will take all our all the data you know into account as we redo the lapse rates.

Colin Simpson: Moving over to global warrants results on slide 16. We reported $1.1 billion of net inflows to the quarter. We continued to generate strong net inflows in our institutional business, which included positive contributions from CQS, but this was largely offset by a large case plan redemption in US retirement. While net inflows were largely neutral this quarter, global WAM delivered core earnings growth of 23% supported by higher average AUMA, which increased 13% from the prior year quarter. We could continue to generate positive operating leverage, evidenced by our strong core EBITDA margin expansion, which grew 170 basis points from the prior quarter, and drove our core earnings growth.

Speaker Change: But what I can say is you know on the overall review you can expect as usual some pluses and minuses. So that's that's how I think you should be thinking about that right now.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Mario Mendonca: The next question is from Mario Mendonca from TV Securities. Please go ahead. I just want a quick answer.

mendonca: The next question is somewhat narrow mendonca TD Securities. Please go ahead.

Mario Mendonca: Thank you. Just one quick clarification on that last question from Tom. It's always very unclear for me on what assumptions go through earnings and what goes through the CSM. Would an update to intermediate lapse assumptions..., in the U.S. via earnings issue or a CSM issue?

Speaker Change: Quick clarification on that last question from Tom.

Speaker Change: It's always thought it's very unclear for me.

Speaker Change: What assumptions go through earnings and what goes through.

Speaker Change: CSM, what an update to intermediate lapse assumptions in the U S D earnings issue or CSM issue.

Colin Simpson: Bringing over to Canada on slide 17, we delivered another strong quarter of new business metrics. AP sales increased 61% from the prior quarter, led by group insurance, which delivered higher sales across all markets, and benefited from a large case sale. This was also the main contributor to our double digit growth in new business value. Core earnings grew by a strong 7% in Canada, primarily driven by business growth in group insurance and affinity markets. We also saw favorable retail claims experience and individual insurance, but this was somewhat offset by lower investment spreads.

Mario Mendonca: Thanks, Mario. So specifically in U.S. life, those lapses, they would go through primarily CSM unless CSM were depleted, and then it would go through P&L. And there is one nuance in terms of the discount rates. You know, there's a little bit that would go through OCI based on what interest rates were when we locked them in at the time of transition versus current interest rates. So it's a little bit complicated, but CSM is depleted through P&L. Yeah, that's a good question.

Speaker Change: Thanks, Mario So four four specifically on U S life those lapses are they would be.

Speaker Change: They would go through primarily C. S M unless CSM were depleted and then it would go through.

Speaker Change: P&L.

Speaker Change: And there is one nuance in terms of the discount rates.

Speaker Change: You know theres, a little bit that would go through OCI based on what interest rates were when we locked them in a time of transition versus current interest rates. So it's a little bit complicated, but I C. S. M. If depleted through through P&L question, Matt is the CSM been depleted.

Colin Simpson: On to slide 18, which shows our US segments results. In the US, we saw lower sales of protection insurance products, which modestly drove down AP sales. But this was partially offset by continued demand from affluent customers for accumulation products. The decline in new business CSM was due to product mix as well as the impact of higher interest rates. Core earnings decreased 11% from the prior quarter, which reflects more unfavorable net insurance expanse, as well as an unfavorable variance from the recent re-insurance transaction with global Atlantic.

Steve: Yeah, I was questioning that. Has the CSM been depleted?

Unknown Executive: The obvious question then is, has the CSM been depleted?

Steve: At this point, on some products in the U.S., as you can see in the quarter in the U.S., we've got some life lapse losses going through P&L. So some cohorts have been depleted, but not all of the cohorts.

Matt: At this point, we on some products in the U S.

Speaker Change: As you can see in the in the quarter in U S. We've got some life lapse losses going through P&L. So some cohorts have been depleted, but not all of the cohorts in the <unk>.

Mario Mendonca: My second question, this might be for Colin, go to page 29 of your presentation, so deep into your appendix, and this is, I appreciate, sort of in the weeds, but it matters to book value growth. That net impact is $732 million. It's positive this quarter. So that's fine. But I'm surprised to see that kind of that size of a contribution from changes in corporate spreads and interest rates. I'm surprised you moved the other way.

Unknown Executive: Okay, my second question, this might be for Colin. Go to page 29 of your presentation, so deep into your appendix, and this is, I appreciate, sort of in the weeds, but it matters to book value growth. That net impact is $732 million. It's a positive impact this quarter. So that's fine. But I'm surprised to see that kind of that size of a contribution from changes in corporate spreads and interest rates. It was my understanding that with the implementation of IFRS 17, those two lines, the fair value of the liabilities relative to the fair value of the assets would be fairly well matched, and we wouldn't see big changes. So maybe talk me through why it was big this quarter, and could we see big swings to the negative if interest rates... I'm surprised you moved the other way.

Speaker Change: Second question this might be for column go to page 29 of your presentation. So deep into your appendix senses I appreciate sort of in the weeds, but it matters to book value growth.

Colin Simpson: Let's now move to our balance sheet on slide 19. In the second quarter, our like at ratio remained strong at 139%, which was $24 billion above the supervisory target ratio. Our financial leverage ratio continues to support our financial flexibility of 24.6%, or 24% including the impact of the announced redemption of subordinated debentures. This puts us comfortably below our target ratio of 25%. During the second quarter, we've also increased the pace of our share buybacks, and together with dividends and share buybacks, we returned approximately $1.4 billion a capital to shareholders. And as Roy mentioned earlier, we are committed to buying the maximum 19 million common shares through the current NCIB program, representing a capital return of more than $3 billion based on the current share price.

Speaker Change: That net impact of $732 million positive this quarter. So that's fine, but I'm surprised to see that kind of that size of a contribution from changes in corporate spreads and interest rates. It was my understanding that with the implementation of <unk> 17.

Speaker Change: That those two lines the fair value of the liabilities relative to the fair value of the assets would be fairly well national wouldn't see big changes. So maybe talk me through why it was made this quarter and could we see big swings to the negative if rates and spreads moved the other way.

Colin Simpson: Thanks, Mario. You addressed it to me, so I'll start, and I'm sure Scott's got quite a bit to say on this topic. So effectively, our sensitivities don't capture the spread environment, and what we saw during the quarter was a steeping of the spread curve, and that drove big gains. Obviously, if that reverses, then the opposite could happen, but we've done a lot of work to make sure that our interest rate exposure is really minimized through extensive hedging. But what you see here is really the spread impact. Scott?

Speaker Change: Yes, Thanks, Marion I mean, you addressed it to me so I'll start and I'm sure Scott so quite a bit to say on this topic. So effectively all sensitivities don't necessarily don't capture the spread environments and what we sold during the quarter was a steeping of the spread curve.

Scott Hartz: And that drove big gains obviously, if that reverses then the opposite could happen, but we've done a lot of work to make sure that our interest rate exposures has really minimized through extensive hedging.

Colin Simpson: And finally, moving to slide 20, which summarizes how we're tracking against our medium-term targets, including the new and updated targets we presented at our own best today. As you can see from our year-to-day results, we are showing momentum towards our new core ROE and expense efficiency targets, and are continuing to deliver on our remaining medium-term targets. We also generated 44%'s earnings from the Asia region, and increased our contribution from our highest potential businesses to 70%. Richard, Looking ahead, all of these factors reinforce my confidence in our ability to raise the bar on financial performance.

Scott Hartz: But what you see is really the spread impact Scott, yeah and to explain that a little bit more Mario. So if you think of our liabilities are very long and we can't get the asset portfolio long enough to match them. So we use derivatives to get the matching on the interest rate and an immunized yourselves against that but what that means is the.

Scott Hartz: Yeah, and to explain that a little bit more, Mario, so if you think of our liabilities, they're very long, and we can't get the asset portfolio long enough to match them. So we use derivatives to get the matching on the interest rate and immunize ourselves against that. But what that means is the derivatives do not have a spread component, whereas the liabilities and the assets have a spread component. So we have an overall spread risk, called spread duration.

Speaker Change: Do not have any spread component, whereas the liabilities and the asset type of spread components. So.

Unknown Executive: So we have an overall spread risk called spread duration. The spread duration on our assets is shorter than the spread duration on our liabilities. So overall, higher spreads decrease the liabilities more than they decrease the assets. And then the steepness matters a lot too because liabilities are pretty long, and where the mismatch is is that we don't have assets as long as our liabilities. So really, spreads at the long end versus the intermediate part of the curve where a lot of our assets are stacked up matters.

Speaker Change: So we have overall spread risk on spread duration, that's spread duration on our assets and shorter spread duration on our liabilities. So overall.

Scott Hartz: The spread duration on our assets is shorter than the spread duration on our liabilities. So, overall, higher spreads decrease the liabilities more than they decrease the assets. And then the steepness matters a lot too, because liabilities are pretty long. And where the mismatch is is that we don't have assets as long as our liabilities. So really, spreads at the long end versus the intermediate part of the curve where a lot of our assets are stacked up matters.

Roy Gori: This concludes our prepared remarks. Before we move to the Q&A session, I would like to remind each participant to adhere to a limit of two questions, including follow us and to re-cue if they have additional questions.

Scott Hartz: Your spreads.

Speaker Change: Decrease the liabilities more than they decrease the assets and then the steepness matters a lot too because liabilities are pretty long and where the mismatches as we don't have assets as long as our liabilities. So really spreads at the long end versus.

Operator: Operator, we will now open the call to questions. Thank you.

Operator: We will now take questions from the telephone lines. If you have a question, please press star one on your device, if you keep at, you may cancel your question at any time by pressing star two. Please press star one. At this time, if you have a question, there will be a brief pause on participant's register. Thank you for your patience.

Scott Hartz: Intermediate part of the curve, where a lot of our assets are stacked up matters. So bottomline why wider spreads creates positive here and the steepening of the spread curve creates a positive and that's really what happened in the second quarter, great and Scott and that's by the way I should say that's part of the reason we chose to go fair value through OCI.

Scott Hartz: So, bottom line, wider spreads create positive here, and a steepening of the spread curve creates a positive. And that's really what happened in the. And that's, by the way, I should say that's part of the reason we chose to go fair value through OCI. I mean, that's noise that won't really affect cash flows or anything till many, many years in the future. And so much will change between now and then. It really is an artifice of the PV of all of this. And so it's noise that really does not belong in the P&L, from my perspective.

Unknown Executive: So, bottom line, wider spreads create positive here, and a steepening of the spread curve creates a positive. And that's really what happened in the. And that's, by the way, I should say that's part of the reason we chose to go fair value through OCI. I mean, that's noise that won't really affect cash flows or anything till many, many years in the future. And so much will change between now and then. It really is an artifice of the PV of all of this. And so it's noise that really does not belong in the P&L, from my perspective.

Meny Grauman: Any first question is from Meny Grauman from Sposha Bank. Please go ahead. Hi, good morning. We talked about older returns in the past, but I wanted to revisit it in the context of what we saw this quarter, the alder charge wide in Q2, and we are seeing eight quarters in a row of alder charges. I am wondering when we look at that, should we be concerned with that and specifically the deterioration in the charge this quarter, calling you touch on it a little bit in terms of the composition. I am just wondering how do you view those fact patterns in terms of where the alder is going and over that period of basically two years?

Speaker Change: I mean, that's noise that you know that won't really affect cash flows or anything to many many years in the future and so much will change between now and then it really is an artifice of the PV of all of this and so it it's noise that really does not belong in the P&L from my perspective.

Mario Mendonca: Enjoy your retirement, and thank you for your tolerance. Well, thank you, Mario.

Speaker Change: Enjoy your retirement and thank you for tolerating over the years.

Scott Hartz: Well, thank you, Mario. And I will say, you know, I'll miss a lot about this place. And this exercise is something I'll miss.

Speaker Change: Well, Thank you Mario and I will say you know I'll Miss a lot about this place and this exercise is something I'll Miss you all keep us on our toes I feel very good about our investment portfolio and investment team and have enjoyed talking about it. So I've enjoyed I've enjoyed our conversations thank you.

Scott Hartz: You all keep us on our toes. I feel very good about our investment portfolio and investment team, and I enjoy talking about it. So I've enjoyed our conversations. Thank you.

Speaker Change: Yeah.

Scott Hartz: Sure, many heights. It has got hard.

Operator: Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Doug Young: Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Next question is from Doug Young from de Sal Bank capital markets. Please go ahead.

Scott Hartz: I will start by looking at the quarterly results for alder. I need to good news in the quarter was that the real state headwinds continued to diminish. As interest rates have stabilized here, we saw in the first quarter the underperformance versus long-term assumptions come down a bit. We had about a $200 million loss on our real estate portfolio in the second quarter that continued to decline down to less than 150 million. That is playing out as we expected. We would expect that to continue to improve in the out quarters.

Doug Young: Hi, good morning. Hopefully, these will be relatively short.

Doug Young: Hi, good morning, hopefully diesel relatively quick at the <unk>.

Doug Young: The Non-Attributable Expenses were up a little more than I expected sequentially. I think there was some reclassification

Speaker Change: Attributable expenses were up a little more than I had expected sequentially. I think there are some reclassification of expenses for maintenance expense since at this bucket. So I'm, just hoping to get a little bit of quantification of what that was and how to think about that line item and whether there's future kind of.

Doug Young: I think there is some reclassification of expenses from maintenance expenses into this bucket. So I'm just hoping to get a little bit of quantification of what that was and how to think about that line item and whether there are future kinds of reclassifications that potentially could become.

Doug Young: expenses remain an expense into this bucket. So I'm just

Speaker Change: Reclassifications that potentially could be coming.

Doug Young: I'm just hoping to get a little bit of quantification of what that was and how to think about that line item and whether there's future kind of reclassifications that potentially could Hey Doug, it's Colin here. You're right to point out an increase in NDA, Non-Directly Attributable Expenses. They're up 37%, 37 million quarter on quarter.

Colin Simpson: Hey Doug, it's Colin here. You're right to point out an increase in NDA, Non-Directly Attributable Expenses. They're up 37 percent, 37 million quarter on quarter. Now some of that's due to higher expenses in items that we classify as non-directly attributable, things like our build out of generative AI or some entity sustaining expenses. So you would expect a bit of an increase in that. The other part, as you've mentioned, was the reclassification. And what's going on here is that we completed our expense experience exercise, the first one we've done since IFRS 17.

Speaker Change: Hey, Doug it's it's Colin.

Doug: Right two points increase an NDA non directly attributable expenses, they were up 37% 37 million quarter on quarter now some of that is due to higher expenses and expense items that we classify as non directly attributable things like I'll build outs of generative AI or some entity sustaining expenses. So you would have.

Scott Hartz: The rest of the all the portfolio was less good. We have six different alder categories. In a normal quarter some will exceed their long-term expectations and some will underperform. This was a quarter where every category underperformed. For most of them it was idiosyncratic factors on a couple of investments that didn't perform well and none of those categories was a particularly large number but they do add up. They don't give me concern on future returns. I don't see a read through going forward.

Colin Simpson: Now some of that's due to higher expenses in items that we classify as non-directly attributable, things like our build-out of generative AI or some entity-sustaining expenses. So you would expect a bit of an increase in that. The other part, as you've mentioned, was a reclassification, and what's going on here is that we completed our expense experience exercise. This is the first one we've done since IFRS 17.

Speaker Change: Expect a bit of an increase and not the other part as you mentioned was the reclassification of what's going on here is that we completed all expense experienced exercise. This is the first one we've done since ive for 17, so we wouldn't really deep into our expense experience and this did involve a little bit of reclassification between maintenance and NDA.

Colin Simpson: So we went really deep into our expense experience, and this did involve a little bit of reclassification between maintenance and NDA. I would consider this quarter's NDA as a good run rate to use going forward. And I would remind everyone, you know, we really focus on total expenses and total efficiency ratio and are very committed to improving that efficiency ratio. Hey Doug, I might just add to Colin's comments that, as Colin mentioned, we go through a process to really assess and evaluate our non-directly attributable expenses and make sure that they're as accurate as possible. We also benchmark ourselves versus our peers. And we believe that we're actually well positioned on that front as well as quite conservative, which is where we want to be. Appreciate the call; thank you.

Scott Hartz: I would say the one category that did stand out where there was a pressure sort of across the board was in the private equity portfolio. Our private equity portfolio historically has been a very good performer over the last three, five, and ten years. It's been the best performing all the category and it's far exceeded its long-term expectations. Again, I think in the medium term going forward and long-term feel good about that portfolio but it was a bit of a rough quarter.

Speaker Change: I would consider this quarter's NDA as a good run rate to use going forward and I would remind everyone. We really focus on total expenses and total efficiency ratio and very committed to our two improving up to improving that efficiency ratio.

Colin Simpson: So we went really deep into our expense experience, and this did involve a little bit of reclassification between maintenance and NDA. I would consider this quarter's NDA as a good run rate to use going forward. And I would remind everyone, we really focus on total expenses and total efficiency ratio and are very committed to improving that efficiency ratio. Hey Doug, I might just add to Colin's comments that, as Colin mentioned, obviously, we go through a process to really assess and evaluate our non-directly attributable expenses and make sure that they're as accurate as possible. We also benchmark ourselves versus our peers. And we believe that we're actually well positioned on that front as well as quite conservative, which is where we want to be, and then maybe Steve.

Speaker Change: I might just add to Collins comments that whilst as Colin mentioned you know obviously, we go through a process to really assess and evaluate them on directly attributable expenses to make sure that they are as accurate as possible. We will set a benchmark ourselves versus our peers and we believe that actually we're well positioned on that front as well is quite conservative which is why we wanted to.

Scott Hartz: Although the private equity portfolio did have a slightly positive return it was well below the long-term expectation and it's a fairly sizable portfolio so it created the largest loss within the all the portfolio. There. Unlike real estate, where it's really long-term rates that matter, those are the discount rates to get into valuations for private equity, portfolio companies underlying those funds, finance themselves in floating rate debt. So short rates really matter for that portfolio.

Speaker Change: Hey.

Speaker Change: Perfect and then maybe Steve.

Steve: Can you refresh us on what you're seeing in the long-term care insurance book and, you know, just the negative P&L experience, offset by the experience in the CSM. This quarter, the CSM wasn't a full offset, so, you know, the impact was negative. I think the numbers are fairly small. But just hoping maybe you can flesh that out.

Steve: Can you refresh us on what Youre seeing in the long term care insurance book and just the negative P&L experience the offset by the experience and the CSM this quarter.

Steve: It wasn't a full offset so the impact was not negative I think the numbers are fairly small but.

Steve: And what impact did the reinsurance, you know, transaction, you know, have on these patterns, if any? And, you know, what cohort are you seeing the negative experience in the P&L versus what you're seeing in the CSM? Thank you. Sure, Doug.

Scott Hartz: And short rates have been up for a while and it has pressured the private equity returns, but there had been an expectation last year, I think that the Fed would lower rates this year quite a bit. And as you know, valuations will reflect sort of the outlook for short rates. And I think this year, you know, the economy was really strong, those expectations got pushed out quite a bit and that weighed on valuations.

Speaker Change: But just hoping maybe you can close that added and what impacted the reinsurance transaction you'll have on these patterns. If anything yeah, why cologuard or have you seen the negative experience in the P&L versus like machine and the CSM, just hoping to get some color on those items.

Steve: Thanks. Yes. And you're correct. Q2 was a modest negative, all in combined P&L and CSM, which is, you know, really how we look at the overall experience. And you notice as well, that this is the first time in nine quarters that we've had any negative in LPC in the experience. So certainly not the beginning of the trend.

Speaker Change: Sure Doug Thanks, Yes, and Youre correct Q2 was a modest negative all in combined P&L in CSM, which is really how we look at the overall experience and you noticed as well.

Scott Hartz: So, you know, looking forward for the private equity portfolio, I think as short rates come down, and I think we're now in a position where we're expecting them once again to come down pretty sharply going forward, that will be positive for, you know, as you know, I think these court, these returns on private equity are lagged at quarter. So our second quarter results reflect first quarter valuations. The second quarter, I would say, which will get reflected in our third quarter results, you know, not much had changed in the second quarter. So that probably will continue to weigh a bit on the third quarter results, but then I expect as we see the cuts coming that, you know, private equity results will resume their good performance going forward.

Speaker Change: That is the first time in nine quarters that we've had at <unk>.

Speaker Change: Any negative in LTC any any experience so certainly not the beginning of a trend, but what we have seen a continuation of.

Speaker Change: Of trends is that are there.

Steve: But what we have seen a continuation of trends is that for those on claim, the cost of providing care is higher than the valuation assumptions, and that's what's going through the P&L. But that has been offset more than offset over time by less people going on claims. So favorable incidents, and we believe these two are, are related in terms of some of the dynamics. In the quarter, specifically, you know, we had been seeing claim termination gains.

Speaker Change: For those on claim the cost of providing care is higher than the valuation assumptions and that's what's going through the P&L, but that has been offset more than offset over time by less people going on claim so favorable incidents and we believe these two are are related in terms of some of the dynamics in the quarter specifically.

Speaker Change: We had been seeing I claim termination gains, but Q2 was we didn't see those those gains coming through there were some losses on claim termination, but again that those can vary quarter to quarter. So those are the dynamics of what we've seen we've seen you know overall mortality levels, including in long term care trend back.

Trevor Kreel: And Trevor, is there anything you'd like to add to that? Yeah. Thanks, Scott. Thanks, man. Thanks for the question. So just a couple of things that I would add to what Scott had said, you know, given the mock to market nature of older, I think the recovery is obviously not going to proceed, you know, in a straight line, we will have variability that will be positive as positives and negatives, you know, quarter to quarter.

Steve: But, you know, Q2 wasn't, we didn't see those gains coming through; there were some losses on claim termination. But again, those can vary quarter to quarter. So those are the dynamics of what we've seen. We've seen overall mortality levels, including in long-term care, trend back to normal levels, but we do see this continued higher cost of care offset by significantly lower. Appreciate the call. Thank you.

Speaker Change: To normal levels, but we do see is continued higher cost of care offset by significantly lower incidents.

Trevor Kreel: And then I think the second thing I would, I would say, just to remind you something that we've said in the past, which is that the higher discount rates that all now priced into our real estate and other real estate real asset valuations, I think give us confidence, more confidence in achieving our expected returns over the medium to long term. Thanks for that detail.

Speaker Change: I appreciate the color. Thank you.

Speaker Change: Thank you.

Lemar Persaud: The next question is from Lemar Persaud from Cormark Securities. Please go ahead.

Prasad: The next question is some of them are Prasad from <unk> Securities. Please go ahead.

Lemar Persaud: Yeah, just a quick one here, maybe for Scott or Trevor. Can you guys quantify all the charges related to PE? I mean, you gave the real estate at around $150,000.

Unknown Executive: Just a quick one here, maybe for Scott or Trevor. Can you guys quantify all the charges related to PE? I mean, you gave the real estate at around $150 million, and then there's the PE piece, and then some other idiosyncratic issues. Just wondering if you could give that component.

Prasad: Yeah, hopefully just a quick one here maybe for Scott or Trevor.

Prasad: Can you guys quantify the ALDA charge related to P. I mean, he gave the real estate at around <unk>.

Scott Hartz: Just as a follow-up in terms of the private equity portfolio, have you made any or you contemplating making any more fundamental changes to the private equity portfolio, or is it just really a function of just, you know, letting maybe rate expectations filter through and just waiting, or is there something more fundamental in the portfolio that's not working as well as you like. It requires any sort of adjustments to that portfolio. Now we do expect this as rates to come down, short rates to come down for the portfolio to perform very well.

Scott Hartz: Around 150 million. And then there's the PEP, some other idiosyncratic issues. Just wondering if you could give that component, the PEP specifically. Sure, Lemar. It's Scott.

Speaker Change: $50 million and then there is the are the P. P summarized some of the other idiosyncratic issues I'm. Just wondering if you could give that component, but can you take the piece specifically.

Scott Hartz: The real estate loss was a bit less than $150 million, and the P.E. loss was a bit more than $150 million.

Scott Hartz: Sure Mara its Scott.

Speaker Change: The the real estate will ask was a bit less than $150 million and the <unk> was a bit more than $150 million.

Scott Hartz: Okay and then.

Speaker Change: How much do we need to be short rates come down to provide relief on that portfolio. Like is there is it like are we talking like 50 basis, So Q3 might be a tough quarter as you kind of alluded to but how much do we need to see rates come down in the U S to provide relief on that portfolio.

Scott Hartz: Q3 might be a tough quarter, as you alluded to, but how much do we need to see rates come down in the U.S. to provide relief on that portfolio? Yeah, I think any amount of decrease will be helpful. And I don't think we need, you know, short rates to get down close to zero the way they were before to start meeting our long-term assumptions. But, you know, it's difficult to quantify that exactly.

Scott Hartz: One thing I would say is because it has been such a strong performer over the last five years, it has grown to a fairly large size. So we've been investing, and it takes a while to get this money invested. You make a commitment, it gets invested over five years. A number of years ago, we really reduced our commitments there. So I think the portfolio as a percent of our all that will probably decline going forward. Thank you.

John Aiken: The next question is from John Aiken from Jeffries. Please go ahead.

Unknown Executive: Unleash the Leap on Your Portfolio!

Unknown Executive: Yeah, I think any amount of decrease will be helpful, and I don't think we need short rates to get down close to zero the way they were before to start meeting our long-term assumptions. But You know, it's it's difficult to quantify that exactly. I think if, you know, if we get the, the market's now expecting 7500 basis points of drop in short rates by the end of the year. If we get something like that, that'll be, you know, very positive for that portfolio.

Speaker Change: Yeah, I think any amount of decrease will be helpful and I don't think we need short rates to get down close to zero. The way they were before to start meeting our long term assumptions, but.

Scott Hartz: I think if, you know, if we get the markets are now expecting 7500 basis points of drop in short rates by the end of the year. If we get something like that, that'll be, you know, very positive for that portfolio.

Speaker Change: It's it's difficult to quantify that exactly I think if if we get the.

Lemar Persaud: Okay, thanks. That's it for me. Thank you. And the next question is from Nigel D'Souza from Veritas Investment Research. Please go ahead.

Speaker Change: You know markets now expecting 75 to 100 basis points of drop in short rates by the end of the year, if we get something like that that'll be very positive for that portfolio.

Roy Gori: Good morning. Right. Not not necessarily on the quarter, but with DBS announcing the CEO succession. I have to ask the painfully obvious stupid question that does this have any impact on your expectations for the relationship between the two of you. And then more importantly, does manual life have a relationship with the incoming scene?

Unknown Executive: Okay, thanks. That's it for me.

Speaker Change: Okay. Thanks, that's it for me.

Speaker Change: Thank you.

Speaker Change: And the next question is from Nigel D'souza from Larry Thompson.

Nigel D'Souza: Search. Please go ahead.

Nigel D'Souza: Thank you. Good morning. I wanted to circle back on everything.

Nigel D'Souza: Thank you good morning, I wanted to circle back on Alder.

Nigel D'Souza: Gupta said that the weaker than expected performance in...

Roy Gori: Thank you. John, thank you for the question. We don't see this as having an impact on our relationship. We've got a deep partnership with the US one that we're very proud of, and one that we showcase that are invested a recently that you are at. Clearly, we're obviously very proud of the partnership that we have with the senior leadership team. And that extends beyond Piyush. In fact, Sushen was a key part of the leadership team that actually signed our agreement with DBS and manualized back in 2017.

Nigel D'Souza: So that the weaker than expected performance in our private equity wondering how that ties into the recent reinsurance transactions I believe the intention is to.

Nigel D'Souza: Back to the point about performance in private equity, I'm wondering how that ties into the recent reinsurance transactions. I believe the intention is to have dispositions in all the specifically private equity assets. Does this make it more difficult to transact? Or is there any change in, I guess, your intentions or timing?

Speaker Change: Dispositions in ALDA, specifically private equity assets does this make it more difficult to transact or is there any change in.

Speaker Change: I guess your intentions or timing of this all the dispositions.

Scott Hartz: Sure. Thanks, Nigel. You know, I'll start by saying for the long-term care transaction we closed in the first quarter, we've pretty much completed the ALDA dispositions. We were intended to sell $1.7 billion of ALDA, and we sold $1.6 billion. $500 million of that was private equity. And in total, we achieved a higher value than our last value on our books, so we feel very good about that, and that's pretty much done. For the Canadian reinsurance transaction, we closed it in the second quarter.

Speaker Change: Sure. Thanks Nigel.

Speaker Change #102: By saying for the long term care transaction, we closed in the first quarter, we've pretty much completed the ALDA dispositions. We were intended to sell $1 7 billion of all that and we've sold $1 $6.500 billion of that was private equity and in total we achieved.

Roy Gori: And I personally spend a lot of time with her at that time locking in that deal and that transaction and agreeing the way that we would move forward. So we're obviously happy that for Piyush and delighted that he's happy to announce his retirement, but we're equally proud of the relationship that we have with DBS and that extends beyond Piyush to Sushen and the broader team there. We're at DBS.

Roy Gori: Fantastic. Thanks. All right. I'll overkeep.

Speaker Change: You know a higher value than than are our last value on our books. So we felt feel very good about that and that's pretty much done for the Canadian reinsurance transaction, we closed in the second quarter.

Operator: Thank you.

Paul Holden: The next question is from Paul Holden from CIDC. Please go ahead. Hi, thanks. Good morning. First question was related to the GMT-Meaning Transparent that it was told, absorbed and corporate, not the business segments. But I guess my question is of the 46 million in GMT this quarter, how much would have been allocated to Asia if legislation had been enacted there? And the second part of the question is, is there any visibility on timeline on when it may get enacted in key countries in Asia?

Speaker Change: We sold the roughly 600 million of of public equity that was backing that block in the second quarter, and we have $600 million in order to sell in.

Scott Hartz: We sold the roughly $600 million of public equity that was backing that block in the second quarter, and we have $600 million of ALDA to sell in Canada. We expect to complete that during the balance of the year. Probably not much of that will come out of private equity. So no, bottom line, I don't think the underperformance we've seen recently in public equity will affect Nigel and Roy here. I might just add some strategic thoughts as it relates to Alder, because there have been some really good questions about Alder, and rightfully so. I would say a couple of things.

Speaker Change: In Canada, we expect to complete that during the balance of the year, probably not much of that will come out of private equity. So no bottom line I don't think the.

Nigel: The underperformance, we've seen recently in public equity will affect any of that thought Nigel will here I might just add some strategic thoughts as it relates to all the because there's been some really good questions on older and rightfully. So I would say a couple of things first is the oldest being a really good asset class for us it's great for our business because we've got long <unk>.

Roy Gori: Nigel, Roy here. I might just add some strategic thoughts as it relates to Alder, because there have been some really good questions about Alder, and rightfully so. I would say a couple of things. First, Alder has been a really good asset class for us. It's great for our business because we've got long-duration liabilities, and to match that with great long-term assets from a tenure perspective, but also with an asset class that's delivered superior returns with lower volatility and equities is, we believe, a source of strength.

Roy Gori: The first is that Alder's been a really good asset class for us. It's great for our business because we've got long-duration liabilities, and to match that with great long-term assets from a tenure perspective, but also with an asset class that's delivered superior returns with lower volatility and equities is, we believe, a source of strength. And it's something that we've had a lot of experience in, in fact, more than 20 years, and we can now see on the retail and on the institutional side a lot more interest in this asset class, and we're well positioned to even provide value there. We are going to see some volatility from time to time. What we've seen, though, is in historic times when we've underperformed our long-term assumptions, we've typically seen periods of outperformance that follow.

Paul Holden: I guess I'd be Hong Kong and maybe Singapore? Hey, John, it's Colin. Thanks for the question. So of the $46 million, $30 million is allocated to the Asia segment. So it's roughly two thirds, Asia segment, one third, G1. We do believe Hong Kong will adopt the two tax rules in 2025. So we expect that tax charge to be passed through to the segments next year, reporting, but until that happens, we'll keep it a corporate.

Speaker Change #100: <unk> liabilities and to match that with great long term assets from a tenure perspective, but also with an asset classes delivered superior returns with lower volatility than equities is we believe its social strengthen it's something that we've got a lot of experience in fact more than 20 years and we can now see on the retail and on the institutional side a lot more interested in this asset.

Roy Gori: And it's something that we've had a lot of experience in, in fact, more than 20 years, and we can now see on the retail and on the institutional side a lot more interest in this asset class, and we're well positioned to even provide value there. We are going to see some volatility from time to time. What we've seen, though, is in historic times when we've underperformed our long-term assumptions, we've typically seen periods of outperformance that follow.

Speaker Change: Clos and we're well positioned to even provide value there.

Paul Holden: So wait and see on that basis, but it's very much within our expectations. Paul, I might just add that Asia's contribution, the end of the contribution of earnings as that Q2 was 44%, and that includes both insurance and wealth. When we pro-rata the impact across the geographies and a portion of that GMT that's attributed to Asia to Asia, it takes our contribution from 44% down to only 43%. So we don't see this as a significant and material adjustment to our earnings contribution by segment.

Speaker Change: We are going to see some volatility from time to time.

Speaker Change #100: What we've seen though is in historic times, where we've underperformed our long term assumptions.

Roy Gori: In 2020, you'll remember that we had a $1.4 billion negative versus our long-term assumption, and the following year, in 2021, we saw a $1.6 billion outperformance. So, yeah, we are seeing some volatility there, and that's a function of the current market environment, and certainly rates are a factor there, but much more so is the uncertainty from a markets perspective. But we still have a lot of conviction as it relates to this asset class and believe it's a source of strength for our business. Great, that's helpful.

Unknown Executive: In 2020, you'll remember that we had a $1.4 billion negative versus our long-term assumption, and the following year, in 2021, we saw a $1.6 billion outperformance. So, yeah, we are seeing some volatility there, and that's a function of the current market environment, and certainly rates are a factor there, but much more so is the uncertainty from a markets perspective. But we still have a lot of conviction as it relates to this asset class and believe it's a source of strength for our business. Great, that's helpful.

Speaker Change #100: <unk> seen periods of outperformance that follow in 2020, you'll remember that we had a $1 4 billion dollar negative versus that long term assumption in the following year in 'twenty. One we saw a $1 6 billion outperformance. So yeah. We are seeing some volatility there and that's a function of the current market environment and suddenly rights as a fact.

Speaker Change: There but.

Speaker Change: But much more so is the uncertainty from a market perspective, but we still have a lot of conviction as it relates to this asset class and believe it's a source of strength for our business.

Colin Simpson: Okay, thanks for that. And then second question also related to Asia. If I look at insurance experience, I'm going to be transparent on this, but if I look at total experience, including both P&L and CSM impacts, there was no year-over-year improvement. In fact, there's almost exactly the same number, I think. But how you've allocated it between P&L and CSM has changed. So maybe you can walk us through sort of what's happening in experience in Asia.

Unknown Executive: And then on the NCIB, I believe that it's upsized now from $2 billion to $3 billion in terms of the capital that was freed up from your transactions. I was wondering if you could expand on what the impact of the LICAT here is from upsizing that NCIB and is also going to result in a reduction in surplus assets or earnings on surplus. Yeah, let me start on that. And I'll ask Colin to chime in if he wants.

Nigel D'Souza: And then on the NCIB, I believe that it has now gone upsized from $2 billion to $3 billion in terms of the capital that was freed up from your transactions. I was wondering if you could expand on what the impact of the LICAT here from upsizing that NCIB is also going to result in a reduction in surplus assets or earnings on surplus, run rate, and wondering if you know the math and arithmetic on those deals if it's still net accretive to core EPS. Yeah, let me start on that. And I'll ask Colin to chime in, if you would like. You're right; we are upsizing our NCIB. And it's a function of a few things.

Speaker Change #117: Great. That's helpful and then on the NCI B I believe that's upsized from $2 billion.

Speaker Change #100: This $3 billion in terms of the capital out of Street up from your transactions I was wondering if you could expand on what is there and in fact of the light catch here from upsizing that in CIB in is also going up.

Speaker Change #103: And a reduction in surplus assets the earnings on surplus.

Speaker Change #117: Run rate I'm wondering if you know the math in Arrhythmic the arithmetic on that those deals if it still.

Colin Simpson: If there has been any sort of improvement in those unfavorable experience items from last year, and why the allocation between P&L and CSM has changed this year, thank you. Thank you. Sure, thanks. It's Steve here. I'll take that. So the drivers of the experience in Asia were the quarter and then relative to prior year. In the quarter, we saw some some claims gains in both Vietnam and in Japan. And that's what you're seeing in the in the PNL.

Speaker Change #100: Net accretive to core EPS.

Unknown Executive: You're right, we are upsizing our NCIB, and it's a function of a few things. The first is that we're in a very strong capital position, as highlighted by Colin earlier; we have $24 billion of capital in excess of our supervisory minimum, and $10 billion in excess of our upper operating range. So we feel really good about our capital position. I'll also note that our leverage ratio is now lower than 25% on a pro forma basis, actually 24%.

Speaker Change #102: Yeah, let me start on that and I'll ask Colin to chime in if he if he would like.

Roy Gori: The first is that we're in a very strong capital position, as highlighted by Colin earlier; we have $24 billion of capital in excess of our supervisory minimum, and $10 billion in excess of our upper operating range. So we feel really good about our capital position. I'll also note that our leverage ratio is now lower than 25% on a pro forma basis, actually 24%. At Investor Day, we articulated some pretty ambitious plans for the franchise to deliver an 18 plus percent ROE, 10 to 12% according to share growth, and strong cumulative remittances of about $22 billion.

Speaker Change #102: Youre right, we are upsizing, our NCI D and it's a function of a few things.

Colin Simpson: First is that we're in a very strong capital position is highlighted by calling earlier, we have $24 billion of capital in excess of that supervisory minimum 10 billion in excess of our upper operating range. So we feel really good about our capital position I'll also note that our leverage ratio is now lower than 25% on a pro forma basis actually 24%.

Colin Simpson: And then the what's going through the CSM primarily is a continuation of some adverse persistency results. Primarily in Vietnam, to a smaller degree, some lapse impact in Singapore in Vietnam. This resulted from some of the broader based industry macro challenges, we have, we saw modest improvement in Q2 on the Vietnam persistency. And we do have clear line of sight to improvement over the second half of the year on that front as, you know, as things have stabilized and begin to move in a positive direction.

Unknown Executive: At Investor Day, we articulated some pretty ambitious plans for the franchise to deliver an 18 plus percent ROE, 10 to 12% corings for share growth, and strong cumulative remittances of about $22 billion. So while we previously had articulated that we would at least deploy the capital that we freed up from the transactions to buybacks, now we believe, and are confident, and have conviction that we will actually do so.

Speaker Change #100: At Investor Day, we articulated some pretty ambitious plans for the franchise to deliver a 19 plus percent ROE a 10% to 12% core earnings per share growth and strong cumulative remittances of about $22 billion.

Roy Gori: So while we previously articulated that we would at least deploy the capital that we freed up from the transactions to buybacks, now we believe and are confident and have conviction that we will actually deploy the full amount of our buyback, which will be in excess of $3 billion. It should not impact our like-hat ratio because as we free up capital from the sale and disposal of older assets, that will translate into the capital that we're deploying.

Speaker Change #100: So while we previously had articulated that we would at least.

Speaker Change #100: Deploy the capital that we've freed up from the transactions to buybacks now we believe and are confident and have conviction that we will actually.

Speaker Change #100: <unk>.

Speaker Change #112: Deploy the full amount of our buyback, which will be in excess of $3 billion. It should not impact ally cat ratio because as we free up capital from the sale and disposal of Aldar that will translate into the capital that we're deploying but calling you may want to chime in with some <unk>.

Colin Simpson: There's a we feel pretty good about the outlook. And so if I remember correctly, was that persistency issue in Vietnam, didn't that flow through PNL in the year ago period? No, it would have been through CSM. Okay. Thank you for that.

Colin Simpson: Thank you.

Roy Gori: But Colin, you may want to chime in with some perspectives as well. Yeah, Nigel, the only thing to add is that we're currently earning a blended rate of 2.9% on our surplus. So when we're using our surplus to buy back stock, you can see the sort of value enhancement from this type of capital allocation activity. Okay, that's it for me.

Nigel: Yeah, Nigel the only thing to add is that we're currently earning a blended rate of two 9% on all surplus so it wouldn't be using all surplus to buyback stock you can see the sort of value enhancement from this type of capital allocation activity.

Gabriel Dechaine: The next question is from Gabriel Bashain from National Bank Financial. Please go ahead. I am good morning. Nothing too complicated here in the wealth flows. I apologize if you already mentioned it in your opening remarks, but I saw Canada had big outflows in the retail business. Is that tied to the higher capital gains and inclusion rates that became effective at the end of the quarter? People getting that out of their funds before before that change.

Speaker Change #112: Okay. That's it for me thank you.

Speaker Change #108: Thank you.

Colin Simpson: The next question is from Mario Mendonca from TD Securities. Please go ahead.

Speaker Change #100: Next question is from Aon Mendonca from TD Securities. Please go ahead.

Unknown Executive: I'll be quick. Have you seen any impact in Japan from the recent volatility? I know the market's sort of stabilized since, but that was quite a shock to the system, and rates are changing there. Is there any change in behavior that you would point us to? Probably for Phil.

Mario Mendonca: Have you seen any impact in Japan from the recent volatility? I know the market's sort of stabilized since, but that was quite a shock to the system, and rates are changing there. Is there any change in behavior that you would point us to? Thanks, Mario.

Aon Mendonca: I'll be quick.

Aon Mendonca: Have you seen any impact in Japan from the recent volatility I know the market so to stabilize but that was quite a shock to the system and rates are changing there is there any change in behavior that you would point us to probably fulfill.

Gabriel Dechaine: Yeah, thanks, Gabriel. It's it's tolerance here. Yeah, that wasn't impact for the industry. We did see elevated redemptions coming through the Canada retail business ahead of that capital gains inclusion rate. It was unique to us. We have since seen those redemption rates moderate. So we would expect that to kind of moderate go forward. And then just looking at the Canada region, there was also a large case redemption in there that is giving results for the quarter.

Mario Mendonca: Thanks, Mario, for the question. The simple answer is no.

Phil: It's very early days, but what I do expect is the very strong sales growth that we've seen in recent quarters in Japan and, notably, in the second quarter. I do expect that to moderate in future quarters as macro conditions normalize. It has been boosted by current, I say current, but foreign exchange rate levels in the second quarter as well as equity market conditions. But I think it's really important to highlight from a macro perspective that the movements we're currently seeing in the macro environment in Japan don't really impact us materially from a balance sheet perspective.

Speaker Change #102: Thanks, Mario for the question. So simple answer is no. It's very early days, what I do expect as you know.

Speaker Change #108: The very strong sales growth that we've seen in recent quarters in Japan, and notably in the second quarter I do expect that to moderate in future quarters as macro conditions normalize. It has been boosted by current Fargo I say current but foreign exchange rate levels in the second quarter as well as equity market conditions.

Gabriel Dechaine: That was remaining redemption from a large climb announced in Q1, but that was quite material. It was 1.8 billion for the quarter. So when you actually factor those two and we're quite optimistic. The other thing I would say just in terms of Canada specifically is we're seen a lot of advisor new advisor interest in our wealth platform. We made an investment earlier this year and the lifeline for rises that are interested in joining in the second half of the year is quite strong.

Paul Lorentz: So we're quite optimistic as we look forward for the Canadian market. Okay, great. Thanks Paul.

Speaker Change #102: But I think it's really important to highlight from a macro perspective. The movements. We are currently seeing in the macro environment in Japan don't really impact us materially from a balance sheet perspective, we're well matched from an <unk> point of view and naturally we it's something we manage very casually more broadly on the topic of Japan I do.

Phil: We're well-matched from an ALM point of view, and naturally, it's something we manage very carefully. More broadly, on the topic of Japan, I do remain optimistic. You know, the environment is favorable in terms of government policy, encouraging customers to provide for their own retirement needs and long-term saving needs. So I think this is something that will sustain growth, albeit at more normal levels in the years to come.

Speaker Change #102: Main optimistic.

Speaker Change #102: The environment is favorable in terms of our.

Gabriel Dechaine: Question on the tax rate guidance. So the 17 to 23%. That's very wide range. So, you know, wherever you end up on that spectrum could have a pretty meaningful impact on the quarter. I mean, I can come up with my own answers here through how you end up at the low end or high end, you know, more growth in Canada and you as versus Asia. I mean, is there anything else that could cause that to swing around a lot?

Speaker Change #102: Government policy encouraging customers to provide for their own retirement needs and long term saving needs. So I think this is something that will sustain growth, albeit at more normal levels in the quarters to come.

Speaker Change #102: Okay.

Speaker Change #104: Thank you.

Unknown Executive: There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Ko.

Speaker Change #104: There are no further questions registered at this time I'd like to turn the meeting back over to Mr. Cola.

Hung Ko: Thank you, operator. We'll be available after the call if there are any follow-up questions. Have a good day, everyone.

Operator: Thank you, operator. We'll be available after the call if there are any follow-up questions.

Mr. Cola: Thank you operator will be available after the call. If there are any follow up questions have a good day everyone.

Gabriel Dechaine: And I guess if Asia is going to continue to grow it, maybe not the rates we saw this quarter, but higher than anywhere else. Should we be biased toward the low end as we forecast? Hey, Gabe, it's common again. I think you've nailed it really. As Asia becomes a bigger proportion of our earnings, we would see some of the lower tax jurisdictions contribute to a lower overall tax rate. And as you would, and as has been noted already, we are at the low end of the range actually we're below the 17 to 23% of this quarter, but that's we're up 2% from the 14% we reported last quarter.

Gabriel Dechaine: So we are staying close to the low end and we expect to continue. That way, but as you, as you noted, if Canada and the US go earnings more, you would expect to see that rates go up. Any technical, I mean, I don't know if there's any other factors that play in the other geography in the amount of they really aren't okay. Okay. No, it's quite straightforward.

Speaker Change #115: The conference has now ended please disconnect your lines at this time and we thank you for your participation.

Gabriel Dechaine: Okay, great. Enjoy the rest of your summer. You too. Thank you.

Tom Mackinnon: The next question is from Tom McKinnon from BMO Capital Markets. Please go ahead. Yeah, thanks. Good morning. Question with respect to Asia looking at APE for Asia other continues to be kind of sluggish down 5% and I think you're to date maybe up just modestly. One thing I did note, though, is the number of agents you have in Asia other kind of running flat for several quarters in a row. And then up 9% quarter over quarter in the second quarter of this year.

Tom Mackinnon: So is what's happening there? Are you beefing up the sales force here in Asia other to try to help rebound some of these, some of the Asia other APE? How should we be thinking about those sales going forward? And how should we be thinking about them in light of this increase in the number of agents?

Colin Simpson: Great. Thank you for the questions. So on this is still so I'll start actually by highlighting that it's been a really strong quarter for our Asia business core earnings are up 40%. We've seen growth in NBC of 19% and that comes from a mix of both volume growth with 7% growth in APE sales. And margin enhancements across multiple markets. Now Tom picked up in your question on the modest decline in APE sales in our Asia other segment.

Hudson: This conference is no longer being recorded so it's gonna say Hudson it lose all Hershey's Te.

Colin Simpson: And it's Colin touched on this briefly in his opening remarks. But what's happening there is that we've seen strong growth across multiple markets in other emerging, the other emerging Asia sub region. But what's happened is that we've seen a moderation of sales growth in China and recall the history here is in the second quarter of 2023. We've seen a tripling of sales in mainland China as the borders with the rest of the world we opened and consumer sentiment was very strong.

Colin Simpson: This year we've seen a site pull back in that 20% decline in sales in China and that's had the effect of moderating the Asia other sales. But I do remain confident in the prospects for our other Asia markets individually and collectively. You also touched Tom on our agent numbers and we have seen an improvement in increase in agent numbers, particularly from our emerging markets during the second quarter. But I do want to highlight our focus is not really on the number of agents.

Colin Simpson: It's on the quality and the productivity of agents, right? I won't dwell too much on sort of the 9% quarter on quarter increase that you referenced. Our focus is really on driving productivity of agents driving value for both customers and manual life. And when I look at the results in the second quarter, I believe it supports the messages that we delivered at investor day with high quality sustainable growth. 19% improvement in your business value. And when I think about the future that the quarters ahead, I also remain confident about the prospects we've seen very strong performance across multiple markets in Asia and the second quarter.

Tom Mackinnon: Okay, thanks.

Tom Mackinnon: And then a quick follow up here with respect to the lapse experience in the U.S, continuing to be a negative here.

Steve Finch: How should we be thinking about that going forward, especially as we move into your third quarter and reserve review with respect to that aspect? Yeah, thanks, Tom, it's Steve. I'll take that one. So as you noted, we did see a continuation of lapse losses in the U.S. That's been, you know, since the pandemic, as I've noted before, we saw a drop in lapse rates across many product lines in Canada. Those lapse rates have turned it back to pre-pandemic levels, but it's been a much slower process in the U.S. We've seen some trending back, but not on all products and not all the way.

Steve Finch: I've also commented before, you know, with respect to how you think about the Q3 Assumption Review, which I'll note, when we transitioned to IFRS 17, last year, we stopped providing detailed guidance at Q2, so you'll get the full disclosure at Q3. But in terms of thinking about how we're looking at this, you know, we're very comfortable with the ultimate lapse rates. Those are very low, and that's not what's causing the issues here.

Steve Finch: It's more the intermediate durations on protection products and some higher lapse rates in early durations from the economic environment. You know, we'll take all the data into account as we review the lapse rates, but what I can say is, you know, on the overall review, you can expect, as usual, some pluses and minuses. So that's how I think you should be thinking about that right now.

Merrill Mandolko: Okay, thank you. Thank you.

Steve Finch: The next question is some Merrill Mandolk from TV Securities. Please go ahead. Just one quick clarification on that last question from Tom. It's always, it's very unclear for me on what assumptions go through earnings and what go through the CSM. Would an update to intermediate lapse assumptions in the US be an earnings issue or CSM issue? Thanks, Merrill. So for specifically on US life, those lapses, they would go through primarily CSM.

Steve Finch: Unless CSM were depleted, and then it would go through PNL. And there is one nuance in terms of the discount rates. You know, there's a little bit that would go through OCI based on what interest rates were when we lock them in at time of transition versus current interest rates. So it's a little bit complicated, but CSM if depleted through PNL. The other question is the CSM then depleted. At this point, we, on some products in the US, as you can see in the quarter in US, we've got some life lapse losses going through PNL.

Steve Finch: So some cohorts have been depleted, but not all of the cohorts.

Colin Simpson: And the second question, this might be for column code to page 29 here presentations with deep into your appendix.

Aimee DeCamillo: And I just appreciate it. [inaudible]000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,[inaudible]000,000,000,000,000,000,000,000[inaudible] DeCamillo.

Colin Simpson: Hey Doug, it's Colin here. You right to point out increase in NDA and non-Direct retrieval expenses. They're up 37%, 37 million, quarter on quarter. Not some of that's due to higher expenses in items that we classify as non-direct retrieval, things like a build out of generative AI or some entities sustaining expenses. So you would expect a bit of an increase in that. The other part, as you mentioned, was a reclassification. And what's going on here is that we completed our expense experience exercise.

Colin Simpson: This is the first one we've done since I for a 17. So we were really deep into our expense experience. And this did involve a little bit of reclassification between maintenance and NDA. I would consider this course as NDA as a good run rate to use going forward. And I would remind everyone, you know, we really focus on total expenses and total efficiency ratio and very committed to improving that efficiency ratio.

Colin Simpson: Hey Doug, I might just add to Colin's comments that whilst as Colin mentioned, you know, obviously we go through a process to really assess and evaluate them on directly attributable expenses and make sure that they're as accurate as possible. We'll set benchmark ourselves versus our peers. And we believe that actually we're well positioned on that front as well as quite conservative, which is where we want to be.

Steve Finch: And then maybe Steve, I can refresh us and what you're seeing in the long-term care insurance book. And you know, just the negative P&L experience, the offset by the experience in the CSM. This quarter, you know, the CSM wasn't a full offset. So, you know, the impact was negative. I think the numbers are fairly small. But just hoping for me to be can plus that out. And what impacted the reinsurance, you know, transaction, you know, have on these patterns. If any, you know, what co-hard are you seeing the negative experience in the P&L versus what you're seeing in the CSM? Just hoping to get some color on one side. Thanks.

Steve Finch: Sure, Doug. Thanks. Yes. And your correct Q2 was a modest negative all-in combined P&L and CSM, which is, you know, really how we look at the overall experience. And you noticed as well, that is the first time in nine quarters that we've had any negative in LTC in the experience. So, certainly not the beginning of the trend. But what we have seen a continuation of trends is that for those on-plane, the cost of providing care is higher than the valuation assumptions.

Steve Finch: And that's what's going through the P&L. But that has been more than offset over time by less people going on-plane. So favorable incidents. And we believe these two are related in terms of some of the dynamics. In the quarter, specifically, you know, we had been seeing claim termination gains. But, you know, Q2 was, we didn't see those gains coming through. There were some losses on claim termination. But again, those can vary quarter to quarter.

Steve Finch: So those are the dynamics of what we've seen. We've seen, you know, overall mortality levels, including in long-term care trend back to normal levels. But we do see this continued higher cost of care offset by significantly lower incidents.

Merrill Mandolko: Appreciate the call. Thanks. Thank you.

Lemar Persaud: The next question is from Lemar Persaud from Quarmark Securities. Please go ahead. Yeah, we just a quick one here, maybe for Scott or Trevor. Can you guys quantify the all they charge related to PE? I mean, he gave the real estate at around 150 million, and then there's the PEP some other idiosyncratic issues. Just wondering if you could give that component the PEP piece. The real estate was a bit less than 150 million, and the PEP was a bit more than 150 million.

Lemar Persaud: Okay, and then how much do we need to see short rates come down to provide relief on that portfolio? Like, is it like, are we talking like 50 basis? So Q3 might be a top quarter as you, you kind of alluded to, but how much do we need to do that? How much do we need to see rates come down in the US to provide relief on that portfolio? Yeah, I think any amount of decrease will be helpful.

Lemar Persaud: And I don't think we need, you know, short rates to get down close to zero the way they were before to start meeting our long term assumptions, but, you know, it's difficult to quantify that exactly. I think if, you know, if we get the, you know, markets now expecting 75, 100 basis points of drop in short rates by the end of the year, if we get something like that, that'll be, you know, very positive for that portfolio. Okay, thanks. That's it for me.

Scott Hartz: Thank you.

Nigel DeShazer: And the next question is from Nigel, the shoes are from very thousand investment research. Please go ahead. Thank you.

Scott Hartz: Good morning. I wanted to circle back on all the, that the weaker than expected performance in private equity, wondering how that ties into the recent reinsurance transactions. I believe the intention is to have this position in all the specifically private equity assets. Does this make it more difficult to transact or is there any change in I guess your intentions or timing of those all the decisions? Sure. Thanks, Nigel. You know, start by saying for the long term care transaction, we closed in the first quarter.

Scott Hartz: We've pretty much completed the all the dispositions. We were intended to sell 1.7 billion of all the, and we've sold 1.6 billion 500 million of that was private equity. And in total, we achieved, you know, a higher value than our last value on our book. So we felt feel very good about that, and that's pretty much done for the Canadian reinsurance transaction we closed in the second quarter. We sold the roughly 600 million of public equity that was backing that block in the second quarter.

Scott Hartz: And we have 600 million of all the to sell in Canada. We expect to complete that during the balance of the year, probably not much of that will come out of private equity. So no bottom line. I don't think the, you know, the underperformance we've seen recently in public equity will affect any of that. Nigel, we're here.

Scott Hartz: I might just add some strategic thought to the relates to older because there's been some really good questions on older and rightfully so. I would say a couple things. First is that older has been a really good asset class for us. It's great for our business because we've got long duration liabilities and to match that with great long term assets from a tenured perspective, but also with an asset class has delivered superior returns with lower volatility than equities is we believe the source of strength and it's something that we've got a lot of experience in in fact more than 20 years.

Scott Hartz: And we see now see on the retail and on the institutional side a lot more interesting this asset class and we're well positioned to even provide value there. We are going to see involuntarily from time to time. What we've seen though is in historic times where we've under performed our long term assumptions. We've typically seen periods of outperformance that follow in 2020. You will remember that we had a $1.4 billion negative versus that long term assumption.

Scott Hartz: And in the following year in 21, we saw a 1.6 billion out performance. So yeah, we are seeing some volatility there and that's a function of the current market environment and certainly rights is a factor there. But but much more so is the uncertainty for a market's perspective, but we still have a lot of conviction as a relates to this asset class and believe it's a source of strength for our business.

Scott Hartz: Great, that's helpful. And then on the NCID, I believe that's upsized now from $2 billion to $3 billion in terms of the capital that was freed up from your transactions. It's wondering if we could expand on, is there an impact of the light catch here from off sizing that NCID? And it is also going to result in a reduction in surplus assets or earnings on surplus run rate. And wondering if the math and arithmetic on those deals that it's still, you know, meta-creative to Cory P.S.?

Scott Hartz: Yeah, let me start on that. And I'll ask Colin to chime in if he would like. You're right. We are up sizing our NCID. And it's a function of a few things. First is that we're in a very strong capital position. It's highlighted by Colin earlier. We have $24 billion of capital in excess of our supervisory minimum, 10 billion excess of our operating range. So we feel really good about our capital position.

Scott Hartz: I'll also note that our leverage ratio is now lower than 25% on a pro-former basis, actually 24%. And in yesterday, we articulated some pretty ambitious plans for the franchise to deliver an 18-plus percent ROE, 10-to-12% coreings for share growth, and strong cumulative remittances of about $22 billion. So while we previously had articulated that we would at least deploy the capital that we freed up from the transactions to buybacks, now we believe in a confident and have conviction that we will actually deploy the full amount of our buyback, which will be an excess of $3 billion.

Scott Hartz: It should not impact our like-out ratio because as we free up capital from the sale and disposal of older, that will translate into the capital that we're deploying. But Colin, you may want to chime in with some perspectives as well. Yeah, and I do the only thing to add is that we're currently earning a blended rate of 2.9% on our surplus. So when we're using our surplus to buybacks stock, you can see the sort of value enhancement from this type of capital allocation activity.

Mario Mendonca: Okay, that's it for me.

Mario Mendonca: Thank you.

Roy Gori: The next question is from Mario Mandolko, some TV securities. Please go ahead. I have me quick. Have you seen any impact in Japan from the recent volatility? I know the market's sort of stabilized since, but that was quite a shock to the system and rates are changing there. Is there any change in behavior that you would point us to? Probably for fun. Thanks, Mario, for the questions.

Roy Gori: It's simple answer is no. It's very early days. What I do expect is the very strong sales growth that we've seen in recent quarters in Japan and notably in the second quarter. I do expect that to moderate in future quarters as macro conditions normalize. It has been boosted by current, I say current, but foreign exchange rate levels and the second quarter as well as equity market conditions. But I think it's really important to highlight from a macro perspective, the movements we're currently seeing in the macro environment in Japan, don't really impact as materially from the balance sheet perspective.

Roy Gori: We're well matched from an ALM point of view and naturally, we have something we manage very carefully more broadly on the topic of Japan. I do remain optimistic. The environment is favorable in terms of government policy, encouraging customers to provide for their retirement needs and long term saving needs. I think this is something that will sustain growth or be at more normal levels in the courses to come.

Operator: Thank you. There are no further questions registered at this time.

Roy Gori: I'd like to turn the meeting back over to Mr. Cole. Thank you operator. We'll be available after the call if there are any four questions. Have a good day everyone. Thank you.

Operator: The conference has now ended. Please disconnect your lines at this time and we thank you for your participation. This conference is no longer being recorded.

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