Q2 2024 Sun Life Financial Inc Earnings Call

🎵 Well, I'll keep music to myself. 🎵 🎵

Operator: Good morning, and welcome to the Sun Life Financial Q2 2024 conference call.

Operator: Good morning and welcome to the Sun Life Financial Q2 2024 conference call. My name is Gaylene, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad.

Gaylene: Good morning and welcome to the Sun Life Financial Q2 2024 conference call. My name is Gaylene and I will be your conference operator today. All lines have been placed on mute to prevent any background noise and the conference is being recorded.

Operator: My name is Gailene, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Gaylene: After the presentation there will be an opportunity to ask questions. To join the question queue you may press star then 1 on your telephone keypad.

Operator: To join the question queues, you may press star, then one on your telephone keypad.

David Garg: The host of the call is David Garg, Senior Vice President, Capital Management, and Investor Relations.

David Garg: The host of the call is David Garg, Senior Vice President, Capital Management and Investor Relations. Please go ahead, Mr. Garg. Thank you and good morning, everyone. Welcome to Sun Life's earnings call for the second quarter of 2024. Our earnings release and the slides for today's call are available in the investor relations section of our website at sunlife.com. We will begin today's call with opening remarks from Kevin Strain, President and Chief Executive Officer. Following Kevin, Tim Deacon, Executive Vice President and Chief Financial Officer, will present the financial results for the quarter. After the prepared remarks, we will move to the question and answer portion of the call.

Gaylene: The host of the call is David Garg, Senior Vice President, Capital Management and Investor Relations. Please go ahead, Mr. Garg.

David Garg: Please go ahead, Mr. Garg. Thank you, and good morning everyone. Welcome to Sun Life's earnings call for the second quarter of 2024. Our earnings release and the slides for today's call are available on the Investor Relations section of our website at SunLife.com.

David Garg: Thank you and good morning everyone.

Speaker Change: Welcome to Sun Life's earnings call for the second quarter of 2024.

Speaker Change: Our earnings release and the slides for today's call are available on the investor relations section of our website at sunlife.com. We will begin today's call with opening remarks from Kevin Strain, President and Chief Executive Officer.

David Garg: We will begin today's call with opening remarks from Kevin Strain, President and Chief Executive Officer. Following Kevin, Tim Deacon, Executive Vice President and Chief Financial Officer, will present the financial results for the quarter. After the prepared remarks, we will move to the question-and-answer portion of the call. Other members of management are also available to answer your questions this morning.

Speaker Change: Following Kevin, Tim Deacon, Executive Vice President and Chief Financial Officer will present the financial results for the quarter.

Speaker Change: After the prepared remarks, we will move to the question and answer portion of the call. Other members of management are also available to answer your questions this morning.

David Garg: Turning to slide two, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events. And with that, I'll now turn things over to Kevin.

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

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

David Garg: Other members of management are also available to answer your questions this morning. Turning to slide two, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events. And with that, I'll now turn things over to Kevin. Thanks, David, and good morning to everyone on the call. I hope you're all having a great summer.

Kevin Strain: Thanks, David, and good morning to everyone on the call. I hope you're all having a great summer. Turning to slide four, we delivered strong second quarter results with a record $1 billion in underlying net income, representing 9% growth over the prior year, underscoring the strength of our diversified business strategy and our commitment to drive growth and deliver long-term value for our clients and our shareholders. Our results of quarter were driven by strong individual protection sales in Canada and Asia, while U.S. Group benefits continues to perform well. Our wealth and asset management businesses saw good earnings momentum on increased assets under management.

Kevin Strain: During slide four, we delivered strong second quarter results with a record $1 billion in underlying net income, representing 9% growth over the prior year, underscoring the strength of our diversified business strategy and our commitment to drive growth and deliver long-term value for our clients and our shareholders. Our results this quarter were driven by strong individual protection sales in Canada and Asia, while U.S. Group Benefits continues to perform well. Our wealth and asset management businesses saw good earnings momentum on increased assets under management.

Kevin Strain: Thanks David, and good morning to everyone on the call. I hope you're all having a great summer.

Kevin Strain: During the slide four, we delivered strong second quarter results with a record $1 billion in underlying net income.

Kevin Strain: representing 9% growth over the prior year, underscoring the strength of our diversified business strategy and our commitment to drive growth and deliver long-term value for our clients and our shareholders.

Kevin Strain: Our results this quarter were driven by strong individual protection sales in Canada and Asia, while U.S. Group Benefits continues to perform well. Our wealth and asset management businesses saw good earnings momentum on increased assets under management.

Kevin Strain: Strong individual protection sales for the quarter were driven by stronger sales from both SLFD and our third-party channel in Canada. Strong momentum from our bank insurance partnership in Hong Kong and our joint venture sales in India. Strong individual and group protection sales drove our new business CSM growth, which was up 62% year over year. Wealth and asset management results were lifted by higher fee income from MFS. We are also pleased to have executed the largest transaction in the Canadian pension risk transfer market by a single insurer, representing a $1.2 billion institutional sale in our defined benefit solution business.

Kevin Strain: Strong individual protection sales for the quarter were driven by stronger sales from both SLFD and our third-party channel in Canada, strong momentum from our bank insurance partnership in Hong Kong, and our joint venture sales in India. Strong individual and group protection sales drove our new business CSM growth, which was up 62% year over year. The Wealth and Asset Management Results were lifted by higher fee income from MFS. We are also pleased to have executed the largest transaction in the Canadian pension risk transfer market by a single insurer, representing a $1.2 billion institutional sale in our Defined Benefits Solution business. Our underlying earnings were partially offset by continued headwinds in our U.S. dental business.

Kevin Strain: Strong individual protection sales for the quarter were driven by stronger sales from both SLFD and our third-party channel in Canada

Kevin Strain: strong momentum from our bank insurance partnership in Hong Kong and our joint venture sales in India. Strong individual and group protection sales drove our new business CSM growth, which was up 62% year-over-year.

Kevin Strain: Wealth and asset management results were lifted by higher fee income from MFS. We are also pleased to have executed the largest transaction in the Canadian pension risk transfer market by a single insurer, representing a $1.2 billion institutional sale in our Defined Benefits Solution business.

Kevin Strain: Our underlying earnings were partially offset by continued headwinds in our U.S. Dental business. Most of the Medicaid dental businesses being reprised during 2024, and as we reprised, we are seeing increased premium rates more consistent with our expectations. As a result, we continued to expect underlying earnings levels from dental to be approximately 100 million U.S. dollars for 2025. MFS continues to experience net outflows this quarter at $14.8 billion US dollars. This was driven by secular shifts from active to passive, public to privates and alternatives, as well as cyclical impacts of investors remaining on the sideline given the high interest rates.

Kevin Strain: Our underlying earnings were partially offset by continued headwinds in our U.S. dental business.

Kevin Strain: Most of the Medicaid dental business is being repriced during 2024, and as we reprice, we are seeing increased premium rates more consistent with our expectations. As a result, we continue to expect underlying earnings levels from dental to be approximately 100 million U.S. dollars for 2025. MFS continues to experience net outflows this quarter at 14.8 billion U.S. dollars.

Speaker Change: Most of the Medicaid dental business is being repriced during 2024, and as we reprice, we are seeing increased premium rates more consistent with our expectations.

Speaker Change: As a result, we continue to expect underlying earnings levels from dental to be approximately $100 million U.S. dollars for 2025.

Speaker Change: MFS continues to experience net outflows this quarter at 14.8 billion US dollars.

Kevin Strain: This was driven by secular shifts from active to passive, public to private, and alternatives, as well as cyclical impacts of investors remaining on the sidelines given the high interest rate. We are confident in the actions that MFS is taking to address these challenges, including building out their retail capabilities, focus on meeting their clients' needs, and a diverse range of investment products, including active ETFs and separately managed accounts. Our asset management and wealth pillars continue to have strong fundamentals, with total SLF assets under management now $1.47 trillion, up 7% over last year. Reported earnings were lower than underlying earnings primarily due to market-related impacts driven by the restructuring charge and real estate. Real estate continued to experience headwinds consistent with the overall industry environment.

Speaker Change: This was driven by secular shifts from active to passive, public to private and alternatives, as well as cyclical impacts of investors remaining on the sideline given the high interest rates.

Kevin Strain: We are confident in the actions that MFS is taking to address these challenges, including building out their retail capabilities, focus on meeting their client's needs, and a diverse range of investment products, including active ETFs and separately managed accounts. Our asset management of wealth pillars continued to have strong fundamentals, with total SLS assets under management now $1.47 trillion, up 7% over last year. Reported earnings were lower than underlying earnings, primarily due to market-related impacts, driven by the restructuring charge and real estate. Real estate continued to experience headwinds consistent with the overall industry environment. In the quarter, we took a restructuring charge related to expense reductions, and we expect over $200 million of pre-tax savings to be delivered by 2026.

Speaker Change: We are confident in the actions that MFS is taking to address these challenges including building out their retail capabilities, focus on meeting their clients needs, and a diverse range of investment products including active ETFs and separately managed accounts.

Speaker Change: Our asset management and wealth pillars continue to have strong fundamentals with total SLF assets under management now 1.47 trillion up 7% over last year

Gailene: Good Morning, and welcome to the Sun Life Financial Q2 2024 conference call. My name is Gailene, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise, and the conference is being recorded.

Speaker Change: reported earnings were lower than underlying earnings primarily due to market-related impacts driven by the restructuring charge and real estate.

Speaker Change: Real estate continued to experience headwinds consistent with the overall industry environment.

Kevin Strain: In the quarter, we took a restructuring charge related to expense reductions, and we expect over $200 million of pre-tax savings to be delivered by 2026. Expense initiatives ensure that we stay efficient and competitive, helping us deliver on our purpose by aligning resources. Finally, we continue to maintain a strong capital position reflecting our discipline, financial management, and emphasis on capital-light businesses. The underlying RE for the quarter of 18.1% is in line with our medium-term financial objectives, while our LICAT ratio at SLF remains strong at 150%.

Gailene: After the presentation, there will be an opportunity to ask questions. To join the question queues, you may press star then one on your telephone keypad.

Speaker Change: In the quarter, we took a restructuring charge related to expense reductions, and we expect over $200 million of pre-tax savings to be delivered by 2026.

Kevin Strain: Expense initiatives ensure that we stay efficient and competitive, helping us deliver on our purpose by aligning resources. Finally, we continue to maintain a strong capital position, reflecting our disciplined financial management and emphasis on capital-like businesses. Underlying our read for the quarter of 18.1% is in line with our medium-term financial objectives, where our LICAT ratio at SLS remains strong at 150%.

David Garg: The host of the call is David Garg, Senior Vice President, Capital Management, and Investor Relations. Please go ahead, Mr. Garg. Thank you, and good morning everyone.

Speaker Change: Expense initiatives ensure that we stay efficient and competitive, helping us deliver on our purpose by aligning resources.

Speaker Change: Finally, we continue to maintain a strong capital position reflecting our discipline financial management and emphasis on capital light businesses.

David Garg: Welcome to Sun Life's earnings call for the second quarter of 2024. Our earnings release and the slides for today's call are available on the Investor Relations section of our website at SunLife.com.

Speaker Change: Underlying ROE for the quarter of 18.1% is in line with our medium-term financial objectives, while our LICAT ratio at SLF remains strong at 150%.

Kevin Strain: We will begin today's call with opening remarks from Kevin Strain, President and Chief Executive Officer. Following Kevin, Tim Deacon, Executive Vice President and Chief Financial Officer will present the financial results for the quarter. After the prepared remarks, we will move to the question and answer portion of the call. Other members of management are also available to answer your questions this morning. Turning to slide two, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks.

Kevin Strain: Turning to slide five, this quarter we delivered on several key business initiatives that help drive our client impact strategy forward. We continued to forget on our digital and innovation capabilities to support client health and financial security. We are scaling generative AI across Sunlight with thousands of sunlifers involved in more than 20 experiments to optimize, automate, and transform client experiences. In the US, the dental team is using generative AI to help sunlight improve accuracy and make quicker recommendations. We also expanded our partnership with Good Path in the US, offering disability members virtual care to help them better look after their physical and mental health.

Kevin Strain: Turning to slide five, this quarter, we delivered on several key business initiatives that help drive our client impact strategy forward. We continue to focus on our digital and innovation capabilities to support client health and financial security. We are scaling generative AI across Sun Life, with thousands of Sun Lifers involved in more than 20 experiments to optimize, automate, and transform client experiences. In the US, the dental team is using Genitive AI to help Sun Life improve accuracy and make quicker recommendations.

Speaker Change: Turning to slide 5, this quarter we delivered on several key business initiatives that help drive our client impact strategy forward.

Speaker Change: We continue to progress on our digital and innovation capabilities to support client health and financial security. We are scaling generative AI across SunLife with thousands of SunLifers involved in more than 20 experiments to optimize, automate, and transform client experiences.

Kevin Strain: As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events, and with that, I'll now turn things over to Kevin. Thanks, David, and good morning to everyone on the call. I hope you're all having a great summer.

Speaker Change: In the U.S., the dental team is using Genitive AI to help sunlight improve accuracy and make quicker recommendations.

Kevin Strain: We also expanded our partnership with Good Path in the U.S., offering disability members virtual care to help them better look after their physical and mental health. In Vietnam, a new point of sale platform allows agents to provide a digitally enhanced client onboarding experience. This platform enables enhanced needs analysis, in addition to a faster paperless application with 98% of applicants enrolled within one business. In Canada, we introduced Sun Life term insurance for diabetes.

Speaker Change: We also expanded our partnership with Good Path in the U.S. offering disability members virtual care to help them better look after their physical and mental health.

Kevin Strain: Turning to slide four, we delivered strong second quarter results with a record $1 billion in underlying net income, representing 9% growth over the prior year, underscoring the strength of our diversified business strategy and our commitment to drive growth and deliver long-term value for our clients and our shareholders. Our results of quarter were driven by strong individual protection sales in Canada and Asia, while U.S. Group benefits continues to perform well. Our wealth and asset management businesses saw good earnings momentum on increased assets under management.

Kevin Strain: In Vietnam, a new point of sale platform allows agents to provide a digitally enhanced client onboarding experience. This platform enables enhanced needs analysis in addition to a faster paperless application, with 98% of applicants enrolled within one business day. In Canada, we introduce Sunlight's term insurance for diabetes. A first of its kind insurance solution designed to empower Canadians living with diabetes to make health and financial decisions on their terms. Recognizing the unique challenges of this condition, this product offers a higher chance of approval compared to conventional life insurance, more affordable premiums, and access to a customized care plan.

Speaker Change: In Vietnam, a new point-of-sale platform allows agents to provide a digitally enhanced client onboarding experience.

Speaker Change: This platform enables enhanced needs analysis in addition to a faster paperless application with 98% of applicants enrolled within one business day.

Speaker Change: In Canada, we introduced Sun Life Term Insurance for Diabetes, a first-of-its-kind insurance solution designed to empower Canadians living with diabetes to make health and financial decisions on their terms.

Kevin Strain: A first-of-its-kind insurance solution designed to empower Canadians living with diabetes to make health and financial decisions on their terms. Recognizing the unique challenges of this condition, this product offers a higher chance of approval compared to conventional life insurance, more affordable premiums, and access to a customized care plan. These capabilities and offerings reinforce our commitment to finding new and innovative ways to deliver on our purpose. As for asset management, we continue to strengthen our position as a market leader.

Kevin Strain: Strong individual protection sales for the quarter were driven by stronger sales from both SLFD and our third-party channel in Canada. Strong momentum from our bank insurance partnership in Hong Kong and our joint venture sales in India. Strong individual and group protection sales drove our new business CSM growth, which was up 62% year over year, wealth and asset management results were lifted by higher fee income from MFS. We are also pleased to have executed the largest transaction in the Canadian pension risk transfer market by a single insurer representing a $1.2 billion institutional sale in our defined benefit solution business.

Speaker Change: Recognizing the unique challenges of this condition, this product offers a higher chance of approval compared to conventional life insurance, more affordable premiums, and access to a customized care plan.

Kevin Strain: These capabilities and offerings reinforce our commitment to finding new and innovative ways to deliver on our purpose. During the asset management, we continue to strengthen our position as a market leader. This quarter, SLC Management unveiled SLC Global Insurance Group, a dedicated team focused on serving the complex deeds of the world's leading insurance companies with B-Spoke solutions. Our deep insurance heritage, combined with our diverse suite of investment capabilities, has allowed us to create a differentiated and tailored experience for clients. SLC also wants the Scotiab Private Real Estate Fund distributed through Scotiabank. Powered by BGO's deep real estate investment capabilities, this new product will give investors an opportunity to diversify their private real estate assets that offer attractive income-focused returns while hedging against inflation.

Speaker Change: These capabilities and offerings reinforce our commitment to finding new and innovative ways to deliver on our purpose.

Speaker Change: Turning to Asset Management, we continue to strengthen our position as a market leader. This quarter, SLC Management unveiled SLC Global Insurance Group, a dedicated team focused on serving the complex needs of the world's leading insurance companies with bespoke solutions.

Kevin Strain: This quarter, SLC Management unveiled SLC Global Insurance Group, a dedicated team focused on serving the complex needs of the world's leading insurance companies with bespoke solutions. Our deep insurance heritage, combined with our diverse suite of investment capabilities, has allowed us to create a differentiated and tailored experience for clients. SLC also launched the Scotia Private Real Estate Fund, distributed through Scotia Bank.

Kevin Strain: Our underlying earnings were partially offset by continued headlands in our U.S, dental business. Most of the Medicaid dental businesses being reprised during 2024 and as we reprised, we are seeing increased premium rates more consistent with our expectations. As a result, we continued to expect underlying earnings levels from dental to be approximately 100 million U.S, dollars for 2025. MFS continues to experience net outflows this quarter at $14.8 billion US dollars. This was driven by secular shifts from active to passive, public to privates and alternatives, as well as cyclical impacts of investors remaining on the sideline given the high interest rates.

Speaker Change: Our deep insurance heritage, combined with our diverse suite of investment capabilities, has allowed us to create a differentiated and tailored experience for clients.

Speaker Change: SLC also launched the Scotia Private Real Estate Fund, distributed through Scotia Bank.

Kevin Strain: Powered by BGO's deep real estate investment capabilities, this new product will give investors an opportunity to diversify their private real estate assets that offer attractive, income-focused returns while hedging against inflation. SLC has grown tremendously since its inception over a decade ago. To support our plan for SLC's continued growth, I'm pleased to announce that Steve Peacher, President of SLC, has been appointed to Executive Chair, SLC Management. Sonny Kelsey, Co-CEO BGO, has been appointed to President and CEO, SLC.

Speaker Change: Powered by BGO's deep real estate investment capabilities, this new product will give investors an opportunity to diversify their private real estate assets that offer attractive, income-focused returns while hedging against inflation.

Kevin Strain: SLC has grown tremendously since its inception over a decade ago.

Kevin Strain: To support our plan for SLC's continued growth, I'm pleased to announce that Steve Peacher, President SLC, has been appointed to Executive Chair, SLC Management. Sonny Kelsey, Co-CEO BGO, has been appointed to President and CEO SLC. Sonny will continue to spend the substantial majority of his time as Co-CEO BGO in partnership with John Carewell. Steve will partner with Sonny and the leaders across the SLC group of companies to help set the future strategic direction of the firm, with a focus on combining the strength of its global platform to benefit new and existing clients. Additionally, Steve will continue to have oversight of the firm's businesses, with a particular focus on leading the growth of SLC fixed income and driving the firm's high net worth strategy.

Speaker Change: SLC has grown tremendously since its inception over a decade ago.

Speaker Change: To support our plan for SLC's continued growth, I'm pleased to announce that Steve Peicher, President, SLC, has been appointed to Executive Chair, SLC Management. Sonny Kelsey, Co-CEO, BGO, has been appointed to President and CEO, SLC.

Kevin Strain: We are confident in the actions that MFS is taking to address these challenges, including building out their retail capabilities, focus on meeting their client's needs and a diverse range of investment products, including active ETFs and separately managed accounts. Our asset management of wealth pillars continued to have strong fundamentals with total SLS assets under management, now $1.47 trillion, up 7% over last year. Reported earnings were lower than underlying earnings, primarily due to market related impacts, driven by the restructuring charge and real estate.

Kevin Strain: Sunny will continue to spend the substantial majority of his time as co-CEO of BGO in partnership with John Caravelle. Steve will partner with Sunny and the leaders across the SLC group of companies to help set the future strategic direction of the firm with a focus on combining the strength of its global platform to benefit new and existing clients. Additionally, Steve will continue to have oversight of the firm's businesses, with a particular focus on leading the growth of SLC fixed income and driving the firm's high net worth strategy.

Speaker Change: Sonny will continue to spend the substantial majority of his time as co-CEO of BGO in partnership with John Caravelle.

Speaker Change: Steve will partner with Sunny and the leaders across the SLC group of companies to help set the future strategic direction of the firm with a focus on combining the strength of its global platform to benefit new and existing clients.

Speaker Change: Additionally, Steve will continue to have oversight of the firm's businesses, with a particular focus on leading the growth of SLC fixed income and driving the firm's high net worth strategy.

Kevin Strain: Real estate continued to experience headwinds consistent with the overall industry environment. In the quarter, we took a restructuring charge related to expense reductions and we expect over $200 million of pre-tax savings to be delivered by 2026. Expense initiatives ensure that we stay efficient and competitive, helping us deliver on our purpose by aligning resources. Finally, we continue to maintain a strong capital position, reflecting our discipline financial management, and emphasis on capital-like businesses. Underlying our read for the quarter of 18.1% is in line with our medium-term financial objectives, where our LICAT ratio at SLS remains strong at 150%.

Kevin Strain: This announcement, along with Jack Parris' appointment as Chief Executive Officer of Infrared last July, and Chris Wright's appointment as President of Crescent Capital Group this year, lays the foundation for SLC's leadership for many years into the future.

Kevin Strain: This announcement, along with Jack Paris's appointment as Chief Executive Officer of Infrared last July, and Chris Wright's appointment as President of Crescent Capital Group this year, lays the foundation for SLC's leadership for many years into the future. We also completed our third sustainability bond offering, issuing $750 million.

Speaker Change: This announcement, along with Jack Paris's appointment as Chief Executive Officer of Infrared last July, and Chris Wright's appointment as President of Crescent Capital Group this year, lays the foundation for SLC's leadership for many years into the future.

Kevin Strain: We also completed our third sustainability bond offering, issuing $750 million. In line with our sustainability bond framework, the proceeds from this bond offering will help fund green and social projects that support the health of communities, such as investments in hospitals, long-term care, and emergency shelters. Finally, we continue to be recognized for our commitment to drive meaningful positive impacts for our clients, society, and the environment. Sonlife was selected by Corporate Knights as being one of the 50 best corporate citizens in Canada for the 19th time.

Speaker Change: We also completed our third sustainability bond offering, issuing $750 million.

Kevin Strain: In line with our Sustainability Bond Framework, the proceeds from this bond offering will help fund green and social projects that support the health of communities, such as investments in hospitals, long-term care, and emergency shelters. Finally, we continue to be recognized for our commitment to driving meaningful positive impacts for our clients, society, and the environment. Sun Life was selected by Corporate Night as one of the 50 best corporate citizens in Canada for the 19th time.

Speaker Change: In line with our Sustainability Bond Framework, the proceeds from this bond offering will help fund green and social projects that support the health of communities such as investments in hospitals, long-term care, and emergency shelters.

Speaker Change: Finally, we continue to be recognized for our commitment to drive meaningful, positive impacts for our clients, society, and the environment. Sunlight was selected by Corporate Night as being one of the 50 best corporate citizens in Canada for the 19th time.

Kevin Strain: Turning to slide five, this quarter we delivered on several key business initiatives that help drive our client impact strategy forward. We continued to forget on our digital and innovation capabilities to support client health and financial security. We are scaling generative AI across sunlight with thousands of sunlifers involved in more than 20 experiments to optimize, automate, and transform client experiences. In the US, the dental team is using generative AI to help sunlight improve accuracy and make quicker recommendations.

Kevin Strain: In closing, we had a strong quarter against our medium-term objectives with underlying EPS growth of 10% and an ROE of 18.1%. We also ended the quarter in a strong capital position with a like at ratio of 150% and have announced our intention to renew our normal course issue of bid to purchase up to 15 million common shares, subject to regulatory approval. We are confident in the resilience of our strategy, our focus on execution, and our sustained commitment to deliver on our purpose.

Speaker Change: In closing, we had a strong quarter against our medium-term objectives with underlying EPS growth of 10% and an ROE of 18.1%.

Speaker Change: We also ended the quarter in a strong capital position with a LICAT ratio of 150% and have announced our intention to renew our normal course issuer bid to purchase up to 15 million common shares subject to regulatory approval.

Kevin Strain: We also expanded our partnership with Good Path in the US, offering disability members virtual care to help them better look after their physical and mental health. In Vietnam, a new point of sale platform allows agents to provide a digitally enhanced client onboarding experience. This platform enables enhanced needs analysis in addition to a faster paperless application with 98% of applicants enrolled within one business day. In Canada, we introduce sunlight's term insurance for diabetes.

Speaker Change: We are confident in the resilience of our strategy, our focus on execution, and our sustained commitment to deliver on our purpose. With that, I will turn the call over to Tim to walk us through the second quarter financial results.

Kevin Strain: In closing, we had a strong quarter against our medium-term objectives with underlying EPS growth of 10 percent and an ROE of 18.1 percent. We also ended the quarter in a strong capital position with a LICAT ratio of 150 percent and have announced our intention to renew our normal course issuer bid to purchase up to 15 million common shares, subject to regulatory approval. We are confident in the resilience of our strategy, our focus on execution, and our sustained commitment to deliver on our purpose. With that, I will turn the call over to Tim to walk us through the second quarter financial results. Thank you, Kevin. Good morning, everyone.

Timothy Deacon: With that, I will turn the call over to Tim to walk us through the second quarter financial results. Thank you, Kevin. Good morning, everyone. We're now on Slide 7. We are pleased with our strong results as quarter. Underlying that income of a billion dollars is up 9%, and underlying earnings per share of $1.72 is up 10% year-over-year, achieving the higher end of our medium-term growth objectives. Underlying return on equity of 18.1% also achieved medium-term objectives, supported by strength across our diversified businesses. Wealth and asset management comprised 41% of Q2 underlying earnings and was up 9% over the prior year on higher fee income, largely due to higher asset levels driven by equity market appreciation.

Timothy Deacon: We're now on slide seven. We are pleased with our strong results this quarter. Underlying net income of a billion dollars is up 9%, and underlying earnings per share of $1.72 is up 10% year over year, achieving the higher end of our medium-term growth objective. Underlying return on equity of 18.1% also achieved medium-term objectives, supported by strength across our diversified business. Wealth and Asset Management comprised 41% of Q2 underlying earnings and was up 9% over the prior year on higher fee income, largely due to higher asset levels driven by equity market appreciation. This is partially offset by higher expenses. Group health and protection businesses comprised 28% of underlying earnings and were down 15% year-over-year.

Tim Deacon: Thank you, Kevin. Good morning, everyone. We're now on slide seven.

Tim Deacon: We are pleased with our strong results this quarter. Underlying net income of $1 billion is up 9%, and underlying earnings per share of $1.72 is up 10% year-over-year, achieving the higher end of our medium-term growth objectives.

Kevin Strain: A first of its kind insurance solution designed to empower Canadians living with diabetes to make health and financial decisions on their terms. Recognizing the unique challenges of this condition, this product offers a higher chance of approval compared to conventional life insurance, more affordable premiums, and an access to a customized care plan. These capabilities and offerings reinforce our commitment to finding new and innovative ways to deliver on our purpose.

Tim Deacon: Underlying return on equity of 18.1% also achieved medium-term objectives supported by strength across our diversified businesses.

Tim Deacon: Wealth and asset management comprised 41% of Q2 underlying earnings and was up 9% over the prior year on higher fee income, largely due to higher asset levels driven by equity market appreciation. This was partially offset by higher expenses.

Timothy Deacon: This is partially offset by higher expense. Group health and protection businesses comprised 28% of underlying earnings and were down 15% year over year. Results reflected strong business growth in the US group benefits in Canada that were more than offset by unfavorable morbidity experience and lower US dental results. The difference between underlying and reported net income was driven by unfavorable market-related impacts, a restructuring charge of 108 million post-tax or 18 cents per share, and acquisition related items in the amortization of intangible assets. The restructuring charge reflects actions taken to improve productivity and help continue to deliver earnings growth at the higher end of medium-term objectives.

Tim Deacon: Group health and protection businesses comprised 28% of underlying earnings and were down 15% year-over-year. Results reflected strong business growth in the U.S. group benefits in Canada that were more than offset by unfavorable morbidity experience and lower U.S. dental results.

Timothy Deacon: Results reflected strong business growth in U.S. group benefits and in Canada that were more than offset by unfavorable morbidity experience and lower U.S. dental results. Individual protection comprised 31% of underlying earnings and was up 31% from last year, driven by business growth in Asia and Canada and favorable mortality experience across our business. Reported net income for the quarter was $646 million.

Kevin Strain: During the asset management, we continue to strengthen our position as a market leader. This quarter, SLC Management unveiled SLC Global Insurance Group, a dedicated team focused on serving the complex deeds of the world's leading insurance companies with B-Spoke solutions. Our deep insurance heritage, combined with our diverse suite of investment capabilities, has allowed us to create a differentiated and tailored experience for clients. SLC also wants the Scotiab private real estate fund distributed through Scotiabank.

Tim Deacon: Individual protection comprised 31% of underlying earnings and was up 31% from last year, driven by business growth in Asia and Canada and favorable mortality experience across our businesses.

Timothy Deacon: The difference between underlying and reported net income was driven by unfavorable market-related impacts, a restructuring charge of $108 million post-tax, or $0.18 per share, acquisition-related items, and the amortization of intangible assets. The restriction charge reflects actions taken to improve productivity and help continue to deliver earnings growth at the higher end of medium-term objectives. Actions under the program include accelerating the digitization of our business, addressing duplicative and redundant capabilities, and optimizing our external spend.

Tim Deacon: Reported net income for the quarter was $646 million. The difference between underlying and reported net income was driven by unfavorable market-related impacts, a restructuring charge of $108 million post-tax or $0.18 per share, acquisition-related items, and the amortization of intangible assets.

Kevin Strain: Powered by BGO's deep real estate investment capabilities, this new product will give investors an opportunity to diversify their private real estate assets that offer attractive income-focused returns while hedging against inflation. SLC has grown tremendously since its inception over a decade ago. To support our plan for SLC's continued growth, I'm pleased to announce that Steve Peacher, President SLC, has been appointed to Executive Chair SLC Management. Sonny Kelsey, Co-CEO BGO, has been appointed to President and CEO SLC.

Tim Deacon: The restructuring charge reflects actions taken to improve productivity and help continue to deliver earnings growth at the higher end of medium-term objectives.

Timothy Deacon: Actions under the program included accelerated digitization of our business, addressing duplicative and redundant capabilities, and optimizing our external spend. We expect these actions to be implemented over the next 18 months and deliver over 200 million pre-tax and cost efficiencies by 2026. Market-related impacts were primarily driven by unfavorable real estate experience. This reflects modestly negative total returns in the quarter compared to our long-term expectations of approximately 2% per quarter, primarily from market-driven cap-related increases. We will continue to be cautious on real estate returns in the near term. We are long-term investors in real estate, and on a 10-year basis, our actual returns are performing in line with our long-term assumptions.

Tim Deacon: Actions under the program include accelerated digitization of our business, addressing duplicative and redundant capabilities, and optimizing our external spend.

Timothy Deacon: We expect these actions to be implemented over the next 18 months and deliver over 200 million pre-tax and cost efficiencies by 2026. Market-related impacts were primarily driven by unfavorable real estate experience. This reflects modestly negative total returns in the quarter compared to our long-term expectations of approximately 2% per quarter, primarily from market-driven, cap-related increases. We will continue to be cautious on real estate returns in the near term.

Tim Deacon: We expect these actions to be implemented over the next 18 months and deliver over 200 million pre-tax and cost efficiencies by 2026.

Kevin Strain: Sonny will continue to spend the substantial majority of his time as Co-CEO BGO in partnership with John Carewell. Steve will partner with Sonny and the leaders across the SLC group of companies to help set the future strategic direction of the firm with a focus on combining the strength of its global platform to benefit new and existing clients. Additionally, Steve will continue to have oversight of the firm's businesses, with a particular focus on leading the growth of SLC fixed income and driving the firm's high net worth strategy.

Speaker Change: Market-related impacts were primarily driven by unfavorable real estate experience. This reflects modestly negative total returns in the quarter compared to our long-term expectations of approximately 2% per quarter, primarily from market-driven, cap-related increases.

Timothy Deacon: We are long-term investors in real estate, and on a 10-year basis, our actual returns are performing in line with our long-term assumptions. Our balance sheet and capital position remains strong with an SLF-LICAT ratio of 150%, up two percentage points from the prior quarter due to strong organic capital generation, a new disclosure for us of $588 million in Q2, and a debt issuance this quarter to pre-fund an expected third quarter redemption. Old Coal Cash remained strong at $2 billion, and we remained active in our share buyback program, repurchasing 4.1 million shares this quarter. We announced our intention to renew our program later this month, pending regulatory approval. Our leverage ratio remains low at 22.6%.

Speaker Change: We will continue to be cautious on real estate returns in the near term. We are long-term investors in real estate, and on a 10-year basis, our actual returns are performing in line with our long-term assumptions.

Timothy Deacon: Our balance sheet and capital position remain strong with an SLF-like at ratio of 150%, up 2 percentage points from the prior quarter due to strong organic capital generation, a new disclosure for us of 588 million in Q2, and a debt issuance this quarter to pre-fund an expected third quarter redemption. Old co-cash remains strong at 2 billion, and we remain active on our share buyback program, repurchasing 4.1 million shares this quarter. We announced our intention to renew our program later this month, pending regulatory approval. Our leverage ratio remains low at 22.6%. Also of note, we had a record new business CSM of 437 million, which was up 62% over the prior year, reflecting strong sales in Hong Kong and Canada.

Speaker Change: Our balance sheet and capital position remain strong with an SLS LICAT ratio of 150%.

Kevin Strain: This announcement, along with Jack Parris' appointment as Chief Executive Officer of Infrared last July, and Chris Wright's appointment as President of Crescent Capital Group this year, lays the foundation for SLC's leadership for many years into the future.

Speaker Change: up two percentage points from the prior quarter due to strong organic capital generation, a new disclosure for us of $588 million in Q2, and a debt issuance this quarter to pre-fund an expected third quarter redemption.

Kevin Strain: We also completed our third sustainability bond offering, issuing $750 million. In line with our sustainability bond framework, the proceeds from this bond offering will help fund green and social projects that support the health of communities such as investments in hospitals, long-term care, and emergency shelters. Finally, we continue to be recognized for our commitment to drive meaningful positive impacts for our clients, society and the environment. Sonlife was selected by Corporate Knights as being one of the 50 best corporate citizens in Canada for the 19th time.

Speaker Change: Old Coal Cash remained strong at $2 billion, and we remained active on our share buyback program, repurchasing 4.1 million shares this quarter. We announced our intention to renew our program later this month, pending regulatory approval.

Timothy Deacon: Also of note, we had a record new business CSM of $437 million, which was up 62% over the prior year, reflecting strong sales in Hong Kong and Canada. Total CSM is now at $12.5 billion, up 11% year-over-year, representing a growing source of future profit. And finally, book value per share increased by 8% over the prior year, demonstrating our ability to generate growth while returning value to our shareholders.

Speaker Change: Our leverage ratio remains low at 22.6 percent.

Speaker Change: Also of note, we had record new business CSM of $437 million, which was up 62% over the prior year, reflecting strong sales in Hong Kong and Canada. Total CSM is now at $12.5 billion, up 11% year-over-year, representing a growing source of future profits.

Timothy Deacon: Total CSM is now at 12.5 billion, up 11% year-over-year, representing a growing source of future profits. And finally, book value for share increased by 8% over the prior year, demonstrating our ability to generate growth while returning value to our shareholders.

Speaker Change: And finally, book value per share increased by 8% over the prior year, demonstrating our ability to generate growth while returning value to our shareholders.

Kevin Strain: In closing, we had a strong quarter against our medium-term objectives with underlying EPS growth of 10% and an ROE of 18.1%. We also ended the quarter in a strong capital position with a like at ratio of 150% and have announced our intention to renew our normal course issue of bid to purchase up to 15 million common shares subject to regulatory approval. We are confident in the resilience of our strategy, our focus on execution, and our sustained commitment to deliver on our purpose.

Timothy Deacon: Now let's turn to our business group performance, starting on slide 9 with MFS. MFS underlying net income of 194 million US was up 4% year-over-year. Its higher fee income from average net asset growth, more than offset higher expenses. Reported net income of 194 million US was up 4% year-over-year. Pre-tax net operating margin of 36.5% was in line with prior year. And AUM of 618 billion was up 5% over the prior year, given higher markets, but down 2% from the prior quarter driven by net outflows. Outflows in the quarter included two large institutional mandate reductions and retail net outflows.

Unknown Executive: Now let's turn to our business group performance, starting on slide 9 with MFS. MFF's underlying net income of $194 million U.S. was up 4% year-over-year. Its higher fee income from average net asset growth more than offset higher expenses. Reported net income of $194 million U.S. was up 4% year over year. Pre-tax net operating margin of 36.5% was in line with the prior year. The AUM of $618 billion was up 5% over the prior year given higher markets, but down 2% from the prior quarter driven by net outflows. Outflows in the quarter included two large institutional mandate redemptions and retail net outflows. Retail outflows reflected the continued preference in the current environment for shorter-term interest-bearing products.

Speaker Change: Now let's turn to our business group performance, starting on slide 9 with MFS.

Speaker Change: MFF's underlying net income of $194 million U.S. was up 4% year-over-year. It's higher fee income from average net asset growth more than offset higher expenses.

Speaker Change: reported net income of 194 million U.S. was up 4% year-over-year.

Speaker Change: Pre-tax net operating margin of 36.5% was in line with prior year. An AUM of $618 billion was up 5% over the prior year given higher markets, but down 2% from the prior quarter driven by net outflows.

Tim Deacon: With that, I will turn the call over to Tim to walk us through the second quarter financial results. Thank you, Kevin. Good morning, everyone. We're now on slide 7. We are pleased with our strong results as quarter. Underlying that income of a billion dollars is up 9%, and underlying earnings per share of $1.72 is up 10% year-over-year achieving the higher end of our medium-term growth objectives. Underlying return on equity of 18.1% also achieved medium-term objectives supported by strength across our diversified businesses.

Speaker Change: Outflows in the quarter included two large institutional mandate redemptions and retail net outflows. Retail outflows reflected the continued preference in the current environment for shorter-term interest-bearing products.

Timothy Deacon: Retail outflows reflected the continued preference in the current environment for shorter term intersparing products. Works. Long-term investment performance for MFS remained good, with 97% of funds' assets ranked in the top half of their respective Morningstar categories for 10-year performance.

Unknown Executive: Long-term investment performance for MFS remained good, with 97% of funds' assets ranking in the top half of their respective Morningstar categories for 10-year performance. Turning to slide 10, SLC management generated an underlying net income of $42 million, down 5% year-over-year as fee-related earnings growth was offset by higher compensation and seed financing costs. Fee-related earnings of $65 million were up 5% year-over-year on continued growth in fee-earning AUMs. Reported net income of $9 million increased by $12 million as the prior year included mark-to-mark losses on a real estate investment which didn't recur. Capital raising of $3 billion remained resilient, with solid fundraising in BGO's Asia Value Fund and U.S. Diversified Equity Fund.

Speaker Change: Long-term investment performance for MFS remained good, with 97% of funds' assets ranked in the top half of their respective Morningstar categories for 10-year performance.

Timothy Deacon: Turning to slide 10, SLC Management generated an underlying net income of 42 million, down 5% year-over-year, as fee-related earnings growth was offset by higher compensation and seed financing costs. fee-related earnings to 65 million was up 5% year-over-year on continued growth and fee-earning AUM. Reported net income of 9 million increased 12 million, as a prior year included mark-to-mark losses on a real estate investment which didn't recur. Capital raising of 3 billion remained resilient, with solid fund raising in BGO's Asia Value Fund and US Diversified Equity Fund. Deployments of 6 billion were up 1.3 billion over the prior year, primarily from strong opportunities in fixed income and private credit in the quarter.

Tim Deacon: Wealth and asset management comprised 41% of Q2 underlying earnings and was up 9% over the prior year on higher fee income largely due to higher asset levels driven by equity market appreciation. This is partially offset by higher expense. Group health and protection businesses comprised 28% of underlying earnings and were down 15% year over year. Results reflected strong business growth in the US group benefits in Canada that were more than offset by unfavorable morbidity experience and lower US dental results.

Speaker Change: Turning to slide 10, SLC management generated underlying net income of $42 million, down 5% year-over-year, as fee-related earnings growth was offset by higher compensation and seed financing costs.

Speaker Change: Fee-related earnings of $65 million was up 5% year-over-year on continued growth in fee-earning AUM.

Speaker Change: Reported net income of $9 million, increased $12 million as the prior year included mark-to-mark losses on a real estate investment which didn't recur.

Speaker Change: Capital raising of $3 billion remained resilient with solid fundraising in BGO's Asia Value Fund and U.S. Diversified Equity Fund.

Unknown Executive: Deployments of $6 billion were up $1.3 billion over the prior year, primarily due to strong opportunities in fixed income and private credit in the quarter. Total AUM of $227 billion was up $9 billion from the prior year. Turning to slide 11, Canada delivered record results with underlying net income of $402 million, up 8% year-on-year on strong insurance business growth and higher net investment results. Reported net income of $292 million included an unfavorable market-related impact. Wealth and Asset Management earnings were up 18% year over year on higher fee-related earnings and lower expenses.

Speaker Change: Deployments of $6 billion were up $1.3 billion over the prior year, primarily from strong opportunities in fixed income and private credit in the quarter. Total AUM of $227 billion was up $9 billion from the prior year.

Timothy Deacon: Total AUM of 227 billion was up 9 billion from the prior year.

Timothy Deacon: Turning to slide 11, Canada delivered record results with underlying net income of 402 million, up 8% year-on-year on strong insurance business growth and higher net investment results. Reported net income of 292 million included unfavorable market-related impacts. Wealth and asset management earnings were up 18% year-over-year on higher fee-related earnings and lower expenses. Results included a 1.2 billion transaction in the defined benefit solution, the largest sale in the Canadian pension risk transfer market by a single insurer. Group health and protection underlying earnings were down 5% year-over-year, as business growth and higher investment contributions were more than offset by less favorable, though still positive, morbidity experience.

Tim Deacon: The difference between underlying and reported net income was driven by unfavorable market-related impacts, a restructuring charge of 108 million post-tax or 18 cents per share, acquisition related items in the amortization of intangible assets. The restructuring charge reflects actions taken to improve productivity and help continue to deliver earnings growth at the higher end of medium term objectives. Actions under the program included accelerated digitization of our business, addressing duplicative and redundant capabilities and optimizing our external spend.

Speaker Change: Turning to slide 11, Canada delivered record results with underlying net income of $402 million, up 8% year-on-year, on strong insurance business growth and higher net investment results.

Speaker Change: Reported net income of $292 million included unfavorable market-related impacts.

Speaker Change: Wealth and asset management earnings were up 18% year-over-year on higher fee-related earnings and lower expenses. Results included a $1.2 billion transaction in the Defined Benefits Solution, the largest sale in the Canadian pension risk transfer market by a single insurer.

Unknown Executive: Results included a $1.2 billion transaction in a defined benefit solution, the largest sale in the Canadian pension risk transfer market by a single insurer. Group health and protection underlying earnings were down 5% year over year as business growth and higher investment contributions were more than offset by less favorable, though still positive, morbidity experience. Group health and protection sales were down 7% year over year due to lower large cases.

Tim Deacon: We expect these actions to be implemented over the next 18 months and deliver over 200 million pre-tax and cost efficiencies by 2026. Market-related impacts were primarily driven by unfavorable real estate experience. This reflects modestly negative total returns in the quarter compared to our long-term expectations of approximately 2% per quarter, primarily from market-driven cap-related increases. We will continue to be cautious on real estate returns in the near term. We are long-term investors in real estate and on a 10-year basis our actual returns are performing in line with our long-term assumptions.

Speaker Change: Group health and protection underlying earnings were down 5% year-over-year as business growth and higher investment contributions were more than offset by less favorable, though still positive, morbidity experience. Group health and protection sales were down 7% year-over-year to lower large case sales.

Timothy Deacon: Group health and protection sales were down 7% year-over-year due to lower large-case sales. Individual protection earnings were up 18% year-over-year, driven by favorable mortality experience and higher investment contribution. Individual protection sales were up 8% due to higher-par life sales.

Unknown Executive: Individual protection earnings were up 18% year over year driven by favorable mortality experience and higher investment contribution. Individual protection sales were up 8% due to higher power life sales. Turning to slide 12, U.S. underlying net income of $149 million U.S. was down 7% from the prior year, driven by unfavorable morbidity experience and dental results. Reported net income of 91 million U.S. includes market-related impacts, acquisition-related expenses, and the amortization of intangibles.

Speaker Change: Individual protection earnings were up 18% year-over-year driven by favorable mortality experience and higher investment contribution. Individual protection sales were up 8% due to higher par life sales.

Timothy Deacon: Turning to slide 12, U.S. underlying net income of 149 million U.S. was down 7% year-from-the-prior-year driven by unfavorable morbidity experience and dental results. Reported net income of 91 million U.S. includes market-related impacts, acquisition-related expenses, and the amortization of intangibles. In group health and protection, our growth benefits benefited from strong revenue growth and favorable experience in employee benefits. This was more than offset by lower dental results, which I will cover more detail on the next slide. U.S. group results of 243 million U.S. were down 24% year-over-year, driven by four large-case government dental sales in the prior year, which occur periodically.

Speaker Change: Turning to slide 12, U.S. underlying net income of $149 million U.S. was down 7% from the prior year, driven by unfavorable morbidity experience and dental results.

Tim Deacon: Our balance sheet and capital position remain strong with an SLF-like at ratio of 150%, up 2 percentage points from the prior quarter due to strong organic capital generation, a new disclosure for us of 588 million in Q2, and a debt issuance this quarter to pre-fund an expected third quarter redemption. Old co-cash remains strong at 2 billion, and we remain active on our share buyback program, repurchasing 4.1 million shares this quarter. We announced our intention to renew our program later this month, pending regulatory approval.

Speaker Change: Reported net income of 91 million U.S. includes market-related impacts, acquisition-related expenses, and the amortization of intangibles.

Unknown Executive: In group health and protection, our group benefits benefited from strong revenue growth and favorable experience and Employee Benefits. However, this was more than offset by lower dental results, which I will cover in more detail on the next slide. U.S. group results of 243 million dollars were down 24% year-over-year driven by four large cape, large case government dental sales in the prior year and which occur periodically.

Speaker Change: In group health and protection, our group benefits benefited from strong revenue growth and favorable experience.

Speaker Change: in Employee Benefits.

Speaker Change: This was more than offset by lower dental results, which I will cover in more detail on the next slide. U.S. group results of 243 million U.S. were down 24 percent year-over-year driven by four large Cape

Tim Deacon: Our leverage ratio remains low at 22.6%. Also of notes, we had a record new business CSM of 437 million, which was up 62% over the prior year, reflecting strong sales in Hong Kong and Canada. Total CSM is now at 12.5 billion, up 11% year-over-year, representing a growing source of future profits. And finally, book value for share increased by 8% over the prior year, demonstrating our ability to generate growth while returning value to our shareholders.

Speaker Change: large case government dental sales in the prior year and which occur periodically.

Timothy Deacon: Individual protection underlying earnings were up significantly over the prior year from favorable mortality experience.

Unknown Executive: Individual protection underlying earnings were up significantly over the prior year from favorable mortality experience. Turning to slide 13, we provide additional details on our U.S. dental performance. As we've mentioned in prior quarters, the headwinds experienced in our U.S. dental business are largely driven by the impact of the Medicaid redetermination process following the end of the public health emergency. Over the past 12 months, state governments have disenrolled approximately 19% of our Medicaid membership base, which has impacted premiums. Disenrollments are now substantially complete as of the end of July.

Speaker Change: Individual protection underlying earnings were up significantly over the prior year from favorable mortality experience.

Timothy Deacon: Turning to slide 13, we provide additional details on our U.S. Dental performance. As we mentioned in prior quarters, the headwinds experience in our U.S. dental business are largely driven by the impact of the Medicaid re-determination process following the end of the public health emergency. Over the past 12 months, state governments have disenrolled approximately 19% of our Medicaid membership base, which is impacted premiums. Disenrollments are now substantially complete as at the end of July. Further, we have experienced higher utilization from the Medicaid members staying in plan compared to those who were disenrolled, resulting in higher-than-expected loss and expense rates.

Speaker Change: Turning to slide 13, we provide additional details on our U.S. dental performance.

Speaker Change: As we've mentioned in prior quarters, the headwinds experienced in our U.S. dental business are largely driven by the impact of the Medicaid redetermination process following the end of the public health emergency.

Speaker Change: Over the past 12 months, state governments have disenrolled approximately 19% of our Medicaid membership base, which has impacted premiums. Disenrollments are now substantially complete, as at the end of July.

Tim Deacon: Now let's turn to our business group performance, starting on slide 9 with MFS. MFS underlying net income of 194 million US was up 4% year-over-year. Its higher fee income from average net asset growth, more than offset higher expenses. Reported net income of 194 million US was up 4% year-over-year. Pre-tax net operating margin of 36.5% was in line with prior year.

Unknown Executive: Further, we have experienced higher utilization from the Medicaid members staying in the plan compared to those who were disenrolled, resulting in a higher than expected loss in expense ratio. Despite these current headwinds, we maintain a favorable outlook for our dental business and expect to deliver underlying earnings of approximately $100 million in the U.S. by 2025. We will achieve this level of profitability through key actions already underway, including ongoing cost and expense management initiatives, repurchasing efforts on our existing block of Medicaid business, and from new contract sales across Medicaid, Medicare Advantage, and commercial business lines.

Speaker Change: Further, we have experienced higher utilization from the Medicaid members staying in plan compared to those who were disenrolled, resulting in higher than expected loss in expense ratios.

Timothy Deacon: Issues. Despite these current headwinds, we maintain a favorable outlook for our dental business and expect to deliver underlying earnings of approximately 100 million USD by 2025. We will achieve this level of profitability through key actions already underway, including ongoing cost and expense management initiatives, reparting efforts on our existing block of Medicaid business, and from new contract sales across Medicaid, Medicare Advantage, and commercial business lines.

Speaker Change: Despite these current headwinds, we maintain a favorable outlook for our dental business and expect to deliver underlying earnings of approximately $100 million U.S. by 2025.

Tim Deacon: And AUM of 618 billion was up 5% over the prior year, given higher markets, but down 2% from the prior quarter driven by net outflows. Outflows in the quarter included two large institutional mandate reductions and retail net outflows. Retail outflows reflected the continued preference in the current environment for shorter term intersparing products. Works.

Speaker Change: We will achieve this level of profitability through key actions already underway, including ongoing cost and expense management initiatives, repurchasing efforts on our existing block of Medicaid business,

Speaker Change: and from new contract sales across Medicaid, Medicare Advantage, and commercial business lines.

Timothy Deacon: Flight 14 outlines Asia's results for the quarter. Underline net income of 179 million was up 19% year-on-year on a constant currency basis, driven by strong business growth in Hong Kong, our joint ventures, and high net worth. Reported net income of 151 million includes market-related impacts. We continue to see strong sales momentum in individual protection, particularly in Hong Kong and India, reflecting our expanded distribution capabilities. The strong sales also drove new business CSM of 220 million in Asia, up 82% from the prior year. Total Asia CSM increased 17% year-on-year.

Unknown Executive: Slide 14 outlines Asia's results for the quarter. Underlying net income of $179 million was up 19% year-on-year on a constant currency basis driven by strong business growth in Hong Kong, our joint ventures, and high net worth. Reported net income of $151 million includes market-related impact.

Tim Deacon: Long-term investment performance for MFS remained good, with 97% of funds assets ranked in the top half of their respective Morningstar categories for 10-year performance.

Speaker Change: Slide 14 outlines Asia's results for the quarter. Underlying net income of $179 million was up 19% year-on-year on a constant currency basis driven by strong business growth in Hong Kong, our joint ventures, and high net worth.

Tim Deacon: Turning to slide 10, SLC management generated an underlying net income of 42 million, down 5% year-over-year as fee-related earnings growth was offset by higher compensation and seed financing costs, fee-related earnings to 65 million was up 5% year-over-year on continued growth and fee-earning AUM.

Unknown Executive: We continue to see strong sales momentum in individual protection, particularly in Hong Kong and India, reflecting our expanded distribution capability. Strong sales also drove new business CSM of $220 million in Asia, up 82% from the prior year. Total Asia CSM increased 17% year-on-year.

Speaker Change: Reported net income of $151 million includes market-related impacts. We continue to see strong sales momentum in individual protection, particularly in Hong Kong and India, reflecting our expanded distribution capabilities.

Tim Deacon: Reported net income of 9 million, increased 12 million, as a prior year included mark-to-mark losses on a real estate investment which didn't recur. Capital raising of 3 billion remained resilient, with solid fund raising in BGO's Asia Value Fund and US diversified equity fund. Deployments of 6 billion were up 1.3 billion over the prior year, primarily from strong opportunities in fixed income and private credit in the quarter. Total AUM of 227 billion was up 9 billion from the prior year.

Speaker Change: The strong sales also drove new business CSM up 220 million in Asia, up 82% from the prior year. Total Asia CSM increased 17% year-on-year.

Timothy Deacon: Overall, we're pleased with our strong Q2 results. We're entering the second half of the year with positive business momentum, having achieved all of our medium-term objectives. Our diversified and attractive portfolio of businesses, our strong LICAT ratio of 150%, and our differentiated purpose-driven culture give us confidence to continue to deliver on our client impact strategy and financial objectives. With that, I will turn the call over to David for the Q&A portion of the call. Thank you, Tim.

Timothy Deacon: Overall, we're pleased with our strong Q2 results. We're entering the second half of the year with positive business momentum, having achieved all of our medium-term objectives. Our diversified and attractive portfolio of businesses, our strong like-at ratio of 150%, and our differentiated purpose-driven culture give us confidence to continue to deliver on our client impact strategy and financial objectives.

Speaker Change: Overall, we're pleased with our strong Q2 results. We're entering the second half of the year with positive business momentum having achieved all of our medium-term objectives.

Speaker Change: Our diversified and attractive portfolio of businesses, our strong LICAT ratio of 150%, and our differentiated, purpose-driven culture give us confidence to continue to deliver on our client impact strategy and financial objectives. With that, I will turn the call over to David for the Q&A portion of the call.

Tim Deacon: Turning to slide 11, Canada delivered record results with underlying net income of 402 million, up 8% year-on-year on strong insurance business growth and higher net investment results.

David Garg: With that, I will turn the call over to David for the Q&A portion of the call. Thank you, Tim. To help ensure that our participants have an opportunity to ask questions this morning, please limit yourselves to one or two questions and then re-Q with any additional questions.

David Garg: To help ensure that our participants have an opportunity to ask questions this morning, please limit yourselves to one or two questions and then requeue with any additional questions. I will now ask the operator to poll the participants. Thank you. To join the question queue, you may press star then one on your telephone keypad.

Tim Deacon: Reported net income of 292 million included unfavorable market-related impacts. Wealth and asset management earnings were up 18% year-over-year on higher fee-related earnings and lower expenses.

David Garg: Thank you, Tim. To help ensure that our participants have an opportunity to ask questions this morning, please limit yourselves to one or two questions and then re-queue with any additional questions. I will now ask the operator to poll the participants.

Operator: I will now ask the operator to poll the participants. Thank you. To join the question Q, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two.

Operator: You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Meny Grauman with Scotiabank. Please go ahead. Hi, good morning. I wanted to ask about the restructuring charge and just get a better understanding of what cuts you're making and where from a segment point of view as well. Thank you. Good morning, many. It's Tim.

Tim Deacon: Results included a 1.2 billion transaction in the defined benefit solution, the largest sale in the Canadian pension risk transfer market by a single insurer. Group health and protection underlying earnings were down 5% year-over-year as business growth and higher investment contributions were more than offset by less favorable, though still positive, morbidity experience. Group health and protection sales were down 7% year-over-year to lower large-case sales. Individual protection earnings were up 18% year-over-year driven by favorable mortality experience and higher investment contribution. Individual protection sales were up 8% due to higher-par life sales.

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

Speaker Change: To withdraw your question, please press star then two.

Manny Groman: Our first question is from Manny Groman with Scotiabank. Please go ahead. Hi, good morning. I want to ask about the restriction charge and just get a better understanding of what cuts you're making and where from a segment point of view as well. Thanks.

Speaker Change: Our first question is from Manny Grohman with Scotiabank. Please go ahead.

Manny Grohman: Hi, good morning. I wanted to ask about the restructuring charge and just get a better understanding of...

Manny Grohman: what cuts you're making and where from a segment point of view as well. Thanks.

Tim Deacon: Turning to slide 12, U.S, underlying net income of 149 million U.S, was down 7% year-from-the-prior-year driven by unfavorable morbidity experience and dental results.

Timothy Deacon: Hi, morning, Manny. It's Tim. Thanks for the question. First, I would say that financial discipline is a key part of our client impact strategy and is a priority for us.

Timothy Deacon: Thanks for the question. First, I would say that financial discipline is a key part of our client impact strategy and is a priority for us. So I would characterize this as a modest enterprise-wide program that we expect to execute over the next 18 months. And it's really across all of our business groups in corporate function. And the types of areas that we're focused on are opportunities to accelerate the digitization of our business, eliminate duplicative or redundant capabilities, and optimize our external spend. I would say we've run similar programs from time to time, so this is not new for Sun Life, but it's been some time since we've executed on a focused program like this.

Manny Grohman: Good morning, many. It's Tim.

Speaker Change: Thanks for the question.

Tim Deacon: First I would say that financial discipline is a key part of our client impact strategy and is a priority for us So I would characterize this as a modest Enterprise-wide program that we expect to execute over the next 18 months and it's really across all of our business groups in corporate functions

Timothy Deacon: So I would characterize this as a modest enterprise-wide program that we expect to execute over the next 18 months, and it's really across all of our business groups and corporate functions. And the types of areas that we're focused on are opportunities to accelerate the digitization of our business, eliminating duplicative or redundant capabilities, and optimizing our external spend. I would say we've run similar programs from time to time, so this is not new for some life, but it's been some time since we've executed on a focused program like this. And, as we've indicated in our disclosures, we expect these actions to deliver over 200 million pre-tax of efficiencies by 2026.

Tim Deacon: Reported net income of 91 million U.S, includes market-related impacts, acquisition-related expenses, and the amortization of intangibles. In group health and protection, our growth benefits benefited from strong revenue growth and favorable experience in employee benefits. This was more than offset by lower dental results, which I will cover more detail on the next slide. U.S, group results of 243 million U.S, were down 24% year-over-year driven by four large-case government dental sales in the prior year, which occur periodically.

Tim Deacon: And the types of areas that we're focused on are opportunities to accelerate the digitization of our business, eliminating duplicative or redundant capabilities, and optimizing our external spend.

Tim Deacon: I would say we've run similar programs from time to time, so this is not new for Sun Life, but it's been some time since we've executed on a focus program like this.

Timothy Deacon: And as we've indicated in our disclosures, we expect these actions to deliver over 200 million pre-tax in efficiencies by 2026. And this is really to help moderate expenses and support the earnings growth at the top end of our MTOs. So you'd expect the majority of this would flow through earnings over time, starting in the second half of this year through to 2026, with a small portion being strategically reinvested to help accelerate our digital transformation and areas of investment in AI.

Tim Deacon: And as we've indicated in our disclosures, we expect these actions to deliver over $200 million pre-tax of efficiencies by 2026. And this is really to help moderate expenses and support the earnings growth.

Tim Deacon: Individual protection underlying earnings were up significantly over the prior year from favorable mortality experience.

Timothy Deacon: And this is really to help moderate expenses and support the earnings growth at the top of an end of our MTOs. So you'd expect the majority of this would flow through earnings over time, starting in the second half of this year through to 2026.

Tim Deacon: Turning to slide 13, we provide additional details on our U.S, dental performance. As we mentioned in prior quarters, the headwinds experience in our U.S, dental business are largely driven by the impact of the Medicaid re-determination process following the end of the public health emergency. Over the past 12 months, state governments have disenrolled approximately 19% of our Medicaid membership base, which is impacted premiums. Disenrollments are now substantially complete as at the end of July. Further, we have experienced higher utilization from the Medicaid members staying in plan compared to those who were disenrolled, resulting in higher than expected loss and expense rates.

Tim Deacon: at the top end of our MTOs. So, you'd expect the majority of this would flow through earnings over time, starting in the second half of this year through to 2026, with the small portion being strategically reinvested to help accelerate our digital transformation and areas of investment in AI.

Timothy Deacon: With the small portion being strategically reinvested to help accelerate our digital transformation and areas of investment in AI. So we'll really show up on a variety of line items, including other expenses, other fee income, which is net of expenses, our corporate segment results, and to some extent in CSM.

Timothy Deacon: So we'll really show up in a variety of line items, including other expenses, other fee income, which is net of expenses, our corporate segment results, and to some extent, in CSM. So just to paraphrase, it's pretty broad-based across segments, like we shouldn't expect one segment to show more of a benefit of that 200 million that you're indicating versus another. No, that's right.

Tim Deacon: So we'll really show up in a variety of line items including other expenses, other fee income, which is net of expenses, our corporate segment results, and to some extent in CSM.

Timothy Deacon: So just to clarify, some pretty broad-based across segments, like we should expect one segment to show more of a benefit of that 200 million that you're indicating versus another. No, that's right.

Speaker Change: So, just to paraphrase, it's a pretty broad-based across segments, like we shouldn't expect one segment to show more of a benefit of that $200 million that you're indicating versus another? No, that's right. It's quite broad-based across all of our business groups.

Tim Deacon: Issues. Despite these current headwinds, we maintain a favorable outlook for our dental business and expect to deliver underlying earnings of approximately 100 million US by 2025. We will achieve this level of profitability through key actions already underway, including ongoing cost and expense management initiatives, reparting efforts on our existing block of Medicaid business, and from new contract sales across Medicaid, Medicare Advantage, and commercial business lines.

Timothy Deacon: It's quite broad-based across all of our businesses, and then just as a follow-up, so you took the restructuring charge non-corporate through corporate, but are there any benefits coming through this quarter already in any of the segments on an adjusted basis? Yeah, a small portion has come in. But I would expect that to ramp up in the second half of this year as the actions that we're taking will occur over time.

Timothy Deacon: It's quite broad-based across all of our business groups.

Timothy Deacon: And then just as the follow-up, so you took the restructuring charge, non-core through corporate, but are there any benefits coming through this court already in any of the segments on an adjusted basis? Yeah, small portions come in, but I would expect that to ramp up in the second half of this year as the actions that we're taking will occur over time, but you'll start to see that coming through, as you said, through the second half of this year, rateably through to 2026. Would you be able to quantify what's coming through this court already?

Speaker Change: And then just as a follow-up, so you took the restructuring charge non-court through corporate, but are there any benefits coming through this court already in any of the segments on an adjusted basis?

Timothy Deacon: But you'll start to see that coming through, as I said, through the second half of this year, relatably through to. Would you be able to quantify what's coming through this corridor already? It's not very material in the grand context, it'd be probably more in the second. Okay, thank you. The next question is from Tom MacKinnon with BMO Capital Markets. Please go ahead.

Speaker Change: Yeah, a small portion has come in, but I would expect that to ramp up in the second half of this year, as the actions that we're taking will occur over time, but you'll start to see that coming through, as I said, through the second half of this year, relatably through to 2026.

Tim Deacon: Flight 14 outlines Asia's results for the quarter. Underline net income of 179 million was up 19% year-on-year on a constant currency basis driven by strong business growth in Hong Kong, our joint ventures, and high net worth. Reported net income of 151 million includes market-related impacts. We continue to see strong sales momentum in individual protection, particularly in Hong Kong and India, reflected our, reflecting our expanded distribution capabilities. The strong sales also drove new business CSM of 220 million in Asia up 82% from the prior year. Total Asia CSM increased 17% year-on-year. Overall, we're pleased with our strong Q2 results.

Speaker Change: Would you be able to quantify what's coming through this corridor already? It's not very material in the grain context. It'd be probably more in the second half.

Timothy Deacon: It's not very material in the grand context. It would be probably more in the second half.

unknown: Okay, thank you.

Speaker Change: Okay, thank you.

Tom McKinnon: The next question is from Tom McKinnon with BMO Capital Markets. Please go ahead. Yeah, thanks very much.

Speaker Change: The next question is from Tom McKinnon with BMO Capital Markets. Please go ahead.

Unknown Executive: Yeah, thanks very much. Maybe a question for... Kevin, I understand that the partnership with MFS has been a long-term, well-entrenched partnership, but these kinds of consistent net outflows really make it tough to be able to grow over time with more, you know, normal markets in line with your medium-term objectives. So you can kind of see that. If outflows are kind of 2% of the AUM, and markets even grow at eight, that's this is like a six-year grower, not the eight to 10 you would want. So in your talks to the board, how do you justify this? Is it just strictly because you like the free cash flow? And I guess as a follow up. R.I. Sue.

Kevin Strain: Maybe question for Kevin. I understand the partnership with MFS has been a long-term, well-entrenched partnership, but kind of consistent net outflows really make it tough to be able to grow. Over time, with more normal markets in line with your medium-term objectives, so you can kind of see that if outflows are kind of 2% of the AUM and markets you can grow at 8, that's just like a six-grower, not the 8 to 10 you would want.

Tom McKinnon: Yeah, thanks very much maybe question for

Kevin Strain: Kevin, I understand that, you know, the partnership with MFS has been a long-term, well-entrenched partnership, but kind of consistent net outflows really make it tough to be able to grow over time with more, you know, normal markets.

Tim Deacon: We're entering the second half of the year with positive business momentum having achieved all of our medium-term objectives. Our diversified and attractive portfolio of businesses, our strong like-at ratio of 150% and our differentiated purpose-driven culture give us confidence to continue to deliver on our client impact strategy and financial objectives.

Speaker Change: in line with your medium-term objectives. So you can kind of see that.

Speaker Change: If outflows are kind of 2% of the AUM and markets even grow at 8%, this is like a 6 grower, not the 8 to 10 you would want. So, in your talks to the board, how do you justify this?

David Garg: With that, I will turn the call over to David for the Q&A portion of the call. Thank you, Tim. To help ensure that our participants have an opportunity to ask questions this morning, please limit yourselves to one or two questions and then re-Q with any additional questions.

Kevin Strain: So, in your talks to the board, how do you justify this? Is it just strictly because you like the free cash flow?

Kevin Strain: And I guess as a follow-up, I assume the broad-based expense cuts that you're implementing are some of those must be an MFS, and how do you think that should impact margins there? Thanks.

Speaker Change: Is it just strictly because you like the free cash flow and I guess as a follow-up

Gailene: I will now ask the operator to poll the participants. Thank you. To join the question Q, you may press star than one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star than two.

Kevin Strain: Broad Base, the expense cuts that you're implementing, are some of those must be an MFS, and how do you think that should impact margins there? Thanks for the question, Tom. It's Kevin.

Speaker Change: are, I assume...

Speaker Change: the broad-based...

Speaker Change: expense cuts that you're implementing. Some of those must be in MFS and how do you think that should impact margins there? Thanks.

Kevin Strain: Thanks for the question, Tom.

Kevin Strain: So MFS is absolutely included in our medium-term objectives and as part of those numbers that we give. So when you think of our medium-term objectives, we've factored in what MFS is going to contribute to that. MFS is an important part of our asset management strategy. We're the largest asset manager in the country; we have 1.47 trillion in assets under management. And we like the fact that we go from public equities and public fixed income into alternatives and a growing asset management business that is sort of combined between Manjit's leadership and Steve in Asia.

Kevin Strain: It's Kevin. So MFS is absolutely included in our medium-term objectives and as part of those numbers that we give. So when you think of our medium-term objectives, we've factored in what MFS is going to contribute to that. That MFS is an important part of our Asset Management Strategy. Where the largest Asset Manager in the country, we have 1.47 trillion in assets under management. And we like the fact that we go from public equities and public fixing, come into the alternatives and a growing Asset Management business that sort of combined between management's leadership and Steve and Asia.

Kevin Strain: Thanks for the question Tom, it's Kevin. So MFS is absolutely included in our medium-term objectives and and as part of those numbers that we give so when you

Manny Groman: Our first question is from Manny Groman with Scotiabank. Please go ahead. Hi, good morning.

Kevin Strain: Think of our medium-term objectives we've factored in.

Tim Deacon: I want to ask about the restarction charge and just get a better understanding of what cuts you're making and where from a segment point of view as well. Thanks. Hi, morning, Manny. It's Tim. Thanks for the question. First, I would say that financial discipline is a key part of our client impact strategy and is a priority for us. So I would characterize this as a modest enterprise wide program that we expect to execute over the next 18 months and it's really across all of our business groups and corporate functions.

Kevin Strain: What MFS is going to contribute to that. MFS is an important part of our asset management strategy. We're the largest asset manager

Kevin Strain: In the country, we have $1.47 trillion in assets under management. And we like the fact that we go from public equities and public fixed income into the alternatives and a growing asset management business.

Kevin Strain: So MFS is an important part of that. For sure, they're, and you heard this in my opening remarks, you know, they're in a cycle where they've had some headwinds around passive and alternatives. That's why we built out the alternative platform.

Speaker Change: that sort of combine between Manjit's leadership and Steve in Asia. So MFS is an important part of that. For sure they're, and you heard this in my opening remarks,

Kevin Strain: So MFS is an important part of that. For sure there, and you heard this in my opening remarks, they're in a cycle where they've had some headwinds around passive and alternatives. That's why we built out the alternatives platform. But we do believe that they're taking all the right actions; they're doing the right things. They have a strong team; they're client focused. And so, you know, they're an important part of this company, and they're an important part of our overall Asset Management Strategy. And, as I said, that goes all the way. We like the fact that it goes from public equities and fixed income rates to alternatives.

Tim Deacon: And the types of areas that we're focused on are opportunities to accelerate the digitization of our business, eliminating duplicative or redundant capabilities and optimizing our external spend. I would say we've run similar programs from time to time, so this is not new for some life, but it's been some time since we've executed on a focused program like this. And as we've indicated in our disclosures, we expect these actions to deliver over 200 million pre-tax of efficiencies by 2026.

Speaker Change: You know, they're in a cycle where...

Speaker Change: They've had...

Speaker Change: some headwinds around passive and alternative, that's why we built out the alternatives platform.

Speaker Change: But we do believe that they're taking all the right actions. They're doing the right things. They have a strong team They're client focused and so, you know They're important part of this company and they're an important part of our overall asset management strategy And as I said that goes all the way We like the fact that it goes from public equities and fixed income rates for alternatives

Kevin Strain: But we do believe that they're taking all the right actions, they're doing the right things, they have a strong team, and they're client-focused. And so, you know, they're an important part of this company, and they're an important part of our overall asset management strategy. And as I said, that goes all the way. We like the fact that it goes from public equities and fixed income right through alternatives. And the fact that it hasn't kind of hit your medium-term objective. Even if you look back, you know, for the last seven or eight years.

Tim Deacon: And this is really to help moderate expenses and support the earnings growth at the top of an end of our MTOs. So you'd expect the majority of this would flow through earnings over time, starting in the second half of this year through to 2026. With the small portion being strategically reinvested to help accelerate our digital transformation and areas of investment in in AI. So we'll really show up on a variety of line items, including other expenses, other fee income, which is net of expenses, our corporate segment results and to some extent in CSM.

Kevin Strain: And the fact that it doesn't kind of, hasn't really hit your medium term objectives, even if you look back, you know, for the last seven or eight years, what is it that, what is it really contributed to this story then, if it's not growing at the 8 to 10 that you want it to grow at? Well, as you know, MFFUM has been growing despite the fact that they've been in in that redemptions, and I think that that growth has been part of the earning story, but they've also been an important part, as you noted, of cash flow, and they send cash up to the whole co, which has allowed us to do the M&A work and the capital work we've done over the past 10 years, right?

Speaker Change: And the fact that it doesn't kind of, it hasn't really hit your medium-term objectives.

Speaker Change: Even if you look back, you know, for the last seven or eight years

Kevin Strain: What is it that... What does it really contribute to the story then if it's not growing at the 8 to 10 that you want it to grow at? Well, as you know, MFS AUM has been growing despite the fact that they've been in net redemptions. And I think that that growth has been part of the earnings story. But it's also been an important part, as you noted, of cash flow. And they send cash up to the whole company, which has allowed us to do the M&A work and the capital work we've done over the past 10 years, OK?

Speaker Change: What is it that What does it really contribute to the story then if it's not growing at the eight to ten that you want it to grow at?

Speaker Change: Well, as you know, MFSAUM has been growing despite the fact that they've been in net redemptions. And I think that that growth has been part of the earning story, but they've also been an important part, as you noted, of cash flow.

Tim Deacon: So just to clarify, some pretty broad-based across segments, like we should expect one segment to show more of a benefit of that 200 million that you're indicating versus another. No, that's right. It's quite broad-based across all of our business groups.

Speaker Change: and they send cash up to the whole co, which has allowed us to do the M&A work and the capital work we've done over the past 10 years, right? So if you look at the significant deployment of capital we've done, MFS has been a good supporter of that deployment of capital.

Kevin Strain: So if you look at the significant deployment of capital we've done, MFS has been a good supporter of that deployment of capital. Okay, understood. Thanks. The next question is from Doug Young with Desjardins. Please go ahead.

Kevin Strain: So if you look at the significant deployment of capital we've done, MFFUM has been a good supporter of that deployment of capital.

Tim Deacon: And then just as the follow-up, so you took the restructuring charge, non-core through corporate, but are there any benefits coming through this court already in any of the segments on an adjusted basis? Yeah, small portions come in, but I would expect that to ramp up in the second half of this year as the actions that we're taking will occur over time, but you'll start to see that coming through, as you said, through the second half of this year, rateably through to 2026. Would you be able to quantify what's coming through this court already? It's not very material in the grand context. It would be probably more in the second half. Okay, thank you.

unknown: Okay, understood, thanks.

Speaker Change: Okay, understood. Thanks

Doug Young: The next question is from Doug Young with Desjardins. Please go ahead. Hi, good morning. Maybe just kind of a big, big picture question for like $1.72 of underlying earnings, Kevin: is this the true earnings power of the company? Obviously, it was a lot less last quarter, and it bounced around a little bit. Can you talk a bit about, you know, when you think of that and trying to gauge whether that is the case, like what went for you and against you this quarter when you think through that? I guess we, as we talked about, I see last quarter; I see last quarter is more of the anomaly, and this quarter is a return to sort of what our expectations would have been.

Speaker Change: David Garg,

Speaker Change: The next question is from Doug Young with Desjardins. Please go ahead.

Kevin Strain: Hi, good morning. Maybe just a kind of a big, big picture question for you, like $1.72 of underlying earnings, Kevin. Is this the true earnings power of the company? Obviously, it was a lot less last quarter, and it's bounced around a little bit. Can you talk a bit about when you think of that and trying to gauge whether that is the case, like what went for you and against you this quarter when you think through that?

Doug Young: Like $1.72 of underlying earnings, Kevin. Like, is this the true earnings power of the company? Obviously, it was a lot less last quarter, and it's bounced around a little bit. Can you talk a bit about...

Speaker Change: You know, when you think of that and trying to gauge whether that is the case, like what went for you and against you this quarter when you think through that?

Tom McKinnon: The next question is from Tom McKinnon with BMO Capital Markets. Please go ahead. Yeah, thanks very much.

Kevin Strain: Doug, as we talked about, I see last quarter was more of an anomaly, and this quarter is a return to sort of what our expectations would have been. We had a number of things that went against us last quarter, and we talked about those.

Speaker Change: I guess we as we talked about I see last quarter I see last quarter is more of the anomaly and and this quarter is a return to sort of what our expectations would have been we had a number of things that went against us last quarter and we talked about those for sure the dental results

Kevin Strain: Maybe question for Kevin. I understand the partnership with MFS has been a long-term well-entrenched partnership, but kind of consistent net outflows really make it tough to be able to grow. Over time, with more normal markets in line with your medium-term objectives, so you can kind of see that if outflows are kind of 2% of the AUM and markets you can grow at 8, that's just like a six-grower, not the 8 to 10 you would want.

Kevin Strain: We had a number of things that went against the last quarter, and we talked about those for sure that dental results will continue to impact us this year, but we see yourself earning our way through that.

Speaker Change: will continue to impact us this year, but we see ourselves earning our way through that. So I see this as a return to more of what our expected levels of underlying earnings would be.

Kevin Strain: So I see this as a return to more of what our expected levels of underlying earnings would be.

Kevin Strain: For sure, the dental results will continue to impact us this year, but we see ourselves earning our way through that. So I see this as a return to more of what our expected levels of underlying earnings would be. Okay, and then, Okay, I'll leave it at that.

Doug Young: Okay, I'll leave it at that, and then Dan, on the US stop-loss side, you had negative morbidity experience, yet it was attributed to just normalizing claims utilization. So this is a supply that you're baking in, you know, more COVID utilization into your pricing, or can you help me think through this and talk about pricing trends in this business. And why, you know, if dental gets better, you know, you should be, you know, obviously there's going to be potentially a deterioration in the stop loss business. Why shouldn't we be kind of worried about those two opposing trends?

Unknown Executive: And then Dan, on the US stop loss side, you had negative morbidity experience, yet you it was attributed to just normalizing claims utilization. So, does this imply that you're baking in, you know, more COVID utilization into your pricing? Or can you help me think through this and talk about, you know, pricing trends in this business and why, as dental gets better, should we, you know, obviously, there's going to be a deterioration in the stop loss business, why shouldn't we be kind of worried about those two opposing trends? Sure, Doug.

Speaker Change: Okay, and then...

Speaker Change: Okay, I'll leave it at that. And then Dan, on the U.S. stop-loss side...

Kevin Strain: So in your talks to the board, how do you justify this? Is it just strictly because you like the free cash flow? And I guess as a follow-up, I assume the broad-based expense cuts that you're implementing are some of those must be an MFS, and how do you think that should impact margins there? Thanks. Thanks for the question, Tom. It's Kevin. So MFS is absolutely included in our medium-term objectives and as part of those numbers that we give.

Speaker Change: You had negative morbidity experience.

Dan: yet it was attributed to just normalizing claims utilization. So, does this imply that you're baking in?

Dan: you know, more COVID utilization into your pricing? Or can you help me think through this and

Speaker Change: and talk about, you know, pricing trends in this business and why, you know, as dental gets better, you know, should we, you know, obviously there's going to be potentially a deterioration in the stop-loss business. Why shouldn't we be kind of worried about those two opposing trends?

Daniel Fishbein: Sure, Doug.

Unknown Executive: You know, what we've seen this year is, as we've talked about, a normalization of utilization, especially hospital utilization and things like outpatient surgery. That normalization back to pre-COVID levels happened a little faster over the past two or three quarters than I think anybody was expecting, but it had been happening gradually over time.

Daniel Fishbein: You know, what we've seen this year is, as we've talked about, a normalization of utilization, especially hospital utilization and things like outpatient surgery. That normalization back to pre-COVID levels happened a little faster over the past two or three quarters than I think anybody was expecting. It had been happening gradually over time, most likely that it is due to hospitals, big hospital systems, especially now being able to staff fully when that was a challenge for quite some time, even lagging after the worst of COVID. So we seem to be back to normal utilization.

Speaker Change: Sure, Doug. You know, what we've seen this year is, as we've talked about, a normalization of utilization, especially hospital utilization and things like outpatient surgery.

Kevin Strain: So when you think of our medium-term objectives, we've factored in what MFS is going to contribute to that. That MFS is an important part of our Asset Management Strategy where the largest Asset Manager in the country, we have 1.47 trillion in assets under management. And we like the fact that we go from public equities and public fixing come into the alternatives and a growing Asset Management business that sort of combined between management's leadership and Steve and Asia.

Doug Young: That normalization back to pre-COVID levels happened a little faster over the past two or three quarters than I think anybody was expecting. It had been happening gradually over time, most likely that is due to hospitals, big hospital systems especially, now being able to staff fully when that was a challenge for quite some time, even lagging after the worst of COVID. So we seem to be back to normal utilization.

Unknown Executive: Most likely, that is due to hospitals, big hospital systems especially, now being able to staff fully when that was a challenge for quite some time, even lagging after the worst of COVID. So, we seem to be back to normal utilization. As far as the particular, you know, sequential quarter results, we do have some seasonality in our reserving. Generally, the way the reserves emerge, we release some reserves in the first and fourth quarters and strengthen reserves in the second and third quarters.

Kevin Strain: So MFS is an important part of that. For sure there, and you heard this in my opening remarks, they're in a cycle where they've had some headwinds around passive and alternatives, that's why we built out the alternatives platform. But we do believe that they're taking all the right actions, they're doing the right things, they have a strong team, they're client focused. And so, you know, they're an important part of this company and they're an important part of our overall Asset Management Strategy. And as I said, that goes all the way. We like the fact that it goes from public equities and fixed income rates to alternatives.

Daniel Fishbein: As far as the particular, you know, sequential quarter results, we do have some seasonality in our reserving. Generally, the way the reserves emerge, we release some reserves in the first and fourth quarters and strengthen reserves in the second and third quarters. So most of the sequential difference that you saw was simply that seasonal reserving pattern. What's most important and what we look at is the year-to-date result, and right now both our loss ratio and our margins in the stop loss business are consistent with our pricing targets. Going forward, we see some signs that utilization is stabilizing.

Speaker Change: As far as the particular, you know, sequential quarter results, we do have some seasonality in our reserving. Generally, the way the reserves emerge, we release some reserves in the first and fourth quarters and strengthen reserves in the second and third quarters. So, most of the sequential difference that you saw was simply that seasonal reserving pattern.

Unknown Executive: So, most of the sequential difference that you saw was simply that seasonal reserving pattern. What's most important in what we look at is the year-to-date result. And right now, both our loss ratio and our margins in the stop-loss business are consistent with our pricing targets. Going forward, we see some signs that utilization is stabilizing. You may hear that from some of the health insurers as well. And we are taking, as we always do, a conservative approach to pricing. Over the past few years, some of our competitors were, you know, this is what happens. They had good results. They can get aggressive.

Speaker Change: What's most important and what we look at is the year-to-date result, and right now both our loss ratio and our margins in the stop-loss business are consistent with our pricing targets.

Kevin Strain: And the fact that it doesn't kind of, hasn't really hit your medium term objectives, even if you look back, you know, for the last seven or eight years, what is it that, what is it really contributed to this story then, if it's not growing at the 8 to 10 that you want it to grow at? Well, as you know, MFFUM has been growing despite the fact that they've been in in that redemptions and I think that that growth has been part of the earning story, but they've also been an important part, as you noted, of cash flow and they send cash up to the whole co, which has allowed us to do the M&A work and the capital work we've done over the past 10 years, right? So if you look at the significant deployment of capital we've done, MFFUM has been a good supporter of that deployment of capital.

Speaker Change: Going forward, we see some signs that utilization is stabilizing. You may hear that from some of the health insurers as well.

Daniel Fishbein: You may hear that from some of the health insurers as well. And we aren't shaking as we always do. A conservative approach toward pricing. Over the past few years, some of our competitors were, you know, this is what happens. They have good results. They get aggressive. We generally did not participate in that. And now, in some other competitors' calls, they've talked about raising rates. So we're probably looking toward a 1-1 next year where the market starts to push pricing upward. Okay.

Speaker Change: And we are taking, as we always do, a conservative approach toward pricing. Over the past few years, some of our competitors were, you know, this is what happens. They have good results, they get aggressive. We generally did not participate in that. And now, in some other competitors' calls, they've talked about raising rates.

Tom McKinnon: Okay, understood, thanks.

Unknown Executive: We generally did not participate in that. And now, on some other competitors' calls, they've talked about raising rates. So, we're probably looking toward a 1-1 next year where the market starts to push prices upward. Okay. I appreciate the colors, thank you.

Speaker Change: So we're probably looking toward a 1-1 next year where the market starts to push pricing upward.

unknown: I appreciate the colors.

unknown: Thank you.

Speaker Change: Okay.

Speaker Change: Appreciate the color, thank you.

Tom Gallagher: The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

Unknown Executive: The next question is from Tom Gallagher with Evercore ISI. Please go ahead. Good morning, a few questions on US 100 million of dental earnings that you're guiding to for 25. Is any of that driven by this 200 million cost saves plan for 26? Or is most of that expected to come from loss ratio improvement? It comes really from all of that and other things as well.

Speaker Change: The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

Timothy Deacon: Good morning. A few questions on the U.S. The 100 million of dental earnings that you're guiding to for 25. Is any of that driven by this 200 million of cost saves plan for 26? Or is most expected to come from loss ratio improvement? It comes really from all of that and other things as well. So we have a series of initiatives that are underway, most of which, even though they've been underway for some time, will start to show in the results in the second half of the year. So, on the expenses, that is one of the tactics we're using. The dental business is one of the larger consumers of the reserve and of those actions.

Doug Young: The next question is from Doug Young with Desjardins, please go ahead. Hi, good morning. Maybe just kind of a big, big picture question for like $1.72 of underlying earnings, Kevin, like, is this the true earnings power of the company? Obviously it was a lot less last quarter and it bounced around a little bit. Can you talk a bit about, you know, when you think of that and trying to gauge whether that is the case, like what went for you and against you this quarter when when you think through that?

Tom Gallagher: Good morning. A few questions on the U.S. The $100 million of dental earnings that you're guiding to for 2025, is any of that driven by this $200 million of cost saves plan for 2026?

Speaker Change: or is most expected to come from loss ratio improvement.

Unknown Executive: So we have a series of initiatives that are underway, most of which, even though they've been underway for some time, will start to show in the results in the second half of the year. So on the expenses, that is one of the tactics we're using. The dental business is one of the larger consumers of the reserve and of those actions.

Speaker Change: It comes really from all of that and other things as well. So we have a series of initiatives that are underway

Speaker Change: Most of which, even though they've been underway for some time, will start to show in the results in the second half of the year.

Kevin Strain: I guess we, as we talked about, I see last quarter, I see last quarter is more of the anomaly and this quarter is a return to sort of what our expectations would have been. We had a number of things that went against the last quarter and we talked about those for sure that dental results will continue to impact us this year, but we see yourself earning our way through that. So I see this as a return to more of what our expected levels of underlying earnings would be.

Speaker Change: So, on the expenses, that is one of the tactics we're using. The dental business is one of the larger consumers of the reserve and of those actions, so there's quite a bit of that that will start to layer into the results in the second half of the year.

Unknown Executive: So there's quite a bit of that that will start to layer into the results in the second half of the year. We also have a robust set of dental cost management actions, additional utilization review, claims edits, and also adjustments to network composition to make sure that we're matching the cost to the prices that we're getting. And then prices themselves are a big aspect of this as well. 13 contracts have so far been renegotiated. 12 of those 13 have been at or above the levels that we thought were needed.

Timothy Deacon: So there's quite a bit of that that will start to layer into the results in the second half of the year. We also have a robust set of dental cost management actions, additional utilization review, claims that it, and also adjustments to network composition to make sure that we're matching the cost to the prices that we're getting. And then prices themselves are a big aspect of this as well. 13 contracts have so far been renegotiated. 12 of those 13 have been above the levels that we thought were needed. That represents about half the business. Another 40% or so will reprise between now and the end of the year.

Speaker Change: We also have a robust set of dental cost management actions, additional utilization review, claims edits, and also adjustments to network composition to make sure that we're matching.

Daniel Fishbein: Okay, I'll leave it at that and then Dan, on the US stop last side, you had negative morbidity experience, yet it was attributed to just normalizing claims utilization. So this is a supply that you're baking in, you know, more COVID utilization into your pricing, or can you help me think through this and talk about pricing trends in this business. And why, you know, if dental gets better, you know, you should be, you know, obviously there's going to be potentially a deterioration in the stop loss business.

Speaker Change: the cost to the prices that we're getting.

Speaker Change: And then prices themselves are a big aspect of this as well. Thirteen contracts have so far been renegotiated. Twelve of those thirteen have been at or above the levels that we thought were needed. That represents about half the business.

Unknown Executive: That represents about half the business. Another 40% or so will reprice between now and the end of the year, so we will start to see meaningful impact from the repricing as well. So it's really an all of the above kind of strategy.

Speaker Change: Another 40% or so will reprice between now and the end of the year. So we will start to see meaningful impact from the repricing as well. So it's really an all of the above kind of strategy.

Timothy Deacon: So we will start to see meaningful impact from the repricing as well. So it's really on all of the above kind of strategy. Gotcha.

Unknown Executive: Gotcha, thanks. And then just for a follow up on medical stop loss. So it sounds like pricing is firming a bit based on how you described it. Would you even though your, I guess, experience has been trending in line with pricing, would you still expect to be able to get some rate yourself? Or would you expect to take some market share and see better growth? Yes, it's, of course, been a very unusual last four to five years with COVID.

Timothy Deacon: Thanks. And then just for a follow-up on medical stop loss. So it sounds like pricing is firming a bit based on how you described it. Would you, even though your, I guess, experience has been trending in line with pricing, would you still expect to be able to get some rate yourself, or would you expect to take some market share and see better growth? Yes, it's of course been a very unusual lap for five years with COVID. There's been a historic classic underwriting cycle on stop loss. Three years of improving results where pricing gets more aggressive and then three years of deteriorating results where pricing goes off.

Daniel Fishbein: Why shouldn't we be kind of worried about those two opposing trends? Sure, Doug. You know, what we've seen this year is, as we've talked about, a normalization of utilization, especially hospital utilization and things like outpatient surgery. That normalization back to pre-COVID levels happened a little faster over the past two or three quarters than I think anybody was expecting. It had been happening gradually over time, most likely that it is due to hospitals, big hospital systems, especially now being able to staff fully when that was a challenge for quite some time, even lagging after the worst of COVID. So we seem to be back to normal utilization.

Speaker Change: Gotcha, thanks. And then just for a follow-up on medical stop-loss, so it sounds like pricing is firming a bit based on how you described it. Would you, even though you're

Speaker Change: I guess, experience has been trending in line with pricing. Would you still expect to be able to get some rate yourself, or would you expect to take some market share and see better growth?

Speaker Change: Yes, it's of course been a very unusual last four to five years with COVID. There's been a historic, a classic underwriting cycle on stop-loss, three years of improving results.

Unknown Executive: There's been a historic, classic underwriting cycle on stop loss, three years of improving results, where pricing gets more aggressive, and then three years of deteriorating results, where pricing goes up. But that whole cycle was delayed by three to four years by the impacts of COVID, particularly around utilization. We've seen a pretty aggressive pricing market in the last year, including currently. We're anticipating that pricing will firm as we head towards the one-year cycle.

Speaker Change: where pricing gets more aggressive and then three years of deteriorating results where pricing goes up. That whole cycle was delayed by three to four years by the impacts of COVID, particularly around utilization. We've seen a pretty aggressive pricing market in the last year, including currently. We're anticipating that pricing will firm as we head towards the 1-1 cycle. As you're seeing other companies report, loss ratio is substantially higher than ours.

Timothy Deacon: That whole cycle was delayed by three to four years by the impacts of COVID, particularly around utilization. We've seen a pretty aggressive pricing market in the last year, including currently, where anticipating that pricing will firm as we head towards the one one cycle. As you're seeing other companies report, loss ratio substantially higher than ours. We have been taking some share, although most recently a lot of that has been coming from new partnerships that we put in place. We have a really good set of partnerships both with health plans and certain markets, as well as with captive management partners.

Daniel Fishbein: As far as the particular, you know, sequential quarter results, we do have some seasonality in our reserving. Generally, the way the reserves emerge, we release some reserves in the first and fourth quarters and strengthen reserves in the second and third quarters. So most of the sequential difference that you saw was simply that seasonal reserving pattern. What's most important and what we look at is the year-to-date result, and right now both our loss ratio and our margins in the stop loss business are consistent with our pricing targets.

Unknown Executive: As you're seeing other companies report, the loss ratio is substantially higher than ours. We have been taking some share, although most recently, a lot of that has been coming from new partnerships that we've put in place. We have a really good set of partnerships, both with health plans in certain markets, as well as with captive management partners.

Speaker Change: We have been taking some share, although most recently a lot of that has been coming from new partnerships.

Daniel Fishbein: Going forward, we see some signs that utilization is stabilizing. You may hear that from some of the health insurers as well. And we aren't shaking as we always do a conservative approach toward pricing. Over the past few years, some of our competitors were, you know, this is what happens. They have good results. They get aggressive. We generally did not participate in that. And now in some other competitors' calls, they've talked about raising rates. So we're probably looking toward a 1-1 next year where the market starts to push pricing upward.

Speaker Change: that we put in place. We have a really good set of partnerships both with health plans in certain markets as well as with captive management partners and that has, you know, contributed to our growth.

Timothy Deacon: And that has contributed to our growth.

Unknown Executive: And that has, you know, contributed to our growth. In general, in the direct market, we're a careful pricer, and this is the time when we really have to be the most careful. But we're optimistic, especially as we head into 2025, that the market will be one that's favorable. Hey, thanks. The next question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Timothy Deacon: In general, in the direct market, we're a careful price, and this is the time where we really have to be the most careful. But we're optimistic, especially as we head into 2025, that the market will be one that's favorable. to us.

Speaker Change: In general, in the direct market, we're a careful pricer, and this is the time where we really have to be the most careful, but we're optimistic, especially as we head into 2025, that the market will be one that's favorable to us.

unknown: Thanks.

Speaker Change: Okay, thanks.

Gabriel Dechaine: Next question is from Gabriel Dechaine from National Bank Financial. Please go ahead. Good morning.

Speaker Change: The next question is from Gabrielle Deschain from National Bank Financial. Please go ahead.

Doug Young: Okay. I appreciate the colors.

Unknown Executive: Good morning. Just a question on the dental business again, similar to the last question, but the $100 million target is an absolute target. It's not an annual run rate, exit rate kind of thing for next year. I'm assuming that's the case. And then, from a glide path sort of way, is it more of a backend loaded figure?

Timothy Deacon: Just a question on the dental business, again, similar to the last question, but the $100 million target, that's an absolute target. It's not an annual run rate, exit rate kind of thing for next year. I'm assuming that's the case.

Tom Gallagher: Thank you. The next question is from Tom Gallagher with Evercore ISI. Please go ahead.

Gabrielle Deschain: Good morning. Just a question on the dental business again, similar to the last question, but the $100 million target, that's an absolute target. It's not an annual run rate, exit rate kind of thing for next year.

Tom Gallagher: Good morning. A few questions on the U.S. The 100 million of dental earnings that you're guiding to for 25. Is any of that driven by this 200 million of cost saves plan for 26? Or is most expected to come from loss ratio improvement? It comes really from all of that and other things as well. So we have a series of initiatives that are underway, most of which, even though they've been underway for some time, will start to show in the results in the second half of the year.

Timothy Deacon: And then from a glide path out sort of way, is it more of a back end hold at figure? How should we be, you know, anticipating that to evolve over next year? Yeah, so to your first question, it is a full year, you know, targets that we're talking about there, not just getting there at the end of the year. There is some seasonality in the dental business. So we'll have to remember that the, you know, there's a big, big portion of our dental business. Of course, that's Medicaid, and a big portion of that is kids.

Speaker Change: I'm assuming that's the case. And then from a glide path sort of way, is it more of a back-end loaded figure? How should we be, you know, anticipating that to evolve over the course of next year?

Unknown Executive: How should we be anticipating that to evolve over the course of next year? Yeah, so to your first question, it is a full year, you know, target that we're talking about. They're not just getting there at the end of the year.

Unknown Executive: Um, there is some seasonality in the dental business. So we'll have to remember that the, you know, there's a big, big portion of our dental business, of course, that's Medicaid. And a big portion of that is kids. So we actually see some significant seasonality in the business. For example, the summer is when a lot of kids go to the dentist getting ready for the school year.

Speaker Change: Yeah, so to your first question, it is a full year, you know, target that we're talking about, they are not...

Speaker Change: Not just getting there at the end of the year. There is some seasonality in the dental business, so we'll have to remember that. There's a big, big portion of our dental business, of course, that's Medicaid, and a big portion of that is kids.

Timothy Deacon: So we actually see some significant seasonality in the business. For example, the summer is when a lot of kids go to the dentist, getting ready for the school year. So those kinds of things will create some natural volatility quarter to quarter. We think, you know, we see recovery of the business beginning in the third quarter, and then a significant recovery in the fourth quarter of this year. Okay, puts us in a, in a good position for next year. So to keep you through this year, you expect better dental despite the whole back to school. Should you want to do an answer thing?

Tom Gallagher: So on the expenses, that is one of the tactics we're using, the dental business is one of the larger consumers of the reserve and of those actions. So there's quite a bit of that that will start to layer into the results in the second half of the year. We also have a robust set of dental cost management actions, additional utilization review, claims that it, and also adjustments to network composition to make sure that we're matching the cost to the prices that we're getting.

Speaker Change: So we actually see some significant seasonality in the business. For example, the summer is when a lot of kids go to the dentist getting ready for the school year. So those kinds of things will create some natural volatility quarter to quarter.

Unknown Executive: So those kinds of things will create some natural volatility quarter to quarter, but we think, you know, we see recovery of the business beginning in the third quarter and then a significant recovery in the fourth quarter of this year, putting us in a good position for next. So in Q3 of this year, do you expect better dental despite the whole back-to-school kids going to the dentist thing? Yes, I think, you know, that is a mitigating factor. So, you know, we wouldn't expect to see a dramatic increase in the third quarter, but we do expect a more significant increase to emerge in the fourth quarter. I got it.

Speaker Change: We think, you know, we see recovery of the business beginning in the third quarter and then a significant recovery in the fourth quarter of this year. Okay. Puts us in a good position for next year.

Speaker Change: So Q3 of this year, you expect better dental despite the whole back-to-school kids going to the dentist thing? Yes, I think you know that is a mitigating factor So, you know, we wouldn't expect to see a dramatic increase in the third quarter But we do expect a more significant increase to emerge in the fourth quarter

Timothy Deacon: Yeah, so you think, you know, that is a mitigating factor. So, you know, we wouldn't expect to see a dramatic increase in the third quarter, but we do expect a more significant increase to emerge in the fourth quarter. Got it.

Tom Gallagher: And then prices themselves are a big aspect of this as well. 13 contracts have so far been renegotiated. 12 of those 13 have been after above the levels that we thought were needed. That represents about half the business. Another 40% or so will reprise between now and the end of the year. So we will start to see meaningful impact from the repricing as well. So it's really on all of the above kind of strategy. Gotcha. Thanks.

Unknown Executive: And then your comments on stop loss in the US again, I, you know, I hear that competitors are going to be, you know, repricing because of, you know, underpricing previously. I'm not quite sure I understand what your strategy is. Can you talk about the duration of these contracts as well and how quickly repricing can actually have an effect? And then in Canada, I guess, the normalization of morbidity experience; you're still positive, but less positive than it was before. So that tailwind is fading.

Daniel Fishbein: And then your comments on stop loss in the US again, I, you know, I hear that competitors are going to be, you know, reprising because of, you know, underpricing previously. I'm not quite sure I got what your strategy is. Can you talk about the duration of these contracts as well and how quickly reprising can actually have an effect. And then in Canada, I'm, I guess, the normalization of morbidity experience, just so positive, but less positive than it was before. So that tailwind is fading, correct me if I'm wrong there.

Speaker Change: Got it. And then your comments on stop-loss in the U.S. again. I hear that competitors are going to be repricing because of underpricing previously. I'm not quite sure I got what your strategy is.

Speaker Change: Can you talk about the duration of these contracts as well and how quickly repricing can actually have an effect?

Tom Gallagher: And then just for a follow up on medical stop loss. So it sounds like pricing is firming a bit based on how you described it.

Speaker Change: And then in Canada, I'm...

Speaker Change: I guess normalization of morbidity experience. You're still positive, but less positive than I was before. So that tailwind is fading. Correct me if I'm wrong there.

Daniel Fishbein: Would you, even though your, I guess, experience has been trending in line with pricing, would you still expect to be able to get some rate yourself or would you expect to take some market share and see better growth? Yes, it's of course been a very unusual lap for five years with COVID. There's been a historic classic underwriting cycle on stop loss. Three years of improving results where pricing gets more aggressive and then three years of deteriorating results where pricing goes off.

Unknown Executive: Correct me if I'm wrong there. Like, is this something that we should view as we're back to a new normal, or is there a similar repricing strategy afoot for the Canadian business? Sure. This is Dan.

Daniel Fishbein: Like, is this something that we should view as we're back to a new normal, or is there a similar reprising strategy of foot for the Canadian business?

Speaker Change: Like, is this something that we should view as...

Speaker Change: We're back to a new normal, or is there a similar repricing strategy afoot for the Canadian business?

Daniel Fishbein: Sure. This is Dan. I'll start with the US. Yep. Ask questions. So the, you know, we, we tend to be a conservative pricer. So when there are these cycles, we are not one of the carriers that goes out in prices aggressively for market share. Now, you saw we had good sales results in the second quarter, but a lot of that came from some of these new partnerships versus, you know, from aggressive pricing. We do think that, you know, pricing will get more rational as we head into next year because a lot of our competitors are not having that same kind of experience.

Unknown Executive: I'll start with the US boss question. So we tend to be a conservative pricer. So, when there are these cycles, we are not one of the carriers that goes out and prices aggressively for market share. Now, you saw we had good sales results in the second quarter, but a lot of that came from some of these new partnerships versus aggressive pricing. We do think that pricing will get more rational as we head into next year because a lot of our competitors are not having that same kind of experience.

Dan: Sure, this is Dan. I'll start with the U.S. boss question. So the, you know, we tend to be a conservative pricer. So when there are these cycles...

Dan: We are not one of the carriers that goes out and prices aggressively for market share. Now, you saw we had good sales results in the second quarter, but a lot of that came from some of these new partnerships versus, you know, from aggressive pricing.

Daniel Fishbein: That whole cycle was delayed by three to four years by the impacts of COVID, particularly around utilization. We've seen a pretty aggressive pricing market in the last year, including currently, where anticipating that pricing will firm as we head towards the one one cycle. As you're seeing other companies report, loss ratio substantially higher than ours. We have been taking some share, although most recently a lot of that has been coming from new partnerships that we put in place.

Dan: We do think that, you know, pricing will get more rational as we head into next year because

Dan: a lot of our competitors are not having that same kind of experience. And on your question about how often this reprices, one of the things we love about the business

Daniel Fishbein: And on your question about how often this reprises, one of the things we love about the business, but also one of the things that makes it most challenging, is almost all of it renews every year. So we're able to rewrite the business annually. Now, of course, that of course means we also have a big task. We have to try and renew all the business every year. But it does enable us to react pretty quickly to these kinds of changes in the market.

Unknown Executive: And on your question about how often this reprices, one of the things we love about the business, but also one of the things that makes it most challenging, is that almost all of it renews every year. So, we're able to reprice the business annually. Now, that, of course, means we also have a big task. We have to try and renew all the business every year, but it does enable us to react pretty quickly to these kinds of changes in the market. Okay. Good morning.

Dan: but also one of the things that makes it most challenging is almost all of it renews every year. So we're able to rewrite the business annually. That of course means we also have a big task. We have to try and renew all the business every year. But it does enable us to react pretty quickly to these kinds of changes in the market.

Daniel Fishbein: We have a really good set of partnerships both with health plans and certain markets as well as with captive management partners. And that has contributed to our growth. In general, in the direct market, we're a careful price, and this is the time where we really have to be the most careful.

unknown: Okay.

unknown: Benzak?

Unknown Executive: So you're correct. The experience and visibility are positive this quarter, but not as positive as the same quarter last year, as you pointed out. And keep in mind that, at 372 earnings per share last year, that was already a record quarter for us. In terms of your comment on sustainability, I remind you, as we've discussed before, that some of it comes from the pricing action that we've taken. We've been quite disciplined in terms of our pricing and wanting to make sure that we deliver on our objectives.

Mario Mendonca: Yeah, this is a good morning. So you're correct. The experience and visibility is positive this quarter, but not as positive as the same quarter last year, as you pointed out. Keep in mind that at 372 of earnings last year, that would already be a record quarter for us.

Dan: Okay.

Mr. Jacques: Mr. Jacques, good morning.

Daniel Fishbein: But we're optimistic, especially as we head into 2025 that the market will be one that's favorable, to us. Thanks.

Mr. Jacques: So you're correct. The experience and visibility is positive this quarter, but not as positive as the same quarter last year, as you pointed out. Keep in mind that at 372 of earnings last year, that was already a record quarter for us.

Gabriel Dechaine: Next question is from Gabriel Dechaine from National Bank Financial. Please go ahead. Good morning. Just a question on the dental business, again, similar to the last question, but the $100 million target, that's an absolute target. It's not an annual run rate exit rate kind of thing for next year. I'm assuming that's case. And then from a glide path out sort of way, is it more of a back end hold at figure?

Unknown Executive: So some of it will continue. I mean, at the level we're at now in terms of earnings, I would say there's probably going to be some moderation. But, you know, some of it is definitely going to continue. Okay, great. Enjoy the rest of your summer, everybody.

Kevin Strain: In terms of your comment on sustainability, remind you, as we've discussed before, that. You know, some of it comes from the pricing action that we've taken. We've been quite disciplined in terms of our pricing and wanting to make sure that we deliver on our objectives. So some of it will continue. I mean, at the level we're at now in terms of earnings, I would say there's probably going to be some moderation. But you know, some of it is definitely going to continue.

Mr. Jacques: In terms of your comment on sustainability, I remind you, as we've discussed before, that

Gabriel Dechaine: How should we be, you know, anticipating that to evolve over next year? Yeah, so to your first question, it is a full year, you know, targets that we're talking about there, not just getting there at the end of the year. There is some seasonality in the dental business. So we'll have to remember that the, you know, there's a big, big portion of our dental business. Of course, that's Medicaid and a big portion of that is kids.

Mr. Jacques: Some of it comes from the pricing action that we've taken. We've been quite disciplined in terms of our pricing and wanting to make sure that we deliver on our objectives. So some of it will continue.

Mr. Jacques: At the level we're at now in terms of earnings, I would say there's probably going to be some moderation But you know some of it is definitely going to continue

Kevin Strain: Okay, great.

unknown: I'll draw the rest of your summary, everybody. Thank you.

Speaker Change: Okay, great. Enjoy the rest of your summer, everybody.

Paul Holden: The next question is from Paul Holden with CIDC. Please go ahead.

Unknown Executive: Thank you. The question is from Paul Holden with CIBC; please go ahead. Thank you. Good morning.

Gabriel Dechaine: So we actually see some significant seasonality in the business, for example, the summer is when a lot of kids go to the dentist getting ready for the school year. So those kinds of things will create some natural volatility quarter to quarter. We think, you know, we see recovery of the business beginning in the third quarter, and then a significant recovery in the fourth quarter of this year. Okay, puts us in a, in a good position for next year.

Speaker Change: The next question is from Paul Holden with CIBC, please go ahead.

Unknown Executive: I want to ask a question on the new disclosure around organic capital generation. So $588 million for the quarter. First off, thanks for that new disclosure. I find it very helpful.

Timothy Deacon: Thank you. Good morning. We'll ask a question on the new disclosure round organic capital generation. So 580 million for the quarter. So first off, thanks for that new disclosure. I find it very helpful. But my question really is, is that a good indicative run rate of what we should expect quarterly? Was there anything that maybe added to it? This quarter is attracted. Anyways, just trying to get a sense of run rate. Thank you.

Paul Holden: Thank you, good morning. I want to ask a question on the new disclosure around organic capital generation, so $588 million for the quarter. So first off, thanks for that new disclosure, I find it very helpful. But my question really is, is that a good indicative run rate of what we should expect quarterly? Was there anything that maybe...

Timothy Deacon: But my question really is, is that a good indicative run rate of what we should expect quarterly? Was there anything that may have been added to it this quarter, or subtracted? I was just trying to get a sense of the run rate. Thank you.

Paul Holden: Added to it this quarter, subtracted. I was just trying to get a sense of run rate. Thank you.

Timothy Deacon: By Paul Tim, thanks for the question. You're right. This is a new disclosure, and we really sought to help give more transparency to how we view a more normalized capital contribution and the same way we think of underlying net income, but for capital. So this would be excluding market-related impacts. So taking our underlying net income and our organic CSM movement, less our shareholder dividends. So you're right that the number that you referenced, the 588 for this quarter, was net of dividends. And we haven't set a formal target, but generally expects that organic capital generation should range between 20% to 30% of underlying net income.

Timothy Deacon: Thanks for the question. You're right, this is a new disclosure, and we really sought to help give more transparency to how we view a more normalized capital contribution in the same way we think of underlying net income, but for capital. So this would be excluding market-related impacts. So, taking our underlying net income and our organic CSM movement, less our shareholder dividends. So you're right that the number that you referenced, the 588 for this quarter, was net of dividends. And we haven't set a formal target, but generally expect that organic capital generation should range between 20 to 30% of underlying net income.

Paul Holden: Hi Paul, it's Tim. Thanks for the question.

Gabriel Dechaine: So to keep you through this year, you expect better dental despite the whole back to school. Should you want to do an answer thing? Yeah, so you think, you know, that is a mitigating factor. So, you know, we wouldn't expect to see a dramatic increase in the third quarter, but we do expect a more significant increase to emerge in the fourth quarter. Got it. And then your comments on stop loss in the US again, I, you know, I hear that competitors are going to be, you know, reprising because of, you know, underpricing previously.

Tim Deacon: You're right, this is a new disclosure and we really sought to help give more transparency to how we view a more normalized society.

Tim Deacon: capital contribution in the same way we think of underlying net income but for for capital So this would be excluding market related impacts. So taking our underlying net income and our organic CSM

Tim Deacon: movement less our shareholder dividends. So you're right that the number that you referenced the 588 for this quarter was net of dividends and we haven't set a formal target but generally expect that organic capital generation should range between 20 to 30 percent of underlying net income.

Gabriel Dechaine: I'm not quite sure I got what your strategy is. Can you talk about the duration of these contracts as well and how quickly reprising can actually have an effect. And then in Canada, I'm, I guess, the normalization of morbidity experience, just so positive, but less positive than it was before. So that tailwind is fading correct me if I'm wrong there. Like, is this something that we should view as we're back to a new normal, or is there a similar reprising strategy of foot for the Canadian business?

Timothy Deacon: So for Q2 at almost 600 million, that's, you know, almost 60% of Uni. So obviously above target result and really driven by strong sales in Canada and Asia that we referenced, and that created the higher new business CSM versus our expectations. So elevated this quarter and last quarter because of the strong sales growth, but over time within that 20 to 30% range net of dividends. Got it. Okay. Thank you for that.

Timothy Deacon: So for Q2, at almost 600 million, that's almost 60% of uni. So obviously, an above-target result and really driven by strong sales in Canada and Asia that we referenced. And that created the higher new business CSM versus our expectation. So, elevated this quarter and last quarter because of the strong sales growth, but over time within that 20 to 30 percent range. Got it.

Speaker Change: So, for Q2 at almost $600 million, that's, you know, almost 60% of uni. So, obviously, above target result and really driven by strong sales in Canada and Asia that we referenced, and that created the higher new business CSM versus our expectations.

Speaker Change: so Elevated this quarter and last quarter because of the strong sales growth but over over time within that 20 to 30 percent range net of dividends

Unknown Executive: Okay. Thank you for that. I guess my second question is with respect to SLC and the net income target there for 2025. So, just looking for confirmation that that has not changed and wondering if the recently announced cost restructuring will have any impact on, or really help your ability to achieve that 2025 target. Thank you. Hi, Paul. Thanks for the question. It's Steve Peacher.

Timothy Deacon: I guess the second question is with respect to SLC and the net income target there for 2025. So just looking for confirmation that that has not changed and wondering if the recently announced cost restructuring will have any impact on or really help your ability to achieve that to 25 target. Thank you.

Speaker Change: Got it. Okay. Thank you for that. I guess second question is with respect to SLC

Gabriel Dechaine: Sure. This is Dan. I'll start with the US. Yep. Ask questions. So the, you know, we, we tend to be a conservative pricer. So when there are these cycles, we are not one of the carriers that goes out in prices aggressively for market share. Now, you saw we had good sales results in the second quarter, but a lot of that came from some of these new partnerships versus, you know, from aggressive pricing.

Speaker Change: and the net income target there for 2025. So just looking for confirmation that that has not changed and wondering if the recently announced cost restructuring

Speaker Change: will have any impact on or really help your ability to achieve that 225 target. Thank you.

Unknown Executive: Yeah, you know, I think that we're still on track for the targets that we put out there. We'll talk more about our longer-term expectations for 25 and beyond at our investor day in the fall. You know, we did for, SLC is participating as part of the cost reduction initiative that was discussed, but I would say, as much as anything, we're also looking to keep investing in the business as we try to get benefits out of the platform as we approach the take calls, and we invest more in distribution with resources that can sell the entire range of products we have across SLC.

Timothy Deacon: Hi, Paul. Thanks for the question. That's the future. Yeah, you know, I think that we're still on track for the targets that we put out there.

Gabriel Dechaine: We do think that, you know, pricing will get more rational as we head into next year because a lot of our competitors are not having that same kind of experience. And on your question about how often this reprises, one of the things we love about the business, but also one of the things that makes it most challenging, is almost all of it renews every year. So we're able to rewrite the business annually.

Speaker Change: Hi Paul, thanks for the question. It's Steve Peter. Yeah, you know, I think that we're still on track for the targets that we put out there. We'll talk more about our longer-term expectations for 25 and beyond at the investor day in the fall.

Timothy Deacon: We'll talk more about our expectations for 25 and beyond at the Investor Day in the fall. You know, we did for we SLC is participating as part of the cost reduction and issue that was discussed, but I would say as much as anything as we, you know, we're also looking to keep investing in the business as we try to get benefits out of the platform as we approach the put calls and we invest more in distribution with resources that can sell the entire range of products we have across SLC. So I would say we expect to get we expect to grow earnings by growing AUM and delivering more strategies to existing clients into new clients over time, and while cost discipline will certainly be part of that.

Speaker Change: You know, we did for, we, SLC is participating as part of the cost

Speaker Change: and the production initiative that was discussed. But I would say as much as anything, as we, you know, we're also looking to keep investing in the business as we try to get benefits out of the platform, as we approach the foot calls and we invest more in distribution.

Gabriel Dechaine: Now, of course, that of course means we also have a big task. We have to try and renew all the business every year. But it does enable us to react pretty quickly to these kinds of changes in the market. Okay. Benzak? Yeah, this is a good morning. So you're correct. The experience and visibility is positive, this quarter, but not as positive as the same quarter last year as you pointed out. Keep in mind that at 372 of earnings last year, that would already a record quarter for us.

Unknown Executive: So I would say we expect to get, we expect to grow earnings by growing AUM and delivering more strategies to existing clients and to new clients over time. And while cost discipline will certainly be part of that, it's really about growing revenue and AUM and less about cost. So will we get some benefits out of cost reduction? Certainly. And we're trying to be mindful of that, but I don't, I don't view that as a driver of our earnings. Well, that's helpful. I'll leave it there. Thank you. The next question is from Mario Mendonca with TD Securities. Please go ahead. Good morning. This might be for Dan, or maybe Tim.

Speaker Change: with resources that can sell the entire range of products we have across SLC. So I would say, we expect to get, we expect to grow earnings.

Speaker Change: by growing AUM.

Speaker Change: and delivering more strategies to existing clients and to new clients over time. And while cost discipline will certainly be part of that, it's really about growing revenue in AUM and less about cost. So will we get some benefits out of cost reduction? Certainly.

Timothy Deacon: It's really about growing revenue and AUM and less about cost. So will we get some benefits out of cost reduction certainly, and we're trying to be mindful of that, but I don't, I don't do that as a driver priority.

Gabriel Dechaine: In terms of your comment on sustainability, remind you as we've discussed before that. You know, some of it comes from the pricing action that we've taken. We've been quite disciplined in terms of our pricing and wanting to make sure that we deliver on our objectives. So some of it will continue. I mean, at the level we're at now in terms of earnings, I would say there's probably going to be some moderation. But you know, some of it is definitely going to continue. Okay, great.

Speaker Change: And we're trying to be mindful of that, but I don't view that as a driver of our earnings going forward.

unknown: Thank you.

Gabriel Dechaine: I'll draw the rest of your summary everybody.

Speaker Change: Well, that's helpful, I'll leave it there, thank you.

Mario Mendonca: The next question is from Mario Mendonca with TD Securities. Please go ahead. Good morning.

Speaker Change: The next question is from Mario Mendonca with TD Securities. Please go ahead.

Unknown Executive: Tim, in your opening comments, you referred to the higher loss ratio in Medicaid. You said it was largely related to the redetermination. And I look at that increase in the loss ratio from 86.2 to 94 in four quarters. And it just seems like such a significant increase for when 19% have left. I mean, that notion that the Stayers have much higher utilization. It made me...

Daniel Fishbein: This might be for Dan, maybe Tim. Tim, in your opening comments, you referred to the higher loss ratio in Medicaid. You said it was largely related to the redetermination. And I look at that immediately. The increase in the loss ratio from 86.2 to 94 and four quarters. And it just seems like such a significant increase for when 19% have left. I mean, that notion that the bears have much higher utilization. It made me less charts makes me think that there's more going on here than just the redetermination. And then your phrase, the turn of phrase, but largely related to the redetermination, maybe think there's more going on.

Mario Mendonca: Good morning. This might be for Dan, maybe Tim. Tim, in your opening comments, you referred to the higher loss ratio in Medicaid. You said it was largely related to the redetermination.

Mario Mendonca: And I look at that increase in the loss ratio from 86.2 to 94 and four quarters, and it just seems like such a significant increase for when 19% have left. I mean, that notion that the

Paul Holden: Thank you. The next question is from Paul Holden with CIDC. Please go ahead. Thank you. Good morning. We'll ask a question on the new disclosure round organic capital generation. So 580 million for the quarter. So first off, thanks for that new disclosure. I find it very helpful. But my question really is, is that a good indicative run rate of what we should expect quarterly? Was there anything that maybe added to it? This quarter is attracted. Anyways, just trying to get a sense of run rate. Thank you.

Unknown Executive: This chart makes me think that there's more going on here than just the redetermination. And then your phrase, the Turner phrase, largely related to the redetermination, made me think there's more going on. So maybe this is a question for Dan.

Speaker Change: Thayers have much higher utilization.

Speaker Change: It made me, this chart makes me think that there's more going on here than just the redetermination, and then your phrase, the turn of phrase, but largely related to the redetermination, made me think there's more going on. So maybe this is a question for Dan. What else is going on in dental beyond Medicaid redetermination?

Daniel Fishbein: So maybe this is a question for Dan. What else is going on in dental beyond Medicaid registration? Yeah, in terms of the dental, the Medicaid loss ratio really is the redeterminations. And let me give a little more color on that, you know, that kind of loss ratio impact. A lot of the people who had become enrolled during the public health emergency no longer needed the coverage. There's a fair amount of turn people coming on and off the Medicaid roles as they get jobs, etc., which is and then get other coverage. So there were a significant number of people who, for whom the states were paying premium, but who were not using the benefit.

Unknown Executive: What else is going on in dental beyond Medicaid redetermination? Yeah, in terms of the dental, the Medicaid loss ratio, it really is redeterminations. And let me give a little more color on that, you know, that kind of loss ratio impact. A lot of the people who had become enrolled during the public health emergency no longer needed the coverage; there's a fair amount of churn, people coming on and off the Medicaid rolls as they get jobs, etc., which is, and then get other coverage.

Dan: Yeah, in terms of the dental, the Medicaid loss ratio, it really is the redeterminations. And let me give a little more color on that, you know, that kind of loss ratio impact.

Tim Deacon: By Paul Tim, thanks for the question. You're right. This is a new disclosure and we really sought to help give more transparency to how we view a more normalized capital contribution and the same way we think of underlying net income, but for capital. So this would be excluding market related impacts. So taking our underlying net income and our organic CSM movement less our shareholder dividends. So you're right that the number that you referenced the 588 for this quarter was net of dividends.

Dan: A lot of the people who had become enrolled during the public health emergency no longer needed the coverage. There's a fair amount of churn, people coming on and off the Medicaid rolls as they get jobs, etc., and then get other coverage.

Unknown Executive: So there were a significant number of people for whom the states were paying a premium but who were not using the benefits. And the way they price, of course, as any actuary would price, they look at the most recent periods of experience, and that got baked into their pricing. And then when you have, in some cases, you know, in a very short period of time, a state disenrolling a big portion of the membership, you can get a very big mix shift. So Texas, for example, disenrolled one third of its entire Medicaid population.

Dan: So there were a significant number of people for whom the states were paying premium but who were not using the benefit.

Daniel Fishbein: And the way they price, of course, as any actuary would price, they look at the most recent periods of experience. And that got baked into their pricing. And then when you have, in some cases, you know, in a very short period of time, a state disenrolling a big portion of the membership, you can get a very big mixed shift. So Texas, for example, disenrolled one third of its entire Medicaid population. So it's not surprising that you get a six or eight percent change in the loss ratio with a 19 percent change in membership. Now related to that, of course, there are gentsists and what are called DSOs, you know, large groups of dental practices that primarily serve the Medicaid market.

Speaker Change: And the way they price, of course, as any actuary would price, they look at the most recent periods of experience, and that got baked into their pricing.

Tim Deacon: And we haven't set a formal target, but generally expects that organic capital generation should range between 20 to 30% of underlying net income. So for Q2 at almost 600 million, that's, you know, almost 60% of uni. So obviously above target result and really driven by strong sales in Canada and Asia that we referenced and that created the higher new business CSM versus our expectations. So elevated this quarter and last quarter because of the strong sales growth, but over time within that 20 to 30% range net of dividends. Got it. Okay.

Tim Deacon: Thank you for that.

Speaker Change: And then when you have, in some cases, you know, in a very short period of time, a state disenrolling a big portion of the membership, you can get a very big mix shift. So Texas, for example, disenrolled one-third of its entire Medicaid population.

Unknown Executive: So it's not surprising that you get a 6 or 8% change in the loss ratio with a 19% change in membership. Now, related to that, of course, there are dentists and what are called DSOs, you know, large groups of dental practices that primarily serve the Medicaid market. So if they lose 19% of their members, and therefore 19% of their revenue, and they have a certain amount of capacity, they're going to do everything they can to fill that capacity.

Speaker Change: So it's not surprising that you get a 6% or 8% change in the loss ratio with a 19% change in membership.

Speaker Change: Now, related to that, of course, there are dentists and what are called DSOs, you know, large groups of dental practices, that primarily serve the Medicaid market.

Tim Deacon: I guess second question is with respect to SLC and the net income target there for 2025. So just looking for confirmation that that has not changed and wondering if the recently announced cost restructuring will have any impact on or really help your ability to achieve that to 25 target. Thank you.

Daniel Fishbein: So if they lose 19 percent of their members and therefore 19 percent of their revenue, and they have a certain amount of capacity, they're going to do everything they can to fill that capacity. That being in some cases, that means taking people off of waiting lists and getting them in for care sooner, which is a good thing. But in some cases, it may mean providing more dental care to those people in order to fill those appointments. So that's part of the story here as well.

Speaker Change: So if they lose 19% of their members and therefore 19% of their revenue, and they have a certain amount of capacity, they're going to do everything they can to fill that capacity.

Unknown Executive: That means, in some cases, it means taking people off of waiting lists and getting them in for care sooner, which is a good thing. But in some cases, it may mean providing more dental care to those people in order to fill those appointments.

Speaker Change: That means, in some cases, that means taking people off of waiting lists and getting them in for care sooner, which is a good thing, but in some cases it may mean providing more dental care to those people in order to fill those appointments.

Unknown Executive: So that's part of the story here as well, and it's also the reason why we're putting in place significantly more robust utilization management capabilities to make sure that we're facing off appropriately against that kind of thing. Okay, maybe a sort of follow-up question to that, and more from a positive perspective. Sun Life paid, I believe it was, 2.5 billion US dollars for DentaQuest back in 2000.

Daniel Fishbein: And it's also the reason why we're putting in place significantly more robust utilization management capabilities to make sure that we're facing off appropriately against that dynamic.

Speaker Change: So that's part of the story here as well, and it's also the reason why we're putting in place significantly more robust utilization management capabilities to make sure that we're facing off appropriately against that dynamic.

Tim Deacon: Hi, Paul. Thanks for the question. That's the future. Yeah, you know, I think that we're still on track for the targets that we put out there. We'll talk more about our expectations for 25 and beyond at the investor day in the fall. You know, we did for we SLC is participating as part of the cost reduction and issue that that was discussed, but I would say as much as anything as we, you know, we're also looking to keep investing in the business as we try to get benefits out of the platform as we approach the put calls and we invest more in distribution with resources that can sell the entire range of products we have across SLC.

Daniel Fishbein: Okay, maybe a sort of follow-up question to that and more from a positive perspective. Some life pay, I believe, was 2.5 billion US for Dental Quest back in 2021. Your aspirations are for US $100 million next year. Just looking at those numbers makes me think that your longer term goals must be for more than 100 million. So what do you think this business is capable of in a normal environment? Yes, so absolutely yes, is the answer to that question. Our longer term aspirations and all the modeling we did is obviously much greater than that number.

Speaker Change: Okay, maybe a sort of follow-up question to that and more from a positive perspective. Some life paid, I believe it was 2.5 billion U.S. for DentaQuest back in 2000.

Unknown Executive: The 21 year aspirations are for us to make 100 million next year. Just looking at those numbers makes me think that your longer-term goals must be for more than 100. So what do you think this business is capable of in a normal environment? Yes, so absolutely, yes, is the answer to that question. However, our longer-term aspirations and all the modeling we did are obviously much greater than that number. And generally, we, you know, the way we thought about this is that we still think that all of that is applicable, but pushed out by about a year or so by the events of the redetermination.

Speaker Change: 21-year aspirations are for US $100 million next year.

Speaker Change: My just looking at those two numbers makes me think that you're longer-term goals

Tim Deacon: So I would say we expect to get we expect to grow earnings by growing AUM and delivering more strategies to existing clients into new clients over time and while cost discipline will certainly be part of that. It's really about growing revenue and AUM and less about cost. So will we get some benefits out of cost reduction certainly and we're trying to be mindful of that, but I don't I don't do that as a driver priority. Thank you.

Speaker Change: must be for more than $100 million.

Speaker Change: So what do you think this business is capable of in a normal environment?

Speaker Change: Yes, so absolutely yes is the answer to that question. Our longer term aspirations and all the modeling we did is obviously much greater than that number.

Daniel Fishbein: And generally, the way we thought about this is we still think that all of that is applicable but pushed out by about a year or so by the events of the redeterminations. One good way to think about the business is a 5% after-tax profit that seems to be what most of the business supports in across the states and the non-government business as well. It's a little different in the different segments, but that's a reasonable rule of thumb. So we are a little shy of 3 billion in revenue today, but we see lots of growth opportunity in the business.

Speaker Change: And generally, we, you know, the way we thought about this is we still think that all of that is applicable, but pushed out by about a year or so by the events of the redeterminations.

Unknown Executive: One good way to think about the business is a 5% after-tax profit. That seems to be what most of the business supports across the states and the non-government business as well. It's a little different in the different segments, but that's a reasonable rule of thumb.

Speaker Change: One good way to think about the business is a 5% after-tax profit.

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

Speaker Change: That seems to be what, you know, most of the business supports in across the states and the non-government business as well. It's a little different in the different segments but that's a reasonable rule of thumb.

Mario Mendonca: Good morning. This might be for Dan, maybe Tim. Tim, in your opening comments, you referred to the higher loss ratio in Medicaid. You said it was largely related to the redetermination. And I look at that immediately. The increase in the loss ratio from 86.2 to 94 and four quarters. And it just seems like such a significant increase for when 19% have left. I mean, that notion that the bears have much higher utilization.

Mario Mendonca: It made me less charts makes me think that there's more going on here than just the redetermination. And then your phrase, the turn of phrase, but largely related to the redetermination, maybe think there's more going on. So maybe this is a question for Dan. What else is going on in dental beyond Medicaid registration? Yeah, in terms of the dental, the Medicaid loss ratio really is the redeterminations. And let me give a little more color on that, you know, that kind of loss ratio impact.

Unknown Executive: So we are a little shy of $3 billion in revenue today, but we see lots of growth opportunities in the business. First of all, Medicaid continues to grow and will continue to grow now that the redeterminations are over. We continue to have a great pipeline there and to win contracts, but we also have lots of opportunity to grow in Medicare Advantage, in the Affordable Care Act exchanges, and especially in commercial. So we see significant revenue growth in the future, and you can do your own calculations based on that 5%. Thank you, Mario. It's Mario.

Speaker Change: So, we are a little shy of $3 billion in revenue today.

Daniel Fishbein: First of all, Medicaid continues to grow, and now that the redeterminations are over, we continue to have a great pipeline there and to win contracts. But we also have lots of opportunity to grow in Medicare Advantage, in Affordable Care Act exchanges, and especially in commercial. So we see significant revenue growth in the future, and you can do your own calculations based on that 5%.

Speaker Change: But we see lots of growth opportunity in the business. First of all, Medicaid continues to grow and will now that the redeterminations are over. We continue to have a great pipeline there and to win contracts.

Speaker Change: But we also have lots of opportunity to grow in Medicare Advantage, in Affordable Care Act exchanges, and especially in commercial. So we see significant revenue growth in the future, and you can do your own calculations based on that 5%.

Kevin Strain: Thank you, Mario. It's Mario's Kevin. I would just add to it that when we did the acquisition, it was during COVID, and we actually knew that the public health emergency would end. We did modeling of that. The public health emergency went longer and was deeper than we expected. And some of the impacts were probably more than we expected in this year. But over the long term, we still expect that, as Dan had talked about that. This is going to be a very good business for Sun Life, and we'll return back to the sort of pricing that we would have expected.

Kevin Strain: It's Kevin. I would just add to it that when we did the acquisition, it was during COVID, and we actually knew that the public health emergency would end. We did modeling of that. The public health emergency went on longer and was deeper than we expected.

Speaker Change: Thank you. It's Mario. It's Kevin. I would just add to it that when we did the acquisition, it was during COVID and we actually knew that the public health.

Speaker Change: emergency would end. We did modeling of that.

Speaker Change: The public health emergency went longer and was deeper than we expected and some of the impacts were probably more than we expected in this year, but over the long term we still expect, as Dan had talked about, that this is going to be a very good business for Sun Life and we'll return back to the sort of

Mario Mendonca: A lot of the people who had become enrolled during the public health emergency no longer needed the coverage. There's a fair amount of turn people coming on and off the Medicaid roles as they get jobs, etc., which is and then get other coverage. So there were a significant number of people who for whom the states were paying premium, but who were not using the benefit. And the way they price, of course, as any actuary would price, they look at the most recent periods of experience.

Kevin Strain: And some of the impacts were probably more than we expected this year. But over the long term, we still expect, as Dan had talked about, that this is going to be a very good business for Sun Life. And we'll return to the sort of pricing that we would have expected. And we're seeing that as we reprice the business. So I think overall that our thesis for the dental business in the US hasn't hasn't changed.

Kevin Strain: And we're seeing that as we reprice the business. So I think overall our thesis for the dental business in the US hasn't changed. And I think you see our culture and our financial discipline in action by how we've disclosed this transparently to our investors and how we're taking action to deal with it.

Speaker Change: pricing that we would have expected and we're seeing that as we reprice the business. So I think overall our thesis for the dental business in the U.S. hasn't hasn't changed and I think you see our our culture and our financial discipline in action by how we've disclosed this transparently to to our investors and and how we're taking action to deal with it.

Mario Mendonca: And that got baked into their pricing. And then when you have in some cases, you know, in a very short period of time, a state disenrolling, a big portion of the membership, you can get a very big mixed shift. So Texas, for example, disenrolled one third of its entire Medicaid population. So it's not surprising that you get a six or eight percent change in the loss ratio with a 19 percent change in membership.

Lamar Prasad: Thank you.

Speaker Change: Thank you.

Lamar Prasad: The next question is from Lamar Prasad with Cormart Securities. Please go ahead.

Unknown Executive: And I think you see our culture and our financial discipline in action by how we've disclosed this transparently to our investors and how we're taking action to deal with it. The next question is from Lemar Persaud with Cormark Securities. Please go ahead. Thanks.

Speaker Change: The next question is from Lamar Prasad with Cormark Securities. Please go ahead.

Timothy Deacon: Thanks. My first question is going back to the restructuring; is probably appropriate for Tim. Is this the first of more restructuring charges, like is this a broader restructuring program? How big could further restructuring charges be? And then I guess you mentioned the 200 million pre-tax savings portion of that. Is that portion of that 200 million pre-tax going to go through the CSM, or is that 200 million pre-tax all going to go through the underlying earnings? Thanks. Thanks, Lamar.

Unknown Executive: My first question, just going back to the restructuring, is probably appropriate. Is this the first of more restructuring charges, like is this a broader restructuring program? How big could further restructuring charges be? I guess you mentioned the $200 million pre-tax savings portion of that. Is that portion of that $200 million pre-tax going to go through the CSM, or is that $200 million pre-tax all going to go through the Underlines?

Lamar Prasad: My first question, just going back to the restructuring, is probably appropriate for Tim. Is this the first of more restructuring charges? Like, is this a broader restructuring program? How big could further restructuring charges be?

Mario Mendonca: Now related to that, of course, there are gentsists and what are called DSOs, you know, large groups of dental practices that primarily serve the Medicaid market. So if they lose 19 percent of their members and therefore 19 percent of their revenue, and they have a certain amount of capacity, they're going to do everything they can to fill that capacity. That being in some cases, that means taking people off of waiting lists and getting them in for care sooner, which is a good thing.

Speaker Change: I guess you mentioned the $200 million pre-tax savings, is a portion of that $200 million pre-tax going to go through the CSM or is that $200 million pre-tax all going to go through the underlying earnings? Thanks.

Unknown Executive: Thanks, Lemar. So, this was a program that we just initiated now. It's a one-time charge of $138 million pre-tax, the 108 that flowed through reported net income, and that's a singular program that will be executed over the 18 months that I had referenced. You know, I also referenced financial discipline as a core part of our client impact strategy, so we're always going to be continually focused on cost discipline. But, as I said, we hadn't run a program like this in a little while, so it was time for a bit of a catch-up just as we looked at our expense growth relative to continuing to ensure we can get to the top end of our earnings growth objectives.

Timothy Deacon: So this was a program that we just initiated now. It's a one-time charge of 138 million pre-tax, a 108 that flowed through reported net income. And that's a singular program that will be executed over the 18 months that I had referenced. You know, I've also referenced financial discipline, a core part of our client impact strategy. So we're always going to be continually focused on cost discipline, but as said, we hadn't run a program like this in a little while. So it was time for a bit of a catch up just as we looked at our expense growth and relative to continuing to ensure we can get to the top end of our earnings growth objectives.

Tim Deacon: Thanks, Lamar. So, this was a program that we just initiated now. It's a one-time charge of $138 million pre-tax, a 108 that flowed through reported net income, and that's a singular program that will be executed over the 18 months that I had referenced.

Mario Mendonca: But in some cases, it may mean providing more dental care to those people in order to fill those appointments. So that's part of the story here as well. And it's also the reason why we're putting in place significantly more robust utilization management capabilities to make sure that we're facing off appropriately against that dynamic.

Speaker Change: You know, as I also referenced, financial discipline is a core part of our.

Speaker Change: Client impact strategy, so we're always going to be continually focused on cost discipline But as I said we hadn't run a program like this in a little while so it's time for a bit of a catch-up just as we looked at our expense growth and relative to Continuing to ensure we can get to the top end of our earnings growth objectives

Kevin Strain: Okay, maybe a sort of follow-up question to that and more from a positive perspective. Some life pay, I believe, was 2.5 billion US for dental quest back in 2021. Your aspirations are for US 100 million next year. Just looking at those numbers makes me think that your longer term goals must be for more than 100 million. So what do you think this business is capable of in a normal environment? Yes, so absolutely yes, is the answer to that question.

Timothy Deacon: In terms of where this shows up, this will come off across a variety of the line items. So it's not all CSM. It will come through other expenses, come through other fee income, which is net of expenses. So you'll see it in a bunch of places. And, as I referenced earlier, we'll likely look to maybe take a portion of that, a small portion for reinvestment. And as I said, to probably accelerate our digitization efforts and look at areas like generative AI and the progress that we've been making, there is a way to accelerate that. So this is a singular program, but will always be focused on cost discipline going forward.

Unknown Executive: In terms of where this shows up, this will come off across a variety of line items, so it's not all CSM. It will come through other expenses. It will come through other fee income, which is net of expenses, so you'll see it in a bunch of places. And as I referenced earlier, we'll likely look to maybe take a portion of that, a small portion, for reinvestment, as I said, to probably accelerate our digitization efforts and look at areas like generative AI and the progress that we've been making there as a way to accelerate that. So, this is Okay, what about the mix through CS?

Speaker Change: In terms of where this shows up, this will come off across a variety of the line items, so it's not all CSM, it'll come through other expenses.

Speaker Change: I'll come through other fee income, which is net of expenses.

Speaker Change: So you'll see it in a bunch of places. And as I referenced earlier, we'll likely look to maybe take a portion of that, a small portion for reinvestment, as I said, to probably accelerate our digitization efforts and look at areas like generative AI and the progress that we've been making there as a way to accelerate that.

Kevin Strain: Our longer term aspirations and all the modeling we did is obviously much greater than that number. And generally, the way we thought about this is we still think that all of that is applicable but pushed out by about a year or so by the events of the redeterminations. One good way to think about the business is a 5% after tax profit that seems to be what most of the business supports in across the states and the non-government business as well.

Speaker Change: So, this is a singular program, but we'll always be focused on cost discipline going forward.

Timothy Deacon: Okay, what about the mix through CSM and regular earnings?

Speaker Change: Okay, what about the mix through CSM and regular earnings?

Unknown Executive: Yeah, predominantly earnings, but there is a portion through CSM, but you'd expect most of that through earnings. Okay, perfect. Thanks.

Timothy Deacon: Yeah, predominantly earnings, but there's a portion through CSM. But you'd expect most of that through earnings. Okay, perfect.

Speaker Change: Predominantly earnings, but there is a portion through CSM, but you'd expect most of that through earnings.

Unknown Executive: And then just moving on to a different type of question here on MFS. If we see rate cuts play out in the US, do you think that's going to be helpful to the net flows? at MFS, just given its products mixed more towards value-based equities up, is that kind of the right way to think about the impact? Lower U.S. rates on that bit on the MFS. Good morning, Lamar. It's Mike Roberge.

Lamar Prasad: Thanks.

Michael Roberge: And then just moving on to a different type of question here on MFS. If we see rate cuts play out of the US, do you think that's going to be helpful to the net flows performance at MFS, just given its products mix to more towards value-based equities? Is that kind of the right way to think about the impact? of lower U.S. rates on the MFS business?

Speaker Change: If we see rate cuts play out in the U.S., do you think that's going to be helpful to the net flows performance?

Kevin Strain: It's a little different in the different segments but that's a reasonable rule of thumb. So we are a little shy of 3 billion in revenue today but we see lots of growth opportunity in the business. First of all, Medicaid continues to grow and will now that the redeterminations are over we continue to have a great pipeline there and to win contracts. But we also have lots of opportunity to grow in Medicare Advantage in affordable care act exchanges and especially in commercial.

Speaker Change: at MFS, just given its products mixed more towards like value-based equities up, is that kind of the right way to think about the impact of lower U.S. rates on that bit on the MFS business?

Michael Roberge: Good morning, Lamar. It's Mike Roberge. Yeah, I mean, that's how we're thinking about it. If you look at prior cycles, you know, as Fed and central banks start to cut rates and people look at their cash yields going down, they re-engage back in the market with longer-term fixed income and equity products. If you look at industry sales rates, you look at our sales rate pre-COVID, which is probably the last normal environment that we have, and you apply that to our asset base today, that would take you back to net positive U.S. Retail flows at MFS.

Unknown Executive: Yeah, I mean, that's how we're thinking about it. If you look at prior cycles, you know, as the Fed and Central Bank start to cut rates, and people look at their cash yields going down, they re-engage back in the market with longer-term fixed income and equity products. If you look at, you know, industry sales rates, you look at our sales rate pre-COVID, which is probably the last normal environment that we have.

Speaker Change: Hey, good morning, Lamar. It's Mike Roberge. Yeah, I mean, that's how we're thinking about it. If you look at prior cycles...

Speaker Change: You know, as Fed and central banks start to cut rates and people look at their cash yields going down, they re-engage back in the market with longer-term fixed income and equity products.

Kevin Strain: So we see significant revenue growth in the future and you can do your own calculations based on that 5%. Thank you, Mario, it's Mario's Kevin. I would just add to it that when we did the acquisition, it was during COVID, and we actually knew that the public health emergency would end. We did modeling of that. The public health emergency went longer and was deeper than we expected. And some of the impacts were probably more than we expected in this year.

Speaker Change: If you look at, you know, industry sales rates, you look at our sales rate pre COVID, which is probably the most the last normal environment that we have. And you apply that to our asset base today, that would take you back to net positive US retail flows at MFS. And so the question ultimately comes is what is normal look like we think, you know, the industry is going to look a lot more normal as cash rates begin to come down and people have to seek

Unknown Executive: And if you apply that to our asset base today, that would take you back to net positive US retail flows at MFS. And so the question ultimately comes down to what the normal look like. We think the industry is going to look a lot more normal as cash rates begin to come down, and people have to seek returns in other parts of their portfolio other than cash. Okay, thank you. The next question is from Nigel D'Souza with Veritas Investment Research. Please go ahead.

Michael Roberge: And so the question also becomes, is what is normal look like? We think, you know, the industry is going to look a lot more normal as cash rates begin to come down, and people have to seek returns in other parts of their portfolio rather than cash.

Kevin Strain: But over the long term, we still expect that as Dan had talked about that. This is going to be a very good business for Sun Life, and we'll return back to the sort of pricing that we would have expected. And we're seeing that as we reprice the business. So I think overall our thesis for the dental business in the US hasn't hasn't changed. And I think you see our culture and our financial discipline in action by how we've disclosed this transparently to our investors and how we're taking action to deal with it. Thank you.

Speaker Change: returns in other parts of their portfolio other than cash.

unknown: Okay, thank you.

unknown: That's it for me.

Speaker Change #100: Okay, thank you. That's it for me.

Nigel D'Souza: The next question is from Nigel D'Souza with Veritas Investment Research.

Speaker Change #100: The next question is from Nigel D'Souza with Veritas Investment Research. Please go ahead.

Timothy Deacon: Please go ahead. Thank you.

Unknown Executive: Thank you. Good morning. I wanted to follow up again on the restructuring initiatives here and the timing of how that flows through into earnings. Is this a linear ramp up, or is it more back-end loaded? And is the right way to think about this, that the $200 million will be fully flowing through underlying net income in Q1 of 26? Hi, Nigel, it's Tim.

Timothy Deacon: Good morning. I wanted to follow up, begin on the restructuring initiatives here, and cadence of the timing of how that flows through the earnings. Is this a linear ramp-up or is it more back-and-loaded? And is the right way to think about this, that the 200 million will be fully flowing through underlying net income in Q1 of 26?

Nigel D'Souza: Thank you. Good morning. I wanted to follow up again on the restructuring initiatives here and

Nigel D'Souza: Cadence of the timing of how that flows through into earnings, is this a linear ramp up or is it more back-end loaded? And is the right way to think about this that the $200 million will be fully flowing through underlying that income in Q1 of 2026?

Lamar Prasad: The next question is from Lamar Prasad with Cormart Securities. Please go ahead. Thanks.

Timothy Deacon: Hi, Nigel. It's Tim. Yeah, it's referenced earlier in some of the questions. We will start to see some of that expense savings come through earnings in the second half of this year. It was mostly rateably through 2025 into 2026. So, by the time we hit 2026, we'll have achieved the full 200 million pre-tax. In terms of how it shows up as said, I'll come through the variety of the line items that are referenced because of the way our disclosures under IFRS 17 require us to report expenses as a mix of the directly attributable as well as these other expenses that don't get allocated.

Timothy Deacon: Yeah, it's referenced earlier in some of the questions; we will start to see some of that expense savings come through in earnings in the second half of this year. It was mostly ratably through 2025 into 2026. So by the time we hit 2026, we'll have achieved the full 200 million pre-tax. In terms of how it shows up, as I said, I'll go through the variety of the line items that are referenced because of the way our disclosures under IFRS 17 require us to report expenses as a mix of the directly attributable as well as these other expenses that don't get allocated. So you would expect to see that occur over time. As I said, it's an 18 month program.

Tim Deacon: My first question is going back to the restructuring is probably appropriate for Tim. Is this the first of more restructuring charges like is this a broader restructuring program? How big could further restructuring charges be? And then I guess you mentioned the 200 million pre tax savings portion of that. Is that portion of that 200 million pre tax going to go through the CSM or is that 200 million pre tax all going to go through the underlying earnings? Thanks. Thanks, Lamar.

Tim Deacon: Hi Nigel, it's Tim.

Speaker Change #102: It's referenced earlier in some of the questions, we will start to see some of that expense savings come through through earnings in the second half of this year.

Speaker Change #103: It's mostly ratably through 2025 into 2026, so by the time we hit 2026, we'll have achieved the full $200 million.

Speaker Change #103: Pre-tax

Speaker Change #105: In terms of how it shows up, as I said, it'll come through the variety of the line items that I referenced because of the way our disclosures under IFRS 17 require us.

Timothy Deacon: So there are some actions that we've already taken now. Dan referenced some of the dental business actions that were taken and will be starting to show through in the second half of this year. But it really is over time.

Tim Deacon: So this was a program that we just initiated now. It's a one time charge of 138 million pre tax, a 108 that flowed through reported net income. And that's a singular program that will be executed over the 18 months that I had referenced. You know, I've also referenced financial discipline, a core part of our client impact strategy. So we're always going to be continually focused on cost discipline, but as said, we hadn't run a program like this in a little while.

Speaker Change #103: to report expenses of a mix of the...

Speaker Change #103: directly attributable as well as these other expenses that don't get allocated. So you would expect to see that occur over time. As I said, it's an 18-month program, so there's some actions that we've already taken now. Dan referenced some of the dental business actions that were taken and will be starting to show through in the second half of this year.

Timothy Deacon: So you would expect to see that occur over time. As I said, it's an 18-month program, so there are some actions that we've already taken now. Dan referenced some of the dental business actions that we're taking, and we'll be starting to show through in the second half of this year. But it really is over time, and I guess just to re-emphasize, this is really to help, again, hit our earnings growth targets towards the top end of our MTOs. So, in terms of how you think about that in terms of foreign guidance.

Timothy Deacon: And I guess just to reemphasize this, this is really to help, again, hit our earnings growth targets towards the top end of our MTOs. So in terms of how you think about that in terms of forward guidance, yeah, that's helpful.

Speaker Change #104: But it really is over time. And just to reemphasize, this is really to help, again, hit our earnings growth targets towards the top end of our MTOs. So in terms of how you think about that in terms of forward guidance.

Tim Deacon: So it was time for a bit of a catch up just as we looked at our expense growth and relative to continuing to ensure we can get to the top end of our earnings growth objectives. In terms of where this shows up, this will come off across a variety of the line items. So it's not all CSM. It will come through other expenses, come through other fee income, which is net of expenses.

Unknown Executive: And then my second one was on other fee income. There's a bump up there in the line item this quarter. I understand part of that is related to expenses, and the other part is related to wealth. Could you kind of break that out for us and kind of get a sense of what the run rate is for other fee income going forward? Great, so I'll take that one and see if others want to supplement.

Timothy Deacon: Okay, that's helpful.

Timothy Deacon: And then my second one was on other fee income. There's a bump up there in the line item this quarter. I understand part of that is related to expenses. The other part is related to wealth income. Could you kind of break that out for us and kind of get a sense of what the run rate is for other fee income going forward?

Speaker Change #106: Yeah, that's helpful. And then my second one was another fee income there. There's a bump up there in the line item this quarter. I understand part of that is related to

Tim Deacon: So you'll see it in a bunch of places. And as I referenced earlier, we'll likely look to maybe take a portion of that, a small portion for reinvestment. And as I said, to probably accelerate our digitization efforts and look at areas like generative AI and the progress that we've been making there is a way to accelerate that.

Speaker Change #107: expenses the other part is related to wealth income could you kind of break that out for us and try to get a sense of what the run rate is for other fee income going forward

Timothy Deacon: Great. So I'll take that one and see if others want to supplement. So the quarter of our quarter increases, you noted, we're seeing a nice uptick in that, and that's really on the strong performance of our wealth businesses. That's both in Canada as well as in Asia. So in Canada, we had strong performance in the GRS business. You know, we had favorable markets. Our AUM was 10% year over year. We had net inflows of just under a billion coming into that business. And then similarly in Hong Kong, in particular, MPF business, we saw a strong growth there.

Speaker Change #108: Great, so I'll take that one and see if others want to supplement.

Unknown Executive: The quarter-over-quarter increase, as you noted, we're seeing a nice uptick in that, and that's really due to the strong performance of our wealth businesses, both in Canada as well as in Asia. So in Canada, we had strong performance in the GRS business. You know, we had favorable markets. Our AUM was up 10% year over year, and we had net inflows of just under a billion dollars coming into that business. And then similarly, in Hong Kong, in particular the MPF business, we saw strong growth there. So that's really driving the majority of it.

Tim Deacon: So this is a singular program, but will always be focused on cost discipline going forward. Okay, what about the mix through CSM and regular earnings? Yeah, predominantly earnings, but there is a portion through CSM, but you'd expect most of that through earnings. Okay, perfect. Thanks.

Speaker Change #109: The quarter-over-quarter increase, as you noted, we're seeing a nice uptick in that. And that's really on the strong performance of our wealth businesses. That's both in Canada as well as in Asia.

Speaker Change #109: So in Canada, we had strong performance in the GRS business. You know, we had favorable markets. Our AUM was up 10% year over year. We had net inflows of just under a billion coming into that business. And then similarly in Hong Kong, in particular MPF business, we saw strong growth there. So that's really driving the majority of it. On the quarter-quarter variance, we also had some costs because this is other fee income also includes our ASO businesses. So whenever we're onboarding new clients, sometimes there's startup costs related to that and the build-up of that. So we had costs in the first quarter, and now we're reporting revenue on those businesses for some of our larger programs.

Michael Roberge: And then just moving on to a different type of question here on MFS. If we see rate cuts play out of the US, do you think that's going to be helpful to the net flows performance at MFS, just given its products mix to more towards value-based equities? Is that kind of the right way to think about the impact? of lower U.S, rates on the MFS business?

Timothy Deacon: So that's really driving the majority of it.

Unknown Executive: On the quarter-over-quarter variance, we also had some costs because this other fee income also includes our ASO businesses. So whenever we're onboarding new clients, sometimes there's startup costs related to that and the buildup of that. So we had costs in the first quarter, and now we're reporting revenue on those businesses for some of our larger programs. And so that's now improved our results because we're starting to report revenue through that. So, you know, it obviously varies based on markets and where AUM positions are. So we'll get variability in that lineup from time to time.

Timothy Deacon: On the quarter quarter variance, we also had some costs because this is other fee income also includes our ASO businesses. So whenever we're onboarding new clients, sometimes there's startup costs related to that in the build-up of that. So we had costs in the first quarter, and now we're reporting revenue on those businesses for some of our larger programs. And so that's now improved the results because we're starting to report revenue through that. So it's, you know, it obviously varies based on markets and where AUM positions are. So we'll get variability in that lineup from time to time, but on the basis that markets continue to perform in our AUM comes up, that's a healthy run rate for us.

Michael Roberge: Good morning, Lamar, it's Mike Roberge. Yeah, I mean, that's how we're thinking about it. If you look at prior cycles, you know, as fed and central banks start to cut rates and people look at their cash yields going down, they re-engage back in the market with longer-term fixed income and equity products. If you look at industry sales rates, you look at our sales rate pre-COVID, which is probably the last normal environment that we have, and you apply that to our asset base today, that would take you back to net positive U.S, retail flows at MFS.

Speaker Change #109: And so, that's now improved the results because we're starting to report revenue through that. So, you know, it obviously varies based on markets and where AUM positions are, so you will get variability in that line from time to time, but, you know, on the basis that markets continue to perform and our AUM comes up, that's a healthy run rate for us.

Unknown Executive: But, you know, on the basis that markets continue to perform and our AUM comes up, that's a healthy run rate for us. Okay, that's it for me. Thank you. The next question is from John Aiken with Jeffrey Securities. Please go ahead.

unknown: Okay, that's it for me. Thank you.

Speaker Change #110: Okay, that's it for me. Thank you.

John Aiken: The next question is from John Aiken with Jeffrey Securities. Please go ahead. Good morning.

Speaker Change #111: The next question is from John Aiken with Jeffrey Securities. Please go ahead.

Unknown Executive: Good morning. I apologize if you've addressed this already. And if that's the case, just send me back to the transcript, but I wanted to drill down a little bit more in terms of the performance in Asia. Can you give us a little more detail in terms of, as you talked about the joint venture contributions that occurred in the quarter, and secondarily, talk about the sustainability of the sales levels in the new business CSM that was generating revenue? Good morning, John. It's Manjit.

Manjit Singh: I apologize if you've dressed us already in a fast case to send me back to the transcript, but wanted to drill down a little bit more in terms of performance in Asia. Can you give us a little more detail in terms of Asia talk about the joint venture contributions that occurred in the quarter? And secondarily talk about the sustainability of the sales levels and the new business CSM was generating.

Michael Roberge: And so the question also becomes, is what is normal look like? We think, you know, the industry is going to look a lot more normal as cash rates begin to come down, and people have to seek returns in other parts of their portfolio rather than cash.

John Aiken: Good morning. I apologize if you've addressed this already and if that's the case, just send me back to the transcript, but wanted to drill down a little bit more in terms of the performance in Asia. Can you give us a little more detail in terms of, as you talked about, the joint venture contributions that occurred in the quarter, and secondarily, talk about the sustainability of the sales levels in the new business CSM that was generated in the region?

Lamar Prasad: Okay, thank you.

Nigel D'Souza: That's it for me. The next question is from Nigel D'Souza with Veritas Investment Research. Please go ahead. Thank you. Good morning. I wanted to follow up, begin on the restructuring initiatives here, and cadence of the timing of how that flows through the earnings. Is this a linear ramp up or is it more back-and-loaded? And is the right way to think about this, that the 200 million will be fully flowing through underlying net income in Q1 of 26?

Manjit Singh: Good morning, John. It's Manjit. In terms of the sales performance, I'm very pleased with the year-to-date sales performance that we've seen in Asia and looking forward to remain confident in our ability to continue to generate good sales growth. And that's really underpinned by a number of things. Now, we have a good presence in growing markets with good and attractive demographics. We have a strong focus on making sure that we're meeting our client needs. We've also brought us, as we talked about in the past, our distribution capabilities, both through a new bank insurance partnership with also through growth in organic growth in our agency workforce as well.

Unknown Executive: In terms of sales performance, I'm very pleased with the year-to-date sales performance that we've seen in Asia. And looking forward, I remain confident in our ability to continue to generate good sales growth. And that's really underpinned by a number of things.

Manjit: Good morning John, it's Manjit. In terms of the sales performance, I'm very pleased with the year-to-date sales performance that we've seen in Asia and looking forward to remain confident in our ability to continue to generate good sales growth. And that's really underpinned by a number of things. You know, we have a good presence in growing markets with good and attractive demographics.

Unknown Executive: You know, we're, we have a good presence in growing markets with good and attractive demographics. We have a strong focus on making sure that we're meeting our client needs. We've also broadened out, as we've talked about in the past, our distribution capabilities, both through new bank assurance partnerships but also through growth and organic growth in our agency workforce as well. And that has resulted in good market share gains in several markets that we operate in.

Manjit: We have strong focus on making sure that we're meeting our client needs. We've also broadened out, as we've talked about in the past, our distribution capabilities.

Nigel D'Souza: Hi, Nigel. It's Tim. Yeah, it's referenced earlier in some of the questions. We will start to see some of that expense savings come through earnings in the second half of this year. It was mostly rateably through 2025 into 2026. So by the time we hit 2026, we'll have achieved the full 200 million pre-tax. In terms of how it shows up as said, I'll come through the variety of the line items that are referenced because of the way our disclosures under IFRS 17 require us to report expenses as a mix of the directly attributable as well as these other expenses that don't get allocated.

Manjit: both through new bank insurance partnerships, but also through growth in Organic growth in our agency workforce as well, and that's resulted in good market share gains in several markets that we we we operate in

Manjit Singh: And that's resulted in good market share gains and several markets that we operate in. We're also investing in digital capabilities to make sure that we deliver simple, fast, and easy experiences for our clients. We've noted that we've also invested in brand, and we're seeing really good uptick in our brand awareness across our markets. And of course, all of that's underpinned by our strong team that we have in Asia. So, with all of that, I remain confident in our ability to grow and continue to grow in Asia.

Unknown Executive: We're also investing in digital capabilities to make sure that we deliver simple, fast, and easy experiences for our clients. We've noted that we've also invested in brands, and we're seeing a really good uptick in our brand awareness across our markets. And, of course, all of that's underpinned by our strong team that we have in Asia.

Manjit: We're also investing in digital capabilities to make sure that we deliver simple, fast, and easy experiences for our clients.

Manjit: We've noted that we've also invested in brand, and we're seeing really good uptick in our brand awareness across our markets. And of course, all of that's underpinned by our strong team that we have in Asia. So with all of that, I remain confident in our ability to continue to grow in Asia.

Unknown Executive: So with all of that, I remain confident in our ability to continue to grow in Asia. And sorry, Manjit, can you address the sustainability of the new business CSM that was generated on your side? Yeah, I think that is partially related to the sales growth, John. So I think, you know, we continue to remain optimistic about that as well. You're going to see quarter and quarter volatility from a number of factors, macro factors, and competitive factors.

Manjit Singh: And so I mentioned, can you address the sustainability of the new business CSM that was generated in your segment? Yeah, I think that is partially related to the sales growth, John. So I think we continue to remain optimistic in that as well. You're going to see quarter-to-quarter volatility from a number of factors: macro factors and competitive factors. But over the medium term, we continue to view our ability to generate CSM and the mid-teens rate that we've talked about. Thank you.

Manjit: And sorry, Manjit, can you address the sustainability of the new business CSM that was generated in your segment?

Unknown Executive: But over the medium term, we continue to evaluate our ability to generate the CSM and mid teams rates that we've talked about. Great, thank you. We have no further questions at this time. I'll turn things back over to Mr. Garg. Thank you, operator. This concludes today's call. A replay of the call will be available in the investor relations section of our website. Thank you, everyone, and have a good day. This brings today's conference call to a close. You may disconnect your lines. Thank you for participating and have a pleasant day.

Nigel D'Souza: So you would expect to see that occur over time, as I said, it's an 18-month program, so there's some actions that we've already taken now. Dan referenced some of the dental business actions that we're taking and we'll be starting to show through in the second half of this year. But it really is over time, and I guess just to re-emphasize, this is really to help, again, hit our earnings growth targets towards the top end of our MTOs. So in terms of how you think about that in terms of foreign guidance.

Manjit: Yeah, I think that is partially related to the sales growth, John. So I think, you know, we continue to remain optimistic in that as well. You're going to see quarter-on-quarter volatility from a number of factors, macro factors and competitive factors. But over the medium term, we continue to view our ability to generate CSM and the mid-teens rate that we've talked about.

unknown: We have no further questions at this time.

David Garg: I'll turn things back over to Mr. Garge. Thank you, operator.

Manjit: We have no further questions at this time. I'll turn things back over to Mr. Garg.

Tim Deacon: Okay, that's helpful. And then my second one was on other fee income. There's a bump up there in the line item this quarter. I understand part of that is related to expenses. The other part is related to wealth income. Could you kind of break that out for us and kind of get a sense of what the run rate is for other fee income going forward? Great. So I'll take that one and see if others want to supplement.

Operator: This concludes today's call. A replay of the call will be available on the Investor Relations section of our website.

Mr. Garg: Thank you, Operator. This concludes today's call. A replay of the call will be available on the Investor Relations section of our website. Thank you, everyone, and have a good day.

Operator: Thank you, everyone, and have a good day.

Operator: This brings to a close today's conference call. You need to disconnect your lines. Thank you for participating, and have a pleasant day.

Speaker Change #115: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Speaker Change #115: David Garg, Paul Holden, John

Tim Deacon: So the quarter of our quarter increases, you noted, we're seeing a nice uptick in that, and that's really on the strong performance of our wealth businesses. That's both in Canada as well as in Asia. So in Canada, we had strong performance in the GRS business. You know, we had favorable markets. Our AUM was 10% year over year. We had net inflows of just under a billion coming into that business. And then similarly in Hong Kong, in particular, MPF business, we saw a strong growth there.

Tim Deacon: So that's really driving the majority of it. On the quarter quarter variance, we also had some costs because this is other fee income also includes our ASO businesses. So whenever we're onboarding new clients, sometimes there's startup costs related to that in the build-up of that. So we had costs in the first quarter and now we're reporting revenue on those businesses for some of our larger programs. And so that's now improved the results because we're starting to report revenue through that.

Speaker Change #115: [inaudible]

Tim Deacon: So it's, you know, it obviously varies based on markets and where AUM positions are. So we'll get variability in that lineup from time to time, but on the basis that markets continue to perform in our AUM comes up that's a healthy run rate for us.

Tim Deacon: Okay, that's it for me. Thank you.

John Aiken: The next question is from John Aiken with Jeffrey Securities. Please go ahead.

John Aiken: Good morning. I apologize if you've dressed us already in a fast case to send me back to the transcript, but wanted to drill down a little bit more in terms of performance in Asia. Can you give us a little more detail in terms of Asia talk about the joint venture contributions that occurred in the quarter? And secondarily talk about the sustainability of the sales levels and the new business CSM was generating.

Speaker Change #115: David Garg, Paul Holden, John

Manjit Singh: Good morning, John, it's Manjit. In terms of the sales performance, I'm very pleased with the year-to-day sales performance that we've seen in Asia and looking forward to remain confident in our ability to continue to generate good sales growth. And that's really underpinned by a number of things. Now, we have a good presence in growing markets with good and attractive demographics. We have strong focus on making sure that we're meeting our client needs.

Manjit Singh: We've also brought us, as we talked about in the past, our distribution capabilities, both through a new bank insurance partnership with also through growth in organic growth in our agency workforce as well. And that's resulted in good market share gains and several markets that we operate in. We're also investing in digital capabilities to make sure that we deliver simple, fast and easy experiences for our clients. We've noted that we've also invested in brand and we're seeing really good uptick in our brand awareness across our markets. And of course, all of that's underpinned by our strong team that we have in Asia. So with all of that, I remain confident in our ability to grow and continue to grow in Asia.

Speaker Change #115: David Garg, Paul Holden, John

Manjit Singh: And so I mentioned, can you address the sustainability of the new business CSM that was generated in your segment? Yeah, I think that is partially related to the sales growth, John. So I think we continue to remain optimistic in that as well. You're going to see quarter and quarter volatility from a number of factors, macro factors and competitive factors. But over the medium term, we continue to view our ability to generate CSM and the mid teens rate that we've talked about. Thank you.

David Garg: We have no further questions at this time. I'll turn things back over to Mr. Garge. Thank you, operator.

Gailene: This concludes today's call. A replay of the call will be available on the investor relations section of our website. Thank you, everyone, and have a good day. This brings to a close today's conference call. You need to disconnect your lines. Thank you for participating and have a pleasant day.