Q4 2024 Sun Life Financial Inc Earnings Call
Gaylene: Good morning and welcome to the Sun Life Financial Q4 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.
Speaker Change: 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. The host of the call is Paul Poon, Assistant Vice President, Investor Relations. Please go ahead, Mr. Poon.
Speaker Change: Thank you and good morning everyone. Welcome to Sun Life's Earnings Call for the fourth 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.
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. Turning to slide 2, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks.
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.
Kevin: Thanks, Paul, and good morning, everyone. Turning to slide four, Sun Life's Q4 results highlight our continuing commitment to helping our clients achieve lifetime financial security and live healthier lives. Fourth quarter underlying earnings saw good results in Canada, Asia, and asset management, offset by lower U.S. results on weaker stop-loss morbidity claims experience.
Kevin: The stop-loss claims experience in the U.S. was driven by higher claims severity, which we have observed across the industry.
Kevin: reported earnings were down year over year from market-driven factors as well as the negative impacts from several one-time items that we don't expect to reoccur. Tim will go through these one-time items in more detail.
Tim Deacon: Wealth, sales and asset management gross flows were up 33% on strong distribution execution at MFS and SLC. Strong net flows at SLC were more than offset by the negative net flows at MFS, which were consistent with the continued outflows across the industry.
Tim Deacon: Individual protection sales were up, driven by strong sales in Asia. Group protection sales were down, reflecting the lower number of large cases coming to market in the quarter and our pricing discipline.
Tim Deacon: Group sales are lumpy and we continue to have strong momentum in our Canadian and U.S. group businesses.
Tim Deacon: We ended the quarter with a strong capital position with a LICAT ratio of 152% at SLF. Given our strong capital position, we will continue to execute on our buybacks under our normal course issuer bid.
Tim Deacon: In asset management, the fundamentals of our businesses remain strong. SLC management achieved record capital raising of $10 billion this quarter, bringing our full year total to $24 billion. And net inflows this quarter at SLC were over $14 billion.
Tim Deacon: MFS long-term retail funds performance remained strong with 95% of fund assets ranked in the top half of the respective Morningstar categories based on 10-year performance.
Tim Deacon: MFS continues to see solid fixed income net inflows, with $1.5 billion this quarter driven by their distribution strategies and strong fund performance. In December, MFS launched five active ETFs, expanding our diverse range of investment products and saw continued sales momentum with their separate managed accounts.
Tim Deacon: while we continue to strengthen our bank assurance relationships with leading banks across Asia. Individual sales were up, driven by healthy high net worth sales, growth in India bank assurance and direct-to-consumer channels, and robust growth in Hong Kong agency and bank assurance.
Tim Deacon: In our India joint venture, our full-year underlying earnings for insurance and wealth surpassed the $100 million milestone this year, maintaining our strong growth trajectory there. In Indonesia, we recently launched our expanded partnership with CMB Niaga with integrated digital capabilities and co-branding.
Tim Deacon: In Canada and the U.S., we are showing strength in our core health businesses.
Tim Deacon: In Canada, group benefits revenue was up 11 percent compared to the same period in the prior year. In the U.S., we see continued momentum in group benefits revenue, up 6 percent compared to the same period in the prior year.
Tim Deacon: Additionally, our U.S. dental business is building momentum with stabilization and membership and improving results driven by repricing and claims expense management actions.
On the digital front, we're driving impact at scale.
Tim Deacon: Our leading virtual care provider in Canada, Dialog, now offers virtual care services to more than 3.5 million clients and their families, including primary care and mental health support. This represents over 8 million Canadians, approximately 20% of the Canadian population.
Tim Deacon: Our services are delivered through partnerships with nearly 50,000 employers, insurance companies, and various organizations nationwide.
Tim Deacon: In the Philippines, we launched Advisor Buddy to help approximately 5,000 new advisors to speed up their onboarding journey. The new generative AI tool provides fast and accurate answers to what new advisors can do to start serving clients more effectively.
Tim Deacon: These digital highlights demonstrate our commitment to drive meaningful client impact, efficiency, innovation, and growth through digital leadership.
Tim Deacon: This recognition reflects Sun Life's commitment to fostering high-performing, future-ready, and welcoming environment where our people thrive and are empowered to deliver on our purpose.
Tim Deacon: Turn to slide 6, we ended 2024 with solid full year results.
Tim Deacon: Underlying net income increased 3% to $3.9 billion. Our total assets under management reached a new milestone at $1.54 trillion. In Canada, we achieved record underlying net income of $1.5 billion, up 6% over the prior year, supported by solid results across all businesses.
Tim Deacon: WealthAUM is up 13% with Divine Benefit Solutions, our pension risk transfer business, achieving record annual sales of $2.5 billion.
Tim Deacon: In the U.S., we grew client revenues to U.S. $8.2 billion, driven by successful execution of our health strategy. We also saw record underlying earnings in employee benefits.
Tim Deacon: In Asia, we saw strong growth momentum and achieved underlying net income of more than $700 million, up 17% year-over-year. These are record results driven by strong protection sales. Total Asia CSM grew by 30%, reinforcing our growth trajectory.
Tim Deacon: Our results demonstrate the strength and resilience of our business. We will continue to build upon this strength and remain purpose-driven as we move into the year ahead. With that, I'll turn the call over to Tim, who will walk us through the fourth quarter financial results in more detail.
Tim Deacon: Full year underlying net income of $3.9 billion and underlying earnings per share of $6.66 were up 3% and 5% year-over-year, respectively.
Tim Deacon: Q4 2024 and full year underlying return on equity with 16.5% and 17.2% respectively.
Tim Deacon: Underlying ROE was impacted by lower underlying net income and growth in book value driven primarily by currency impacts.
Tim Deacon: The decline in quarterly underlying results over the prior year were primarily driven by adverse morbidity experience in our U.S. health and risk solutions business due to an increase in claim severity which has been observed across the industry.
Tim Deacon: Overall, our results continue to benefit from Sun Life's resilient businesses and diversified business model.
Tim Deacon: Wealth and asset management underlying earnings were up 11% over the prior year on higher fee income, primarily from increased asset levels partially offset by credit experience in Canada.
Tim Deacon: Group health and protection underlying earnings were down 27% year over year, driven primarily by unfavorable morbidity experience in U.S. medical stop loss and less favorable morbidity experience in Canada. These impacts were partially offset by solid business growth in Canada.
Tim Deacon: Individual protection underlying net income was up 19% over the prior year resulting from improved protection experience and higher Asia Joint Venture contribution.
Tim Deacon: The variance between underlying and reported net income included market-related impacts and several one-time items, which we do not expect to recur.
Tim Deacon: First, our reported net income was impacted by lower tax-exempt income on foreign currency assets from the material strengthening of the U.S. dollar compared to the Canadian dollar in the fourth quarter. We are taking actions to mitigate this tax volatility going forward.
Tim Deacon: And second, in Vietnam, we recognized an impairment charge on the intangible asset related to our bank assurance agreements.
Tim Deacon: Market-related impacts reflected unfavorable net interest rate, equity market impacts, and the adverse real estate experience.
Tim Deacon: Real estate returns were flat in the quarter, but below our long-term return assumptions.
Tim Deacon: Organic capital generation remained solid at $350 million this quarter, or 36% of underlying net income, driven by underlying net income and new business CSM.
Tim Deacon: Total CSM of $13.4 billion, which is a store of future profits, increased by 13% year-over-year, driven by strong organic CSM growth and currency impacts.
Tim Deacon: New business CSM of $306 million with down 20% year-over-year driven by changes in sales mix this quarter.
Tim Deacon: Finally, book value per share increased by 11% over the prior year and 2% quarter-over-quarter, demonstrating our ability to generate strong growth while returning value to our shareholders, with 3 million shares repurchased this quarter under our Share Buyback Program.
Tim Deacon: Turning to our business group performance on slide 10, MFS's underlying net income of $216 million U.S. was up 13% year-over-year from higher average net assets partly offset by expense growth. Reported net income of $216 million U.S. was up 18% year-over-year.
Tim Deacon: Pre-Tech's net operating margin of 40.5%, improved by 1.1 percentage points over the prior year, driven by higher average net assets.
Tim Deacon: Assets under management of $606 billion in the U.S. was up 1% over the prior year but down 6% over the prior quarter. The sequential decline in AUM was driven by net outflows and market depreciation.
Tim Deacon: This quarter, outflows of 20 billion U.S. included several large institutional mandate redemptions and retail outflows.
Institutional outflows included portfolio rebalancing and fund consolidation.
Tim Deacon: Retail outflows, while negative, improved over the prior year and reflected the continued preference of investors for high-growth tech stocks and shorter-term interest-bearing products.
Tim Deacon: Overall, long-term investment performance for MFS remains strong, with 95% of fund assets ranked in the top half of their respective Morningstar categories for 10-year performance.
Tim Deacon: Fixed income performance was also strong, with 98% of fund assets ranked in the top half of Morningstar on a 10-year basis.
Turning to slide 11.
Tim Deacon: SLC management generated underlying net income of $59 million, down 16% year-over-year, as higher net seed investment income was more than offset by lower fee-related earnings.
Tim Deacon: Fee-related earnings of $79 million were down 14% year-over-year as higher incentive compensation driven by strong fundraising at BAGO was more than offset by higher fee earning AUM.
Tim Deacon: Reported net income of $25 million was down 47% over the prior year, reflecting market-related impacts and lower underlying net income.
Tim Deacon: Deployments of 6.3 billion was down from the prior year but remains solid as we observe sequential quarterly growth in deployments across all affiliates.
Tim Deacon: SLC's fee-earning AUM of $193 billion was up to $16 billion year-over-year, reflecting market growth and net deployments.
Tim Deacon: Turning to slide 12, Canada delivered solid results with underlying net income of $366 million, up 5% year-over-year, on higher fee income and strong insurance business growth, partially offset by lower net investment results.
Reported income of $253 million included net unfavorable market-related impacts.
Tim Deacon: Wealth and Asset Management underlying earnings were up 10% year-over-year as business growth and higher fee-related earnings were partially offset by negative credit experience.
Tim Deacon: Group sales were down 49% year-over-year due to higher large case sales in the prior year.
Tim Deacon: Individual protection earnings were up 13% year-over-year, reflecting favorable mortality experience. Individual protection sales were down 17% year-over-year due to lower participating policy sales through the third-party broker channel.
Turning to slide 13.
Tim Deacon: Sun Life U.S. underlying net income was $115 million U.S., down 39% from the prior year.
Tim Deacon: In group health and protection, underlying earnings were lowered by 46% year-over-year, driven by unfavorable morbidity experience in medical stop-loss from higher claim severity, which we're observing across the industry. This impact more than offset strong underlying business results in group and improved dental results.
Tim Deacon: In dental, the business benefited from management actions to secure repricing on Medicaid business, generate sales, and deliver efficiencies. We will continue to drive profitability improvements through these levers.
Tim Deacon: U.S. group health and protection sales of $830 million U.S. were down 11% year-over-year, driven by lower government dental contracts as fewer opportunities came to market this quarter. Individual protection underlying earnings were in line with the prior year.
Tim Deacon: Reported net loss of $1 million U.S. includes negative market related impacts and a non-recurring provision in dental.
Tim Deacon: Results benefited from improved insurance experience, higher contributions from joint ventures, and higher fee income. Reported net income of $11 million includes the impairment charge related to an intangible asset for bank assurance agreements in Vietnam and market-related impacts.
Tim Deacon: We continue to see strong sales momentum in individual protection in International, India and Hong Kong.
Kevin: And finally, Asia's total CSM grew to $6 billion, up 30% year-over-year driven by strong organic CSM growth and currency impacts. And with that, I will pass it back to Kevin to conclude on the prepared remarks for this call.
Kevin: Thanks, Tim. In closing, our commitment to our purpose, our clients, our people, and our values remain constant and unwavering. We're focused on helping our clients achieve lifetime financial security and live healthier lives.
Kevin: We're confident that Sun Life's balanced and diversified business strategy, as well as our financial strength, will position us to deliver on our medium-term objectives which we introduced at our last Investor Day.
Kevin: I want to thank all our employees and advisors around the world for their commitment to SunLife's purpose and for making a positive impact for our clients around the world. I will now turn the call over to the operator for Q&A.
Speaker Change: Thank you. To join the question queue, you may press star then one 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. To withdraw your question, please press star then two.
Speaker Change: Our first question is from Tom McKinnon with BMO Capital Markets. Please go ahead.
Tom McKinnon: Yeah, thanks and good morning question really just with questions with respect to the stop-loss here Dan maybe you can share with us the loss ratio in the fourth quarter how that's trending
Tom McKinnon: Okay, good morning Tom, it's Dan. So let me take each of those and also give a little bit of context. Obviously we had
a variance in the stop-loss-loss ratio in the fourth quarter.
Tom McKinnon: and utilization remained at roughly that level throughout the year. What we saw in the fourth quarter was a change in the severity of stop-loss claims.
Tom McKinnon: So just a comment or a reminder about how stop-loss claims emerge. Most of the business is effective and renews each January 1st.
Tom McKinnon: Stop-loss has a fairly high attachment point. These are, you know, very severe medical claims.
Tom McKinnon: Attachment points, or think of it as a deductible, are often $150,000, $250,000, or even $300,000. So by the time a claim accumulates to that level, it does take some time versus when the case was effective.
Tom McKinnon: So it's really during the fourth quarter of the year and even the first quarter of the following year when we actually receive most of those claims.
Tom McKinnon: We get some insight into those claims throughout the year, but we actually see the details when the claims come in. And what we, and others who've reported in the industry, saw in the fourth quarter was those claims were meaningfully more severe than had been the case in the past.
The
Tom McKinnon: So, you saw a spike in the loss ratio in the fourth quarter, but probably the most important loss ratio number to think about, and which I'll share, is what that resulted in in terms of a full year loss ratio.
Tom McKinnon: We started to move those price increases up actually in the middle of 2024.
Tom McKinnon: You will see, and will experience, a significant price increase from the 1-1-25 actions.
Tom McKinnon: Most of the business renews on 1-1-2025, and also there were significant new sales. We achieved about a 14% pricing increase on 1-1-25.
Tom McKinnon: And we also took underwriting actions in terms of the business we renewed versus didn't renew, which we think actually gave us about a 2% favorable result to where we were on those kinds of actions around the same time last year.
Tom McKinnon: So with that, Tom, have I answered all your questions or do you have a follow-up?
Tom McKinnon: Well, I think the way things are disclosed, you have the expected amount in a PAA and then the policyholder experience.
Tom McKinnon: picks up something that's different than they expected. You know, if your expected was a 73 and the actual was a 74, I guess we have to look at it for the entire year as opposed to just the quarter, but
Speaker Change: I guess, how should we be looking at this going forward? In 2023, it looked like your loss ratio was between 65 and 70 percent.
Speaker Change: And so, I assume then, if you price then to $73, you would have been able to pick up positive policyholder experience in law in 2023. If you're pricing to $73 for 2023...
4, then how should we be thinking about
Any adverse policyholder experience for 2024 for this line?
Speaker Change: Yeah, so let's go back a little bit to COVID during 2020, 21, 22, 23.
Speaker Change: We experienced extremely favorable utilization, and there are obvious reasons for that. It persisted quite a bit longer than COVID itself because hospitals were understaffed.
Speaker Change: So contrast that with 74% in 2024. And we've been saying, really, since 2023,
Speaker Change: that the utilization would return ultimately to pre-COVID or normalized levels.
Speaker Change: and indeed it did so we've certainly been expecting for a while from rebound
Speaker Change: in the loss ratio. So we've been taking pricing action consistent with that throughout, while understanding that we would not be able to maintain.
Speaker Change: those extra favorable results that were coming from the unusually low
Speaker Change: And then moving forward, we've taken additional pricing actions moving into next year.
Speaker Change: Severity was not fully expected, so there's likely to still be some pressure as we move into
Speaker Change: 2025, but there also were pricing actions and we will take additional pricing actions.
Speaker Change: We believe the additional pricing actions we need to take are modest, in the range of about another 2%. You may have seen some of our competitors talking about pricing actions they need to take, which are many, many times that.
Speaker Change: So, well, first of all, Effective 1.1, we did achieve 14% average rate increase. We also...
Speaker Change: took additional underwriting actions, which, as I mentioned before, were worth probably about 2%. And then we do think we need to raise our prices about another 2%, which we are in the process of doing.
Speaker Change: Okay, so what's the outlook then for this line for 2025?
If we want...
if we ran 2024 at 74.
Speaker Change: Yeah, I'm not sure we're prepared to give a specific loss ratio pick for 2025.
We would say we would expect, you know...
Speaker Change: Some pressure from severity to persist. We don't think this is
Speaker Change: short-term impact, this may be the new level of severity that we would see, but we think the order of magnitude of action that we would need to take in order to address it is around that 2% incremental price increase.
Speaker Change: And just, is the way these things are booked, is the fourth quarter when you really do all your catch up here, so is this, should we be looking at stop loss for the full year as opposed to just the fourth quarter results?
Speaker Change: Well, I mean, I wouldn't quite call it catch up, but kind of back to the point I made earlier, we really don't receive most of the claims until the fourth quarter, and then some into the first quarter of the following year. So while we certainly get some indications as to what's happening, we also have arrangements with many of our third-party administrator partners to give us claims information about claims that are on their way towards hitting a stop-loss deductible. We don't see the actual claims.
Speaker Change: While it's not catch-up, the results clearly do affect the entire year.
Speaker Change: Just to put it into perspective, two-thirds of our business is effective on January 1st of each year, and it takes five quarters for us to get to about 90% actual claims experience on that cohort. So right now, what we're really seeing is the results of last January's effective dated business.
Speaker Change: The next question is from Gabrielle Deschain with National Bank Financial. Please go ahead.
Gabrielle Deschain: Two-thirds of the book has been repriced as of 1.1. So that pricing has an impact on this year of 2025. So there should be margin improvement or restoration on that basis alone, correct?
Gabrielle Deschain: Yes, it's a little more complicated than that, so I would add two points to that. Some of the experience that we report on in 2024 was actually experience from 2023.
Gabrielle Deschain: So, recall that I said 2023 had a 67% loss ratio, a very favorable year. Now we no longer have the benefit of the 2023 business.
Gabrielle Deschain: The other adjustment I would make to that is we started adjusting pricing in the middle of 2024 so We have taken pricing action on more than two-thirds of the business But also I said we probably we probably do need to take a little more pricing action
Gabrielle Deschain: Okay, so ignoring that 2% of additional pricing action required, just what you've done so far, when should we expect that to be fully reflected in your book?
Well, um...
Gabrielle Deschain: Being that we do need a little bit more price, it would obviously take through next January for us to be fully through that. But there should be meaningful impact even from the pricing actions we took effective 1-1-25.
Speaker Change: Okay, and then you said the claims filter in, well not filter, a deluge rather, it comes in Q4 and a bit in Q1, like what we're in currently, so we could see another blip in Q1 based on 2024 claims.
Speaker Change: Yeah, I mean... IDNR, I guess. These are... Anyway, sorry. Go ahead.
Speaker Change: No, I was just going to say that, you know, most of the claims come in in fourth quarter and then also in first quarter of the subsequent year. So yes, there could be some pressure that continues into the first quarter from that.
Speaker Change: And the message you're giving us, the 14%, the price increase, the 2%, which is lower than what we've heard from peers, is reflective of the pricing discipline that you exercised in prior years, like the not assuming that the good times are going to last forever type of thing, right?
Speaker Change: Yeah, exactly. We and we've been pretty open about that. We've been saying, you know, for a couple of years that the low utilization from COVID.
Speaker Change: can't be baked into the future and we priced it for an assumption.
Speaker Change: that things would go back to normalized levels, which indeed they have. And yes, you're correct. The loss ratio we're reporting, the degrees of price increases needed, are quite modest compared with what some of our competitors are reporting.
Speaker Change: performed better from a claims experience and and Dan had been signaling for a while that that would come back. He came back faster than we expected in a way this quarter because of severity.
Speaker Change: , , , , , , , , , , , , , ,
Speaker Change: in some quarters underperformed, and that's been performing really well. So, I would just say that we're confident in our strategy here, we're confident that we have the right scale, we have the pricing discipline.
Speaker Change: And you can see that we were less impacted than many of our competitors. So I would look at it from that perspective. And if you look at slide 18,
Speaker Change: Yeah, no, no, I get that. I don't want to freak out over this stuff. It's just understanding the mechanics, the timing of everything.
Speaker Change: Redetermination stuff for for dental a lot of that stuff, you know, there's a bit of a learning curve there Anyway switching over to Tim you mentioned the tax-exempt income. Can you can you you know this stronger US dollar?
Speaker Change: Can you explain how that worked out? And you called it a one-time item, but you're taking action to mitigate the volatility. So how is it a one-time item and also something you have to mitigate?
going forward.
Speaker Change: Sure, thanks Gabe. There are a few pieces to this so maybe I'll start with a little bit of background.
Speaker Change: So, under Canadian tax law, a portion of our investments aren't taxable in Canada, as they're tax-exempt. They support our foreign businesses that we operate through branches of our Canadian entities. And, historically, we've had a tax benefit under this program, really, since inception.
Speaker Change: This year we had a lower tax investment income on foreign currency assets and related FX swaps.
Speaker Change: And we really saw that from the material strengthening of the US dollar compared to the Canadian dollar. And that overall led to a tax loss, and that's highly unusual for us. As I said, we've always had a tax benefit through the program by design.
Speaker Change: So, the loss you're seeing in reported income is the difference between the expected tax benefit, which we include in underlying net income, and the actual tax loss, which we experience for the year.
Speaker Change: Okay, and then on the earnings, the last thing on earnings on surplus, so I forget, you've given guidance on sensitivity to rate declines or rate cuts rather. If I look at slide...
Tom McKinnon: 20, core investment income down quite a bit year over year. Is that really all the impact of the rate cut there and we should use that in a linear manner for future rate cuts?
Thank you for watching!
Tom McKinnon: and we saw 80 basis point decline in that short-term yields in that quarter alone. You know, there's a modest lesser extent. We had a slightly lower surplus balance.
Tom McKinnon: When you look at overall earnings and surplus, we of course had lower fair value through OCI trading gains this quarter.
Tom McKinnon: And when longer term rates come down, it will also provide us an opportunity for fair value through OCI gains.
Tom McKinnon: No, in the fourth quarter we had a lot of repatriations from our operating entities, you know, in terms of capital repatriation, as you can see in our strong cash generation or our growing capital. And so that was just parked in short-term investments temporarily. We wouldn't normally seek to run that at 40 percent. Now, surplus is a bit of a mix, right? We have cash, we have that to use for collateral for derivative needs.
Tom McKinnon: And then we have a long-term portion of the holding, but it's more skewed to short-term in the current environment because of that inflow of cash, but we'll seek to reinvest that, as I said, particularly as rates present themselves for opportunities for yield.
The next question is from Menny Gromann with
Menny Gromann: Hi, good morning. I think this is for Dan. I'm not sure if you addressed this, but if so, maybe I missed it. You've been talking about a target of a hundred million dollars underlying earnings for dental for 25
Tom McKinnon: Would you be able to give sort of similar guidance to the group benefits line in terms of where you see that for 2025?
Tom McKinnon: For dental, we've decided to give a specific target because of the very unusual events last year with the impact of the end of the public health emergency. So we generally don't give a specific earnings target by line of business. What I would say is it's worth pointing out that our group benefits business, or employee benefits business as we call it,
Tom McKinnon: had the best year it's ever had in 2024. Earnings were up by over 50%.
Tom McKinnon: and the margin reached above our long-term target of over 6%.
Tom McKinnon: very good loss ratio results, good expense coverage progress as they scale and they've got that business has quite a bit of momentum and we expect good results to continue in that business as they did in the fourth quarter.
Speaker Change: Okay, just another question on SLC this time. I noticed a discussion about capital raising and coming from Crescent and BGO. Crescent makes a lot of sense to me just given trends. BGO stood out to me and so I just wanted to get a better understanding of
Speaker Change: What's driving that and how you see the outlook for capital raising specifically in the real estate sleeve of SLC, again, a little counterintuitive just given the pressures that we've been dealing with on the real estate side for a while now.
That's a question, yeah.
Speaker Change: Yeah, this is Steve Peter. Thanks for the question. You're right. We had, I think, our best fundraising quarter ever at $10.2 billion. And it was really across all the different asset classes.
Speaker Change: The biggest share of that was in Crescent. A lot of this is due to the timing of...
Speaker Change: fund closings. So at Crescent we had, I believe, three fund closings and three key fundraisers at Crescent. So in total that was just over five billion, about half of the ten billion. But at BGO we had a big closing in there, Asia Fund 4, a really successful group. In fact, I think if you were to look at
Speaker Change: In Japan, our team probably has the top results, and so this fund could approach $4 billion. They had a big closing during the quarter. We also won a sizable separately managed account in Canada in real estate.
Speaker Change: And then we also, in addition to that, had over a billion dollar fixed income wins and some money coming in for it too. So it was broad based. But I would say in real estate, we're actually starting to see renewed interest. You know, if you look at
Speaker Change: The impacts on real estate, obviously, the overhang on the office sector put a pall over real estate in general. The inverted yield curve really had an impact. If you look at our fundraising for BGO, it was almost $9 billion in 2002. It dropped to $4.2 billion in 2009.
Speaker Change: Three at BGO, it was up to almost $8 billion this year.
and we think that's going to continue to trend up.
We're seeing more demand for core.
Speaker Change: Real Estate and we see that in demand for our Prime Canadian Fund.
Speaker Change: You're seeing demand for specific sectors like industrial and cold storage and data centers. So I think with real estates now starting to come down, with office utilization starting to come back up, you know, we're seeing investor demand for real estate pick back up.
Great. Thanks for the call.
Doug Young: The next question is from Doug Young with Desjardins Capital Markets. Please go ahead.
Doug Young: Hi, good morning. Just Dan, just a few hopefully quick ones here just on the medical stop-loss. Just want to confirm, I think I know the answer, but 100% of this renews annually. And can you size out the negative morbidity experiences? Is it fair to say it's about...
Doug Young: U.S. $50 million in the quarter, and, you know, and assuming, you know, things are rolling through, that this should be the worst of it.
Doug Young: represented our view of the full year results for especially for the 1-1.
24 cohort.
Speaker Change: Is there a way you can smooth this out so it doesn't all come in Q4? Is there a better way to smooth it out? I don't know if that's a possibility, but...
Speaker Change: Yeah, you're not the first person to ask that question, you know, it...
Speaker Change: You know, in a business where you don't fully see the results, really, for five quarters.
Speaker Change: A lot of what we do is based on reserving choices.
Speaker Change: and we do the best we can each quarter to give a very good educated estimate of what's happening with each of the cohorts that we're managing.
Speaker Change: and observing the emerging experience on. So there already is, you know, a fair amount of.
Speaker Change: reserving involved in the business as it moves forward. So, you know, to some degree what you're saying is already in there, but obviously when things happen that you didn't fully anticipate, you have to, you know, make the right reserve call each quarter.
Speaker Change: Yeah, I just think of property and casualty insurance and your reserve up front and we always look for positive reserve developments.
Speaker Change: This is kind of where I was going. And then, Dan, on the U.S. dental side.
Speaker Change: There's a one-time payment for ASO for remediation reimbursement. I mean, can you elaborate?
Speaker Change: What that was? Yeah, sure. We took a provision in the fourth quarter for one-time payments to reimburse several administrative services-only clients for services that were provided on their behalf during 2024.
Speaker Change: These were one-time payments for services where we're the administrator, so it's not related to claims incurred by us, and therefore there's no impact to dental loss ratios or the insurance experience. There was no negative impact to members or providers. Rather, this was...
Speaker Change: isolated and specific to the self-funded clients themselves. The provision reflects our best estimate of the amounts and we're addressing the issue and don't expect it to recur.
Speaker Change: And what does it relate to, still not clear to me, as to why the payment was made? I guess it doesn't impact the loss ratios or anything like that, is that, was there, yeah, I just.
Speaker Change: Yes, some of our business is administrative services only where we're acting as the administrator or TPA
where we pay claims on behalf of the sponsor.
Speaker Change: And we paid some more claims in certain situations than it turns out we should have. So we're correcting that with the clients to make sure that, you know, we take care of our clients and put the issue behind us.
Okay, I appreciate the call. Thank you.
The next question is from Nick Liu with
Nick Liu: Good morning. Thanks for taking the question. The first one is again on medical stop-loss. Just wondering what's the level of
Nick Liu: medical cost trend you are building in for the rate increases, and not less so on the first dollar, but more so where sunlight comes in. And where do you see that impact your total top-line premium for the year? Thank you.
Nick Liu: Okay, so medical trend overall, including for core health insurance and the overall health system, is at an elevated level compared where it's been for the past several years.
Nick Liu: We are now pegging that rate as about 8%. That's the core rate. However, the way stop-loss works, because of the high attachment points, there's a leveraging effect. So the effective trend...
Nick Liu: and that will, you know, impact our revenue going forward, obviously, in a positive way. And that includes the additional 2% that I've mentioned a couple of times that we believe we need to add to our pricing in order to get to that 16%.
Speaker Change: Thank you and my follow-up is in the U.S. you also called out some unfavorable in disability so wanted to see if that's related to relative to the favorable recent trends or do you see it back to pre-pandemic level and what do you guys see out there that made you guys decide to take a step back in the employee benefit sales? Thank you.
Thank you.
Speaker Change: Yeah, so the there was a little bit of negative morbidity and disability in the fourth quarter, but if you look at the entire year
The experience was actually very good.
Speaker Change: So I would view that as more, you know, of quarter-to-quarter volatility than anything else.
Speaker Change: Disability experience is really not directly impacted by medical trend or medical experience. We've actually seen a number of years of improving disability experience.
Speaker Change: Fewer people are ending up filing for disability and more people are going back to work.
Speaker Change: We also think there's been some impact from remote work. About half of the workforce is capable, is in jobs where remote work is a possibility. And that's enabling people to stay at work in ways that weren't possible before. So we're in a period of time where disability incidence has actually been dropping as well as successful return.
Speaker Change: to work has been increasing. So we're actually in a time of very good and steadily improving disability experience.
Great, thank you.
Speaker Change: The next question is from Paul Holden with CIBC. Please go ahead.
Speaker Change: Yeah, no, this is a great question and we've been doing a tremendous amount in the way of analytics to understand what the drivers are and we see three drivers of the increase in severity. One is
Speaker Change: and the illnesses as a result are somewhat more severe. Also related to that, there are a number of new cancer drugs that are very promising but also very expensive. And we have seen some elevation in the use of those drugs.
The second issue is...
Speaker Change: A pretty significant increase in premature births and neonatal care, which obviously can trigger stop-loss thresholds.
Speaker Change: There was just a report actually published last week that showed that the number of births in the U.S. rose four percent.
Speaker Change: last year versus the prior year. So there's actually more births.
Speaker Change: tools like in vitro fertilization continues to rise, and all of those things contribute to more premature births and neonatal intensive care as well. So that's really the second category. And the third driving factor is hospitals are increasing prices. Now, obviously the core health insurers
Speaker Change: But we are seeing hospitals being successful recently in raising the cost of inpatient care.
during COVID have worn off.
Speaker Change: and so one of the ways that they are addressing that and also that they've built back to pre-COVID
Speaker Change: capacity has been to raise prices. So those are three factors we think are primarily driving the severity and, you know, those factors are likely, you know, persistent.
Speaker Change: Okay, got it. Thanks for that. All right. Why don't we give you a break, Dan?
Speaker Change: I want to ask Tim a question regarding expenses. So earlier in 2024, it announced I think it was $200 million of planned expense savings. I'm wondering how much of that came through in the quarter, maybe how much has been achieved to date?
Speaker Change: Where can we see that in the DOE and how much additional should be realized in 2025?
Tim Deacon: Hi Doug, thanks for the question. So on our expense efficiency program, we've made great
Tim Deacon: Part of the challenge, as we signaled at the beginning of the program, and it's part a factor of IFRS 17, is it's difficult to see where expenses come through, because they come through a different category. So on your question of where this is showing up...
Tim Deacon: Almost 40% of that's coming through net insurance service results and then the bulk of the rest coming through other expense lines. This is non-attributable items.
Tim Deacon: And then when you think about from a geography perspective, almost half of that's coming from the U.S. and in particular in the dental businesses, we've been taking a lot of expense actions there. 20% is coming from Canada and the remaining 30% would be in the corporate segment.
Tim Deacon: Most of the savings are really coming from those geographies, but a little more than half are FTE related So this is both in FTE reduction that has already been occurred, but also through attrition
Tim Deacon: and then 20% of savings will then come through automation. And that's really what we look ahead at 2025.
Tim Deacon: So we expect the remainder of the savings under the program to hit the full $200,000. We'll have 80% of that total efficiencies by the end of the year, and we're on track with that expectation.
Tim Deacon: But it'll be difficult to see that through the various lines, so we're going to just report on a regular basis just in terms of where we are in that progress.
Speaker Change: Yeah, it's a bit of both. So we are seeing it come through the bottom line, but we are investing in technology and digital and AI like we covered at our investor day. And I think the best way to think about this is this is embedded in our growth objectives, in our medium-term objectives.
Speaker Change: So we really look at the overall earnings growth rate targets by each one of our business groups and this program is helping to support underpin those growth rates. And, you know, we've been pleased with the progress and expenses continues to be a focus really because we do need to continue to invest in the businesses and we want to make sure that we're generating positive operating leverage.
Mario Mondonca: The next question is from Mario Mondonca with TV Securities. Please go ahead.
Good afternoon.
Speaker Change: Dan, a question for you, but this has nothing to do with soft loss. It does have to do with Medicaid.
themes and theories around what a U.S. administration will do.
Speaker Change: to reduce expenses. And there are certain sacred cows out there like Social Security and Medicare, but Medicaid keeps coming up as one of those areas where
this new administration may cut expenses. Can you talk about...
Speaker Change: Sun Life's overall exposure to Medicaid. What would happen if Medicaid rolls really do come under pressure over the next couple of years?
Speaker Change: Yeah, Mario, I think, um, so we have about two billion dollars of Medicaid business just in, you know, in round figures. It is obviously a very big part of our dental business and a business we're, you know, a market we're very happy to serve and and have done very well in, you know, over a longer period of time including the DentalQuest history. I think the best way to think about that is probably to look at
Speaker Change: The proposal that was floated in the House of Representatives yesterday
Speaker Change: This is the first draft of the House Reconciliation Bill, not necessarily going to pass and in fact probably would change significantly from a first draft.
Speaker Change: to adult coverage, and that's a relatively smaller part of our business.
Speaker Change: And cuts might very well take the form of work requirements for able-bodied adults.
Speaker Change: And when you look through the way they would calculate something like that, actually most people would already meet those requirements. And so that change, for example, would have a fairly de minimis impact on us. You know, it's impossible to predict exactly what's going to happen, but.
Speaker Change: I see and and dental is not the only that's not what makes up the two billion dollars presumably there's other Medicaid beyond dental its own life
Speaker Change: No, not in Sun Life. Sun Life, the only participation we have in Medicaid is is through the dental benefits.
Speaker Change: Okay, that's clear. And then, if we could go back to Q3.
Your response to questions around
Speaker Change: stop-loss were a little bit more optimistic, a commentary around Sun Life's conservative pricing. So I think something clearly surprised you in the last three months. Is it just a matter of the timing of when Sun Life gets information that a lot of new information arose in the last three months? Was there no way to have seen this sooner?
year and has been generally stabilized.
since then.
Speaker Change: What, you know, was a little surprising, and obviously you've seen it, everybody's had the same impact if you've looked at the earnings reports of...
Speaker Change: some of our peers both in stop-loss and more broadly in health insurance.
Speaker Change: But the severity of the claims is something a little bit new in the experience. And as I mentioned, we don't see the claims themselves, or most of the claims themselves, until the fourth quarter of a cohort and even some in the fifth quarter, meaning into the first quarter of the subsequent year. So I think that's what everyone saw in the fourth quarter was the severity.
Speaker Change: Presumably that's still true, it's just that things got particularly bad this quarter. I mean is it still an appropriate thing to cite something like the quality of somebody's book is better?
Speaker Change: Well, of course we think so, but yes, because I think we, you know, if you look at our experience and the way we handled it, it is different than what some of the peers are reporting. So, I think for us
Speaker Change: You know, the severity of illnesses is not something we can necessarily, you know, control, obviously. That's something that is occurring market-wide. What we can control is pricing and underwriting.
Speaker Change: and our pricing was certainly much closer to the pin than that of our competitors.
Speaker Change: I think some of our competitors have been, you know, assuming low utilization from COVID would continue and other things. So you've heard competitors talking about
You know, having to put through just, you know, epic.
Speaker Change: rate increases to get back to where they need to be versus the kind of numbers we're talking about. So I think it's it's both, it's healthcare severity which is an exogenous factor but then it's pricing and underwriting where I do, I do agree with you, I think we shine compared to the competition.
Thank you.
Speaker Change: Thanks, Mario. I mean, first off, this program that we've been operating for decades, you know, it's part of the tax code and tax regime. And what I would say, at the end of each year, we determine what assets are designated to support our Canadian business.
Speaker Change: for tax purposes and the remaining assets and swaps are considered tax-exempt.
Speaker Change: The tax and pre-tax income on these assets and that will smooth out the volatility So you wouldn't see these this distortion, but it would have the effect of a modest reduction in the overall tax benefit That we've been experiencing where the prior years because we didn't have those losses coming through
Speaker Change: So, modestly higher effective tax rate, but nothing that you would really cause us to worry about. Correct.
Speaker Change: I think that's right, Mayor. Modestly higher, but it wouldn't take away from our medium-term objectives for earnings growth. Yeah, we're still committed to that.
Speaker Change: Thank you. For sure. I understand. I just figured there would be at least some effect. Thank you. Appreciate it.
Speaker Change: Yeah, thanks. My first question is for Dan on stop loss here.
Speaker Change: I guess claims are moving higher. So then why the surprise on the claims front in Q4? I'm just trying to square that up because it sounds like you moved pricing up because you knew there was gonna be an issue here, but then we still had the big surprise in Q4. So why wouldn't that have been reserved for earlier? I'm just trying to understand.
A lot of the surprise here, hopefully that makes sense.
Speaker Change: Yeah, it does. Early in the year, remember, we saw utilization recover fully back to pre-COVID norms, so our pricing increases.
Speaker Change: in the middle of the year were related to fully reflecting that utilization level.
Speaker Change: but not necessarily the increased severity that we saw emerge in the fourth quarter. So that's why there's really two separate issues. We took care of the first one first and now we have a little bit to do or a little bit more to do to fully take care of severity.
Okay, okay, I understand.
Speaker Change: Then just moving over to a different type of question here, maybe for Manjit, can you just give some additional details on this impairment charge on bank assurance in Vietnam?
Speaker Change: You know the performance in the country has been challenged for some time. I think even dating back to 2023 So I'm just wondering about the timing of the impairment
Speaker Change: in 2024. And then could you kind of flesh out some detail on what the regulatory changes were? Like, was this related to changes related to bundling? And does it feel like there could be more regulatory changes that could impact your business there?
Speaker Change: All right, good morning Lamar. So let's give a bit of background and then get to your questions as well. So as you know
Speaker Change: Bank Assurance is an important distribution channel for us and other market players in Asia. And in Vietnam, we entered into two bank assurance partnerships, the first one with TP Bank in 2020 and then with ACB Bank in 2021. They're both 15-year.
Speaker Change: David Garg, Timothy Deacon, Timothy Deacon, David Garg, Timothy Deacon, David Garg, Timothy
Speaker Change: Now, while Sun Life has performed better than that, our sales have also declined as well.
Speaker Change: So what we see right now is we think that has bottomed and we're starting to see some signs of re-emerging growth. But you know as we looked at it this quarter and we factored all that stuff in and we have to then take a look at what the value of the intangible is, we reflected the trends I spoke about earlier and that's what led to the write-down.
Speaker Change: In terms of your second question, regulation, I mean I think there is ongoing discussions with regulators, they are looking at some of the commission structures that banks enjoy as part of these arrangements, so we'll see what comes out of that.
Speaker Change: Okay, just the last point here on the timing, like why wasn't there like an impairment even back in 2023, because I think the business was challenged at that time as well, and you guys probably run the impairment test annually, or am I wrong on that?
Speaker Change: Yeah, we do run it annually, but there is no bright-line test, Lamar. As I mentioned earlier, these are 15-year agreements, so we're making long-term assumptions. And, you know, we had to kind of let the facts emerge, and I think that's kind of what's been happening the last few quarters.
Speaker Change: The next question is from Alex Scott with Barclays. Please go ahead.
Speaker Change: Hi, good morning. I had one on stop-loss to bear with me here. I follow up to Tom's question earlier.
Speaker Change: The 1124 book, could you disclose to us what percentage of your incurred loss at this point is paid?
Speaker Change: I'm just trying to understand if that's like pretty darn fully developed at this point or if there's still information that we need to be concerned about coming in over the next quarter or so.
Speaker Change: Yeah, that's a great question. At the end of the fourth quarter, we've got about 70% of the experience on that cohort.
Speaker Change: And then by the end of the first quarter, I think it gets to around 90%. So it's pretty much done or just about done by the end of the first quarter. But yeah, there is some more in the first quarter that comes in.
Speaker Change: Got it. Okay, and then for my follow-up question, I just wanted to see if you could give us a little more color around, you know, flow expectations, the outlook for net flows both in MFS and SLC.
Speaker Change: Ted, do you want to take MFS first and then Steve can take SLC here in the room?
Ted: Sure, good morning everyone. I think the overarching comment I'd make about flow expectations is that on a given quarter or even year, predictability is going to be
Difficult
Ted: Certainly on a trailing basis, and particularly in the quarter, it was not a good quarter for flows.
Ted: On the retail side, a little bit simpler and more historically consistent explanation in that we're holding or gaining share in a market that is in outflows. We're confident both in the long term.
Ted: of the market and in our ability to maintain and grow our share and return to positive flows.
One Market Dynamics.
Ted: you know, that is a rare confluence in terms of a number of large losses in our strategies that are underweight to, more meaningfully underweight to the MAG 7.
Ted: We've been working through a lot of these, and they came together in the quarter. So as we look forward, we're not going to make predictions on flows, but those, particularly those institutional dynamics, we would expect to get better over time. And overall, we would expect to return to positive flows over the medium to long term as we execute on our various growth strategies.
Ted: Hi, it's Steve Peacher. As it relates to SLC, one point I would make is that, and you saw it this quarter, our quarterly flows will be a function and we'll move around based on when we have fund closings.
Ted: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Private Credit. We have a number of funds in the market, so that we think will help us over the course of this year. As I mentioned earlier, we're starting to see increased demand for real estate after kind of hitting a trough in 2023. We see steady demand for fixed income.
Speaker Change: and I think we'll see a pickup for infrastructure. So I don't have an exact number to give you, but we would expect fundraising to be higher in the coming year than it was in 24.
Speaker Change: The next question is from Darko Mihalic with RBC Capital Markets. Please go ahead.
Darko Mihalic: Hi, thank you. Good morning. I can be quick. Dan, I just didn't understand your answer to Manny's question on dental earnings. You guys had committed to U.S. $100 million for 2025. Is that still on the table? Is that still what you're committed to earning?
Darko Mihalic: Yes, it is, and we're pleased with the progress we made in the fourth quarter there.
Speaker Change: Okay, thank you. And second question real quick, Dan, also on the stop-loss, you said that you've achieved 14% on average increase, price increase, plus another two. Is all of this happening without any plan loss? And what is your expectation on that front?
Speaker Change: Sorry, without any what loss? Any loss of customers or any like. Oh, OK.
Yeah, so we, um...
Speaker Change: As of 1.1, the book of business is about 5% larger than it was 1.1 of last year, so we've actually grown the book, modestly of course.
Speaker Change: Each year there's substantial turnover in the business. Remember, it's a one-year cycle. Typically, all the business goes out to bid annually.
Speaker Change: So we have to sell enough to make up for the cases that move and then get some growth on top of that.
Speaker Change: We were somewhat surprised in the fall to see still aggressive pricing in the market in light of all of these different factors, but we do see that changing now. We think market behavior in 2025 is going to be quite different and actually may be a good opportunity for us.
Speaker Change: And that 5% how would that compare to like a typical year for for you in that business?
Speaker Change: It is smaller. In recent years, we've generally been around a double-digit increase. And that's reflective of our, you know, more conservative pricing approach than some of our competitors.
Great, thank you.
Speaker Change: We have a follow-up from Tom McKinnon with BMO Capital Markets. Please go ahead.
Speaker Change: Yeah, a question about the capital generation, you know, $350,000 when you add the dividend, that's...
Speaker Change: Steve Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: And then some of the movements as a result of mark to market stuff. Even on your Leicad it looks like, you know, there would have been at least...
Speaker Change: three to four hundred million there and then taken in ninety percent of
Any comments? Yeah, it's Tim, thanks Tom.
Speaker Change: I think your math is probably correct. You know, our organic generation after dividends was 350 in the quarter, and that's really within the range of our target. We communicated we expect to be around 30 to 40.
Speaker Change: David Garg, Timothy Deacon, Timothy Deacon, David Garg, Timothy Deacon, David Garg, Timothy
Speaker Change: And our dividends are up because of our increase in dividends. Our payout ratio is roughly around 50%, so at the top end of our range.
Speaker Change: So, on the organic components of that, we look at things like our new business CSM, that was strong, but some of our sales were a little bit more capital intensive than prior periods, so that's in part why that's come down.
Speaker Change: and just ongoing investments in our business. You referenced a couple examples. So, overall, the organic capital generation before dividends was around $840,000 and then after our dividends came in at the $350,000.
Speaker Change: and within lines of our expectations. And when we communicated this as a metric, we did say that there would be volatility quarter to quarter. It's going to be a function of the earnings, the dividends, and then how much the CSM growth. Those are really the largest contributors to that.
My question was really on, that's an organic number?
Speaker Change: Um, you know, and it takes out any kind of noise related to market impacts, but even if I look at
So I'm trying to get what's the capital generated.
Speaker Change: not organically, actually, I guess I'll use that term. But if you take in, generally, at least 90% of the MFS earnings and take in somewhere in around
Speaker Change: you know, the movement in the LICAT ratio that you have at SLF.
Speaker Change: or maybe just strictly the movement in the Leicat Ratio at SLF, we can probably get a number in around...
400-ish or something like that.
Speaker Change: Do you actually look at the capital generated actually versus organically? And was it significantly different in the quarter?
Hi Tom, it's Kevin Morris here. I'll take that one.
Speaker Change: Capital generation was positive and it is in the range of three to four hundred million
Speaker Change: The share buyback measurement actions in the quarter was about minus one and a half and as you know, the Likert ratio stayed flat over the quarter so the actual was positive.
Speaker Change: Okay, so it's interesting, despite the fact that the reported number was a lot lower than what people were anticipating, the actual capital that you would have generated, not organically, but actually, was really not impaired to any extent.
Tom McKinnon: Am I, is that a proper take away? Yeah, that is right, Tom. A couple of the large one-time items that we had this quarter...
Speaker Change: did not impact the capital position at all, both the tax issue that we talked about, as well as the intangible write-down of Vietnam. Both of those total about $400 million. Neither of those are included in the LICAT ratio, so they had no impact on the capital this quarter.
Okay, thanks for that.
Speaker Change: But the underlying fundamentals remain strong, right? If you look at Canada, Asia, and SOC,
Speaker Change: We've had good top and bottom line momentum and strong strategies to continue to deliver results.
Speaker Change: Cash Flow Coming There and Earnings and Capital Generation. If you look at MFS as an at-scale in-game player, their earnings and margins were strong.
Speaker Change: and we think they're doing the right things for the future and they cash flow really nicely at MFS and the US had a tough quarter but it's a capital life, high growth business and it does have
Speaker Change: a bit more volatility. We have scale there. We have the experience, the volatility and claims experience, mostly in stop loss and dental is consistent with what the industry is seeing. So we continue to have confidence in
Speaker Change: our strategies in the US and our ability to deliver so you did see a tough quarter. We're not trying to walk that back and I think we answered the questions. But I think you end on a really good point that this capital generation and overall our strategy remains strong and the cash generation remains strong.
Speaker Change: And your opening comments about given strong capital, will you continue to execute on share buybacks within your NCIB?
Can you give a little bit more color there?
Speaker Change: Yeah, we have room on the current NCIB and I think you'll see us be a strong buyer back of our shares given the change we saw today.
Okay, thanks.
Speaker Change: We have no further questions at this time, and I'll turn things back over to Mr. Poon for closing remarks.
Speaker Change: Thank you, Operator. This concludes today's call. A replay of the call will be available on the Investor Relations section on our website. Thank you and have a good day.
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