Q1 2025 Sun Life Financial Inc Earnings Call

Good morning, and welcome to the Sun Life Financial Q1, 2025 Conference call. My name is Caitlin and I will be your conference operator today.

Operator: Good morning and welcome to the Sun Life Financial Q1 2025 conference call.

Operator: My name is Gaylene and I will be your conference operator today. All the lines have been placed on mute to prevent any background noise and the conference is being recorded.

All the lines have been placed on mute to prevent any background noise and the conference is being recorded.

Operator: 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.

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.

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

Speaker Change: Hosting the call is Natalie Brady Senior Vice President Capital Management, and Investor Relations. Please go ahead Mr. Brady.

Natalie Brady: Thank you and good morning, everyone welcome to Sun Life's earnings call for the first quarter of 2025 or.

Natalie Brady: Welcome to Sun Life's earnings call for the first quarter of 2025. Our earnings release and the slides for today's call are available on the investor relations section of our website at sunlife.com.

Natalie Brady: Our earnings release and the slides for today's call are available on the Investor Relations section of our website at Sun Life's dotcom.

Natalie Brady: 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.

Kevin Strain: We will begin today's call with opening remarks from Kevin strain, President and Chief Executive Officer, Following Kevin Kim Deakin Executive Vice President and Chief Financial Officer will present, the financial results for the quarter.

Natalie Brady: 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.

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

Kevin Strain: Other members of management are also available to answer your questions. This morning.

Natalie Brady: Turning to slide 2, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events.

Kevin Strain: Turning to slide two I draw your attention to the cautionary language regarding the use of forward looking statements and non <unk> 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.

Kevin Strain: And with that, I'll now turn things over to Kevin.

Kevin Strain: Well, thanks, Natalie.

Kevin Strain: Well, thanks for that Lee and welcome to the call to you and to in your new role and to everybody who's on the call. This beautiful Friday morning, turning to slide four our results this quarter highlight the strength of our balanced and diversified business mix an important attribute in an increasingly complex operating environment, we achieved top and bottom line growth across all of our businesses.

Kevin Strain: And welcome to the call to you and to in your new role and to everybody who's on the call this beautiful Friday morning. Turn to slide four. Our results this quarter highlight the strength of our balanced and diversified business An important attribute in an increasingly complex operating environment, we achieve top and bottom line growth across all of our business. Our underlying EPS was $1.82, up 21% year-over-year. Underlying net income was a record $1.045 billion and reported net income was $928 million. Underlying ROE was 17.7%. Asset management and wealth saw strong earnings growth, particularly in SLC management and Asia, driven by higher fee income and seed investment income.

Kevin Strain: Our underlying EPS was $1 82 up 21% year over year underlying net income was a record 1.0 for $5 billion and reported net income was $928 million.

Kevin Strain: Underlying ROE was 17, 7%.

Kevin Strain: Asset management and wealth saw strong earnings growth, particularly in SLC management in Asia, driven by higher fee income and seed investment income. Additionally, we saw strong asset flows across S O C Asia and Canada.

Kevin Strain: Additionally, we saw strong asset flows across SLC, Asia, and Canada. Group Health and Protection Earnings and Sales Growth were led by Canada. Individual Protection Earnings were higher year over year, with sales growth growth across the board. In Asia, we're seeing good momentum with sales driven by continued distribution strength in Hong Kong and India. Our leadership position in the Philippines, and the launch of our partnership with CNB Niagara also supported our sales Our capital position remains strong, reflecting our financial discipline and capital-like business Our LICAT ratio at SLF remained strong at 149% and cash at SLF Holdco level was $1.3 billion.

Kevin Strain: Group Health and protection earnings and sales growth were led by Canada individual protection.

Kevin Strain: Protection earnings were higher year over year with sales gross growth across the board in Asia, We're seeing good momentum with sales driven by continued distribution strength in Hong Kong and India, Our leadership position in the Philippines and the launch of our partnership with C. N V. Niagara also supported our sales growth.

Kevin Strain: Our capital position remains strong, reflecting our financial discipline and capital light businesses are like cat ratio. That's the left remained strong at 149% and cash that's left holdco level was $1 $3 billion, reflecting this capital strength, we bought back $520 million of common shares during the quarter.

Kevin Strain: Reflecting this capital strength, we bought back $520 million of common shares during the quarter.

This quarter, we are pleased to announce a 5% increase to our common share dividend and are renewing our normal course issuer bid to enable continued share buybacks pending regulatory approval.

Kevin Strain: This quarter we are pleased to announce a 5% increase to our common share dividend and are renewing our normal course issuer bid to enable continued share buybacks pending regulatory approval. We are confident in the resilience of our business mix, our focus on executing our long-term business strategy, and our sustained commitment to deliver on our purpose.

Kevin Strain: We are confident in the resilience of our business mix, our focus on executing our long term business strategy and our sustained commitment to deliver on our purpose.

Kevin Strain: Turning to slide five we highlight our progress against our strategic imperatives.

Kevin Strain: Turning to slide five, we highlight our progress against our strategic imperative. We saw good performance across our asset management and wealth platforms. SLC management raised $4.4 billion in the quarter, including strong demand in BGO's Asia Value Add real estate fund series. Fee-earning AUM surpassed $200 billion, driven by a large insurance mandate for fixed income and increased BGO Asia deployment. These results reflect the scaling of our SLC platform. At MFS, we continue to experience solid fixed income flows, generating approximately one billion U.S. dollars in flows. MFS also won the 2025 US LIP Award for Fixed Income, recognizing consistently strong relative returns over a three-year period.

Kevin Strain: We saw good performance across our asset management and wealth platforms, and you will see management raised $4 $4 billion in the quarter, including strong demand and videos age of value add real estate fund series fee, earning AUM surpassed $200 billion driven by a large insurance mandate for fixed income and increased P. J O Asia.

Kevin Strain: These results reflect the scaling of our Soc platform at.

Kevin Strain: At MFS, we continued to experience solid fixed income flows generated approximately $1 billion inflows MFS.

Kevin Strain: MFS also won the 2025 U S. Lipper award for fixed income recognizing consistently strong relative returns over a three year period.

Kevin Strain: Beyond that, MFS is seeing strong early momentum for their active ETFs, which first launched last December. In Canada, our group and individual wealth businesses also demonstrated attractive growth. We achieved strong sales in our group retirement services business, supported by large case and rollover sales and defined contribution, and in our individual wealth business, SLGI, grew well. Our Asia business delivered good results on higher protection sales growth and higher wealth management earnings. In India, individual protection sales were up 35%, demonstrating growth in our Banka and Direct channels. Our India Asset Management Joint Venture grew AUM by over 20%, underpinned by higher fixed income and other fund sales.

Kevin Strain: Beyond that MFS is seeing strong early momentum for their active Etfs, which first launched last December.

Kevin Strain: In Canada, our group in individual wealth businesses also demonstrated attractive growth we achieved strong sales in our group retirement services business supported by large case and rollover sales in defined contribution and in our individual wealth business S. L. G I grew well.

Kevin Strain: Our Asia business delivered good results on higher protection sales growth and higher wealth management earnings in India individual protection sales were up three 5% demonstrating growth in or a banker and direct channels, our India asset management joint venture grew AUM by over 20% underpinned by higher fixed income and other funds.

Kevin Strain: <unk>.

Kevin Strain: Growth in India has been a consistent and robust driver of growth over the past few years and highlights the good growth in the Indian economy and our strong capabilities there. In Hong Kong, our agency and bank sales channels have contributed significantly to growth of individual protection sales. Our agency sales growth was driven by both increasing the size of our sales force and increasing productivity. Our bank insurance channel continued to perform well with strong results from our partnership with Dasing. While our brokerage channel remained a stable source of sales, we continue to diversify and accelerate our momentum in this attractive, fast-growing market.

Kevin Strain: Growth in India has been a consistent and robust driver of growth over the past few years and highlights the good growth in the Indian economy, and our strong capabilities there.

Kevin Strain: In Hong Kong, our agency and Banca sales channels have contributed significantly to growth of individual protection sales. Our agency sales growth was driven by both increasing the size of our sales force force and increasing productivity. Our bancassurance channel continued to perform well with strong results from our partnership with Dawson.

Kevin Strain: While our broker channel remains a stable source of sales, we continue to diversify and accelerate our momentum in this attractive fast growing market.

Kevin Strain: In health, we continue to show strength and resilience in our Canadian health business higher large case deals contributed to very strong sales in the group health and protection business.

Kevin Strain: In health, we continue to show strength and resilience in our Canadian health business. Higher large case deals contributed to very strong sales in the group health and protection business. Earnings were strong and we continue to be the scale leader in this market. In the US, our management team continues to take action and we saw a positive shift in the performance across business. We continue to experience growth in our U.S. employee benefits business, driven by disciplined pricing, our focus on claims and expense management, and our strong technology capability. Results in stop loss improved significantly from the prior quarter, as our pre 2025 cohorts of business performed in line with expectations we provided at the end of 2024.

Kevin Strain: Earnings were strong and we continue to be the scale leader in this market.

Kevin Strain: In the U S. Our management team continues to take action and we saw a positive shift in the performance across businesses.

We continue to experience growth in our U S employee benefits business driven by disciplined pricing our focus on claims and expense management and our strong technology capabilities.

Kevin Strain: Results in stop loss improved significantly from the prior quarter as our pre 2025 cohorts of business performed in line with the expectations. We provided at the end of 'twenty 'twenty four.

Kevin Strain: As noted last quarter, we have added two points to our claims expectations for the January 1 2025 cohort, reflecting the higher claims experience we saw at the end of 2024. Our growth our strong capabilities in this business and leading scale continue to give us confidence. Dental results continue to stabilize, reflecting a mix of improved pricing, beneficial claims experience and expense discipline, as well as the benefit of a retroactive payment in the quarter.

Kevin Strain: As noted last quarter, we have added two points to our claims expectations for the January one 'twenty twenty-five cohort.

Kevin Strain: Reflecting the higher claims experience we saw at the end of 'twenty 'twenty four or grow our strong capabilities in this business and leading scale continue to give us confidence.

Kevin Strain: Dental results continue to stabilize reflecting a mix of improved pricing beneficial claims experience and expense discipline as well as the benefit of a retroactive payment in the quarter.

Kevin Strain: We continue to make it easier for our clients to do business with us by delivering streamlined digital experiences.

Kevin Strain: We continue to make it easier for our clients to do business with us by delivering streamlined digital experiences. Group Retirement Savings Clients in Canada can now set up money movements within minutes. We plan to build upon and scale this functionality, integrating it into other client processes and experiences. We also launched several client portals, including a new client mobile app in the Philippines. In the U.S., we introduced the Your Benefit concept portal, designed to support absence and short-term disability management. This new portal features a streamlined claim filings process, provides valuable insights to help clients manage their benefits, and offers an employer dashboard to help them more effectively manage their business.

Kevin Strain: Group retirement savings clients in Canada can now set up money movements within minutes, we plan to build upon and scale. This functionality integrating it into other client processes and experiences.

Kevin Strain: We also launched several client portals, including a new client mobile app in the Philippines.

Kevin Strain: In the U S. We introduced the your benefit concept portal designed to support absence in short term disability management. This new portal features a streamlined claim filings process provides valuable insights to clients to help clients manage their benefits and offers an employer dashboard to help them more effectively manage their business.

Kevin Strain: Underpinning, our strong business performance or our people and culture.

Kevin Strain: Underpinning our strong business performance are our people and culture. We were recognized as the best place to work in Canada and in Ireland for the third year in a row. Achieving this recognition is a reflection of our positive culture and our care for people who are at the heart of Sun Life's success. I'm also pleased to congratulate Hela Pagano, Sun Life's Chief People and Culture Officer. I'm being recognized as the winner of the 2025 Global Males Report on Business Best Executive Award. Helena's exceptional leadership and innovative approach continue to drive our organization forward, empowering our people to thrive and grow.

Kevin Strain: We were recognized as a best place to work in Canada and in Ireland for the third year in a row.

Kevin Strain: Achieving this recognition is a reflection of our positive culture and our care for people who are at the heart of Sun life success.

Speaker Change: I'm also pleased to congratulate Hello, Pagano Sun life's chief people and culture Officer.

Speaker Change: On being recognized as the winner of the 2025 Global Mail's report on business Best Executive Award held his exceptional leadership and innovative approach continued to drive our organization forward empowering our people to thrive and grow we're proud of her well deserved recognition.

Kevin Strain: We're proud of her well-deserved recognition. Additionally, congratulations to Melissa Kennedy, Sun Life's Chief Legal and Public Policy Officer, for being named one of the top general counsels by Chambers and Partners. This award recognizes outstanding in-house lawyers who significantly impact their organizations and clients, as well as reflects Melissa's contribution to our company, the legal profession, and the industry at large. These awards reinforce the invaluable experience and vision Sun Life's global leadership team bring to our organization. Guided by our purpose, our dedicated leadership and their teams blend global strengths with local expertise, driving our continued success.

Speaker Change: Additionally, congratulations to Melissa Kennedy Somebody's, Chief legal and public policy officer for being named one of the top general counsels by Chambers and partners.

Speaker Change: This award recognizes outstanding in house lawyers, who significantly impact their organizations and clients as well as reflects Melissa contribution to our company the legal profession in the industry at large.

Speaker Change: These awards reinforce the invaluable experience envisions somebody's global leadership team bring to our organization guided by our purpose, our dedicated leadership and their teams blend global strengths with local expertise driving our continued success.

Speaker Change: All in all Q1 was a strong start to 2025, despite the challenging political and political and economic conditions. We continue to watch both the geopolitical environment and the economy closely.

Kevin Strain: All in all, Q1 was a strong start to 2025, despite the challenging political and economic conditions. We continue to watch both the geopolitical environment and the economy closely. Sun Life has been in business for 160 years and operates in 28 markets around the world, giving us the tools to manage challenging conditions. Our business mix, prudent risk management capabilities, and strong capital position provide resiliency to our customers.

Speaker Change: So in life has been in business for 160 years and operates in 28 markets around the world, giving us the tools to manage challenging conditions, our business mix prudent risk management capabilities and strong capital position provide resiliency to our company.

Tim Deacon: With that, I'll turn the call over to Tim, who will walk us through the first quarter financial results in more detail. Thank you, Kevin. Good morning, everyone.

Tim: With that I'll turn the call over to Tim who will walk us through the first quarter financial results in more detail.

Tim: Thank you Kevin Good morning, everyone turning to slide seven we are pleased with our first quarter 2025 results, which reflects strong performance across each of our operating segments. We've reported record underlying net income of 1.045 billion up 19% year over year, well, while underlying earnings per.

Tim Deacon: Turning to slide seven. We are pleased with our first quarter 2025 results, which reflects strong performance across each of our operating segments. We've reported record underlying net income of $1.045 billion, up 19% year over year, while underlying earnings per share of $1.82 was up 21% over the same period, reflecting strong performance over our Q1 2024 results. Asset management and wealth underlying earnings were up 19% over the prior year on higher fee income and higher net seed investment income at SLC Management. Group Health & Protection underlined earnings were up 18% year-over-year driven by business growth, favorable insurance experience in Canada, and improved U.S.

Tim: Share of $1 82 was up 21% over the same period, reflecting strong performance over our Q1 'twenty 'twenty four results.

Tim: Management unwell underlying earnings were up 19% over the prior year on higher fee income and higher net seed investment income at SLC management group.

Tim: Group Health and protection underlying earnings were up 18% year over year, driven by business growth favorable insurance experience in Canada and improved U S. Dental results, partially offset by moderately unfavorable morbidity experience in U S medical stop loss in line with expectations individuals'.

Tim Deacon: dental results, partially offset by moderately unfavorable morbidity experience in U.S. medical stop-loss in line with expectations. Individual protection underlying net income was up 20% over the prior year, driven by business growth and higher joint venture contribution in Asia and improved protection experience in Canada. Underlying return on equity was 17.7%, a strong improvement from the prior year and prior quarter. Reported Net Income for the quarter was strong at $928 million. The variance between underlying and reported net income included acquisition and integrated related items at SLC and U.S. Dental, amortization of intangible assets in Sun Life U.S., and modestly unfavorable market-related impact.

Tim: Individual protection underlying and net income was up 20% over the prior year driven by business growth and higher joint venture contribution in Asia and improved protection experience in Canada.

Tim: Underlying return on equity was 17, 7% a strong improvement from the prior year and prior quarter.

Tim: Reported net income for the quarter was strong at $928 million the variance between underlying and reported net income included acquisition and integrated related items had a cell C and U S dental amortization of intangible assets in U S son, somebody U S and modestly unfavorable market related impacts.

Tim Deacon: Market-related impacts reflected unfavorable equity markets and adverse real estate experience, partially offset by favorable interest rate impacts. Real estate returns were positive in the quarter, but were below our long-term rates. Total CSM, which is a store of future profits, of $13.6 billion increased 12% year over year driven by strong organic CSM growth and currency impacts. New business CSM of $406 million was up 17% year over year driven primarily by strong margins in Hong Kong. Organic capital generation net of dividends remains solid at 308 million within our target range of 30 to 40 percent of underlying net income Our balance sheet and capital positions remain strong with an SLF LICAT ratio of a hundred and forty nine percent which was down three points from the prior quarter as Organic capital generation was more than offset by share buybacks and the investment in our expanded bank assurance agreement with CIMB Niaga in Indonesia Hold Coal Cash remains solid at $1.3 billion and our leverage ratio remains low at 20.1%.

Tim: Market related impacts reflected unfavorable equity markets and adverse real estate experience, partially offset by favorable interest rate impacts real estate returns were positive in the quarter, but were below our long term Roe.

Tim: Turn assumptions.

Tim: Total CSM, which as a store of future profits of 13.6 billion increased 12% year over year, driven by strong organic CSM growth and currency impacts new business C. S. M. A 406 million was up 17% year over year, driven primarily by strong margins in Hong Kong.

Tim: Organic capital generation net of dividends remains solid at 308 million within our target range of 30% to 40% of underlying net income our balance sheet and capital positions remain strong with Vanessa let fly cat ratio of 149%, which was down three points from the prior quarter as organic capital generation was more than offset by share buybacks.

Tim: And the investment in our expanded Bancassurance agreement with C. I M B Niagara in Indonesia.

Tim: Holdco cash remains solid at 1.3 billion and our leverage ratio remains low at 21% finally book value per share increased by 9% over the prior year and by 5% quarter over quarter, demonstrating our ability to generate strong growth, while returning value to our shareholders with $6 4 million shares repurchased this quarter under our share buyback.

Tim Deacon: Finally, book value per share increased by 9% over the prior year and by 0.5% quarter over quarter, demonstrating our ability to generate strong growth while returning value to our shareholders, with 6.4 million shares repurchased this quarter under our Share Buy Back program.

Tim: Program.

Tim Deacon: With only 2 million shares remaining under the existing normal course issuer bid, we announce today the intention to renew our NCIB program to purchase up to an additional 10 million shares subject to regulatory approval.

Tim: With only 2 million shares remaining under the existing normal course issuer bid, we announced today the intention to renew our NCI V program to purchase up to an additional 10 million shares subject to regulatory approval.

Tim Deacon: Turning to our business group performance on slide 9. MFS's underlying net income of $186 million U.S. was down 2% year-over-year, as higher average net assets and lower expenses were more than offset by lower net investment income from declining rates on lower cash and short-term investments and the impact of fewer fee-earning days in the quarter. Reported net income of $190 million U.S. was up 6% year-over-year, driven by declines in the fair value of MFS's shares owned by management, primarily from the sequential decline in AUM. Pre-tax net operating margin of 35.4% decreased by 1.8 percentage points over the prior year driven by the lower net investment income.

Tim: Turning to our business group performance on slide nine.

Tim: MFS is underlying net income up $186 million U S was down 2% year over year as higher average net assets and lower expenses were more than offset by lower net investment income from declining rates on lower cash and short term investments and the impact of fewer fee, earning days in the quarter.

Tim: Reported net income of 190 million U S was up 6% year over year driven by declines in the fair value of Mfs's shares owned by management, primarily from the sequential decline in U M pre.

Tim: Pretax net operating margin of 35.4% decreased by 1.8 percentage points over the prior year driven by the lower net investment income.

Tim Deacon: Assets under management of $604 billion were down 4% over the prior year and was in line with the prior quarter. The sequential movement in AOM was driven by net outflows partially offset by market appreciation. Outflows of $8.1 billion US included retail outflows of $6.2 billion and institutional outflows of $1.9 billion. Retail outflows accelerated this quarter as investors continued to shift assets to risk-free instruments in light of the current equity market uncertainty. While institutional outflows improved from the prior quarter, we continue to see client activity to rebalance and restructure select strategies. Overall, long-term investment performance for MFS remains good, with 92% of fund assets ranked in the top half of their respective Morningstar categories for 10-year performance.

Tim: Assets under management of 604 billion were down 4% over the prior year and was in line with the prior quarter. The sequential movement in a L. M. What's driven by net outflows, partially offset by market appreciation.

Tim: Flows of 8.1 billion U S included retail outflows of $6 2 billion in institutional outflows of $1 9 billion retail outflows accelerated this quarter and as investors continued to shift assets to risk free instruments in light of the current equity market uncertainty, while institutional outflows improved from the prior quarter, we continue to see client activity.

Tim: To rebalance and restructure select strategies.

Tim: Overall long term investment performance for MFS remains good with 92% of fund assets ranked in the top half of their respective Morningstar categories for 10 year performance.

Tim Deacon: Fixed income performance was strong, with 98% of fund assets ranked in the top half of Morningstar on a 10-year basis.

Tim: Fixed income performance was strong with 98% of fund assets ranked in the top half of Morningstar off a 10 year basis.

Tim Deacon: Turning to slide 10, SLC management generated record underlying net income of $85 million, more than double over the prior year, driven by strong growth in fee-related earnings and higher net seed investment income from strong asset performance, particularly in real estate. Fee-related earnings of $99 million were up 43% year-over-year, driven primarily by catch-up fees from strong capital raising at BGO. Catch-up fees are typically earned on the final closing of a fund. Reported net income of $55 million was up 31% over the prior year, reflecting higher underlying net income, partially offset by a gain in the prior year on the early termination of a distribution agreement.

Tim: Turning to slide 10, SLC management generated record underlying net income of $85 million more than double over the prior year driven by strong growth in fee related earnings and higher net seed investment income from strong asset performance, particularly in real estate fee related earnings of $99 million were up 43% year over year driven primarily.

Tim: By catch up fees from strong capital raising at P. G O catch up fees are typically earned on the final closing of a fund reported the net income of $55 million was up 31% over the prior year, reflecting higher underlying net income partially offset by a gain in the prior year on the early termination of a distribution agreement.

Tim Deacon: SLC management continued to generate strong capital raising with $4.4 billion raised this quarter with strength across all affiliates, particularly in BGO Asia and private credit. SLC's fee-earning AUM of $201 billion was up 13% year-over-year driven by deployments and market appreciation.

Tim: And cell C management continued to generate strong capital raising with $4 4 billion raised this quarter with strength across all affiliates, particularly in B G O Asia in private credit.

Tim: SLC fee, earning AUM of 201 billion was up 13% year over year driven by deployments in market appreciation.

Tim Deacon: Turning to slide 11, Canada delivered solid results with underlying net income of $376 million up 21% year-over-year driven by favorable insurance experience, strong business growth and higher fee income. Reported net income of $351 million was up 21% year-over-year on underlying net income growth. Asset management and wealth underlying earnings were up 3% year-over-year driven by fee income growth on AUM. Canada reported record wealth AUM of $190 billion, which was up 10% year-over-year on market appreciation and net inflows. At SLGI, gross flows increased 42% year-on-year, driven by strong mutual fund sales growth during the RRSP season. Group health and protection underlying earnings were up 27% year over year on business growth and favorable morbidity on shorter claims duration and favorable mortality reflecting lower claims severity.

Tim: Turning to slide 11, Canada delivered solid results with underlying net income of 376 million up 21% year over year, driven by favorable insurance experience strong business growth and higher fee income.

Tim: Net income of 351 million was up 21% year over year on underlying net income growth.

Tim: Asset management and wealth underlying earnings were up 3% year over year was driven by fee income growth on a U N. Kennedy.

Tim: Canada reported record wealth AUM of 190 billion, which was up 10% year over year on market appreciation and net inflows at S. L. G. I gross flows increased 42% year on year, driven by strong mutual fund sales growth during the RSP season.

Tim: Group Health and protection and underlying earnings were up 27% year over year on business growth and favorable morbidity on shorter claim duration and favorable mortality, reflecting lower claims severity group.

Tim Deacon: Group sales were up 21% year-over-year by higher large case sales. Individual protection earnings were up 37% year-over-year based on favorable insurance experience. Individual protection sales were up 7% year-over-year driven by third-party and SLFD sales.

Tim: Group sales were up 21% year over year by higher large case sales individual.

Tim: Individual protection earnings were up 30% euro 37% year over year.

Tim: Just on favorable insurance experience individual protection sales were up 7% year over year, driven by third party and S. L. F. D sales turning to slide 12 Sun Life U S. Underlying net income was 151 million U S up 7% from the prior year in group Health and protection underlying earnings were higher by 4% year over year.

Tim Deacon: Turning to slide 12, Sun Life U.S. underlying net income was $151 million U.S., up 7% from the prior year. In group health and protection, underlying earnings were higher by 4% year-over-year. In stop loss, results improved significantly over the prior quarter as claims experience was in line with our estimates last quarter and included the expected 2% pricing shortfall for the January 1, 2025 cohort. In dental, we benefited from re-pricing actions on the Medicaid business, including a retroactive premium payment this quarter, the second in the past year, and from ongoing expense efficiency action.

<unk> and stop loss results improved significantly over the prior quarter as claims experience was in line with our estimates last quarter and included the expected 2% pricing shortfall for the January one 'twenty twenty-five cohort.

In dental we benefited from recent pricing actions on the Medicaid business, including a retroactive premium payment this quarter. The second in the past year and from ongoing expense efficiency actions.

Tim Deacon: U.S. group in health and protection sales of 107 million U.S. were down 13% year over year driven by lower government dental sales due to lower RFP activity and lower employee benefit sales as we remain disciplined on price. Individual Protection Underlying Earnings were up year-over-year, primarily driven by higher net investment results. Reported net income of $129 million U.S. increased year-over-year, driven by favorable market-related impacts and higher underlying net income.

Tim: U S group and health and protection sales of 107 million U S were down 13% year over year, driven by lower government dental sales due to lower RFP activity and lower employee benefit sales as we remain disciplined on pricing.

Tim: Individual protection underlying earnings were up year over year, primarily driven by higher net investment results.

Tim: Ported net income of 129 million U S increased year over year, driven by favorable market related impacts and higher net underlying net income.

Tim: Turning to slide 13, Asia posted record underlying net income of $197 million up 11% year over year results benefited from business growth higher contributions from joint ventures, and fee income growth and wealth, partially offset by lower earnings on surplus and unfavorable mortality in the high net worth segment reported net income of 106.

Tim Deacon: Turning to slide 13, Asia posted record underlying net income of $197 million, up 11% year-over-year. Results benefited from business growth, higher contributions from joint ventures, and fee income growth in wealth, partially offset by lower earnings on surplus and unfavorable mortality in the high net worth segment.

Tim Deacon: Reported net income of $166 million was lower year-over-year, reflecting a prior year gain on the partial sale of our asset management joint venture business in India. We continue to see strong sales momentum in individual protection, up 17% year-over-year as we observe solid sales growth across virtually all markets. Asia's total CSM of $6.2 billion grew 29% year-over-year driven by strong organic CSM growth and currency impacts. New business CSM of $273 million was up 19% from strong margins in Hong Kong.

Tim: <unk> 6 million was lower year over year, reflecting a prior year gain on the partial sale of our asset management joint venture business in India.

Tim: We continued to see strong sales momentum in individual protection up 17% year over year as we observe solid sales growth across virtually all markets Asia total CSM of $6 2 billion grew 29% year over year, driven by strong organic CSM growth and currency impacts new business CSM of 273.

Tim: <unk> was up 19% from strong margins in Hong Kong.

Tim: In summary, we are pleased with the overall quality of our results this quarter demonstrating the earnings power of our diversified businesses, we remain laser focused on execution and delivering towards our medium term financial objectives, and our strong capital levels make us both well positioned to navigate the uncertainties in the current macroeconomic environment.

Tim Deacon: In summary, we are pleased with the overall quality of our results this quarter, demonstrating the earnings power of our diversified business. We remain laser-focused on execution in delivering towards our medium-term financial objectives. And our strong capital levels make us both well-positioned to navigate the uncertainties in the current macroeconomic environment and to capitalize on the potential opportunities that may lie ahead.

Tim: And to capitalize on the potential opportunities that may lie ahead.

Kevin Strain: With that, I will pass it back to Kevin for some closing remarks before we open it up for Q&A. Well, thanks, Tim. And as you note, the resiliency created by our business mix and our ability to execute were key to our strong results this quarter. We know that the most important thing we can do in these challenging and uncertain times is bring value to our clients and focus on our purpose. Helping clients achieve lifetime security and live healthier lives. That is what we do, that drives us and shapes who we are. At the same time, we have a deep understanding of the markets where we operate.

Kevin Strain: With that I will pass it back to Kevin for some closing remarks before we open it up for Q&A.

Kevin Strain: Well, thanks, Tim and as you note the resiliency created by our business mix and our ability to execute were key to our strong results this quarter.

Kevin Strain: We know that the most important thing we can do in these challenging and uncertain times is bring value to our clients and focus on our purpose, helping clients achieve lifetime financial security and live healthier lives that is what we do that drives us and shapes, who we are.

Kevin Strain: At the same time, we have a deep understanding of the markets, where we operate we have strong relationships with government businesses and individuals. We do everything we can to be part of the fabric of those countries, bringing a global understanding and view, while delivering local impact and with that I'll turn the call over to Natalie for the Q&A portion of the call.

Kevin Strain: We have strong relationships with government, businesses and individuals. We do everything we can to be part of the fabric of those countries, bringing a global understanding and view while delivering local impact.

Natalie Brady: And with that, I'll turn the call over to Natalie for the Q&A portion of the call. Thank you, Kevin.

Kevin Strain: <unk>.

Natalie Brady: Thank you Kevin to help ensure that all 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.

Natalie Brady: To help ensure that all participants have an opportunity to ask questions this morning, please limit yourselves to one or two questions and then re-cue with any additional questions.

Natalie Brady: I will now ask the operator to poll the participants. Thank you.

Kevin Strain: Thank you.

Operator: To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request.

Kevin Strain: To join the question queue.

Kevin Strain: Alright, and then one on your telephone keypad now here at Killen acknowledging your class.

Operator: If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two.

Kevin Strain: We are using a speakerphone please pick up your handset before pressing any key to.

Kevin Strain: To withdraw your question. Please press Star then two.

Meny Grauman: Our first question is from Meny Grauman with Scotiabank. Please go ahead. Hi, good morning. If I look at your Asia performance on the sales side, it doesn't seem like tariffs or tariff uncertainty is having an impact yet. But I'm wondering as you look forward, what's your expectation there?

Speaker Change: Our first question is from many Goldman with Scotiabank. Please go ahead.

Manny Goldman: Hi, good morning.

Manny Goldman: If I look at your Asia performance on the sales side it doesn't seem like tariffs or tariff uncertainty is having an impact yet, but I'm wondering as you look forward, what's your expectation there.

Manjit Singh: Good morning, Meny. It's Manjit. As you noted, we had a very good quarter this quarter with sales up 17% on a year-over-year basis, and that was a broad-based as well. As Tim mentioned, we are up in six of eight markets, and also in terms of our channel mix, we were up in across agency, bank, and broker. Obviously, as you know, we're dealing in a very fluid environment right now, and so it's a little bit difficult to understand or see where the world is going. I think what we focus on, as Kevin said, is on our client and making sure that we're fulfilling the needs of our clients, and we're also very pleased with our business fundamentals.

Manny Goldman: Good morning, Manny it's manage it as you noted we had a very good quarter this quarter with sales up 17% on a year over year basis.

Manny Goldman: And that was a broad based as well as Tim mentioned, we are up in six of eight markets and also in terms of our channel mix, we were up in across agency banker and and broker.

Manny Goldman: Obviously as you know we're dealing in a very fluid environment right now and so it's a little bit difficult to understand or see where where the roles for navy going I think what we focus on is cash.

Manny Goldman: Instead as a on a client and making sure that we're fulfilling.

Manny Goldman: The needs of our clients and we're also very pleased with our with our with our business fundamentals. We have a strong brand. We have good distribution. We have a good client proposition. So I think that will position us well to manage through this environment.

Manjit Singh: We have a strong brand, we have good distribution, we have a good client proposition, so I think that'll position us well to manage through this environment.

Manny Goldman: Yeah.

Meny Grauman: Thanks, Manjit.

Manny Goldman: And then if I could just ask on the U S. Just in terms of you know.

Meny Grauman: And then if I could just ask on the US just in terms of, you know, we've seen quite a bit of volatility in earnings over the last few quarters. And definitely, this quarter, looks like the momentum is moving in the right direction. But from a earnings volatility perspective, is your expectation that the volatility will come down? Or should we still be prepared for some ongoing volatility in this unit as we look ahead?

Manny Goldman: We've seen quite a bit of volatility in earnings.

Manny Goldman: Over the last few quarters and.

Manny Goldman: Definitely this quarter looks.

Manny Goldman: It looks like the momentum is moving in the right direction, but from a earnings volatility perspective.

Speaker Change: Is your expectation that the volatility will come down or should we still be prepared for sure. Some some ongoing volatility in this unit.

Manny Goldman: Good.

Manny Goldman: Yes.

Dan: Well, thanks, Meny.

Dan: Well, thanks, Manny it's Dan Good morning, I would characterize it's <unk>.

Dan: It's Dan.

Dan: Good morning. I would characterize it, maybe not so much as volatility, but seasonality and cyclicality. The businesses we're in now, and they've obviously become quite a bit larger and a bigger part of the whole, have a unique seasonal and cyclical set of patterns to them. And they're different across the different businesses. Obviously, there are some challenges that we've been facing in the dental business, and we're working hard to address those. But those are not by no means completely behind us. The stop loss business, as you know, had some increase in severity in the fourth quarter, we're pleased with the first first quarter results and the way that has stabilized and even improved somewhat.

Dan: Maybe not so much as volatility, but seasonality and cyclicality the businesses. We're in now and they've obviously become quite a bit larger and a bigger part of the whole have a unique seasonal and cyclical set of patterns to them and they're different across the different businesses. Obviously there are some.

Dan: The challenges that we've been facing in the dental business and we're working hard to address those but those are not by no means completely behind us.

Dan: The stop loss business as you know had some increase in severity in the fourth quarter. We're pleased with the first first quarter results and the way that has stabilized and even improved somewhat.

Dan: But that issue, of course, is something that will happen from time to time in stop loss. And then each of these businesses has its own seasonal pattern. If you look at these businesses over a year long period or a two or three year period, you're going to see them all very nicely performing. But from quarter to quarter, we're likely to still have some variance. That's not necessarily a bad thing. It's just the nature of these businesses.

Dan: But that issue of course is something that will happen from time to time in stop loss and then each of these businesses has its own seasonal pattern. If you look at these businesses over a year long period or a two two or three year period, youre going to see them, all very nicely performing but from quarter to quarter. We're liked.

Dan: <unk> does still have some variance that's not necessarily a bad thing. It's just the nature of these businesses.

Manny Goldman: Manny can I, even like it.

Kevin Strain: I'd like to add one thing too because that happens particularly in the health side where you can get things like flus and medical costs and we can typically reprice that over one, two or three years and so again we don't see that as that's natural to the business and the way the business is structured we can reprice for those higher medical costs or those impacts that have happened and that's what Dan and his team are doing and they do very well and having scale is important to doing that and we do have scale in both our health businesses in Canada but also our health businesses in the U.S.

Speaker Change: I had one thing too because that that.

Speaker Change: It happens, particularly in the health side, where you can get things like blues and medical costs and we can we can typically replate priced at over one two or three years in and so again, we don't see that as that that's natural to the business and the way. The business is structured we can reprice for those higher medical costs or those impacts that have happened and that's what.

Speaker Change: Dan and his team are doing and they do very well and having scale is.

Speaker Change: It is important to doing that and we do have scale in both our health businesses in Canada, but also our health businesses in the U S.

Speaker Change: I guess, just a follow up to that Kevin is just in terms of is there anything that you can continue to do that you're not doing that.

Kevin Strain: I guess just to follow up to that Kevin is just in terms of, is there anything that you can continue to do that you're not doing that can minimize that seasonality or I think I think Dan Dan and and Jess are doing everything they can but we can't control when there's a bad flu season or the medical costs in the US but what we can control is how we treat our clients how we do our repricing the discipline we bring to our business and how proactive we are in managing expenses and those types of things and I think we're doing everything we can on those and I have confidence that we're doing all the right things but coming back to it having scale is really important to being able to see yourself through that those those fluctuations and those changes The next question is from Gabrielle Dechaine with National Bank Financials.

Speaker Change: Minimize that seasonality or are well in place.

Speaker Change: I think I think Dan Dan and Jeff are doing everything they can but we can't control when theres, a bad flu season or the medical costs in the U S. But with what we can control is how we treat our clients how we do our repricing the discipline, we bring to our business and how proactive we are in managing expenses and those types of things and I think where do.

Speaker Change: Everything we can on those and I have confidence that we're doing all the right things, but coming back to it having scale is really important to being able to see yourself through that those those fluctuations in those changes.

Speaker Change: Hum.

Speaker Change: Yeah.

Speaker Change: The next question is from Danielle <unk> with National Bank Financial. Please go ahead.

Gabriel Dechaine: Please go ahead. Hey, good morning.

Speaker Change: Hey, good morning, a J.

Gabriel Dechaine: Just a question about your group businesses, both sides of the border. And I'm just thinking about, you know, expected profits or whatever it's called. And, you know, how you model that out. You know, typically, we think about claims, incidence rates, severity, all that stuff. Just if that applies, because, you know, we've obviously got some, you know, flat employment trends, and maybe some sectors of the economy that are facing more significant scenarios. And if you can shed some light on that, be very helpful.

Speaker Change: A question about your group business is both sides of the border and I'm, just thinking about the expected profits or whatever its called.

Speaker Change: And you know how you model that out.

Speaker Change: Typically we think about claims incidence rate severity all that stuff just wondering what what sort of employment environment do you have.

Speaker Change: Our assumptions underpinning your you know your expected profits in that business over.

Speaker Change: Over the next year or two.

Speaker Change: The thought of applause, because you know we've obviously got some you know.

Speaker Change: Employment trends and maybe some more sectors of the economy, there if anything they're more significant scenarios and if you can shed some light on that.

Speaker Change: Helpful.

Speaker Change: Yeah.

Kevin Morrissey: Hi Gabriel, it's Kevin Morrissey. Thanks for that question. Generally, when you're looking at those group businesses, that's the earnings on short term business. And what you're seeing in that line of the DOE is based on the pricing assumptions. And as you know, that business is repriced, you know, one, two or three years. And it's really, it's a short term horizon on that in terms of the expectations underpinning that. And so in each one of the geographies, it would be the outlook that we have in each of those geographies for that time horizon. And, you know, it's closely monitored and updated, you know, as we see the circumstances changing.

Speaker Change: Hi, Gabriel it's Kevin Morrissey, Thanks for that question.

Speaker Change: Generally when when you're looking at those group businesses. That's the the earnings on on short term business.

Speaker Change: What's your what Youre seeing in that line as a D. O is based on the pricing assumptions and as you know that business is repriced, one two or three years and it's really the it's a short term horizon on that in terms of the expectations underpinning. So in each one of the geographies it would be kind of the outlook that we have.

Speaker Change: In each of those geographies for that time horizon, and you know it's closely monitored and updated as we see the circumstances changing.

Speaker Change: You got price times volume equals revenue or whatever but there's an element.

Kevin Morrissey: You got price times volume equals revenue or whatever, but there's an element of, you know, job growth in there, I gotta assume, or is that insignificant in your outlook? We would include all the economic factors as well as experience components as well. So what we're seeing in terms of trends on claims and costs, as well as economic factors, all of that would be incorporated into those expectations and the pricing. And that's what would show up in that DOE line. So would that one fluctuate real time sort of thing? Usually we reset those once a year.

Speaker Change: You know job growth in there I got to assume or the insignificant your outlook.

Speaker Change: We would include all of the economic factors as well as experience components as well so what we're seeing in terms of training [noise] excuse me trend trends on our claims and costs as well as economic factors all of that would be incorporated into those expectations in the pricing and that's what would show up in that deal we lie.

Speaker Change: So without one fluctuate real time sort of thing.

Speaker Change: Usually we reset those once a year and so youre going to see.

Manjit Singh: And so you're going to see that stable in the DOE for a year and then kind of a reset based on the latest price in each Good morning, Gabriel, it's Manjit. Yeah, no, we're very pleased with the with the results of our business this quarter. As I spoke about earlier, our sales were strong. We're also building good momentum, you know, across our business on both distribution and client proposition. We also launched this quarter our deal with CNB Niagara. So we feel very good for for about the momentum in our business and going forward. There was nothing that I would say was unusual in our results for the quarter.

Speaker Change: Stable and in the D O four year in and then kind of a reset based on the latest pricing each year.

Speaker Change: Okay.

Speaker Change: My quote Unquote second question.

Speaker Change: The Asia business I know there was some FX tailwind, but I see a 14.6% ROE in the quarter your medium term target of 15% plus a year.

Speaker Change: It looks like you're ahead of schedule, there, but I don't know if that's actually the case was there anything unusually positive this quarter and you talked about some margin.

Speaker Change: The Hong Kong, just wanted to see how how sustainable that figure is really.

Speaker Change: Good morning, Gabriel its management Yeah, no. We're very pleased with the with the results of our business. This quarter as I spoke about earlier our sales were strong. We're also building good momentum.

Speaker Change: Across our business on both distribution and our client proposition. We also launched this quarter our deal with the C. O M. B Naga. So we feel very good for four about the momentum in our business and going forward. There is nothing that I would say was unusual and our results for the quarter.

Gabriel Dechaine: Well, that number is kind of a good run rate. I think, you know, obviously, they'll be impacted by how the environment unfolds in front of us. But, you know, if the environment remains the way it does, I would say that's a good money. Okay, thank you.

Speaker Change: I remember as a kind of a good run rate.

Speaker Change: I think no obviously that'll be impacted by how the environment unfolds in front of us, but you know if the environment remains the way it doesn't I would say that's a good run rate.

Speaker Change: Thank you enjoy your weekend.

Gabriel Dechaine: Enjoy the weekend.

Speaker Change: Okay.

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

Tom Gallagher: The next question is from Tom Gallagher with Evercore ISI. Please go ahead. Good morning, a few questions for Dan on the US. When you said the US stop loss has stabilized and even improved somewhat. Can you give a sense for how much of that is informed by actual claim emergence in the book, because I know it takes a bit longer over the course of the year to see claims. But I think there's probably some leading indicators you have underneath the surface. So is it is it a claims emergence or is it more of a broader macro assumptions you're looking at to make to make those observations?

Tom Gallagher: Good morning, a few questions for Dan on the U S.

When you said the U S stop loss has stabilized and even improved somewhat.

Tom Gallagher: You give a sense for how much of that is informed by actual claim emergence in the book because I know it takes a bit longer over the course of the year to see claims.

Tom Gallagher: But I think theres, probably some leading indicators you have on underneath the surface.

Tom Gallagher: So is it a is it a claims emergence or is it more of a broader macro assumptions, you're looking at to make to make those observations.

Speaker Change: Well. Thanks, it's as you know from conversations we had an even from the lunch and learn that many people went to we look at this business in terms of different cohorts. So the cohort from a big part of the experience is the one 124 cohort.

Dan: Well, thanks, as you know, from, you know, conversations we had, and even from the lunch and learn that many people went to, we look at this business in terms of different cohorts. So the cohort from a big part of the experience is the 1-1-24 cohort, as well as a smaller but still meaningful piece was the non-1-1-24 cohort. That is largely based on claims experience emerging. And in the first quarter, those two cohorts combined actually were a little bit favorable to where we had set them at the end of the fourth quarter.

Speaker Change: As well as a smaller but still meaningful piece was the non one 124 cohort.

Speaker Change: That is largely based on claims experience emerging and in the first quarter. Those two cohorts combined actually were a little bit favorable to where we had set them at the end of.

Speaker Change: The fourth quarter are the other big part of the experience. This quarter is the one 125 cohort and that's almost entirely a reserve pick there's been very few claims at this point and as we mentioned last quarter since the higher severity in stop loss emerged at the very end of the year lag.

Dan: The other big part of the experience this quarter is the 1-1-25 cohort. And that's almost entirely a reserve pick. There's been very few claims at this point. And as we mentioned last quarter, since the higher severity and stop loss emerged at the very end of the year last year, that cohort had already been priced. And even though we got a robust 14% rate increase on that business, we now feel that we really needed 16%. So we were short about 2%. And that's a meaningful part of the experience this quarter as well, as we continue to have that extra 2% increase.

Speaker Change: Year that cohort had already been priced and even though we got a robust 14% a rate increase on that business. We now feel that we really needed 16%. So we were a shocker short about 2%.

Speaker Change: That's a meaningful part of the experience this quarter as well as we continue to have that extra 2% in there.

Speaker Change: Should should Dan on the 25 cohort.

Dan: So, Dan, on the 25 cohort, or do you, you know, whether it's the 50% claims report or otherwise, do you have any real emergence? Or does that take a couple more quarters to be able to determine how the development on claims are looking on the 25 cohort? Yeah, in the first quarter, you see very little real data, even on the 50% claim reports, right, the coverage was effective for the plan year starting January 1. So in those first three months, you're not typically going to see much, you know, we'll start to see a little more each quarter.

Speaker Change: Alright, do you, whether it's 50% claims report or otherwise.

Speaker Change: Do you have any real emergence or does that take a couple more quarters to be able to determine how how the development on claims are looking from the twenty-five cohort.

Speaker Change: Yeah in the first quarter, you see very little real data, even on the 50% claim reports right.

Speaker Change: Coverage was effective for the plan year, starting January 1st so in those first three months youre not typically going to see much yeah, we'll start to see a little more each quarter, but of course as we've discussed you really see most of those claims in the fourth and fifth quarters of that cohort year. So we'll start to see some of the 50 per se.

Dan: But of course, as we've discussed, you really see most of those claims in the fourth and fifth quarters of that cohort year. So, you know, we'll start to see some of the 50% reports in the second and third quarters. And we'll start to get a little better idea. But at this point, it's largely a reserve.

Speaker Change: Reports in the second and third quarters.

Speaker Change: And we will start to get a little better idea, but at this point, it's largely a reserve pick.

Speaker Change: Got you. Thanks, and then my follow up is just on the comment about lower employee benefit shells that you were disappointed on pricing.

Speaker Change: Where where are you seeing the most price competition is it true group voluntary.

Speaker Change: And also how is your persistency holding up through you know some elevated competition.

Yeah, I think where we're seeing the most price competition is in the disability lines.

Dan: Yeah, I think what we're seeing the most price competition is in the disability lines. For the past several years, there's been highly favorable disability experience and continuously improving across the industry. There's a number of probably of system wide factors for that, including the more use of remote and hybrid work, which enables people to get back to work in ways they didn't used to be able to. So we're seeing the competition starting to put some of that favorable disability experience into their pricing. So you know, if you think of the business in three components, disability, life and voluntary, we're actually doing very well in the life and the voluntary, which is voluntary is an area we really want to grow.

Speaker Change: For the past several years theres been highly favorable disability experience and continuously improving across the industry.

Speaker Change: There's a number of probably of system wide factors for that including the more use of remote and hybrid work, which enables people to get back to work in ways. They didn't use to be able to so we're seeing the competition starting to put some of that favorable disability experience into their pricing. So if you think.

Speaker Change: The business in three components disability life and voluntary.

Speaker Change: We're actually doing very well in the life and the voluntary which is voluntary is an area, we really want to grow but we've been more cautious in disability because of that price competition.

Dan: But we've been more cautious in disability because of that price competition. Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: The next question is from Doug Young with Desjardin capital markets. Please go ahead.

Doug Young: The next question is from Doug Young with Desjardins Capital Markets. Please go ahead. Good morning, Dan, maybe we can stay with you just looking at us group sales on the dental Specifically the Medicaid and Medicaid Advantage weaker versus what we've seen in the last few years. And maybe you can kind of talk about a little bit what you're seeing there and how this informs, you know, your underlying earnings growth outlook for this business. and and maybe if you can weave in obviously there's a fluid situation with the administration in the U.S. and who knows what's happening but you know any concerns that you have in terms of changes to those two businesses in particular and then got a follow-up Yeah, thanks.

Yes.

Speaker Change: Hey, Good morning, Dan maybe we can stay with you just looking at U S group sales on the dental.

Speaker Change: Specifically, the Medicaid and Medicaid advantage.

Speaker Change: Weaker.

Speaker Change: What we've seen in the last few years.

Speaker Change: And then maybe you can kind of talk about a little bit what youre seeing there in Edison forums your underlying earnings growth outlook for this business.

Speaker Change: And maybe if you can we then obviously there is a fluid situation with the administration in the U S and who knows what's happening, but any concerns that you have in terms of changes.

Speaker Change: To those two businesses in particular.

Speaker Change: And then got.

Speaker Change: Got it follow up.

Speaker Change: Yeah. Thanks.

Dan: There's a whole set of questions and answers there that I want to provide. You know, first of all, it's a very good observation that the conversations coming out of Washington are having a lot of secondary influence here. You know, we don't see what's been proposed in Washington as having a lot of direct impact on dental benefits. 75% of the Medicaid coverage we have is kids and nobody's really talking about cutting Medicaid benefits to kids. And in the adult coverage, the, you know, while there could be some impacts, we feel they're fairly modest. But the bigger impact that's having is that overall Medicaid funding is definitely under a lot of pressure.

Speaker Change: There's a whole set of questions and answers there that I want to provide you know first of all it's a very good observation that the conversations coming out of Washington, and are having a lot of secondary influence here.

Speaker Change: We don't see what's been proposed in Washington, as having a lot of direct impact on dental benefits, 75% of the Medicaid coverage, we have as kids and nobody's really talking about cutting Medicaid benefits to kids and in the adult coverage. The you know while there could be some impacts we've it feel they're feral fair.

Speaker Change: Early modest, but the bigger impact that's having is that overall Medicaid funding is definitely under a lot of pressure and we work with states that fund Medicaid not just in dental but much more significantly in health and we work with a lot of health plans as a subcontractor that do the same and they're feeling quite.

Dan: And we work with states that fund Medicaid, not just in dental, but you know, much more significantly in health. And we work with a lot of health plans as a subcontractor that do the same. And they're feeling quite a bit of uncertainty and pressure on their revenues going forward. So that is making some of the second round of renegotiations that we're engaged in this year for to get our pricing back to where it needs to be go somewhat more slowly than perhaps we had hoped or expected. So that's certainly a factor. You know, we I also, you know, should mention that in the dental results, we, you know, we did have a retroactive premium payment from one of our large clients, which was great.

Speaker Change: A bit of uncertainty and pressure on their revenues going forward. So that is making some of the second round of renegotiations that were engaged in this year for to get our pricing back to where it needs to be go somewhat more slowly than perhaps we had hoped or expected. So that's certainly.

Speaker Change: A factor.

Speaker Change: Yeah, we I also should mention that in the dental results. We you know we did have a retroactive premium payment from one of our large clients, which was great. In fact, it's the second the retro that we've gotten in the last three quarters. So we do you know we do think this may be a regular part of the business.

Dan: In fact, it's the second retro that we've gotten in the last three quarters. So we do, you know, we do think this may be a regular part of the business, but not your routine. And we don't expect another retro payment specifically in the second quarter. So that is a bit of a, you know, a relative headwind to the results in the first quarter going into the second quarter. And then in terms of the impact on sales, we have noticed, again, due to the uncertainty that some of the RFP timelines have slowed down. So in the first quarter, that tends to be a small quarter for sales the way we record them.

Speaker Change: Not your routine.

Speaker Change: And we don't expect another retro payments specifically in the second quarter. So that is a bit of a relative headwind to the results in the first quarter going into the second quarter.

Speaker Change: And then in terms of the impact on sales.

Speaker Change: We have noticed again due to the uncertainty that some of the RFP timelines have slowed down.

Speaker Change: So in the first quarter that tends to be a small quarter for sales the way we record them also large institutional government sales are lumpy.

Dan: Also, large institutional government sales are lumpy. They, you know, a small number of very large things, but there were none in the first quarter. Now, despite all that, we have nine significant Medicaid and contracts we're bidding on this year, representing almost 5 million potential lives.

Speaker Change: A small number of very large things, but there were none in the first quarter now despite all that we have nine significant Medicaid and met our contracts were bidding on this year, representing almost 5 million potential lives. So there is a robust pipeline, but perhaps the timelines have slowed down just a bit.

Dan: So there is a robust pipeline, but perhaps the timelines have slowed down just And just to follow up, Dan, like, this doesn't impact your underlying earnings progression for this business through because you've got obviously you've laid out targets for this year and for 2029. And, and can you quantify the retro payment side? Yeah, so the retro payment applied to the current fiscal year, in the case of that client, that fiscal year started 9-1. So there's a part of that retro payment that applies to the first quarter and a part that applies to the 9-1 to 12-31 period.

Speaker Change: And just a follow up then.

Speaker Change: This doesn't impact your underlying earnings progression for this business because you've got obviously you've laid out targets for this year and for 2029.

Speaker Change: And can you quantify the retro payment size.

Speaker Change: Yeah, so the retro payment.

Speaker Change: Applied to the current fiscal year in the case of that client that fiscal year started nine one so there's a part of that retro payment that applies to the first quarter and apart that applies to the nine 1% to 12 31 period and that was in the single digits still very helpful, but not particularly large.

Dan: And that was in the single digit, still very helpful, but not, you know, particularly large. In in terms of our progression towards the target for this year, we're still very committed to that number working very, very hard to get there. And the long term, the MTOs we laid out in November. for the Dental Business, are still very much our plan and intention. But as I mentioned, I think the, you know, because there was a retro in the first quarter that wouldn't recur in the second quarter, you know, we wouldn't necessarily see the same result in the second quarter that we did this quarter.

Speaker Change: In in terms of our progression towards the target for this year, we're still very committed to that number working very very hard to get there in the long term the empty OS we laid out in November.

For the dental business are still very much our plan and intention.

Speaker Change: But as I mentioned I think the you know because there was a retro in the first quarter that wouldn't recur in the second quarter.

Speaker Change: We wouldn't necessarily see the same result in the second quarter that we did this quarter.

Speaker Change: That's fair enough and then.

Tim Deacon: Fair enough. And then, I guess Kevin and Tim, you both said, you know, you talked about the financial strength of the organization, you know, the amount of capital you generate, the amount of capital you have, you know, your debt capacity. Yet, the increase in the NCIB, you know, is $10 million. It was $15 million previously. It's a question that's coming up in a lot of conversations I'm having. So why not You know, why not have another 15 million in CIB? Is there a message that's being sent here? Or can you just maybe walk through your thought process?

Speaker Change: I guess, Kevin and Tim You said, you talked about the financial strength of the organization.

Speaker Change: Out of capital you generate the amount of capital you have.

Speaker Change: Your debt capacity.

Speaker Change: Yet the increase in the NCI B now is $10 million it was $15 million previously.

Speaker Change: A question that's coming up in a lot of conversations I'm, having so why or why not.

Speaker Change: Why not have another $50 million in CIB is there a message that's being sent here or can you just maybe walk through your thought process.

Tim Deacon: Sure, Doug, it's Tim. So as you said, we have a very strong capital position, we have strong holdco cash, and we've been able to maintain that despite, you know, paying out dividends and the share buybacks, etc. So that's in a really good position, we have leading capital ratio at 149%. We just did 12 million, we have 2 million remaining and wanted to remain active. But also wanted flexibility going forward. So we did, we were applying for 10 million. And that's really because as we look ahead over the next 12 months, we have some also some planned upcoming capital deployments.

Speaker Change: Sure Doug It's Tim So as you said, we have a very strong capital position, we have strong hold co cash and we've been able to maintain that despite.

Speaker Change: You know paying out dividends and the share buybacks et cetera. So that's in a really good position, we have leading capital ratio at 149%. We just did 12 million, we have $2 million remaining and wanted to remain active but we also wanted flexibility going forward. So we did we are applying for 10.

Speaker Change: And that's really because as we look ahead over the next 12 months. We have some also some planned upcoming capital deployment. So the remaining equity that we don't currently own within or SLC affiliates that buy ups occurring in the first half of next year. That's about $2 3 billion you can see that in note four of our financials. So it really reflects.

Tim Deacon: So the remaining equity that we don't currently own within our SLC affiliates, that buyups occurring in the first half of next year, that's about 2.3 billion, you can see that note for our financials. So it really reflects to have for us to have the flexibility to remain active in the program, but also to be able to meet our future commitments as well. And Doug, I would just add one thing. I think if we look at the current economic conditions and where things are at, there's, you know, there's significant risk going forward in a lot of parts of the economy.

Speaker Change: To have it for us to have that flexibility to remain active in the program, but also to.

Speaker Change: To be able to meet our future commitments as well.

Speaker Change: And Doug I would just add one thing I think if we look at the current economic conditions and where things are at there as you know there is significant risk going forward.

Speaker Change: In a lot of parts of the economy and so.

Tim Deacon: And so we are going to be carefully looking at that and how we deploy capital. And when we do buybacks, it's when we have cash flow and the ability to do it. But having that, this is not, you know, this is an unusual time. And I think being ready and prepared for that unusual time is important. Makes sense.

Speaker Change: We are going to be carefully looking at that and how we deploy capital and when we do buybacks. It's when when we have cash flow and the ability to do it but.

Speaker Change: Having that this is not a this is an unusual time and I think being ready and prepared for that unusual time is important.

Speaker Change: That makes sense I appreciate the color. Thanks.

Tim Deacon: Appreciate it, Colin.

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

Tom Mackinnon: The next question is from Tom MacKinnon with BMO Capital. Please go ahead. Chai, Progressing, and then progressing in light of what I believe would be, you know, the biops of the minorities here, which Correct me if I'm wrong, is it 25% of SLC that you would be buying in, associated with that $2.3 billion that you're talking about? Tom, thanks for the question.

Speaker Change: Yeah. Thanks, a question with respect to S. L. C. Obviously ketchup continues here as certainly has helped our.

Speaker Change: Revenue in the quarter I think several years ago, you gave a guide of 235 correct me if I'm wrong for 2025.

Speaker Change: How are you thinking about that just given I guess the bump we saw in the first quarter the stronger capital raises that you have and how should we be looking at in at that number in 2026 progressing and then progressing in light of what I believe would be you know the buy ups.

Speaker Change: The minorities here, which.

Speaker Change: And correct me if I'm wrong is it 25% of S. L. C that you would be buying and associated at $2 3 billion that you're talking about thanks.

Speaker Change: Hey, Tom Thanks for the question, Steve You know we were on the $2 35, you're right. That's the target that we put out we feel good about that number for the year.

Steve: It's Steve. You know, we're on the 235, you're right, that's the target that we put out. We feel good about that number for the year. You know, this quarter was certainly elevated because of the catch-up fees that Tim mentioned. Also, we had some seed income. So it was above a normalized level for us. You know, this business is pretty stable because you've got base management fees. And if you were to look at our core management fees, they were up about 8% year over year. And then you've got some things that are variable. Catch-up fees can fluctuate quarter to quarter.

Speaker Change: This quarter was certainly elevated because of the catch up fees that Tim mentioned also we had some seed income so it was above a normalized level for us.

Speaker Change: This business is pretty stable, because you've got base management fees and if you.

Speaker Change: If you were to look at our core management fees. They were up about 8% year over year and then you've got some things that are variable catch up fees can fluctuate quarter to quarter. We almost always have some this was a bigger quarter. We've got some other things that fluctuate quarter to quarter seed income, which generally is positive, but we've had some quarters, where that's been negative property management.

Steve: We almost always have some. This was a bigger quarter. We've got some other things that fluctuate quarter to quarter. Seed income, which generally is positive, but we've had some quarters where that's been negative. Property management fees can be seasonal. We've got performance fees, which generally have been low, but those could, we expect those will increase over time. So there are some aspects to our quarterly results that can fluctuate around a pretty stable base. So we feel good about the 235 number for this year. And we think as we look beyond that into 2026 and beyond, you know, we expect to have really solid growth.

Speaker Change: Fees can be seasonal.

Speaker Change: We've got performance fees, which generally have been low but those coding we expect those will increase over time. So there are some aspects to our quarterly results that can fluctuate around a pretty stable base.

Speaker Change: So we feel good about the 235 number for this year and we think as we look beyond that.

Speaker Change: Into 2026 and beyond we expect to have really solid growth I think we've got good momentum in the business you know if you look at our.

Steve: I think we've got good momentum in the business. You know, if you look at our AUM year over year, we're up 12 to 13%. If you look at fee earning AUM or AUM. And I don't think we've, we're only now really starting to harness this as a platform. Up until now, we've basically had a bunch of individual businesses that we let operate on their own. And now only now we're really starting to think about this and operate as a platform. And I think that's going to help us accelerate our growth going forward. You know, there's always headwinds and tailwinds.

Speaker Change: Year over year were up 12%, 13%, if you look at fee, earning AUM or AUM and I don't think we've we've we're only now really starting to harness this as a platform up until now we basically had a bunch of individual businesses that we let operate on their own and now now only now really starting to think about this and operate as a platform and I think that's going to help.

Speaker Change: Accelerate our growth.

Speaker Change: Going forward you know there's.

Speaker Change: There's always headwinds and tailwind you've got as Kevin mentioned this is an unusual time. So some of those you know there are puts and takes to that one thing that we have seen is.

Steve: You've got, as Kevin mentioned, this is an unusual time. So some of those, you know, there are puts and takes to that. One thing that we have seen is we have a global investor base and for investors outside the US, we have seen some emerging reluctance to allocate into the US for different reasons. So, you know, that's. It's not catastrophic, but something we're seeing. but you always have things in your favor and you always have things that you're battling against.

We have a global investor base and for investors outside the U S. We have seen some emerging reluctance to allocate into the U S for different reasons. So that's sad.

Speaker Change: Catastrophic that's something we're seeing.

Speaker Change:

Speaker Change: But you always have things in your favor and you always have things that you are battling against though.

Kevin Strain: Steve, I was just going to mention one thing. When you see these catch-up fees, the larger they are, the better they are. That means we've raised more funds, we were more successful, investors are really interested. So you should see these catch-up fees as being a really positive endorsement of the alternatives business, and as Steve said, a natural part of how the alternatives business works. And so we're pretty pleased with the Asia Fund that BGO had launched, and just the success in getting money there and deploying money. So that catch-up fee is a recognition of that.

Speaker Change: Steve I was Susan mentioned, one thing when you when you see these catch up fees.

Speaker Change: The larger they are the better they are that means we raise more funds. We were we were more successful investors are really interested so you should see these catch up fees as being a really positive endorsement of the alternatives business and as Steve said, a natural part of how the alternatives business works and so we're pretty pleased with the.

Speaker Change: The Asia fund that be Joe It launched and just the success in and getting money, there and deploying money. So that catch a P is a recognition of that the other thing on this.

Kevin Strain: The other thing on this, we are, as SLC grows, and we expect to see SLC grow, an important piece is helping with seed money and helping start new funds. And so that's when you're seeing some of those seed investment earnings come through like they did this quarter. And when those are positive, that's also a good thing. It means that we're getting strong performance in the start of those funds. So I think these are normal parts of the alternatives business, and you should see them both as being very positive. And on the minority, is that 25%?

Speaker Change: Our.

Speaker Change: S O C grows and we expect to see S. O C grow an important piece is is helping with seed money and helping start new funds and so that's when you're seeing some of those a seed investment earnings come through like they did this quarter and when those are positive. That's also a good thing it means that we're getting strong performance in the start of those funds. So I think these are normal parts of the alter.

Speaker Change: <unk> business and you should see them, both as being very positive.

Speaker Change: And on the minority is that 25%.

Kevin Strain: Well, you know, it's... It's a good question. And the answer is a little bit more complicated, because we have different percentage interest in different businesses. So, you know, we completed the buy up of infrared. So now we own 100% of that we own all of our fixed income business, we've got a majority interest in both Crescent and BGO, but high minority interest there that we'll be buying out. And then the other factor is, as we think about the go forward structure, we expect employees don't own a portion of this business, as you would see with most all its businesses out there.

Speaker Change: Well you know.

Speaker Change: It's a it's a.

Speaker Change: Good question and the answer is a little bit more complicated because we have different percentage interest in different businesses. So.

Speaker Change: We completed the buy up of infrared so now we own 100% of that we own all of our fixed income business, we've got a.

Speaker Change: A majority interest in both Crescent and Biggio, but high minority interest there that we'll be buying out and then the other factor is as we think about the go forward structure, we expect employee stone on a portion of this business as you would see with.

Speaker Change: Most salts business is out there and we think that's important to Lps and we think it's important to alignment and we're working through that now so.

Kevin Strain: And we think that's important to LPs. And we think it's important to alignment. And we're working through that now. So, you know, the specific percentage that we'll end up owning is there's some moving parts. What percentage would the employee But the $2.3 billion that you've noted in your financials is for Sun Life to buy. Not for the Aliens, is that correct? Yeah, Tom, that figure assumes that we buy up 100% of the remaining interest that we don't. Okay, and is that still the plan?

Speaker Change: The specific percentage that will end up owning as there's some moving parts there is what I'll say.

Speaker Change: What percentage with the employees.

Speaker Change: Well if you look at let me put it this way if we spend a lot of time looking at the universe and if you look at the universe of all firms.

Speaker Change: Not uncommon to see employees on 20% of our business.

Speaker Change: And that's and that's if you look across the landscape and I think if you talk to the big institutional investors out there, it's really important to them to see employees aligned through things like carried interest, but also ownership in the entity. So we're taking all that into account.

Speaker Change: But the $2 3 billion that you've noted in your financials as for Sun life to buy the <unk>.

Speaker Change: Some remaining portion of it and not today.

Speaker Change: That correct, yet Tom that that figure assumes that we buy up a 100% of the remaining interest that we don't own.

Speaker Change: Okay and is that still the plan I mean, you Wouldnt book It in your notes if the employees, we're gonna be buying it is that correct.

Kevin Strain: wouldn't book it in your note. Well, I let me just say that all of that was in process to think about, you know, how we align the incentives going forward. So these are active discussions. And we want to make sure we get that right.

Speaker Change: Let me just say that all of that was in process to think about how we align the incentives going forward. So these are active discussions and we want to make sure we get that right, but today that liability reflects us the assumption that we'll buy 100% of the business.

Paul Holden: But today, that liability reflects us the assumption that we'll buy 100% of the Okay, thanks for The next question is from Paul Holden with CIDC, please go ahead. Thank you. Good morning. So going back to the US business, sorry to keep you busy, Dan, but going back to the US business, when I look at that expected profit line on on short term business, it's up roughly half a point year over year. So how do I think about that? Obviously, I think you've kind of addressed the the higher Thank you. Thank you.

Speaker Change: Okay. Thanks for that.

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

Thank you good morning.

Speaker Change: So going back to the.

Speaker Change: The us business, sorry to keep you busy Dan, but going back to the U S business. When I look at that expected profit line on short term business, it's up roughly half a point.

Speaker Change: Year over year. So how do we think about that obviously I think you've kind of address the the higher.

Speaker Change: Claims loss assumption on on stop loss or are there any other factors that are kind of holding that back from being a higher growth rate and will that will that evolve over the course over the year or is that kind of cause that kind of set sort of an expectation for the remainder of the year.

Paul Holden: Claims Loss Assumption on Stop Loss, are there any other factors that are kind of holding that back from being a higher growth rate? And will that will that evolve over the course of the year or that kind of does that kind of set sort of an expectation for the remainder Hi, Paul.

Speaker Change: Yeah.

Speaker Change: Hi, Paul it's Kevin Morrissey, Thanks for that question.

Kevin Morrissey: It's Kevin Morrissey. Thanks for that question. I just wanted to give you maybe a bit of the details of how that line is determined. So that expected earnings on that type of business is really based on the profitability and the expectations. So when you see the growth year over year, it's really going to be driven by the volume of business that we have in force and the pricing expectations on that. So it's kind of the combination of those two, and those are what are going to drive the changes year to year. And so as the business comes on, that would naturally update each quarter, but on the pricing side of that, that's updated once a year.

Speaker Change: I just wanted to give you maybe a bit of the details of how that that line is determined so.

Speaker Change: That that our expected earnings on that type of business is really based on the profitability and the expectation. So when you when you see the growth year over year, it's really going to be driven by the volume of business that we have in force and the pricing expectations on that so it's kind of the combination of those two in that.

Speaker Change: Those are what are going to drive.

Speaker Change: The changes year to year and so as the business comes on that would naturally update each quarter, but on the pricing side of that that's updated once a year.

Speaker Change: Okay. Okay.

Kevin Morrissey: Um, second question is related to stop loss premiums. So up 4% year over year, which is obviously different than the other rate increases have been putting through closer to 14. So just wanna make sure I understand that correctly. Is that is that just because simply Not all customers wanted to take the rating. Yeah, so a couple of factors there. First of all, we recall that when we say there's a 14% increase, that's the increase if they kept benefits the same. But many times when stop loss clients are facing a rate increase, they'll buy down the benefit by taking a bigger deductible.

Speaker Change: Second question is related to stopped.

Speaker Change: Stop loss premiums, so up 4% year over year.

Speaker Change: Which is obviously different than the rate increases had been putting through closer to 14. So just wanted to sure I understand that correctly is that is that just because its simply not.

Speaker Change: Not all customers wanted to take the rate increase.

Speaker Change: Yeah. So a couple of factors there first of all we recall that when we say, there's a 14% increase that's the increase if they kept benefits the same but many times when a stop loss clients are facing a rate increase they'll buy down the benefit by taking a bigger deductible. So the net.

Dan: So the net rate increase is usually coincidentally about half. So if you get a 14% rate increase, you might have a, you know, a six or 7% impact on revenue. So now, you know, with the four and a half percent increase year over year in revenue, that that doesn't seem like a great deal, considering the rate increases. And that's, that's true. We've been emphasizing maintaining our margins over, you know, significant growth at this point in the underwriting cycle. So You know, our loss ratio right now is, you know, solidly in the mid 70s, you may have seen a couple of large competitors report loss ratios over the past week of 90% or above.

Speaker Change: Rate increases usually coincidentally about half. So if you get a 14% rate increase you might have a you know a six or 7% impact on revenue.

Speaker Change: So now you know with the four 5% increase year over year in revenue that that doesn't seem like a great deal considering the rate increases and that's that's true we've been emphasizing maintaining our margins over you know significant growth at this point in the underwriting cycle.

Speaker Change: So.

Our loss ratio right now is solidly in the mid seventies, you may have seen a couple of.

Speaker Change: Large competitors report loss ratios over the past week of 90% or above and one of the ways that we keep that loss ratio very favorable that by the way you generated a nine 5% after tax.

Dan: And one of the ways that we keep that loss ratio very favorable that by the way, generated a nine and a half percent after tax margin in the stop loss business in Q1, which is above our target of 8%. And the way we're able to do that is be by being conservative on pricing at this point in the underwriting cycle. As others start to put through bigger rate increases and the market hardens, we would expect to see sales and net growth pick up. And in fact, sales in the first quarter, which is generally a small quarter for sales, were higher than in the first quarter of last year.

Speaker Change: Margin in the stop loss business in Q1, which is above our target of 8% and the way we're able to do that is be by being conservative on pricing at this point in the underwriting cycle as as others start to put through bigger rate increases in the market hardens, we would expect to see sales and net growth pick up.

Speaker Change: <unk> and.

Speaker Change: And in fact sales in the first quarter, which is generally a small quarter for sales.

Speaker Change: We're higher than in the first quarter of last year. So we hope we're at the beginning of that part of the cycle now.

Kevin Strain: So we hope we're at the beginning of that part of the cycle now.

Paul It's Kevin I wanted to take a bit of a step back and as we we gave 12% sort of.

Kevin Strain: Paul, it's Kevin. I want to take a bit of a step back. And as we gave 12% sort of growth expectations in medium term for the US, and we still feel really good about that. If you looked at the stop loss business, we have scale, we typically have better margins than our competitors, we've seen even outperformance, even though it's been challenging the last few quarters, we have capabilities that we've added there. And as a big player, we continue to see be strong player in that in that business, our employee benefits business is doing as well as it's ever done.

Speaker Change: Growth expectations in the medium term for the U S and we still feel really good about that if you. If you looked at the stop loss business. We have scale, we typically have better margins than our competitors, we've seen even outperformance even though it's been challenging in the last few quarters. We have capabilities that we've added there is a big player. We continue to see b be strong.

Speaker Change: And that in that business, our employee benefits business is doing as well as its ever done and the investments that Dan and the team have made into technology and differentiating themselves. There has been really powerful and as we move out of this phase for the dental into the growth targets that we put we see that as being part of the.

Kevin Strain: And the investments that Dan and the team have made into technology, and differentiating themselves there has been really powerful. And as we move out of this phase for the dental into the growth targets that we put, we see that as being part of the of the tailwind to achieving that medium term objective. So if you step back, I think we've got great capabilities in the US, we are very dedicated to hitting that 12%. And Dan has built a really good team there to deliver on that. So I think scale is really important. I would also say scale on the dental side, like we talked about all the challenges in dental, if you don't have scale, getting through those challenges is going to be hard for even for a lot of our competitors.

Speaker Change: The tailwind to achieving that medium term objectives. So if you step back I think we've got great capabilities in the U S. A we are very dedicated to hitting that 12% and Dan has built a really good team there to deliver on that so I think scale is really important I would also say scale on the dental side like we talked about all the challenges in <unk>.

Speaker Change: Dental if you don't have scale getting through those challenges is going to be hard even for a lot of our competitors. So I think we're well positioned I think we're in the right parts of the business there and I think we're doing the right things to drive out that growth over the medium term.

Paul Holden: So I think we're well positioned, I think we're in the right parts of the business there. And I think we're doing the things to drive out that growth over the medium term. Got it. That's all helpful.

Speaker Change: Got it that's all helpful. I'll just stick to my two questions. So thank you.

Paul Holden: I'll just stick to my two questions.

Speaker Change: Yeah.

Lemar Persaud: The next question is from Lemar Persaud with Cormark Securities. Please go ahead. Thanks. Maybe just two quick ones here for me. Just first on the dental business, does that $100 million in dental earnings include these benefits from the retroactive premium payments? Or are those kind of on top of the $100 million target for ? Well, you know, anything that generates underlying net income is part of the calculation, of course. And I think, you know, the way to think about these retroactive payments, they're not a gift. They're something that, you know, is part of the becoming part of the regular process as states look to find ways to fund these programs correctly.

Speaker Change: The next question is from Illinois Prasad with Cormack Securities. Please go ahead.

Illinois Prasad: Thanks, maybe just two quick ones here for me just first on the dental business is that $100 million in dental earnings include.

Illinois Prasad: These benefits from the retroactive premium payments or are those kind of on top of the $100 million target for 2025.

Illinois Prasad: Well anything that generates underlying net income is part of the calculation of course.

Illinois Prasad: And I think the way to think about these retroactive payments theyre not a gift there or something that you know as part of the becoming part of the regular process as states look to find ways to fund these programs.

Illinois Prasad: Correctly, so as I mentioned earlier two of the last three quarters, we've had a retroactive premium so that's something that may happen periodically versus something that's unrelated to the current results.

Lemar Persaud: So as I mentioned earlier, two of the last three quarters, we've had a retroactive premium. So that's something that may happen periodically versus something that's unrelated to the current results. Okay, okay, so that's so those payments would be included in part of that 100 million bottom Yes, and any any revenue we get would be included. Yes. Okay, perfect.

Illinois Prasad: Okay. Okay. So that's so those payments would be.

Illinois Prasad: And part of that $100 million bottom line.

Illinois Prasad: Yes, I mean any any revenue we get would be included yes.

Speaker Change: Okay Perfect and then next question on S. L C. Here.

Lemar Persaud: And then next question on SLC here. Just kind of building on Tom's line of questioning, would I be correct in suggesting you're likely to handily exceed that $235 million 2025 target, based on some of the run rateable impacts we saw for SLC and Q1? Like, I hear you that, you know, there's some, some elements here are one timers, like the seed gains and catch up fees, but the growth in fee earning AUM and, you know, strong deployments, those are those are sticky things.

Tom Gallagher: Just kind of building on Tom's line of questioning.

Tom Gallagher: Would I be correct in suggesting you're likely to handily exceed that $235 million 2025 target based on some of the run ratable impacts we saw for S. I'll see you in Q1.

Tom Gallagher: Hear you that you know there's some.

Speaker Change: Some elements here, one timers like the seed gains and catch up fees, but the growth in fee, earning AUM in San deployments. So there those are sticky things and I'm. Just wondering if my math is correct that it's likely to be well in excess of the 235.

Lemar Persaud: And I'm just wondering if my math is correct, that it's likely to be well in excess of the You know, I think that the Some of the wild cards that we need to think about, we've got some big fundraisings this year on Crescent, two in particular that we're working on, and the timing of those closings can make a So, um, and it doesn't really make a difference long term, but it can make a difference in terms of what income hits this year. So I don't know if I'm ready to sit here and say, yeah, it's a guarantee that we're going to blow that number away.

Tom Gallagher: I think that the.

Tom Gallagher: Some of the Wildcards that you need to think about it we've got some big fundraising this year on the on Crescent two two in particular that working on and the timing of those closings can make a difference so.

Tom Gallagher: And it doesn't really make a difference long term, but it can make a difference in terms of what income hits. This year. So I don't know if I'm ready to sit here and say, yes, it's a guarantee that we're going to blow that number way I'll tell you we feel confident about it and the trends are we feel good about the momentum in the business, but there are some things that are hard for me to predict that could have an influence as to where we ended up at the end of the year.

Lemar Persaud: I'll tell you, we feel confident about it and the trends are, you know, we feel good about the momentum in the business, but there are some things that are hard for me to predict that could have an influence as to, you know, where we end up.

Tom Gallagher: Thank you that's it for me.

Alex Scott: Thank you.

Alex Scott: That's it for me.

Speaker Change: The next question is from Alex Scott with Barclays. Please go ahead.

Alex Scott: The next question is from Alex Scott with Barclays. Please go ahead. Hey, good morning. I had one for you on MFS. You know, flows actually showed a little bit of progress, which was good. I think in some of your comments you mentioned that, you know, your clients are still continuing to look at allocations and so forth. I just wanted to understand that comment and if that's indicative of anything in the pipeline you're seeing. Just trying to understand if we could maybe think about this positive momentum or, you know, flows being less negative. Is something that could continue or is this more of a blip and you're still seeing a lot of activity there?

Alex Scott: Hey, good morning, I had one for you on that.

Alex Scott: It flows actually showed a little bit of progress.

Alex Scott: Rich.

Alex Scott: Which was good I think in some of your comments you mentioned that.

Alex Scott: Your clients, you're still continuing to look at allocations and so forth I just wanted to understand that comment and if thats indicative of anything in the pipeline you're seeing there.

Alex Scott: Just trying to understand if we could maybe.

Think about this positive momentum.

Alex Scott: Flows being less negative as something that could continue or is this more of a blip and you were still seeing a lot of activity there in terms of.

Alex Scott: Pressure.

Alex Scott: Pressure.

Ted: Hi, This is Ted I think the comments were meant to be.

Ted: Hi, this is Ted. I think the comments were meant to be more of a continuation of what we've seen. I think the blip was actually, we hope and we think, in Q4, where a number of redemptions were pulled into one quarter that, in the current trends we've seen, would have been spread across more. But, you know, that's how lumps happen. So I think the point is that a lot of the trends that we've seen to date have persisted. I think what changed in the quarter, of course, is that you had a lot of volatility. That led to some retail outflows picking up.

Ted: More of a continuation of what we've seen I think the blip with actually.

Ted: And we think or where.

Ted: A number of redemptions were pulled into one quarter of that.

Ted: In the current trends and spread across or.

Ted: That's how that's how long has happened so.

Ted: The point is that a lot of the trends that we've seen in data persistent I think what changed in the quarter of course.

Ted: A lot of volatility.

Retail outflows picking up.

Ted: But actually, the institutional side, as you can see, was significantly less bad than Q4. So the retail outflows are an industry phenomenon. Our share remains very strong. And so we'd expect that as money comes back in, it would come back into us. But largely speaking, you know, it's nearly impossible to predict quarter to quarter, but the trends that we've seen in place remain in place.

Ted: But actually the institutional side.

Ted: With significantly less bad than Q4, so the retail outflows are an industry phenomenon our share remains very strong and so we'd expect that as when he comes back.

Ted: It would come back to us, but largely speaking flows nearly impossible to predict quarter to quarter, but the trends that we've seen in place remain in place.

Kevin Strain: I think that was Ted. Ted, your answer was a little choppy.

Speaker Change: I think that was a Ted.

Speaker Change: Ted Your answer was a little choppy. So it's Kevin maybe I'd, just say that as Ted was saying most of the outflows in the quarter related to the U S. Retail business, where you you know we all know what happened to equity markets in the U S and what typically happens and as their outflows in the industry was outflows in MFS is roughly consistent with those outflows on the institutional side.

Kevin Strain: So it's Kevin. Maybe I'd just say that, as Ted was saying, most of the outflows in the quarter were related to the US retail business where, you know, we all know what happened to equity markets in the US and what typically happens in is their outflows and the industry was outflows. And MFS was roughly consistent with those outflows. And on the institutional side, it was much closer to flat. And I think that, again, MFS is a great long term performance. They know how to run money and they're coming through as still an at scale industry leader in that business.

Speaker Change: It was much closer to flat.

Speaker Change: And I think that again, we you know MFS has a great long term performance they know how to run money and that Theyre coming through is still an.

Speaker Change: And add scale industry leader in that business and we're starting to see flows to fixed income and active Etfs as I mentioned in my.

Kevin Strain: And we're starting to see flows to fixed income and active ETFs, as I mentioned in my earlier discussion. I think that's a positive as we look forward as well.

Speaker Change: Earlier discussion I think that's a that's a positive as we look look forward as well.

Got it very helpful.

Speaker Change: Maybe if I switch gears to Asia, Hong Kong sales are really strong I was just hoping maybe you could give us.

Speaker Change: Color on because I think youre doing to drive the strong sales and then.

Speaker Change: Along with that.

Speaker Change: I understand there's a wide range of outcomes from tariffs, but I guess, maybe just high level, how how sensitive do you think your sales would be in Hong Kong to a deteriorating economic environment.

Yeah. Good morning, Alex has mentioned.

Manjit Singh: Good morning, Alex. It's Manjit. As I've mentioned before in previous calls, we've made a lot of investments and have a lot of momentum in our Hong Kong business across a number of dimensions. We've invested in our agency force. That's gone up more than 50% over the last couple of years, and that's helping to drive good volumes. About 18 months ago, we also launched a new banker partnership with Da Sing. That's doing very well, in fact, ahead of our business case, and we maintain a very strong position in the broker channel as well. All those things are working for us.

Speaker Change: I made a lot of investments and have a lot of momentum. Some momentum.

Speaker Change: in our Hong Kong business, across a number of dimensions. We've invested in our agency for us. That's grown up more than 50% over the last couple of years and that's helping to drive good volumes.

Speaker Change: You know, about 18 months ago, we also launched a new Bank of Partnership with Dawson. That's doing very well in fact ahead of our business case and we maintain a very strong position in the broker channel as well. So all those things are working for us.

Kevin Strain: You marry that up with a great brand, good products, and a good client proposition, and that's really driving good momentum in the business. In terms of the macro environment, obviously, I can't predict where that's going to go, but I feel very good with how the business is performing and how we're positioned, and I think that will help us manage through the conditions that we see going forward.

Speaker Change: and then you marry that up with a great brand, you know, good products and a good client proposition and that's really driving

Speaker Change: Gubermentim in the business, I mean in terms of the macro environment obviously I can't. [inaudible]

Speaker Change: and I'm going to be speaking to them about the future of the economy and how we can predict where that's going to go but I feel very good with how the business is performing and how we're positioned and I think that will help us manage through the conditions that we see going forward. It's Kevin, Alex. Hong Kong's also had an incredible resiliency and it's a really important market for all the life insurance wealth businesses.

Kevin Strain: It's Kevin, Alex. Hong Kong's also had an incredible resiliency, and it's a really important market for all the life insurance wealth businesses in Asia. I think what we've done particularly well in the last two years, 12 months, under management's leadership is really drive distribution through our agency force, which is growing through our new relationship with Da Sing and having good relationships with the brokers in Hong Kong. We've been seeing ... The industry overall has seen strong results, but we've done really well there.

Speaker Change: in Asia, and I think what we've done in particularly well in the last. [inaudible]

Speaker Change: Two years, 12 months under Manjit's leadership is really drive distribution through our agency force which is growing through our new relationship with Dossing and having good relationships. Thanks for your time.

Speaker Change: with the brokers in Hong Kong. And so we've been seeing the industry overall has seen strong results, but we've done really well there.

Thank you for watching. Bye. Bye.

Thank you [inaudible]

Gabriel Dechaine: We have a follow-up question from Gabriel Dechaine with National Bank Financial. Please go ahead. Hey, just a quick one on SLC. Okay, what I'm hearing from the private equity industry, I mean, we all know this at this point, but just to, you know, frame it. Higher interest rates, volatile markets, not good for monetization. And some are pushing back expectations. I'm wondering how that dynamic plays into the outlook for SLC. I know, it's not a private equity, in the private equity industry necessarily. But you do rely on monetizing assets to make money at some point, and that generates performance fees, etc.

Speaker Change: And we have a follow-up question from Gabriel Dechaine with National Bank Financial. Please go ahead.

Gabriel Deshane: Hey, just a quick one on SLC. Okay, when I'm hearing from the private equity industry, I mean, I'll notice at this point, but just to, you know,

Frame it.

Gabriel Deshane: and some are pushing back expectations. I'm wondering how that dynamic plays into the outlook for SLC. I know the...

Gabriel Deshane: It's not a private equity industry necessarily, but you do rely on monetizing us as to make money at some point and that generates performance for you, etc. Is there any commentary on the outlook for monetization that you...

Gabriel Dechaine: Is there any, you know, commentary on the outlook for monetization that you believe need to be, you know, addressed?

I believe need to be, you know, addressed.

Gabriel Dechaine: Yeah, Gabriel, you're right. It does have a secondary impact, an important one on our private credit business, and it can cut both ways. So this quarter, I think you see on the slide at the bottom, net deployments. And deployments are up strongly this quarter, which is a good thing, because in the funds we manage at Crescent, we start earning fees as we get the money deployed. And then on the flip side, if a private equity portfolio company sold and they repay the debt, then that becomes money that comes back to us and we distribute it out to our LPs, which is a great thing.

Gabriel Deshane: Yeah, Gabriel, you're right, it does have a secondary impact and important one on our private credit business and it can cut both ways.

Gabriel Deshane: So, this quarter, I think you see on the slide at the bottom, net deployments. And deployments are up strongly this quarter, which is a good thing, because if funds we manage at Crescent, we start earning fees as we get the money deployed. [inaudible]

Um...

Gabriel Dechaine: But it does mean that assets under management can go down. So as we've seen less activity in the private equity world for the reasons you cite, the good news is that means some loans that we have are outstanding longer than they might otherwise be. But it can also mean that there's just less deal activity, so we have less opportunities to invest new money. So, you know, it can cut both ways.

Gabriel Deshane: and the world for the reasons you cite. The good news is that means some loans that we have are outstanding longer than they might otherwise be. But it can also mean that there's just less deal activity so we have less opportunities to invest new money. So, you know, it can cut both ways, I guess.

Gabriel Dechaine: Alright, and then I'll sneak one on MFS. We talked the rebalancing stuff we hear about the rebalancing as a reason for outflows, which we're seeing that but on the institutional mandates nearly $10 billion of inflows that's been, you know, in the five to six billion range for the past number of quarters. I'm wondering if, you know, MFS is style is maybe back in vogue or back in fashion, or something else.

Gabriel Deshane: All right, and then I'll sneak one another on MFS. We talked about the rebalancing stuff. We hear about the rebalancing of the reason for outflows, which we're seeing that, but

Gabriel Deshane: And on the institutional mandates, nearly $10 billion of inflows that's been, you know, in the five to six billion range for the past number of quarters. I'm wondering if, you know, MFS's style is maybe back in the invogue or back in fashion or something else.

Gabriel Dechaine: Can you hear me? Yeah, now I can. Yeah, yeah, that's that's better. Okay. Thanks. Great. Yeah, a little too much anything, but okay. So, yes, I mean, we, the flows are are brought across the board. Kevin highlighted that our net flows are positive in fixed income, which is true across institutional and retail. But then also, we have a very strong international equity franchise that continues to be in pretty meaningful flows, both retail and institutional. And that has been a driver, particularly of the institutional flows that you mentioned on the equity side. So, yes, negative net flows always include some positive gross inflows.

Can you hear me?

Yeah, yeah, yeah, that's better. Okay. Okay.

Thanks, great, yeah, a little too much, anything but-

Kevin Strain: So, yes, I mean, the flows are brought across the board, Kevin, highlighted that our net flows are positive in...

Kevin Strain: Fixed Income, which is true across institutional and retail, so that's a factor. But then also, you know, we have a very strong international equity franchise that continues to be imposed in pretty meaningful flows. Thank you both.

Kevin Strain: Both Retail and Institutional and that has been a driver particularly of things.

David Garg, Kevin Strain

Kevin Strain: on the equity side. So yes, you know, negative net flows always include some positive growth inflows, and those...

Gabriel Dechaine: And those trends that are in place there, we do think that's part of why the math has has led to less negative flows.

Kevin Strain: The trends that are in place there, we do think that's part of a lot of math has has led to less negative flows and we would expect that to can you over time with lots of love events.

Gabriel Dechaine: And we would expect that to continue over time with lots of lump sums. Yeah, can you remind me the split of, you know, international AUM there for, you know, I don't know if this trend is going to last, but clearly there's money moving out of the US market and going elsewhere. Um, yes, and we can follow up with you on the on the precise numbers, but it's a it's a meaningful part of our business, where it gets complicated is meaningful part of our business that's global, right, which is a combination of US and international. Got it.

Speaker Change: Yeah, can you remind me the split of, you know, international AUM there for, you know, I don't know if it's trends gonna last but clearly there's money moving out of the US market sales and going elsewhere?

Speaker Change: Yeah, so we can follow you on the precise numbers, but it's a meaningful part of our business where it gets complicated is meaningful part of our business that's global, which is a combination of US and international. And also just to be clear, we're talking about the

Gabriel Dechaine: And just, and also, just to be clear, we're talking about the, the companies that we're investing in on the equity side, not not the client type, right. So, you know, investing in international sort of non US global mandates. But we can certainly follow up with you on the precise split.

Speaker Change: The companies that we're investing in on the equity side, not not the client type, right? So, you know, investing in international sort of non US global mandates, but we can certainly follow up with you on the precise split.

Operator: We could take it offline, as they say. And again, have a good weekend. Thank you.

Speaker Change: We could take it offline, as they say, and again, have a good weekend.

Thank you.

Natalie Brady: We have no further questions at this time.

Speaker Change: We have no further questions at this time. I will turn thanks back over to Ms. Brady for closing remarks.

Natalie Brady: I will turn things back over to Ms. Brady for closing. Thank you, operator.

Operator: This concludes today's call. A replay of the call will be available on the investor relations section of our website. Thank you and have a good day.

Natalie Brady: 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 and have a good day.

Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day. Awareness Month,