Q4 2024 Sagicor Financial Co Ltd Earnings Call
Core earnings call.
All lines have been placed on mute to prevent any background noise. After.
After the Speakers' remarks, there will be a question and answer session if.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
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Speaker Change: George Sepsis, EVP corporate development and capital markets you May begin your conference.
Speaker Change: Great. Thank you operator, and Hello, everyone. Thank you for joining us today to discuss <unk> fourth quarter and full year 2024 results.
Speaker Change: I'd like to highlight our disclosures are available under the Investor Relations tab on our website at <unk> Dot Com, which includes our press release financial statements MD&A, our annual information form along with the unaudited supplemental information package containing core earnings drivers of earnings and additional disclosures.
Speaker Change: The link to our life a webcast is available on our website and a replay will be available.
Speaker Change: This conference call is open to the financial community investors the media and the public with a reminder, that the Q&A period is reserved for financial research analysts.
Speaker Change: So we'll.
Speaker Change: Proceed to refer you to the cautionary language and disclaimers in our materials and public filings regarding the use of forward looking statements and the use of non <unk> financial measures and ratios, which may be mentioned as part of our remarks today.
Speaker Change: I'd also like to remind the audience that.
Speaker Change: Actual results regarding forward looking information could differ materially and please note that a detailed discussion of <unk> risk factors is provided in our MD&A, which is available on SEDAR plus and on our website.
Speaker Change: A discussion of the assumptions underlying our expectations as provided in our filings and earnings releases.
Speaker Change: Unless otherwise noted all dollar amounts referenced will be in U S dollars consistent with our reporting practice.
Speaker Change: Joining me today is our president and CEO Andre Musso, our Chief Financial Officer, Cathy Jenkins and Anthony Chandler, Our Chief controller will begin with prepared remarks by Andre and Kathy followed by Q&A session with that I will pass the call onto our president and CEO Andre Michel.
Speaker Change: Thank you George and good morning, everyone. Thank you for taking the time to join us today.
Speaker Change: It is our pleasure to discuss another solid quarter to end 2024, and our first full year of earnings including our Canadian segment, we recorded core earnings to shareholders consistent with our guidance and reported net income to shareholders.
Speaker Change: In excess of our core earnings are.
Our annualized core return on equity in Q4 shows our potential for further earnings growth both in 2025 and beyond in the medium term.
Speaker Change: We continue to make meaningful progress on our strategic initiatives, including collaboration between our operating segments refreshing our technology at.
Speaker Change: At improving our access to and cost of capital all with the aim to reduce costs drive growth and ultimately expand our return on shareholders equity.
Kathy <unk>: I'll now hand, the call over to our CFO, Kathy <unk> to discuss our consolidated and individual segment results Kathy. Thank.
Kathy: Thank you Andre and good morning, everyone.
Speaker Change: As Andre mentioned, we are reporting a strong fourth quarter to cap off a solid year for Q4 core earnings to shareholders was up 28% from 2000 $23 million to $28 million and net income to shareholders was $52 million for full year 2024 surgical.
Speaker Change: Net income to shareholders was $98 million and core earnings to shareholders with $91 million exceeding managements revised guidance from Q2, 2024 of 80 million to $90 million.
Speaker Change: Revenues were $3 1 billion for the year compared to $2 5 billion for last year.
Speaker Change: New business CSN of $166 million was within the revised guidance from Q2 of 160 million to $180 million net of reinsurance.
Speaker Change: Our total net income for the year came in slightly ahead of quarter as we saw some positive asset price emergence in the fourth quarter.
Speaker Change: Now I will give you some more detail on the segment financials.
Speaker Change: <unk>, Canada sales protection of $18 million in the quarter and $70 million for the year with consistent with management expectations, resulting in new business CSM of $12 million for the quarter and $46 million for the year.
Speaker Change: Core earnings to shareholders of $25 million for the quarter increased $3 million or 16% from the same quarter in prior year, reflecting an increase in expected investment earnings it was partially offset by unfavorable mortality experience.
Speaker Change: Net income to shareholders of $8 million for the quarter was lower than core earnings to shareholders due to unfavorable market related impacts primarily from higher risk free rates on surplus asset.
Speaker Change: Net CSM ended the year at $535 million, which was a slight decrease quarter over quarter, resulting from changes in assumptions and unfavorable currency impact that was offset by organic CSM growth.
Speaker Change: Thank you cord life, USA generated $152 million of new business production for the quarter and 80 $894 million for the year.
Speaker Change: The level of production in Q4 was lower than our targeted annualized run rate and we know today 10 weeks into Q1 that our production in the first quarter of 2025 is going to be over $300 million.
Speaker Change: We believe that we may still see quarterly volatility and the production due to the size and competitive environment, but measured in aggregate over years, we believe we will be able to meet our growth targets.
Be it in a bit of a volatile manner.
Speaker Change: In the meantime core earnings to shareholders. This quarter for the for this segment of $11 million increased $1 million or 12% from the same quarter in the prior year driven by higher net investment income on the growing investment portfolio.
Speaker Change: Net income to shareholders was $42 million for the quarter and was higher than core earnings to shareholders due to market related impacts, including gains on equity investments and favorable tax recoveries.
Net CSM decreased by $11 million to $155 million quarter over quarter due to basis changes from the previous quarter lower volume of premiums written in Q4 and the impact of the introduction of a new and reinsurance agreement.
Speaker Change: Thank you cord, Jamaica capped off a lower than expected year with a soft fourth quarter.
Speaker Change: <unk> share of statutory Jamaica as core earnings to shareholders of $8 million for the quarter declined from $13 million for the same period in the prior year due to unfavorable experience and the impact of rising interest rates.
Speaker Change: Offset by improved margins on core non insurance activities and lower financing costs.
Speaker Change: Our share of reported net income to shareholders of $10 million this quarter declined from $17 $3 million for the same period in the prior year.
Speaker Change: Due to marginally lower results from the long term insurance and.
Speaker Change: In commercial banking division.
However, we see signs of reversion to historical performance in 2025 with strong net premium growth across all business lines and improve margins from repricing of group health products.
Speaker Change: Commercial banking division continued its year over year growth trend in profit as a result of higher net investment income and fees and the investment banking division reversed the prior year's unrealized capital losses, leading to a meaningful improvement in profit.
Speaker Change: At CSM of $282 million increased 2% quarter over quarter as strong new business CSM, a $15 million was offset by changes in assumption.
Speaker Change: Thank you cord life core earnings to shareholders of $6 million for the quarter increased 21% over Q4, 2023, reflecting improved profitability from short term and long term businesses from repricing and product offering adjustment and.
Speaker Change: And improved insurance experience and lower incidents of onerous contracts in the long term business.
Speaker Change: Net income to shareholders of $12 million for the quarter was higher than core earnings to shareholders, primarily due to positive market experience in.
In 2024 core earnings to shareholders was $26 million and net income to shareholders was $39 million.
Speaker Change: Net CSM was $248 million, increasing from $244 million at the end of September 2024, due to growth inorganic CSM a $7 million.
Speaker Change: Driven by strong new business sales, partially offset by changes in actuarial assumptions of $4 million.
Speaker Change: Returning to the consolidated picture.
Speaker Change: <unk> remained well capitalized in Q4.
Speaker Change: The group <unk> ratio was 139%, which improved by three percentage points year over year, and our financial leverage ratio was 27, 3% our access to capital further improved in the fourth quarter through raising our Canadian dollars $200 million term loan facility.
Speaker Change: Which was used to repay the balance of the more expensive U S. Dollar debt used to acquire a very improving both our cost of capital and improving our natural hedge against <unk> net asset position in Canadian dollars.
Speaker Change: Our book value per share finished the quarter at $7 and eight U S or $10.19 Canadian dollars.
Two year growth trend in profit as a result of higher net investment income and fees and the investment banking division reversed the prior year's unrealized capital losses, leading to a meaningful improvement in profit.
Speaker Change: Our deployable capital our shareholders equity plus net CSM to shareholders.
Speaker Change: At CSM of $282 million increased 2% quarter over quarter as strong new business CSM, a $50 million was offset by changes in assumptions.
Speaker Change: With $2 billion or.
Speaker Change: Or $15 <unk> per share U S or $21 61.
Speaker Change: <unk> per share.
Speaker Change: I will now provide an update to our guidance on key measures.
Speaker Change: Statutory life core earnings to shareholders of $6 million for the quarter increased 21% over Q4, 2023, reflecting improved profitability from short term and long term businesses from repricing and product offering adjustments and.
Speaker Change: We expect core basic EPS for 2025 to be approximately between 74%.
Speaker Change: To 80 per share.
Speaker Change: This translates to approximately $100 million to $108 million of expected core earnings to shareholders.
Speaker Change: And improved insurance experience and lower incidents of onerous contracts in the long term business.
Speaker Change: That represents 14% to 23% growth on a per share basis.
Speaker Change: Net income to shareholders of $12 million for the quarter was higher than core earnings to shareholders, primarily due to positive market experience in.
Speaker Change: 15% to 24% growth on an absolute constant currency basis.
Speaker Change: In 2024 core earnings to shareholders was $26 million and net income to shareholders was $39 million.
Speaker Change: New business CSM is expected to be between $180 million to $200 million.
Speaker Change: At CSM was $248 million, increasing from $244 million at the end of September 2024.
Speaker Change: Our 2026 target for core earnings to shareholders growth is 10% plus growth beyond 2025 levels and thereafter, we project a target core return on shareholder's equity over the medium term of 13% plus and targeted core dividend payout ratio over.
Speaker Change: Growth inorganic.
Speaker Change: Sure.
Speaker Change: Driven by strong new business.
Speaker Change: Yes sure.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: The medium term of 30% to 40%.
Speaker Change: Okay.
Speaker Change: Okay.
Andre Musso: With that I hand, it back to Andre.
Okay.
Speaker Change: Thank you.
Andre Musso: Alright, Thank you very much Kathy.
Speaker Change: Okay great.
Andre Musso: Beyond our strong financial results, we continue to be excited about our prospects for 2025 and beyond our internal initiatives all of which are geared to generate strong sustainable return on equity growth are showing measurable progress.
Speaker Change: Okay.
Speaker Change: Thank you so much.
Speaker Change: Yeah.
Speaker Change: [noise] duration.
Speaker Change: Sure.
Andre Musso: We continue to grow our asset base in our U S business and will accelerate and intend to accelerate this in 2025, we.
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: To quantify.
Speaker Change: Okay.
Andre Musso: We believe this will continue to offer a robust growth opportunity and deliver to us very high marginal returns on our capital our operating segments are working better than ever together to drive technological change and efficiencies that will allow us to cement our business, where we have large market shares and.
Speaker Change: Got it.
Speaker Change: Right.
Speaker Change: Sure.
Speaker Change: All right.
Speaker Change: [laughter].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Shareholder.
Speaker Change: Yes.
Andre Musso: Senior to grow efficiently, where we're relatively small.
Speaker Change: Sure.
Speaker Change: Okay.
Andre Musso: And our balance sheet management is incrementally improving our cost of capital with these initiatives. We believe we can target of 13% or better return on shareholders equity.
Speaker Change: I appreciate it.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [noise] yeah.
Andre Musso: Towards the end of our three year planning cycle.
Andre Musso: We are very pleased to be able to deliver this growth while accelerating our return of capital to shareholders. We repurchased 3 million shares in 2024 at a significant discount to book value, which contributed to a 4% net reduction in our share count through the year. This helped drive our book value.
Absolutely.
Vince: Okay.
Vince: I appreciate it.
Vince: Okay.
Vince: Thank you.
Vince: Got it.
Vince: Yeah.
Vince: Okay.
Vince: Okay.
Vince: Sure.
Vince: Yeah.
Vince: Right.
Andre Musso: Per share higher than the rate of our retained earnings.
I appreciate it.
Andre Musso: Our increased projected core earnings are robust capitalization and liquidity and the reduced share count are all enabling us to provide our shareholders with a meaningful increase in our quarterly dividend.
Vince: Okay.
Vince: Okay.
Vince: Okay.
Vince: Yes.
Vince: Okay.
Vince: Yeah.
Sure.
Andre Musso: At this payment level, we anticipate will be at approximately the midpoint of our 30% to 40% target core dividend payout ratio for 2025.
Vince: Yeah.
Vince: For 2000.
Vince: Okay.
Vince: Sure.
Yes.
Vince: That's right.
Oh.
Andre Musso: And while economic on certainly Mei Mei cloud certain macroeconomic macro economic variables. We believe our core initiatives will enable us to continue to grow our return on shareholders equity.
Vince: Okay.
Vince: Sure.
Vince: Yes.
Vince: Thank you.
Vince: Okay.
Vince: [laughter].
Andre Musso: And I am excited about coming out of our quiet period to get back out and talk to some of our new shareholders, who have had a good run so far and to communicate that we believe that there is a lot more good news to come.
Vince: [noise] [noise].
Vince: [noise] [noise] [noise].
Andre Musso: So.
Andre Musso: With that George I think we're ready to start start the Q&A period.
Speaker Change: Yes, we are operator, please lead the lines for questions.
Vince: Okay.
Vince: Okay.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone you will hear a prompt that your hand has been raised.
Vince: Okay.
Vince: Alright.
Vince: Yes.
Vince: Right.
Vince: [noise] [laughter].
Vince: Sure.
Speaker Change: If you do wish to decline from the polling process. Please press star followed based on number two.
Vince: Uh huh.
Vince: Okay.
Speaker Change: If you are using a speaker phone. Please make sure you lift your handset before pressing any keys.
Vince: Okay.
Vince: Got it.
Vince: And efficiencies that will allow us to cement our business, where we have large market shares and continue to grow efficiently, where we're relatively small.
Speaker Change: Your first question comes from the line of Manny <unk> from Scotia Bank. Please go ahead.
Vince: Our balance sheet management is incrementally improving our cost of capital.
Speaker Change: Okay.
Yes.
Vince: With these initiatives, we believe we can target of 13% or better.
Speaker Change: Many Goldman your line is now open please ask your question.
Our return on shareholders equity.
Vince: Towards the end of our three year planning cycle.
We are very pleased to be able to deliver this growth while accelerating our return of capital to shareholders, we repurchased 3 million shares in 2024 significantly.
Speaker Change: Many robin please check if your phone is on mute. Your line is now open.
Vince: Yes.
Vince: Alright.
Speaker Change: Please go ahead and ask your question.
Speaker Change: Sorry can you hear me now.
Vince: For the year.
Vince: Yes.
Speaker Change: Yes, yes indeed.
Alright.
Speaker Change: Okay, great. Thanks.
Vince: Thank you.
Speaker Change: Just a few questions.
Vince: Alright.
Speaker Change: One.
Vince: Alright.
Speaker Change: You talk about lower than expected production in the U S. I think also for the quarter, but for the year as a whole.
Vince: Thanks.
Vince: Sure.
Okay Brian.
Vince: Sure.
When you talk about.
Vince: Okay.
Speaker Change: The impact of rate volatility on that so I'm just wondering if you could flush that out a little more.
Vince: Yes.
Vince: Okay.
Vince: Yeah.
Vince: Right.
Speaker Change: In terms of the impact of rate volatility.
Vince: Alright.
Vince: Perfect.
Speaker Change: On competition I'm trying to understand sort of what youre getting out there in terms of in terms of rate volatility and how that impacted the production.
Vince: Yes.
Vince: All right.
Vince: Yes.
Vince: Okay.
Vince: Okay.
Vince: Sure.
Vince: [noise] economics.
Right so.
Speaker Change: So maybe.
Vince: Okay.
Speaker Change: I will take a little step.
Vince: Okay.
Speaker Change: Step back and.
Vince: Alright.
Speaker Change: And talk about what we're trying to what we're trying to achieve because.
Vince: Okay.
Vince: Got it.
Speaker Change: We see the variability of production of our U S business as.
Vince: Okay.
Vince: Right.
Vince: Okay.
Vince: Okay.
Speaker Change: A feature of our business model.
Vince: Okay.
Got it.
Speaker Change: As opposed to a bug so to speak.
Vince: Thanks.
Vince: Yeah.
Vince: Perfect.
Speaker Change: What we're trying to do is over the next three or four years grow our balance sheet too towards $10 billion in the U S and to do that at the best risk adjusted spreads that we can and so we are nimble when we do that and we are.
Vince: Yeah.
Vince: Okay.
Vince: Okay.
Vince: Thank you.
Thanks.
A question and answer session.
Vince: Question.
Vince: Perfect.
Vince: Okay.
Vince: Okay.
Speaker Change: Because of the size of the market, we are able to throttle production.
Vince: Okay.
Vince: Sure.
Vince: Sure.
Speaker Change: <unk>.
Vince: Okay.
Speaker Change: Quite significantly from one week to the next and so we're constantly making judgments on.
Vince: Yes.
Vince: Yeah.
Vince: Okay.
Vince: Perfect.
Speaker Change: Whether the risk adjusted spread is.
Vince: Okay.
Vince: Okay.
Speaker Change: Favorable relative to other times that we're able to generate that production because when we take this business onto our books were going to be investing the capital.
Vince: Okay.
Vince: Okay perfect.
Speaker Change: Right up to two the duration match, the liability and we're going to.
Speaker Change: We're going to take profit off that spread for the.
Speaker Change: The next the next five years, if if it's if it's a five year annuity so have.
Vince: Thank you.
Vince: Okay.
Vince: Please go ahead and ask the question.
Speaker Change: If you look back over the last two or three years, our production has oscillated between with a significant degree of variability from.
Vince: Yes.
Vince: Okay.
Vince: Okay.
Vince: Good morning.
Speaker Change: The things in the mid one hundreds in a quarter or two.
Okay.
Vince: Gotcha.
Speaker Change: Two up towards $400 million in any given quarter and we think the ability to.
Okay.
Vince: Good morning.
Vince: Can you talk about.
Speaker Change: To pick our spots ads in aggregate 10 to 30 basis points.
Vince: Good morning.
Vince: Okay.
Vince: Yes.
Vince: Johnny.
Speaker Change: Additional spread.
Vince: Okay.
Vince: Yes.
Speaker Change: Compared to if we just targeted keeping production flat every month and every quarter and so if you are looking to bring on a $1 billion of of new annuities in a given year that extra 10 to 30 basis points is it.
Vince: Hi, good morning.
Vince: Okay.
Vince: I'm sorry, Jim.
Okay.
Vince: Okay.
Vince: Alright.
Vince: Thanks.
Vince: Okay.
Vince: At this time.
Vince: Okay.
Vince: Yes.
Speaker Change: $1 million to $3 million of pre tax income a year.
Vince: Hey, guys.
Vince: Okay.
Speaker Change: Every year for the five years that you have.
Vince: Good afternoon.
Speaker Change: Have those products and once once you get into.
Okay.
Vince: Okay. Thank you.
Vince: Okay.
Speaker Change: Towards the $10 billion balance sheet and add that all up it starts to be really material amounts amounts of net income. So it's all the way of saying that we are deliberately picking our spots and so the spread is a function of where we can invest which itself is.
Vince: Okay.
Vince: Got it.
Vince: Yes.
Vince: Our next CFO.
Okay.
Vince: Alright.
$10 million.
Vince: So good luck with that.
Vince: Thanks, Brian.
Vince: Okay.
Speaker Change: A function of our sourcing of base rates and of credit spreads.
Vince: Okay.
Okay.
Vince: Hi.
Vince: We are because of the size of the market, we are able to throttle production.
Speaker Change: And then it's also a function of the crediting rates that you need to be in the market and to be and to be competitive.
Vince: Yes.
Vince: Quite significantly from one week to the next and so we're constantly making judgments on where.
Speaker Change: The specific thing that happened in Q4 was there was a moment of time in time, where.
Speaker Change: Certain markets were priced to perfection in terms of.
Vince: Whether the risk adjusted spread is favorable relative to other times that we're able to generate that production because when we take this business onto our books were going to be investing the capital.
Speaker Change: The impending regime change.
Speaker Change: And early days of the regime change in the United States and a soft landing in equity markets.
Speaker Change: Anticipating to go up forever and.
Vince: Right up to two the duration to match the liability and we're going to.
Speaker Change: Our adjudication at the time was that the spreads weren't as good as they would be.
Vince: Yes.
Vince: Okay.
Vince: Brad.
Speaker Change: <unk>.
Vince: Yes.
The next question.
Speaker Change: No.
Speaker Change: And following quarters and so we backed off on the throttle and ended up with.
Vince: At this time.
Vince: Yes.
Vince: If you look back over the last two or three years, our production has oscillated between whether a significant degree of variability from.
Speaker Change: With lower production now.
Speaker Change: As disclosed in our <unk>.
Speaker Change: And kathy's comments that.
Speaker Change: That trend has reversed itself because we see a much more positive.
Vince: Things in the mid one hundreds on in a quarter or two.
Vince: Two up towards $400 million in any given quarter and we think the ability to two.
Speaker Change: Spread environment that has that has come with.
Speaker Change: Let's say the market's decoupling of the thesis of the.
Vince: To pick our spots ads in aggregate 10 to 30 basis points of additional spread.
Speaker Change: The economy being pricing and perfection.
Speaker Change: And we've seen.
Vince: Compared to if we just targeted keeping production flat every month and every quarter and so if you are looking to bring on a $1 billion of of new annuities in a given year that extra 10 to 30 basis points is it.
Speaker Change: We've seen a better rate environment and so.
Speaker Change: We can sit here today 10 weeks into the quarter I know that we've got more than $300 million.
Speaker Change: That's going to close in Q1, so we see this as we see this is deliberate.
Speaker Change: I said in my comments that we intend to accelerate the growth of our U S business and so what I would say to you into to our investors as we intend to put more than $1 billion of new business on our books.
$1 million to $3 million of pre tax income a year.
Vince: Every year for the five years.
Vince: Have those products and once once you get into.
Vince: Towards the $10 billion balance sheet and add that all up it starts to be really material amounts amounts of net income. So it's all the way of saying that we are deliberately picking our spots and so the spread is a function of where we can invest which itself is a fun.
Speaker Change: In 2025.
Speaker Change: And thinking about ourselves as shareholders.
Speaker Change: We're going to we're going to put that production then.
Speaker Change: Where we see the best economics, and so we.
Vince: <unk> of our sourcing of base rates and of credit spreads.
Speaker Change: We intend for that production to be a bit variable quarter over quarter. So.
Vince: And then it's also a function of the crediting rates that you need to be in the market and to be and to be competitive then.
Speaker Change: We may show up with $350 million to $400 million of production in Q1, and we may show up with meaningfully less than that in Q2, if it turns out that that.
Vince: The specific thing that happened in Q4 was there was a moment of time in time, where.
Vince: Certain markets were priced to perfection in terms of.
Speaker Change: That is where.
Speaker Change: The optimal thing for for our long term economics.
Vince: The impending regime change.
Vince: And early days of the regime change in the United States, and a soft landing and equity markets.
Speaker Change: So just to kind of make sure I understand what youre, saying.
Are you, saying that youre willing to trade off.
Speaker Change:
Vince: Anticipating to go up forever and you our adjudication at the time was that the spreads weren't as good as they would be.
Speaker Change: Like you basically willing to trade off volume for profit or it's more just.
Speaker Change: The message really is more just about expect volatility in the sales numbers on a quarter to quarter basis, and it could be quite extreme.
Vince: And.
Vince: No.
Vince: And following quarters and so we backed off on the throttle and ended up with.
Speaker Change: Depending on the circumstances, we have.
Speaker Change: <unk> targets, so what we're willing to trade off as volatility for excess spread and so what I'm, telling you is that we believe that.
Vince: With lower production now.
Vince: We've disclosed in our in and Kathy's comments that.
Vince: That trend has reversed itself because we see a much more positive.
By accepting.
Speaker Change: That one quarter it may be a $150 million in another quarter, maybe 400.
Spread environment that has that has come with.
Speaker Change: We believe we can generate better spreads than if we just said we're going to aim for $2 50 to $2 75 every quarter.
Vince: Let's say the market's decoupling of the thesis of of the.
Vince: The economy being pricing and perfection and.
Speaker Change: And.
Speaker Change: So we still as you draw a line through our production, we expect that line to trend up and you can look at this.
Vince: And we've seen.
Vince: We've seen a better rate environment and so.
Vince: We can sit here today 10 weeks into the quarter and know that we've got more than $300 million.
Speaker Change: As I am.
Speaker Change: On average on.
Speaker Change: For or or.
Speaker Change: Six quarter Rolling basis, we would intend for that to tick up because we intend to put more than $1 billion of volume on in aggregate in 2025 and beyond.
Vince: That's going to close in Q1, so we see this as we see this is deliberate.
Vince: I said in my comments that we intend to accelerate the growth of our U S business and so what I would say to you into to our investors as we intend to put more than $1 billion of new business on our books.
Speaker Change: Saying that we think it's in the best interest of our shareholders for us to pick our spots and for the production to be a bit volatile quarter over quarter.
Speaker Change: Understood and then maybe as a follow up just connecting it to the bigger picture I mean.
Vince: In 2025.
Vince: And thinking about ourselves as shareholders.
Speaker Change: We are in a very volatile environment in terms of economic expectations and rates and so.
Vince: We're going to put that production then.
Vince: Where we see the best economics, and so we.
Speaker Change: I think.
Speaker Change: You are acknowledging that beyond the volatility in your sales numbers the actual volatility out in the market and so the question is.
Vince: We intend for that production to be a bit variable quarter over quarter. So.
Speaker Change: That volatility.
Vince: We may show up with $350 million to $400 million of production in Q1, and we may show up with meaningfully less than that in Q2, if it turns out that that that is where that's the optimal thing for for our long term economics.
Speaker Change: You are acknowledging the volatility at the same time, you seem to be pretty certain about.
Speaker Change: Over a billion dollars in production in the U S. Your financial targets for 2025 are strong and pretty clear. So what gives you that confidence in those targets given the environment that we're in.
Speaker Change: Okay.
Speaker Change: So.
Vince: So.
Speaker Change: Just to kind of make sure I understand what youre, saying are you, saying that youre willing to trade off.
Speaker Change: First in the U S annuities market. There are a couple of things that are going on.
Speaker Change: First thing is.
Speaker Change: Like you basically willing to trade off volume for profit or it's more just it's just the message really is more just about expect volatility in the sales numbers on a quarter to quarter basis, and it could be quite extreme.
Speaker Change: We see equity volatility as positive for the fixed annuities space in that.
Speaker Change: The annuity fixed annuities market is big and robust, but the true addressable market is all.
Speaker Change: Depending on the circumstances.
Speaker Change: We have aggregate target so what we're willing to trade off as volatility for excess spread and so what I'm, telling you is that we believe that.
Speaker Change: Our retiree savings.
Speaker Change: Fact, and so the substitutes for that.
Speaker Change: Ken involve products that.
Speaker Change: By accepting.
Speaker Change: Like mutual funds or other ways to access equity that don't have the same.
Speaker Change: That one quarter it may be a $150 million in another quarter, maybe 400.
I don't have the same certainty that a fixed annuity has and so.
Speaker Change: We believe we can generate better spreads than if we just said we're going to aim for $2 50 to $2 75 every quarter.
Speaker Change: When you see a.
Speaker Change: Meaningful drawdown in the equity markets when as were experiencing I don't know today, but over the last couple of weeks.
And so.
Speaker Change: So we still as you draw a line through our production, we expect that line to trend up and you can look at this.
It reminds the addressable market that.
Speaker Change: As.
Speaker Change: On average on.
Speaker Change: The equity markets don't go up in a straight line.
Speaker Change: For or or six quarter rolling basis, we would intend for that to tick up because we intend to put more than $1 billion of volume on in aggregate in 2025.
Speaker Change: And if you think about that.
Speaker Change: The equity volatility that started at the start of Covid back in 2020 went a long way to kick starting the big growth in the annuities market.
Speaker Change: And beyond.
Speaker Change: Going back five years ago.
Speaker Change: Just saying that we think it's in the best interest of our shareholders for us to pick our spots and for the production to be a bit volatile quarter over quarter.
Speaker Change: And then.
Speaker Change: The investing environment.
Speaker Change: There is a good one for spread investors right now we play in.
Understood and then maybe as a follow up just connecting it to the bigger picture I mean.
Speaker Change: Spot and the credit stock that is overwhelmingly investment grade and we continue to have confidence in.
Speaker Change: We are in a very volatile environment in terms of economic expectations and rates and so.
And how our portfolio will will will work out.
Speaker Change: Thank you.
Speaker Change: You are acknowledging that and even beyond the volatility in your sales numbers the actual volatility out in the market and so the question is.
Speaker Change: And so.
Speaker Change: We have.
Speaker Change: We have good confidence on the on the robustness of investing in the demographic demographic trends that are driving the annuities market with the baby boomers, reaching retirement age.
Speaker Change: That volatility.
Speaker Change: You are acknowledging the volatility at the same time, you seem to be pretty certain about.
Speaker Change: Over $1 billion in production in the U S. Your financial targets for 2025 or are strong I'm pretty clear. So what gives you that confidence in those targets given the environment that we're in.
Speaker Change: <unk> to persist.
Speaker Change: More broadly when we talk about confidence about continuing to deliver earnings growth.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: We've got a we've got a view around the strategic initiatives.
Speaker Change: First in the U S annuities market. There are a couple of things that are going on.
Speaker Change: We have talked about that I talked about earlier in the call.
Speaker Change: First thing is.
Speaker Change: We see equity volatility as positive for the fixed annuities space in that.
So there is a little bit of.
Speaker Change: Reversion to the mean, we believe of after a tough couple of years for for our Caribbean businesses, and we're seeing green shoots on that.
Speaker Change: Yes.
Speaker Change: The annuity fixed annuities market is big and robust, but the true addressable market is all.
Speaker Change: And.
Speaker Change: Where we've got more torque on our financial statements in our Canadian and U S business, just because of the the size of the assets.
Speaker Change: Retiree savings.
Speaker Change: Factors, so the substitute for that.
Speaker Change: And involve products that.
Speaker Change: Like mutual funds or other ways to access equity that don't have the same.
Speaker Change: We've got a good idea of where some of that margin expansion come.
Comes from as.
Speaker Change: That don't have the same certainty that are fixed.
Speaker Change: As we.
Speaker Change: We work to drive efficiencies in those businesses.
Speaker Change: Annuity has and so.
Speaker Change: Got it.
Speaker Change: When you see a.
Speaker Change: Just a final question just.
Speaker Change: In the earnings release.
Speaker Change: Meaningful drawdown in the equity markets when as were experiencing I don't know today, but over the last couple of weeks.
Speaker Change: Your commentary upfront.
Speaker Change: Talk about technology refresh and I'm, just wondering if that.
Speaker Change: It reminds the addressable market that.
Speaker Change: Is baked into guidance for 'twenty five 'twenty six.
Speaker Change: Equity markets don't go up in a straight line.
Speaker Change: Would that be something that is.
Speaker Change: Sort of a headwind to these targets.
Speaker Change: And if you think about that the the equity volatility that started.
Speaker Change: I just wanted to clarify that.
Speaker Change: So.
Speaker Change: <unk> back in 2020 went a long way to kick starting the big growth in the annuities market going back five years ago.
Speaker Change: The cost of it are baked into the guidance.
Speaker Change: When we talk about getting through a 13% Roe.
Speaker Change: And then.
We have internal targets that are higher than that.
Speaker Change: The investing environment.
Speaker Change: That is getting out into 2027 and beyond and is starting to see the effects of <unk>.
<unk>.
Speaker Change: <unk> is a good one for spread investors right now you know we play in a spot in the credit stock that is overwhelmingly investment grade and we continue.
Speaker Change: It would be seeing the effects of some of the investments that we're making in in 2025 and 2026.
Speaker Change: To have confidence in.
Speaker Change: Got it thank you.
Speaker Change: And how our portfolio will will will work out.
Speaker Change: And so.
Speaker Change: Your next question comes from the line of Trevor Reynolds from Acumen capital. Please go ahead.
Speaker Change: We have we.
Speaker Change: We have good confidence on the on the robustness of investing in the demographic demographic trends that are driving the annuities market with the baby boomers, reaching retirement age.
Trevor Reynolds: Good morning, guys.
Speaker Change: I was just curious about the.
Trevor Reynolds: The primary drivers of your expected growth in <unk>.
Speaker Change: <unk> to persist.
Speaker Change: New business, yes.
More broadly when we talk about confidence about continuing to deliver earnings growth.
Speaker Change: From that 166 level this year to that 180 to 200 next year and 10% beyond just maybe if you could just touch on what the primary drivers of that.
Speaker Change: We've got we've got a view around the strategic initiatives.
Speaker Change: The big one would be accelerated production.
Speaker Change: We have talked about or that I talked about earlier in the call.
Speaker Change: In our U S business so.
Speaker Change: So there is a little bit of.
Speaker Change: We had kathy about $850 million.
Reversion to the mean, we believe of after a tough couple of years for for our Caribbean businesses, and we're seeing green shoots on that.
Speaker Change: About <unk> of of new business production in the U S. This year and.
Speaker Change: We're targeting through through a $1 billion so.
Speaker Change: And where we've got more torque on our financial statements in our Canadian and U S business, just because of the the size of the assets.
Speaker Change: For 2025, so I think mechanically that's mostly it.
Speaker Change: I don't think were projecting meaningfully different margins.
Speaker Change: Our Canadian and Caribbean businesses.
We've got a good idea of where some of that margin expansion come.
Speaker Change: We continue to generate.
Speaker Change: Net CSM in excess of what they are replacing and so they continue they continue to grow as well.
Speaker Change: Comes from as.
Speaker Change: As we.
Speaker Change: We work to drive efficiencies in those businesses.
Speaker Change: Got it and maybe just a final question just.
Speaker Change: Okay, and then as you look at that.
Speaker Change: In the earnings release.
Speaker Change: Longer term Roe.
Speaker Change: Your commentary upfront.
Speaker Change: I was just wondering how we should think about.
Speaker Change: Talk about technology refresh and I'm, just wondering if that.
Speaker Change: That growth towards that target is that is it expect it to be a fairly linear growth towards that or how that plays out over the next few years in your eyes.
Speaker Change: It is baked into guidance for 'twenty five 'twenty six.
Speaker Change: Could that be something that is.
Speaker Change: Are the headwinds to these targets and.
Speaker Change: Hi.
Speaker Change: So I just wanted to clarify that.
Speaker Change: Yes, the <unk>.
Speaker Change: So the.
Speaker Change: Christian.
Speaker Change: The cost of it are baked into the guidance.
Speaker Change: As more linear more linear than not.
Speaker Change: When we talk about getting through a 13% Roe.
Speaker Change: And it's a combination of the organic growth that.
Speaker Change: We have internal targets that are higher than that.
Speaker Change: The businesses naturally generate with.
Speaker Change: That is getting out into 2027 and beyond and is starting to see the effects of.
Speaker Change: Accelerated with continuing to have the U S being a bigger proportion of our earnings with then the overlay of our other strategic initiatives to improve cost structure and improve the cost of funding.
Speaker Change: Or would be seeing the effects of some of the investments that we're making in in 2025 and 2026.
Speaker Change: Got it thank you.
Speaker Change: <unk> of our balance sheet.
Speaker Change: Your next question comes from the line of Trevor Reynolds from Acumen capital. Please go ahead.
Speaker Change: So as we're looking out to 2027.
Trevor Reynolds: Good morning, guys.
Speaker Change: That's where we start to get into the range of that in the range of that medium term guidance, we wouldn't want to put a hard number around our 2027 earnings its a little early for that but that's but that's how we're planning.
Speaker Change: I was just curious about the.
Speaker Change: The primary drivers of your expected growth in new business CSM.
Speaker Change: 966 level this year to that 180 to 200 next year and 10% beyond just maybe if you could just touch on the on what the primary drivers of that.
Speaker Change: Okay, Great and then just I guess touch on those those cost reductions that you guys are targeting where do you kind of in terms of those targets and.
Speaker Change: The big one would be accelerated production in our <unk>.
Speaker Change: Our U S business, So we had like Kathy about $850 million.
Speaker Change: What's the sort of timeframe for for those cost reductions and where are they coming from.
Speaker Change: Thereabouts of of new business production.
Speaker Change: Okay.
Speaker Change: In the U S. This year and.
Speaker Change: Yes.
Speaker Change: Throughout all of the segments.
Speaker Change: We're targeting through through a $1 billion so.
Speaker Change: The operating segments and head office and so.
Speaker Change: For 2025, so I think mechanically that's mostly it.
Speaker Change: There is there is quite a list of initiatives there.
Speaker Change: I don't think were projecting meaningfully different margins.
Speaker Change: Bringing together procurement policies as an example.
Speaker Change: Our Canadian and Caribbean businesses.
Continue to generate.
Speaker Change: Having having the businesses on common technology platforms that allows us to bring down the cost of technology and eventually the <unk>.
Net CSM in excess of what they are replacing and so they continue they continue to grow as well.
Speaker Change: The units work together to service, each other which Ken which can lower lower our cost of lower our cost of delivery.
Speaker Change: Okay, and then as you look at that.
Speaker Change: The longer term ROE target I was just wondering how we should think about.
Speaker Change: And.
Speaker Change: Allow allow our people.
Speaker Change: That growth towards that target is it a is it expected to be a fairly linear growth towards that or or.
Speaker Change: As we upgrade the technology to be deployed on value add.
Speaker Change: That plays out over the next few years in your eyes.
Speaker Change: And value add initiatives as opposed to manual and administrative line.
Speaker Change: Yes, the progression.
Speaker Change: Okay, Great and then just a last quick one.
Speaker Change: More linear more linear than not.
Speaker Change: Obviously bought back quite a bit of stock last year, maybe just what the plans look like in terms of share buybacks moving forward.
Speaker Change: And it's a combination of the organic growth that.
The businesses naturally generate with.
Speaker Change: So we intend to keep our normal course issuer bid.
Accelerated with continuing to have the U S being a bigger proportion of our earnings.
Speaker Change: Active.
Speaker Change: Now I think we as we've gone and <unk>.
Speaker Change: With then the overlay of our other strategic initiatives to improve cost structure.
Speaker Change: Accelerated our engagement with the equity market.
Speaker Change: One of the things that has.
Speaker Change: And improve the cost of funding.
Speaker Change: One of the things that has.
Speaker Change: Of our balance sheet so.
Speaker Change: That has resonated with some of our new investors as the dividend stream and growing the dividend.
As we're looking out two to 2027, that's where we start to get into the range of that in the range of that that medium term guidance, we wouldn't want to put a hard number around our 2027 earnings its a little early for that but that's.
Speaker Change: And so.
Speaker Change: If you look at what we've done with the dividend increase.
Speaker Change: Increased.
Speaker Change: 12, 5% and.
Speaker Change: So maybe starting to tilt the return of capital towards.
Speaker Change: Towards the dividends as opposed to buying back so much stock.
Speaker Change: But that's how we're planning.
Speaker Change: Every year one of the other comments we hear from.
Okay, Great and then just I guess to touch on those those cost reductions that you guys are targeting where do you kind of sit in terms of those targets and.
Speaker Change: From investors is.
Speaker Change: They would love to see more liquidity in the stock and we don't necessarily want to be competing buying what's out there for sale.
Speaker Change: What's the sort of timeframe for for those cost reductions and where are they coming from.
Speaker Change: [laughter].
Speaker Change: We reserve the right if the stock reverts to.
Speaker Change: Uh huh.
Speaker Change: Throughout all of the segments the.
Speaker Change: Even wider discounts to fundamental value.
Speaker Change: The operating segments and head office and so.
Speaker Change: Two two to lean back in.
Speaker Change: There is there is quite a list of initiatives there.
Speaker Change: But we've started to see green shoots of a market develop and so one of the things we want to do is to provide.
Speaker Change: Bringing together procurement policies as an example.
Speaker Change: Having having the businesses on common technology platforms that allows us to bring down the cost of technology and eventually the.
Speaker Change: Our investors the ability to anticipate not only a robust dividend, but thats going to grow.
Speaker Change: Year over year.
Speaker Change: <unk>.
Speaker Change: If we can.
Speaker Change: The units work together to service, each other which can which can lower lower our cost of lower our cost of delivery.
Speaker Change: Grow grow our grow ourselves.
Speaker Change: Our net income so it's all to say please I'd rather you not model in a strengthening our share base by 4% over here.
Speaker Change: And allow allow our people.
But we're still going to keep it open.
Speaker Change: As we upgrade the technology to be deployed on value add.
Speaker Change: Okay, great. Thanks for taking my questions.
Speaker Change: And value add initiatives as opposed to manual in the administrative line.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star followed by the number one on your Touchtone phone.
Speaker Change: Okay, Great and then just a last quick one.
Speaker Change: Obviously bought back quite a bit of stock last year, maybe just what the plans look like in terms of share buybacks moving forward.
Speaker Change: I wish the decline from the polling process. Please press star followed by the number too.
Speaker Change: You're using a speaker phone. Please make sure you lift your handset before pressing any keys.
So we intend to keep our normal course issuer bid.
Speaker Change: Your next.
Speaker Change: One is from the line of Darko Me, Alex from RBC capital. Please go ahead.
Speaker Change: Active now I think we as we.
Speaker Change: Gone in.
Alex: Hi, Thank you good morning, I just have a couple of modeling questions should be pretty brief.
Speaker Change: Accelerated our engagement with the equity market.
Speaker Change: Our first question is for Canada, when I look at the expected investment earnings of $30 million for the quarter.
Speaker Change: One of the things that has.
Speaker Change: One of the things that has.
Alex: Actually better than last year and last quarter.
Speaker Change: That has resonated with some of our new investors as the dividend stream and growing the dividend.
Alex: Presumably you are making some changes with your investment portfolio I'm, just curious is $30 million a good quarterly run rate.
Speaker Change: And so.
Speaker Change: Do you like what we've done with the dividend we have increased.
Alex: I assume.
Alex: For Canada.
12, 5%.
Alex: 2020, I'm sorry.
Maybe starting to tell the return of capital towards.
Towards the dividends as opposed to buying back so much stock every year one of the other comments we hear from.
Alex: Okay.
Alex: Yeah.
Alex: Yes.
Alex: So we just have Kathy flipping through to the supplement here.
Speaker Change: From investors is.
Speaker Change: They'd love to see more liquidity in the stock and we don't necessarily want to be competing buying what's out there for sale.
Speaker Change: [laughter].
Alex: Okay.
Speaker Change: We reserve the right if the stock reverts to.
Alex: I think if we're going to get into drivers of earnings.
Speaker Change: Even wider discounts to fundamental value.
Alex: <unk> of earnings modeling.
Alex: Yes.
Two two to lean back in.
Speaker Change: On this individual question Kathy do you think it would be better to do.
Speaker Change: But we've started to see green shoots of a market develop and so one of the things. We wanted to do is to is to provide.
Alex: I think it would be better to.
Speaker Change: Do this in a holistic firm with the analyst I think so.
Okay can we defer on that Darko.
Our investors the ability to anticipate not only a robust dividend, but that's going to grow.
Speaker Change: Sure No problem. Another question then for the.
Speaker Change: <unk>.
Speaker Change: Head office corporate.
Speaker Change: Year over year.
Speaker Change: <unk>.
Speaker Change: What is the.
Speaker Change: If we can.
Speaker Change: I think well.
Speaker Change: Grow grow our grow ourselves.
Speaker Change: Very big stock price very late in December.
Speaker Change: Our net income so.
Speaker Change: Was that mark to market.
Speaker Change: It's all to say please I'd, rather you not model in a strengthening our share base by 4% of them here.
Speaker Change: Included in that results and since then I think the news has come out that fly is being purchased by.
Speaker Change: But but we're still going to keep it open.
Speaker Change: So.
Speaker Change: Okay, great. Thanks for taking my questions.
Speaker Change: Maybe you can.
Speaker Change: That's actually in the quarter here in the <unk> and the expected earnings for.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star followed by the number one on your Touchtone phone.
Speaker Change: In that segment.
Speaker Change: Right. So youre correct, so we owned or so.
Speaker Change: If you wish to decline from the polling process. Please press star followed by the number too.
Speaker Change: Still do.
Speaker Change: 11 million shares.
If you are using a speaker phone. Please make sure you lift your handset before pressing any keys.
Speaker Change: Fly and.
Speaker Change: So we mark those to market, mostly through noncore income and so they announced a strategic process.
Darko Michalec: Your next question is from the line of Darko Michalec from RBC capital. Please go ahead.
Speaker Change: The night before that I had before Christmas.
Darko Michalec: Hi, Thank you good morning, I just have a couple of modeling questions should be pretty brief.
Speaker Change: The stock went up and then.
Darko Michalec: First question is for Canada, when I look at the expected investment earnings of $30 million for the quarter.
Speaker Change: Now just a definitive transaction in Q1, so we mark to market at the end of December and now that there's certainty around it there's a little bit more gain in Q1, and our shares were kind of distributed throughout the organization throughout the different segments. So Kathy do you want to break that down.
Darko Michalec: Substantially better than last year and last quarter.
Darko Michalec: Presumably youre, making some changes with your investment portfolio I'm, just curious is $30 million a good quarterly run rate.
Darko Michalec: Assume for Canada.
Speaker Change: Yeah.
Darko Michalec: 2020, I'm sorry.
Speaker Change: So this quarter.
Speaker Change: Had after tax gain of $43 $9 million on our <unk> shares.
Darko Michalec: Yeah.
Speaker Change: So.
Darko Michalec: So we just have.
Speaker Change: 36, eight in in the U S.
Darko Michalec: Kathy flipping through to the supplement here.
Speaker Change: $2 7 million in head office.
Speaker Change: $4 four in our Soi segment.
Speaker Change: Uh huh.
Darko Michalec: Okay.
Speaker Change: Okay, and sorry, just to be clear thats excluded from core earnings or is that included in the quarters.
Speaker Change: I think if we're going to get into drivers of earnings.
Darko Michalec: The drivers of earnings modeling.
Speaker Change: Okay.
Speaker Change: That's excluded from from core earnings Okay.
Yeah.
Speaker Change: On this individual question Kathy do you think it would be better to do you think it would be better too.
Speaker Change: The rationale for splitting it into the segments.
Do this in a holistic firm, Louisiana I think so.
Speaker Change: We were just using us as an asset back capital.
Darko Michalec: Okay can we defer on that Darko.
A couple of different spots so.
Speaker Change: Sure no problem.
Darko Michalec: And then for the.
Speaker Change: It was basically.
Speaker Change: Sure.
Speaker Change: Head office corporate.
Speaker Change: You can use a small proportion of equities.
Speaker Change:
Speaker Change: To back capital and so we had some of it in the U S company and some of it in.
Speaker Change: I think.
Speaker Change: Very big stock price very late in December.
Speaker Change: Was that mark to market.
Speaker Change: In Bermuda for.
Speaker Change: Included in that result.
Speaker Change: For the benefit of both SLR and the U S through our.
And since then I think the news has come out that fly is being purchased by.
Speaker Change: Our internal reinsurance company so.
Speaker Change: So.
Speaker Change: Maybe you can.
Speaker Change: So that will emerge in Q1 with a little bit more of again, probably in aggregate about another $10 million and then that'll.
Speaker Change: That's actually in the quarter here in the in the expected earnings for.
Speaker Change: That segment.
Speaker Change: Right. So youre correct. So we owned R. R.
Speaker Change: I will just turn into turned into cash that we can.
Still do.
Speaker Change: We can deploy.
Speaker Change: 11 million shares.
Speaker Change: And so out of that we will get about a bit of a capital bump because we have lower capital charges on non equity than we do on equity. So there'll be there is in the background. It frees up some capital and liquidity.
Speaker Change: Fly and so we mark those to market, mostly through noncore income and so they announced a strategic process.
Speaker Change: The night before then I before Christmas and.
Speaker Change: For us as well so in aggregate.
Speaker Change: The stock went up and then the <unk>.
Speaker Change: Our share ownership of Playa.
Speaker Change: <unk> a definitive transaction in Q1, so we marked to market at the end of December and now that there's certainty around it there's a little bit more gain in Q1, and our shares were kind of distributed throughout the organization throughout the different segments. So Kathy do you want to break that down.
Speaker Change: Has it been a very successful adventure.
Speaker Change: Okay, and so since most of it was put into the U S. Presumably there is where you get the biggest impact for capital correct.
Speaker Change: Yes, correct and so.
Speaker Change: That's one.
Speaker Change: One of the things that.
Speaker Change: That that helps us with.
Speaker Change: Re accelerating growth in the U S. As we have had a bit of a capital windfall and so.
Speaker Change: Yeah.
Speaker Change: So this quarter, we had after tax gain of $43 $9 million on a class shares.
Speaker Change: We can grow the business faster without the capital without capital injections because of how Thats, how thats worked through.
Speaker Change: So a $36 eight and in the U S.
Speaker Change: Okay. That's very helpful. And then maybe just as well what we're sticking with that segment.
Speaker Change: $2 seven in head office.
Speaker Change: You do mention that you would get to about $12 million of savings in interest costs because of all the.
Speaker Change: $4 four in our Soi segment.
Speaker Change: Uh huh.
Speaker Change: Let's call it financial management of that.
Speaker Change: Okay, and sorry, just to be clear that's excluded from core earnings or is that included in the quarter.
Speaker Change: Is there any more in the pipeline or should I, just consider now for that segment, because lower that financing cost or is there more on you're right. It's on the way.
Speaker Change: Okay.
Speaker Change: Thats excluded from from core earnings Okay.
Speaker Change: Or do you think there's more maybe rephrase it that way.
Speaker Change: Rationale for splitting it into the segments.
Speaker Change: We have we.
Speaker Change: We have now as of Q4 replace to the expensive debt alright.
Speaker Change: We were just using us as an asset back capital.
Speaker Change: It was worth it to pay double digit interest rates to be able to get the Canadian acquisition across the line.
And a couple of different spots so.
Speaker Change: It was basically.
Speaker Change: You can use a small proportion of equities.
Speaker Change: But that's all been refinanced so.
To back capital and so we had some of it in the U S company and some of it.
Speaker Change: As we grow we wouldn't put we may put more debt on the books just to manage our debt to cap.
In Bermuda for.
Speaker Change: Closer to our target.
For the benefit of both SLR and the U S through our R.
Speaker Change: And the high Twenty's.
Speaker Change: That will be incremental debt.
Speaker Change: Our internal reinsurance company so.
Speaker Change: As opposed to replacement debt.
Speaker Change: If you look at where we're putting new debt on the books.
Speaker Change:
Speaker Change: So that will emerge in Q1 with a little bit more of again, probably in aggregate about another $10 million and then that I'll just turn into turned into cash that we can.
Speaker Change: Around 6% it kind of matches, our overall cost of debt funding because the old bonds that we had from back when we were sub investment grade in the international market were done in such a radically different interest rate environment that the cost of debt is about the same.
Speaker Change: We can deploy.
Speaker Change: And so out of that we'll get about a bit of a capital bump because we have lower capital charges on non equity than we do on equity. So there'll be there is in the background. It frees up some capital and liquidity.
Speaker Change: Okay. Okay. That's helpful. And then maybe if we're going to have just a follow up call on.
Speaker Change: On Canada, just my other modeling question was on the CSM.
Speaker Change: For us as well so in aggregate.
Speaker Change: Sure.
Speaker Change: <unk> like USA. So maybe we can just that's also just another nitty gritty question that.
Speaker Change: Our share ownership of Playa.
Speaker Change: It has been a very successful adventure.
Speaker Change: We could probably take it offline. Thank you.
Okay, and so since most of it was put into the U S. Presumably there is where you get the biggest impact for capital correct.
Speaker Change: The CSM in Q4 was a little funny because.
Speaker Change: Some of the CSM goes away to the reinsurers and we did all of our U S reinsurance in Q4.
Speaker Change: Yes, correct and so.
Speaker Change: One of the things that.
Speaker Change: That that helps us with.
Speaker Change: And so the new business CSM.
Speaker Change: Re accelerating growth in the U S. As we have had a bit of a capital windfall and so.
Speaker Change: It was not proportional to.
Speaker Change: Two production.
In Q4 for the U S. But we can talk more about that in kind of a modeling session.
Speaker Change: We can grow the business faster without the capital without capital injections because of how Thats, how thats worked through.
Speaker Change: Okay awesome. Thank you very much.
Speaker Change: Okay. That's very helpful. And then maybe just as well what we're sticking with that segment.
Speaker Change: Thank you.
Your last question is a follow up for many Goldman from Scotiabank. Please go ahead.
Speaker Change: You do mention that you get to about $12 million of savings in interest costs because of all the.
Speaker Change: Thanks for taking the question.
Speaker Change: Let's call it financial management of that.
Speaker Change: Just about 2025 targets.
Is there any more in the pipeline or should I, just consider now for that segment, because lower that financing cost or is there more on you're right. It's on the way.
Speaker Change: In the past you've been able to give us some guidance in terms of segments. So I'm just wondering if you're able to do that on a segment basis in terms of.
Speaker Change: Or do you think there's more maybe rephrase it that way.
Speaker Change: We have we.
Speaker Change: Would you expect.
We have now as of Q4 replace to the expensive debt right like it was worth it to pay double digit interest rates to be able to get the Canadian acquisition across the line.
Speaker Change: In 2025, and you can break it down.
Speaker Change: By the segments that'd be helpful.
Speaker Change: We're choosing not to do that right now and so if you look at what we did this year. We had initial guidance and then we updated it.
Speaker Change: But that's all been refinanced so you know as.
Speaker Change: As we grow we wouldn't put we may put more debt on the books just to manage our debt to cap.
Speaker Change: So at some point during Q2.
Speaker Change: I think we will refresh the guidance and we will include segment guidance.
Speaker Change: Closer to our target.
Speaker Change: Long with that and so.
Speaker Change: In the high Twenty's.
Speaker Change: That's the plan for now.
Speaker Change: But that will be incremental debt.
Aman: Got it thanks Aman.
Speaker Change: As opposed to replacement debt.
If you look at where we're putting new debt on the books and around 6% it kind of matches, our overall cost of debt funding because the old bonds that we had from back when we were sub investment grade in the international market were done in such a radically different interest rate environment that the cost of debt.
Aman: There are no further questions at this time I'd like to turn the call over to Mr. George <unk> for closing comments. Please go ahead Sir.
Speaker Change: Thank you operator, and thank you everyone for joining the call today.
Speaker Change: A minor a replay of this call will be available for one month on our website and a transcript will be posted as soon as available. If you have any additional questions. Please do not hesitate to reach out to any one of us with that thanks again for your participation and interest today have a great weekend everyone.
Speaker Change: About the same.
Speaker Change: Okay. Okay. That's helpful. And then maybe if we're going to have just a follow up call on.
Speaker Change: On Canada, just my other modeling question was on the CSM.
Speaker Change: This concludes today's conference call. Thank you very much for your participation you may now disconnect.
Speaker Change: Or for <unk> or like USA. So maybe we can just that's also just another nitty gritty question that we could probably take it offline. Thank you.
Speaker Change: The CSM in Q4 was a little funny because.
Speaker Change: Some of the CSM goes away to the reinsurers and we did all of our U S reinsurance in Q4.
Speaker Change: And so the new business CSM.
Speaker Change: It was not proportional to.
Speaker Change: Two production.
Speaker Change: In Q4 for the U S. But we can talk more about that in kind of a modeling session.
Speaker Change: Okay awesome. Thank you very much.
Thank you.
Speaker Change: Your last question is a follow up for many <unk> from Scotiabank. Please go ahead.
Speaker Change: Thanks for taking the question.
Speaker Change: Just about 2025 targets.
Speaker Change: In the past you've been able to give us some guidance in terms of segments. So I'm just wondering if youre able to do that on a segment basis in terms of what to expect.
Speaker Change: In 2025, and you can break it down.
Speaker Change: By the segments that'd be helpful.
Speaker Change: We're choosing not to do that right now.
Speaker Change: So if you like about what we did this year, we had initial guidance and then where we updated it.
So at some point during Q2.
Speaker Change: I think we will refresh the guidance and we will include segment guidance.
Speaker Change: Long with that and so.
Speaker Change: That's the that's the plan for now.
Aman: Got it thanks Aman.
Aman: There are no further questions at this time I'd like to turn the call over to Mr. George <unk> for closing comments. Please go ahead Sir.
George: Thank you operator, and thank you everyone for joining the call today. A reminder, a replay of this call will be available for one month on our website and a transcript will be posted as soon as available. If you have any additional questions. Please do not hesitate to reach out to any one of us with that thanks again for your participation and interest today have a great weekend everyone.
George: This concludes today's conference call. Thank you very much for your participation you may now disconnect.