Good morning, and welcome to the Sun Life Financial Q4 2022 conference call. My name is Michelle, and I'll be your conference operator today. All lines have been placed on mute to prevent any background noise. The host of the call is Yaniv Bitton, Vice President, Head of Investor Relations and Capital Markets. Please go ahead, Mr. Bitton. Thank you, operator. Good morning, everyone. Welcome to Sun Life's earnings call for the fourth quarter of 2022. Our earnings release and the slides for today's call are available on the investor relations section of our website at sunlife.com. We will begin today's call with opening remarks from Kevin Strain, President and Chief Executive Officer. Following Kevin, Manjit Singh, Executive Vice President and Chief Financial Officer, will present the financial results. After the prepared remarks, we will move to the question-and-answer portion of the call. Other members of management are also available to answer your questions this morning. Turning to Slide two, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events. With that, I'll now turn things over to Kevin. Thanks, Yaniv. Good morning to everybody on the call. Turning to Slide four, Sun Life delivered strong performance during the fourth quarter, contributing to solid 2022 full year results. Our results demonstrate the resilience of our diversified business model and the commitment of our people to deliver strong earnings and continued growth in this challenging environment while meeting our commitments to clients and delivering on our purpose. We've made tremendous progress on our business strategy by driving positive client impact for our 85 million clients around the world. We achieved strong underlying earnings this quarter of CAD 990 million, representing 10% growth over prior year, demonstrating the resilience of our business mix. Our growth was driven by strong results from our protection and health businesses. Sun Life U.S. had a strong fourth quarter underlying earnings as a result of solid underwriting performance in health and risk solutions, significant moderation of COVID-related impacts, and contributions from DentaQuest. In Asia, we saw a breakthrough in earnings profitability in Vietnam, driven by the addition of scale in bank insurance and in agency. We saw higher margins in our international high net worth business. Strong results from our protection and health business were partially offset by lower income and increased outflows from our wealth and asset management businesses, largely reflecting declines in global equity markets. Underlying ROE for the quarter of 15.7% continues to trend towards our medium-term objective of 16%+, reflecting our disciplined capital management and growing emphasis on capital-light businesses. Our LICAT ratio at SLF remains solid at 130% for the quarter. Turning to Slide five, our full year 2022 results were driven by similar factors as seen during the fourth quarter. Underlying net income increased 4% to CAD 3.7 billion, supported by growth in our health and protection businesses. Underlying ROE for the year was 15.1% was also strong. Over the past year, we increased our quarterly dividend by 31% following the lifting of restrictions in November of 2021. Turning to Slide six, this quarter we delivered on several key business initiatives that help drive forward our client impact strategy. The strengthening of our distribution capabilities in growth markets has been a priority for Sun Life in 2022. In Sun Life Asia, we remain focused on building quality distribution channels. We realized a step change in our bank insurance distribution over the last 12 months, driven by new marquee relationships and executing on our existing partnerships. Last month, we announced our first exclusive bank insurance partnership in Hong Kong with Dah Sing Bank. Under the 15-year agreement, Sun Life will be the exclusive provider of life insurance solutions to Dah Sing's retail banking customers, with distribution of Sun Life products expected to start this summer. This rounds out our distribution capabilities in Hong Kong and positions us well to compete. With the addition of this bank insurance partnership in Hong Kong, we now have more than 20 quality bank insurance partnerships in 7 markets across Asia. Our history of execution in Asia has proven that strong bank insurance distribution coupled with high-quality advisor channels provides a critical platform for growth. One example of this is how we're building our business in Vietnam, executing on transformational bank insurance partnerships with a focus on providing high-quality insurance and wealth products and services to fit our clients' needs. We are now one of the fastest-growing life insurance players in Vietnam. We've improved our market position for insurance sales from 15th position in the full year of 2020 to 6th position in 2022. At SLC Management, we also recently closed our acquisition of a majority stake in Advisors Asset Management. Advisors Asset Management or AAM adds distribution capabilities in the U.S. high net worth retail market, one of the fastest-growing distribution channels for alternative assets. We're excited to welcome the AAM team to our SLC team. We are increasingly delivering positive client impact by elevating our focus on health, helping clients access health care and coverage, and the coverage they need. In the U.S., DentaQuest continues to expand its dental business, advancing our goal to increase access to oral health care in underserved communities. In Q4, DentaQuest expanded its Advantage Dental Plus care practices with four new offices in Florida. These practices went from start-up to at capacity in 90 days, which demonstrates the need for these services. DentaQuest also had a strong quarter for contracts awarded, including two new dental managed care contracts from a multi-state health plan provider. The two newest contracts expand DentaQuest partnership with the health plan to 10 states. DentaQuest unique capabilities continue to contribute to our ability to win and retain state business while also driving higher margins. The COVID-19 pandemic has exacerbated the mental health crisis in Canada. We know many people are at a breaking point, and we need to offer more resources and more access to tackle this crisis. We know the workplace is an important place to address these concerns, and we're doing our part in Canada by providing clients with better access to mental health solutions. Last month, we announced an investment to support mental health programs for at-risk marginalized youth across Canada, continuing to build capabilities that will expand access to care, will support Canadians with early prevention and with faster recovery. We continue to make great strides in our digital journey. Tied to our commitment of increasing financial security, we continued to work hard to build the capabilities such that our clients can access our spectrum of advisory options through a frictionless digital experience. Sun Life Canada has created more than 65,000 financial roadmaps for Canadian clients in 2022 using our Sun Life One Plan digital tool. Sun Life One Plan contributes to our goal for all Canadians to have a financial plan. Finally, we continue to be recognized for our progress in sustainability and our inclusive culture. Sun Life was recognized by Corporate Knights as being among the global 100 most sustainable corporations in the world for the 14th consecutive year. This year, we were the top-ranked insurance company globally. Additionally, Sun Life received many employer awards in 2022, including being certified as a great place to work in several of our markets. This is especially gratifying because it's the result of direct feedback from our employees. This is recognition of our focus on ensuring we have an environment where diversity is championed, in addition to offering resources and flexibility to support mental, physical, and professional well-being. Before I turn to Manjit to detail our Q4 financial results, I'd like to share a few final thoughts. I'm excited to welcome Tom Murphy, our new Chief Risk Officer, to the Sun Life executive team. Some of you will know Tom from his time with SLC Management, where he headed up our fixed income and institutional business. Tom brings a global depth of knowledge and experience, particularly in asset management and the pension space, which will be a tremendous benefit for all of us. I'd also like to recognize Colm Freyne. Many of you on the phone will know him from his time as the Sun Life CFO and then as our Chief Risk Officer. Colm will retire on May 1st after an illustrious 20-year career with Sun Life. He has played a significant role in our company's growth over the past two decades. On behalf of everyone at Sun Life, I want to thank Colm for his service to Sun Life and wish him well in his retirement. Lastly, I'd like to share a few thoughts on the year ahead. While we expect the environment to remain challenging, we are optimistic about the outlook. Based on recent direction of travel for inflation in North America, we're seeing most economists forecasting a plateau of interest rates in the back half of 2023, with some showing reductions in interest rates in 2024. We expect some volatility in rates will persist, but this will likely be within a tighter range. While inflation looks to be moderating, we continue to watch the environment, including geopolitical uncertainty, additional shocks to energy supply, the reopening of markets in Asia, and COVID-19. We continue to feel prepared as a result of a resilient client impact strategy supported by our diversified and capital-light business mix. Recent investments across growing spaces in health, asset management, and Asia, and our sustained commitment to delivering on our purpose to help clients achieve lifetime financial security and live healthier lives will all support us next year. With that, I will now turn the call over to Manjit, who will walk us through the fourth quarter financial results. Thank you, Kevin. Good morning, everyone. Let's begin on slide eight, which provides an overview of our Q4 results. Sun Life had a strong finish to the year, with record underlying earnings in the fourth quarter reflecting the strength of our businesses and the benefits of our diversified mix. Underlying net income of CAD 990 million and underlying earnings per share of CAD 1.69 were up 10% from the prior year. Strong results in protection and health businesses were underpinned by business growth, the contribution from the DentaQuest acquisition, higher margins in the U.S. and Canada, and moderating COVID-related impacts. This was partially offset by lower wealth and asset management results, which were impacted by global equity market declines. Reported net income for the quarter was CAD 951 million, down 12% from the prior year. The results for this quarter include market-related impacts and DentaQuest integration expenses. Our balance sheet and capital position remain strong as reflected by an underlying return on equity of 15.7% for the quarter, a 5% increase in book value per share over the prior year. A strong capital position with a LICAT ratio of 130% at SLF, up 1% from Q3, and 130 basis points improvement in the leverage ratio from 26.4% last quarter to 25.1%. Let's turn to our business group performance, starting on slide 10 with MFS. MFS underlying net income of $202 million was down from the prior year, driven by lower average net assets, largely reflecting declines in global equity markets. Reported net income of $223 million was down 5%, reflecting impacts on underlying net income, partially offset by fair value changes on share-based payment awards. MFS generated a strong pre-tax net operating margin of 40%. AUM of $548 billion was up 8% from Q3, largely reflecting higher equity markets, partially offset by net outflows. Retail net outflows of $8.3 billion in the quarter were impacted by industry-wide redemptions as our investors remain cautious in an uncertain macroeconomic environment. Institutional net outflows were $3.6 billion in the quarter. Turning to slide 11, SLC Management delivered underlying net income of $38 million and reported net income of $19 million. We are pleased with the attractive business fundamentals at SLC Management. This includes good momentum on capital raising across all asset classes, including CAD 3 billion in the current quarter, as well as 22% growth in fee-related earnings, reflecting the deployment of capital into fee earning AUM. Total AUM of CAD 210 billion were up 14% year-over-year. This includes CAD 21 billion that is not yet earning fees. Once invested, these assets are expected to generate an annualized fee revenue of more than CAD 180 million. Turning to slide 12, Canada's underlying net income of CAD 324 million was up 22% from the prior year, driven by strong insurance sales, improved disability performance in Sun Life Health and higher investment gains. This was partially offset by lower fee income in wealth management businesses. Reported net income of CAD 360 million was up slightly from the prior year. Total protection and health sales were up in the quarter, reflecting an increase in large case sales in Sun Life Health. On the wealth side, retail sales were impacted by the market environment. Group retirement sales increased year-over-year, reflecting our differentiated products and services as well as the strength of our client relationships. Turning to slide 13, US underlying net income of $177 million was up $121 million from the prior year. Reported net income of $81 million was up $13 million. The results were driven by strong performance across all businesses, including the contribution of DentaQuest. Group Benefit results were driven by a 16% increase in expected profit and a significant moderation of COVID-related mortality and disability impacts. Business fundamentals remain strong, including good client persistency, strong premium and fee growth and solid stop-loss underwriting margins. The Group Benefits after-tax profit margin increased to 8.4%. Sales in the U.S. were up 11% year-over-year. We saw good momentum in Employee Benefits sales, reflecting our investments in technology partnerships and new digital capabilities. Stop-loss sales were lower, reflecting a more competitive pricing environment. Despite the change in competitive dynamics, our focus remains the same: provide value to our clients and maintain good pricing discipline. We're very pleased with the DentaQuest results. We are on track with our integration milestones and are confident that we will achieve our synergy targets. DentaQuest delivered strong sales for the year, adding approximately 3 million new members in 2022, bringing the total number of members to 36 million. Slide 14 outlines Asia's results for the quarter. Underlying net income of CAD 152 million was up 16% year over year on a constant currency basis. The results were driven by insurance business growth and moderating COVID-19 related experience. Wealth and fee-related earnings were impacted by lower equity markets in Asia. Reported net income of CAD 98 million was down from the prior year, largely driven by the gain from the IPO of our India asset management joint venture in October of last year and market related impacts. Asia generated double-digit insurance sales growth in most markets. We continue to gain momentum, reflecting the benefits of our continued focus on client experience, rollout of new products and expanded digital capabilities, as well as the easing of pandemic restrictions. In corporate, underlying net loss of CAD 39 million reflects a higher effective tax rate compared to the prior year, while reported net income was in line with the prior year. Turning to slide 15, we outlined the progress on our medium-term financial objectives. Despite the challenging operating environment in 2022, our resilient set of businesses delivered a 9% underlying EPS growth over the 5-year period. Underlying ROE over the 5-year period was 14.7% and 15.1% for 2022, reflecting the shift in our mix to capital light businesses. The payout ratio was in our target range of 40%-50%. We continue to maintain a strong balance sheet and capital position, which provides support to execute on strategic priorities and is a key strength to manage through an uncertain environment. Looking ahead to 2023, we remain optimistic about the fundamentals across each of our businesses. While we expect the operating environment to remain challenging, we are confident that our leading business positions, focus on client outcomes, disciplined capital and expense management and strong talent will help to drive continued growth. Of course, this will be our final quarter under the current reporting framework as we transition to IFRS 17 in Q1 2023. As we've noted before, IFRS 17 does not impact our core business strategies or the fundamental economics of our businesses. It will, however, impact the timing and presentation of our financial results. Based on our parallel runs for the first three quarters, we have provided some updated disclosures this quarter. First, we updated the estimated earnings impact for the 2022 restated comparative year from a decrease of mid-single digits to a decrease of high single digits. This is largely driven by higher investment activity gains for the year. Our investment team has a proven track record of identifying and executing on opportunities to enhance the spread for our investment portfol-- in volatile market environments like we saw for most of 2022. The present value of the higher spread is recognized immediately into earnings under IFRS 4, but will be recognized over time as we transition to IFRS 17. While the economics and earnings benefit from the higher yield is the same over time, it results in a higher IFRS 4 versus IFRS 17 difference at transition. The second update is that we expect a high single-digit increase in the LICAT ratio on transition to IFRS 17. This is higher than our estimates in May of last year, reflecting updates to our capital projections under the new LICAT guidelines as well as refinements to our estimates as we complete our quarterly IFRS 17 parallel reporting. We're currently in the process of finalizing our dual reporting for the 2022 comparative year and look forward to sharing additional details in May with you with the reporting of our first quarter results. With that, I'll turn the call back to Ned for Q&A. Thank you, Manjit. To help ensure that all our participants have an opportunity to ask questions this morning, please limit yourselves to one or two questions and then re-queue with any additional questions. I will now ask the operator to poll the participants. Thank you. If you'd like to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself from the queue, please press star one one again. One moment while we poll the Q&A roster. Our first question comes from Meny Grauman with Scotiabank. Your line is open. Hi. Good morning. Manjit, you concluded your remarks by talking about expecting the operating environment to remain challenging in 2023. I was hoping you could go into more detail. When I look at it, you know, I see some improvement in equity markets to start out the year, the reopening in Asia. When I look at it seems like there's more reason to be optimistic for the outlook. I'm wondering if you could just go into where the causes for concern as you see them in 2023 are. Thanks for your question, Meny. I think you're right. I think we are seeing some signs of improvement, but I don't think we're ready to declare victory yet in terms of the overall operating environment. We do sort of see some, you know, some potential for things to move back and forth over time. More importantly, I think, you know, for us, we are very pleased with the diversified set of our businesses and our leadership positions within those businesses. We feel that, you know, as we've shown over the last couple of years, that we can manage through pretty well through a very different types of environments. Manny, it's Kevin Strain. The, the equity markets year-over-year are starting off still down, although they're up a little bit at the start of the year. That puts pressure on fee income, which impacts MFS, impacts SLGI, impacts our GRS and pension business in Asia. Also a lot of our universal life business in Asia is tied to fee income as well. It's a, you know, it's a bit of a headwind, but we are seeing, the start of the year look good. I sort of addressed that in my comments as well. You know, we'll see how the year performs, but it's really a factor on the fee income from our equity businesses. Thanks for that Kevin. If I could just follow up. You gave an interview about a month ago talking about M&A opportunities in Asia and the potential opportunities created by the reopening that maybe, you know, some deal competitors potentially would be distracted. I'm wondering if you could provide a little bit more color on those views in terms of, you know, how you see opportunities for M&A in Asia in 23. Maybe more specifically, what specific areas are you looking at in Asia for deploying capital in 23? Yeah. Thanks, Meny. Well, post the interview, we did the bancassurance deal in Hong Kong, we're quite excited about that. That really rounds out our capabilities in Hong Kong. It gives us bancassurance alongside of our agency distribution. We have brokerage there, we have the second-largest pension business by flows. We're quite happy with where we ended in Hong Kong with that Hong Kong bancassurance deal. As you know, we've done a bancassurance deal, a fairly sizable one in Vietnam that I talked about with ACB Bank in my remarks, that built on our position with TPB. We redid our lengthened our agreement with GREPA, which is RCBC Bank in the Philippines. We were quite active in Asia and have been quite active. I'm pretty pleased with where we are now. If you look at our capabilities across Asia, ability to do multi-channel distribution, with the addition of bank assurance in Hong Kong, we now have bank assurance in every market except for Singapore. You know, we're well suited in Asia. I think that piece of the puzzle of adding bank assurance in Hong Kong was an important step for us. You're right to note that, and Ingrid may wanna talk about this a little bit more, that the border is opening, and we see that as a good thing for Hong Kong and the Hong Kong economy, which should be a good thing for sales in the Hong Kong business. Now, that will take a little while. It just opened in January, and those sales take a little while to come through. There is still, you know, working through getting the momentum in sort of that travel back and forth across the border. I don't know, Ingrid, if you wanted to add anything? Thank you. You've captured it well, Kevin. Just additionally, in Indonesia, also expanding our bancassurance deal with CIMB Niaga is very important for us. Definitely optimistic about the potential as well as the underlying momentum that we're seeing in the insurance sales, which were, you know, almost 30% in all of our other markets except Hong Kong and China. We are well-placed, but clearly with some of the headwinds Kevin described. Thank you. Our next question comes from Scott Chan with Canaccord Genuity. Your line is open. On DentaQuest second quarter contribution, I remember when you announced the acquisition, you talked about robust growth and kind of cited a 14% revenue CAGR from 2018 to what was probably near 2021, to $2.7 billion. If I look in the supplemental on your gross premiums on dental, it seems to be tracking in line with 2021 in terms of sales growth. Am I reading that right? Is it more stable growth that you witnessed within that platform in 2022? Well, thanks for the question. This is Dan Fishbein. You know, one thing to point out is that we are reporting commercial dental, which includes the legacy Sun Life commercial business and DentaQuest in that segment. It's important to look at both pieces. First of all, commenting on the commercial, we've actually had really great sales growth in the past year on commercial dental. That was up about 50%. It's obviously still very early. We've only reported on 7 months of DentaQuest results, but their sales results have continued to be quite strong. They added 3 million government programs members last year, for example. Kevin mentioned in his opening remarks some significant sales in the Q4, and that momentum has actually continued in January. To specifically answer your question, overall, both their sales and revenue growth have been roughly in line with the past trend. The sales in the government programs business tends to be quite lumpy. You get big sales infrequently, so a 7-month period is a little bit hard to, you know, establish a trend on, but so far, so good. When I look forward, Dan, and looking at growth outside of the revenue synergies, how do we kind of maybe track that? Is it more of like the industry trend on like government program growth, or is it more on DentaQuest, maybe taking market share and expanding into certain states like you did in Florida last year? Yeah, we, you know, I would suggest you look at our growth specifically. There's lots of good tailwinds going on there. There's a very robust pipeline that DentaQuest is working on right now. I think it's, you know, we view it as just about the strongest that they've ever had. There are states continuing to move their programs from regular fee for service to managed care, and we're certainly participating in all of those RFPs. There are health plans, as we noted in the fourth quarter, who continue to outsource their dental business in the Medicaid and Medicare programs to us. We also have quite a bit of momentum on the commercial side. We're optimistic about the growth trajectory here. The pipeline is very strong. Okay. Thank you. Thank you. Our next question comes from Gabriel Dechaine with National Bank Financial. Your line is open. Hey, good morning. I got a couple questions. First here, I, you know, the group results have been, both in Canada and the US, really strong, and I'm wondering if that's, you know, the claims costs have been inflated at all because of interest rates. I guess my question is, despite the impact of interest rates, you're still generating these strong results, or has that not been a material thing? We let Dan maybe start, and Jacques may wanna jump in on the Canadian experience. Yeah. The group results are strong. I think, as you noted, improving morbidity and mortality, of course, are the primary reasons for that and kind of overwhelm all of other factors. In the U.S., our mortality moderated significantly, still elevated, but moderated significantly throughout the year and certainly in the fourth quarter. Disability morbidity has improved and stabilized. You're right, there is a little bit of an impact around interest rates on long-term disability liabilities, but it's relatively small compared to the morbidity and mortality incidents. Got it. Can we answer, Jacques? Can you hear me? Yep. In the case of Canada, then you would know that there's essentially three things we're looking at here. A few years ago, we started repricing the business in line with the higher volume of claims that we were seeing in disability, group side. You know, that's obviously now contributing nicely to our results. You know, the other two things that we watch very closely are the volume of claims. This past quarter, I would say those were a little bit better than we are expecting, but not materially. The other area is the duration of the claims, and there we had better experience than expected. On that one, Gabriel, I would be a little bit careful because as we've said in the past, one of the drivers of experience and duration is access to care. It's not clear in my mind that this has changed materially in Canada. We still see some challenges in the healthcare system. We had a great quarter. We're pleased with that, of course. As you can imagine, this is an area that we've always continued to watch very closely, and we'll do that. One of the levers we look at very carefully is the pricing. You know, we think we're priced in the right place. Well, we'll save the pricing discussion for the our conference in March there, Jacques. my next question- Sure My next question is on the real estate experience losses. I get why it's happening. Just wondering, you know, what sectors, what geographies may have yielded that result. Two, could we be in another phase like the one we saw in, you know, most of 2020 where real estate experience losses were. You know, we had them for, like, three or four quarters in a row. Hi, Gabriel. It's Randy Brown. Thank you for the question. Let's take a step back for a moment on commercial real estate. We've seen very strong growth in this sector over the last couple of years broadly, although you did see within that weakness in office and retail because of the whole shift in office because it was exacerbated by the pandemic. With that said, the total return of our portfolio in Q4 was positive. What you're seeing come through is the deviation relative to the long-term expectation of what we would earn. Okay. Right. Within that, though, very, the sectors broadly performed in line, so we weren't seeing a major deviation between the various subsectors. That would be one point. The second point would be, as you think about real estate as we go forward, yes, we do expect some cap rate decompression given the speed of risk-free rates increasing. Mm-hmm. We're seeing that. Now in some sectors, it's been offset by fairly robust rental inflation, think industrial multifamily. In others, weakness in rent growth, think office. With that said, you know, we had talked about a pretty major repositioning of our real estate portfolio over the last number of years, anticipating a downturn. To give you an example, our office portfolio went from 39% to 24% over the last, you know, from basically the beginning of 2019 to the end of 2022, the majority of that coming early in that transition. At the same time, our industrial portfolio more than doubled. We are positioned well within the real estate portfolio for what we believe may be coming. Just you appraise a quarter of the portfolio a quarter? Like, you don't do it all in one shot, right? Right. It's a rolling appraisal. Everything gets externally appraised periodically, and then we will reappraise using those benchmarks. We'll use internal appraisals on everything every quarter. All right. Thank you. Welcome. Thank you. Our next question comes from Doug Young with Desjardins. Your line is open. Good morning. Maybe this is for Dan on DentaQuest. I mean, if I look at the dental operation, and I know it's got the legacy business in there, but there was a loss of $22 million. If we back out the acquisition-related costs in the U.S., which I assume is all related to DentaQuest, you know, I can triangulate back to $33 million of earnings. I know there's gonna be a little bit in there for again, the legacy business. Just curious, is the math correct? I've got a follow-up on the U.S. Yeah, Doug, I think that is a good way of looking at it. I think you're thinking about that the right way. The integration expense you're seeing there is virtually all, you know, is all related to DentaQuest. I can share in the quarter that the legacy commercial Sun Life business generated about $3 million in after-tax underlying earnings. The balance would be from DentaQuest. Okay. Perfect. just looking at the U.S. group business as a whole, you know, you've expressed the margin target of around 7%. for the quarter, I know last 12 months it was 8.4%, for the quarter it was 10.4%. I guess my question, Dan, like, what causes the margin to migrate down to 7%? or is there a need to push this 7% target higher? Do you see more comfort in the outlook for that group business over the coming years? Yeah. It's a great question. Of course, we just, you know, went back over the 7% threshold on a trailing 12-month basis, because of the primarily because of the very adverse COVID mortality experience earlier in 2022. You know, we've just gotten above that metric again. We're obviously pleased to be there, you know, we don't anticipate right now a return to the COVID mortality that we saw in the fourth quarter of 2021 or the first quarter of 2022. You know, having just hit the threshold again, I'm not sure we're ready yet to raise the threshold at this point. Just, you know, when I look at that business, you know, stop-loss sales were down. It seems from the prepared remarks you're seeing a pickup in competition. I mean, we've seen this trend happen in the past and margins being negatively impacted in stop-loss, and I think that's where you're punching above your weight in the margin side. Are you comfortable, you know, that the competition isn't getting irrational in that stop-loss business? Anything to be concerned there? I think, you know, historically, we've said this before, stop-loss has always been a cyclical business. You know, margins improve, competitors decide they want to take some share, they get a little less disciplined, a little more aggressive. We've had a history of being a very disciplined underwriter and pricer of the business. You see that in our experience. We actually anticipated this. Our sales were down a bit in the fourth quarter versus the prior year quarter, but we actually planned for that. Now, a little bit of that is we had a big block of business that came in in the fourth quarter of 2021, and we knew that that would not recur. We actually our sales for the year were a little bit above our expectations, which is good. We will not, you know, break our discipline around our view of trend and pricing in order to acquire market share. There are some competitors who are probably doing that right now, so the market is getting a little bit more competitive. We think, as you've noted, we can continue to outperform the market on that basis. Well, I guess it's Kevin Strain. We're also finding new ways to compete for business by adding things like PinnacleCare on top of the stop-loss business, which helps to take the conversation away from being solely priced to being ways of adding value. Because we're one of the larger players, we have unique capabilities to do that sort of thing. Appreciate it. Thank you. Thank you. Our next question comes from Tom MacKinnon with BMO. Your line is open. Yeah, thanks. Good morning. A question with respect to Asia. If I look at the impact of new business, it was positive 1 in the quarter. We've seen that similar positive 1 in the fourth quarter of 2021. Historically, this has always been negative. You know, the sales were up nicely in international, or they were flat year-over-year in the international hubs and up maybe about 10% or 11% in the local markets. Just curious as to what's driving this in this quarter. Is it more profitable new business? Is it a better mix? How sustainable would that be? You know, granted there is going to be an accounting change as to how this stuff is going to be booked. Any color there, and then I have a follow-up. Thanks. Thanks very much. It's Ingrid Johnson here. You're exactly right. This quarter, we are very pleased with the new business gains, particularly in Vietnam and international, where it's been a focus to improve product economics and margins relating to that. That we're very pleased about. You are seeing also just some changes if we look versus the prior year on just the absence of some of the benefits that we would have had in prior. We had reversal of mortality and some investment-related gains. I think on new business strain specifically, there's a combination of things. Ingrid's approach to selective underwriting for the international high net worth has made that business more profitable. As we've added scale, that also helps in terms of business strain. Adding the bancassurance agreements and focusing on building out agency helps with the new business strain item that you were talking about. Tom, as you noted, of course, goes away under IFRS 17, but we're happy to see a positive result from the selective underwriting and the addition of scale. Okay, that's great. The, the follow-up here is just curious as to what's driving the increase in the LICAT upon transition. You know, if I look back, OSFI had said, you know, the movement accounting this accounting change is not gonna drive capital. I think they had said for the industry as a whole, the movement to IFRS 17 would be capital neutral. Just curious as to if you can put your now high single digit, I think it is, impact upon transition to your LICAT ratio in that context. What is driving your increase? Any commentary you can share with what I said about the industry would be helpful as well. Thanks. Sure. Thanks for that question, Tom. It's Kevin Morrissey. Yes, we are expecting a favorable high single digit LICAT ratio increase at January 1st of 2023 as part of the transition to IFRS 17. You're right to point out that OSFI did set a target for industry neutrality, you know, recognizing that there will be pluses and minuses. Some companies will be more favorable, some less. That was an overall. What's driving our specific increase? I think there's a lot of moving pieces, Tom. As you know, LICAT ratio is quite complex and there's moving pieces across the numerator and the denominator. I think that we can highlight probably the one driving factor that accounts for Sun Life's increase is the change to the scaler. OSFI scaler on the Base Solvency Buffer reduces from 1.05 to 1, and this accounts for approximately 7-point increase at transition for Sun Life. The one final thought I'll leave with your question with regard to color on the industry, I think that one of the challenges around the final calibration OSFI had is the changing market conditions and the volatility of LICAT under IFRS 17 as it responds to changes in market conditions, especially interest rates. I think, you know, with that kind of moving ball throughout the year of 2022, it's I think quite difficult to set that exact point. I think that, you know, where we landed with interest rates higher, that was probably a bit overall favorable for the industry. Okay, thanks for that color. Your CAD 1 billion, I think it's your capital generation annually after investing in the business and paying your dividend is still CAD 1 billion annually. Is there any color you can share with respect on that? Yes, Tom, it's Kevin again. Yes, that's right. We're seeing the IFRS 17 outlook largely the same in terms of capital generation. Okay, thanks for that. Thank you. Our next question comes from Paul Holden with CIBC. Your line is open. Thank you. I want to continue with the with the same topic because it's an important one given the the change in your LICAT ratio. Sort of in the context of, Kevin, what you were just saying regarding increased volatility under IFRS 17, does all of the additional capital margin become deployable capital or will you have a bias to maintaining more of a LICAT margin because of that increased volatility under IFRS 17? Thanks for the question, Paul. It's Kevin Morrissey. I'll answer the first part around the volatility, and then I'll pass it to Manjit around the deployability of that. When we're thinking about the LICAT volatility, you know, the comment I made around volatility is largely with regard to interest rates. I did mention the changing interest rate environment, volatility of interest rates that we saw throughout 2022. Where we are now with interest rates, we see our interest sensitivity for LICAT to be largely in line with our reported sensitivities now. However, one of the things to note that is the sensitivities can change quite a bit with changing market conditions. For example, with interest rates being lower or higher, those sensitivities will change more rapidly than they do under IFRS 4. A lot of that is driven by the IFRS 17 market consistent cost of guarantees in the new accounting and actuarial basis. That is something that, you know, we're aware of, that we're gonna be monitoring and we're ready to manage, but it is something we do expect will create some inherent increase in underlying volatility. Just on the second question, Paul, it's Manjit. Overall, the higher capital will lead to higher whole co cash and deployable capital. I would just sort of note two considerations. The first is that some of the LICAT increase that we're getting is related to businesses outside of Canada. For those businesses, they continue to be subject to their local regulatory requirements. There can be some timing differences between when we can bring that cash balance back up to Sun Life. The second factor to consider is obviously, as we've talked about, in Kevin's remarks and mine, we also look at the overall operating environment and kind of base our capital levels in that environment. Those would be two additional considerations. Got it. Thanks for that. Second question is with respect to SLC, another year of strong sales. You know, there has been some industry news regarding, you know, certain alternative managers, closing funds for redemptions, maybe, you know, some sales headwinds because of higher rates and concerns regarding valuation of private asset classes. I think it'd be helpful just give an update on what you're currently seeing and expecting for SLC flows in 2023. Thank you. Thanks, Paul. It's Steve Peacher. I'll comment on that. You know, just quickly looking back at 2022, obviously a volatile market environment, but we felt really good about the capital that we were able to raise in the past year. I think total capital raise was CAD 18 billion for the year. AUM, depending on whether you look at fee earning AUM or total AUM, was up double digits. Net flows were over CAD 20 billion for the year. When I look back at 2022, despite, you know, a challenging environment for institutional investors, you know, it was a good capital raising environment for us. We certainly see some pressures in the institutional market looking forward because if you're making decisions at a, you know, large pension fund insurance company, volatility in the markets makes decision-making harder. The other thing is that we have something called the denominator effect. As public markets have traded off more dramatically than private markets, the weighting in a portfolio to private markets increases. When a chief investment officer is thinking about allocating their next dollar and they see their alternative weightings are higher, they may be a little bit less prone to allocate there. That created some headwinds in the fourth quarter. You saw that our fundraising was positive in the fourth quarter, but lower than it had been earlier in the year. I think that pressure's gonna continue a bit, you know, continue in the first half of this year. Having said that, it's against a backdrop, both institutionally and now on the retail front, of a trend toward alternative asset classes. You'll have some fluctuation in trends as the economy moves, as interest rates move, but the basic trend is toward higher allocations. We don't see that stopping, and we think it's a multi-year trend. Great. Thank you. Thank you. Our next question comes from Nigel D'Souza with Veritas. Your line is open. Thank you. Good morning. I wanted to go back to SLC Management. When I look at the revenue line item, that's up materially quarter-over-quarter. Looks like that's related to Crescent's carry interest. There's a corresponding increase in expenses. Just wondering was there anything that particularly drove a bit more lumpiness this quarter for that item, because there's a bigger divergence between total revenue and fee related revenue and how we should think about that going forward. Well, thanks for the question, Nigel. The way I would... I really think, you know, given our disclosures now, which I think we improved last year and expanded, really, if you wanna look at the core trends in the business, I think you should look at management fees. I know in the supplement, it's the revenues are on page 87, I think, in the supplement. Management, if you just isolate management fee revenue for the quarter, it was CAD 234 million, up from CAD 204 million last year. For the full year, it was CAD 862 million, up from CAD 755 million, or about a 14% increase. Those are core management fees for managing assets under management, and those revenues are up because AUM is up. If you look at the core earnings measure that we look at and also you look at across the industry is fee-related earnings. Fee-related earnings for the quarter were CAD 73 million. That was up 22% from the fourth quarter of last year. For the full year, fee-related earnings were up 20%. That's really, I think, the way to look at the core business. In terms of performance fees, we don't have a lot of performance fees yet coming through. Those actually I think are recorded below underlying income and in reported net income. Over the coming years, you will start to see, I think, more performance fees impact results. Okay, that's helpful. I'd like to switch to IFRS 17. I believe Manjit mentioned that the impact was on investment activity gains running lower and the benefit of the spread being recognized over a longer period of time. Just wondering if you could expand on that. What's the spread benefit you recognize over the duration of that underlying asset? Could you size the expected decrease in the run rate of investment activity? Would it be 20, 30, you know, 40% lower on IFRS 17? Nigel, it's Manjit. Yes. Under IFRS 4 when we trade up in our investment portfolio, that excess spread, as you know, is present valued into our earnings. Under IFRS 4, you get the same excess spread, so economically and from an earnings standpoint, over time, the benefits will be the same. That spread now, instead of being present value into earnings in the quarter that you undertake the activity, will come in over time over the duration of the asset. That would be really a function of the duration of the assets that we traded up into. No sizing there, but just to circle up on guidance you had earlier, I think you mentioned previously that you expect underlying net income on IFRS 17 in 2023 to be higher than underlying income on IFRS 4 in 2022. Is that still the guidance and outlook you expect for this year? Well, I think what you have to do, Nigel, is that, you know, we just updated our impact from going from IFRS 4 to IFRS 17 to be high single digits. If you wanna take a look at what happens in 2023, then you have to factor in the current operating environment that we're in and take account of, you know, how that would impact all of our businesses. I will say, as we said in May, that two-thirds of our businesses are not impacted by IFRS 17. Businesses like MFS, SLC, our group businesses, you could kind of just look at what you would normally expect to come out of those businesses in this kind of environment. Okay. I'll leave it there. Thank you. Thank you. We have no further questions at this time. I will turn things over to Mr. Strain for closing remarks. Well, thank you Operator, and thank you everyone for the great questions. Before we close today's call, I would like to take a moment to thank our employees for their dedication, resilience, and persistence over the course of the year. The strength of our people and culture, combined with our focus on execution, has been instrumental in achieving great progress on our strategy in 2022. A big thank you from me and the executive team to all of our people. Thanks, Operator. Thank you, Kevin. 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.