Earnings Call: Q2 2021

Aug 5, 2021

Good afternoon, ladies and gentlemen. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to Sun Life Financial Second Quarter 2021 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. The host of the call is Yaniv Bitton, Vice President, Head of Investor Relations and Capital Markets. Mr. Bitton, please go ahead. Thank you, Sarah, and good afternoon, everyone. Welcome to Sun Life's earnings call for the Q2 of 2021. Our earnings release and the slides for today's call are available on the Investor Relations of our website at sunlife.com. We will begin today's remarks with a message from Dean Connor, our Chief Executive Officer. We'll then turn it to Kevin Strain, President and Incoming CEO, for highlights for the Q2. Following Kevin's remarks, Manjit Singh, Executive Vice President and Chief Financial Officer will present the financial results for the quarter. After their prepared remarks, we will move to the question and answer portion of the call. Other members of management will also be available to answer your questions this afternoon. Turning to Slide 2, I draw your attention to the cautionary language regarding the use of forward looking statements and non IFRS financial measures, which form part of today's remarks. As noted in the slides, forward looking statements may be rendered inaccurate by subsequent events. And with that, I'll now turn things over to Dean. Thanks, Yaniv, and good afternoon, everyone. As you know, this is my last quarterly earnings call, and I have just a few comments before turning it over to Kevin. It has been the privilege of a lifetime to lead Sun Life for the past nearly 10 years. This is such a great business. We have a noble purpose, helping clients achieve lifetime financial security and live healthier lives. We've put clients in the center of everything we do And that, plus our purpose, has created a magnetic pole for talented employees and advisors who want to have an impact, who want to grow their careers and be part of a winning team. It's that talent and culture that has allowed us to execute effectively on our 4 pillar strategy. I do want to thank our investors who have supported Sun Life's growth strategy and this management team over time. We have benefited from your many questions and suggestions, And we've always imagined that you are in the room alongside us as we make critical decisions around the allocation of your capital. I also want to thank the many sell side professionals who have followed Sun Life and who have invested the time to understand our story and our future prospects. The company will be in great hands with a strong and experienced executive team and with Kevin Strain at the helm. Kevin's skills, character and his experience leading businesses in Canada and Asia and more recently as our CFO have uniquely equipped him to lead Sun Life onwards to future success. And with that, I'll now turn the call over to Kevin. Thanks, Dean, and good afternoon, everyone. Over the past 10 years, Dean has built a strong foundation for Sun Life underpinned by our 4 pillar strategy and our focus on clients, while nurturing a strong culture where our people can thrive. Dean is leaving behind a lasting legacy of Sun Life. Under Dean's leadership, the company has made key strategic decisions that drove top quartile returns for our shareholders with annualized total shareholder returns of over 18% during his tenure. On behalf of our employees, advisors and partners around the world, I want to thank Dean for his guidance, inspiration and leadership over the past 15 years you've been with Sun Life. Dean, you're retiring from Sun Life on a high note, I know you will continue to follow the company closely and will be cheering us on. We wish you the very best. Turn to Slide 5 for the highlights from the Q2. Reported net income of $900,000,000 was up $381,000,000 Underlying net income and earnings per share increased 19% from the prior year, reflecting strong growth across our businesses driven by investments in our people and technology as we continue to emerge from pandemic conditions. We also generated a strong underlying return on equity of 16% in the Q2. With a LICAT ratio of 147% at SLF, We continue to have a strong capital position, which provides flexibility and the opportunity for capital deployment. While we've been operating and executing in a Challenging environment over the past 18 months, we have maintained a relentless focus on our purpose of helping our clients achieve lifetime financial security and live healthier lives. We continue to invest in ways to make it easier for clients to do business with us. In June, we announced that clients in Canada between the ages of 18 to 40 can now qualify for up to $5,000,000 in life insurance coverage without the need for lab exams. This means that approximately 75% of clients May not require lab exams going forward. We are transforming our underwriting processes through data and analytics using predictive models to replace previously required health tests. At a time when health and financial security have never been more important, we are making life and health insurance more accessible than ever before for our clients. In Asia, we have made substantial investments in our technology, tools and products. For example, in Hong Kong, Our mandatory providence fund offering continues to outperform the market. We are now ranked 1st in net inflows and 3rd in assets under management based on 2nd quarter results. We're adding new and innovative capabilities to our group businesses in the U. S. On July 1, we completed our acquisition of PinnacleCare, a leading U. S. Healthcare navigation and medical intelligence provider, which is now part of our U. S. Stop loss and health business. Sun Life and Pinnacle Care create a new dynamic that will improve care, outcomes and costs for our clients. Pinnacle Care's health advisors help members navigate the complex U. S. Health care landscape to identify the best possible treatment options for their unique conditions, Leading to better client health outcomes. Sustainability continues to be a strategic priority for Sun Life. Our commitment also includes sustainable investing. Recently MFS and Infra Red Capital, our infrastructure manager in SLC Management joined the Net Zero Asset Manager Alliance. In Q2, we also made several investments across our private fixed income portfolio that align to our sustainable investing goals and more importantly demonstrate the positive impact we can have on society. These include sustainability linked financing to a North American shipping company that is reducing the carbon intensity of its fleet annually, while keeping in line with ambitious quantifiable decarbonization targets. We also invested in Greenbond where proceeds will be used to improve the efficiency of certain buildings. These are examples of how we continue to incorporate sustainability into our investment decisions. In the Q2, wealth sales and asset management gross flows were up 8% from prior year on a constant currency basis, driven by strong gross sales at SLC Management and higher wealth sales in Asia and Canada. In Q2, 96%, 61% 93% of MFS U. S. Retail fund assets ranked in the top half of their Morningstar categories based on 10, 5 3 year performance respectively. Moving to digital highlights on Slide 6. We look at how digital is helping us deliver on our purpose of helping clients achieve lifetime financial security and live healthier lives. In Canada, our digital coach Ella continues to connect with our clients, helping them save for their future and ensure protection of their loved ones. In the first half of the year, Ellis Nudges drove nearly $500,000,000 of wealth deposits and the sale of over $650,000,000 in life insurance coverage for our clients. In the U. S, we are helping clients get the coverage they need through new offerings and digital capabilities. An example of this is the expansion of our online dental health center capabilities, which enable clients to receive dental estimates and access advice virtually from leading dentists. We also continue to advance digital in Asia. In the Q2, 74% of new insurance applications were submitted digitally, an increase of 41 percentage points over Q2 last year. Stepping back, we're pleased with the results Sun Life achieved in the first half of the year. We've delivered double digit earnings growth, strong ROE and maintain a solid balance sheet that provides us with significant flexibility. As some parts of the world have slowly started to open up, we've received many questions about our future of work status. Last month, we outlined our guiding principles for our employees for the post pandemic future of work. This includes supporting flexible work styles revolving around our client and business needs. In our offices, we're committed to providing safe and healthy working environments that are designed to spark collaboration, productivity and creativity. We want the office to be a magnet for employees at times when face to face collaboration is more effective and we're making investments in our office spaces to enable this. And whether employees are working from home or in the office, we're committed to providing them with a great seamless work experience with the tools, technology and support they need to do their jobs. Our approach to a hybrid working model supports our goal to attract and retain talent and accelerates our ambition to be one of the best insurance and asset management companies in the world. On a personal note, I'm looking forward to taking on my new role as CEO. I'm committed to building on Sun Life's success and keeping our clients at the center of everything we do, while remaining focused on our key strategic priorities, including Continuing to push and support our digital innovation and transformation, making sustainability a key part of our strategy across insurance and asset management, Leveraging our asset management strength, fostering a diverse, equitable and inclusive workplace and above all, nurturing our strong, Caring Optimistic Sun Life Culture Where Employees Can Develop and Thrive. With that, I will now turn the call over to Manjit, who will take us through our financial results. Thank you, Kevin, and good afternoon, everyone. I also want to take a moment to recognize Dean's tremendous contributions during his tenure as CEO and wish him all the very best. Let's turn to Slide 8 for an overview of our 2nd quarter results. Sun Life delivered good results with strong momentum across all our business pillars. Reported net income of $900,000,000 was up 73% from the prior year, reflecting a recovery of market related impacts as well as higher underlying net income. Underlying net income of $883,000,000 was up $144,000,000 or 19% from the prior year driven by business growth, favorable credit experience and a more normalized effective tax rate for the current quarter. These factors are partially Set by unfavorable foreign currency translation, lower investing activity gains and higher incentive compensation reflecting strong year to date performance across all of our businesses. Q2 underlying earnings per share were $1.50 and underlying return on equity was 16%. Assets under management climbed to nearly $1,400,000,000,000 reflecting market value growth and strong net flows at SLC Management. For the first half of twenty twenty one, our wealth and asset management businesses generated $14,000,000,000 of net inflows compared to $8,000,000,000 in the first half of twenty twenty. Book value per share was up 2% from the prior year, reflecting strong reported net income growth, mostly offset by foreign currency translation. Excluding impacts and other comprehensive income, Book value per share increased 10% over the prior year. Our balance sheet position remains strong. Q2 LICAT ratios of 147 percent at SLS and 125% at SLA were up 6 percentage points and 1 percentage point respectively from the prior quarter. The main driver of the increase at SLF was the issuance of $1,000,000,000 of limited recourse capital notes, which added approximately 5 percentage points of LICAT. The issuance also increased holding company cash to $3,200,000,000 And the financial leverage ratio ended the quarter at 24.7%. Subject to regulatory approval, Our intention is to redeem 2 series of fixed rate preferred shares totaling 725,000,000 at the end of the 3rd quarter. Upon redemption, SLF's LICAT ratio will decline by approximately 3 percentage points and the financial leverage ratio will decline by approximately 2%. Slide 9 highlights the performance of our business groups. Given the significant impact of foreign currency translation on our year over year results, We have also provided earnings growth in constant currency on this slide. Canada's reported net income of $404,000,000 in Q2 was up $287,000,000 over the prior year driven by favorable market related impacts. Underlying net income of $290,000,000 increased $9,000,000 reflecting continued business growth in Insurance and Wealth Management as well as favorable credit experience. This was partially offset by a lower contribution from the investment investing activities as the prior year included gains related to investments initiated, while credit spreads were more favorable. The U. S. Reported net income of $157,000,000 was up $39,000,000 versus the prior year, reflecting higher underlying net income. Underlying net income of $165,000,000 was up 42,000,000 Well, 51% on a constant currency basis, driven by favorable mortality, morbidity and credit experience as well as higher investing activity gains. This was partially offset by unfavorable expense experience from higher incentive compensation costs, reflecting strong results in the first half of twenty twenty one. The U. S. Group Benefits business achieved an after tax margin of 8.5% on a trailing 12 month basis, up from 7.5% in the prior year. Asset Management reported net income was $221,000,000 down $2,000,000 from the prior year. This reflects fair value adjustments and NFS share based awards and the impact of a UK tax rate change in SLC Management, largely offset by underlying net income growth. Underlying net income for MFS of 286,000,000 Was up 41% on a constant currency basis, driven by strong average net asset growth, partially offset by higher variable compensation expenses. MFS ended the quarter with a pre tax net operating margin of 39%. SLC Management Generating underlying net income of $25,000,000 which was down from the prior year due to lower performance fees, partially offset by contributions from the Infrared and Crescent Acquisitions. In Asia, Q2 reported net income was $143,000,000 up $17,000,000 year over year. This was driven by improved market related impacts, partially offset by unfavorable foreign currency translation. Underlying net income of 152,000,000 was up 17% in constant currency driven by business growth and favorable credit experience. This was partially offset by higher compensation costs and unfavorable mortality experience in the India joint venture. Corporates reported net loss of $25,000,000 improved from the prior year, driven by higher net tax recoveries in the quarter, partially offset by unfavorable expense experience and lower seed investment gains. Slide 10 provides an overview of our sources of earnings. Expected profit increased 9% from the prior year. Excluding the asset management pillar and the impact of currency, Expected profit was up 7%, driven by business growth in Canada and Asia. New business gains increased by $21,000,000 over the prior year, reflecting strong sales growth in Asia along with robust sales growth in individual insurance in Canada. Experience gains of $99,000,000 were primarily driven by market related impacts. Earnings on surplus of $118,000,000 declined $37,000,000 from the prior year, which included higher seat gains. Turning to Slide 11, which outlines insurance and wealth sales on constant currency basis. Individual insurance sales were up 52% driven by higher participating policy sales in Canada and an increase in sales across most markets in Asia. While sales in Asia have improved, we are seeing renewed lockdowns in some countries as a result of new variants. We are working closely with our local teams to monitor the situation. The slight decline in group benefit sales was driven by lower stop loss sales in the U. S. And flat sales growth in Canada as we continue to see fewer large cases coming to market in the current environment. Wealth sales increased 63 On a constant currency basis compared to the prior year. In Canada, sales increased 47%, reflecting higher individual wealth and Group Retirement Services sales. Asia sales increased by 81%, reflecting growth in mutual fund sales in India, money market sales in the Philippines and the Hong Kong Pension Business, where we are now the market leader in net inflows. Asset Management gross flows increased 3% year over year, driven by higher gross flows in SLC Management, partially offset by lower sales in MFS. MFS ended the quarter with US5.6 billion dollars in outflows, reflecting continued inflows in retail, which were more than offset by institutional outflows. SLC Management has strong net inflows of $7,600,000,000 which will generate good fee income in the coming quarters. Value of new business generated in the Q2 was 284,000,000 up 46% in constant currency compared to the prior year driven by strong sales in Asia and Canada. Turning to Slide 12, operating expenses were up 15% from the prior year. Excluding the impact of currency, Run rate expenses from acquisitions and fair value adjustments, expenses were up 17%. 8 percentage points of this increase was driven by higher incentive compensation and sales related costs in our asset management businesses, reflecting strong revenue growth. Another 8 percentage points was driven by higher distribution costs in Canada and Asia, reflecting robust sales growth as well as a higher accrual for our annual incentive compensation plan. The increase in the annual incentive compensation plan accrual Reflect strong business performance in the first half of the year versus weaker year to date performance in the prior year, which included the impact from the onset of the pandemic. The remaining 1% increase was attributable to continued investment in our business, partially offset by savings from our focus on disciplined expense management. To conclude, Q2 was another good quarter, highlighting the strength of Sun Life's balanced set of businesses, which operated attractive markets with significant growth opportunities. While the pandemic has resulted in a challenging operating environment, We are pleased with the resiliency and strength our businesses have demonstrated. And we're continuing to invest in initiatives to further enhance our client experience, Digital capabilities have transformed the way we work and business opportunities to drive future growth. Now I'll hand the call back to Yaniv for Q and A. Thank you, Manjit. To help ensure that all of our participants have an opportunity to ask questions this afternoon, I would ask you to limit yourself 1 or 2 questions and then re queue with any additional questions. I will now ask Sarah to poll the participants. Thank you. Our first question comes from the line of Humphrey Lee with Dowling and Partners. Your line is now open. Good afternoon and thank you for taking my questions. And before I ask the question, I do want to extend My congratulations to Dean for your retirement. It's been a pleasure working with you. My first question is related to the U. S. Group Benefits business. 1 of the health insurers in the U. S. Has talked about rising medical costs On this earnings call today, I know the topic of medical inflation is not new, but given the broader inflation concerns, How do you see inflation affecting the self loss business? Generally, what have you been your observation so far? And Have you looked at how to address that? Good afternoon, Humphrey. It's Dan Fishbein. Thanks for the question. Generally, when we look at medical inflation in the stop loss business, we're able to predict that in Advance and build that into our rates and actually that's been one of the drivers of the growth in premiums that we have in the business. But at the same time, there are obviously somewhat unusual effects from the COVID pandemic. What we're seeing in our book of business so far Is one of the reasons why we have lower morbidity in that business this year is likely some delays in treatment due to the pandemic And that plays out in later periods in lower stop loss claims. Now that's not the only reason we're seeing favorable results. The favorable morbidity is obviously also related to good performance in our underwriting and pricing. We do have some concern about delayed treatment obviously on behalf of our members. And that's actually one of the ways that we can use our new Care acquisition to help guide people to the right care at the right time. But we would expect that in subsequent periods, We may see some increased utilization as compared to the depressed level of utilization that we've seen in the past couple of quarters. Yes, that's more on Dependent demand or kind of normalization of activities. But given some of the kind of the pricing dynamic is going on, have you seen any kind of Difference or the deviation of medical cost inflation from what you're seeing versus what you have in your pricing assumptions? Not at this point. Again, actually, we're seeing quite the opposite, because of lower care or delayed care. But as far as the overall trend, there's always medical inflation. That's been a part of medical care in the U. S. For a very long time. And we always have a forecast, which we work with outside actuarial firms To confirm as to what medical inflation will be and build that into our pricing. So at this point, beyond some of the anomalous impacts Related to the pandemic, we're not seeing anything that would suggest, for example, a substantial increase in the level of medical inflation. Understood. My second question is related to the strong SLC. I think this is the 2nd quarter in a row that you have secured Large capital commitments that's driving higher net. Since these flows haven't been really funded, like how should we think about the lead time Getting these inflows versus turning them into fee earnings assets that flow through your earnings? Humphrey, this is Steve Petcher. Thanks for that question. You're right to point out that we've had a couple of strong quarters of flows. And I think importantly, it reflects capital raising across the broad platform at SLC. So I'm very pleased by that. And when we raise and that capital comes in different forms sometimes and this was a quarter where that was reflected. That money comes into closed end funds where investors commit capital and then we invest that over the coming quarters. Sometimes it comes from winning a new separately managed account that would be funded immediately. When we get money that's committed to a closed end a vehicle like an alternative credit fund or a new real estate fund. There's usually an investment period of 2 to 3 years to get that money invested. It often gets invested much more quickly than that. So it depends on the type of commitment we get, but If it's not an immediate flow, which sometimes it is, you can usually expect that that money will be invested and turn into fee paying AUM over the coming year or 2. We do have some funds where we get paid fees on committed capital even before we've invested it. But I would say that's more the exception than the norm. Got it. Thank you. Thank you. Our next question comes from the line of Meny Grauman with Scotiabank. Your line is now open. Hi, good afternoon. And I want to first off, team wish you best of luck in your new chapter and I hope you get to golf more. In terms of questions, just want to revisit the subject of return of capital. And First off, from the dividend perspective, you're running at a payout ratio below your target range. And I'm wondering When the green light finally comes, so where do you want to be? Do you want to be at the midpoint? And how fast do you think you want to get there? Hey, Meny, it's Kevin. Thanks for your question on the dividend. We remain committed to paying out dividend in the 40% to 50% of earnings range that we've Talked about in the past and getting to there once the restrictions are lifted as you've noted. Our intention would be To do like we were before that earnings would grow dividends would grow alongside of earnings in sort of the 8% to 10%, which gives the investors kind of A sense of what they can expect from the dividend so that it's sustainable and gives a sort of good growth perspective. So we're still looking at the 40% to 50% range. So just to understand you correctly, there is it's reasonable to assume that you're going to catch up and get Into that range before growing more in line with sort of regular earnings growth. Is that Yes. That's right. That's how you should think about it. We would more quickly get into the range and then we would go back to sort of that sustainable 8% to 10% growth Alongside earnings. And then just on the buyback front, a lot of excess capital there, definitely capacity to do buybacks once You're allowed. If I look back pre pandemic 2018, 2019, you were buying back about 2%. Is it reasonable to assume that you could buy back more than that? Is that something you're contemplating at this stage In terms of a larger buyback than what we saw pre pandemic? It's Kevin again. Our Priority has always been on deploying capital for growth, whether that be organic growth and investing in the business or through M and A. When we look at the pipeline and we see that we have excess, what we believe we would need, we make that decision in terms of The buyback, so it's really dependent on where we are in terms of organic growth opportunities we see and investments we can make, but also In terms of M and A that's there in terms of opportunities, I will say that we're disciplined around How we use the capital and by discipline, I mean, we look at our MTOs and as we deploy capital, we want it to support All of our MTOs, it should support earnings growth, should support our ROE and it should targets and it should support cash back. So we will deploy capital based on the same discipline that we've had in the past. Thanks, Kevin. Thank you. Our next question comes from the line of Tom Kennen with BMO Capital. Your line is now open. Yes. Thanks very much and good afternoon. Just want to offer my congratulations to Gene C, not only in a great career at Sun Life, but a great career at Mercer as well and as well serve very rewarding professional life. And I hope you enjoy all the best that comes to you in the interior years. So I guess maybe the first question would be for Dan. Just with respect to soft loss sales, it seems to be the lowest Q2 we've seen in a while. Maybe you can comment on what you're seeing out there in the marketplace. Is there pricing pressure? Any commentary around that? And I have a follow-up. Yes. Thanks. This is Dan. We're definitely seeing some Increase in competitive pricing in the stop loss business. There's no question about that. It's our belief that some of this is related to the fact that Probably most stop loss carriers are seeing favorable experience, maybe not to the degree we are, but they're seeing favorable experience right now, At least partially due to delays in care and that may be leading to some competitors being more aggressive on pricing, particularly as they're trying to Makeup for misses on sales, especially last year. So we are seeing that. That's the major driver for why our sales are Down somewhat. Now our stills are still very high. We're running around in the quarter, we were at about 85% of the prior year quarter and that still puts us well in the lead amongst independent stop loss carriers Well ahead of anybody else. But we are largely sticking to our guns on pricing and the margins that we build into pricing. So we will accept a little bit lower close ratio if necessary rather than sacrificing future margins. Okay. And then as a follow-up, just with respect to the expense experience Losses in the quarter. Traditionally, Sun Life would kind of roll on for the 1st 3 quarters of the year With not much activity in terms of expense experience and then booked some losses as a sort of a catch up in the Q4, maybe to reflect incentive comp and other spend. How should we be looking at this cadence Going forward, is this the loss that we took in this quarter, is that a bit of a catch up? Or Should we in time to see Sun Life stock price go up, should we be looking for a negative amount of expense experience on? Good afternoon, Tom. It's Manjit. I'll take that question. So the expense experience you saw was largely related, as I mentioned in my remarks, to an accrual we've made on the incentive compensation plan. As disclosed in our proxy circular, The key drivers on that plan are really our underlying earnings, our reported earnings, DNB and various client related metrics. And we constantly take a look at how we're performing against the targets that we're established. So as you saw this quarter, we performed extremely well alongside all those measures And the accrual really reflects that strength and performance. And is that the strength and performance over what time frame? Is that just over the course? It's a year to date view. And so you hadn't made any adjustments in the last 12 months up until this time? No, it was Year to date fiscal, so it would have been for the 1st 6 months of the year. So we saw similar kind of growth In 6 months of underlying earnings on DNB, would we expect a similar kind of Expense experience loss? We have an annual target, Tom. So we would look at how we're trending on the annual target And what that payout would suggest relative to what we've accrued year to date and make any adjustments that are required. Okay. And So you're just going to revisit this more on a quarterly basis as opposed to Yes, we think that's more appropriate because it really then matches up the Tom, it's Kevin Strain. I just note that the 3 big elements of our annual incentive pay are Reported earnings, underlying earnings and BNB. And you can see that reported earnings, There's a big jump up this year with the economic conditions and so that starts to come through as do the other elements. So that gives you a sense of what the three Most important sort of elements are the 4th one is client performance and that's also on an annual basis. Okay. Thanks so much. Thank you. Our next question comes from the line of Doug Young with Desjardins Capital Markets. Your line is now open. Hi, good afternoon. Maybe just starting, Dan, Back to yourself on the U. S. Group side and we've seen a steady improvement in the under in the reported earnings And your LTM after tax profit margin is 8.5%. And you talked a bit about things Eventually normalizing and how like over what timeframe should we think about claims trends starting to normalize? And can you remind us like where does this after tax profit margin likely settle down and if you can kind of maybe address it on the employee benefit and the stop loss side? Well, thanks. As you know, our target margin is 7% or greater. And as you pointed out, we're now at 8.5%, so You're well above that number. There are different factors pointing in different directions, which makes it very hard to predict exactly how that will play out over what periods of time in the future. So I'll just quickly go through what some of the biggest factors are. On mortality, we obviously, over the past 16 months, have seen significantly elevated group life mortality. That did moderate In the Q2, although we certainly have some concern about that maybe starting to come back with the Delta variant. We continue to see elevated short term disability claims directly related to COVID. The good news is our long term disability experience so far has been relatively benign in line with expectations. Dental claims this quarter were in line with normal expectations, but much higher than the same quarter last year, Because as you'll recall, last year at this time, dental offices were closed, so there was very little dental utilization. And then of course, there's the stop loss component of this as well, which I described a little earlier, but has been very favorable. We believe the majority of that favorability is due to delays in care related to COVID, but certainly not all of it. There's underlying favorability in our performance, that should continue. So as to how exactly all of those factors play out over what period of time, It's not really possible to predict that. We would say we're confident of being able to remain At or above the 7% target, we still feel good about that target. Okay. So we should expect the gravitation over Whatever timeframe back towards the 7% for this business essentially. And that's what you're saying. Well, I mean not necessarily exactly those words, but Because there are different factors that go in different directions. So for example, we may see lower mortality over the next Several quarters as COVID hopefully wanes, and we should continue to see some favorability in stop loss. So it's a little bit hard to say exactly where that will settle out. Sure. No, totally understand. And then just on MFS, Yes. Obviously, the institutional net outflows were elevated. Can you maybe break down what you're hearing from your clients? What drove that elevated net outflows? Is there a specific mandate, specific rationale for money coming out? Just hoping to get a little color on that. Thank you. Yes, good afternoon. This is Mike. Yes, the Majority of the well, all of the outflows were institutional, but represented by just a few outflows, in the quarter. And maybe a couple of things on the institutional insurance side. The first is the entire book is almost entirely equity based. And so as market makes all new time highs, You get derisked pension plans, you get rebalanced to an asset allocation and other plans. And so that's just generally a headwind at market highs. And then the second as to some of the larger redemptions that we saw in the quarter, it was really move to passive, rebalancing of plans It was nothing out of the ordinary other than just a couple of really large plans in the quarter. Okay. Thanks and all the best in retirement team. Thanks. Thank you. Our next question comes from the line of David Motemaden with Evercore ISI. Your line is now open. Hi, thanks. Good afternoon. And I'd like to echo Dean congrats on the retirement and stellar career. So I guess, my first question is for Dan, Just on the stop loss experience and on the lower utilization. I'm wondering If you could just tell us if you're seeing signs of utilization picking up as things kind of reopen and maybe just Quantify how much of a benefit that was in the quarter? David, We see utilization well after it occurs, because what a stop loss claim obviously is, is a very severe claim. So it takes a while Until a person has had that level of care and severity of illness, until that Threshold is reached and then ultimately until the claim is filed. So there's a pretty long delay in when we would see that. What I can tell you, we've obviously done a lot of analysis of this. And we are also looking at External sources just what's doing in general. And hospital care has returned close to normal Over the past couple of quarters outside of COVID, of course, but not completely back to normal. And then in our own experience, as you see in the second quarter. We've continued to see quite a bit of favorability, which as I said, we think is more than half Due to delays in care, but not entirely due to that either. So at least through the end of the second quarter, We were continuing to see very favorable morbidity and at least as of that point, We hadn't started to see that wane at all. Got it. And some of the leading indicators that Your tracking would suggest that that is the continuing trend is what it sounds like. Well, all I can comment on is what we've seen through the end of the second quarter, but and that has continued to be quite favorable. We would expect inevitably that Care will catch up and people will catch up with getting care and getting diagnosis. But at least through the end of the quarter, we hadn't really Seeing that yet. Got it. Okay. That's helpful. Thanks. And then maybe just shifting gears, a question for Leo. I guess maybe could you just wanted to just touch on individual insurance sales in Hong Kong. I think things have started to open up there. And I'm just wondering if we've started to see the pipeline Start to build back up on the hub side. Hi, good afternoon, David. It's Leo here. Thank you for your question. So What you'll have seen in Q2 in terms of international hub sales, which is our Hong Kong local business, Our Hong Kong high net worth business and then our Bermuda high net worth business and then Nuuly Singapore. What you have seen is decrease in sales overall in Hong Kong last quarter. That It's really composed of 2 things. First is continued strong sales on the agency side As a result of our focus on local markets and continued strong demand locally and A decline in sales in the broker and high net worth space. That was offset by a very strong quarter In high net worth sales in international in Bermuda. And so the way you should think about this It's really overall and this is really the rationale for us bringing together international hubs and all of our High net worth businesses where the brokers are really dealing with international clients, high net worth, ultra high net worth clients, where location is somewhat fungible and the brokers will place the business in the most Effective location at any given point in time. And so what we saw there in Q2 is that Travel restrictions continue to actually be quite strong in Hong Kong. Over the course of Q2, you were facing 3 week quarantine coming into Hong Kong and only for residents of Hong Kong. And so that has made High net worth sales continuing to be quite difficult, but in contrast, we saw strong demand through our offshore business in the Q2. The other thing that happened for us in international is And we've been doing this across the business. We're constantly re pricing the business based on market conditions and redesigning products. And in Q2 specifically, we launched a new product in international and are closing an existing one. And so given the long nature of the pipeline in high net worth, you've got 6 to 12 months sales cycle. Our brokers who had business that was in the pipeline worked hard to get all of These policies issued before the end of this product. And so that brought forward some of our Q3 and Q4 sales into Q2. So that explains the strong international sales in Q2. So overall, very strong sales in high net worth, less in Hong Kong, more in international. Going forward, We do continue to have restrictions in terms of travel into Hong Kong. So that should continue to affect the Hong Kong specific business. We continue to have travel restrictions globally into Singapore and so on. And so we do see continued headwinds, But we also see brokers working very proactively, working on their overall pipelines and there continues to be demand, as a result of growing wealth and growing need for protection among high network clients. Got it. And To be clear, I guess the Hong Kong, the high net worth sales there in Hong Kong, are those It sounds like those are mainly offshore sales, is that correct? There isn't really a domestic component there? There is a domestic component to those sales, but they're a smaller part of the total. So you also have to rely On international as well. Yes. Okay. Got it. Thank you. Yes. We rely on people being able to come into the market. Yes, makes sense. Okay. Thank you. Thank you. Our next question comes from the line of Gabriel Dechaine with National Bank Financial. Your line is now open. Hi, good afternoon. And Dean, congratulations on the retirement and Great run at the helm of Sun Life and my 2¢, gentleman farmer, Trump's golfing. But my question is about the group business. I know we've had a lot of discussion there already, Puts and takes of some of the trends that are mostly headwinds lately. I'm wondering if we can keep it simple, both in Canada and the U. S, Let's say 2022 as utilization rates start to move higher, is profit growth going to be Positive or flat or maybe negative in some of these markets, if you can just give me a very directional commentary. So Gabriel, you are on both Canada and U. S? Yes, please Jacques. I'll go first, if that's okay, and then I'll pass it on to Dan. So the We've said this before, in the GB market, it's in Canada at the moment. COVID is impacting the activity, Particularly Gabrielle at the large employer level. So what we call the national accounts. And in fact, if you were to split our portfolio Between large, medium and small, what you'd find is that we're actually getting pretty good sales In small and medium, but the sales there's low activity at the larger end. One of the reasons for that, by the way, Gabriel, is that the larger end, Sun Life of the small and medium where you have more standard off the shelf type of plans, the large employers tend to have complex and customized plans. And so what's happening now is that it's more difficult and they don't want to create the level of disruption in the middle of COVID. I don't have a crystal ball for 2022, but I would expect that as we get past the pandemic, We'll start seeing activity rise again. Earnings, I mean, but not sales. Yes. Well, okay, earnings, I would say, things are for Canada, things are looking pretty good as you can see. One of the things I'm particularly pleased about is we've got 13% expected profit growth across the business. That's by the way, Gabriel, across all four of our business units, we're seeing expected profit growth. And as you know, that speaks to the More fundamental of the business, there was a question to Dan a bit earlier about pricing. One of the things in Canada that we've been very disciplined on and trying not to get into What I would call a race to the bottom. So we've been pretty disciplined on pricing and taking on business with the view of not just growing the top line, but growing the bottom line. So in terms of the earnings power, the continuation of the strong earnings power in Canada is what we expect. Okay. Dan, I'll address that for the U. S. So as I mentioned earlier, healthcare utilization Has different effects on different products within our business group. Maybe the 2 that are most relevant to healthcare utilization are dental and Stop loss. Dental utilization is largely back to normal. So we would expect that to continue. And then, healthcare utilization obviously affects our stop loss business and that's where there is some concern about delays in care, and both For the well-being of our members and then what that could suggest as hopefully those delays go away. So we would expect some increase in utilization In the stop loss business, certainly. But as I mentioned before, exactly how that plays out is very difficult to predict. Similar to what Jacques described also, we do price for increased utilization. And in fact, it is one of the drivers of premium growth in these businesses. Yes. I think you talked about that utilization For diagnostics and cancer checkups and stuff like that on the last call and that's the concern. Is that maybe something that I could push back to 2023? I mean, Tough to predict these things, but it's out there on the horizon, right? Yes. As I've said, it's Tough too impossible to predict, but we are tracking different diagnoses categories very carefully and we do see Some continued delays in the healthcare system in general in cancer diagnosis. So that does concern us Again, largely for the well-being of our members, but also there could be some impact in our results in the future. All right. Thank you. Enjoy the rest of your summer, everyone. Thank you. Our next question comes from the line of Paul Holden with CIBC. Your line is now open. Thanks. Good afternoon. Sort of continue along the line of questioning that Gabe just had. Maybe as we think about the normalization or at least the lower margin for U. S. Group, I calculate that roughly every fifty Basis point move in that margin equates to roughly US20 $1,000,000 of annual earnings. Am I doing that math correctly? Not sure if I can do that math as quickly as you can. Okay. Maybe I'll follow-up after this call to get a better sense of that. So the two other questions I had, I guess, first one related to SLC Asset Management and the strong flows there. Is there any kind of Since you can give us on the pipeline, I assume you're active with current fundraising, so might have some perspective on Whether this level of flows can continue or maybe we step down to a more normalized rate? Paul, this is Steve. Thanks for the question. We are going to see some volatility quarter to quarter because if you think of the fundraisers now with firms like Crescent and Infrared, They're selling new closed end funds. For instance, in the Q2, we had the first closing on Crescent's 8th mezzanine fund. And we've got another year and we expect to have 2 to 3 more closings on that fund. So that's going to lead to the numbers to fluctuate Quarter to quarter, we do have some new funds launching in the second half. We've got some sizable separate accounts that we're talking about. So it's hard for me This is a business that will move around, but we have an aggressive projection for the year and we're on for flows and we're on track for that. So, I don't I guess it's another way of saying, I don't think the first half is an anomaly, but expect to see the quarterly numbers move around a bit. Got it. I'm sorry, could you remind me, did you share that annual target for flows for the year publicly? No, we no, that I don't think we've given that And then I just want to also ask on the on Asia and Following up on some of the comments regarding COVID impacts, maybe, Leo, if you don't mind, you can kind of Just give us a summation of which jurisdictions are seeing ongoing lockdowns at least as of today and Good afternoon, Paul, Itzio. Thanks for your question. You're right to note that There's still quite a bit of movement with COVID in Asia. In particular, if you look at what happened in Q2, we're seeing a strong surge In the Delta variant, especially in Southeast Asia, which is impacting the region. And it's actually quite broad. If you look at Q2, really what and now as a start of Q3 July, You obviously had the very strong wave in India with not just high cases, but also Very high mortality at about 4,000 deaths per day at its peak. Those numbers have started to come down in India, but we've seen a surge In the rest of the region. So more recently, you've seen Malaysia start going to a peak. Philippines has been kind of hovering at a constant level for the last year really. But then you're starting to The Vietnam have cases and quite a bit of an increase in the death rate. And then Indonesia is also At a peak of about 2,000 deaths per day, which is now higher than India currently is. So that's affecting broadly Southeast Asia. We've also seen some cases in a few provinces in China. And so all the governments are responding with various lockdown measures. So Malaysia has been in a state of emergency, for example. Vietnam that had been completely open, people could travel across the country, is now facing movement restrictions, curfews and so on. And then you've had various escalations and restrictions in Indonesia and the Philippines and then now in various areas of China That are being affected. So it's actually fairly broad. The only place where we haven't seen a growth in cases is in Hong Kong. And that's really a result of very strong travel restriction into the market. So the economy is running Pretty well within Hong Kong, but it's very hard to travel in and out. So all of that obviously creates Some uncertainty for us heading into Q3. Although, we do feel Confident about our positioning for recovery as a result of the strong Investments we've made in the business in distribution and also in digital, enabling our advisors to engage with clients remotely. That's great. That's very helpful. Thank you. Thank you. Our next question comes from the line of Mario Mendonca with TD Securities. Your line is now open. Good afternoon. Kevin, you are inheriting a company, let's say, So called the life insurance company, but it's got a 16% ROE, 147,000 percent buy cut at the holdco, reasonably low leverage. When I look at this, and I think a lot of people on this call would recognize that's not normal for a life insurance company. So when you look at this, How do you react to that ROE? Do you is your reaction simply, well, Dean's made some good calls over the last 10 years And we're not really a life insurance company anymore, so this is normal. Or do you look at it and say, we could your company could absorb A large transaction and maybe temporarily live with an ROE that's much lower. How do you look at it? Is this normal for Sun Life now? Thanks, Merrill, for the question. First, you're absolutely right. Dean and the executive team under him have left the extremely strong foundation, the derisking that was done early on in his tenure to exit some of the Higher capital use businesses and focus on fee businesses and focus on faster growth jurisdictions like Asia and the addition of Now, SLC have positioned us to be very different than just an insurance company. And our ambition is to be one of the world's best insurance and asset Management companies and in fact, if you added up our asset management businesses, including GRS, which is a defined contribution business that in many ways in Canada looks like Asset Management Business and Pension Risk Transfer, we're almost half asset management. And I can see us continuing to Grow our earnings across the four pillars. I think we've got great growth potential in Asia, which we've talked about being 15% plus. I think we've got great we've got sort of such a leadership position and a strong brand in Canada. I can see Canada growing. We've talked about 6% plus. The U. S. You've talked a lot about the U. S. On this call and I think that, that growth in the U. S. Group Benefits business, we've got a real powerhouse in stop loss and with the additional things like Pinnacle Care to really extend that and the work that Dan and his team are doing on digital. So Mario, our focus On reducing use of capital and fee income, not just asset management fee income, but fee income in our insurance businesses around the world, That focus on financial discipline, on earning our targets, on how we deploy capital. We've deployed capital in a way that Tries to build all of our MTOs, right? We're trying to build earnings growth. We're trying to build ROE. We're trying to build cash flow and dividends back to our shareholders. And that discipline, I've been involved with Dean ever since he took over as CEO, I work for McCann as well. That discipline, I'd like to think I was part of that as well as CFO. So we're going to maintain that and not just me, the entire executive Dean's comments started with the executive team. So there's we're focused on making our business Stronger and better, the work we've done on digital, the work we've done on which lines of business, the 4 pillars, and we're going to continue to build on that. All right. So 16%, even higher, I guess, is not unusual for a company of Sun Life's makeup. There's no reason to expect that ROE to Trended back down to 13%, which is where it was for much of Sun Life's time as a public company. I think our mix of business, if we continue to grow, we should be able to grow the ROE as well. Okay. Let me go to maybe a more detailed question. And it relates to The assumption review that's coming up next quarter. I don't believe you've given us any guidance. I don't think it's Sun Life's practice to give us guidance on your assumption review. So let me ask this, commercial real estate, it's an important part of the asset mix for Sun Life and every life insurance company. Is there Should we be sensitive to the notion that life insurance companies, including Sun Life, have to revisit the asset return assumptions around commercial real estate? Is that a reasonable concern? Mario, it's Kevin again. I'll let Kevin Morrissey address that question. Yes. Thanks Thanks for that question, Mario. This is Kevin Morrissey. So we are reviewing a number of assumptions as normally a majority of our assumption reviews will be in Similar to previous year's. Commercial real estate assumptions are definitely part of that review. We do review that assumption every year, Mario. So this is not something that's new for this year. We look at our experience, what we've had in the past. We also look at how the markets are changing and look at projections for the future as well. So I will note we did have a significant gain in real estate this quarter, which was great to see. So I guess the short answer to your question is yes, it's certainly part of our review. And you'll see The results of that and all the other changes in the next quarter, there's nothing that we're calling out or highlighting for Q3 other than The changes that have been announced and approved by the actual standard boards, that's the ultimate reinvestment rate and the ultimate credit spreads, And we will be making those updates in Q3 as and we've included estimates in our disclosures on that. Thank you. And Dean, all the best of your time. Thank you. Our next question comes from the line of Darko Mihelic with RBC Capital Markets. Your line is now open. Hey, thanks for taking my questions. Dean, congrats all the best. I have a question. I'm looking specifically at Slide 11. And I'm looking at this upper left hand corner of the individual Insurance sales up 52% year over year. Few questions I wanted to poke at on this stuff. The first is, Obviously, last year, we know there was disruption. But what's the biggest driver of the sales apart from just Now sort of being out there and capable, like has there been any pricing changes with respect to these policies that are being sold. So Darko, it's Kevin. I think it's best answered by Pillar. So I'll turn maybe Jacques first to answer the Canada growth in sales and then Leo can talk about Asia. Darko, this is Jacques. Thanks for the question. As you point out, of course, the individual insurance sales are up significantly in Canada, dollars $121,000,000 up 57%. Remember that in Canada, we have 2 distinct channels. We have Sun Life Financial Distributors And then the 3rd party, which is high net worth and ultra high net worth. The high net worth is where the growth is the highest At the moment in Q2, and this business can be lumpy, Darko, and in particular, if you put yourself back to the previous Order in 2020 and the fact that there was a lot of medical facilities that were closed and so on, We saw lower sales in part because while we announced that we are going to go up to $5,000,000 without Labs, when you get to the ultrahigh net worth, these are very significant amounts. So there was, I would say, a kind of a buildup of the Pipeline and that has come through nicely this quarter. But I just want to highlight the fact that those can be lumpy from quarter to quarter. Neil? Yes. Good afternoon, Darko, and thanks, Jacques. So there are two parts to your question. The first one is the increase in sales and the second one was any pricing changes associated with the numbers. In the case of Asia, what you're seeing is a strong rebound on Q2 2020 sales, which were significantly affected by the We should capacity in a COVID environment. Some of that has been increasing capacity with our partnerships with ACV, TP Bank in Vietnam, for example, but also the growth of our agency were up in high single digit rates in terms of agent count over that period. So strong capacity growth there and strong rebound as well with the digital enablement of all of our distribution. And then the second factor is that we constantly review our product pricing and our product design. And You're right that over the past year, we have taken pricing action across multiple parts of our business, notably International would have seen some price increases, Hong Kong, Philippines, Indonesia, Malaysia. So quite broad based as well. Okay. That's helpful. So pricing has gone up and despite the fact that pricing has gone up, We're seeing significant improvement in sales. And I guess the question leads to the next obvious one, which is, Has underwriting changed? And ultimately, what I'm interested in knowing, and Kevin Strain, I guess this is the question for you, And as you inherit this company, how do I know that the $473,000,000 of sales is a good thing In the sense that we're now living with COVID-nineteen that's here forever and we could end up having higher mortality later on that you're going to pay for. So has underwriting changed? Are you asking people if they're vaccinated? Are you changing pricing because of vaccination rates? Most actuaries that I talk to tell me it's too early to know much about COVID-nineteen, but we're plowing ahead with a lot of sales anyway. So I guess the ultimately the question is Kevin, why are you comfortable with so much life insurance sales being put out there And yet, we don't know enough about COVID-nineteen and all of its variants and the possible impacts later on could be very bad for your business. I'll let Kevin Morrissey jump in on this as well, Darko. But you're aware we use we do use significant amount of reinsurance in this business as well. So we do work with the reinsurers in terms of how we look at underwriting, how we look at risk, how we think about risk. Kevin can talk a little bit more about that. But there's a number of factors that you were seeing in the quarter, but I just want to summarize again, right? Like remember the previous quarter Was really the Q1 of COVID and it was hard for agents to get out and they hadn't yet pivoted To the new tools that were introduced, in fact, in a lot of the jurisdictions, licensing wasn't approved yet for electronic or some licensing, I should say, electronic signatures weren't yet Approved yet by the regulator. So you had a you've had a very big shift In the quarter over quarter, right? Q2 last year, newly into COVID, Q2 this year, Starting to come out of COVID in some jurisdictions with improved tools and also we've been investing in distribution During the pandemic and Leo talked about the addition of ACV and some of those types of things. So I think there's A combination of things, but on the risk side, I would just again point out, you've seen our mortality experience coming through COVID. We've talked about the use of more analytics and more data, Different ways of thinking about risk, and we've done that in partnership often with reinsurers. So I don't know, Kevin Morrissey, if you wanted to add anything on mortality risks? Yes. Thanks, Kevin. So Darko, maybe just add a bit to that. So we are paying, of course, very close attention to the pandemic and how it Progressives in all the different geographies, so we're paying close attention to the risks, the trends, the focus on the underwriting and Our pricing will be quite responsive as well, but your question is a good one about the risks we're writing now. And I think I would point to Really the benefit of diversification across our product portfolios. We really benefit from a geographic diversification. So we sell in a number of different markets. And as you can see in the ebbs and flows of the pandemic across the world, we certainly had that balance out with our global business Also the insurance and annuity diversification for a big writer of tailed annuities, which have the opposite exposure As a result of the pandemic and we've certainly seen that in our results as well that great diversification across the different product types. So I think that Broad diversification across those dimensions help us feel really good about the risk we're writing today. Kevin, is it fair to say that For every dollar of mortality risk you put on, you're putting on dollar of ANUFA of longevity risk or is it not quite that balanced? It's not quite exactly balanced, but I will tell you we have a longer term strategy to have that risk profile Quite well balanced and we're looking at getting that balance across the enterprise, but also across different jurisdictions as well. So it's very much in our minds To have that longer term balance in place. Great. Thank you. Thank you. Our next question comes from the line of Nigel D'Souza with Veritas Investment Research. Your line is now open. Good afternoon. Thank you for taking my question. I'll try to keep it brief since we're over time here. I wanted to follow-up on individual insurance sales in Asia. And there's a fair bit of color already provided on this. But when I look at it on a sequential basis, Your individual insurance sales are down across essentially all the regions except for Vietnam. I'm trying to understand how much of that is just order noise like portal volatility and seasonality and how much of that is related to COVID-nineteen and recent mobility restrictions and lockdowns. Leo mentioned that you haven't seen case counts rise in Hong Kong, but individual Sales also down sequentially there. And I know it's a bit hard to predict, but do you have a sense of at least in the 3rd quarter, how Individual insurance sales in Asia are trending and do you think it's going to drift lower in the short term with some mobility restrictions that are being slow? Nigel, it's Kevin. Hi, Nigel. Okay, go ahead. Go ahead, Leo. Sorry. Okay. Hi, Nigel. It's Leo. Thank you for your question. Regarding the first part of your question around sequential sales, You're right that in local markets on a sequential basis, the markets were down other than for Vietnam. And there's really two factors that are at play here. The first one is that as you noted, Southeast Asia We saw a resurgence in COVID cases and in particular the delta variant and all of that impacted sales across the region. And then the other factor that you're seeing is India sales are down and that is a seasonal pattern. Some of that is also the COVID cases in India. As you know, there was a strong wave, but some of that is seasonality In that our India business has a fiscal year ending at the end of March. And as a result, their Our Q1, their Q4 is their strongest quarter of the year every year. So there's some seasonality in India and then an overlay of the impact of the most recent COVID wave across the other markets. In terms of sales going forward, it is a little bit unpredictable at this point in time and that we don't quite know where things are going with the handling of the increasing cases across the region. As I discussed a little bit earlier, we are currently at peak levels of COVID cases and COVID deaths in the broad population in markets like Indonesia and Malaysia. And in those types of situation, you've got countries with very low vaccination rates at this point in time. The governments are taking Some quite strong actions in terms of movement restriction. They are, for example, closing bank branches, which obviously affects Our bank Assurance business in places like Malaysia and Vietnam notably. So we do see Some uncertainty there in terms of the market. And then offsetting that is what I talked about earlier, which is increased distribution capacity and strong enablement of our advisors for non face Space and digital sales, which should dampen some of that impact. But nonetheless, There is material uncertainty there, Nigel. Okay, thanks. That's really useful color. And if I could just quickly follow-up Another point brought up earlier on mortality versus longevity. Do you have any color on the Geographic breakdown of that mix exposure, would it be fair to say that the longevity offset is more prevalent in North America And less prevalent or less substantial in Asia, is that the right way to think about it? Or how should we think about it? Nigel, it's Kevin Morrison. Maybe I'll take that one. I think when you're looking at that mix of business, Predominantly, the longevity risk that we're writing would be in Canada today. We also have quite a large business in the U. K. So that would be kind of the predominantly where you'd see the longevity exposures on our books today. Yes. That's really helpful. Thank you. Thank you. Our last question comes from the line of Scott Chan with Canaccord Genuity. Your line is now open. Yes. Thanks for sticking me in and Dean congrats on all your achievements at Sun Life and best of luck in retirement. I just have one follow-up question for Mike at MFS. You talked about the redemptions in the quarter, but I think what's more Maybe concerning is the gross inflows that we see. I saw total in the quarter, it was down 20% quarter over quarter and 25% year over year on what was a very strong Q2 flows globally from what we can tell. Is it I also noticed your medium term fund performance slipped a little bit, but I just wanted to see any color on some of the gross flows that seem very suppressed this quarter. Thanks, Scott. Thanks for Question, it's Mike. I think year over year comparisons are a little tough in that last year was such an outsized year. We had sales up 40% last year. There was incredible movement in the Q2, so the opposite of what I was talking about earlier, where at market highs, money comes out of equities in Fixed income, it sort of was the opposite last year. We saw money come out of fixed into equity and we were well positioned for that. So I think last year is a tough year to comp off of. When you look at Q2 versus Q1, and you look at active fund sales in the U. S. Industry this year, Our flows were in line with what happened in the active industry. So the active industry saw flows come down in 2Q from 2.1. And I think some of that is related to market being at highs and people not allocating as market continues to go up. Interest rates are relatively low. I think people are sitting on their hands some. So our flows look very similar. If you look at U. S. Retail flows very similar to what happened in the industry Q2 versus Q1. Okay. Thank you very much. Thank you. We have no further questions at this time. And I return thanks to Mr. Bitton for closing remarks. I would like to thank all of our participants today. And if there are any additional questions, we will be available Should you wish to listen to the rebroadcast, it will be available on our website by tomorrow morning. Before I end the call, I would also like Congratulate Dean on his successful tenure at Sun Life. Dean, we wish you all the best in your retirement. Thank you and have a good day.