Good morning, ladies and gentlemen. Welcome to the Manulife Financial Second Quarter 2024 Financial Results Conference Call. I would now like to turn the meeting over to Mr. Ko. Please go ahead, Mr. Ko.

Thank you. Welcome to Manulife’s earnings conference call to discuss our second quarter and year-to-date 2024 financial and operating results. Our earnings materials, including webcast Slides for today’s call, are available on the Investor Relations section of our website at Manulife.com. Before we start, please refer to Slide 2 for a caution on forward-looking statements, and Slide 35 for a note on non-GAAP and other financial measures used in this presentation. Note that certain material factors or assumptions are applied in making forward-looking statements, and actual results, may differ materially from what is stated. Turning to Slide 4, Roy Gori, our President and Chief Executive Officer, will begin today’s presentation with the highlights of our second quarter and year-to-date 2024 results and a strategic update. Following Roy’s remarks, Colin Simpson, our Chief Financial Officer, will discuss the company’s financial and operating results in more detail. After their prepared remarks, we’ll move to the live Q&A portion of the call. With that, I’d like to turn the call over to Roy Gori, our President and Chief Executive Officer. Roy?

Thanks, Hung, and thank you, everyone, for joining us today. Starting on Slide 6, we recently hosted our Investor Days in Hong Kong and Jakarta in late June, and it was truly a pleasure to have so many of you join us to hear how we are raising the bar at Manulife. There are a few key takeaways that are worth recapping here. First is that we've gone from being a high-risk low ROE business in 2017, to a lower risk and high ROE business today. Second, we remain uniquely positioned to capitalize on the mega trends that are shaping the global economy, a growing middle class in Asia, an expanding global retirement gap, and the dramatic digitization of the consumer. Third, as a result of our strategy and disciplined execution, we announced ambitious but achievable new targets and a clear path for achieving them. These include increasing our core ROE target from 15% plus to 18% plus, and introducing a cumulative remittances target of $22 billion plus, both by 2027. By delivering on these targets, we will further solidify Manulife as a high-growth, high-return and high cash generation company. To achieve that, we know we must double down on execution, which takes me to Slide 7. You can see that we've maintained our momentum, and delivered and delivered another set of strong results for the second quarter. APE sales increased 17%, led by strong growth in Canada and broad-based growth in Asia, with both segments contributing to new business CSM growth of 6%. Core earnings increased 6%, while Asia and global WAM generated very strong growth of 40% and 23%, respectively. This was somewhat offset by the impacts of a higher effective tax rate related to global minimum taxes or GMT, as well as lower core earnings due to…

Thanks, Roy. The momentum in our financial performance continues. I will dive into a little more detail on the quarter’s results before the Q&A. I'll start with our top-line on Slide 10. Our APE sales increased 17% from the prior year, reflecting strong growth in our Asia and Canada segments. In Asia, we generated higher sales across multiple markets, in particular Hong Kong and Japan, although we did see lower sales in mainland China, following the record high second quarter sales in 2023. While in Canada, we had higher large case group insurance sales. Our strong sales contributed to a solid increase in new business CSM of 6%, and another quarter of double-digit growth in new business value of 23%. Global WAM saw net inflows of $0.1 billion, mainly reflecting the strength in our institutional business, offset by outflows in our retirement business. These results really demonstrate the strength of our diversified global portfolio of businesses in driving growth. Turning to Slide 11, which shows the growth in our profit metrics. Core EPS increased 9% as we grew core earnings and continued buying back shares. I should note that the newly enacted Global Minimum Tax Act in Canada reduced core earnings for the quarter, and core EPS would've grown 12% excluding this impact. During the quarter, our core ROE was 15.7%, up 20 basis points from the prior year. Execution in Asia and global WAM, our highest return businesses, will be key levers to achieving the updated core ROE targets, and I’ll touch on performance in these businesses shortly. On Slide 12, you can see we grew our adjusted book value per share by 15% from the prior year quarter to $33.96, even after returning a significant amount of capital to shareholders over the past year. This continued our track…

[Operator instructions] And the first question is from Meny Grauman from Scotiabank. Please go ahead.

Hi, good morning. We've talked about ALDA returns in the past, but I wanted to revisit it in the context of what we saw this quarter. The ALDA charge widened in Q2, and we're seeing eight quarters in a row of ALDA charges. So, I'm wondering, when we look at that, should we be concerned with that and specifically the deterioration in the charge this quarter? Colin, you touched on it a little bit in terms of the composition. I'm just wondering how to view those fact patterns in terms of where the ALDA is going and over that period of basically two years.

Sure, Meny. Hi. It’s Scott Hartz. I’ll start by looking at the quarterly results for ALDA. Now, I think the good news in the quarter was that the real estate headwinds continued to diminish. As interest rates have stabilized here, we saw in the first quarter the underperformance versus long-term assumptions come down a bit. We had about a $200 million loss on our real estate portfolio. In the second quarter, that continued to decline down to less than $150 million. So, that is playing out as we expect, and we would expect that to continue to improve in the out quarters. The rest of the ALDA portfolio was less good. We have six different ALDA categories, and in a normal quarter, some will exceed their long-term expectations and some will underperform. This was a quarter where every category underperformed. For most of them, it was idiosyncratic factors on a couple of investments that didn't perform well. And none of those categories was a particularly large number, but they do add up. They don't give me concern on future returns. I don't see a read through going forward. I would say the one category that did stand out where there was a pressure sort of across the board was in the private equity portfolio. Now, our private equity portfolio historically has been a very good performer. Over the last three, five, and 10 years, it's been the best performing ALDA category and it's far exceeded its long-term expectations. So, again, I think in the medium-term going forward and long-term feel good about that portfolio, But it was a bit of a rough quarter. Although the private equity portfolio did have a slightly positive return, It was well below the long-term expectation, and it's a fairly sizable portfolio. So, it created…

Yes, thanks, Scott. Thanks, Meny. Thanks for the question. So, just a couple of things that I would add to what Scott had said. Given the mark-to-market nature of ALDA, I think the recovery is obviously not going to proceed in a straight line. We will have variability. There'll be positives and negatives quarter to quarter. And then I think the second thing I would say, just to remind you something that we've said in the past, which is that the higher discount rates that are now priced into our real estate and other real estate, real asset valuations, I think give us confidence, more confidence in achieving our expected returns over the medium to long-term.

Thanks for that detail. Just as a follow-up in terms of the private equity portfolio, have you made any, or are you contemplating making any more fundamental changes to this private equity portfolio, or is it just really a function of just letting maybe rate expectations filter through and just waiting? Or is there something more fundamental in the portfolio that's not working as well as you like, that requires any sort of adjustments to that portfolio?

No, we do expect as rates to come down, short rates to come down, for the portfolio to perform very well. One thing I would say is, because it has been such a strong performer over the last five years, it has grown to a fairly large size. So, we've been investing, and it takes a while to get this money invested. You make a commitment, it gets invested over five years. A number of years ago, we really reduced our commitments there. So, I think the portfolio as a percent of our ALDA, will probably decline going forward.

Thank you.

Thank you. The next question is from John Aiken from Jefferies. Please go ahead.

Good morning. Roy, not necessarily on the quarter, but with DBS announcing the CEO succession, I have to ask the painfully obvious stupid question that, does this have any impact on your expectations for the relationship between the two of you? And then more importantly, does Manulife have a relationship with the incoming CEO?

Yes, John, thank you for the question. We don't see this as having an impact on our relationship. We've got a deep partnership with DBS, one that we're very proud of, and one that we showcased at our Investor Day recently that you were at. Clearly, we’re obviously very proud of the partnership that we have with the senior leadership team, and that extends beyond Piyush. In fact, Su Shan was a key part of the leadership team that actually signed our agreement with DBS and Manulife back in 2017. And I personally spent a lot of time with her at that time locking in that deal and that transaction and agreeing the way that we would move forward. So, we're obviously happy that - for Piyush, and delighted that he's happy to announce his retirement, but we're equally proud of the relationship that we have with DBS and it extends beyond Piyush to Su Shan and the broader team there at DBS.

Fantastic. Thanks, Roy. I’ll reach you.

Thank you. The next question is from Paul Holden from CIBC. Please go ahead.

Hi, thanks. Good morning. First question is related to the GMT, I mean, being transparent that it was totally absorbed in corporate and not the business segments. But I guess my question is, of the $46 million in GMT this quarter, how much would've been allocated to Asia if legislation had been enacted there? And the second part of the question is, is there any visibility on timeline on when it may get enacted in key countries in Asia? I guess that'd be Hong Kong and maybe Singapore.

Hey, John, it's Colin here. Thanks for the question. So, of the $46 million, $30 million is allocated to the Asia segment. So, it's roughly two thirds Asia segment, one third GWAM. We do believe Hong Kong will adopt the pillar two tax rules in 2025. So, we expect that tax charge to be passed through to the segments next year reporting, but until that happens, we'll keep it at corporate. So, wait and see on that basis, but it’s very much within our expectations. Paul, I might just add that Asia's contribution is a contribution to earnings as that Q2 was 44%, and that includes both insurance and wealth. When we pro rata the impact across the geographies and apportion that GMT that's attributed to Asia, to Asia, it takes our contribution from 44% down to only 43%. So, we don't see this as a significant and material adjustment to our earnings contribution by segment.

Got it. Okay. Thanks for that. And then second question also related to Asia. If I look at insurance experience, and again, you've been transparent on this, but if I look at total experience, including both P&L and CSM impacts, there was no year-over-year improvement. In fact, it was almost exactly the same number, I think, but how you've allocated it between P&L and CSM has changed. So, maybe you can walk us through sort of what's happening in experience in Asia, if there has been any sort of improvement in those unfavorable experience items from last year, and why the allocation between P&L and CSM has changed this year. Thank you.

Sure. Thanks. It's Steve here. I’ll take that. So, the drivers of the experience in Asia were the quarter, and then relative to prior year. In the quarter, we saw some claims gains in both Vietnam and in Japan, and that's what you're seeing in the P&L. And then the - what's going through the CSM primarily is a continuation of some adverse persistency results, primarily in Vietnam to a smaller degree, some lapse impact in Singapore. In Vietnam, this resulted from some of the broader-based industry macro challenges. We have - we saw modest improvement in Q2 on the Vietnam persistency, and we do have clear line of sight to improvement over the second half of the year on that front as things have stabilized and begin to move in a positive direction there. So, we feel pretty good about the outlook.

And sir, if I remember correctly, wasn't that persistency issue in Vietnam, didn't that flow through P&L in the year ago period?

No, it would've been through CSM.

Okay. Thank you for that.

Thank you. The next question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Good morning. Nothing too complicated here. In the wealth flows, apologies if you've already mentioned it in your opening remarks, but I saw Canada had big outflows in the retail business. Is that tied to the higher capital gains inclusion rate that became effective at the end of the quarter, people getting that out of their funds before that change?

Yes, thanks, Gabriel. It's Paul Lorentz here. Yes, that was an impact for the industry. We did see elevated redemptions coming through the Canada retail business ahead of that capital gains inclusion rate. It wasn't unique to us. We have since seen those redemption rates moderate, so we would expect that to kind of moderate go-forward. And then just looking at the Canada region, there was also a large case redemption in there that is skewing the results for the quarter. That was remaining redemption from a large client announced in Q1, but that was quite material. It was $1.8 billion for the quarter. So, when you actually factor those two in, we’re quite optimistic. The other thing I would say, just in terms of Canada specifically is, we're seeing a lot of new advisor interest in our wealth platform. We made an investment earlier this year, and the pipeline for advisors that are interested in joining in the second half of the year is quite strong. So, we're quite optimistic as we look forward for the Canadian market.

Okay, great. Thanks, Paul. Question on the tax rate guidance. So, the 17% to 23%, it's very wide range, so wherever you end up on that spectrum, could have a pretty meaningful impact on the quarter, any given quarter. I mean, I can come up with my own answers here as to how you end up at the low end or high end, more growth in Canada and US versus Asia. I mean, is there anything else that could cause that to swing around a lot? And I guess, if Asia is going to continue to grow at maybe not the rates we saw this quarter, but higher than anywhere else, should we be biased towards the low end as we're forecasting?

Hey, Gabe, it's Colin again. Yes, I think you've nailed it really. As Asia becomes a bigger proportion of our earnings, we would see some of the lower tax jurisdictions contribute to a lower overall tax rate. And as you would you - and as has been noted already, we are at the low end of the range. Actually, we're below the 17% to 23% this quarter, but that's - we're up 2% from the 14% we reported last quarter. So, we are staying close to the low end, and we expect to continue that way. But as you noted, if Canada and the US grow earnings more, you would expect to see that rate go up.

Any technical, like, I mean, I don't know if there's any other factors that play in other than geography? I mean, the amount of …

There really aren't, Gabe. No, it's quite straightforward.

Okay, great. Enjoy the rest of your summer.

Thank you. The next question is from Tom MacKinnon from BMO Capital Markets. Please go ahead.

Yes, thanks. Good morning. A question with respect to Asia, looking at APE for Asia other, continues to be kind of sluggish, down 5%, and I think year-to-date, maybe up just modestly. One thing I did note though is the number of agents you have in Asia other kind of running flat for several quarters in a row, and then up 9% quarter-over-quarter in the second quarter of this year. So, what's happening there? Are you beefing up the sales force here in Asia other to try to help rebound some of the Asia other APE? How should we be thinking about those sales going forward? And how should we be thinking about them in light of this increase in the number of agents?

Great. Thank you for the questions, Tom. This is Phil. So, I'll start actually by highlighting that it's been a really strong quarter for our Asia business. Our core earnings are up 40%. We've seen growth in NBV of 19%, and that comes from a mix of both volume growth, with 7% growth in APE sales and margin enhancements across multiple markets. Now, Tom, you picked up in your question on the modest decline in APE sales in our Asia other segment. And Colin touched on this briefly in his opening remarks, but what's happening there is that we've seen strong growth across multiple markets in the other emerging Asia sub-region. But what's happened is that we've seen a moderation of sales growth in China. And recall the history here is in the second quarter of 2023, we'd seen a tripling of sales in mainland China as the borders with the rest of the world reopened, and consumer sentiment was very strong. This year we've seen a slight pullback in that, a 20% decline in sales in China, and that's had the effect of moderating the Asia other sales. But I do remain confident in the prospects for our other Asia markets individually and collectively. You also touched, Tom, on our agent numbers, and we have seen an improvement, an increase in agent numbers, particularly from our emerging markets during the second quarter. But I do want to highlight, our focus is not really on the number of agents. It's on the quality and the productivity of agents. So, I won't dwell too much on sort of the 9% quarter-on-quarter increase that you referenced. Our focus is really on driving productivity of agents, driving value for both customers and Manulife. And when I look at the results in the second quarter, I believe it supports the messages that we delivered at Investor Day with high-quality sustainable growth, 19% improvement in new business value. And when I think about the future, the quarters ahead, I also remain confident about the prospects. We've seen very strong performance across multiple markets in Asia in the second quarter.

Okay, thanks. And then a quick follow-up here, with respect to the lapse experience in the US continuing to be negative here, how should we be thinking about that going forward, especially as we move into your third quarter reserve review with respect to that aspect?

Yes, thanks, Tom. It's Steve. I’ll take that one. So, as you noted, we did see a continuation of lapse losses in the US. That's been - since the pandemic, as I've noted before, we saw a drop in lapse rates across many product lines. In similar product lines in Canada, those lapse rates have trended back to pre-pandemic levels, but it's been a much slower process in the US. We've seen some trending back, but not on all products and not all the way. I've also commented before with respect to how you think about the Q3 assumption review, which I'll note, when we transitioned to IFRS 17 last year, we stopped providing detailed guidance at Q2. So, you'll get the full disclosure at Q3. But in terms of thinking about how we're looking at this, we're very comfortable with the ultimate lapse rate. Those are very low, and that's not what's causing the issues here. It's more the intermediate durations on protection products and some higher lapse rates in early durations from the economic environment. We'll take all the data into account as we review the lapse rates. But what I can say is, on the overall review, you can expect, as usual, some pluses and minuses. So, that's how I think you should be thinking about that right now.

Okay. Thank you.

Thank you. The next question is from Mario Mendonca from TD Securities. Please go ahead.

Just one quick clarification on that last question from Tom. It’s always - it’s very unclear for me on what assumptions go through earnings and what go through the CSM. Would an update to intermediate lapse assumptions in the US be an earnings issue or a CSM issue?

Thanks, Mario. So, for specifically on US Life, those lapses, they would go through primarily CSM, unless CSM were depleted, and then it would go through P&L. And there is one nuance in terms of the discount rates. There's a little bit that would go through OCI based on what interest rates were when we locked them in at time of transition versus current interest rates. So, it's a little bit complicated, but CSM is depleted through P&L.

My next question then is, has the CSM been depleted?

At this point, on some products in the US, as you can see in the quarter in US, we've got some life lapse losses going through P&L. So, some cohorts have been depleted, but not all of the cohorts.

Okay. My second question, this might be for Colin, go to Page 29 in your presentation. So, deep into your appendix, and this is, I appreciate sort of in the weeds, but it matters to book value growth. that net impact of $732 million, it's positive this quarter. So, that's fine, but I'm surprised to see that kind of - that size of a contribution from changes in corporate spreads and interest rates. It was my understanding that with the implementation of IFRS 17, that those two lines, the fair value, the liabilities relative to the fair value of the assets, would be fairly well matched and we wouldn't see big changes. So, maybe talk me through why it was big this quarter, and could we see big swings to the negative if rates and spreads move the other way?

Yes, thanks, Mario. I mean, you addressed it to me. So, I'll start, and I'm sure Scott's got quite a bit to say on this topic. So, effectively our sensitivities don't necessarily - don't capture the spread environment. And what we saw during the quarter was a steepening of the spread curve. And that drove big gains. Obviously, if that reverses, then the opposite could happen. But we've done a lot of work to make sure that our interest rate exposure is really minimized through extensive hedging. But what you're seeing here is really the spread impact. Scott?

Yes. And to explain that a little bit more, Mario, so if you think of our liabilities, they're very long, and we can't get the asset portfolio long enough to match them. So, we use derivatives to get the matching on the interest rate and immunize ourselves against that. But what that means is the derivatives do not have a spread component, whereas the liabilities and the assets have a spread component. So, we have overall spread risk called spread duration. The spread duration on our assets is shorter than the spread duration on our liability. So, overall, higher spreads decrease the liabilities more than they decrease the assets. And then the steepness matters a lot too because liabilities are pretty long. And where the mismatch is, is we don't have assets as long as our liabilities. So, really spreads at the long end versus the intermediate part of the curve where a lot of our assets are stacked up matters. So, bottom-line, wider spreads creates a positive here and a steepening of the spread curve creates a positive. And that's really what happened in the second quarter. And that's - by the way, I should say that's part of the reason we chose to go fair value through OCI. I mean, that's noise that that won't really affect cash flows or anything till many, many years in the future, and so much will change between now and then. It really is an artifice of the PV of all of this. And so, it's noise that really does not belong in the P&L from my perspective.

Enjoy your retirement and thank you for tolerating us over the years

Well, thank you, Mario. And I will say, I'll miss a lot about this place. And this exercise is something I'll miss. You all keep us on our toes. I feel very good about our investment portfolio and investment team, and I enjoy talking about it. So, I've enjoyed our conversations. Thank you.

Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Hi, good morning. Hopefully these will be relatively quick, but the non-attributable expenses were up a little more than I had expected sequentially. I think there was some reclassification of expenses for maintenance expense into this bucket. So, I'm just hoping to get a little bit of quantification of what that was and how to think about that line item and whether there's future kind of reclassifications that potentially could be coming.

Hey, Doug, it’s Colin here. You’re right to point out increase in NDA, non-directly attributable expenses. They're up $37 million quarter-on-quarter. Now, some of that's due to higher expenses in items that we classify as non-directly attributable, things like our build out of generative AI or some entity-sustaining expenses. So, you would expect a bit of an increase on that. The other part, as you mentioned, was a reclassification. And what's going on here is that we completed our expense experience exercise. This is the first one we've done since IFRS 17. So, we went really deep into our expense experience, and this did involve a little bit of reclassification between maintenance and NDA. I would consider this quarter’s NDA as a good run rate to use going forward. And I would remind everyone, we really focus on total expenses and total efficiency ratio and very committed to our to improving that efficiency ratio.

Hey, Doug, I might just add to Colin's comments, that whilst - as Colin mentioned, obviously we go through a process to really assess and evaluate our non-directly attributable expenses and make sure that they're as accurate as possible. We also benchmark ourselves versus our peers, and we believe that actually we're well positioned on that front as well as quite conservative, which is where we want to be.

Perfect. And then maybe, Steve, can you refresh us on what you're seeing in the long-term care insurance book and just the negative P&L experience, the offset by the experience in the CSM. This quarter, the CSM wasn't a full offset, so the impact was net negative, and I think the numbers are fairly small, but just hoping maybe you can flesh that out. And what impact did the reinsurance transaction have on these patterns, if any, and what cohort are you seeing the negative experience on the P&L versus what you're seeing in the CSM? Just hoping to get some color in those items. Thanks.

Sure, Doug. Thanks. Yes, and you're correct. Q2 was a modest negative all in combined P&L and CSM, which is really how we look at the overall experience. And you notice as well, that is the first time in nine quarters that we've had any negative in LTC in the experience. So, certainly, not the beginning of a trend, but what we have seen a continuation of trends is that there - for those on claim, the cost of providing care is higher than the valuation assumptions, and that's what's going through the P&L. But that has been offset, more than offset over time by less people going on claims. So, favorable incidents, and we believe these two are related in terms of some of the dynamics. In the quarter specifically, we had been seeing claim termination gains, but Q2 was - we didn't see those gains coming through. There were some losses on claim termination. But again, those can vary quarter to quarter. So, those are the dynamics of what we've seen. We've seen overall mortality levels, including in long-term care, trend back to normal levels. But we do see this continued higher cost of care offset by significantly lower incidents.

Appreciate the comment. Thank you.

Thank you. The next question is from Lemar Persaud from Cormark Securities. Please go ahead.

Yes, hopefully just a quick one here, maybe for Scott or Trevor. Can you guys quantify the ALDA charge related to PE? I mean, you gave the real estate at around $150 million, and then there's the PEP, and then some other idiosyncratic issues. Just wondering if you could give that component, the PE piece specifically.

Sure. Lamar, it's Scott. The real estate loss was a bit less than $150 million, and the PE loss was a bit more than $150 million.

Okay. And then how much do we need to see short rates come down to provide relief on that portfolio? Like is it like, are we talking like 50 basis points? So, Q3 might be a tough quarter as you kind of alluded to, but how much do we need to see rates come down in the US to provide relief on that portfolio?

Yes, I think any amount of decrease will be helpful. And I don't think we need short rates to get down close to zero the way they were before to start meeting our long-term assumptions. But it's difficult to quantify that exactly. I think if we get - the market's now expecting 75, 100 basis points of drop in short rates by the end of the year. If we get something like that, that'll be very positive for that portfolio.

Okay. Thanks. That's it for me.

Thank you. And the next question is from Nigel D’Souza from Veritas Investment Research. Please go ahead. Nigel D’Souza: Thank you. Good morning. I wanted to circle back on ALDA, the weaker than expected performance in private equity. Wondering how that ties into the recent reinsurance transactions. I believe the intention is to have dispositions in ALDA, specifically private equity assets. Does this make it more difficult to transact, or is there any change in I guess your intentions or timing of those ALDA dispositions?

Sure. Thanks, Nigel. I'll start by saying, for the long-term care transaction, we closed in the first quarter. We've pretty much completed the ALDA dispositions. We were intended to sell $1.7 billion of ALDA, and we've sold $1.6 billion. $500 million of that was private equity. And in total, we achieved a higher value than our last value on our books. So, we feel very good about that, and that's pretty much done. For the Canadian reinsurance transaction, we closed in the second quarter. We sold the roughly $600 million of public equity that was backing that block in the second quarter. And we have $600 million of ALDA to sell in Canada. We expect to complete that during the balance of the year. Probably not much of that will come out of private equity. So, no, bottom-line, I don't think the underperformance we've seen recently in public equity will affect any of that.

Nigel, Roy here. I might just add some strategic thoughts as it relates to ALDA, because there's been some really good questions on ALDA and rightfully so. I would say a couple things. First is that ALDA has been a really good asset class for us. It's great for our business because we've got long duration liabilities, and to match that with great long-term assets from a tenure perspective, but also with an asset class that's delivered superior returns with lower volatility than equities, is we believe a source of strength. And it's something that we've got a lot of experience in, in fact, more than 20 years. And we now see on the retail and on the institutional side a lot more interest in this asset class, and we're well positioned to even provide value there. We are going to see some volatility from time to time. What we've seen though is in historic times where we've underperformed our long-term assumptions, we've typically seen periods of outperformance that follow. In 2020, you'll remember that we had a $1.4 billion negative versus our long-term assumption, and in the following year, in 2021 we saw a $1.6 billion outperformance. So, yes, we are seeing some volatility there, and that's a function of the current market environment and certainly rates is a factor there. But much more so is the uncertainty from a markets perspective. But we still have a lot of conviction as it relates to this asset class and believe it's a source of strength for our business. Nigel D’Souza: Great, that's helpful. And then on the NCIB, I believe that's upsized now from $2 billion to $3 billion in terms of the capital that was freed up from your transactions. Was wondering if you could expand on what - is there an impact of the life catch here from upsizing that NCIB? And is it also going to result in a reduction in surplus assets or earnings on surplus run rate? And wondering if the math and arithmetic on those deals, if it's still net accretive to core EPS?

Yes, let me start on that, and I'll ask Colin to chime in if he would like. You are right, we are upsizing our NCIB, and it's a function of a few things. First is that we're in a very strong capital position, as highlighted by Colin earlier. We have $24 billion of capital in excess of our supervisory minimum, $10 billion in excess of our upper operating range. So, we feel really good about our capital position. I'll also note that our leverage ratio is now lower than 25% on a pro forma basis, actually 24%. At Investor Day, we articulated some pretty ambitious plans for the franchise to deliver an 18 plus percent ROE, 10% to 12% core earnings per share growth, and strong cumulative remittances of about $22 billion. So, while we previously had articulated that we would at least deploy the capital that we freed up from the transactions to buybacks, now we believe and are confident and have conviction that we'll actually deploy the full amount of our buyback, which will be in excess of $3 billion dollars. It should not impact our LICAT ratio because as we free up capital from the sale and disposal of ALDA, that will translate into the capital that we're deploying. But Colin, you may want to chime in with some perspectives as well.

Yes, Nigel, the only thing to add is that we're currently earning a blended rate of 2.9% on our surplus. So, when we are using our surplus to buy back stock, you can see the sort of value enhancement from this type of capital allocation activity. Nigel D’Souza: Okay, that's it for me. Thank you.

Thank you. The next question is from Mario Mendonca from TD Securities. Please go ahead.

I'll be quick. Have you seen any impact in Japan from the recent volatility? I know the market's sort of stabilized since, but that was quite a shock to the system and rates are changing there. Is there any change in behavior that you would point us to, probably for Phil?

Thanks, Mario, for the question. Simple answer is no. It's very early days. What I do expect is the very strong sales growth that we've seen in recent quarters in Japan and notably in the second quarter, I do expect that to moderate in future quarters as macro conditions normalize. It has been boosted by current - well, I say current, but foreign exchange rate levels in the second quarter, as well as equity market conditions. But I think it's really important to highlight, from a macro perspective, the movements we're currently seeing in the macro environment in Japan don't really impact us materially from a balance sheet perspective. We're well matched from an ALM point of view and naturally it's something we manage very carefully. More broadly on the topic of Japan, I do remain optimistic. The environment is favorable in terms of government policy encouraging customers to provide for their own retirement needs and long-term saving needs. So, I think this is something that will sustain growth, albeit at more normal levels in the quarters to come.

Thank you.

Thank you. There are no further questions registered at this time. I'd like to turn the meeting back over to Mr. Ko.

Thank you, Operator. We'll be available after the call if there are any follow-up questions. Have a good day, everyone.