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

Thank you. Welcome to Manulife’s earnings conference call to discuss our fourth quarter and full-year 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 42 for notes on non-GAAP and other financial measures used in this presentation. Please note that certain material factors or assumptions applied in making forward-looking statements and actual results may differ materially from what is stated. Turning to Slide 4. We'll begin today's presentation with Roy Gori, our President and Chief Executive Officer, who will provide a highlight of our full-year 2024 results and a strategic update. Following Roy, Phil Witherington, our incoming President and Chief Executive Officer will also provide some remarks, before we hand it over to Colin Simpson, our Chief Financial Officer, who will discuss company's financial and operating results in more detail. After their prepared remarks, we 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. Yesterday, we announced our fourth quarter and full-year 2024 financial results. 2024 was a banner year for Manulife on many fronts and we continue the momentum and finished the year with very strong results. During 2024, we further accelerated the growth of our highest potential businesses. Led by Asia and Global WAM. Which contributed to 70% of our record core earnings that exceeded $7 billion for the first time. This is a 10 percentage point increase since 2023. These results were supported by strong top-line metrics with record APE sales, new business CSM and new business value in Asia, and $13.3 billion of net inflows generated by our Global WAM business. We also executed several milestone transactions to reshape our portfolio towards higher-return, and lower-risk. You'll recall that in February of 2024, we closed the largest-ever LTC reinsurance transaction at attractive terms with Global Atlantic. Which was instrumental in establishing an active LTC reinsurance market. And then in April, we closed the largest-ever Canadian universal life reinsurance transaction with another highly experienced strategic partner, RGA. This was followed by another LTC deal in less than 12 months when we announced a reinsurance transaction with RGA in November on a younger block. This deal recently closed in early January. In addition to further validating the prudence of our reserves and assumptions, these transactions will unlock significant value for our shareholders with an expected capital release of $2.8 billion. As well as a 0.4 percentage point accretion to our core ROE on a cumulative basis. Moving to Slide 7. To support our strong operating momentum, we've been driving relentlessly towards our ambition of becoming the most digital customer-centric company in our industry. Throughout 2024, we've been raising the bar for our customers,…

Thanks, Roy, and good day to you all. Before I start, I'd like to recognize Roy for his exemplary leadership, including setting and delivering on our strategic priorities, steering Manulife through the pandemic, accelerating growth in our highest potential businesses globally, reshaping our portfolio and optimizing returns, as well as establishing Manulife as a digital customer leader. These are just a few of his many contributions to transforming Manulife into the company it is today. And on a more personal note, over the course of the past decade, I've truly enjoyed working closely with Roy, and I'm very grateful for his partnership, mentorship and friendship. Now with the incredible foundation that we've built together under Roy's tenure as CEO, I'm thrilled and excited by the opportunity to lead the next chapter of growth for Manulife globally and deliver on the bold ambitions that we set out at our Investor Day in June 2024. We will continue to focus on the execution of our strategy and delivering on the raise the bar targets we've set ourselves. We've seen strong momentum in Asia and Global WAM, and I'm committed to continuing to invest to sustain this momentum and deliver on the compelling growth opportunity these businesses have, while maintaining our market leadership in Canada, and continuing to focus on our unique offerings in the US, to provide differentiated solutions to the financial and life stage needs of our customers. We will also continue to invest in advancing our digital, and customer leadership priorities, which will further improve our customer service capabilities, enhance our efficiency and contribute to the delivery of our growth ambitions. Meanwhile, and until May 8, I have three key priorities. First, I will be laser-focused on executing in Asia to deliver high quality sustainable growth. Second, selecting and transitioning a successor to lead our Asia segment, and I look forward to sharing more on that with you in due course. Lastly, executing a seamless transition with Roy, providing for continued momentum for Manulife. I'm excited for the future for Manulife. We have strong foundations, and a roadmap to deliver on our ambitious yet achievable targets. I truly believe that we're well positioned to build on our momentum to reach even greater heights, and continue to generate shareholder value. And finally, I'd like to take a moment to thank our business partners, and other stakeholders around the world, as well as our global leadership team and every single one of our over 37,000 employees for the support that you've extended. I'm very much looking forward to working with you even more closely in this next chapter for Manulife. And with that, I'll hand it over to Colin to review the highlights of our financial results. Colin?

Thanks, Phil, and welcome back to Canada. As I reflect on 2024, I'm proud of what we have achieved and the momentum we've built over the course of a fantastic year at Manulife. Let me dive into more detail on the fourth quarter's results before the Q&A. Starting with our new business metrics on Slide 13, once again, we delivered very strong growth of over 30% across APE sales, new business CSM and new business value. Our APE sales increased 42% from the prior year with contributions from all our segments led by the continued momentum in Asia with broad based growth across the region. Our strong sales also drove substantial increases in new business CSM, and new business value of 32% and 31%, respectively. Global WAM delivered another quarter of positive net flows of $1.2 billion with solid contributions from our institutional and retail businesses. It's been a tremendous year for our top line growth, particularly in our Asia and Global WAM segments, which bodes well for the continued earnings growth for these higher return businesses. It was a record year and quarter for our core earnings. On Slide 14, I'd like to call out some of the highlights of the drivers of earnings analysis presented relative to the prior year quarter. The first point to note is that the continued growth in our insurance businesses has contributed to higher insurance service results. But that was partially offset by the impacts from the two reinsurance transactions completed in 2024. Also contributing to the increase was the net favorable insurance experience across all segments, which notably improved year-over-year. Moving down on the DOE table, you will see that Global WAM once again generated strong growth, the fifth consecutive quarter of 20% plus growth in pre-tax core earnings. And it is…

Thank you. We will now take questions from the telephone lines. [Operator Instructions] And the first question is from Meny Grauman from Scotiabank. Please go ahead.

Hi, good morning. I wanted to ask about [indiscernible] drag is definitely shrinking, including in Q4. And I just wanted to better understand what drove that. Is that primarily PE or is there some dynamic on the real estate side? What's the key driver for the improvement in the quarter now?

Hi, Meny. It's Trevor. Thanks for the question. So, yes, obviously happy to see the better order experience for the quarter, consistent with our expectations for a steady improvement over time. The main driver of the non-core loss was again real estate return was largely flat, with small declines in external appraisals offset by income. The remaining classes were a mix of gains and losses with infrastructure quite strong and private equity much better than Q3 to your point, supported by some lumpy gains. I think in terms of the outlook, we do expect broad improvement across the portfolio, but do expect office real estate to continue to underperform for a period. So the path will, I think, to some degree be dependent on the economic environment, but we do expect a continued improvement.

Just as a follow-up, if office continues to underperform, is it still realistic? Could we still see positive experience next year or would that preclude that outcome?

Yes, thanks for the follow-up. Now, I think we're still reasonably comfortable that we will get back to our long-term assumptions around the middle of this year. It is, as I said, I think, subject to the economic environment. But I think while office has been a little bit challenged, I think industrial and multifamily has actually performed quite well. And so we remain, I think, confident.

Thanks so much.

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

Hey, good morning. Just want to ask about the Asia segment. Good quarter, good year, both in terms of profit growth and sales. I'm just wondering about the outlook, though, from two perspectives here. First, it seems like there was a substantial boost just from -- as a result of the actuarial assumption review in 2023. So your risk adjustment went down this year, but your CSM amortization or unwind, whatever you want to call it, went up. The net of the two is positive. So next year, 2025, we're going to be apple-to-apple, so that tailwind won't be there to the same degree. And then on the global minimum tax, I assume you're applying it as if it was effective across all your regions, and it hasn't been adopted, I don't think, in all of your Asia footprint. So if it were to be adopted and applied to all of your Asia footprint, what would the impact be on profits there? I suspect the GMT impact is mostly in Asia. And that's just more of a geographic thing from a segmentation standpoint. It wouldn't change your consolidated performance, would it?

Great. Well, this is Phil. Thank you for the question, Gabriel. I'll start on the first question on outlook and probably touch briefly on GMT, but I'll hand over to Colin to elaborate on that. 2024 has certainly been a strong year for Asia, tremendous business momentum that's absolutely continued into the fourth quarter. 37% growth in new business value. And that's high quality growth coming, as Colin said in his remarks, coming from all of our distribution channels we've seen strong double digit growth agency, bank assurance, as well as third party channels, including broker. And I think it is notable that, of course, we've made very notable investments in Asia. We walked through some of those as part of Investor Day in June. It's notable that Hong Kong and Singapore continue to emerge strongly as regional hubs with regional wealth management and financial services hubs. And that's part of what's driving the growth. But the growth is broad based. We've seen seven markets growing double digits year-on-year in the fourth quarter. But you are specifically asking about outlook. And you talked about the methodology change that was put in place a year ago. I do want to highlight that of the 27% core earnings growth that we have seen in 2024, the components of that that came from the methodology change was in the order of 10%. So it's that the majority of the growth we're seeing is from normal activity and that's a combination of, of course, the higher CSM build from higher sales, continued disciplined expense management and notably improvements in policyholder experience that I believe are sustainable. Q4 is an interesting benchmark when it comes to earnings growth. There is no distortion in Q4 from the methodology change. It's been a full year since that methodology change happened. And so the 16% core earnings growth is sustainable. Now on GMT, I will hand over to Colin, but I just want to highlight that when -- during 2024, when we did start providing for GMT, we provided for all markets where we would expect GMT to bite. So all markets where the average tax rate was below 15%. The top-up tax was recognized in the [indiscernible] of the segment. But I'll hand over to Colin to elaborate on that.

Hi, Gabe. Phil is absolutely right. Not all the countries enacted in 2024, so we kept the charge of the corporate segment. Once Hong Kong enacts, and they are enacting in 2025, we will incur the tax where it is earned. As far as how much comes from Asia, out of the $57 million, 80% came from Asia, and we would expect that to be a good run rate going forward so you can use that for your models. I will say that is shared between both our insurance and our asset management segments.

Okay so the numbers as we see them consolidated it's the GMTs in effect and next year if it's applied to the segments it's just a, I don't know, I call it, a geographic issue.

That's right. We'll push it down from the segment from the -- from the center into the each business.

Last question is this Roy's last call?

It is not Gabriel, thank you for asking.

Well I'll save my best wishes for next quarter then.

I'll look forward to that.

All right have a good one.

Thank you. The next question is from Alex Scott from Barclays. Please go ahead.

Hey, good morning. First one I have for you is always on GWAM and I was just interested if you could talk about the margins in the business. And they look, I think when you take out some of the more one-time in nature things that were talked about, the margins looked really strong this quarter. And I know markets are up, so it sort of makes sense. But I just wanted to see if you could add any additional color around expense discipline margins and what you anticipate going forward there.

Great. Thanks, Alex. It's Paul here. I'll take your question. Yes, thanks for recognizing the strong results and the margin. And as Colin mentioned in his slides, there is some really strong momentum in the business. And while there was some one-time tax items, it is our fifth consecutive quarter of over 20% growth on a pre-tax earnings basis. And that's really driven by just the fundamentals of the business. We have a great diversified franchise. We've got access to higher margin geographies and product lines and we've got some really good momentum from a top line perspective. And kind of looking forward, I guess, if you actually look at this year you've seen the combination of not just strong markets but strong top-line growth and really strong disciplined expense management. We do expect that to continue. We did take some actions this quarter that will generate run rate savings going forward and that's a nice tailwind for us to kind of keep the momentum of disciplined growth on the expense line. But when we couple that with just the strong top line growth that we're seeing. And if you just look at our business, I guess one of the things that differentiates us is about 50% of our core earnings come from outside the US. About two-thirds of that come from outside of retail. Both retirement institutional tend to be longer term focus so they don't have the same volatility. And if you look at our global retirement business, this year we surpassed $1 billion in core earnings for that business and if you look at the earnings power of that business per dollar of AUM relative to some of our peers, it's driving some fantastic margins and results on a more diversified platform. So we feel really good about the outlook. We think our ability to continue to drive strong top line growth and positive net flows will continue over the long term. And with the management team continuing to focus on expenses we would expect that to continue over time.

Helpful. Thank you. The follow-up question is on the P&C, I guess, catastrophe reinsurance operation that you guys have. Can you talk about your exposure to the California wildfires and I guess, even beyond like what we might see next quarter if there is anything? If you could talk about how this maybe changes the risk profile of your aggregate exposure going into hurricane season just because we're only a couple of months into the year and some of these aggregates are already pretty filled up. I think some of the primaries that I cover look like they will attach at some point this year, even in the normal hurricane season. So I'd just be interested in if it changes the profile of sort of the P&L exposure you all have there.

Yeah, Alex, it's Marc Costantini here. Thanks for your question. So you've got a couple of questions embedded there. The first, I'll start by saying that when you see wildfires and natural catastrophes like that, our heart goes out to obviously everybody affected and it's terrible to see. So that being said, as you say, we do have obviously a P&C, a retro business and our exposure to the wildfires and events such as that has a limit of about $90 million. I would say, there we don't have reporting. Obviously we are a retrocessionary, right? So it's got to go to a fair bit of reporting before it gets to us. But based on the industry estimates that are coming out in terms of insured losses, we would expect our exposure to these wildfires to be less than half of that $90 million US limit. And obviously, as we get more reporting through Q1, we'll obviously reflect all of this in our Q1 financials when we close our books in a couple of months. So your broader question about our exposure to hurricane season, I would go back to -- obviously, Ian was a big hurricane and we are affected. But I would say if you look at the past two years, we adjusted our underwriting very strongly. We increased our attachment points. We tightened our pricing. We adjusted terms and conditions across our portfolio. And you saw the benefit of that coming in 2023 and 2024. And the actual exposure that we saw to Ian in the final analysis, which is not complete yet, was much lower than what we had reserved for back in 2022. So positive developments. And you saw some of that in Q4 filter through. The key renewal season is behind us already. It's Jan 1, 2025. And I would tell you that our approach to that renewal season was very much in line with what I just mentioned about the last couple of years and we feel good about our portfolio. Having said so, we take volatility out of people's balance sheets when there's catastrophes that exceed $50-plus billion. So if there's such an event coming up later in 2025, which is highly unknown, and it depends a lot as well where it hits, then obviously our portfolio may be affected. But the last thing I'll leave you with is that, when you look through the course of time and cycles, this business has by far exceeded 20% to 25% return on capital. So we're quite proud, and it provides a lot of very hard cash every year, year in, year out when we do well. So thank you.

All right. Thank you for all the details.

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

Thank you. Good morning. I want to ask a question on earnings on surplus. In the corporate segment, it increased quite a bit quarter-over-quarter, so maybe you can address the drivers of that? And maybe more importantly, a lot of movements in interest rates across geographies and what that kind of implies for earnings on surplus going forward. Thank you.

Thanks, Paul. It's Colin here. So we invest our surplus long, so you would expect a very stable result on our earnings on surplus. However, as you pointed out, we did actually see some increase. It's $20 million year-on-year and $37 million quarter-on-quarter. A couple of issues going on. One is currency has had a favorable impact. We do hold some of our surplus in US dollars. And the second issue is, just as part of normal course business, we did have some fund rebalancing, and that created a positive contribution, which is one off for the quarter. But if you look at the ongoing run rates, I would take the average of the past four quarters as a good forward looking estimate for earnings on surplus. To my first point on investing surplus quite long, it does mean we're fairly immune from movements in the short-term rate. And so, you wouldn't expect a lot of variability in our earnings on surplus. In fact, if the yield curve moved down by 50 basis points, we would only have a $25 million to $30 million impact on earnings on surplus. So you can expect a fairly stable number in this line going forward.

Paul, the only thing I'd add to Colin's comments, the surplus bond portfolio for us today is about $40 billion, and the average yield is about 2.85 on that portfolio. And as we've talked about in the past, obviously, higher rates are a positive tailwind to our business and if you look at US treasuries at the moment, 30 year US treasuries around 4.8 as that Portfolio matures and we reinvest those maturities that will be a -- certainly a tailwind so long as rates continue to stay elevated and that's something that obviously will continue to flow through our results.

That extra color is helpful then. Of that $40 billion roughly, how much would be US dollars?

It's roughly about a quarter to a third Paul.

Thank you. Okay. Second question is related to the Asia business. As you're probably aware, one of your competitors took a fairly sizable write-down in Vietnam. Now, Manulife has obviously been exposed to the same challenging industry conditions, so maybe you can walk us through your review of the Vietnamese business and why Manulife did not make to take a similar right down.

Hey Paul, this is Phil. Thank you for the question. And I think it's important to note that Manulife in Vietnam is one of the leading life insurers in the market. We're without doubt a scale player with a very large in-force portfolio. And that strong in-force portfolio and those strong roots does make us resilient to changes that may arise, the regulatory environment, the macro environment that can impact sales from quarter-to-quarter, year-on-year. With respect to your specific question on intangible assets that are capitalized for bank assurance partnerships. Our approach for all bank assurance partnerships, and this is true across the region, is very much to take a partnership approach whereby our interests are aligned with our bank partners. And we routinely build in protections for ourselves, such that there are financial clawbacks or other protections in the event of sales falling below targets. And one of those common protections is an automatic extension of the term of an agreement if sales fall below our agreed business plans. So taking into account those protections, as well as our expectations for the future, we have reviewed the recoverability of our intangible assets, and our conclusion is that our intangible assets are recoverable. And I think it's really important to note that the strength of our distribution across all of our channels does position us well to capture the rebound from Vietnam that I believe is inevitable. It's been a tough couple of years, but the market shows substantial promise over the medium term in line with the rest of the ASEAN markets.

I just have to quickly then follow up. Have any of your bank assurance agreements been extended in Vietnam?

Actually -- what we've actually done, to be very transparent, over the course of the fourth quarter, we mutually agreed to exit one of our bank assurance partnerships in Vietnam and that mutual agreement to exits combined with the protections that we had built into our agreement resulted in us recovering substantially all of our unamortized intangible asset relating to that agreement.

Very helpful. Thanks for the time. Appreciate it.

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

Good morning. Hopefully this will be relatively quick, but on the remittances, Colin, $7 billion, I think there was mention of positive impact from the reinsurance transactions. I apologize if it's somewhere in your details here. But can you quantify what that $7 billion would have been if you -- what the impact was from the reinsurance deals?

Hey, Doug. Yes, sure. We took $750 million from the reinsurance transaction through to remittances. And actually, that $750 million is relative to the $1.2 billion that we said at the time of the transaction. So you can expect a bit more coming from that LTC transaction.

And so just, I mean, I know it's one year into your four-year plan of getting to $22 billion in cumulative, but it looks like you're well ahead of plan. Is that what we should be taking away from this in terms of the remittances or is there -- was 2024 just an abnormally really good year?

It's a combination of both, Doug. So short $7 billion into a $22 billion four year target is a great start and we're really pleased with the remittances. Certainly the LTC one-off remittance wasn't a surprise when we set the target, but we've had some good tailwinds from markets. And a lot of that comes through the center. I talked about our surplus account, and so interest does have an impact on the surplus of the center. But we've also been working on some optimization activity. We took a dividend out of our P&C business. We had tax settlement, which we recorded last year. And so the cash earnings of that was received. So all those come together to create a little bit of a one-off in the center, and you'll see that. But going forward you would expect 60% or 70% of our earnings to come through as remittances. And that's largely because we're a really cash generative business with a great asset management contribution.

Doug, when we highlighted remittances at our Investor Day, it was very specifically focused on highlighting the power of the organic capital generation of the franchise, and as well, the strong remittability of that cash generation. So we thought that target was an important one. And obviously getting out off the bat in the first year with a very strong start is something we're very proud of, but we also think that that will continue. And like all of the other targets that we established at Investor Day, our goal is to not just achieve them, but to exceed them. This is a good starting point for that one.

And just another follow up on the remittance, that 60% to 70%, that's on core, I assume.

That's right. Yes.

Yes. Perfect. And second, just expected investment earnings was low this quarter. I know there's so many things that go into that and modeling it is real tough. Is this $670 million? What drove it down if there's one or two things? And then is this a new run rate that we should be thinking about in terms of expected investment earnings?

Hi, Doug. It's Trevor. Thanks for the question. So yes, in terms of expected investment spread, you're right. I think we would normally expect this to grow as our balance sheet grows and you see this happening in Asia fairly consistently. In terms of the total company the year-over-year decline is largely driven by the reinsurance transactions in the US and Canada as well as the US basis change The quarter-over-quarter decline was largely driven by some older sales in the US. We did some sales in anticipation of the recent agreement with RGA, and so that obviously had an impact as well. So I think quarter-to-quarter, to your point, there is some variability, but we do think that Q4 is an appropriate base to model total company quarterly expected investment spread going forward.

Perfect. Appreciate the color. Thanks.

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

Good morning. Phil, this might be best for you. In response to that first question from Gabriel, you talked about -- we were talking about Asian growth, and there was a little more going on in Asia than just the CSM allocation that Gabriel referred to, there was just a lower tax rate, there was an allocation of investment income into Asia as well. So when you think about 2025, have you provided an outlook for growth as you have in the past for Asia? Is it still something around that 15% growth rate. And if so, does that contemplate the significant increase in the tax rate we'd expect in Asia in 2025?

Thanks, Mario. Great question. When I think about the outlook from a core earnings perspective for Asia, I do expect mid-teens to be the sustainable rate of growth. That's consistent with the message we have provided at Investor Day. And there's nothing for me to believe that 2025 would be any different to that medium term expectation. Now in terms of the impact of global minimum tax, that sort of mid-teens growth rate would be normalizing for the impact of global minimum taxes. But as Colin referenced earlier, we had already taken -- during 2024, taken the charge that we would expect to incur in 2024 from the Canadian overlay of global minimum tax. So when we look at the allocation of that comparative down to our segments, operating segments, both Asia and GWAM, that distortion should be removed when you look at the comparative year-on-year. And I'd expect to see sort of the mid-teens earnings growth. It's really important under IFRS 17, and this is one of the reasons I like the earnings basis under IFRS 17. Regardless of variability in sales that can happen from quarters-to-quarter and year-to-year, I do expect earnings to be stable and growing. And I think that's important in the context of some of the trends we're seeing in Asia, which is the emergence of new or newer distribution channels as a stronger relevance of third party channels, broker channels to supplement our traditional agency channels and bank assurance channels. And I think that's relevant because broker third-party channels does have the potential to be more variable to factors such as the competitive environment as well as regulatory changes. And if I look at our overall distribution mix across the region, about a third is coming from agency, a third is coming from bank assurance, and a third is coming from third-party channels.

Just as a quick follow-up, do you anticipate -- and I know it's hard to do this, but do you anticipate any changes in 2025 related to CSM, allocation of investment income, into a segment like Asia or wealth management from other segments?

There's nothing that I'm aware of, Mario, that we anticipate on changing in 2025.

Thank you.

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

Yes, thanks. One quick question here just on the tax rate. Like, what's the core tax rate we should assume for 2025? And do you foresee more of these tax gains in wealth because two quarters in a row now?

Hi, Lemar. It's Colin here. Yes, it's -- the tax -- when we set the new tax range of 17% to 23%, we did that because we expected GMT to add 2 percentage points to our historic 15% to 20%, 2 to 3 percentage points to our historic 15% to 20% range. So what we're finding now, and GMT is relatively new, is that there are some permanent differences we can apply to the pre-tax income before we apply the GMT charge. So that is pushing our tax rate down towards more the 15% rate, which is below the 17% to 23% that we guided you to. Of course, also, more earnings coming out of Hong Kong is helpful for the overall effective tax rate, and we see that continuing. So we're going to continue seeing how GMT goes for the next few quarters and come back to you if our guidance changes. At the moment we don't have any update for you, but there's no reason to believe that the 15% is a one-off effective tax rate.

Okay, that's helpful. And then my more fulsome question here, just credit loss is very low this quarter, kind of as expected, just given the timing of the end of Q4. But obviously, as we start this year, there's all these talks about the impacts of tariffs and, increased macroeconomic volatility. So I'm just wondering, can you talk to us about what we should expect as we look forward into Q1? Like, could there perhaps be a bigger Stage 1 and 2 build as we look forward into Q1?

Yes, thanks for the question, Lemar. I'll start and then I'll hand it to Trevor. And you're right. The macroeconomic environment continues to be volatile. I would say that 2024 was the year of macroeconomic volatility and we're therefore not expecting 2025 to be any different. There's a lot of discussion around trade wars and what the impact of that will be. Trade wars are not good for anyone. Obviously, there will be an impact to GDP, inflation and unemployment, but it's hard to predict how that's going to unfold. What I would say is that, I believe we are really well positioned to navigate a challenging environment in 2025. As we did in 2024, you could see from our results that we were able to deliver in a record earnings and sales despite the volatility and the uncertain markets. We've done a lot over the last seven years to reduce our sensitivity to market movements significantly reducing our equity market sensitivity as well as our interest rate sensitivity. But obviously we're not going to be immune to any of the negative impacts that you see from unemployment and inflation creeping up. But again, I would say that our portfolio really positions us well to navigate that from a relative perspective, which is a source of strength that quite honestly, I think has come through in our 2024 results for not only Q4, but the full year. But Trevor, you might want to elaborate a little bit more on credit in particular.

Yeah, thanks Roy. Yeah, thanks Lemar, thanks for that question. So I would basically reiterate what Roy said. I think we've had strong credit experience for many years. The portfolio remains 96% investment grade. But credit losses are, by their nature, variable and lumpy. So -- bit it wouldn't be a surprise to see some quarterly volatility, depending on how this all actually plays out. I think to your question around Q1, I think it's probably too early to say. And so we would, I think, stick with the guidance that our $30 million to $50 million a quarter remains inappropriate through the cycle run rates to use in your modeling.

Okay, I appreciate the time. Thank you.

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

Yes, thanks. Good morning. First question is for Colin here. I think you said the $7 billion remittances included $750 million from the Global Atlantic reinsurance transaction. How much did it include from the Canadian Universal Life Reinsurance Transaction that you did in 2024?

Hey, Tom. So we take a fairly conservative approach to remittance definition in Canada because we operate our liquidity out of our MRI entity where that transaction emanated. So the short answer is, we didn't include any -- there was no contribution to remittances from the Canadian Universal Life transaction.

Okay, thanks. Even though there was $800 million in potential capital release, it wasn't reflected in that $7 billion remittance then. Is that right?

It was capital relief, but not surplus creation.

Okay, great. Thanks for that. And the second question is with respect to improved insurance experience, how sustainable is it? Phil made comments earlier in the call that he sees the improvement there in Asia as being sustainable. Maybe we can have Canada and the US talk about the sustainability of the good insurance experience that we saw in the fourth quarter. A little bit of color on that and what we should be thinking about going forward for that. Thanks.

Sure, Tom. It's Steve. Thanks for the question. And first off, we were very pleased with the experience that we saw in the quarter. Positive experience both through the P&L and CSM in every insurance segment. So strong results overall. In terms of maybe some of the drivers, in terms of why we've seen the improved experience. Phil noted sustainability of the improvement in Asia. We had in the first half of the year and prior year some ongoing headwinds from Vietnam persistency, which we expected to normalize and it has. So the past couple of quarters, we've been overall neutral in Vietnam experience. So that is sustainable. And then US life, that was another source of headwinds from the lapse experience. And as you recall, we had strengthened our lapse assumptions in the US in Q3. And that's what we've seen as expected, a material improvement in ongoing experience from that. In the quarter, we did have a release of P&C provisions, which we would not expect to be an ongoing event. That was about just over $45 million in the quarter. And then in Canada, we've seen ongoing, it varies a bit quarter to quarter, but very strong experience in our Canadian group benefits in the long-term disability business. We've got a very, very strong team that oversees the claims and cautious in terms of calling ongoing performance, but the team continues to do a very good job. So that's really the big picture.

Okay, thanks. And if I could just squeeze one more in, the 3% NCIB, I think the RGA deal, the loss of earnings there is $70 million. That would be about one-third of that 3% NCIB. I think you have used the term business as usual, share buybacks. Maybe you can provide us what that might necessarily mean and how we should be thinking about share buybacks going forward, especially the good cash and capital generation that you're seeing.

Yes, thanks, Tom. You're right. Buybacks had been a key part of our strategy over many years and we've created a lot of shareholder value through the buybacks. In fact, since 2021 we've deployed about $8.8 billion towards buybacks and that's generated an economic benefit of approximately $3 billion. In 2024 we bought back $3.5 billion and we've always committed through the transactions that we've done to deploy the excess capital that we've generated towards buybacks at a minimum, and we've continued to do that. In 2025, we've just announced a 3% repurchase of outstanding common shares, then you're right, about a third of that is the RGA transaction and the rest of that, approximately 2%, is what we would say is the incremental. I don't know if I'd use the word BAU because it assumes that it's a given every year, but the strong capital generation of the franchise and the strong remittability really does talk to the fact that we have this effective tool to create shareholder value, whilst maintaining very strong capital ratios. Our LICAT ratio of 137% means that we've got $24 billion of capital in excess of our supervisory target and more than $10 billion above our internal operating range. And that's despite the buyback. So, yes, we are very positive about the fact that we can continue to deploy capital towards buybacks whilst maintaining significant financial flexibility.

Okay, thanks.

Thank you. And the next question is from Lemar Persaud from Cormark. Please go ahead.

Yes, I appreciate you taking my follow-up. Just in response to the answer to Tom's question on insurance experience here. I appreciate it's a very tough question to answer, but I'm going to try it anyways. It sounds like -- based on your response, it sounds like we should expect positive experience moving forward. Is that fair? If I look at and exclude Q4 and look at the average experience over the past two years, it was pretty much dead neutral. So should we be modeling out positive experience moving forward? Is that kind of the takeaway there?

Thanks, Lemar. I'd be cautious to promise a positive experience on a run rate basis. If you look at the past two quarters after the assumption update and you back out the P&C benefit that we got in Q4, were roughly neutral, slight positive. So I'm really giving you my sort of expectations that it's running pretty close to expectations with variability by business and the caveat that we're in the very large case market in the US on mortality, so you'll expect variations. But I look at that last half of the year as roughly neutral as a good run.

Appreciate it. 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 will be available after the call if there are any follow-up questions. Have a good day, everyone.

Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.