Good morning, ladies and gentlemen. My name is Dikitriya and I will be your conference operator today. At this time, I would like to welcome everyone to the Sun Life Financial Q2 2020 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 Leigh Chalmers, Senior Vice President, Head of Investor Relations and Capital Management. Please go ahead, Ms. Chalmers.

Thank you, Dikitriya and good morning everyone. Welcome to Sun Life Financial’s earnings conference call for the second quarter of 2020. Our earnings release and the slides for today’s call are available on the Investor Relations section of our website at sunlife.com. We will begin today’s presentation with an overview of our second quarter results by Dean Connor, President and Chief Executive Officer of Sun Life Financial. Following Dean’s remarks, Kevin Strain, Executive Vice President and Chief Financial Officer, will present the financial results for the quarter. After the 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 on today’s call. 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 maybe rendered inaccurate by subsequent events. And with that, I will now turn things over to Dean.

Thanks, Leigh and good morning everyone. As communities around the world continue to grapple with the health and economic impacts of COVID-19, our thoughts go out to the many people whose lives continue to be affected. In the midst of that, Sun Life is continuing to help our clients, employees, advisors and communities navigate their way through these times and that sense of shared purpose is stronger than ever. This quarter, we have also had many important conversations across Sun Life about underrepresented communities, including Blacks, indigenous and people of color. We know that building diverse teams creating an inclusive environment free of racial discrimination and providing a sense of belonging are all keys to our success. And we have committed to an action plan. It will take time. But I have high confidence in the ability of people at Sun Life to make this happen. Turning to Slide 4, during this past quarter, we continued on our relentless journey of putting clients at the center of everything we do. In Asia, we further advanced our digital capabilities rolling out new virtual sales experiences in Hong Kong, Indonesia, India and the Philippines. Clients don’t have to leave their homes in order to connect with their Sun Life advisor. Instead, they can transact safely from application submission to digital signings without using paper or meeting face-to-face. At this year’s age of trusted life agents and advisors awards, I am really pleased to report that we won three awards, all won by our team in Hong Kong, including Insurance Company of the Year. During the quarter, we received an insurance license from the Monetary Authority of Singapore, which will enable us to provide Life Insurance Solutions to help high net worth clients grow, protect, and transfer their wealth to the next generation.…

Thanks, Dean and good morning everyone. Turning to Slide 7, our reported net income for the quarter was $519 million, down 13% when compared to the same period a year ago. The drop in reported income was primarily from unfavorable market related impacts, resulting from COVID-19 specifically lower interest rates, narrowing credit spreads and changes in the fair value of investment properties partially offset by equity market impacts as markets rebounded from the lows we saw in the first quarter. Positive equity market impacts also included basis risk, primarily on our Canadian segregated funds which was negative this quarter and the impact of lower valuations on private equities. Underlying net income of $739 million and earnings per share of $1.26 remains level with Q2 2019. Our underlying results this quarter versus prior year were driven by strong growth and expected profit, investing activity gains, favorable morbidity experience and higher net investment returns on surplus offset by unfavorable tax impacts on adjustments relating to the prior year’s Canadian tax filings of approximately $50 million and lower tax exempt investment income, unfavorable credit experience of $58 million in the quarter primarily driven by downgrades, and unfavorable expense experience from lower expense recoveries in our Canadian group benefits administration’s business. Our underlying return on equity for the quarter was 13.4% within our medium-term objective of 12% to 14%. Assets under management grew by nearly $100 billion in the quarter to over $1.1 trillion driven by the strong recovery in equity markets and the overall net inflows partially offset by foreign exchange impacts. Book value per share of $37.56 increased by 4% over the prior year reflecting reported net income and foreign exchange gains in other comprehensive income over the last 12 months. Our capital position remains strong at 146% LICAT at SLF and…

Thank you, Kevin. To help ensure that all of our participants have an opportunity to ask questions on today’s call. I ask that each of you please limit yourself to one or two questions and then to re-queue with any additional questions. With that, I will allow now ask Dikitriya to please poll the participants for questions.

Thank you. Your first question comes from Gabriel Dechaine with National Bank Financial.

Alright, good morning. My first question for Jacques and Dan, I guess, the group business, we touched on a lot of times talking about claims, I want to get a sense for the revenue or premium outlook over the next 12, 24, maybe 12 months that you have for the business considering the trend in unemployment and maybe even business decisions like some employers may choose to cut coverage to offset the premium increases you are probably going to be putting through?

Kevin, should I go first?

Yes, Jacques, why don’t we start with you and then move to Dan.

Hey, Gabriel. Good morning. Thank you for your questions. It’s you point to a bunch of good factors there, employment levels is something we have been watching. Interestingly, I have – see Gabriel, we haven’t seen much of an impact so far. There have been layoffs in many cases temporary, so benefit coverage has not necessarily stopped. The other issue is looking at the segmentation of clients as you know in our Canadian business we would have a larger proportion of large national accounts. I think there has been more stability in that part of the economy. So, sectors of the economy, of course, also have an impact. We also have what I would describe as mitigating factor. So, as you know, in our group businesses, when people terminate, they can roll over into individual products. So that sort of plays a bit of an offsetting impact. So at a macro level, all the things you say are things that we also think about and are watching, we haven’t really seen that much of an impact. Of course, the trajectory of the disease and the impact on the economy going forward is going to have to be watched carefully, but as I said so far, not that much of an impact.

And this is Dan Fishbein. Let me add on for the U.S. To-date like Jacques is describing, we have not seen much impact. Premiums revenues have stayed fairly close to where we would have expected them to be. We have been watching that very closely. We did give extended grace periods during the second quarter. Those have now largely ended and we have seen clients make the payments for anything that was deferred under those grace periods. So, our premium receipts are right about where they would have been without the pandemic. We think what’s happening to some degree is that the CARES Act in the U.S., the government support has been very effective. And combine that with the fact that it’s clear that our clients value these benefits and want to keep providing them to people even those who have furloughed workers have continued paying for benefits during those furlough periods. And certainly, the government supports have been very helpful in that regard. We are obviously watching very carefully what’s going on in Washington right now with potential extension of those kinds of supports. That will be important to us. But with that said, as we get into more structural layoffs versus furloughs, we have to keep watching that, because that could create a different dynamic in the coming months. The final comment I will make like Jacques, our mix is somewhat favorable. We have measured that and evaluated that very carefully and the industries we serve are somewhat more resilient in this economy than the economy as a whole.

Okay. Thanks for both responses. And my next question and it’s a bit more morbid, but a core one to the life insurance business and mortality and I guess there is – if you mortality or some negative mortality experience this quarter, I guess where that’s coming from. I am more curious though about your longer term outlook and maybe Kevin for you, there is some direct impact from COVID than indirect, economic downturns are on lead to health issues and mortality rates moving higher. And if it lasts a long time, then that could be a secular trend. Just wondering how you think your business is positioned for potentially higher mortality rates over the next few years? You are long or short mortality, I should say, but then the individual product mix, the insured population also play the role here.

Gabe, I am going to suggest that Kevin Morrissey start with some of the answer to this question. And then we can pass it to the business group presidents if there’s additional color to add, because it is different, as you noticed a little bit different by country and by market.

Yes Gabriel its Kevin Morrissey thanks for that question. I think when we are thinking about the impacts of mortality, it's important to Sun Life to step back and look at the different types of diversification and risk mitigation that we had. So far, what we have experienced as a result of COVID-19, we have seen significant product diversification. As you’re aware, we have life insurance and annuity products. And so we are seeing some of that offsetting of risks. We are also benefiting so far from geographic diversification. So, to date, the pandemic has been more severe in the U.S. and UK and less severe in Canada and the Asian countries where we operate. We also seen a significant risk mitigation for the impacts on the insured population versus the general population. And so across those three dimensions, where we are seeing some significant risk mitigation, also, I would highlight we have significant use of reinsurance across a number of a number of our blocks. So when we are looking across all of our businesses, we have the experience to date, we have had some significant diversification and that that has helped us so far in what we have seen in our experience, longer term, I guess, it’s tough to say about the trajectory of what it will do for mortality, I think, we are still very early days in the pandemic. And I think it’s tough to draw conclusions around longer term where this would go. So I think at this point, I will probably reserve opinion. We are closely monitoring it both our experience and industry experience and we will have to I think time will tell longer, longer term but at this stage a little early to make conclusions.

Gabe, it’s Dean and I don’t – get that was a great answer, Kevin, I don’t think we need to go by geography. The only thing I would add to it is a significant part of our mortality exposure is in our group businesses in Canada and United States where we have the ability to re-price, so to the extent that, that trends over the longer period turn negative on mortality, we can catch that up in relatively quick order through pricing.

Thanks. Thanks for that.

And your next question comes from the line of Steve Theriault with Eight Capital.

Thanks very much. If I could start with a question on Asia, likely for Leo, Leo on the sales front, Hong Kong is coming through the pandemic very well, in terms of terms of top line in sales, but more volatility in the local markets. Kevin gave a view from the top of the house. And things are changing pretty swiftly in terms of additional waves. But to the extent possible, can you give us a bit of an update on what you are seeing sort of early Q3 and maybe help us? If you could point to geographies where your outlooks getting better or worse, that would be helpful in terms of how we think in the second half of the year?

Okay, good morning, Steve. Thank you for the question. So, if you look at our sales in Q2, maybe I will start with momentum. If you recall, our Q1 analyst call. We shared sales for the month of April at 80% of prior year. We ended up the quarter, basically flat to prior year. So that tells you a little bit about the momentum through the quarter, which we feel quite good about. Now, as you mentioned the trends are a little bit different market to market. So you talked about international hubs. That’s our international business in Hong Kong being quite strong in Q2 we also had strong results in, in China and in Vietnam. Whereas the markets like Indonesia, Philippines, Malaysia, were quite a bit weaker. I think you can link that quite directly to what’s happening in terms of COVID-19 measures in these different markets. The Southeast Asian countries had much more severe levels of COVID-19 cases and therefore much more severe social distancing measures throughout the quarter. Now, despite all of that, I talked about the momentum across the region you can assign that in part to some of the relaxation of social distancing in Southeast Asia, but also to a lot of their capabilities that we deployed to all of our markets in Q2, where we equipped our advisors with a number of new digital capabilities to allow them to interact with their clients non face-to-face. And to give you a bit of a sense of what that means, for example, if you take the Philippines in the month of June, 75% of our applications were submitted via digital remote capabilities. We have also seen quite a bit of new creative and productive activities being rolled out across the region. So, for example, one of the ways our advisors operate is that they create client seminars and would typically bring 100 clients together in a conference room and have an educational seminar. In the middle of the crisis, we moved all of that to webinars online and we are having attendance of several thousand clients joining these digital venues. So, all of that is fueling good momentum, which is offsetting some of the headwinds related to social distancing measures. So, we see that momentum across the region. And then of course, at the same time, we do see quite a bit of uncertainty into Q3 as you would have seen Vietnam and Hong Kong have had a resurgence of COVID-19 cases. And Hong Kong is going through its toughest wave of social distancing measures so far in the last 6 months. And so that’s definitely a headwind. The Philippines announced a new set of social distancing and quarantine measures earlier this week. So, that’s also going to obviously be a headwind. But we are cautiously optimistic in terms of the momentum of our business, all of these headwinds notwithstanding.

Can you give a sense – last quarter you mentioned how April is 80% of prior year – can you – does that – can you roll that up into something in terms of July?

So, it’s Kevin. We gave the disclosure for a total company at 95%, but we weren’t going to break it up by business group. You can imagine that it’s – that’s pretty current information. We just ended July a few days ago. And so we are trying to give keep that at the total company level, but maybe Leo, can talk a little bit more kind of trends in the quarter, which I think is sort of addressed by the nature of what’s happening?

Yes, I think what you described at a global level, Kevin, is quite in line in terms of momentum, April versus July, the trends would be similar in the context of Asia.

Okay, thanks for that. And just if I could, second question, going to MFS, and thanks Leo, I want to ask about the institutional business, you had been running at $5 million or $6 million of quarterly gross sales for a stretch of time there. But the last couple of quarters that’s jumped to the $10 billion range through a difficult Q1 and what was a better Q2, so Mike, are you seeing indications that you are turning the quarter after a more challenging period for the institutional side and maybe a bit of color on what’s resonating with the institutional client base? Is it as simple as performance or is there some better uptake in some of the initiatives you have been working on for the last year or two?

Yes, good morning, Steve. This is Mike. Yes, I would just say the work that we have been doing to continue to broaden the opportunity set around the world by client. What’s interesting, I think with MFS relative probably to what you are seeing broadly, in the active marketplaces is much of what we have been distributing institutionally has been equities. And so we are winning in the equity platform. And I would also say from a product perspective is we did see several years of redemptions in the institutional channel. There have been some strategies that were capacity constrained that we have reopened and we have seen some interest in those as well. And so I think there are number of things that we are doing in terms of prospecting, engaging with clients cross-selling to existing clients. And I do believe the investment platform on the consistency of the performance and risk management has resonated around the world and we are seeing a lot of interest in a variety of products across the platform.

Okay, thanks for that color. I’ll leave it there.

Your next question comes from the line of David Motemaden with Evercore.

Thanks. Good morning. Just a question for Leo and specifically in the international hub sales, that was a very strong result, maybe you can give some color in terms of what was driving that and what region specifically was driving that because my understanding was there was a lot of Hong Kong driving the international high network sales? And I would think that those require more of a face-to-face meeting to close. So just wondering if I could get a bit more color on what was driving that during the quarter?

Thanks. Thanks for the question, David. In terms of international hub sales, there is really two factors that I would point you to the first one is our strategic focus on the high net worth segments over the past few years and then the second one is more of a technical aspect of the sales cycle of the high net worth product, right. So on the first point of strategic focus, we have – we have made high net worth one of our key strategic priorities in Asia over the past few years. As you will remember, we brought international into the Asia business group in 2018, given its natural alignments with the Asian markets. Then we launched our high net worth business in Hong Kong onshore in 2018 as well and then more recently, in Q1 of 2020, we brought these operations together under one roof as international hubs. And through that process, we have really strengthened our product suites. We have enhanced our technology capabilities to support brokers and distribution partners. And we have deepened our relationships with banks and international brokers significantly. And so one of the things you are seeing in the momentum of these sales is, those efforts paying off. And then the second thing that you are seeing that’s a little bit staggered to maybe other markets given COVID-19, if that – it can take 6 to 12 months for the sales cycle of a high net worth sales. And so some of the high net worth sales we saw in Q1 and Q2 of this year are really from our pipeline generated in 2019. And so we are really benefiting right now from the momentum we generated in 2019.

Got it. Thanks. If I could just follow-up is there a lot of mainland Chinese visitors in that high net worth business in Hong Kong, is that a big component of the sales?

It’s a very small part of the sales at the current time. It’s always been a small part of our business in general. So, it’s Hong Kong and it’s the rest of Asia really.

Got it. Okay, thanks. And then just a bigger picture question for Dean, just wanted to get your insight into what happened in Hong Kong with the Securities Act and how that impacts how you are thinking about growth in the country and potential M&A there?

Yes, thanks, David. The National Security Law is clearly – it’s an important development that we have been studying and comparing notes with other financial institutions in the region. I think it’s too soon to say what impact. We understand the background, the rationale and the different points of view on it. I think for our business for the industry, it’s too soon to say. For the time being, it feels like business as usual in the sense that businesses, the access to capital, the access to courts, the access to talent, all of those things that cause us to want to for the last 125 years want to be in Hong Kong. All of those continue. And I think the question that we will watch closely and I know others are watching closely is to what extent will that change. For the time being, we continue to see access to strong talent. We have got a great team in Hong Kong both in our local business and in the regional office and we think that will continue for some time, but it’s in some ways, I think it’s too soon to say whether or not it will have a significant impact on business.

Great, thank you.

Your next question comes from the line of Meny Grauman with Scotiabank.

Hi, good morning. Just a question on M&A, I am wondering if COVID has changed how you view M&A right now, just in terms of potential to be more opportunistic, if you are seeing anything and then specifically, I know you mentioned investment in dialogue that was very small, but I am wondering, larger, in the larger terms, your perspective on tech investments and potential to deploy in large tech investments as your uptick for that change. And do you see any platforms out there companies that would potentially make sense?

Thanks. Meny it’s Dean. So we continue to be in the mix in discussions on M&A as Kevin noted, and as I have noted, and as we have talked about before, we have a balance sheet and a cash and capital position, leveraged position that I think puts us in a good place in terms of considering M&A opportunities. We don’t have to do M&A. We have good organic growth opportunities, as you see coming through these quarterly earnings results, as we look at opportunities, one of the additional lenses that we will apply given we are in the middle of a pretty significant, event with COVID and the economic impact is we will apply an additional stress scenario. So, if we end up with a severe stress scenario, as one of our tail events coming out of this, we want to make sure our capital position remains strong. So that’s just an additional lens that we would apply to anything that we look at specific tech investments. You have seen us make some investments in, tech businesses, like Maxwell Health now dialogue that provide additional capability that we can integrate to the benefit of our clients for the benefit of our clients and we are seeing that with Maxwell Health in the U.S. it is making a difference in winning business and getting more lines of coverage in place when we take employees through an employer through a Maxwell Health enrollment process. And similarly, it’s quite remarkable Jacques and his team in Canada have signed up. There’s over half a million Canadians, who now have access to dialogue, virtual healthcare coverage, just in the last quarter, because we pushed it out, and we made it available and, and made it easy to connect with. And so I think and that is exactly in line with our purpose and our strategy and it kind of fits with the Lumino digital health platform that we have been building. So I think for tech investments the first filter that we look at is, does it help accelerate our core business? Does it help deliver on the purpose of the company and I think you would say in the case a dialog. In the case of Maxwell, it ticks those boxes. So I’ll stop there.

Thank you.

Your next question comes from the line of Doug Young with Desjardins Capital Market.

Good morning, I guess this is probably for Kevin. I think Kevin mostly I think you had negative mortality experience in the U.S. closed block. And I think even if you exclude COVID, you can kind of tell me if I am wrong just your thoughts on the trends there and do you need to make adjustments to your assumptions? And I think that’s something that you are studying as part of your Q3 assumption, review any early insights into that potential impact from that review?

Thanks for the question, Doug. This is Kevin Morrissey. Yes, you have noted correctly that the U.S. mortality experience was negative in the quarter in the U.S. same force block of life shirts business. And it has had a bit of a negative trend over several consecutive quarters. So as we are looking to the update in Q3 in terms of assumption, I think that’s one of the areas where we are seeing some, potential stress in terms of strengthening. So I think you are right directionally. When I look kind of maybe pull the lens back more broadly on the Q3 ACMA, we are still quite early days, and we are seeing some significant positive items as well as significant negative items. And so it is too early to tell now about Q3 results in total. Which we knew about a large net positive or net negatives we would disclose it, but we are not at that point yet to be able to, have a clear view on the overall net impact.

Thank you but some of the positives would be like? Some mortality in the U.S. is a negative, what would be some of the positive items that you would be thinking about?

Doug, it’s Dean, I think it’s too early to talk about Q3 ACMA. So, you will let Kevin off the hook on that one, I will have a full discourse for that as part of our Q3 earnings.

Fair point. And then maybe to yourself, Dean, Sun Life Investment Management had $30 million of earnings, $12 million in Q1, when I look back at the 2016 Investor Day it looks like you have hit the targets on AUM, looks like you have hit your EPS targets, roughly speaking which you are in trajectory to do so. So, what’s next for this business? It’s been an area now when we think of M&A and a lot of people think of M&A, you think – we think Asia, we think U.S. group, but also I think this has been an area that’s in technology, but this has been an area you have been active. What’s next for this business?

Doug, it’s Dean. Thank you for the question. And I am going to have Steve Peacher, who is President of SLC to comment on that, but I would – before Steve speaks, I would just say that we are very pleased with the progress here. You are right to point out that we have gone from zero to $100 billion of AUM in a relatively short period of time and we are starting to see some meaningful net income come from the business. Now, we have allocated a lot of capital here. So, we need to see that income growth to generate the kind of ROEs that we expect on that allocation of capital over the fullness of time. So, with that, I will turn that over to Steve to give you a little more color on how we think about the future.

Yes. Thanks, Dean and thanks Doug for the question. Yes, I think that I am really pleased with as you point out today with the acquisitions and the organic initiatives we have had. We have built a pretty broad platform today across real estate and fixed income and private credit and our infrastructure, with InfraRed. And I think in terms of the future, our – what’s in – the opportunities in front of us is start to connect dots across that platform. And one of the things that I have been really pleased about in this – during this pandemic is a) how much new business we are winning, but also the breadth of that business. So, if you look at the last few months we have won mandates in fixed income, in private credit, in value-added real estate in Europe and Asia. We had our first closing on a U.S. core plus real estate fund. And so the breadth is starting to come through. And also when you look under the covers, we are winning business that no one entity could have won on their own, but we are winning because we are connecting dots across the organization. And I think that’s going to be key going forward. I think in terms of future M&A, one of the things I have said in the past is the one big area that if we could wave a magic wand, we would love to add would be in that below investment grade private credit space. And maybe that will – we will be able to slot that in. But even without that, I think we have – I am really pleased with the breadth and depth of the platform we have today.

Great. Thank you very much.

Your next question comes from the line of Paul Holden with CIBC.

Thank you. Good morning. So, I have a couple of more questions on SLC asset management. Because of the investments you made in the last few years, my understanding is a large proportion of the AUM would be in real estate investment. So, first, maybe you can provide us some context in terms of what proportion of AUM would be real estate? And then second part of that question, probably the more important one is how are you thinking about risks in the real estate market today as it pertains to both SLC and I guess on balance sheet direct investments as well and maybe the potential for AUM outflows out of that product category?

Yes. Hi, it’s Steve Peacher. I will take the first part of that. And as it relates to real estate on the balance sheet, Randy Brown may want to also comment. In terms of our AUM related to real estate, I would say today, I don’t have the exact number in front of me, but it’s probably about a third of SLC’s AUM when you think of direct real estate. Now, we also have commercial mortgages, which is real estate-related, but of course has more fixed income characteristics given the senior nature of the loans that we make against real estate. In the quarter, obviously, you are seeing – some of the dynamics you are seeing across the real estate markets on average, I think if you look at our third-party portfolios and our balance sheet, we probably on average saw values down 2% to 3%. But when you look under the covers, there is a lot there. Obviously, retail assets would be down significantly more. Office assets would depend significantly based on location. Many industrial assets were actually up in valuation because of the increased demand given the online economy that’s emerged in this crisis. I think you are seeing cap rates actually start to come down, because risk free rates have come down so much. Risk premiums are widening, but you are seeing cap rates come down. So you are seeing a lot of cross-currents in terms of the drivers of real estate values. I think and we are seeing in some of our funds, some redemption activity as people think about reallocations. But I think maybe more than that, actually, we are seeing interest in allocating to the sector with the idea that there will be value – there will be values in the market going forward. As I mentioned, in response to last question, we had our first close for a new U.S. core plus fund that BentallGreenOak is running in the past quarter. And we have continued to raise significant money in Europe and Asia for our real estate funds there. So, I actually think we are seeing investors interested in values that may develop as a result of the current market environment.

And Paul, this is Randy Brown. So with respect to the balance sheet, as you saw, we had a modest write-down in the portfolio for the quarter largely driven by retail down. Couple of idiosyncratic markdowns in office, but broadly office did fine, but an uptick in industrial, as Steve said, in terms of value. As I think about real estate going forward, I actually think there is quite an opportunity there, with interest rates, 10-year interest rates at 54 basis points, long rates in Canada, even lower. I think that the return opportunity away from fixed income broadly will become even more attractive than it has been in the past. So, I think the jury, there is a lot of talk on real estate and real estate valuations in the future of office and those types of discussions, but I am actually quite optimistic. You may get a minor debit here, as you look in prices as we look forward, but if you look as a long-term investor as we are, I think it’s a great opportunity and aligns quite nicely with what Steve was talking about with the growth of SLC.

Great. Appreciate the current color and I will leave it there.

Your next question comes from the line of Tom MacKinnon with BMO Capital.

Yes, thanks very much. Good morning. The expected profit – my first question is about expected profit growth, Kevin, you said, it looks to be up nicely in both U.S. employee benefits and in Canada and you said the driver of that was widespread growth. Maybe you can give us a little bit more color, because it seems to be – the second quarter expected profit seems to be up nicely year-over-year and running higher than the kind of quarterly run-rates we saw in 2019 and to what extent is sort of improving operational leverage help these numbers as well? And then I have a follow-up.

Okay. Thanks, Tom. I will just start – I will start off by saying that you heard the numbers in my sort of prepared remarks and SLC benefited from the addition of BGO and that explains a big part of the growth, but we continue to see good flows inside of SLC and Steve just talked about that. I am going to let Jacques talk about the expected profit growth in Canada and Dan talk about the expected profit growth in the U.S. and Leo maybe a little bit on – I think Leo has probably covered what you have seen anyway. So, I think the two key stories there are Jacques and Dan, so maybe we will start with Jacques on Canada expected profit and then go to Dan.

Thank you, Kevin and good morning, Tom. So yes, 12% growth in expected profit Q2 ‘20 over Q2 ‘19 and we are pleased with that as you can imagine in terms of absolute number. But we are also pleased because we are seeing expected profit growth across all of our businesses. It’s not the case of one business as a strong locomotive for the rest year. We are seeing widespread growth. And by the way, I would point out, Tom it’s the sixth quarter in a row in Canada that expected profit is up either 9% or more. What’s happening is essentially a couple of things, it’s driven by business growth, I would say that’s about half of it. The other half is strong expense discipline. On the business growth side of things, we have a lot of focus. We have just talked a few minutes ago about digital investments. I will give you a quick fact here how our digital coach in Canada in the first 6 months of this year has driven an extra $500 million of deposits on our plan members. So, that’s obviously good. Our digital assets are helping us win more business. They are helping us grow the business. We have got some of our growth engines. We have talked about in Investor Day, whether it’s SLGI002, defined benefit solution, the – what we call the worksite advantage with our client solutions. All of these are really coming on strong and helping to grow expected profit. The other side of it is the expense as I said we mentioned in 2018 that we made a pretty significant step change in the financial and the management of our expenses. And you are seeing that come through as well. So, the combination of strong expense discipline and strategic investments in very important growth areas is definitely helping here. And I would say, Tom, last few years we have put the right building blocks in place to increase the earnings power of the Canadian segment, and that’s what you are seeing.

And good morning, Tom, it’s Dan Fishbein. Just some comments on the U.S., first, the technical comment, when our biggest sales months of the year, is January 1, especially for our stop loss business, so those sales show up in new business gains in the first quarter and then they transition over to expected profit in the second quarter. So when we have a big January, you see a big growth in expected profit in the second quarter. But with that said, like Jacques’ comments, we are seeing growth in expected profits across all our businesses, except of course, IFM, which is actually a negative by definition each month. So the results are even a little better than the total would appear. A lot of that is being driven by growth – volume growth in the stop loss business, obviously that business has been – continues to have great growth over the past few years both in retention of business and in new sales. We are also seeing good growth in the group business. A lot of that is coming from achieving our target pricing margins. That is starting to make a really big contribution there. And we are also seeing growth in our full scope business. So, there is growth across the board in addition to that Q1 to Q2 technical issue.

Great. And then in terms of my follow-up question, the impact of changes in the fair value of investment properties that’s shown on Slide 13 to be $55 million pre-tax. Now, what I believe this to be is it’s your commercial real estate investments that are on balance sheet and they back long tail liabilities and changes in the fair value of these have an immediate impact on earnings. And then the number you show on that slide is really the impact here as it relates to your non-par business. First of all, do I have that correct? And then secondly, what is the split of this between par – what was the decline in the quarter in the fair value? I think you had said it was modest, but what was the fair – and how was that decline split between your par block and your non-par block?

Kevin Morrissey, do you want to take that question?

Sure. I will start and maybe Randy, I will ask you if you have any further questions. So the – where you started Tom was that the non-par tax? And the answer is yes, you are asking about whether that’s backing liabilities and that’s yes as well. So, it is backing that. As far as the third part of the question, maybe I will, Randy, if you want to address that one?

Yes, I will take that one. Thank you and thanks Tom for the question. So the change in the real estate valuation, as Kevin said, is backing long-term liabilities. I think really which – the heart of your question really gets to the return, which was in terms of valuation, we were down approximately little under 3% in mark-to-market and we had income – income return to offset that. So, if you look at it in total return space, we were actually pretty much unchanged, roughly zero total return to the income component. But what you see is the change in valuation. As I said earlier, that valuation was really driven largely by retail down, industrial up in a couple of those idiosyncratic buildings in the U.S. in office.

So this is a $7.4 billion portfolio. So a 3% decline is over $200 million pre tax, you show a $55 million pre tax is that because then about three quarters of that block would back par? Is that? Do I have that right?

Tom, it’s Kevin Morrissey. Yes, if you are thinking about the real estate and the liabilities, how that's splitting across par, nonpar, that's splitting across par, nonpar, we have a proportionally higher amount in nonpar blocks. And so I think directionally, you are on the right page there and that the majority would certainly be in if you are looking at Real Estate majority would be in par and then looking at what happened in the quarter the par impacts would have been larger. That’s right.

Okay, Thanks for that.

And your next question comes from the line as Nigel D'Souza with Veritas Investment.

Thank you. Good morning. My first question I just want to touch o n credit experience. And I noted that in the quarter looks like the impact from changes in ratings and impairments picked up quarter over quarter. So I was wondering credit experience could you speak to what the drivers were and how do you see those two components playing out over the coming quarters?

Randy, can you address Nigel’s question?

Sure. Nigel Randy Brown, thank you for the question. So what we saw was, as Kevin mentioned, we took a pretty hard look at the whole portfolio given the impact of COVID and given the global shutdown, and therefore the economic impact of that. So migration as you see in the Slides was post tax about $60 million with impairments about 24. The impairments were largely what I am going to call, mostly non COVID. Related, they were COVID influenced, but it was largely the same, the same loans that had had issues prior, continuing in their in their trend in terms of migration what you saw there was largely the majority were in the sectors that we identify in the MD&A, as you would expect, and that ratings migration was really not unexpected, part of our review has been that the in an economic slowdown, the rating agencies would downgrade further and faster than they have in the past. And we are seeing that materialize. And we did that, as I said, a pretty hard look through the quarter.

Okay good lastly

Sorry, just Kevin. I just might just even stress that we took a really hard look at all the sectors that we thought were most impacted and then we continue to review other sectors as well. So there was Randy and his team along with the credit risk guys and the finance team took a really, really deep dive on the sector and got through way more loans than we would ever typically get through and made more private fixed incomes on a given quarter. So they worked, worked really, really hard and really accelerated their reviews.

Okay, that’s really helpful. And the last question I had was on capital restrictions. And Kevin, you touched on this in your prepared remarks. I know it’s early, but do you have any sense on when you may get the green light on revenue increases and buybacks and I can understand that you may not be able to answer that in terms of timing but maybe in relation to banks and non bank Banks, financials. And the reason I ask that is because it appears that you are better positioned on capital balance sheet, credit risk exposures and your earning stability. So do you see OSFI booking restrictions for you? Now they’re insurers ahead of other financials or do you expect OSFI when it does move, kind of move across the board and for the entire sector once the risks related to COVID are in the clear.

So Nigel we have a lot of discussions with OSFI and they haven’t given any indication yet of what they might do in terms of lifting the restrictions on either that the buyback or the dividends. I do know that they look at the insurance industry separately from the banking industry, as you're noting. And we have sessions with myself and and Kevin with the CFO, CRO and Chief actuaries from the other companies with OSFI is something we continue to stress our strong capital position certainly that we start ours and they start their strong capital position and where we are at. So, it’s – but they haven’t given any indication in terms of what the timing might be.

Alright. Appreciate the color. Thank you.

Your next question comes from the line of Scott Chan with Canaccord Genuity.

Good morning. Just on the URR, your competitors have offered some guidance on timing and the potential range and I was wondering if you could update us on that if you can?

Kevin Morrissey, do you want to give an update on the URR?

Yes, thanks for the question, Scott. This is Kevin Morrissey. So, as you have probably heard, the actual standard boards is going to be reviewing the URR. So the ASP review and analysis is not done yet. So I don’t know if a change will be made, but if it changes made by the ASP it would be promulgated next year and we would make our update at that time. As a reminder, the last URR change was in 2019 where the URR decreased by 15 basis points, about $93 million absent tax loss.

Great. That’s a bunch of thoughts. And maybe on MFS, Mike, I guess similar to Steve’s question, but just on the retail side, the gross sales has really picked up the last two quarters, $25 billion to $26 billion range versus a 17 run-rate. Is some of the same factors that you talked about in the institutional relates to retailers or something in the industry or the retail industry that is driving that?

Yes, I think it’s a little bit different, Scott, on the retail side. And that is what we are seeing is providers, consolidating their list of providers, our counterparts. And so – and you can see that when you look at flows in the industry is the flows and active funds continue to be in outflows, but where you are seeing flows as they continue to consolidate into fewer players. And so we see a number of funds being sold within providers in the marketplace. And so we are benefiting from that and we have seen – really we have seen that trend accelerate through this period of COVID and we have been expecting this for a number of years and we would expect it to continue to happen. So, the platforms are consolidating the list of providers that consolidating the funds that they use and firms like MFS are benefiting from that. And I think that’s probably the biggest impact year-over-year.

Great. Thank you very much.

Your next question comes from the line of Humphrey Lee with Dowling & Partners.

Good morning and thank you for taking my questions. Maybe a question for Kevin, just thinking about expenses, like we have heard different companies talking about the current government, you do have a little bit of a tailwind for expenses from a T&E perspective. But looking at kind of the expenses for this quarter is a little bit of a negative variance, again, just wondering how you see expenses kind of in this quarter and also as far as the coming quarter given some of the disruptions and how you think about the expense efficiency?

Yes. Thanks, Humphrey. So, we obviously have a very strong focus on controlling expenses and we benefit from business group leaders who you have heard earlier who see this as a priority. The uptick this quarter really related to as I mentioned earlier, the group benefits ASO administered services business and just the level of claims that has come through and that showed up in the expense line. But we are very focused on expenses. We have got a – we are seeing the tailwind as you mentioned from some of the COVID things like travel and conferences, but we are also investing in technology and that’s absorbed in that rate, but overall, very modest growth in terms of controllable expenses at 2%, which is in line with how we are growing the business right or even less than. So, we see expenses as being having a lot of potential to support the earnings going forward, expense declines.

Alright. A question for Mike Roberge for MFS, I guess like looking at the margin for this quarter like nominally, I think historically, you have talked in the past that like when you have a positive market that tends to be a tailwind to the margin, just looking at the asset growth, looking at the equity market performance this quarter, I probably would expect the margin to be a little bit better. Is there like a time lag between kind of how the margin will improve relative to market conditions and AUM growth?

Hey, good morning, Humphrey. I think there are couple of things. The first is as you are thinking about the market, most people as they are thinking about the market like to use the S&P. We have got a significant piece of our assets outside of the U.S. and markets outside of the U.S. lagged fixed income markets obviously did not move with the U.S. equity markets. So, revenues didn’t necessarily move with the S&P that would be the first. If you look year-over-year, Q2 does tend to be a lower margin quarter, because amortization of stock compensation and you tend to see the margin expand in the back half of the year. And that’s happened year-over-year for the last number of years. And so I don’t think there was anything in the quarter that was any different seasonally than what we have seen historically. Again, revenues would have been impacted by the relative market performance around the world. Expenses were relatively in line and Kevin did call out, I mean, one – the one expense line in the quarter, because sales were up so dramatically year-over-year, we have had some sales based expenses that have been higher that are offset by travel, entertainment, technology and other expenses. And so we have guided in the past in a normal market environment, while this certainly hasn’t been normal, but if you look – we had the big decline in March, April, big increase off of that base. As you look at the first 6 months of the year, we have provided guidance of mid to high 30s is something that we see through a cycle and we are within that range. And so I don’t think there is anything extraordinary that I would call it the quarter.

Okay, got it. Thank you.

And we have no further questions at this time. I will turn things to Ms. Chalmers for closing remarks.

Thank you. And I would like to thank all of our participants today. If there are any additional questions we will be available after for the call – after the call. And should you wish to listen to the recording, it will be available on our website later this afternoon. Thank you and have a good day.

This concludes today’s call. Thank you for your participation. You may now disconnect.