Good morning everyone. My name is Justin and I will be your conference operator today. At this time, I would like to welcome everyone to Sun Life Financial Q4 2021 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] The host of the call is Yaniv Bitton, Vice President, Head of Investor Relations and Capital Markets. Please go ahead Mr. Bitton.

Thank you, Justin and good morning, everyone. Welcome to Sun Life’s earnings call for the fourth quarter of 2021. Our earnings release and the slides for today’s call are available on the investor relations section of our website at sunlife.com. We will begin today’s call with an overview of the fourth quarter and full year results from Kevin Strain, President and Chief Executive Officer. Following Kevin’s remarks Manjit Singh, 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 this morning. Turning to slide two, I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures which form part of today’s remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events. With that I’ll now turn things over to Kevin.

Thanks, Yaniv. Turning to slide 4, we delivered solid fourth quarter results with reported net income up 45% to approximately $1.1 billion and underlying net income up 4% to $898 million. Growth in underlying net income was strong across asset management in Asia, both up 18% on a constant currency basis, and also in Canada, which was up 9% over the prior year. US underlying earnings were down approximately 50% mostly reflecting adverse COVID-19 mortality experienced. US infection and mortality rates related to COVID-19 remained elevated and as a result, we continue to see significantly higher than expected mortality in the working age population. We also saw elevated mortality in Asia, mostly in the Philippines. Our capital position remains strong ended the year at 145% LICAT for SLF and cash at the holding company of $4.7 billion. In November, following the length of regulatory restrictions for all federally regulated institutions, we announce a 20% increase to our common share dividend reinforcing our commitment to provide strong returns to shareholders. Turning to slide 5, with strong full year results in 2021 closing the year, with reported net income up 64% to $3.9 billion driven by favorable market related impact and a $297 million gain on the IPO of our India Asset Management joint venture. Underlying net income was up 10% to $3.5 billion at the high end of our medium term objective of 8% to 10% growth. 2021 underlying ROE of 15.4% was also strong moving towards our 16% plus medium term objective. And we ended the year with $1.4 trillion in assets under management. We also had strong growth across our businesses in 2021. SLC management had $32.5 billion of net inflows in the year, and MFS ended the year with record AUM of US $693 billion. Individually insurance sales…

Thank you, Kevin and good morning everyone. Slide 9 provides an overview of our fourth quarter results. The results once again demonstrate the resilience of our diversified business model. Our wealth and asset management businesses delivered strong results driven by good net flows and favorable market conditions. On the protection side, fundamental business activity was strong while COVID-19 related mortality and morbidity experience remained elevated in the quarter. Reported net income in the quarter was nearly $1.1 billion. This included higher investment property valuations, reflecting the value our investment team has created and repositioned portfolio over the past few years. Reported net income also included a $297 million gain from the IPO of our India Asset Management joint venture. This was partially offset by an increase to acquisition related liabilities of SLC management, largely reflecting higher expected earnings at the time of buy up of the remaining interest in affiliates. Underlying net income of $898 million and underlying earnings per share of $1.53 increased 4% driven by broad-based growth across our business groups. COVID-19 weathered the impacts of approximately $110 million the quarter was largely offset by a lower effective tax rate, reflecting higher tax exempt income and the release of a tax resolution of prior year’s tax matters. Underlying return on equity is 15% in the quarter, and 15.4% for the full year, marking the first time our underlying ROE has crossed 15% on a full year basis. Assets under management grew over $1.4 trillion, reflecting market value growth and another strong quarter of net flows at SLC management. For the year, SLC assets under management were up nearly $70 billion driven by strong net flows and the Crescent acquisition. Our wealth and asset management businesses in Canada and Asia also delivered strong AUM growth up $14 billion from…

Thank you, Manjit. To help ensure that all of our participants have an opportunity to ask questions this morning. I would ask you to limit yourselves to one or two questions and then re-queue with any additional questions. I will now ask Justin to pull the participants.

Thank you. [Operator Instructions] And our first question comes from Humphrey Lee from Dowling & Partners. Your line is now open.

Good morning and thank you for taking my questions. My first question is on US group benefits underwriting results. The dramatic normalization of stop-loss claims experience was a little over, it was a big surprise to me, especially since all the stop-loss players do have relatively favorable performance. Can you just talk a bit more in terms of your stop-loss underwriting and compare that to the favorability that we’ve seen in previous quarters?

Yes, thanks Humphrey. This is Dan Fishbein. We continue to have favorable stop-loss results in the fourth quarter. What we’ve seen is a gradual wearing off of the favorable impact that we were seeing from the slowdown and reductions in care during the pandemic. As you know those were very significant both in 2020 and the first half of the year. And in the third and fourth quarters, we’ve returned largely to normal hospital utilization which then starts to impact the stop-loss results. But the stop-loss results actually remain favorable, we have estimated that about 60% of the favorable stop-loss results we’ve seen during the year were due to the delays in care due to COVID. But 40% was due to favorable underwriting and pricing results and those continue and continued in the fourth quarter.

So just to kind of thinking more like for this quarter’s results, since you don’t provide the underlying net income for group benefits, but just thinking about on the net income basis, the $9 million versus the $15 million last quarter like is that delta, just the COVID claims was a little bit more than favorable, is the delta just seemed like the normalization of the stop-loss, or is there anything kind of running through the numbers?

No, the delta was essentially entirely or almost entirely the COVID claims. We’ve indicated that we experienced $66 million in the fourth quarter in unfavorable COVID claims mostly mortality, some disability as well. So the difference between the fourth quarter and the third quarter is largely due to COVID claims. If we think about what’s been happening in the US during the third quarter and especially the fourth quarter we were experiencing the delta variant, which was quite severe in terms of mortality. And now we’ve begun very late in the fourth quarter and into the first quarter experience in the Omicron variant which is less severe, but far, far more contagious and more common. So I think what you’re seeing playing out here is the overall population mortality in the US from COVID which has, in the second half of the year, migrated much more into the working age population whereas earlier in the pandemic, it was largely in the above 65 population.

But for the first quarter COVID impact was it like $15 million US, so it just is not a big increase from 4Q to 3Q?

I believe our COVID mortality and morbidity that we reported in the third quarter was $27 million. It significantly higher, though, in the fourth quarter, and that follows the incidence of deaths unfortunately in the US in those time periods.

All right. Thank you.

And thank you. And our next question comes from Gabriel Dechaine from National Bank Financial. Your line is now open.

Well, thank you. Yes. I’m more curious about the outlook. You talked for the US group business and Canada as well, for that matter. But I see some headwinds that may appear transient, like the mortality rates and COVID-19 and hopefully transient anyway. But they may be replaced by other issues like mental health claims and medical cost inflation and I’m just wondering how you see those trends evolving over the next year really such that this quarter was particularly weak, but there’s still some headwinds on the horizon for the group business that we have not really fully seen yet or alternatively, do you think alright, you’ve just you saw these things coming in, you price for it, and we won’t see an impact Canada and US actually?

Dan, do you want to start with the US and then maybe Jac can talk about the Canadian group benefits business?

Sure, sure. So very good question as to what second order impacts maybe. In the US, we are not as exposed to mental health claims. In our stop-loss business, of course, remember what that business is very large claims generally above in a catastrophic kind of threshold. So those are typically not where our mental health claims would fall. Mental healthcare certainly have an impact on our disability business on the morbidity. But in the US environment, which is quite different than Canada, mental health benefits and disability are limited to a two year term. So while we may see some claims in that category the reserve impacts because we of course, set up a reserve based on the expected duration of the claim are much smaller there. We’re obviously very concerned about that issue for our members and we’ve put additional capabilities in place to help members in these difficult times, especially because of our disability business with return to work, including looking at alternative approaches, which are now more feasible in this more virtual work environment at least for many roles. So we have more tools at our disposal to manage that. But again, I think the impact in the US is more modest simply because of the products that we are offering.

But what about medical costs inflation, is there any concern?

Well, medical cost inflation would potentially impact our stop-loss business, that’s the one area that it could impact. Our sample of business is fully re-prices every year. And when we set our pricing factors, we take expected medical costs inflation into account, and we actually work with leading actuarial consulting firms to project medical inflation, which is a pretty widely shared number in the US, of course, amongst the health insurers as well in public sources. So we price prospectively for medical trend, and we would have that in our pricing going forward. And if for some reason that expectation was incorrect, we would be able to react very quickly, as the business re-prices each year. In fact, I mean, not that we’re hoping for medical inflation, but the primary impact for medical inflation on our stop-loss business would be more premium.

No, it’s okay. So the situation in Canada, as you probably know, is a little bit different from what Dan is experiencing. COVID has actually not had material impact on our mortality here. And as you probably know, [Indiscernible] there’s a bit of a natural hedge in the Canadian business, because we also have a large annuity block as you know. The mental part is an issue. And you’ve addressed that before. But let me give you a bit more context this time around. You might recall we saw an increase in mental health cases, and then the impact on visibility, actually from a number of years before COVID. And it’s accentuated through COVID. But starting in May 2019, we started putting some price increases through the book. And in fact, as of now we’ve done 97% of it. So we think we’re in a good place. And the incidence of visibility is in line with what we expect from the pricing. But the issue is, at the moment is actually getting people back to work. It’s the return to work variable that is a bit of a challenge. And that is in part driven by COVID because people need access to care and access to care has been an issue during COVID. So we actually think when it comes to morbidity in Canada, we’re in the right place in terms of pricing incidents, and the return to work aspect of it with US in fact, something that’s more transient as you were saying earlier.

Duration, your price for some of these trends in Canada, but the one that might be a little bit uncertain now as the duration of claim?

Yes and due to difficulty, and as you know, it’s well known it’s been in the media access to care have been a problem during COVID, but we expect that as COVID recedes this will come back to normal.

Thank you.

Thank you. And our next question comes from David Motemaden from Evercore. Your line is now open.

Hi, good morning. Kevin, I’m wondering if you could just talk about how you’re thinking about share repurchases now, and maybe putting another NCIB out there now that it’s allowed. A – Kevin Strain: Yes. Thanks David. As you can see from the quarter results, we’re in a strong capital position, but we do have the DentaQuest acquisition that’s coming up, we expect that to close in the May, June timeframe still and that will be using about $2.6 billion US of cash and capital. What we do with the NCIB is we look at opportunities for M&A activity to support growth and building capabilities at our capital position. So, we’ll be assessing that as we get closer to the back half of the year and get the DentaQuest acquisition closed. So it’s a matter of looking sort of at our pipeline. We’re still pretty active. You would have saw in my opening remarks that we did ten strategic initiatives in 2021. And we’ve got lots that we see on the go and lots of opportunity to invest in our businesses. So it’s a balance of those two things. And we’ll be assessing that as we get closer to the back half of the year.

Great. Thanks for that. And then maybe a question just on cash flow, free cash flow. Where did that come in for the year? I think last year, we were talking about an $800 million level net of the dividend. I guess obviously, COVID has an impact this year, but maybe just talk about what you think free cash flow was this year and the outlook going forward given growth in the underlying businesses? A – Manjit Singh: Yes, David, good morning. Thank you for your questions. This is Manjit. As you know, we’ve sort of outlined the $800 million are referencing as sort of a capital generation range over the medium term. In 2021 we are broadly in line with that. And given the mix of our businesses and our growth potential, we expect to be in that range going forward.

Got it. And I guess why hasn’t that grown? I think the last time you first gave that I believe it was 2019. I mean, obviously, COVID is a headwind. But the underlying earnings have grown since 2019 despite the headwinds from COVID. So just wondering why the free cash flow generation hasn’t increased? A – Manjit Singh: I think there’s a couple of things. So number one, as Kevin mentioned, we’re continuing to invest organically in our businesses. And in looking at some of the opportunities we have there, then obviously, there’s been some market impacts as we’ve seen changes in some of the market factors like interest rates. And like I said, the 800 is kind of a medium term target over a cycle.

Thank you.

And thank you. And our next question comes from Tom MacKinnon from BMO Capital. Your line is now open.

Yes, thanks very much. Good morning. Maybe question for Dan here. In all fours big time for new business activity in US group business and you had 26% growth, I think in sales there. So on one end you’re growing your sales 26% and then the other end you’re experiencing higher than expected mortality claims both in the same quarter. So maybe you can help us go through explaining your thought process in terms of pricing when these groups came up for renewal? Did you try, to what extent are you r-epricing in this elevated mortality? And in how much of this elevated mortality do you think could go away to the pricing?

Yes, thanks, Tom. This is Dan. So first of all, the increase in sales in the fourth quarter, which as you noted was substantial was mostly in our stop-loss business. So we had strong sales results in the group business as well. But largely consistent with the prior year, the increase was mostly in stop-loss. And the dynamics there is that we saw a much more rational pricing environment emerge in the fourth quarter, especially in the last two months of the fourth quarter which of course, are the two biggest sales months of the year because most of that business is on a one-one renewal and sales cycle. So our very strong stop-loss products and team really carried the day in the fourth quarter as some earlier irrational pricing, quite frankly, that we had seen earlier in the year largely evaporated in the fourth quarter. So we ended up finishing the year very, very strong, and having a nice strong close ratio, especially in those last two months. And so that bodes well for this year because we’ve had some nice business growth in the stop-loss business. Your comment of course, pricing is related specifically to the group life business. And of course, that is COVID driven. In fact, we believe that entirely COVID driven. So we are not pricing fully for the current COVID mortality because that’s not expected to persist long-term. However, we have taken pricing actions, some of which occurred in the fourth quarter to adjust our both disability pricing upward to reflect what we think will be some long term elevated experience. And we observed that in the marketplace. The entire marketplace appears to have moved modestly upward in the fourth quarter and moving into the first quarter. I would point out as we’ve talked about in the past, that pricing changes don’t click in immediately. Most business on the group side, as opposed to the stop-loss side is on two and three year contracts. So it does take a while for those price increases to cycle through the book of business.

Thanks. And then for the second question. You’ve had really good sales growth in Asia exclude the international hub. And this was the first time I’ve seen correct me if I’m wrong, but pretty good new business in Asia. So what is happening here? Is this business coming more to scale? Is it much more profitable? And how should we be looking at new business in Asia going forward, what we saw in the first quarter and the normal or the fourth quarter normally, or are you looking for new business coming from Asia going forward? Thanks. A –Kevin Strain: Tom. It’s Kevin. Ingress is on the call this quarter. She’s on the ground in Hong Kong now. And so I’m going to turn that question to Ingress. A –Unidentified Company Representative: Kevin thanks very much. Good morning. Good to see a little bit blanked out. But I think I did get a question overall in terms [Indiscernible]. On the new business gains, we’ve done a tremendous effort on actually addressing product profitability, ensuring we’re asking quality sales. While you’ve actually seen some of the trends, perhaps the a little bit irregular, some of that has been already fixed. But interestingly, on the local market, look back over the past nine quarters. This past quarter four has actually been our best quarter in this 9. And then if you look at the International hubs, it’s actually been a [Indiscernible] of some of the momentum that this quarter was just probably 5% or 6% of the first quarter. So we are seeing this coming through and rebuild. So you should look at the expected profit and new gains as the line which shows the line remain. And we do remain optimistic. But clearly, there are some uncertainties around federal restrictions and…

And is the takeaway that the new business gains that you’ve gotten a quarter in Asia that you expect those things to continue or to be significantly better than the business losses that you traditionally had in Asia? Is that the takeaway? A – Kevin Strain: I think, Tom, you’re right that the scale is helpful in Asia, because it controls the expenses, the bigger your distribution channel, and also the work we’ve done on the mix of business that Ingress discussed earlier. So the combination of both of those is what you’re seeing in the results.

Thanks. I do like the disclosures. Thanks for that. A – Kevin Strain: Yes, you’re welcome, Tom. A – Unidentified Company Representative: But it is more variable, don’t expect positive trajectory, it will be variable through the quarter.

Thank you. And our next question comes from Doug Young from Desjardins Markets. Your line is now open.

Good morning. So just back to you, Dan. The question, I guess, getting loaded on is on US group business and I think you’ve answered a lot of the questions, but maybe I’ll just throw this out there the question is like, is the policyholder experience that you’re seeing whether it’s stop-loss or in the employee benefits side, do you see this as transitory? Do you see it more as permanent and why? And how do you feel about being able to achieve that 7% plus margin on your group side that you’ve thrown at that you’ve obviously been in excess of that? Is that margin still realistic given the pressures that you’re seeing

Yes, thanks, Doug. Great questions. I think there’s a number of different pieces there to go through. So first of all, on the stop-loss experience. As I said earlier, we think that about 60% of the favorable experience in 2021 was from the impact of delays and care due to COVID. But about 40% of it was due to ongoing just really strong underwriting results. So, we in the fourth quarter utilization returned and this is based on overall population statistics as well as what we see in our book of business utilization return very close to normal. So it’s that underlying part a favorable experience that we would expect to continue, but the tailwind from delays and care would not. Now I should caveat that there was a period of time, especially in January, in the first quarter where there were hospitals were very overburdened, but thankfully getting a little better now. So we might see some anomalies in the pattern versus a straight linear path back to complete, normal utilization. As far as the mortality, what we experienced in the fourth quarter was if you look at loss ratios, or mortality as a percent, as a relative portion of the book of business I experienced was middle of the pack compared to peer companies in the US So, nothing unusual in our book of business. Obviously though, very unusual in that we’re having a once in a century pandemic. As you know, with both the delta variants in the fall, and then the Omicron variant extending into January and February, we’re in a very difficult part of the pandemic. At the same time, things are starting to get better. Cash flows, hospitalizations, and now even deaths are starting to fall nationwide. So our belief and our hope, but of course, we can’t predict what will happen, especially with the emergence of new variants. But barring another dramatic new variant, we would expect the COVID impacts to subside after the first quarter. There will still be significant impacts in the first quarter. But we’re hoping that we get to a much more endemic kind of level of impact beyond the first quarter.

And just around the margin.

Yes, on the margin. Thank you. Thank you. The margin, obviously, it peaked at around 8%, which was actually well above our target. Remember, it’s a trailing 12 months measure. So we have to look back at all four quarters and it will take a while for the COVID impacts to fully wear off. I will say the group business is actually in the best condition that it’s ever been in with the exception, the very notable exception of the COVID mortality, but it’s obviously hard to see through the fog of that right now. But in terms of where we are on pricing, on sales momentum, on growth in the book of business, on persistency, on products that we’ve put in the market, new digital capabilities, I can sincerely say that business has never been in better condition than it is now. So as the COVID impacts fade, which hopefully they will, we should see the group business as a significant source of earnings growth in the US as its underlying earnings power reemerges. Now, one other comment just on the margin, the dental business, which will become a very big part of our business, when DentaQuest closes, is by its nature a somewhat lower margin business because it’s a business that requires very little capital. So, lower margins generate very strong return on equity. So that’s the nature of that business. So we are thinking about is margin and the current target that we have out there the right metric going forward, considering the role that DentaQuest will play in our total book of business going forward.

Now that’s good color. And then just my second question, I know Steve’s on the line, but just on SLC net inflows $10 billion in the quarter. Just wanted to get a little color of what you’re seeing from a flow perspective. And obviously, it sounds like you increased your earnings target for 2025 by $10 million to $235. Just trying to get a sense of what drove that increase? And is there more gas in the tank on that side? A – Stephen Peacher: Yes. Hi, Doug. It’s Steve. Thanks for the question. Yes we feel like we’re seeing really good momentum in that business. And one of the things that I feel really good about in our fundraising for the fourth quarter, but also for the full year is the diversity of those flows. We’re seeing growth across the platform. If you think of the fourth quarter for instance that number includes over a billion dollars for Crest and Mezzanine fund, almost a billion for a European real estate fund, that BGO almost over half a billion for a cold storage real estate fund, 500 million for our private fixed income business in the US, almost 500 million for lending increasing assets for UK lending business at BGO. So it’s very widespread, and the same thing is true for the year. So we feel good about that. And we expect that to continue into this year. And I would say that in terms of the increase in liability and the increase in our guidance that we had given out at Investor Day. That’s primarily due to an increase in outlook at [Indiscernible] and I would say that’s because we’re seeing new funds launch there that we hadn’t originally included. And a good example of that is a cold storage fund. So that’s a niche within industrial. That was a fund idea that came that kind of started to germinate last in the fourth quarter of 2020. And today we’ve raised over a billion dollars. And we’ve also another example that BGO is they bought a very small business from Carlisle in the secondaries business now called BGO strategic partners. They’re out fundraising, that’s going gangbusters. So that’s some of the things driving the increased outlook there.

Appreciate the color. Thank you.

And thank you. And our next question comes from Meny Grauman from Scotia Bank. Your line is now open.

Hi, good morning, we talked about some of the headwinds to the group business but want to talk potentially about some of the positives here. Dan, you touched on a little bit, but lots of discussion on what people are calling the golden age of benefits. And just wondering if that’s just a headline or there’s something more material there that’s really going to make an impact? And I don’t know if we look at the results so far, I don’t know if we see that coming through just yet. I’m just wondering your perspective on that given on both sides of the border really?

Yes. So I’ll start and then maybe turn it over to Jacques. It’s a really interesting dynamic. And as you noted, there’s a lot of speculation on that. Clearly, the labor market at the moment has become hyper competitive. So employers are competing in whatever way they can for talent. In fact, we’re doing that ourselves and obviously one very obvious way is with overall compensation and benefit packages. It’s hard for us to tease out the specific drivers as to whether or not an employer is increasing the number of benefits and the amount they pay for them. We do see anecdotes that’s scary as well our number of products perk has been going up steadily, although in a fairly modest way over an entire book of business. It does appear and this may be more opinion than data that employers are using the compensation versus benefits side as the bigger lever to attract talent in this environment but certainly the general direction and pressure is to preserve and expand benefits versus to reduce benefits at this time. So that certainly bodes well for the business. And indeed again, we can’t exactly ascribe cause and effect, we are seeing nice growth in our group business.

Yes. Meny this is Jac here. I would agree with everything that Dan has said, certainly benefits are becoming more and more important. One example I might give you in Canada is virtual care telemedicine. It’s become a little bit of a mush, if you like, if you want to have a modern and competitive benefits program in your organization. Lots of emphasis on mental health and the benefits that come with that. So last point, I might mention, you may have seen the announcement from Ontario where they’re looking to expand benefit coverage to cover what we call gig workers. And it’s something that we obviously welcome. We think that increasing benefits coverage, have more people covered is the right thing to do. So I fully agree with Dan. And I think that benefits remain and are increasingly strategic for employers.

Thanks.

And thank you. And our next question comes from Scott Chan from Canaccord Genuity. Your line is now open.

Good morning, Steve. I just wanted to go back to full speed for a moment, because you talked about many, many different product launches. And if I kind of put it together, looking back your investor day you had 13 billion net flows in 2020, you guided 23 billion in 2021 and with almost 10, this quarter, you certainly exceeded it. So it sounds like you’ve got good visibility in one year ahead on the platform. So just wondering, with the pipeline you’re seeing, is 2021 repeatable or is it something that was just an obscure year just based on the timing of certain products?

Well I would say thanks for the question, Scott. I would say that there is some lumpiness quarter to quarter and we’ve seen it and we’ll continue to see it. The reason is that we’ve got a number of different product types. But across the businesses, we do raise private equity stall funds. So as you know, those get raised periodically, you have two or three closings typically have a couple big closings in that product, you won’t raise another fund for a couple years. And so there’s some lumpiness to it. And we saw some of that this year. We had a big, we’re in the middle of a big fun of mezzanine fundraise for the eighth mezzanine fund at Crescent. They had a closing up their US direct lending fund that was large this year. So there were some lumpy fundraisers this year. Having said that, we’ve got a number of things on the docket next year. As an example, Crescent will be in the market with their third European direct lending fund. They will be in the market with a couple of different BGO products. So I don’t think there was anything that would be anomalous in this year, beyond just kind of some normal lumpiness. So I don’t think we’re putting out a specific projection for next year. But we think it’ll be another strong fundraising year in the same zip code.

That’s helpful. And my second question for Manjit just on earnings on surplus got affected this quarter by more AFS and seed investment games. And then the past you kind of guided near term, spot number. And I think it’s been in below 100 million range, I was just wondering with a rising interest rate to the projected rise in interest rates, if you’ve got any near term guidance you could provide on that line? A – Manjit Singh: Yes, thanks for the question Scott. As you mentioned we’ve have $100 million sort of rough target and plus or minus four per quarter. And as you mentioned, this quarter, we had the impact of the AFS impairment. But overall, we think the $100 million range for earnings and surplus remains the right level. But you might sort of see it bouncing around from quarter-to-quarter.

Thank you very much.

And thank you. And our next question comes from Paul Holden from CIBC. Your line is now open.

Thanks. Good morning. So Mike Roberge normally gets a number of questions on the call, but none directed his way so far this morning. So let’s get Mike involved. There was a lot of volatility in the market clearly in January and MSS as you’ve messaged in the past tends to benefit from these periods of volatility. So wondering if you can give us some thoughts around fund performance sort of during this period, and what it might mean particularly for fund flows as well?

Morning. This is Mike. thanks, Paul. I was getting lonely here. I mean it’s such a short period of time, I would say from where we saw some of the parts of the market peak in terms of the really high valuation stocks in the fall in the early part of the year, and some of our strategies that had struggled we’ve seen some pickup in performance. I just, I guess, the way I’d frame it is we think this is a year where the markets are going to be more volatile. We think that we’re going to have bouts of downside, just given the fact that for the first time in a number of years, the central bank is in play around the world. Central banks that are in play around the world starting valuations are high, and there continue to be a number of risks, whether they be inflation, and what the impact of interest rates, geopolitical risks and a number of things. So emerging and newer emerging and more risks, at the same time valuations are high, I think, is going to create some challenges for the market. Our platform historically through cycle is performed well. Historically we’ve done well in more difficult environments. And I would say that being those tied to the economic cycle, and so we’ll see how that plays out. But we do feel comfortable to an economics like cycle. In terms of flows, you see it quarter-to-quarter, and we saw that in US retail in the fourth quarter, is when the markets get more volatile, you do tend to see flows for the industry come down some, and I would expect that probably what we’ll see this year. If the market remains volatile, people will sit on the sidelines, cash actually is going to have an additional yield this year. So people are likely to sit in cash relative. And so our view is we’ve got to think through the cycle. We’re investing in those things that we think will drive growth through the cycle. And we’ve been preparing over the last several years by not adding too much in terms of headcount, discretionary costs, and we think we’re prepared for a more difficult environment.

Great, thanks. Thanks for that context. And then second question, and maybe this one guided for Manjit or Kevin is just related to the DentaQuest acquisition. Can you give us an update on expected close maybe can give us an update on any work you’re able to do ahead of close to help realize on expected benefits and synergies. A –Kevin Strain: Yes, it’s Kevin, I’ll start with that. And I would ask Dan to speak to this. But he’s actually had to step away for a funeral at 11. And I’m mentioning that so that he does step away and know that Manjit and I and Kevin Morrissey and David Healy, have his questions covered. So keep the US questions coming. But I want to make sure that Dan does leave, his dad passed away earlier this week, and he needs to make it to the funeral. So on DentaQuest, as I said earlier there’s a number of states still to approve it. There’s a number of steps to be taken. We still expected to close in May or June. There are restrictions in how involved we can be but we’ve been watching in the business has been performing well. So we’re as close as we can be, but there are restrictions in terms of how much we can do in this interim period. But we’re expecting that it will still at least maintain what we thought it would in our original business case and pricing. So we’re excited. I hope that it closes as soon as it can. And I think it’s going to be a great addition to the business still.

Got it, thank you.

Thank you. And our next question comes from Lemar Persaud from Cormark Securities. Your line is now open.

Great, thanks. My question is for Mike, just moving back to MSS here. So, margin just keeps grinding a little bit higher, entirely due to the shift in mix to retail? Or there something else in this 43% pre-tax margin? I remember in the not too distant past talking about margin in the upper 30% range. So just any comments on that would be helpful.

Yes. Good morning. Thanks for the question, Lemar. Yes, obviously pretty good print in the quarter. But you got the market backdrop and the beta backdrop, obviously it’s contributed to that. So our costs aren’t going to rise at the same level, you get some operating leverage that’s going to drive the market higher. We would continue to stay in that 35% to 40% through the cycle, just to remind you that the first half of the year where we’ve got amortization of deferred compensation and stock compensation here tends to bring the margin lower and then we get better margin in the back half of the year. So for the year with the market at an all time high, we printed a little over a 40% margin. And that’s the guidance that we’ve provided. So I don’t think there’s anything different that that I would provide.

Thanks for that. Just from answer on the earlier question, so should we think that that with increased volatility and some of the challenges in the market would it be fair to suggest that the net outflows in the institutional business might normalize?

It’s possible because that that book is primarily an equity book so as the market continues to make all-time highs you see clients rebalance in addition to that you get de-risking and these DB plans and so that’s definitely been a headwind for us as the market makes all-time highs and so we’re hopeful. We’re not hopeful for volatility but I guess the offside to that is it probably brings some redemption activity down on that. The longer term strategy in that book is to diversify into fixed income. So we can be on the other side of those allocations where people go out of equities into fixed income and that’s a clear part of the strategy here and so again as we think over the next several years we would expect the redemption activity in that book hopefully to come down but we do need to sell more particularly in fixed income.

Great, thank you.

And thank you. And our next question comes from Nigel D’Souza from Veritas. Your line is now open. Nigel D’Souza: Thank you. Good morning. I had a quick follow-up question for you first on your US group benefits exposure and trying to understand the relative risk on morbidity and mortality experience. Could you give us a sense of the vaccination rates in your group policies versus the general US population? Is it higher, lower roughly the same just to get a sense of how experience could play out?

Yes. It’s Kevin. I’m going to take a crack at this, but at a higher level Nigel. If you and there’s been a lot of discussion around mortality on this call for obvious reasons and I think it’s appropriate discussion. If you look at the death rates and the hospitalization rates where we do business and where you see them spiking you see us having COVID death claims and we you see us having more morbidity claims and that happened to us this quarter in the US and in the Philippines and it’s happened to us in other quarters in India and in Indonesia as well and it does relate back to vaccine rates. It relates back to lockdown approach by country and those types of things and so COVID not going to be with us forever that we know but it’s not ending now either. I mean Omicron is taking hold. So I would say that in general if you look at death rates and hospitalization rates in the countries where we do business that gives you a good indication of mortality and morbidity when it’s spiking and I think that’s the best way to look at it. This is what we’re here for. These claims are important because they help protect our clients and it is why we’re in business. It’s part of why we’re in business and I think that these are COVID obviously challenging different areas. So I don’t know if we can give you the vaccination rates in our group benefits business versus the general population but what I would say is that this quarter when we talked to Dan, we saw it consistent to industry and spiking death rates in terms of our mortality and morbidity claims. Kevin Morrissey may want to add a comment though.

Yes, thanks Kevin maybe the only thing I’ll add to that is when we think about the claims when we think of individual life insurance that’s individually underwritten we see a benefit in terms of that underwriting effect and we’ve seen that across all the geographies where generally the mortality rates are lower for the insured population than the uninsured. So that’s generally a positive but when you switch to group business it’s much more broad-based. We don’t have individual underwriting done and I think it probably more accurately reflects the profile of the population. Nigel D’Souza: That’s helpful and my second question was on your effective tax rate. It’s running you ran lower this quarter and I understand that a mix of a benefit from tax exempt income and tax items from the prior year that were resolved. I was wondering if you could just provide more color on that how much of the decrease was for tax-exempt income versus prior your issues and maybe some specificity and what exactly drove it and some color on where you expect that tax rate to run at going forward?

Good morning, Nigel it’s Manjit, thanks for your question. So as you know the tax rate can move around from a quarter- on-quarter basis for many reasons, the jurisdictional mix of our earnings, throughout the prior year tax matters and the nature of the income that we generate in the quarter as I mentioned in my prepared remarks, the two main items that drove the lower tax rate this quarter was sort of the increase in the tax exempt income and the resolution of prior year tax matters. And we’ve disclosed that in our financial statements, but to give you a rough estimate, it’s about two-thirds of those related to tax exempt, higher tax income and about a third of that is to relate to resolution of prior year matters. And then, in terms of your last point, in terms of how we think about it going forward we think about the 15% to 20% range for the full year is still a good way to think about it, but on a specific quarter you can have differences for the reasons I mentioned. Nigel D’Souza: And just the clarification on that, I mean are these items that are essentially automated where there’s a marker that triggers a recognition or is there any elective nature of when you can recognize these tax items?

No there’s sort of you know. You don’t get to pick when these things happen. Nigel D’Souza: That’s helpful. Thank you.

Thank you and I am showing no further question. I would now like, we have no further questions at this time and I would now like to turn things to Mr. Bitton for closing remarks.

I would like to thank all of our participants today. Should you wish to listen to the rebroadcast, 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 participating. You may now disconnect.