Good morning, and welcome to the Sun Life Financial Q3 2023 Conference Call. My name is [ph]Dalem, and I'll be your conference operator today. [Operator Instructions] The host of the call is David Garg, Senior Vice President, Capital Management and Investor Relations. Please go ahead, Mr. Garg.

Thank you, and good morning, everyone. Welcome to Sun Life's Earnings Call for the Third Quarter of 2023. 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 opening remarks from Kevin Strain, President and Chief Executive Officer. Following Kevin, 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 are also available to answer your questions this morning. I draw your attention to the cautionary language regarding the use of forward-looking statements and non-IFRS financial measures, which form part of today's remarks. As noted in the slides, forward-looking statements may be rendered inaccurate by subsequent events. And with that, I will now turn things over to Kevin.

Thanks, David, and good morning, everyone. Turning to Slide 4, we delivered good performance during the quarter, reflecting our diversified business mix, our focus on execution and the continued importance our clients put on health and financial security. We achieved solid underlying earnings for the quarter of $930 million, maintaining steady growth year-to-date. Our positive results this quarter are attributed to good performance in our Canadian group and Wealth businesses, higher fee-related earnings and asset management and favorable growth in Asia's Individual Protection business. Sun Life Canada achieved strong earnings this quarter, up 15% from the prior year, driven by strong investment results and improved disability experience. Sun Life Asia also had strong third quarter results driven by individual insurance sales, which were up 60% year-over-year. In Hong Kong, sales were four times higher than the prior year and over 50% higher than the previous quarter, supported by strong performance across our distribution channels. Earnings were down 19% from the prior year in our Sun Life U.S. business, largely due to lower dental results. This was driven by faster-than-expected state Medicaid redeterminations associated with the end of the public health emergency as well as continued investment in the Advantage Dental Plus business. Our total SLF assets under management now sit at $1.34 trillion, up 6% over last year. In our asset management pillar, MFS and SLC continue to perform well despite challenging market conditions. SLC management fee-related earnings increased 17% driven by higher AUM, reflecting strong capital raising and deployment across the platform and the AAM acquisition. MFS maintained healthy margins. Net outflows were driven by industry conditions. On a year-to-date basis, defined contribution sales at MFS were up 14% compared to the prior year due to strong placement on consultant adviser and record-keeping platforms, driving approximately USD three billion…

Thank you, Kevin, and good morning, everyone. Let's begin on Slide 8, which provides an overview of our third quarter results. We are pleased with our business results this quarter. Underlying net income of $930 million and underlying earnings per share of $1.59 were in line with prior year results, excluding the impact from the sale of the U.K. business. Underlying ROE of 17.7% was strong, underpinned by our diverse and attractive businesses in Wealth and Asset Management, Group Health and Protection and Individual Protection. Wealth and Asset Management underlying earnings comprised 44% of total Q3 underlying earnings and were up 9% from the prior year. This was driven by higher investment income, reflecting volume growth and higher yields as well as an increase in fee-related earnings in our Asset Management businesses. Group Health and Protection businesses comprised 27% of Q3 underlying earnings and grew 1% year-over-year. Strong revenue growth across all group businesses and better disability experience in Canada was largely offset by less favorable experience in the U.S. Individual protection earnings comprised 29% of underlying earnings and declined 3% year-over-year, driven by the sale of our U.K. business and lower investment results in the U.S., largely offset by strong business growth in Asia. New business CSM of $370 million more than doubled from the prior year, reflecting strong sales results in Hong Kong, International High Net Worth and Canada. Total CSM grew 11% year-over-year, primarily driven by organic CSM growth, reflecting strong sales results. Reported net income for the quarter was $871 million, up from $111 million in the prior year. The difference between underlying and reported earnings this quarter of $59 million largely reflects the top-up in the SLC foot liability, DentaQuest integration costs and amortization of intangibles, partially offset by favorable market-related impacts and positive ACMA.…

Thank you, Manjit. To help ensure that all our participants have an opportunity to ask questions this morning, please limit yourself to one or two questions and then requeue with any additional questions. I will now ask the operator to pull the participants.

Thank you, Sir. [Operator Instructions] And I show our first question comes from the line of Tom MacKinnon from BMO Capital. Please go ahead.

Yeah, thanks very much. Good morning. First question is just with respect to the LICAT being better than anticipated, and you mentioned four points that would have heard it from net debt and some other deployments, buybacks -- same thing. So if -- but the LICAT was actually only down one point quarter-over-quarter. So are we to sort of infer that there could have been at least you mentioned strong capital generation, does it look like it's probably in the area of three points or so of capital -- LICAT capital that was attributable to capital being generated in the quarter? And if so, it seems to be a little bit better than your 25% to 30% kind of medium-term target? And I have a follow-up.

Tom, it's Manjit. You're right. As I mentioned in my prepared remarks, our general view is that over the medium term, we expect to generate 25% to 30% of underlying earnings as organic capital. And that really reflects the portfolio of attractive capitalized businesses that we've built over time. Now that amount will bump around quarter-over-quarter depending on things like new levels of business and as well as market conditions. And you're correct, for this -- for the current quarter, we had about three LICAT points or approximately $600 million of organic capital generation in the quarter, and that was above our target that I mentioned previously. And that was really driven by good underlying earnings in Group Health and Protection, Asia individual protection, solid asset management earnings as well as strong new business CSM. So overall, we feel very good about the capital generation this quarter.

And that $600 million is before payment of the common dividend, correct then?

Correct, yes.

Yes. Okay. And then just as a follow-up for Kevin. I think you -- in your prepared remarks, Kevin, you mentioned the changes in management with respect to Ingrid's responsibilities. Did I hear that correctly? And I'm just wondering, Asia is on fire here in terms of some of your great sales and CSM growth and why make a change in management there?

You did hear it correctly. And Tom, we increasingly see partnerships being an important part of what we're trying to do globally and creating those connections, and Ingrid is well suited for that. Asia is on fire, and our intention is to keep it on fire and to keep it moving in the right direction. You would have seen that -- I mentioned that Chris, Manjit and I will be leaning into Asia over the next few weeks as we get ready to appoint the successor to Ingrid there. Chris is based in Singapore. So he's going to be looking after the Asian countries. He also sits on our joint venture Board in China. So he's going to be leading into China. Manjit is on our Joint Venture Board in India and taking responsibility for India in the interim. And then I'm -- as you know, I spent many years in Asia, not just running Asia, but as CFO and now as CEO, and I'll be leading into our hubs business, which is Hong Kong, Singapore, Bermuda as well as the regional office, and we're working with Ingrid on that. So I don't think that this is going to slow us down at all. And in fact, it's about accelerating the company's growth through global partnerships, but also in Asia.

Sorry, Tom, just on your previous question, the $600 million was net of dividends, just to confirm that.

Yes. Yes, that's right. Yes, correct. Yes. So if we want to look at before payment of the dividend, it would have been higher, I assume then.

Correct. Exactly right.

Okay. Great. And then sorry, just -- is the look internal or external in terms of someone to take over [indiscernible]

Yes. For all of our senior roles, we do succession planning, and we have a list of both internal and external candidates. And as I said, I expect to have an announcement in the next month or so. There is an advantage to Asia from an internal candidate because knowing Sun Life and understanding our footprint and understanding Asia, is an advantage, but we always look at both internal and external and try to attract the best candidate. You should hear from us in about a month or so.

Thank you. And I show our next question comes from the line of Gabriel Dechaine from National Bank Financial. Please go ahead.

Good morning. I wanted to revisit this dental or the redeterminations of Medicaid recipients. And you said a couple of things. One, that the roll-off is taking place at a faster pace than you expected? And two, as that's happening, it's causing higher expenses, I guess, as you're processing those or something? Maybe delve into a bit more of what's behind that. And why you think things will maybe stabilize or get better? Because I'm just looking at the sales number, you averaging over $100 million over the past four quarters and that just fell off a cliff to $4 million. I'm wondering how that's expected to rebound and what the next few quarters could look like for profitability in this business if you can?

Sure. It's Dan. Let me kind of walk through the whole story of the redeterminations with the end of the public health emergency. And just as a reminder, during COVID, the federal government instituted a public health emergency and one of the impacts of that was that people could not be dis-enrolled from Medicaid during that period of time. The public health emergency ended on May 11, and that freed up the date who have the responsibility for enrollment to recertify or re-determine who is eligible. We and most of the industry have estimated about 12% of existing Medicaid membership would roll off as a result of that process over a 24-month period. Our latest estimate, which is consistent with industry estimates is for about 13.5% of membership to roll off, so pretty close to that original, but at a much faster pace, roughly over a 12- or 13-month period. In fact, we think the -- will be complete or largely complete by June one of next year. So it's largely the acceleration that has been the difference here. And so far, as of October, about half of those redeterminations we believe, have occurred. So we're about halfway through that process. But we have about three more quarters where that will be happening.

No, no, no. I got my second question. I got to hold off on that. But I...

You had asked us what the outlook is, especially considering sales and also what the impact was on other -- on loss ratios and expense ratios. So it's worth commenting as that membership has come off, that just gives us a higher expense ratio, not necessarily higher expenses. There are some higher expenses in the quarter that are related to investments we've been making in the new Advantage Dental Plus practices. But since the membership comes off or is coming off more quickly, the expenses don't come off quite as quickly. We also have seen some modest loss ratio pressure, not surprisingly, the members who come off through the redeterminations tend to be lower utilizing members than members who are staying on, but that's obviously a temporary impact. Just in terms of looking forward, a couple of important things to note here. Since the acquisition, which was June of last year, the Dental business has sold about $600 million in new business. About $400 million of that is from seven large Medicare and Medicaid sales and none of that premium is yet on the books. That premium will come on the books in 2024. It's anticipated during the first three quarters of 2024. And that $400 million in premium is larger than the amount of premium that we expect to be associated with all of the disenrollment. So we do have a bit of a timing challenge obviously, with the disenrollment happening more quickly than the new business coming on and more quickly than anticipated. So there could be some challenge around that over the next three quarters. But at the end of that transition, the business should actually be larger than it was. And in addition, there's a very large pipeline of opportunities beyond the sales that have already occurred.

Okay. That's very illustrative, I guess. And I guess, the next few quarters, you'll see maybe similar to this quarter, but then gradually maybe Q2, Q3 next year starting to go in the other direction in terms of net sales and premiums?

Well, in terms of premium, yes, the next three quarters, we would see the other half of the membership that's associated with the redetermination come off, but we would also see that $400 million in new business start to come on [ specialty ] first quarter of next year. In addition, it's also worth noting that the third quarter of any year is the worst quarter for seasonality. In other words, the highest utilization quarter largely related to kids getting dental care right before school starts. That's been a very long-standing pattern. So -- and there were also some onetime accounting true-ups and contractual true-ups in the quarter. So we would expect those things not to recur. So from a revenue perspective, I would agree with your comment. From an earnings perspective, we would hope that the next quarters would be better.

Gabe, it's Kevin. I might just add that nothing has changed our thesis on the DentaQuest acquisition. We knew that these -- the public health emergency was going to end and there was -- these people were going to be falling off of the membership. In fact, as Dan said, the sales is ahead. So if we think about our M&A thesis, we're -- nothing has changed our thought process on that. In fact, we think it could be a little bit better, and the integration continues to go well. So yes, you're seeing some lumpiness in the quarter, but we still expect DentaQuest to perform as we expected it to.

Thank you. And I show our next question comes from the line of Meny Grauman from Scotiabank. Please go ahead.

Hi, good morning. Kevin, I wanted to follow up on your discussion of partnerships and it sounds like the thesis there has changed a little bit for the positive and maybe sharpened. So I'm just hoping you could provide a little bit more insight in terms of that, whether my impression is correct? And then a follow-up on that.

Well, Meny, we have a lot of partners around the world that linked into our joint venture partners, which are significant in India and China, our bancassurance relationships, our relationships with different banks. We also have a few opportunities that we continue to sort of push on and look at in terms of partnerships. And having a senior person who thinks globally about that, we think is going to be a benefit to our strategy. And if you think about how quickly the world is changing, in different areas, having these partnerships and understanding how to leverage them, we see being important to the strategy and Ingrid is a great fit for that, as I said in my opening remarks.

And is this a signal in terms of capital deployment in this specific area? Should we expect to see more there? Is there a change that you're signaling in that?

I wouldn't take it as a signal of capital deployment. I would take it as a signal of us leveraging the relationships we have and the opportunities that we see in front of us.

Got it. And then if I could just ask a question on Asia just in terms of Hong Kong, specifically, very strong sales. And I'm just wondering if you can maybe disaggregate how much of that is the contribution from the new bancassurance deal? How much of that is from the MCV market specifically?

Yes. Meny, Ingrid's on the line, so I'm going to let her answer the Hong Kong question.

Thanks, Kevin. Thanks, Meny. We're delighted with Hong Kong. It really was a standout quarter. So sales strongly up fourfold and interestingly, strongly outpacing the market in the first six months. The factors are really twofold. So one is externally with the border reopening with Mainland China. There's significant demand and strong momentum generally, but the fact that we've outpaced the market shows that we also had significant internal readiness that we've been focusing on over the last few years, and a number of those relate to our client value proposition that we've invested in. Firstly, as you point out around our distribution. So we've emphasized all aspects of distribution. So it's around our broker relationships that we've broadened and deepened agency teams, including focused on MCI. Last call, I mentioned our beautiful client center that we've opened in Tsim Sha Tsui. We're seeing a lot of activity through that. And then Dah Sing is our first quarter where we've activated our exclusive banker relationship, and we're seeing strong sales through that, which we haven't disclosed separately. So that's on the distribution. On products, we continue to be leaders in innovation and actually incorporating some of the ESG concepts so that we're relevant for how important it is to address the climate aspects. And then the third part and also important in a brand-conscious Asia is investing in our brand, and were excited in August that we were in the top five of brand movers in Hong Kong alongside a number of leading brands, whether it's in mobile 1010 or you've had other competitors. So that's part of the reason why we are shifting gear in Asia. And so to give you a sense, pre-pandemic, MCI was around 10% of the overall sales in Hong Kong. Today, we're standing at roughly 30%. So that's a threefold increase.

I might -- I may just reiterate that in Hong Kong, you saw a combination, as Ingrid mentioned, of our investments in agency and growth there. Our investment in Dah Sing, and it's off to a great start. It started selling on July 1. A big bulk of the sales -- were through the broker channel, and that's been driven by Mainland Chinese visitors, but also leverages our knowledge of the high net worth business out of Bermuda. So there's a combination of things that are happening in Hong Kong that are driving those good sales. And I think that's a good thing to see that balanced growth across agency brokerage and our new bancassurance relationship. So we're seeing it in all three areas in Hong Kong. The team is doing a great job there.

Thank you. And I show our next question comes from the line of Mario Mendonca from TD Securities. Please go ahead.

Good morning, Dan, could you help me understand the redetermination a little better. I understand where -- how it can affect your premium growth in Dental. In fact, that's well described in your supplement in your MD&A. I'm not sure I understand how the redetermination impacts experience gains in this segment, which I think you offered that the redetermination was one of the factors that drove experience gains to be down noticeably on a year-over-year basis. So help me understand that dynamic a little better the experience line in the context of the redetermination?

Sure. And hopefully, this will answer it. The loss ratio does experience some pressure from the redeterminations because the people who are being dis-enrolled tend to be lower utilizers than the people who stay on the books. What happened during COVID was a lot of people who might even have had gotten other coverage through getting employment remained on the books because nobody could be dis-enrolled. So we did anticipate and we are seeing some modest loss ratio impact from the disenrollment of those lower utilizing members. And then, of course, there's also just fewer members, which puts a little pressure on the expense ratio as well.

So applying your outlook for the next few quarters then. And I appreciate that there are a lot of moving parts or plenty of things could change. But just focusing on this Medicaid redetermination, you'd expect the experience to be a little modest experience gains, maybe even some modest losses relative to what we've had in the past because of this -- that I'm referring to. And then would you then expect experience to improve again sometime in 2024 once the redetermination has run its course?

Yes. So a couple of key factors there. One is we built some impact on the loss ratio into the experience plan. We would only see pressure on the experience gains if that impact was bigger than what we anticipated. And so we think we've built in the right amount. But of course, we could always be a little bit off there. Another very important point is 80% of our Medicaid contracts re-price where are available for renegotiation of pricing in one way or another during the next 12 months. Generally, the states have been very cooperative wanting to make sure that the loss ratios on this business stay within a target range. So if they see that the loss ratio is moving in the wrong direction, generally, they've been very amenable to some renegotiation there. But in many ways, the loss ratio is a short-term commitment in these contracts because they do tend to get reset. Right now, we don't think that's a big issue. But if it did become an issue, we would have an opportunity to address that. And so you would expect to see as this process completes and the business reset, you would also expect to see the loss ratio refer to historical norms.

Thank you. And I show our next question comes from the line of Doug Young from Desjardin. Please go ahead.

Hi. Good morning. Just, Dan, quickly -- excluding the U.S. redetermination, so just forget about that, what was Dental experience in the quarter? Was it in line with expectations? Or was it adverse or better than expected? Just trying to get a sense of like excluding this noise, what the underlying experience trend has been?

Yes. So there were several things that happened all at once in this quarter. If you compare either to the same quarter last year or even to the prior quarter, it's about the -- those were similar quarters. The variance is about half these factors related to the end of the public health emergency, the redetermination. So mostly revenue and then some, as I've mentioned, some loss ratio pressure. The other half are some accounting and contractual true-ups. We -- for example, we aligned on some accounting practices post acquisition. There is the seasonality impact. The third quarter is always the worst for seasonality or the highest for utilization. And then there were some unique investments in the Advantage Dental Plus business, we've been opening new practices, especially in Texas. So half of it was in those categories and half is related to the public health emergency.

Okay. And so there wasn't anything from a loss ratio perspective. It seems like it's just more normal course outside of the redetermination.

Yes. I mean that's what -- obviously, some of those things are nonrecurring, which is good news. But yes, there was nothing fundamental about the business. In fact, as Kevin mentioned, we remain very optimistic about the Dental business. As I mentioned, there's another $400 million of business sold that's yet to go on the books, a great pipeline. We're meeting or exceeding all of the integration synergy targets. The momentum with the business and the performance of the business is actually really strong and we would expect it to meet or exceed our acquisition expectations.

And then just a question on the ACMA, I guess, more Kevin Morrissey. But I just want to understand the [ last ] and the lapse impact on reported earnings, but also on the CSM and I guess you had -- can you talk a little bit about what drove this? And I guess the way I think of lapse is always, it typically goes through the CSM, but there was an earnings hit as well this quarter. And so I don't know if that was just because lapse was going through on businesses where there was no CSM? Just hoping to understand and what really drove the negative lapse?

Yes. Thanks for that question. Doug, this is Kevin Morrissey. You're right. For the general model method, where we have individual wealth and protection products, normally changes in lapse assumptions do go through the CSM. So that's kind of the normal place you would see them. However, we did have some impacts related to a block in Asia, the international business where we updated some of the financial risk assumptions. It was related to lapse, but it was specific to the yield curve inversion. And because financial risk assumptions on the -- method that does go through net income. So it's a bit of a unique circumstance where -- when you have these types of products, normally, it goes it goes through CSM, as you said, except where the CSM has been depleted. That is not the case. In this case, it's really specific to that financial risk assumption that was updated that, that was part of the overall lapse assumption set.

That's clear. And then just on the lapse charge that went through the CSM, can you unpack a bit about what were the main drivers there?

Yes, sure. So on the CSM, the lapse impact, as noted, was significantly negative. There was really two sources, and we saw the reductions in CSM, both in Canada and Asia. In Canada, there were two product groups that were impacted was term products where renewals were lower than expected. And in some of the lapse supported universal life products, the lapses were lower than expected as well. So we had some reductions CSM there from Canada. And in Asia, we updated the Vietnamese lapse assumption for that business. You've heard us talk about low persistency as part of our ACMA review this year. We fully reflected the current level of experience in our ACMA update despite the fact we are taking actions to improve persistency, we felt it was prudent to fully reflect our current level of first year lapses in the ACMA -- and so there was a reduction to the CSM in Asia from that component as well.

Thank you. And I show our next question comes from the line of Paul Holden from CIBC. Your line is open.

Thank you. Good morning. First question is related to the real estate experienced during the quarter. Wondering if you can give us an update on how much you've changed cap rates sort of on average across the board year-to-date? And if you're expecting potentially more movement going forward on real estate valuations?

Sure. Thank you for the question. Paul, it's Randy Brown. So we look at several measures when looking at changing valuations on real estate. So let me start kind of overall with the comment that the total return on the real estate portfolio was essentially flat this quarter. Valuations were down by less than 1% and largely offset by income. So the negative that you've seen, as Manjit mentioned, is the difference between the long-term expected return in the actual economic return on the quarter. But as Manjit also said, our real estate portfolio has outperformed our long-term expectations and -- so we remain quite comfortable with the assumption. So in terms of -- specifically on your question, we look at cap rates, but we also look at yields, cap rate being more of a spot measure and yield being more of a life of the property. And so we've seen 25 to 50 basis point increases in cap rates and 50 to 75 basis point increases in yields in the portfolio. So we have, frankly, fared better than the broader market because of the very significant repositioning that I had mentioned on prior calls. So we were well positioned for this type of market with significant overweight relative to the opportunity set in industrial and residential and much lower allocations to office and retail.

Got it. And then a question for Dan, usually this time of year, you might give us a little bit of an update or your thoughts around the upcoming pricing and negotiations for stop-offs and U.S. group benefits given it's been a pretty strong quarter for or quarter, strong year for margins, are you seeing increased competition or I guess, really what is your view for 2024 pricing renegotiation?

Yes. Thank you. We're in the midst of selling season for really all our products, but especially for stop loss, this is like the playoffs and the Super Bowl rolled into one. Most of the sales occurred during the fourth quarter, and we're actually quite optimistic about the outlook. We've been holding to our pricing. You've seen the loss ratio normalize back towards our pricing targets as we've signaled for quite a while that, that would happen. And we are seeing some intensified competition, which always seems to happen especially this time of year. But our team is performing quite well, and we're optimistic about sales results for the quarter, while holding to our pricing targets.

Thank you. And I show our next question comes from the line of Nigel D'Souza from Veritas Investment Research. Please go ahead.

Thank you. Good morning. My first question was on the other expenses line, both in Canada and Asia. I noticed that expense line has picked up meaningfully year-to-date, and there was a step-up this quarter. Just wondering what's driving higher expenses in both those segments? Or if there's any outliers or nonrecurring items we should be aware of?

Nigel, it's Manjit. Overall, the corporate expenses on a quarter-over-quarter basis are relatively flat. On a year-over-year basis, we have seen an increase, and there's a couple of factors that are driving that. So the first one is just increase in sort of compensation, both relative to wage inflation, and also higher incentive comps and the two businesses that you mentioned, Canada and Asia, as we've talked about earlier, have had very strong results this quarter and for the year-to-date. And then as Kevin mentioned, as Ingrid mentioned, we're also continuing to invest in these businesses. So that's also reflected in there. But then as you've talked about, you've seen higher revenues related to those expenses.

Okay. That's helpful. And then the second question was on your actual review this quarter. And wondering if you could provide some color on what experience since -- pandemic was incorporated into your assumption versus long-term trends? And maybe a bit more on morbidity because I think you noted a favorable morbidity update in the U.S. and unfavorable morbidity in Canada. But -- and the experience this quarter was actually, I think, favorable in Canada and unfavorable in the U.S. So just wondering if you could unpack how much of experience has kind of been an input into those updates and what hasn't?

Nigel, it's Kevin Morrissey. So on the first one, the pandemic experience, I would categorize it as saying we fully reflected all the pandemic experience in our valuation assumptions and our updates, and so that's really specific to each of the local jurisdictions. So we took a look at the experience, how relevant it is and whether it's appropriate or not to include it directly in the update. So for example, where we had in some of our Annuity segments, some higher death rates spike up as part of the pandemic, we did not project that to continue going forward. In some of the Life Insurance businesses where it was fairly benign, we did incorporate that in the experience study and just became part of our regular update. So I would say it's fully reflected where appropriate. And again, we always take a very conservative bias on that, not wanting to be overly aggressive with regard to that. Your second question around morbidity; one, maybe I'll start by making a couple of comments. When you update our assumptions, we always include three different perspectives when we're setting our new assumptions. The first is the longer-term average of the historical performance, the second being the trend and the third, the future outlook. And so you mentioned morbidity specifically in Canada and the U.S., and that has been positive in the quarter. And when we're looking at the update, as noted, there was strengthening -- some strengthening done in Canada. I would describe it as fairly modest in the update this year. However, that does reflect the longer-term time horizon. So that's a 5-year historical average. And it won't necessarily link with a direct line with the experience in the last couple of quarters. So it's a much longer-term perspective on that. That being said, the experience in Canada over the last two quarters has been positive. I'd say it was a bit elevated probably in this quarter for Canada, a bit higher than we would normally expect. But again, the trend line has been good. The experience update though is much longer term. So if we do have that, that short trend line continues, then we would expect to see favorable results going forward.

Thank you. And I show our next question comes from the line of Lemar Persaud from Cormark. Please go ahead.

Thanks. I just want to close the loop on this medical or Medicaid redetermination. I guess, given that it was mentioned that over 50% of the redeterminations are in now, some of the new Medicaid sales coming in 2024 and Q3 being a seasonally high quarter for claims, would it be fair to suggest that this quarter was the trough for Dental earnings?

I think that's a reasonable comment. Of course, we can never know for sure, but I think that's the way we look at it, too, that there were some onetime events plus we're at -- in a sense, we've had a lot of the redeterminations without the new business yet coming on the books, which is really more of a timing issue. I think in terms of thinking about looking at one quarter versus a longer period of time, year-to-date, our underlying net income is up 33% and sales are up 44%. And that may actually be a better indication of the way to look at things than just the stand-alone quarter, especially with some of these onetime events.

Okay. That's fair. And then just turning over to SLC, I guess you guys called out an unusually low tax rate. So maybe start on what drove that? What's the reasonable tax rate moving forward? And then beyond the tax rate, is this quarter's result an appropriate run rate for earnings moving forward?

It's Steve Peacher. Thanks for the question. I -- off the top of my head, I don't have -- I can't answer the kind of the good run rate tax rate question for you, but we can get back to you on that. It was around -- I would say that it certainly bolstered underlying net income for the quarter by $7 million, $8 million. I would -- in terms of run rate earnings, I think if you look at -- if you look at the financial supplement where we -- where you see the quarterly results, management fees have been growing every quarter because AUM has been growing. And as Kevin mentioned in his comments, or Manjit did, we have a significant portion of our AUM is in commitments that where we've gotten commitments from investors, and we haven't yet invested the money, so we haven't started joining fees. That AUM that's been committed but not invested is around $21 billion. So we definitely think that the trend in earnings in both revenue and earnings is up. And as we -- and we think -- feel like we're on target to hit our Investor Day targets. So I would -- well, I would say this is a representative quarter, we think the trend in earnings and revenues are just going up.

Thank you. And I show our next question comes from the line of Tom MacKinnon from BMO Capital. Please go ahead.

Yeah, thanks. Just on the Medicaid redetermination. What were the total net premiums annualized for that business when you -- just prior to that, I guess, that May 11 date kind of where do they sit now as well?

Yes, I don't have that off hand. What I can say is that Medicaid does represent more than 80% of the total revenue within the Dental business. And the -- you can also see if you look at the premium revenue for the quarter versus the prior quarter, some decline, and that would basically all be from the Medicaid business.

Okay. Yes. So if I take 80% of your total Dental net premiums annualized, and then I take 13% of that, and then I take that as a percentage of your total net premiums in both Group benefits plus Dental, it's still less than 5% of your total net premiums .

We can follow up with some more specifics there. But yes, the 5% would be about the way to think about it. just a caution, the membership numbers and the premiums are not exactly the same.

We have no further questions at this time. And I will turn things to Mr. Strain.

Thank you, operator. I wanted to end the call by recognizing that Diwali celebrations began on Sunday in India and around the world. I want to take a moment to say Happy Diwali to our employees, our colleagues and partners around the world who are celebrating. Diwali celebrates the triumph of light over darkness, good over evil and the human ability to overcome whatever you are facing. At Sun Life, we celebrate that resilience. Shubh Dipavali, Happy Diwali. And with that, I'll turn the call back to David.

Thank you, Kevin. This concludes today's call. A replay of the call will be available on the Investor Relations section on our website. Thank you, and have a great day.