Good morning, and welcome to the Sun Life Financial Q4 2025 Conference Call. My name is Rocco, and I'll be your operator today. [Operator Instructions] The host of the call today is Ms. Natalie Brady, Senior Vice President, Capital Management and Investor Relations. Please go ahead, Ms. Brady.

Thank you, and good morning, everyone. Welcome to Sun Life's Earnings Call for the Fourth Quarter of 2025. 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, Tim Deacon, 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. 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 may be rendered inaccurate by subsequent events. And with that, I'll now turn things over to Kevin.

Thanks, Natalie, and good morning, everyone. Turning to Slide 4. We delivered strong fourth quarter results, driven by our disciplined execution, diversified business model and our continued focus on our clients and our purpose. Underlying net income reached $1.1 billion contributing to underlying earnings per share growth of 17% over Q4 last year and underlying return on equity of 19.1%. Our diversified strategy continues to prove its strength with strong performances across all business groups. Notably, we saw robust protection growth in Asia, solid wealth sales in Canada, and meaningful progress at SLC Management, which exceeded its Investor Day earnings target. We're also pleased with the earnings and sales growth in our U.S. stop-loss business. We ended the quarter with a LICAT ratio of 157%, demonstrating our strong capital position. Turning to Slide 5. We saw continued strength across our asset management and wealth platforms. At SLC Management, we achieved $242 million in underlying net income in 2025, which exceeds our Investor Day target of $235 million. We also saw solid growth in fee-related earnings. We remain on track for the BGO and Crescent buy-ups taking place in the first half of 2026. We're also introducing a management equity plan for SLC. The management team at SLC will own up to 25% of the company, which is the best practice to motivate, retain and attract talent in the alternative space. We're pleased with the response we've had to the management equity plan. The vast majority of eligible employees are choosing to participate in the share offering. In Canada, we delivered strong performance in our wealth businesses. Gross sales were up 46% year-over-year, driven by strong results in Group Retirement Services and individual mutual funds. Group Retirement Services sales doubled year-over-year, reflecting strong large case defined benefit solutions and defined contribution…

Thank you, Kevin, and good morning, everyone. Turning to Slide 8. We finished 2025 with double-digit earnings growth across all of our business types and strong sales growth in Asia, Canada and the U.S. Our results this quarter underscore the strength of our balanced and diversified businesses. We reported Q4 underlying net income of $1.1 billion, up 13% year-over-year with underlying earnings per share of $1.96, up 17% over last year, and 12% for the full year, and ahead of our medium-term objective of 10%. Underlying ROE for the quarter reached 19.1%. Asset Management and Wealth underlying earnings of $534 million was up 10% over the prior year. These results were driven by lower credit losses and higher fee income in Canada, and higher fee income from average net asset growth in MFS. Group - Health & Protection underlying earnings of $308 million increased 16% year-over-year, as claims experienced in our U.S. medical stop-loss business stabilized, and we delivered continued growth in our Canadian health businesses. Individual - Protection underlying net income of $362 million was up 17%, driven by business growth and favorable mortality experience in Asia and in the U.S. Corporate underlying net loss increased by $13 million to $110 million, reflecting higher financing costs to support the upcoming buy-ups of BGO and Crescent Capital. Going forward, we expect the corporate segment to generate a loss of approximately $110 million to $120 million a quarter. This will have no impact on our overall medium-term objectives. Total company reported net income of $722 million was 34% lower than underlying net income, driven primarily by market-related impacts, including the impact of risk-free rates, swap and credit spreads, and other timing-related mark-to-market items from rate movements during the quarter. Real estate returns were flat this quarter compared to our expected long-term…

Thank you, Tim. To ensure that all participants have an opportunity to ask questions this morning, please limit yourselves to 1 or 2 questions, and then requeue with any additional questions. I will now ask the operator to pull the participants.

[Operator Instructions] Our first question today comes from John Aiken at Jefferies.

In terms of the stop-loss experience, I think the word that you used was stabilized. But with the pricing and other actions that are undertaken, are we hoping to see improvements in 2026 again?

Yes, John, it's David. Thanks for the question. Yes, we're pleased with our improved results and also our strong sales at the end of the year. So in terms of experience, we did see a modest improvement in the loss ratio, the ultimate loss ratio for the 1/1/25 cohort that we had shared in Q3, that was offset a little, but overall, it was neutral, and we're in good shape heading into 2026.

And just a bit of a follow-on in terms of the improvement that we've seen in stop loss as well as the improvement on Dental. We did see an uptick in the sales in Q4. I know there's seasonality in there, but we are up year-over-year. Are we actually now opening the taps for sales along these -- on these products?

So we maintained our pricing discipline. Let me start with stop-loss first. While we're pleased with our results, we've maintained our discipline. And as Kevin noted at the top of the call, we're benefiting from a hardening market. We achieved the rate increases we were seeking. And ultimately, we'll remain disciplined in our pricing approach as we head into '26. In terms of the Dental business, we did see a modest improvement in sales as well year-over-year that reflects seasonality a little bit because the 1/1 business, particularly for commercial is when we write a lot of our business. And then we also saw one large Medicaid contract that returned to us in -- for 2026.

John, it's Kevin. I wanted to reemphasize a few things on the stop-loss business. We've managed an industry-leading stop-loss business for many years now. And in that business, we have the scale, the data and underwriting advantages that have helped us create like a sustainable earnings business there, and we've built out our service model over the past few years to better help members who have serious illness to manage those illnesses. For example, we bought Pinnacle Care, and that's helping them. And we think that gives us a strategic advantage when it comes to pricing and also to managing the risk here. This is an area that we've had long-term margins that have been ahead of our employee benefits target margin that we've talked about, and we expect that to return over the next little while. And David mentioned this, but it has been a challenging environment where both severity of the claims and the price of the claims has been going up. But in 2025, we achieved a 14% increase in price. And we talked about that should have been maybe 2% higher at 16%, but this year, we achieved a 17% increase in price. And we think that, that positions us really well. So the sales that we won in the fourth quarter we see them as being priced appropriately. And given our scale and some of the advantages we have, we think that we're well positioned in that business.

And our next question comes from Gabriel Dechaine with National Bank.

Yes. Just a follow-up on that stop loss. Did I hear you correctly, you increased pricing by 17% in -- on the Jan 1 block? And that should get you back to target margins fairly soon, I would imagine?

Yes. So Kevin's referring 17%, that's the price increase -- average price increase we received on our renewal business. And yes, that was at our target margins.

Okay. No, excess capital. You have 157% LICAT ratio, which is very comfortable, but oddly enough to say with that excess capital for a company giving us a 19% ROE, it is suppressing your returns, right? M&A came up a lot on a previous call. I suspect your M&A appetite might be a bit more limited while you're focused on getting that DentaQuest business back on track. So if we look ahead to Q2, and I believe last year, you did an early renewal of the program, didn't necessarily upsize it, but I'd like to know what you're thinking about capital deployment broadly and then the buyback, more specifically, what your thought process there with regards to the renewal, which is, I guess, in May, right? Program expiry rather in May.

Gabe, this is Tim. Thanks for the question. We continue to take a disciplined approach in our capital deployment. And overall, our priorities have not changed. You referenced our LICAT ratio, where we finished the year with a very strong LICAT ratio and industry-leading, in fact, at 157%. And that's up over the last 2 quarters because of 2 debt issuances that we did to complete the purchases of the remaining interest that we have in our private asset affiliates that we plan to do in the first half of this year. On a pro forma basis, if you were to reflect those buy-ups, our LICAT ratio would be around 150%...

Still high.

We took advantage of the excess leverage capacity that we saw, and we had an opportunity to take advantage of attractive rates and spreads in the market when we did those debt issuances. So then on your second part of your question in terms of the priorities and the uses of capital, our priorities haven't changed. Our first priority is organic. We continue to make investments in our business, scaling Asia and our asset management businesses in particular, and continued growth in our investments in digital and AI. On the organic side, which is our second priority, as I mentioned, our priority for the first half of the year is to complete the purchase of our private asset affiliates. So this is BGO and Crescent. And then beyond that, we wouldn't be looking to make any transformative acquisitions. Rather, we'd look at bolt-on type acquisitions where we could acquire adjacent capabilities to augment our existing platforms, for example, in Asia or in asset management or in wealth. And then finally, pending market conditions, we would expect to resume share buybacks later in the year. And so in light of the deployment priorities I spoke about, we typically don't buy back shares at a rate that is higher than our organic capital generation. And as I said in my prepared remarks, this year, we generated $4.2 billion of organic capital generation. So that's well in excess of our guidance of 30% to 40% of underlying net income. We've returned $3.7 billion of that back to shareholders through share buybacks and common shareholder dividends. And we also did $500 million of M&A in the first quarter of 2025 with the extension of our bancassurance agreement in Indonesia. And all that still maintained a dividend payout ratio at 47%, which is well within our medium-term objectives. So you can see our discipline, and we'll continue to be disciplined going forward.

All right.

Gable, it's Kevin. I just want to add, you mentioned that it might be suppressing our returns. A big chunk of our capital position is the CSM. And we're actually quite proud of how quickly we've been growing the CSM and it's an important part of our capital. And of course, that's not in the book value, and it is supporting our -- so it's not part of that ROE calculation. So that's an important part of capital. It's also an important part of future income. And the growth in that reflects our growth in Asia and Canada as we're growing the business. And so you have to look at those pieces, but it's not -- that additional capital position is not really impacting the ROE.

Right. I acknowledge it's a weird wave -- weird sort of question when you're generating a 19% ROE and -- but it's mathematical, regardless anyway.

And our next question today comes from Mike Ward at UBS.

I guess I'm just trying to interpret the strategy at stop-loss. And I guess it certainly seems like a hard market across that space. But some of your peers are either getting out of the business, or shrinking the business, and '25 was another challenging claim year for them, based on what they see. So I'm just trying to sort of compare that to what you guys are seeing where it's a little bit more optimistic and you're potentially growing, which is another strategy, right, to grow into a hard market when there's less capacity, the employers still need that coverage. So you're there to be able to provide that to them. But is it possible that, that growth is a longer-term focus of yours? And maybe we'll see elevated margin volatility as we move through this medical inflation environment with higher severity?

Mike, it's David. Thanks for the question. As Kevin noted, we have a long track record of success in this business, and we have historically, our loss ratios are among the lowest in the industry, and they have been. We are a leading independent writer. We have a talented team. And as Kevin noted, also many capabilities, including our risk selection approach, our ability to price through many different cycles, our clinical programs and our cost containment program. So we feel really good about this business and the path that we're on. It's something that we have a strong reputation in the market for. And certainly, we've taken into consideration medical trend and leverage trend. And of course, the historical claims experience that we've seen to date.

Mike, it's Kevin, can I add to that? If you don't have scale in this business, the individual claims amounts can be punishing to you as well. And so I think it's really important that we have had that scale and that history of the positive experience. So I just wanted to put out that some of those players that you're hearing about don't have the same scale that we have.

Got it. Okay. No, that's helpful. And then just on the Dental side. On the corporate side, of the dental market, it seems like that's an area of focus even for the U.S. incumbent. So I'm just wondering if you can comment on your strategy for distribution to really enter that market because it's so competitive?

Yes. Thanks for that question. So you're really referring to what we call our commercial dental segment within our Dental business. So that's an important part of our focus for growth of the Dental business. We actually grew 7% in premium volume versus 2024. And that segment overall has grown 20% since we acquired the DentaQuest business. We're already in the market actively. We have a strong distribution footprint that is part of our employee benefits business and these products, the dental products specifically are very often bundled with our other employee benefits products. So it's an area of strength for us in terms of our distribution footprint. And over time, we expect to continue to grow it out.

And our next question today comes from Alex Scott of Barclays.

First, I wanted to just ask on the 17% rate you mentioned on stop-loss. Is that sort of what some peers are calling an effective rate? Like does that include the benefit of changes in terms and conditions like attachment points and so forth that you might be doing? Yes, that's my first question.

Yes. So the 17% rate increase on our in-force renewed business really reflects both the expected medical cost trend increases and our claims experience to date. Obviously, as you know, medical trend has been in the U.S. in the high single digits last year, and we expect it to stay there in 2026. But leverage trend is -- can be quite a bit larger than that because that really reflects how our increases flow through plan designs. It includes things like you mentioned, deductibles, attachment points and coverage layer. So as I said, we have really strong and disciplined pricing approach. We have really good risk selection, and it is reflected in our 17% renewal rate increase.

Got it. Okay. That's helpful. And then two premium growth questions. One, if you could opine on like how much the stop-loss sales growth will contribute to premium growth? I assume just retention side, too. So I wanted to get a feel there. And then also if you could maybe touch on Asia growth and just kind of coming up on some of these tough comps in Hong Kong, what we should expect?

So it's David, I'll just start with the U.S. growth. So as you do see the headline numbers in terms of our sales growth in the stop-loss business and we're pleased with those results. We did also see strong and record persistency in our in-force book as a result of this hardening market that we're experiencing. So when you put the two together, we feel good about our premium flows going into 2026.

It's Manjit. On the Asia side, you're right. I think we had a phenomenal year in Hong Kong in 2025. We expect some moderation in the growth rate, but we still expect to continue to deliver good performance in Hong Kong. And then, of course, we have other markets that are coming up too notably as Kevin had in his remarks, Indonesia. So overall, we're still feeling good about the diversified nature of our business in Asia and continuing to deliver good growth.

And our next question today comes from Doug Young at Desjardins Capital Market.

I just want to go back to one comment Tim or Kevin made, just about on the buybacks. You buy back essentially the organic capital generation in any particular year. And maybe I'll challenge it, like why not buy back more? By my math, you're sitting on $6 billion of excess capital? And I get the argument about the book value in CSM, but you've got a lot of capital flexibility. You're not looking to do anything transformative acquisition-wise. You're moving to capital-light businesses. Why not be more active than in the buyback side?

Thanks, Doug. This is Tim. Yes, as I spoke about earlier, this really comes down to our disciplined approach. Any time that we have been active in the buyback program, we fully utilized it. So you saw that we were very active in the fourth quarter. We repurchased about 4.7 million of shares. That was nearly $400 million -- on a year-to-date basis, it was $1.7 billion or almost 20.8 million shares. So we've demonstrated the capacity and willingness, and ability to use a share buyback program. But I also spoke about our priorities in the near term, and that's really getting through the final purchases of those private asset affiliates. We have a liability on our books of about $2.2 billion. As I said, we're still going through the buyout process there. We expect there will be final adjustments. We think that could be at least under $150 million more. I talked about where we might see opportunities beyond that. And so we still will continue to be active in the program, but we just wanted to get through those priorities first. And I would say, historically, our approach really has been to not get ahead of our organic capital generation and that discipline helped us along. And as I said, pending market conditions, we'd expect to resume share buybacks later in the year.

And maybe I'll kind of say this, but -- so you're not seeing any impediment to holding this excess capital or the leverage ratio to getting to your 20% underlying ROE target. Because if you do take the excess capital down like -- that are 20% underlying ROE target starts to look kind of very conservative? Like what's -- maybe any thoughts on that?

Yes. Our capital deployment is, as I outlined, our medium-term objectives aren't dependent on M&A or features like that, that would be all upside and incremental. The flexibility that we have has served us well, and I think that gives us a lot of dry powder and optionality as the opportunities present themselves in '26.

Okay. Maybe I'll move over to just -- maybe 2-part question on the asset management side. I mean maybe, Tim, you doing the buy ups for SLC minority interest, like what impact should we think about having on the underlying earnings for SLC? And then you're putting all these businesses under one roof, under the asset management group? Just what's the hope -- what you hope to get from this? Is this something where you're hoping that SLC and MFS are going to work a little bit more closer together? Maybe you can flesh that out.

It's Steve Peacher. Let me make a couple of comments. In terms of -- as we get through the call, there are a number of puts and takes. No unintended, I suppose, as it relates to the impact on income. We'll be buying up the minority interest. We're also implementing a management equity plan that we've had -- I think it was mentioned in Kevin's remarks, we've had -- we're offering to certain employees the opportunity to buy equity, which we think is really important to be competitive in the alternative asset management world. We think employee ownership will be over 20%. We've had an extraordinary response to that. So that will go the other way because we'll have employees participating. We think that, that will drive culture and enhance the growth rate. And so -- so those forces will work to then combine what the impact is on underlying net income. It really doesn't -- we -- at the Sun Life Investor Day in 2024, we put medium-term targets out of 20% growth. And fee-related earnings in UNI, and we stand behind those. We think we'll achieve that. And Tom may want to comment. I think that I'm really excited about having the Sun Life Asset Management overlay across the various asset management operations of Sun Life. I think it's going to open doors to growth that at least at SLC, we couldn't necessarily open ourselves. And so I think it's going to help us enhance our growth rate as we connect dots across relationships that Sun Life has and capabilities that Sun Life has with investment capabilities that SLC has. But Tom, you may want to make some comments.

Yes. Thanks, Steve, and good morning. So our focus on growing AUM opportunities is right across the enterprise, and we're specifically focused on the intersection between our global insurance company, our wealth businesses and our asset management businesses, the so-called flywheel effect. And maybe it's useful to give you some examples. So touching on SLC. SLC and any alternative asset management business really a big part of our future growth trajectory is based on access to seed capital and permanent capital. And we believe, if we look internally into our insurance company balance sheet, we think that there's more room for us to leverage the balance sheet to help Steve grow his alternative asset management business. Specifically, we believe that there's a significant opportunity to collaborate between SLC and our pension risk transfer business. And that was why you saw us move our pension risk transfer business into our asset management pillar, so we get better collaboration and quite frankly, grow both businesses at the same time. And then external partnerships. We've been talking to a number of external or potential external partners who we think can be a good long-term source of seed and permanent capital. If I flip quickly to MFS. MFS already works very closely with our wealth businesses, SLGI, GRS and our MPF business in Hong Kong. We think that MFS can grow on the back of the growth of those wealth businesses. We also think MFS can grow by further penetrating those wealth businesses and managing a greater share of wallet. And then I'll touch on Asia and then I'll pause. But from an Asia perspective, I think we're a #3 player in the MPF market in Hong Kong. We think there's room to grow. We think there's room to grow in Asia in the high net worth market. And India, the most populous market on the planet. India has a very interesting stage in the alternative asset management sector, which is emerging and growing really, really quickly. I think we're the only provider globally who has a really, really strong local partner with Aditya Birla and a really, really strong global alternative franchise with SLC, and the combination of those two can help us grow in that marketplace. So I'm not sure that was too much, but I wanted to give you some tangible examples. It's early days, and we'll share more as we progress through the year.

And Doug, it's Kevin. I just want to add just a quick comment that Steve couldn't add for himself. I mean Steve has worked extremely hard over the past 12 years, building out these incredible capabilities we have across the alternatives business from the real estate of Bentall Kennedy merging with GreenOak and BGO, and Crescent and InfraRed and then taking our PFI capabilities to third party. And we've been consistently in positive flows at SLC. And now as we transition into the new world where we're going to own more, we're going through the put calls. We've aligned the management team there with the shareholders with -- as you referred to, the 20% equity interest that they're going to have. We've kept the top talent there, and we're really looking forward to that new stage of SLC and Steve has done a great job of preparing us to get there. 2026 is going to be a transition year, but we do see ourselves getting to that 20% growth in earnings that we talked about earlier. And Steve mentioned they hit their Investor Day targets. So I have full confidence that they'll continue to deliver on that. And when we created [ SLIM ], part of that was to help create more opportunities for all of our asset management and to think about asset management in a more strategic way. And under Tom's leadership, I think that, that's going to add even additional capabilities to SLC. So we're feeling quite good about the positioning of our overall asset management pillar and in fact, MFS' role in that. So this is a big step forward for us this year, and I think it really positions us well.

And our next question comes from Tom Gallagher with Evercore.

A couple of other questions on stop-loss. I guess whenever I see 50% plus growth in an insurance business, the presumption is usually you may have either mispriced the business, or maybe the market is just getting really disrupted by either peers withdrawing, or maybe there's increased demand. Can you provide a little more color on what you saw on January renewals? Because this is -- obviously, it's getting a lot of attention and I think, questions in terms of like what were the terms and conditions that led to this outcome?

Yes. Sure, Tom. Thanks for the question. It's David again. Yes. So first of all, it is a hardening market. We are seeing some changes and disruption in the U.S. health care system more broadly. That is affecting, as Kevin noted, in particular, some of our competitors who don't have as much scale, and maybe the same capabilities that we see in our business. So that's certainly the case. I talked about the 17% renewal rate increase. That is the gross amount, but obviously, there's risk selection involved. There are other factors as well. And we have historically had very strong capabilities and a long track record of success managing through this various cycles that we see in this business. This is not the first time we've seen this. But certainly, as I've mentioned before, we do have historically low loss ratios among the lowest in the industry consistently. And we do -- we recognize this market emerging. And in fact, we started to take pricing action well before that of our competitors. So what you're seeing a little bit is the changes that we had to make in '26 are less than what our competitors had to make because the gap that we had to make up was not nearly what it might have been for others.

Got you. And then my follow-up is, can you just remind us, I think you were running 2 to 3 points behind of your target margin. Is that what you priced for? Or just given the uncertainty, increased volatility, did you look to restore more than 2 to 3 points in the way you repriced?

Yes. So our pricing, we were seeking rate increases that included expected medical cost trend increases and of course, the claims experience that we've had today. And so those are reflected in the pricing approaches that we took. Obviously, we'll pay attention to emerging claims costs in '26 as we always do, but they are fully reflected -- those things are fully reflected in our pricing.

Tom, I think -- I just want to just point out that inherent in David's question was because of our scale and our consistency, we're able to be somewhat selective in our selection of risk that we took on as well. And I think that, that's really an important component that our deep understanding and our capabilities allowed us to be selective in how we approach the client base. And that's something we we've done historically, for example, in the pension risk transfer business in Canada as well. So if you have that scale and that deep knowledge, it gives you an advantage.

And our next question comes from Mario Mendonca with TD Cowen.

Kevin, in response to your question, the questions around SLC and the moving parts, and where earnings could fall out in 2026, you used the word transition. It's a transition year, which in this industry is an euphemism for shrinking. Can you be clear with us? Is that what you're telling us that in 2026, that business will generate lower earnings than it did in 2025? Is that a...

No, we're not suggesting that it's going to shrink next year, Mario. I'm just saying that it's the year that we're transitioning into the new ownership percentages, and it will -- the medium-term objective is the 20%. But Steve may want to add a little bit more detail.

Yes. No, Mario, this is Steve Peacher. We've shown good growth in AUM and earnings this year. We expect that to see a case next year. We do -- we will have a mix in terms of the percentage of ownership as we go from the current minority interest that are outstanding, buying those up and then allowing employees to buy back in. So there's kind of a financial transition there. I think the -- more importantly, when I think of transition, we're -- the opportunity we have is to date, because of how we built this through acquisition, this has been kind of a siloed entity. You've had BGO and Crescent and InfraRed and our fixed income business. And while there's been some connections between those, it's really operated as a bunch of businesses kind of moving forward side by side. And that's been necessary because they've -- we've had -- they haven't been fully owned. Now all equity interests are at SLC and you've got everybody aligned around how do you harness the power of this platform to increase margin and to grow faster. And getting ourselves lined up to do that, which we really can't take full action on until after the buy ups is really a big focus for us this year. So when I think about transition, I think it's about transitioning the business to harness the power of the platform in a way that we haven't been able to do before.

Okay. Another question perhaps for David in stop-loss. I appreciate Sun Life's scale and expertise in the business, and it's certainly been helpful in the past, but that didn't prevent Sun Life from having some sloppy quarters over the last couple of years, like the experienced losses in Q4, Q2, Q3 this year. So where, I guess, I'm going with this first, David, if you could help us understand what's in that $17 million experience loss this quarter? Maybe break that down between Dental and stop-loss or in-force? And then as a follow-up to that, what would be a reasonable level of experience, either gain or loss going forward?

So obviously, the majority of the miss is in the stop-loss business because we were off our original plan. Part of it, we went into the year with -- we know we had a pricing gap that continued throughout the year. Q3 that you mentioned was really -- we've had a couple of quarters where we've had to restate our loss ratios for the prior periods because of emerging experience, and that did happen in Q3 and was reflected -- and it was 3 quarters reflected in that quarter. But of course, we saw that loss ratio stabilize in Q4 and really remain the same. So we stay focused on understanding the underlying risk that we have. And certainly, we're confident in where we are now because the 2025, 1/1/25 cohort is now 65% complete, and it's much more credible, and like the loss ratio has been stable. So that gives us a lot of confidence in where we're headed.

For obvious reasons, it's -- I guess the point I'm taking from your answer is that it's not really possible to give us an outlook on experience going forward because it's experience. We don't know yet. That point is you're not prepared to discuss that just yet?

That's right. I mean, obviously, we have our own view of it, and we have a great projection for experience, but we don't comment on future experience at this point.

Okay. Then finally, Kevin, let's go back to MFS for a moment. Your comments about MFS producing a lot of cash flow. Those are the -- that's an important comment for me. I paid a lot of attention as you described that. And I can see that as an immense positive for Sun Life. On the flip side, you've got a business that is a meaningful part of Sun Life's overall earnings that isn't growing. I think looking at underlying earnings at MFS in U.S. dollars, it was down 1% in '25 relative to '24. And again, this is in a year when markets were super strong. So how do you balance those two? On the one hand, it's a cash machine. On the other hand, it's not growing anymore. Is that some -- is that a dynamic you can live with?

Yes. Well, thanks for the question, Mario. And if you step back and you look at where Sun Life is today, we're a top 25 asset manager globally by assets under management. And we believe strongly in being both in public and private markets, and we talked about the build-out of SLC and MFS is our vehicle in the public markets. And we think that being in both is an important success factor to the long-term success of an asset manager. I talked earlier about how we built these capabilities out in SLC over the past 10 years, and we've now created Tom's role, and I think that's important. But having MFS as part of our strategy and asset management is a strategic choice, and we believe it's the right choice. Market cycles will change over time, and this has been indeed a more challenging time for active asset management. But long term, we believe that active asset managers add value to their clients. And I think this is critically important. And for MFS, we see MFS as being a leading global player in active asset management. In fact, they invented the mutual fund, and they continue to have leading investment capabilities and distribution capabilities. The issues that the industry are experiencing over the past few years, have allowed them to also pick up talent. And Ted and I were talking about this the other day. And that additional talent is critical to the long-term success of MFS. Their outflows at MFS are in line with the market, and so we continue to have confidence in their ability to deliver. And I fully support Ted and the MFS team in this. We spend a lot of time with them. They're doing the right thing for their clients and they're doing the right thing for the business. As Tom mentioned, we think the build-out of our wealth businesses in both Canada and Asia will help support MFS and SLC. We have -- in Canada, we have over $200 billion in wealth assets and wealth businesses, and Jessica is looking at growing that. And in Asia, we have a rapidly growing business as well. So if you step back and look at MFS, in addition to the contribution to earnings and contribution to ROE and the cash flow, they're an important part of our asset management business, and we think they have the right capabilities to be successful. And so that support from us, we think is critical to the ongoing support and success of our asset management pillar.

And our next question comes from Paul Holden at CIBC.

So lots of questions on stop-loss, Let's instead ask about U.S. Dental. Maybe give us a sense of the outlook for 2026 just in terms of, if there's any kind of positive movement at all in terms of -- and pricing cost actions you might be taking to help bring operating expenses down in line with the revenue outlook? And should we be expecting any acceleration in commercial premium growth here? You're at 7%. But is that enough to really change the mix favorably over time? Or should we want to see something higher?

Paul, it's David. Thanks for the question. Well, we expect to make modest progress in 2026 in the Dental business. Obviously, if you look back at 2025, higher claim utilization did offset much of the pricing increases that we had achieved coming into the year. But we continue to stay focused on the business, and we expect to make gradual progress as we move forward. We are seeing states that are beginning to reflect the higher utilization in their forward pricing. But at the same time, the Medicaid headwinds will persist. We do have a number of actions underway. Certainly, we continue to focus on repricing and working with states and health plans to do that. We're also looking at changing some of our risk agreements and [indiscernible] to ASO depending on what the clients might be looking for. And also just overall, working with states and health plans around our cost containment capabilities and as you mentioned, managing expenses. So we are very focused on continuing to improve this business, but it will be something that we will improve gradually over time.

Okay. And then just again, in terms of a reasonable expectation for growth in the commercial business, is 7% the right bogey? Or would you like to accelerate that to something higher?

Yes. Sorry. Thanks for that follow-up. We continue to focus on opportunities in the commercial space in terms of both extending our reach into new segments of the market and also adding more products when we sell Dental through our employee benefits distribution as well. So we're not just looking at it as a stand-alone Dental opportunity, but also how can we accelerate the overall growth of our employee benefits business. So ultimately, yes, we have a strong aspiration, but we have to be careful about the pace in which we build this out as well because it's a competitive market, and we have to do that carefully, which we'll do.

Okay. Okay. Got it. And then my second question is for Ted. And just, I guess, again, it's probably a 2-part question. So trying to look to see if there's any early evidence of potential change or improvement in flows here? Obviously, they've been challenged -- well known to be challenged again in Q4. But if you think about a couple of potential inflections for the business. One is it's no longer so much about the dominance of U.S. public equity markets, there's actually demand for other things now in MFS. I think historically has done a very good job running [ EF ] mandates. So wondering if you're seeing any signs of demand there? And then the second thing, and I know you really don't like to focus on short term, but we've talked about performance versus Mag 7, and sort of same thing. It's no longer so much the dominance of Mag 7 versus other parts of the market. So wondering if you're seeing early indications of better relative performance of some of your U.S. equity mandates on that basis?

Thanks for the question. This is Ted. So on the [ EF ] strategies, yes, that has been for the trailing period where we've, in general, been in outflows, that has been a net inflow driver in the fourth quarter, it wasn't, but -- but through time, it has been, we do have a strong franchise there. And as you said, there's been increased interest in that precisely because of the dominance of U.S. companies in global markets, a number of our global clients are looking to shift exposures and our international strategies are a nice way to do that. As it relates to the Mag 7 impact on the shorter term, you correctly predicted we don't like to make short-term predictions and we won't. However, yes, as that has been a dominant factor, we would expect that if it ceases to be a dominant factor, it will cease to be a headwind. We don't want to say that the -- that we're a one factor investment shop that has one headwind that can turn to a tailwind. There's multiple tailwinds. There are multiple headwinds at any given period of time. So it's not as simple as which way the Mag 7 goes and hopefully, that's clear for everyone. But certainly, the concentration of global and U.S. markets has been both a performance and a flow headwind for us over the last number of years.

And our next question comes from Tom MacKinnon with BMO Capital Markets.

Yes. With respect to SLC, as you end up buying in the minorities here at the BGO and Crescent. Just wondering how we should be looking at NCI going forward then? And how that will be handled when we have that management equity plan in there as well? Will that kind of just replace this NCI? Just curious as to how we should be thinking about that? And I have a follow-up.

Tom, it's Tim. Maybe I'll take that one. The buyout process that we're going through is to buy out the remaining equity interest that we don't own. And as Steve was outlining, that will be happening in the first part of next -- of this year in '26. But that will be replaced with the management equity plan. So where the employees and key participants will own shares in SLC. So you can think of that as a substitution of existing noncontrolling interest with a new noncontrolling interest of the employee base. And we think that's going to be up to about 25% of ownership that will be in minority interest after the buy-ups. So we'll continue to have the reported net income reflect that difference. But our underlying income, we would expect to be showing at 100%. And I think as we get through the movements of the buy-ups that we will have an opportunity to share through enhanced disclosures, both the Sun Life Asset Management pillar, as well as the impacts of this buyout process.

So you can pay them $2.5 billion, and then they're going to put $2.5 billion back into the business? But is that the way we should be thinking of just the cash?

Well, I think there'll be -- the employees will be -- it's a combination of things that -- but if you think about employees buying in, they'll be putting in cash. They'll be -- that will be supplemented with some what we're calling preferred equity from Sun Life to enhance that from their standpoint. But we will have -- not to the -- maybe to the extent that the numbers you just threw out, but we will have employees putting up cash to the tunes of hundreds of millions of dollars as they buy into the equity of SLC.

But the NCI now is worth $2.5 billion, and then they're going to get 25% ownership at just hundreds of millions of dollars? What am I missing there?

So Tom, this is Tim again. That's the net impact in terms of the cash flow exchange. So there's -- you can think about it, there's the agreed purchase price, it's a formulaic amount that's based on the trailing -- average of the trailing 12 months EBITDA for both 2025 and 2024. So that's the amount of the purchase. And then that creates a new valuation for going forward. So it's the net of the two that Steve was talking about. And as I said, I think, we'll have a chance to walk through the mechanics of this and lay that out so it's clear so that everyone can understand what the current treatment is, and how that's showing up in our financials today, and then post the buy-ups and the management equity plan. I think that will help make it a lot clearer. That's all taking place. That's effective Q1. So that's not obviously in our Q4 results just yet. But we'll have a chance to update our disclosures.

Yes. And then the only thing, if I could add, and everyone want to understand exactly how the numbers work and we'll walk our way through it. I just want to also make sure it's a -- from my standpoint, and I think from the employee -- standpoint of the employees, as we've been going through the process of getting people's interest, it's incredibly impactful to have employees now putting up their own money to be holders at SLC. Not within the business that they're used to, but to say we buy into the platform, I can see it impacting behavior as people are saying, how do we now work together to enhance the growth rate of this platform. So I think it's going to be a really important part of this business going forward. It also is important in terms of attracting people because if you look at the businesses that we compete with, they have this kind of structure, and we work with a lot of comp consultants to make sure we were designing something that was very competitive. So I think when you step back for this, this is an important part of our future success.

Yes. And as you look at sort of a more holistic approach here in terms of kind of revenue sharing between Sun Life and MFS and SLC, is there any opportunity between maybe MFS and SLC for -- or operating expense synergies, maybe procurement or what have you. Is that being analyzed? And what can we see there?

It's Tom Murphy here. Hopefully, I did a reasonable job giving you a sense of the growth opportunities in front of us, and that's -- that's really where we're focused. We're not focused at all on expense synergies. Traditional asset managers and alternative asset managers, they have very, very different operating models. They also have completely different buying centers. And so we're looking forward to growing the business, and that's where 100% of our focus will be.

Okay. And then one final quick one is on in the Asia division, maybe for Manjit joint ventures and other, this thing jumps all over the place. I assume these are your shares from your JV in India and in China. It was elevated last quarter, certainly the lowest we've seen in about 8 quarters this quarter. How should we be thinking about that going forward?

Tom, thanks for your questions, Manjit. As you noted, the joint ventures line includes -- largely includes the joint ventures that we have in India, China, but also in Malaysia and the Philippines. And one of the elements of the joint venture income and security gains that our joint ventures incur from balance sheet management and other activities, particularly in China and in India. And I noted on the call last quarter that these can bump around quarter-on-quarter. And in Q3, we had elevated gains in this quarter. We had some moderate losses. So you're seeing a variance that's reflected in the quarter-over-quarter change. For the full year, earnings were up just over 10%. And so we think going forward, that's a decent rate to look at, and we're optimistic that our joint ventures will continue to deliver good growth over the medium term.

And our next question today comes from Darko Mihelic with RBC Capital Markets.

Just two questions. My first one is a bit of a clarification question on stop-loss. I just want to be 100% sure that I understand this. Last quarter, you assumed a higher loss ratio and you built a reserve. And you'd mentioned at the time it was for 3 quarters. This quarter, it sounds stable. So did that result in a reserve build this quarter or no? Or was there a release? And maybe just ultimately, like what was the loss ratio on the '25? Was it 74%, 73%? Just those clarifications that help me understand. And I have a follow-up.

Yes. So as you recall, in Q3 -- thanks for the question, it's David here. That we did make an update to the ultimate loss ratio in that 1/1/25 cohort in Q3, and it then reflected back for the first 2 quarters as well in Q3. Essentially, in Q4, the loss ratio held, it was marginally improved actually, but almost identical to what we had projected in Q3. So that was the experience that is reflected in our Q4 results.

And what was the final loss ratio for the '25?

Yes. So our loss ratios historically have been in the mid-70s, and we've continued to operate, like I said, at that range and those are our targets going forward.

Okay. And maybe just my final question on this, just so I understand this a bit better. There's -- one of your competitors in the U.S. had a fairly extensive call with respect to stop-loss. And one of the things that they mentioned that caught my ear was that they're talking about a wider range of outcomes now. And just given the environment and cost trend. And so my question is, do you concur, is there potentially a wider range of possible outcomes as you look forward? And are you reserved for that? And could we expect, perhaps, more volatility as a result of a wider range of possibilities here in stop-loss.

Yes. So thanks for that follow-up question. So first of all, in terms of experience, medical costs include inflation, utilization, advances in technology, the aging population, new treatments, new medications, things like drug, cell and gene therapies. So there are quite a number of different things that drive costs. Kevin mentioned earlier, but we have a lot of scale in our business. And some of the maybe -- I can't comment on competitors, but perhaps you're referring to those that maybe not -- do not have as much scale and therefore, the volatility might feel greater in light of -- there are large claims involved in this business and scale really matters. And so obviously, with the amount of book we have, with the experience we have, and with our risk selection and pricing approaches, we feel good about our approach to the business and how we're managing through this cycle, and we're certainly seeing a hardening market that is benefiting us right now.

Darko, it's Kevin. Just really quickly that the rising cost trend in the U.S. health care space has been many, many, many years. I think it's -- so it's something that we're quite used to. The severity increased a little probably coming out of COVID, but we think we've adjusted for that. So it's an area that I think -- I just want to reinforce David's comment that, that scale really matters and it allows you to absorb some of those higher claims.

Okay. And so no change to reserving methodologies either for a wider outcome either. That's what I'm sensing from you. Is that the fair assessment?

That's correct. It's Brennan Kennedy. That's correct at this point, no reserving changes to highlight.

We have no further questions at this time. I'll now turn things back over to Mr. Strain for closing remarks.

I wanted to end the call with a few thoughts on Tumbler Ridge, BC. We were all heartbroken to hear about the tragedy a few days ago. The first responders and health care workers are the true heroes there. And I've personally been touched by how the community has pulled together and supported each other. Our thoughts and prayers are with everyone affected. Thank you.

This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.