Sun Life Financial Inc. (SLF) Earnings Call Transcript & Summary

Good morning, and welcome to the Sun Life Financial Q2 2026 Conference Call. My name is Gayleen, and I will be your conference operator today. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The host of your call today is 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 second quarter of 2026. 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 5. We delivered strong second quarter results with double-digit underlying EPS growth, reflecting higher earnings across our businesses and continued progress against our strategic priorities. Strength in Canada, Asia and U.S. all contributed to growth, while Asset Management continues to build momentum. Underlying net income was $1.12 billion, up from $1.02 billion last year. Underlying EPS was $2.02, up 13% over the prior year, and underlying return on equity was 19.1%. Reported net income was $1.01 billion compared with $716 million a year ago. Strong protection earnings were driven by growth in all insurance business groups. Canada delivered record results, reflecting strong business growth and favorable experience. In Asia, earnings increased from continued business growth. In the U.S., Health and Risk Solutions continued to perform well, while In-force Management delivered strong earnings driven by favorable investments and insurance results. In Sun Life Asset Management, SLC Management earnings increased year-over-year, supported by improved fundraising and deployment momentum while MFS delivered consistent earnings. We also delivered strong top line performance across the organization. Insurance sales increased 20%, driven by growth in Asia and continued strength in the U.S. Asset Management net flows and net wealth sales improved by $16.3 billion, supported by strong private credit fundraising and a large mandate win in our Aditya Birla Sun Life Asset Management business. The scale and brand recognition from this mandate amplifies our growth strategy for Asset Management in India. At MFS, outflows remained elevated, reflecting continued industry-wide pressure on active U.S. equity managers. Our capital position remains strong. We ended the quarter with a LICAT ratio of 145% and holding company cash of $2.3 billion, reflecting the strength and resilience of our business. During the quarter, we renewed our normal course issuer bid to repurchase up to 10 million common shares and began purchasing shares under the program. Our strong capital position and cash generation continue to provide flexibility to invest in our business while returning capital to shareholders. Overall, this was a strong quarter that reflected the strength of our purpose, our disciplined execution, our business growth across key markets and the resilience of our diversified model. Turning to Slide 6. Let me touch on a few areas where we're seeing notable momentum. First, our digital transformation journey. We made significant progress this quarter. At an enterprise level, we recently announced our founding membership in an AI consortium alongside Scotiabank, TELUS and Lightworks. The AI consortium is a collaborative effort to build the infrastructure, governance and controls needed to deploy AI responsibly at scale in regulated industries. It is helping us accelerate AI adoption in a way that's consistent with the governance standards clients and regulators expect while sharing costs with other major regulated Canadian institutions. In addition, to help technology architecture teams make informed decisions faster, we launched a new proprietary agentic AI platform. It has already freed up time by replacing the manual process of trade-off analysis with structured, data-driven and scalable decision-making. Beyond these enterprise initiatives, we're deploying AI solutions that deliver tangible benefits for clients and advisers. In Indonesia, we launched AI in our contact centers to enhance the client experience service through using advanced routing, analytics and monitoring capabilities to improve responsiveness and first-call resolution. More broadly, across Asia, we also launched tools in our agency channel that accelerate adviser onboarding and support higher quality service through real-time coaching, strengthening client interactions and enhancing the onboarding experience. In Canada, we enhanced My Sun Life app with integrated health capabilities, creating a more connected digital experience and bringing health benefits, services and support together in one place. We also launched an AI-powered concierge for SLFD advisers, enabling faster access to information and the ability to address complex inquiries, helping advisers spend more time focused on advice and client relationships. Our responsible approach to AI is helping us improve client experiences, operate more efficiently and scale our businesses while keeping clients at the center. Turning to Asset and Wealth Management. We've now completed our first full quarter of Sun Life Asset Management operating as a unified platform. We've retained strong talent, continue to deliver strong results to our clients and remain focused on realizing the full potential of our combined capabilities. Our strength in alternatives and our local expertise in new markets continue to be a driver of growth for Sun Life Asset Management. Crescent closed the largest direct lending in its history with USD 10.8 billion of investable capital, reflecting the strength of its platform and investor relationships. Crescent and Pantheon also closed a USD 3.2 billion private credit continuation vehicle in the first half of the year, marking the largest transactions in the private credit secondaries market. In India, Aditya Birla Sun Life Asset Management won a large fixed income mandate for a government sponsor, doubling their assets under management to USD 113 billion. At MFS, while we continue to experience outflows, our active ETFs continue to gain traction, generating inflows more than triple the prior year with AUM having now doubled since the start of 2026 to USD 3 billion. In our Canadian business, wealth sales increased 60%, supported by record defined contribution sales, strong rollover activity and higher mutual fund sales. These examples show the scale and momentum we're building in Asset Management and the breadth of solutions we're able to provide to a range of clients. Looking to Asia, momentum accelerated across the region. Sales increased 20% to $875 million, reflecting broad-based growth across the region. Hong Kong continued to perform well with sales increasing 20%, driven by growth across all distribution channels and a 28% increase in advisers to nearly 4,000. Indonesia was another standout this quarter. Sales increased 69%, demonstrating the ongoing success of our expanded CIMB partnership. We also saw strong growth in India and Malaysia, reflecting attractive market conditions and solid execution by our local teams. What stands out to me is the breadth of growth. It's coming from multiple markets and multiple channels. That's important because it creates a more resilient, higher-quality growth profile over time. As a result, total CSM now exceeds $7 billion, up over 90% since the adoption of IFRS 17 and providing a strong foundation for future earnings growth. In the U.S., we delivered strong sales results and continue to expand services offered to our members. Medical stop-loss sales increased 86% over last year, reflecting disciplined pricing, strong underwriting and continued success in winning attractive business. We continue to benefit from our scale and capabilities in this market while maintaining our focus on risk-adjusted returns. This quarter, we expanded our suite of health solutions to provide differentiated support for employers and members. Through a new partnership, we're providing access to clinical trials for people facing complex health conditions. Enhancing the solutions available to support access to care, improve health outcomes and help people through serious health challenges remains a core part of our strategy. In Dental, we continue to focus on improving profitability through ongoing portfolio management activities across our government business, growth in our commercial business, disciplined expense management and continued execution. While there is still work to do, we continue to make progress. Turning to Slide 7. We're continuing to perform well against our medium-term objectives. Underlying EPS growth was 13%, above our target of 10%. Underlying ROE was 19.1%, approaching our target of 20%. And our dividend ratio was 48%, within our target range of 40% to 50%. Supported by these strong fundamentals, our diversified business strategy, strength in both asset management and insurance and our industry-leading LICAT ratio, we remain well positioned to continue delivering sustainable broad-based earnings growth over the medium term. I'll now turn it over to Tim to go through the financials for the quarter.

Thanks, Kevin, and good morning, everyone. Turning to Slide 9. We delivered strong second quarter results with underlying net income of $1.12 billion and underlying earnings per share of $2.02. Results were driven by strong contributions from Canada, Asia and the U.S. and continued momentum in Asset Management. Reported net income was $1.01 billion. The difference between underlying and reported net income was primarily driven by acquisition and integration-related costs in SLC in the U.S., intangible asset amortization and modestly unfavorable net market impacts. Market impacts reflected yield curve movements during the quarter, real estate returns that were positive but below long-term expectations and strong public equity market performance in the quarter. Turning to Slide 10. Sun Life Asset Management underlying net income of USD 262 million increased 4% year-over-year, mainly driven by earnings growth at SLC. Favorable seed investment performance and disciplined expense management improved fee-related earnings margins in the quarter. At MFS, higher average net assets supported earnings growth and profit margins improved by 0.6% despite continued fee rate pressure. Reported net income increased 14% from market experience at SLC and also reflects the offsetting impacts of accelerated amortization of certain compensation expenses for retirement-eligible employees at MFS and a gain on the sale of a $1.3 billion block of closed-end funds. The compensation item reflects the timing and recognition of expenses rather than the change in total compensation costs. Capital raising of USD 4.7 billion and deployment activity of USD 6.2 billion remained strong across the platform, up 8% and 42%, respectively, particularly within our private credit and fixed income strategies. MFS continued to experience net outflows during Q2 from increased industry-wide pressure on active equity managers from the increasing popularity of lower-tracking error strategies. In parallel, the business continues to see momentum in its ETF businesses with $0.6 billion of retail inflows and 2 new ETF launches this quarter, alongside continued growth in fixed income and retail SMA products. Turning to Slide 11. Canada underlying net income of $427 million, a new record, increased 23% from the prior year. Favorable insurance experience was a significant contributor to earnings in the quarter, reflecting both seasonality and sustainable benefits from the investments we've made over time in our people, processes and capabilities. Canada's wealth businesses increased underlying earnings by over 19%, driven by growth in AUM. Reported net income of $443 million reflects favorable market-related impacts. Canada's wealth platform reached $286 billion in assets under management and administration, up 18% from last year as a result of record sales in the defined contribution business, increased volumes in the rollover business and strong equity market performance. Insurance sales were broadly consistent with the prior year in both Sun Life Health and Individual Insurance, reflecting timing of large deals and sales campaigns. Turning to Slide 12. We're demonstrating solid progress and growth in our U.S. business. Underlying net income increased 15%, driven by business growth in medical stop-loss earnings and favorable investment results and insurance experience in In-Force Management. Reported net income increased 69% from the prior year, driven by a prior-year intangible impairment charge in Dental and the increase in underlying net income. In stop-loss, sales increased 86% year-over-year, reflecting strong close ratios and pricing discipline, supported by our risk selection approach. Growth continues to be supported by our differentiated Health and Risk Solutions, advanced analytics capabilities and continued focus on risk selection. In Dental, we continue to reposition the business by improving pricing, exiting unprofitable contracts, optimizing our expense base and growing our commercial dental business. These actions contributed to improved loss ratios this quarter. Medicaid membership declined 9%, reflecting our deliberate actions to terminate unprofitable contracts as well as ongoing industry-wide dynamics. Commercial dental sales increased 10% in the quarter, reflecting progress in building a stronger business mix. As we continue to execute against these priorities, we expect gradual improvement in earnings over time. Turning to Slide 13. Asia had another outstanding quarter with underlying net income increasing 21% over the prior year, driven by robust organic CSM growth, lower expenses and improved credit experience. Reported net income increased 158% from the prior year, driven by market-related impacts and the increase in underlying net income. Asia individual insurance sales of $875 million were up 20%, primarily from strong growth across Hong Kong and our bancassurance channels in India, Malaysia and Indonesia. Hong Kong delivered insurance sales growth of 20% year-over-year across all channels, supported by expansion of the adviser force by 28% to nearly 4,000 advisers. Indonesia achieved 69% sales growth, reflecting the continued momentum from our bancassurance partnership with CIMB Niaga. New business CSM declined year-over-year, primarily reflecting the competitive environment in Hong Kong. Although margins were lower than a year ago, they remain strong. Turning to our capital position on Slide 14. We ended the quarter with a LICAT ratio of 145%, which increased 2 percentage points over the prior quarter, mainly driven by a $750 million sub debt issuance at the lowest spread for a 7-year issuance in the Canadian financial sector in the last 25 years. This is a testament to the quality of Sun Life in the debt markets. We delivered book value per share growth of 3% to $42.49 and finished the quarter with a financial leverage ratio of 23.8%. Organic capital generation was 41%, which exceeds our 30% to 40% range of guidance. Total CSM of $15.3 billion increased 12% over Q2 last year, driven by strong insurance sales. Together, these metrics reinforce our financial strength and provide resilience in more volatile periods. Turning to Slide 15. In the quarter, we returned $0.5 billion to shareholders through common shareholder dividends, delivering a dividend yield of 3.8%. We also renewed our normal course issuer bid to repurchase up to 10 million shares in June, and we purchased 0.8 million shares to date under the program. In closing, we are very pleased with our second quarter results, which demonstrate the earnings power of our business. Our strong balance sheet and capital position provides flexibility to invest in growth, support our clients and return capital to shareholders. Looking ahead, we remain focused on executing our client impact strategy and delivering sustainable long-term value for shareholders. With that, I'll turn it back to Kevin for some closing remarks.

Thanks, Tim. As I mark 5 years as CEO, I see this quarter as another proof point of our work to build a more diversified global and growth-oriented Sun Life. The company delivered strong earnings growth in line with medium-term objectives. Our diversified global business, strong capital position and disciplined execution continue to enable progress in areas that matter most for long-term value creation. Across our organization, we remain anchored by our purpose, helping clients achieve lifetime financial security and live healthier lives. Broad-based growth across Canada, Asia and U.S. Health and Risk Solutions, combined with accelerating Asset Management momentum is showing up clearly in earnings growth. We remain confident in our ability to continue creating sustainable value for clients and shareholders. With that, I'll turn it over to Natalie for the Q&A portion of the call.

Thank you, Kevin. [Operator Instructions] I will now ask the operator to poll the participants.

[Operator Instructions] The first question comes from Gabriel Dechaine with National Bank.

My question is on the U.S. business, both the stop-loss and the Dental. On stop-loss, I forget what page in the slides, it says an unfavorable experience due to seasonal reserve build. Kind of the phrasing of that seems like odd. If it's seasonal, wouldn't you have kind of anticipated that? Or is there actually a variance here versus what you normally do because everybody is focused on the stop-loss stuff?

Yes, Gabriel, thanks for the question. It's David. Yes, so the Q2 results do include known seasonality from the buildup of IBNR reserves. That is what is in that unfavorable [ morbidity ] line. It is -- you could consider it unfavorable but expected. The experience is still in line with our expectations despite this. And so morbidity in the quarter was impacted by -- sorry, was -- it was mostly because of the IBNR build. While we maintained our target loss ratios, the morbidity experience overall is a little bit higher in that unexpected line than a year ago, just reflecting the larger book due to the stronger growth year-over-year over the past several quarters. But loss ratios remained stable, within our target range in the mid-70s and which is a very strong result. And overall, the stop-loss business continues to perform very well and in line with our expectations.

So I guess you said it, but I don't quite get that, unfavorable but expected. If it's expected, why is it unfavorable? You said like a lower short-term insurance profit number in the quarter, something like that. Don't know how it works...

So the IBNR reserves do build over the course of the year just because claims don't pay out at the same time the premiums come in. So it's just a matter of...

No, I get that. It's just that you would have -- and we can move on. The Dental business, I understand the strategy there. You've been -- you've clearly articulated it. I just want to get a sense for how much more business is there to shed? And what's the time line for that, like the intermediated or brokered Medicaid business?

Yes. So as was noted, Dental results were pressured in the quarter, predominantly driven by lower membership, which was down 9% year-over-year. We are making progress in Dental, and our pricing discipline on new business and decisions to exit unprofitable existing business are driving improvements in the loss ratio. But as you noted, there are ongoing significant volume headwinds in our Medicaid dental business, and that's consistent with the broader market, which will suppress Dental earnings this year. We remain focused on shifting towards a more profitable mix as we reshape that government book of business and continue to grow our commercial dental. And then our broader plans, of course, include optimizing our expense base and continuing to stay focused on disciplined expense management. So we expect these actions to start to shift our business mix over -- to a more stable, higher-quality earnings base, but -- over the next 1 to 2 years.

Yes. No, I understand the strategy and you're articulating. And I just -- if next quarter, the Medicaid premiums drop $150 million or -- I'm just making up a number, but people have to kind of get a sense of the glide path here so we can avoid negative surprises. I don't know if you can give a sense of that direction or the timing of it, in 1 or 2 years, sure, but how much of this business is going to be shifted away?

Yes, it's a good question. I mean, the activities that we are taking are unlikely to fully offset the Medicaid volume-related pressures we're seeing over the near term. And as a reminder, Q3 is seasonally the highest quarter for utilization of the year prior to the start of the school year. And then Q4 is relatively lower utilization quarter. So we do expect the membership to remain lower this year. And then we're looking ahead to the broader market dynamics that are in '27.

It's Kevin. I want to maybe just add a quick thing on this. I watch David and his team, and they're fixing the fundamentals of the state business, but it is going to be a fundamentally smaller part of what we do on the dental side and building out the commercial, which is going to take a number of years to build the commercial, but there is more and more focus on that, building out the commercial side of the Dental business. And I'd also say on the overall U.S. results were really strong in the quarter, and it reflects what David and the team are doing to build that out. And exactly what we said would happen on stop-loss. We were seeing the pricing hardening, and we were winning more of that, and it's coming in at roughly the ratios we would have thought. So I'm actually quite pleased with how the stop-loss and benefits business is doing, and I'm pleased with the progress they're making on the Dental side. The state business is going to be a struggle. It's going to be a struggle for a number of years, and the focus is shifting over to the commercial side. And that's very clear and it's very deliberate, and I see them making progress there. And that's where you should be measuring the progress. I wouldn't have high expectations of the state business for a number of years because it's a number of years building it out.

The next question is from Mike Ward with UBS.

I was just wondering if you could discuss the stop-loss sales result. I just thought that was super strong. And I just -- I've got to imagine you guys are pretty confident on the margins on new and renewal business. So I'm just wondering if you could kind of characterize the competitive environment? And is it easy -- is it easier to win new business given the hard market and some people are pulling back? Or are you being more aggressive in growth?

Yes, Mike, it's David again. Thanks for the question. Yes. So we, first of all, remain diligent and disciplined in our pricing and underwriting approach, which has led to our scale and leading market position. And we certainly are benefiting from all the work we're doing in underwriting and advanced analytics around our risk selection and our decision-making. Our differentiated health capabilities are also notable because that focus on cost containment is increasingly resonating in the market as employers are more focused than ever on ways to manage overall medical cost increases. We are benefiting from a continued hard market and our approach to pricing and underwriting, along with those capabilities, they really position us well over the longer term. But in terms of margins, we remain focused on our margins, and we have that disciplined approach. If you look at our performance over the last little while, the 1/1/25 cohort is now largely complete. It's 97% complete and in line with our expectations, and we continue to get the pricing on our '26 business. It's probably worth noting that sales in the first half of '25 were a little lower than our typical growth rate due to what were competitive pressures at the time. And now, as I said, the market has been hardening later in the year and into '26.

That's helpful. And then I was wondering in Asia, could you discuss the sustainability of the strength there? And maybe any thoughts on the kind of focus on the MCV business in Hong Kong by China?

Okay. Mike, it's Manjit. So maybe I'll start with your second question. So in terms of the -- our Hong Kong business, let me just start with a bit of context on that business. As you've seen, the business has delivered exceptional performance over the last few years. In fact, we've outperformed our peers, and we've gained market share over that period. And that's been supported by deliberate investments we've made in distribution, brand, talent and IT, as well as strong execution. So the fundamentals of the business are very strong. And we have a very diversified business across all dimensions. In distribution, we sell through bank, broker and agency. We provide client solutions to meet protection, savings and retirement needs, and our clients include local Hong Kong, clients from Southeast Asia as well as MCI. In terms of the MCI client base, that makes up roughly about 30% of our overall client base in Hong Kong. And obviously, that will change a little bit quarter-to-quarter, depending on the mix. And in terms of how we serve that client base, I mean, we really focus on providing specific needs for them, and that includes higher rates of return, diversification of investments, as well as access to products to help them with legacy planning and wealth preservation needs. So I know there's some focus on the tax element of this, but that hasn't really been the key focus of what they're looking for when they come and talk to us. So fundamentally, I think the business is in very good shape, and I feel that we have good momentum and that will continue.

The next question is from Doug Young with Desjardins.

Maybe just going to Canada. Can you, Jessica, like talk a little bit about the experience this quarter, which was favorable. It's not as favorable as it has been in the past, but it's noticeably improved, the PAA growth. And then, I mean, in general, Canada is generating, I think, year-to-date about a 34% ROE. Like is this division punching above its weight? Or just trying to get a sense of the sustainability of this because it's a big part of the Sun Life story here.

Doug, this is Jessica. Thank you. So maybe let me talk about the insurance experience for this particular quarter, and then I'll talk a bit about more sustainability if you zoom out and look across. So I think for this quarter, you see a significant experience gains. About 1/3 of that is from mortality and then 2/3 of that is morbidity. And I think from the morbidity standpoint, we benefit from actually sustained and very purposeful investments in people, processes and capabilities such that not only we have actually lower claims volume, shorter claims duration, but also while maintaining actually pricing discipline to be competitive as well. So some of the things that we have taken to kind of get the sustained results would be things, for example, it's not just individual case managers, but it's actually an integrated case management team supported by actually health practitioners. We made actually lots of significant investments in different tailored processes between different cases and that you have different nudges and digitized experience so that for the members, as they navigate through this very difficult journey, that they are able to do it seamlessly. So things like digital forms with the help of practitioners, we actually made a lot of investments and reduce that. We have tailored nudges helping actually help practitioners to nudge so that they will be better in the recovery journey. So these are things that we've been purposefully doing for the past few years, which is why you see this. And then zooming out about sustainability, if you look at the past 8 quarters, we've had a positive insurance experience, on average about $57 million every quarter, pretax. And I think that is something that is quite sustainable. It is as reflected because we've been very disciplined, what we write in our CSM and risk adjustments are solid. And then I think while there are variations quarter-to-quarter, we do expect to continue every quarter to have a positive experience in the insurance side. And then I think maybe one more point. While if you zoom out beyond the insurance experience, you hear from Tim's opening remarks that actually -- if you look at this half of the year, overall Canada has actually improved its earnings by 15%, only 5% of that is actually from the insurance experience and the remaining 10% came from actually strong growth across all 3 parts of our businesses. Insurance grew at 6%. You see our CSM, continued strong growth. Health, if you look at the other short-term insurance line, actually grew by 11%. And then most importantly, I think our Wealth Asset Management business that Tim alluded to is now $286 billion of AUMA. The earnings actually in this half of the year went up by 26%, 18% of which is credited to both favorable market, but also positive inflows. This quarter, we had $1.4 billion of net inflows. And then the other kind of remaining 7% growth is due to efficiencies and economies of scale, which you would expect as you build a wealth asset management that would benefit from the scale that we get. So I think sustainability-wise, we're very confident that Canada is punching above the 6-plus, and I emphasize the plus, percentage medium-term objective.

Very fulsome. I appreciate that. Just one quick one, Tim. The USD 350 million price for Bell, I think 80% of that is being settled in stock in Q3. I assume that's at a fixed stock price, given your share price has gone up a lot just because that will lower the amount of shares you have to issue. Just kind of curious as to -- I assume that's fixed stock price that, that was set at, but just thought I'd clarify.

Doug, this is Tim. Yes, you're correct. The Bell acquisition, we completed that at the beginning of July and almost 80% of that purchase price was made in shares. And it was based on the 20 days leading up to the closing price. It was on the average share price during that period. And that was just shy of $400 million overall for the total purchase, and it was about 3.6 million shares. So that's already been issued and it's completed and the amount is fixed. Yes.

And that's in Q3 then?

Yes, it will show up in Q3. It's a subsequent event in our financials, but because it closed in July, we'll start to pick up the earnings from that business in the third quarter.

The next question is from David Andrich with Jefferies.

Just wanted to follow up on Doug's question around the experience gains in Canada. And just based upon the response, it sounds like you're kind of expecting the positive trend to continue and to see that come through. And then the second part to that was some of your peers have experienced some headwinds from long-term disability experience and just doesn't seem to be anything coming through in your results. So just wondering if you could comment on that -- on your experience specifically.

Yes. Yes. No, we do expect that I think the insurance experience line to continue to be positive. I mean, there will be fluctuations quarter-to-quarter due to season and other factors. But I think, as I mentioned, if you look at the past 8 quarters, the past -- it doesn't matter which period you look at, average is about $57 million pretax, $41 million post-tax. So I think there will be fluctuations within every quarter, but I think that we expect to continue to have that positive number. And then I think in terms of the long-term disability trends, I think there's -- some of the trends in the market has been there for quite some time. For example, I think since COVID, we've already had 40% of the claims due to mental wellness and stuff. So that's not something new. And I think this is one that all of us in the industries have been diligently working on. And I think the long-term kind of results, I think one is about pricing discipline, while remaining competitive, and that's one that we try to do. And then two, as I mentioned, because of the short- and the long-term disability, we're talking about multiyear journey. These are purposeful and sustained investments. It's not one single thing, but it's really all the things I described about the people, the processes and the capabilities that we've made investments across. So for example, one of the things that I think continue to help improve the outcomes for our members is this year -- last year, we had a pilot for all of Ontario on disability management for 20% of our business. There were some of the technical platform and processes and nudges that I mentioned. And this year, we started to roll out to the whole country, right? So I think we'll continue to be diligent in helping our members get to better outcomes.

The next question is from Nick Lu with Evercore.

My first one was a quick follow-up on Asia. Should I read the earlier comment as in the MCV business represent about 30% of total sales out of Hong Kong? And how have the local bancassurance partners been reacting to the updates, whether on taxes or the broader cross-border capital flow?

Nick, it's Manjit. Yes, you're correct. It's -- the figure I quoted was 30% of the total Hong Kong sales. I think in terms of the bancassurance partners, we have a very strong bancassurance agreement with Dah Sing. I think, obviously, with some of the new requirements put in place, there's sort of even more diligence that all banks are putting on in terms of account openings, and we're seeing that across the industry.

And my follow-up is on the stop-loss business in the U.S. Are we at a stage where you think you have an early view into what kind of rate increases going in -- that you're thinking about going to 1/1/27? Some of your large U.S. peers also noted some favorable experience on '26 book relative to '24 and '25. And I was wondering if you are seeing something directionally similar as well?

Nick, it's David. Thanks for the question. Yes. So obviously, we're monitoring very carefully the emergence of experience on the 1/1/26 cohort. It's still early in that process. It's about 15% complete. Our underlying technical analysis and our underlying emerging actual experience are certainly giving us a lot of confidence in terms of our pricing approach and how we're approaching that. But we'll continue to monitor that as the dynamic can change over the course of the year. And we remain very focused and very confident based on our proprietary advanced analytics models and our risk evaluation that we'll continue to focus on that as we -- as the year progresses.