Daniel Fishbein: I think new business strains specifically there’s a combination of things. Ingrid’s approach the selective underwriting for the international high net worth has made that business more profitable. And then as we’ve added scale, that also helps in terms of business strain. So adding the bank insurance agreements and focusing on building an agency helps with the new business strain item that you were talking about. And, Tom, as you note, it, of course, goes away under IFRS 17. But we’re happy to see a positive result from the selective underwriting and the addition of scale.
Tom MacKinnon: Okay, that’s great. And then the follow up here is just curious as to what’s driving the increase in the LICAT upon transition. If I look back our head said, the movement accounting doesn’t this accounting change is not going to drive capital, I think they had said for the industry as a whole, the movement to IFRS 17 would be capital neutral. So just curious as to if you can put your now high single digit, I think it is impact upon transition to your LICAT ratio in that context. Is there what is driving your increase? And any commentary you can share with what I said about the industry would be helpful as well. Thanks.
Kevin Morrissey: Sure, thanks for that question, Tom. It’s Kevin Morrissey. So yes, we are expecting a favorable high single digit LICAT racial increase at January 1 of 2023, as part of the transition to IFRS 17. You’re right to point out that RC did set a target for industry neutrality recognizing that there will be pluses and minuses, some companies will be more favorable, some less. So that was an overall. What’s driving our specific increase I think there’s a lot of moving pieces, Tom. As you know, LICAT ratio is quite complex and is moving pieces cross the numerator and the denominator. But I think that we can highlight probably the one driving factor that accounts for Sun Life’s increase is the change to the scalar. So as the scalar on the base solvency buffer reduces from 1.05 to 1.
And this accounts for approximately 7 point increase at transition for Sun Life. Maybe the one final thought I’ll leave with your question with regard to color on the industry. I think that one of the challenges around the final calibration we had is the changing market conditions, and the volatility of LICAT under IFRS 17 as it responds to changes in market conditions, especially interest rates. And so I think with that kind of moving bald throughout the year of 2022, it’s quite difficult to set that exact point. And I think that where we landed with interest rates higher, that was probably a bit overall favorable for the industry.
Tom MacKinnon: Okay, thanks for that color and your billion dollar I think it’s your capital generation annually after investing in the business and paying your dividend is still a billion dollars annually. Is there any color you can share with respect on that?
Kevin Morrissey: Yes, Tom it’s Kevin again. That’s right. We’re seeing the IFRS 17 outlook largely the same in terms of capital generation.
Operator: Thank you. Our next question comes from Paul Holden with CIBC. Your line is open.
Paul Holden: Thank you want to continue with the same topic. It’s an important one given the change in LICAT ratio. And sort of in the context of given what you were just saying regarding increased volatility under IFRS 17. Does all of the additional capital margin become the boilable capital? Or will you have a bias to maintaining more of a LICAT margin because of that increased volatility under IFRS 17?
