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Manulife Financial (NYSE:MFC)

Q3 2013 Earnings Call

November 07, 2013 2:00 pm ET

Executives

Anique Asher

Donald A. Guloien - Chief Executive Officer, President and Director

Stephen Bernard Roder - Chief Financial Officer and Senior Executive Vice President

Warren Alfred Thomson - Chief Investment Officer and Senior Executive Vice President

Cindy L. Forbes - Chief Actuary, Executive Vice President and Chairman of Capital Committee

Robert Allen Cook - Chief Executive Officer of Manulife Asia Operations and President of Manulife Asia Operations

Craig Richard Bromley - Executive Vice President of Japan Operations and General Manager of Japan Operations

Analysts

Steve Theriault - BofA Merrill Lynch, Research Division

Peter D. Routledge - National Bank Financial, Inc., Research Division

John Aiken - Barclays Capital, Research Division

Robert Sedran - CIBC World Markets Inc., Research Division

Tom MacKinnon - BMO Capital Markets Canada

Mario Mendonca - TD Securities Equity Research

Gabriel Dechaine - Crédit Suisse AG, Research Division

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

Sumit Malhotra - Macquarie Research

Michael Goldberg - Desjardins Securities Inc., Research Division

Operator

Please be advised that this call is being recorded. Good afternoon, and welcome to the Manulife Financial Third Quarter 2013 Financial Results Conference Call for Thursday, November 7, 2013.

Your host for today will be Ms. Anique Asher. Ms. Asher, please go ahead.

Anique Asher

Thank you, and good afternoon. Welcome to Manulife conference call to discuss our third quarter 2013 financial and operating results. Today's call will reference our earnings announcement, statistical package and webcast slides, which are available in the Investor Relations section of our website at manulife.com. As in prior quarters, our executives will be making some remarks. We will then follow with a question-and-answer session.

Today speakers may make forward-looking statements within the meaning of securities legislation. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied. For additional information about the material factors or assumptions applied and about the important factors that may cause actual results to differ, please consult the slide presentation for this conference call and webcast available on our website, as well as the securities filings referred to in the slide entitled Caution Regarding Forward-looking statements.

We've also included a note to use the slide that sets out the performance on non-GAAP measures used in today's presentation. [Operator Instructions]

With that, I'd like to turn the call over to Donald Guloien, our President and Chief Executive Officer. Donald?

Donald A. Guloien

Thank you, Anique. Good afternoon, everyone, and it is indeed a good day, and thank you for joining us. Joining on the call this afternoon by our Chief Financial Officer, Steve Roder; as well as several members of our senior management team, including our Asian General Manager, Bob Cook; our Canadian General Manager, Marianne Harrison; our U.S. General Manager, Craig Bromley; our Chief Investment Officer, Warren Thomson; our Executive Vice President, General Account Investments, Scott Hartz; our Chief Actuary, Cindy Forbes; our Chief Risk Officer, Rahim Hirji; and our Treasurer, Steven Moore.

This morning, we announced our third quarter 2013 financial results. I am very pleased to see our strategy unfolding into strong operating results. We are making real tangible progress against our longer-term objectives.

This quarter, we had strong wealth sales, driven by growth in our Mutual Fund businesses worldwide. We reported strong core earnings. And as we predicted last quarter, a number of items with unusual timing reversed themselves this quarter contributing to the increase in net income. Investment performance also made a very significant contribution. As a result, we ended the quarter with a very solid capital ratio, and we again delivered record funds under management. Let me start by reviewing the progress we made on our growth strategies in the third quarter.

We continue to develop our Asian opportunity to the fullest, generating strong growth in our wealth sales, compared to a year ago, with double-digit growth in most of our territories. We maintained our leadership position in net cash flows in the Mandatory Provident Fund business in Hong Kong. And while insurance sales were below the same quarter last year, we've seen good momentum building in both Hong Kong and Japan in September and expect this to carry forward into the third quarter.

We also continue to grow our wealth and asset management businesses. In the third quarter, we had strong positive net wealth flows, which contribute to the 20th consecutive quarter of record funds under management, which as you know, drives future fee income. On a year-to-date basis, we have now achieved over $13 billion net, and I stress net, mutual fund flows, exceeding our full year 2012 results, reflecting our robust distribution partnerships, strong product suite, as well as improved market conditions. Our institutional advisory business continues to deliver, with assets under management up 30%, since September of last year.

Our balanced Canadian franchise continued its steady progress. And in the third quarter, mutual fund sales continue to outperform the market, and we ended the quarter with Mutual Fund assets under management up almost 30%, compared with the same period last year. Manulife Bank's net lending assets increased. And we saw a significant improvement in new loan volumes over the previous year. And our Canadian business continue to build its diversified platform this quarter. We announced the launch of RetirementPlus, a new segregated fund product. Manulife became the first company in Canada, licensed to offer the new Pooled Retirement Pension Plans. And we expanded our travel insurance business through a transaction with RBC Insurance.

In the United States, we continue to grow our higher ROE, lower risk businesses. Our mutual fund sales were almost doubled the prior-year period, and nearly 5x greater, 5x greater than the industry increase for the Intermediary-Sold channel. Our 401(k) sales declined due to lower plan turnover in the market, but our recently launched mid-market 401(k) product continues to gain traction with additional commitments from sponsors.

And while our U.S. insurance sales were relatively flat, compared to the same period last year, we saw increased sales of Life products with much more favorable shareholder-friendly attributes.

In terms of our operating performance in the third quarter, we reported net income of $1 billion and core earnings of $704 million, both representing an increase over the prior year and the prior quarter.

On the top line, we achieved solid growth in our wealth businesses. The performance of our wealth and asset management business so far in 2013 has been, simply, outstanding.

While the increase in insurance sales increased modestly from last year, we have much improved margins and are seeing encouraging signs from initial sales of some of the new products that have been recently launched.

So in summary, our growth strategies continue to generate positive results. And we are making measurable progress towards our longer-term financial goals.

With that, I'll turn it over to Steve Roder, who will highlight our financial results, and then open the call to your questions. Thank you.

Stephen Bernard Roder

Thank you, Donald, and hello, everyone. Let's start on Slide 6, where we highlight our financial and operating results for the third quarter of 2013. We reported net income attributed to shareholders of $1 billion, reflecting strong investment-related experience of $543 million, partly offset by a charge related to the annual review of actuarial assumptions.

In terms of our operating performance, we generated core earnings of $704 million. We strengthened our MCCSR ratio by 7 points to 229%. And we generated new business embedded value of $278 million.

Turning to Slide 7. You can see that we are demonstrating solid progress on growing core earnings. In the third quarter, our core earnings were $704 million, an increase of $95 million from the prior quarter. The increase was primarily due to more favorable policyholder experience, the release of tax provisions in Canada from closing prior year's tax filings and lower net hedging costs, partly offset by lower investment income in the surplus segment.

Turning to Slide 8. Third quarter total company core earnings reflect improvements in each of our territories and lower hedging costs. In Asia, core earnings improved due to improved lapse experience and new business strain in Japan, partly offset by the negative impacts of currency and higher dynamic hedging costs. Excluding the impact of currency and additional dynamic hedging costs, core earnings in Asia improved 14% from the prior quarter.

In Canada, the improvement in core earnings was primarily due to the release of prior year tax provisions of approximately $40 million and lower expenses. In the U.S., core earnings growth was due to improvements in policyholder experience and new business strain in the Life business, partly offset by higher dynamic hedging costs. Corporate & Other core earnings declined largely due to lower investment income on equities and oil and gas assets in the surplus segment. And expected macro hedging costs declined due to the favorable market environment and a shift towards more dynamic hedging.

Turning to Slide 9. As we predicted last quarter, a number of items with unusual timing reversed themselves this quarter, contributing to the increase in net income. In the third quarter, our reported net income benefited from strong investment-related experience of $543 million, $52 million of which was included in core earnings.

The favorable experience included $284 million, primarily related to favorable returns from our timber, agriculture and private equity assets; gains from the redeployment of government securities into higher yielding assets; and continued excellent credit experience. In addition, we reported net gains of $259 million related to planned asset allocation activities that enhanced surplus liquidity and resulted in better asset-liability matching in the respective liability segments.

You may recall, last quarter we referenced this as a positive onetime benefit expected in the second half of 2013. Market-related factors, including gains on variable annuity liabilities that are dynamically hedged, also contributed $94 million to net income. Partly offsetting these gains was a net charge of $252 million related to the annual review of actuarial methods and assumptions.

Moving on to Slide 10. In the third quarter, we completed our annual actuarial review, which covered more than 150 methods and assumptions this year. The review included updates to our lapse and policyholder assumptions that resulted in a $530 million after-tax charge to earnings, driven by premium persistency on Universal Life products in the United States, where we reviewed policyholder premium funding patents and prudently adjusted our assumptions.

Lapse experienced for certain insurance lines in Canada and Japan to reflect that in the current low-rate environment, certain guarantees on our products are valuable to policyholders, which results in fewer lapses, and lapse assumptions on certain variable annuities were updated to reflect recent experience, including reducing the base lapse rates in Japan as contracts get closer to maturity.

The triennial review of our Long-Term Care assumptions resulted in a net charge of $12 million. I would discuss the Long-Term Care assumption review in more detail later in the call. These charges were partly offset by reserve releases related to updates to our segregated fund stochastic valuation parameters and other method and assumption changes, which had a combined $290 million benefit.

You may recall that in the second quarter, we took a charge related to the impact of interest rates on bond and balanced funds in variable annuity products. This is largely reversed, as we updated our bond parameters to reflect higher prevailing rates in the third quarter actuarial review.

On Slide 11 is our source of earnings. Here are some of the highlights. Expected profit on in-force declined largely due to an increase in dynamic hedging costs and lower PfAD releases on our variable annuity business as a result of improved markets, partly offset by currency benefits and higher fee income.

New business strain improved, particularly in the U.S. and Japan, as a result of product repricing, favorable new business mix and higher interest rates.

The third quarter's experience gains reflect strong investment-related experience, favorable equity markets and improved policyholder experience, partly offset by URR charges and the impact of wider swap spreads.

Management actions and changes in assumptions largely reflect the impact of the annual actuarial review, expected macro hedging costs and realized losses on our AFS bond portfolio.

Earnings on surplus increased, largely, due to lower non-core losses on surplus, which reflect the impact of interest rates on mark-to-market assets.

And finally, income taxes reflect income earned in lower tax jurisdictions and the favorable release of prior year tax provisions.

Turning to Slide 12. You will see that our total insurance sales for the third quarter were $605 million, up 4% from the third quarter of 2012. Sales in Asia declined 4%, as higher sales in Hong Kong and Other Asia were more than offset by lower corporate product sales in Japan. In Canada, sales increased 27%, reflecting normal variability in Group Benefits. And in the U.S., sales were largely in line with the prior year and reflected an improved product mix.

On Slide 13, you can see new business strain arising from insurance sales improved to $66 million from a year ago, with improvements in all geographies, particularly, in the U.S. Driving the improvement was product repricing, favorable new business mix and higher interest rates.

Turning to Slide 14 in wealth sales. In the third quarter, we achieved wealth sales of $11.3 billion, an increase of 34% over the prior-year period. In Asia, wealth sales were up 21% with double-digit growth in most territories. Canadian wealth sales were up 32%, reflecting strong mutual fund deposits and higher new loan volumes. And in U.S. wealth sales increased 37%, driven by continued strong mutual fund sales, partly offset by lower 401(k) sales. Wealth new business strain of $82 million was largely in line with the prior year period.

Turning to Slide 15 in premiums and deposits. Continued growth of our Wealth business was reflected in strong Wealth P&D, up 27% to $14.6 billion. Insurance P&D increased 9% to $6.1 billion, reflecting broad-based growth, particularly in U.S. Life.

Turning to Slide 16. New business embedded value or NBEV of $278 million rose 56% over the prior-year period. Wealth NBEV nearly, doubled as a result of strong mutual fund sales and improved fixed expense coverage. Insurance NBEV was up 38%, reflecting higher margins due to product repricing and an improved new business mix.

Turning our focus to the operating highlights of our divisions. We began with the Asian division on Slide 17. Asia Division core earnings of $233 million U.S. were up 6% from the second quarter, or 14% when normalized to currency and additional dynamic hedge costs. Asia wealth sales increased 21% over the prior year period, driven by double-digit growth in most territories and strong pension sales in Hong Kong. Insurance sales were down 4% versus the prior year, largely due to lower corporate product sales in Japan.

While insurance sales were below the same quarter last year, in September, we saw good momentum building in both Hong Kong and Japan and expect this to carry forward into the fourth quarter. Total annualized premium equivalents grew 8% over the prior year, due to strong growth in Hong Kong and other Asia, partly offset by lower corporate product sales in Japan. Total weighted premium income increased 6%, driven by solid in-force growth across Asia and strong wealth sales, partly offset by lower corporate product sales in Japan.

Turning to our Canadian Division operating highlights on Slide 18. Core earnings for the Canadian Division improved 19% from the prior quarter to $268 million. Wealth sales in Canada were up 32% to $3.1 billion, reflecting strong mutual fund sales, which outpaced industry growth and strong growth in new loan volumes at Manulife Bank.

Group Retirement Solutions also contributed with a 23% increase in sales. Although individual insurance annualized premium sales were 8% lower than the prior year, sales in Group Benefits drove an increase of 27% in total insurance sales, compared with third quarter 2012.

Moving on to Slide 19 and the highlights for the U.S. division. Core earnings in the U.S. were $348 million, up 4% from the prior quarter. As you can see in the chart, core earnings for our U.S. operations continued on a positive trend. In the third quarter, wealth sales grew 37% over the prior year to USD 6.7 billion, driven by continued strong mutual fund sales. This more than offset lower 401(k) sales, which were impacted by lower plan turnover in the industry and competitive pressures.

Insurance sales of USD 154 million were in line with the third quarter of 2012. We continue to record strong sales in our repriced lower risk insurance products. Additionally, sales of our redesigned Long-Term Care products were up 15%, reflecting a more rational competitive environment.

Turning to Slide 20. Funds under management at the end of the third quarter were 550 -- sorry, $575 billion, representing our 20th consecutive quarter of all-time record funds under management.

Slide 21 highlights our diversified and high-quality investment portfolio as at September 30, 2013.

Slide 22 summarizes the capital position for the Manufacturers Life Insurance Company. We ended the quarter with a further strengthened regulatory capital ratio of 229%, an improvement of 7 points over the second quarter of 2013. The improvement in our capital ratio reflects lower required capital on segregated funds as a result of both higher equity markets and changes to the assumptions used in the required capital calculation, consistent with the third quarter changes in actuarial assumptions and strong reported earnings.

Before I conclude, I would like to address a couple of topics, which may be on the minds of our investors. The first topic that I want to discuss is the U.S. Long-Term Care triennial review. This year's review include an update of our Long-Term Care morbidity, mortality and lapse assumptions from our last review in 2010. Since then, we have seen an increase in expected claim costs due to longer length of stay on average for our customers, higher incidence rates and lower mortality.

While we strengthened our morbidity and mortality assumptions in line with this emerging experience, the impact was largely offset by our estimate of future rate increases as we will be fining for additional premium increases that average 25%, on approximately 50% of our in-force business. Our methodology refinement to tax cash flows, as well as better-than-expected experience on our 2010 in-force price increase approvals.

It's important to recognize that our Long-Term Care product is adjustable, and we expect over time to get the appropriate rate increase approvals to offset the increase in expected claims cost. As you know, we have had significant experience in the state approval process, having received approvals from 47 states so far on our retail Long-Term Care business on our 2010 rate increases.

The second topic I will address is, with regard to the impacts of a rising interest rate environment on Manulife. Despite the hedging of our mark-to-market accounting sensitivities, Manulife has retained positive exposure to a rising interest rate environment, as well as follow-on benefits in an improving economic environment.

Since the end of April, interest rates have risen nearly 100 basis points, leading many investors to ask how will Manulife benefit in a rising rate environment. The answer is rising interest rates will have a favorable impact on our net income, core earnings and capital position. We have already seen the impact on our core earnings, as a result of improvements to new business strain.

We've seen reduction in the interest rate charges related to changes in the ultimate reinvestment rate on our in-force business, and we are starting to see the pro-cyclical impact of lower interest rates on our MCCSR ratio now starting to reverse, as interest rates rise.

For illustration, let's assume we had a 50-basis-point rise in interest rates, including swap and Corporate rates, and they remained at this level for a year. In terms of the first order impacts, we would expect the onetime positive impact to net income, of approximately $150 million due to the impact of the rising rates on our policyholder liabilities. And a reduction in our URR charges of approximately $100 million over the next year.

In regards to our capital, all else being equal, we would expect approximately a 10-point benefit to MLI's already strong MCCSR ratio.

Additionally, over the medium-term, we would expect further benefits from second or third order impacts. Higher interest rates would imply an improved operating environment and customer sentiment, which typically results in reduced new business strain, subject, of course, to any pricing changes; higher earnings on surplus over time as cash flows are reinvested into higher yielding bonds, initially, this however, will be more than offset by losses on the sale of AFS assets in surplus; an improved environment for generating positive investment experience; and an opportunity to reduce our leverage ratio, which also improves core earnings.

Unfortunately, while these benefits are easy to identify, they are very difficult to quantify. Conversely, if rates were to stay low under the Canadian Actuarial Standards, we have already, largely, reserved for the current rate environment, and as such, and we would not expect any material impact.

To summarize, in the third quarter of 2013, we made substantial progress on our growth strategies. We reported strong core earnings and net income. We generated favorable investment-related experience, and we further strengthened our capital ratio.

This concludes our prepared remarks. Operator, we will now open the call to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from Steve Theriault with Bank of America Merrill Lynch.

Steve Theriault - BofA Merrill Lynch, Research Division

So I have a couple questions on hedging, probably, for Steve or for Cindy. So we're seeing today that you unwound a pretty sizable portion of the notional macro hedge. So a couple of related questions. First, if equity markets reverse course, do you feel like would you need to begin ramping the macro hedge -- hedges to the same extent as before? Or the actions that you're taking on the dynamic side, would those actions preclude are required ramp in the macro hedge, at least to some extent? And then the second part was, I was surprised to see the decline in the expected macro hedge cost be fairly large this quarter or larger than expected. Can you help us understand it all how quickly the remaining macro hedges could run off? If market's rally another 10%, what's the sensitivity? I know that's hard to quantify, but anything you can give us would be helpful?

Stephen Bernard Roder

Okay. I'll start-off, and then I'll ask Warren to comment. The first part of your question, the answer is, no. We wouldn't necessarily have to reverse that. And what we've done on the dynamic side would prevail in a sense. So you shouldn't assume that we would have to go into reverse on that at all. On the macro hedge side, yes, the costs have come down. I think to date, we have around a run rate saving of $35 million. And we were at 20, and we have increased that to 35. But I'll just pass to Warren and see if he wants to add.

Warren Alfred Thomson

Sure. I think, Steve, the important point is, when things do move from the macro to the dynamic program, it's a permanent change. So anything that –- once it cease being subject to hedging under the macro program, it won't revert to the macro program. Market moves are adjust -- addressed by the changes within the dynamic programs. So as markets move, we adjust the dynamic hedges. So I think, as the name suggests it, the macro program is more of a static program and until things move from the macro to the dynamic, you don't really make much in the way of changes there. But once in the dynamic program, it does not revert back.

Steve Theriault - BofA Merrill Lynch, Research Division

Okay. And, if I just before I let you go, can you tell us based on Q3 rates what -- just refresh us on what your URR expectations are looking out the next 1 or 2 years before any potential guideline changes?

Stephen Bernard Roder

Okay. On URR, you've seen the quarterly run rate has come down. Our expectation would be that it will continue to come down based on the mechanical process that we, eventually, have to follow through. So we would expect an improvement to that. And to a large extent that would be maintainable, although, it is as you know, a mechanical function of movements in interest rates over the last several quarters. So it wouldn't necessarily be without the uptick back up again, but by and large, we're going to see a lower continuing run rate per quarter.

Steve Theriault - BofA Merrill Lynch, Research Division

So a little bit lower than the 63 we're seeing this quarter?

Stephen Bernard Roder

Yes.

Operator

Our next question is from Peter Routledge with National Bank Financial.

Peter D. Routledge - National Bank Financial, Inc., Research Division

Just a couple of thoughts on the lapse, and I'm on Page 28. Just to clarify first, the benefit is $1 billion. I just want to make sure, I read it right. You added $500 million this quarter. There was already $500 sitting there from your prior quarter. Is that fair? I'm talking about the benefit for premium increases.

Stephen Bernard Roder

So you're talking about Long-Term Care, Peter?

Peter D. Routledge - National Bank Financial, Inc., Research Division

Yes.

Stephen Bernard Roder

Okay. Just a second, we are just trying to make sure we fully understand your question.

Cindy L. Forbes

So, Peter, on Page 28 of the...

Peter D. Routledge - National Bank Financial, Inc., Research Division

Press release.

Cindy L. Forbes

Where we state that we have $1 billion of premium increases embedded in our reserves?

Peter D. Routledge - National Bank Financial, Inc., Research Division

Yes.

Cindy L. Forbes

$0.5 billion is due to the 2013 premium increases. We'll file for it in the next quarter. And the other $0.5 billion is from the 2010, the remainder of the 2010. It's not exactly what's left over because we did prudently reserve for premium increases in 2010. And so we had some experienced gains on that, which we had thought we had better experience than we expected on 2010. And now we're reflecting those additional remaining premium increases related to 2010 that would have been part of the margin before but now are being included in the reserve, but there again are properly and prudently margined, as conservatively as, we margined the premium increases in 2010.

Peter D. Routledge - National Bank Financial, Inc., Research Division

Just -- you may not disclose, I'm not going to press for it, but you have a gross increase in expected claims costs. What is that number? Or if you can't give the direct disclosure, the concern, when I read that, I had was that could be a big number because there's a lot of offsets in there. And does it foreshadow more of these charges down the line?

Cindy L. Forbes

It's Cindy again. The -- we've updated our experience. We, certainly, with being in the LTC business for 20 years, we have quite a credible amount of experience. And each time we updated our assumptions, we have even more credible experience. Really can't speak to what the future trends might be. But as you note, the increase in the gross claims cost, they're not a large percentage, but they are -- the dollar amount would be in excess of the $1 billion that you see in future premium increases are included in the reserves.

Peter D. Routledge - National Bank Financial, Inc., Research Division

Okay. Just final one, and perhaps for Don. You've done a great job in terms of getting your premium increases, and you're managing a tough business pretty well. I don't mean to be confrontational, but looking at more charges on this business, the question naturally comes up, why not just get out? Why go for the extra premium increases? Why not just pull out?

Donald A. Guloien

Yes. Well, pulling out would do nothing to reduce the exposures that you're observing. That's largely -- all on the in-force. The products we are selling now have a very, very handsome margin built in, even for profit and also for the potential for worsening results down the road. And if anything is going to be a profitable, it's the new business we are writing. We're also writing very small amounts in new business and as we've said another venue's -- part of the leverage we get in going for rate increases is being in the business because, I guess, the ultimate threat for regulators is if everybody pulls out of Long-Term Care business because they can't get rate increases. There will be no Long-Term Care available to consumers. So we are managing the new business very, very prudently, and I don't think you're going to have to worry about big swings with respect to the new business. What the future holds for the in-force business is something that we can't determine with any specificity, but we feel we are getting on top of it.

Operator

.

Our next question is from John Aiken with Barclays Capital.

John Aiken - Barclays Capital, Research Division

Wanted to circle back on the hedgings just for a moment. Steve, can you refresh our memory? In terms of the dynamic hedging, is there any accounting for volatility in terms of the hedges that are put in place? Are you specifically hedging volatility or is it in terms...

Stephen Bernard Roder

No.

John Aiken - Barclays Capital, Research Division

Okay. And then...

Stephen Bernard Roder

Let me just pass to Warren, I think, Warren can give you an fuller answer on that one.

Warren Alfred Thomson

The actual dynamic hedging program doesn't actually cover the cost of volatility per se. That actually is one of the byproducts of the program. Actually that when we have a modest cost of hedging that emerges, that's we're including, when we talk about our realized hedging cost. The -- I lost my train of thought.

John Aiken - Barclays Capital, Research Division

Well. That answers my question. The follow-on one that I had, Dan is, with the switch -- with reporting the dynamic hedging in the expected profit, any sense of -- I mean, volatility right now in the market this is actually quite low. Any impact on whether increased volatility would be a material headwind to expected profit growth going forward?

Donald A. Guloien

You helped me up by buying me some extra time there. The conversion to options was the piece that I was trying to get to. We have, in fact, been adding options into our program. The options do address the cost of volatility. So again, as -- once the cost of volatility has dropped in the current environment, we've actually been adding to our option-based program. So, prospectively, I think if you know the markets remain benign, you would expect us to do more option-based hedging. And that will cover the cost of volatility. The current dynamic program, it's a bit of a byproduct. The volatility comes out as a cost. As the -- when volatility rises, the cost of our hedging will be higher in the current dynamic program. But we do hope over time to have a meaningful portion of business covered by options.

Operator

Our next question is from Robert Sedran with CIBC.

Robert Sedran - CIBC World Markets Inc., Research Division

Want to start with Asia insurance sales, please. The strong momentum we're seeing in September that you mentioned, Steve, is that the result of a -- of the product launch? Or is there a feeling that perhaps insurance sales in Asia are starting to turn and maybe we'll get to -- into a double-digit range going forward? And if it -- and if you do, is there a negative offset through earnings because of strain or some other expenses that might come?

Stephen Bernard Roder

Well, let me just start off, and then I'll pass over to Bob Cook. There are various factors to take into consideration when we look at what's been happening in September and heading into Q4. So first of all, he did have a new product launch in Japan, which is starting to get some traction. That's our SSLT [ph] product, which is what we are referring it as. And that was

[Audio Gap]

So we're expecting Japan to -- improving into Q4. At the same time, we've had a campaign running in Hong Kong, and it's had a lot of momentum in September and into October. So Hong Kong's come back. And Indonesia went through a bit of a lull in Q2 partly because of the weakness of the rupiah. But Indonesia has also come back. So our 3 largest jurisdictions, if you like, have all had a positive September and into October. But let me then pass over to Bob for a bit more color.

Robert Allen Cook

Yes, I guess the only thing I would add, Robert, is in the -- throughout the third quarter across our 11 countries in Asia, we actually launched 40 new or repriced insurance products. So we do expect those to have an impact in the fourth quarter and then more particularly, give us momentum going into 2014.

Robert Sedran - CIBC World Markets Inc., Research Division

And, Steve, would there be then a strain impact that we should be watchful for going forward? Or is it -- should it be negligible?

Stephen Bernard Roder

Well, I guess you have to look at both sides of that. I mean, we have insurance strain and wealth strain. Now insurance strain has improved because of improvement in interest rates. Wealth strain is a volume gain. So I think we've said before, it's incredibly difficult to predict strain because there's so many moving parts. I think previously, we gave some guidance -- $100 million was a reasonable number for us on an overall strain number per quarter. Our feeling is that that's probably come down. And I think if we have to call a number now for the spreadsheet, if you like, I'd probably say $70 million is a better number.

Robert Sedran - CIBC World Markets Inc., Research Division

Okay. And can I just ask you for one point of clarification on this triennial review. You mentioned that a lot of the products are adjustable and you're also going for price increases. Are they -- I mean, are you making the adjustments plus the price increases? Or is there some interplay between those 2 variables? Or can you just perhaps clarify that for me?

Stephen Bernard Roder

Yes. I mean, Cindy can answer this, but we basically made assumptions about our ability to get price increases. As Cindy said before, we've got a lot of experience now from what happened in 2010, and bear in mind, in 2010, we were perhaps a bit of a trailblazer. We were one of the first companies to go out there for price increases. That's not the case now. The various states are well used to companies seeking to get these price increases to which they're entitled. And we're certainly not alone anymore. Our outreach program in relation to these new increases, and I think the mood is, well, nobody's surprised. So it's a lot more certain of an environment, if you like, than it probably was 3 years ago. But let's just see if Cindy wants to add anything to that.

Cindy L. Forbes

Sure. So, Rob, it's Cindy. The price increases or the adjustable price I was referring to is LTC in particular, and that's related to the annual review of actuarial assumptions and what we're assuming for those future increases, which is separate from the discussion around our new business and the impact on -- of more new business on strain and the repricing of new products, so the repricing of products that we've done over the last number of years. So when you're looking at year-over-year or quarter-over-quarter numbers, the repricing that we've done has reduced our strain on the insurance side because we've reflected the current rate environment. So there's effort and distinct. And overall, I think increased sales in insurance sales in Asia wouldn't really have a negative impact on strain. In other words, the $70 million that Steve was referencing would be -- I think, stand up even with higher sales in insurance sales in Asia.

Operator

Our next question is from Tom MacKinnon with BMO Capital Markets.

Tom MacKinnon - BMO Capital Markets Canada

Just wondering if I can get 2 questions. The first is an E&E update. I think you talked about the initiative at $175 million at the -- Steve, at the second quarter call and talked about $100 million in 2014 benefits from the E&E initiative. Is there any update on these numbers?

Stephen Bernard Roder

Steve here. So you're correct. On the second quarter call, we made 2 references. One was to the fact that we had already achieved annualized run rate savings of about $175 million. And the second was to the fact that we expected an accounting benefit, if you like, in 2014 of around $100 million. And bear in mind that the accounting would take into account investment in certain projects to -- would have benefits in the future. So the phasing of the accounting and the phasing that we achieved on the run rate savings is not the same. That's why the numbers are somewhat different. And we are not -- we haven't provide an update at this quarter. We're going to provide an update on E&E in Q4. All I would say, Tom, at the moment is there's no significant change as to what we've indicated previously. So there's nothing material that I would highlight right now.

Tom MacKinnon - BMO Capital Markets Canada

Okay. And then the follow-up is perhaps for Donald...

Stephen Bernard Roder

Sorry, Tom. Can I just say I'm just reminded to say that was pretax numbers, which I've omitted to say. Sorry about that.

Tom MacKinnon - BMO Capital Markets Canada

That's right, okay. The follow-up for Donald was the MCCSR now really poised to -- I guess given the fact that the duration of, I guess, your VA business continues to shrink here and you get some required capital release there. It really stands to gain significantly if equity markets were to run up and interest rates were to run up. And you're already sitting at a 229% now. So is there a way you can think about returning some of that capital to shareholders? Can you repatriate some reinsurance contracts? What should we -- what can we look at you doing?

Donald A. Guloien

Well...

Tom MacKinnon - BMO Capital Markets Canada

Or recapture reinsurance, I should say, pardon me.

Donald A. Guloien

Sure. I guess our order priority is first to reduce the leverage ratio. Two, as we see acquisitions more and more, we're funding them internally. Doesn't mean we can fund very huge deals internally, but it's nice to be able to do them internally. Third is, I guess, we'd look for some -- we are looking at reinsurance contracts as they come up and seeing whether it makes sense to recapture them or to keep them in place. And actually, we -- in different situations, we've taken different responses. It all depends on the circumstances. The next thing is we want to see some -- I guess, have greater insight into where capital rules and accounting rules are going long term. And then ultimately, we'd like to talk to our board about dividends. But that would be roughly the sequence.

Tom MacKinnon - BMO Capital Markets Canada

All right. If you -- and if you have a -- like a -- some sort of internal metric for the MCCSR, is -- I mean, how -- would you be able to share with us anything related to that, like do you need enough to withstand a certain correction in the market and maintain that over a certain percentage? Is there anything that you have or you would figure an optimum level would be?

Donald A. Guloien

Yes, I don't know -- optimal level is not necessary the answer. But we have certainly a minimum that -- and we're well above that. We have a very handsome cushion in there, and the minimum is calculated with reference to extremely high probability of safety for not only in customers but also debtholders and everyone else in the chain. And we are in a very, very satisfactory capital position. But we do have our own calculation of economic capital that is different than the way OSFI looks at it, and we're in a very comfortable level regardless of which measure you use.

Tom MacKinnon - BMO Capital Markets Canada

Well, maybe I will try to ask it a different way. If you're going to price the product, presumably, you have some sort of target surplus level that might be a function of the MCCSR. If it is, can you share with us what that MCCSR metric you would use when you price a product to try to get a specific hurdle?

Donald A. Guloien

Yes. I'd rather not get into the specific target right now, but yes, we do have a target that would be less than the amount of capital we're holding at the present time. And -- but, Tom, you also have to take into account that we -- when we price a product, we look at not only the MCCSR capital but the local capital because that can also be a constraint. In some cases, local capital rules are more conservative. In other cases, they're more liberal. We have to look at both.

Stephen Bernard Roder

Tom, one other thing maybe to add is we also have to be concerned about the external environment and what's going on in the external environment. So there's a couple of things out there at the moment that we have to monitor. As you know, there's the Actuarial Standards Board review here in Canada, and that piece of work has been going on for some time. But it's not complete yet, and how that will play out, we're not entirely clear. And the other is, as you're aware, we have to contend with the IASB, the International Accounting Standards Board, and their exposure draft and what does that turn into in terms of accounting standard and how does that flow through into capital rules. So those sorts of issues are also things that we have to consider when we sort of judge how comfortable we feel about our MCCSR ratio.

Operator

Our next question is from Mario Mendonca from TD Securities.

Mario Mendonca - TD Securities Equity Research

If we could just go back to the Long-Term Care for a moment, it would be helpful to understand how leveraged these assumptions are to getting the price increases across the board. I -- what I'm getting at here this is, is there a particular block of business where if the pricing increases didn't stick, the reserve hit could be more significant? Or is this -- would you characterize it as sort of broad-based, everything is equally important?

Cindy L. Forbes

Mario, it's Cindy. I would not say that there's a particular block that we're overly leveraged to. I mean, I'd point to the disclosure on Page 28 where we say we have $1 billion of premium increases embedded in the reserves and every dollar of those are equal. I would not -- I mean, there are some blocks that would have higher percentage increases obviously, but I wouldn't say that we're overly leveraged in any one particular block.

Operator

Our next question is from Gabriel Dechaine with Crédit Suisse.

Gabriel Dechaine - Crédit Suisse AG, Research Division

My first question's for Donald or Steve. Just the macro hedge cost reduction, revisit that one there. If I look at your 2016 earnings objectives, I don't believe it anticipated any increase to that program. I'm just wondering if that's correct. And if it is, how should we look at this reduction in cost? Is it additive to your target? Or are there any parts of the business that maybe aren't progressing as well as you'd anticipated, macro factors perhaps, like the yen weakening, that this is really somewhat of an offset to those issues?

Donald A. Guloien

Well, Gabriel, I'll take a start at it. I mean, you have to look at in isolation, I think you've got -- the answer to there is it is a positive. I mean, the more we have buoyant equity markets faster than the roughly 8% growth that we factor in, that is going to enable us to produce macro hedges shift into dynamic programs, and on average, there'd be less hedging taking place and less hedging necessary. So it will cost us less. So that is definitely a tailwind. As you pointed out, though, there's other headwinds. The earnings that are coming from Japan, they translate at a lower cost -- a lower currency translation rate currently. I mean, that may not be the case for the next 4 or 5 years but certainly is in the current period, is a bit of a drag. And there's a grab bag of things that go forward and go against us. I think on balance, though, we feel pretty good about not only the quarter but the next quarter and how things are shaping up against our long-term plan. There is one thing on hedging, I guess, I would want to point out. None of you asked the -- there have been a few questions asked about the shift from macro to dynamic. That creates some interesting geography issues, particularly as it relates to Asia. The -- we show macro Asia, and this is fairly prescribed, this presentation. The cost of dynamic hedging programs get reflected in the operating divisions, but the macro hedges show up in the corporate accounts. So when you have a shift from macro hedging to dynamic, that shows the benefit to corporate but a cost in the operating...

Gabriel Dechaine - Crédit Suisse AG, Research Division

For the segment, yes.

Stephen Bernard Roder

In the segment. So that has had the impact of depressing Asian earnings. You've identified the other one is the yen particularly given that we make a lot of money in Japan. That has had an impact on Asian earnings. If you adjust for those, you get a different picture what Asian earnings are. But those are important things to adjust for.

Gabriel Dechaine - Crédit Suisse AG, Research Division

Okay. And I'm just so I'm clear, Steve, you mentioned the -- it was $35 million a quarter is the run rate, and that's net of the macro shifting into dynamic, I guess.

Stephen Bernard Roder

No, that's the year-to-date run rate saving per quarter. We flagged $20 million previously, and now -- it's now increased to $35 million.

Gabriel Dechaine - Crédit Suisse AG, Research Division

Okay. Then my next question is a quick one on the Long-Term Care. Would you -- when you went to your first round of pricing increases, had you left the door open with the regulators that maybe we'll be coming back for more? And then how did your pricing increases compare to the industry? And then I'll just throw this one in while I'm talking. The lapse rate assumption increase in Japan on the VAs, does that in any way affect the outlook for the capital free-up from runoff of that book if people are annuitizing instead of just surrendering?

Stephen Bernard Roder

Well, let me start with the first one. I think -- I don't think it will be characterized as "By the way, we're coming back for more." That might...

Gabriel Dechaine - Crédit Suisse AG, Research Division

Those are my words.

Stephen Bernard Roder

Yes. But I think actually, there was some comment from some regulators who said, "Can -- if you need to come back again, please come back again fairly quickly. We'd rather you came frequently for smaller amounts than kind of coming less often for a larger amount." So that's good. And we're following that advice, I guess, you could say. So that's the first part of the question. The second part of the question on Japan, I think Cindy is going to have a go at that.

Cindy L. Forbes

Yes, Gabriel, could I ask you to repeat it, sorry?

Gabriel Dechaine - Crédit Suisse AG, Research Division

Also, the magnitude of pricing increases, how that compares to the industry? But the Japan element is -- because of the lapse assumption, I guess, people aren't lapsing enough in -- on the Japan VA book. Is -- does that change the outlook for the capital liberation that you're expecting to ramp up next year and into the later parts of this decade?

Cindy L. Forbes

No, I wouldn't say so. We have seen somewhat higher lapses on our Japan VA book, particularly one product line that has -- or one price that has a target hit feature. And obviously, as we have higher lapses, that does release us from liability and capital. But I wouldn't characterize it that way you did.

Donald A. Guloien

Most of the lapses that they're being reflected are things like when markets are down, fewer people lapse at the bottom because it's not in their economic interest to do so. And while some of that was anticipated, not the -- a full reality of what we're experiencing today. So no, that does not expect -- affect at all the runoff of the Japanese block.

Gabriel Dechaine - Crédit Suisse AG, Research Division

All right. I don't think so. I was just confirming.

Donald A. Guloien

Yes, Gabriel. You asked the question there that on the Long-Term Care, that the second part of it, which was, how do the price increases compare with the competition? And I think that's a good thing. Number one is when we're -- the price increases that have been reflected in Cindy's valuation are lower than the ones we asked for last time, and they tend to be lower than what a lot of the competition has asked for more recently because some of them delayed in their catching up. So not to say that any regulator is happy to see us coming in for a rate increase. But what we're looking for is, shall we say, in the scheme of things, rather reasonable.

Operator

Our next question is from Joanne Smith with Scotia Capital.

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

I just wanted to touch on a couple of things. One is the changes that you're -- that you are making to your variable annuity subaccounts. And that, I guess, is part of the reason that the basis review is not complete for the third quarter. And I just would like to understand from either Steve or Cindy how that could possibly reduce the volatility in earnings and also would possibly reduce your hedging costs.

Stephen Bernard Roder

Okay. So we're talking about -- here about the items that we flagged up as being potentially [indiscernible] it was in the fourth quarter.

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

Yes, the shift to the volatility control funds.

Stephen Bernard Roder

Right, okay. So in our release, you see we talked about the future tax reserve work that's been -- that's going on and is yet to be completed. And that is -- that work is in some way dependent on the outcome of the change we're making in relation to the investment strategy on the Seg Funds within the VA product. And these changes are being made for the benefit of policyholders, and we need to see how that -- those changes that are being proposed to policyholders, how that progresses so that the work can be completed. So that's the linkage there. Does that answer your question, Joanne?

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

I was -- I'm talking specifically about once the policyholders approve the shift of their funds from, let's just say, an S&P 500 Index fund to one of these managed volatility funds. Obviously, it's to the benefit of the customer because they're going to have less volatility. A lot of your peers have done this. They'll have less volatility in the fund returns. But it should also result in less volatility to your earnings as well. And I would also expect that it would result in lower hedging costs because if you're embedding some of the hedging at the product level now through these managed volatility funds, that's one less hedge that you have to put on.

Stephen Bernard Roder

Yes, that's correct, and that's laid out in the filings. But you're absolutely correct.

Donald A. Guloien

We expect the -- we'll have all those benefits you ascribed, but we expect them in total to be modest. And of course, it depends so heavily on what the path of outcomes is going forward. We wouldn't want to put out a number. It really depends on what happens. This -- the markets go up and then go down or if they go down and then go up, the whole direction, how much volatility is experienced, then how much to get moved. It's impossible to predict. But we expect, as a result of these changes, if they are passed by the policyholders -- and one of the things that we've tried to do is be very, very clear of the benefits and the costs to our policyholders, that if they pass it, that it will reduce volatility for them and also for us.

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

Okay, all right. That's -- that helps a lot. Second question is on the Retirement Plan Services division. Is Craig on the phone?

Craig Richard Bromley

I'm here, Joanne.

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

Okay. So on -- what I wanted to know is I believe that you've had a lot of success in the midmarket and you have a lot of momentum there. But it appears that the small case market has increased in competitiveness. And I'm wondering if you could just flush that out a little bit for us.

Craig Richard Bromley

Yes. So I mean, as you know, we're a leader in the small case market. We consider that our -- has been our core market. We have the #1 market share, and we have reasonably good margins because we have a high service model for small customers. The -- we are under some attack, that position is an attractive one, and there are a number of competitors who would like to displace us. And so we are getting some pricing pressure. The way we've reacted to that -- we knew this was going to be coming. It's competitive market. We are going on the attack and going into the mid-market, taking some of the abilities that we have from the core market into the mid-market, which was really like a -- launching almost a whole other company but based on the core of our service model. And that is doing very well in terms of commitments, but you won't see it in terms of recorded sales probably until 2014 because these things have a long lead time as sponsors move the plan and take some time. And so that's going very well, and that's sort of one part of responding to the competitive pressures. And the other is both working on our expenses and on our pricing for our core market to vigorously defend that. So we're adding features all the time, and from an economic perspective, we're making sure that we're competitive because that's -- it's a very important segments to us.

Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division

Okay. And I guess just on one of your competitors -- not maybe direct competitors in this market but a peer, in an earlier conference call today, suggested that they've been seeing a lot more RFP activity in the full-service retirement plan market because of a shift in focus from health care to now retirement plans. And that's just an anecdote that I got from a competitor's conference call earlier, and I'm just wondering if you could comment on what you're seeing there.

Donald A. Guloien

Well, in our segment of the market, we saw an awful lot of RFP activity last year and actually the year before. And it's actually -- we see it having slowed down this year. It may pick up going forward, but we haven't seen that.

Operator

Our next question is from Sumit Malhotra with Macquarie Capital Markets.

Sumit Malhotra - Macquarie Research

My first question is for Bob Cook, and it relates to Wealth Management sales in Asia. Your year-over-year results here have obviously been very strong over the past number of quarters. Just looking at this sequentially, it did seem to be a material step down. And I know there was some commentary in the documents about the fact that a number of new products were launched late in 2012. Is there anything more at play here than just seasonality? Or is there a situation where you think there is a slowing trend because those launches from last year are starting to slow in terms of sales?

Robert Allen Cook

Yes. No, I wouldn't characterize it as seasonality at all. And I am still very bullish on the long-term trajectory of our wealth businesses in Asia. I just think you have to look at them over longer periods of time than just quarter-to-quarter. So I think if you look at full year next year versus full year this year, you should see and expect good progress on our part. The reason why I say this is that in most of the countries in which we operate in Asia, the Mutual Fund business operates more on a -- what I would call an IPO model rather than a regular contribution model that you would be used to in North America. So our sales tend to be very lumpy depending on when we have new fund launches. And this year, it just happened that our product calendar concentrated the bulk of our fund launches in the first 2 quarters of the year, and that's where our sales were concentrated. So I don't -- we don't have a firm calendar for next year or so. I can't really predict what the pattern of sales will be next year. But again, over the course of the entire year, I would expect -- I believe our strategy is still working extremely well, and I think the long-term trajectory is positive.

Sumit Malhotra - Macquarie Research

So don't read too much into the stepdown in this quarter's results?

Robert Allen Cook

Correct.

Sumit Malhotra - Macquarie Research

And second question, final question is probably for Steve. You've talked about the expectation of an extra $100 million pretax from the E&E initiative in 2014 and then a larger benefit in 2015. Are you in a position to talk about what -- if any, which geographies of the company are set to benefit more from this? Or do you still -- do you see it as being relatively widespread?

Stephen Bernard Roder

Okay. Yes, I think the way to look at this is probably to say that there are 4 work streams, if you like, that contain the most dollars. That would be information services, operations, workplace or workplace transformation and procurement. And then you'd probably say that there's more opportunity for those in North America than there is in Asia because Asia is a bit of a growth story, if you will. But then I'd also say that from an Asian perspective, it's more about making sure that we continue to get our unit costs down. So rather than, as we say, it will be a -- if you like, a save-a-future cost increase, if I could characterize it that way.

Sumit Malhotra - Macquarie Research

So yes, just to make sure I get you clearly here, so from the E&E initiative itself, the benefits are more likely to accrue in the North American business?

Stephen Bernard Roder

The immediate benefits, that's correct. But I think at the same time, some of these initiatives will benefit us in terms of preventing cost increases in Asia and in terms of getting unit costs, if you like, down over time in Asia.

Operator

And our last question is from Michael Goldberg with Desjardins Securities.

Michael Goldberg - Desjardins Securities Inc., Research Division

A couple of questions. You've given some color on insurance sales and to -- and Asian wealth sales. And I guess that it was the slower sales this quarter sequentially that contributed to the slower VNB levels sequentially also. Is that a fair way to look at it? And also, that being the case, can you give us some idea of what kind of VNB growth you think is achievable over the remainder of the year and into 2014?

Stephen Bernard Roder

Okay, Steve here. I'll start off. Well, first of all, the new business embedded value year-on-year is actually increasing...

Michael Goldberg - Desjardins Securities Inc., Research Division

No, but I'm talking quarter-over-quarter.

Stephen Bernard Roder

Yes. No, I understand. But there is some seasonality to that. So yes, you're correct in the sense that the insurance sales in Q3 in Asia in particular were not as strong. That would impact new business embedded value. On the other hand, we have been successful in getting some pricing actions implemented, particularly in Asia and in Canada. So that will benefit us going forward. In terms of the new business embedded value growth going forward, we're optimistic about that. It's a focus to continue to make sure that we're getting our pricing actions passed and implemented and would expect that to see on an upward trajectory.

Donald A. Guloien

Why don't we have Bob fill in on Asia specifically.

Robert Allen Cook

Well, I guess I think you will see, although we don't give you the granular breakdown, is we are expecting that our value of new business will grow at a somewhat faster rate than our sales growth because of -- most of the product activity that we've been engaged in for the last year has been in the direction of reducing risk and widening margin.

Michael Goldberg - Desjardins Securities Inc., Research Division

Okay. I have another question also. Looking at the potential impact of higher interest rates, is it reasonable for me to think that you would -- you'd offset some of the benefit of rising rates by strengthening other reserves? Would this, in effect, back-end load the benefit of higher rates on earnings emergence? And whatever you do to shape the pattern of earnings emergence over time, is it fair to say that there's no change overall to your present value or future profit?

Stephen Bernard Roder

Michael, it's Steve here. No -- I think the answer to your question is no. I think when Cindy and her team go about their reserving exercise, they want to sort of play it straight down the middle rather than vary their stance on conservatism or otherwise. So I would say the answer to that is no.

Cindy L. Forbes

Yes, that's correct, Steve. We -- we're -- we would not be changing our earnings emergence or back to -- adjusting reserves to offset the impact of rising rates. We have an approach to setting our reserves that's defined and disciplined, and we follow the same approach every quarter. We're not, for example, holding back changes in reserves and then reflecting maybe the impact of interest rates at the end of the year. Some companies do that, and maybe that's you're thinking about, Michael. So for us, it's we really -- the impact of interest rates flows through in the current quarter.

Michael Goldberg - Desjardins Securities Inc., Research Division

No, I'm not really thinking about it on a quarter-by-quarter basis. I'm thinking on more of a longer-term basis.

Cindy L. Forbes

Once again, I'd -- I wouldn't expect us to necessarily strengthen our reserve base to hold back the impact of higher rates. If we -- but if we did anything at all to change the earnings emergence pattern, in general, the PV wouldn't change very much. But obviously, you're discounting the time value of money. It might -- there might be some difference somewhat in the PV. I would've expect it to be material.

Operator

There are no further questions registered at this time. I would like to turn the meeting back over to you, Ms. Asher.

Anique Asher

Thank you, operator. We'll be able -- we'll be available after the call if there are any follow-up questions. Thank you.

Operator

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.

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