Jack Matten

Jack Matten from BMO asked for more details on Lemonade's enhanced cross-sell platform, particularly how it views the home insurance line of business within its overall mix, given a past de-emphasis on home growth. He also questioned the opportunity and competitive positioning of Lemonade's Tesla FSD insurance initiative against Tesla's own offering.

Answer

CFO Tim Bixby explained that cross-selling is a key strategic initiative, with over 5% of customers holding multiple policies contributing almost 20% of in-force premium, representing an efficient growth method. He noted that the company is investing in cross-selling, pricing, and growth spend optimization. Regarding the Tesla FSD initiative, he stated Lemonade aims to be where customers are going, leveraging its data-driven platform and agility to price autonomous driving risks effectively, but declined to comment on Tesla's specific plans or financial impact projections.

Jack Matten followed up on Lemonade's strategic initiatives, specifically the enhanced cross-sell platform, and asked for more details on how home insurance growth is viewed within Lemonade's overall business mix longer term, given a past de-emphasis on its growth. He also inquired about the opportunity for Lemonade with the Tesla FSD initiative, its potential contribution to business share, and how Lemonade positions its offering competitively against Tesla's own insurance.

Answer

CFO Tim Bixby highlighted the importance of cross-selling, noting that over 5% of customers hold multiple policies, contributing nearly 20% of in-force premium, making it an efficient growth driver. He confirmed continued investment in cross-selling, pricing, and growth spend allocation, with overhead expenses growing modestly while most expense growth targets customer acquisition. Regarding Tesla FSD, Tim stated Lemonade aims to align with customer trends, leveraging its pay-per-mile product and data-driven platform to price autonomous driving risks effectively. He emphasized Lemonade's agility and data strengths as competitive advantages but refrained from discussing Tesla's specific plans or quantifying the financial impact of the FSD initiative at this early stage.

Jack Matten inquired about the drivers of the car insurance loss ratio improvement, the full-year IFP guidance not implying further acceleration, and the nature of a one-time tax refund.

Answer

CFO Tim Bixby highlighted a notable 20-point loss ratio improvement from a car policy's first term to its renewal and noted a trend of reduced frequency but increased severity. Co-Founder, Chairman & CEO Daniel Schreiber added that improvements are across both new and renewal business. Regarding guidance, Bixby cited seasonality and the ongoing 'clean the book' effort in the home business as headwinds tempering acceleration. He also confirmed the tax refund was a one-time ERC credit and is not expected to recur.

Jack Matten followed up on the term life growth outlook, asking if the easing cost of living pressures are already evident in January's sales or recruiting metrics, or if the confidence stems primarily from leading macro indicators. He also sought clarification on the 2026 term life margin outlook of 21%, which is slightly below recent years, inquiring about the contributing factors like mortality trends or DAC and insurance commission run rates.

Answer

CEO Glenn Williams stated that January results were encouraging despite tough comparisons, but it's very early to definitively link them to easing cost of living pressures, maintaining a conservative projection. CFO Tracy Tan explained that the term life business remains stable, with the benefit and claims ratio stable when considering the offset from net investment income. She noted that the DAC, amortization, and insurance commissions ratio is a function of growth, with lighter commission dollars in Q4 due to slower recruiting, and that faster AVP growth leads to a higher DAC ratio. Overall, she emphasized the stability and sustainability of the recurring premium-driven business.

Jack Matten asked if the easing cost of living pressures were already reflected in January 2026 sales or recruiting growth metrics, or if the outlook was primarily based on leading macro indicators. He also inquired about the term life margin outlook of 21% for 2026, which is slightly below recent years, asking for an explanation of the moving pieces like mortality trends, DAC, and insurance commissions.

Answer

Glenn Williams (CEO) stated that January 2026 results were encouraging despite tough comparisons, but it's very early to confirm if easing pressures are fully reflected, maintaining a conservative projection. Tracy Tan (CFO) explained that the term life business is stable, with the benefit and claims ratio remaining consistent. She noted that the DAC ratio is influenced by growth in commissions and Adjusted Direct Premiums (ADP), and that the overall margin remains sustainable due to recurring premiums.

Jack Matten of BMO Capital Markets asked about the specific incentives that drove strong July recruiting and the trend in recruiting pressure during Q2. He also questioned the strategy behind maintaining a high RBC ratio of 490% and plans for deploying excess capital.

Answer

CEO Glenn Williams detailed that a discount on the licensing fee for new recruits drove the strong July numbers. EVP & CFO Tracy Tan explained the high RBC ratio is partly due to statutory limits on dividend capacity but also reflects a strategic desire to maintain a strong rating and support future growth. She added that all options for capital deployment are being evaluated.

Jack Matten asked about the outlook for net flows in investment management for the year, including any leading indicators like RFP volumes. He also inquired about the drivers behind the lower management fee rate (28.4) in Investment Asset Management (IAM) for the quarter and the overall outlook for fee rates.

Answer

Kamal Bhatia, President of Principal Asset Management, highlighted a new pipeline in European real estate, growth in the international wealth platform (e.g., a new private wealth product in France), and strategic partnerships (e.g., with an Islamic bank in Saudi Arabia for private market solutions). He noted substantial growth in private market AUM from outside real estate. Regarding fee rates, he attributed the quarterly fluctuation to $13 billion in divestitures (which had no earnings impact but a 2% revenue growth impact), the mix of public market strategies, and performance variability. He explained that growth in private markets, anchored on committed/invested capital, can create temporary mismatches in average fee rates but ultimately supports stronger revenue and earnings through transaction and performance fees.

Jack Matten asked about the outlook for net flows in Investment Management for the year, including any leading indicators like RFP volumes, and inquired about the drivers behind the lower management fee rate (28.4) in the quarter and the outlook for this metric.

Answer

Kamal Bhatia, President of Principal Asset Management, highlighted a new pipeline in European real estate, growth in the international wealth platform (e.g., a new private wealth product in France), and a strategic partnership with an Islamic bank in Saudi Arabia as growth drivers. He noted substantial growth in the private markets platform, with over $16 billion AUM now outside real estate. Regarding the fee rate, he attributed the quarterly fluctuation to $13 billion in divestitures impacting revenue growth comparison, an underlying mix of public market strategies, and the shift to private market strategies that generate more transaction and performance fees, which can temporarily mismatch average fee rates when compared on a traditional AUM basis.

Jack Matten inquired about Principal Financial Group's expectations for continued strong margin expansion, particularly if market performance remains robust, and asked for details on areas where the company is accelerating or expanding growth investments.

Answer

CEO Deanna Strable and CFO Joel Pitz affirmed expectations for continued margin expansion through expense discipline. President Chris Littlefield highlighted investments in modernizing recordkeeping and individual customer capabilities. President Amy Friedrich detailed multi-year investments in front-end acquisition systems and data exchange for group benefits. President Kamal Bhatia noted investments in new private and public market investment capabilities and optimizing sales distribution for asset management.

Jack Matten followed up on Principal Financial Group's free capital flow conversion, noting its healthy levels above 90%, and asked about the key drivers and expected trends in the near term.

Answer

CFO Joel Pitz explained the strong capital position, capital-efficient business mix, and ability to organically invest while freeing capital for shareholders. He highlighted $1.6 billion in excess capital, $400 million deployed in Q3 (including $225 million in share repurchases), and anticipated even further elevated deployment in Q4. CEO Deanna Strable added that growth in fee-based businesses provides tailwinds to the free capital percentage.

Jack Matten of BMO Capital Markets asked about the drivers of healthy loss ratios in group life and disability and the state of pricing competition for non-dental lines. He also questioned if RIS margins could exceed the target range given market tailwinds.

Answer

President of Benefits & Protection, Amy Friedrich, attributed strong disability results to favorable incidence trends, partly driven by hybrid work arrangements, and described competition in life and disability as 'relatively stable.' For RIS margins, President Christopher Littlefield stated that while they are confident in operating at the upper end of the target range, they do not expect to exceed it as they balance expense discipline with investments for future growth.

Jack Matten asked about the individual retirement spread outlook, specifically if the current lower end of the range represents a 'new normal' or if an upward reversion toward the longer-term average margin is expected. He also inquired about the potential implications of NAIC's VM22 reserving changes for Corebridge Financial given its business mix.

Answer

Elias Habayeb (CFO) explained that spread compression is driven by relative margins between new business and in-force, expecting this dynamic to play out through the end of 2026, with margins starting to grow beyond 2026. Mark Costantini (President and CEO) stated that Corebridge Financial follows VM22 closely, works with the industry and NAIC, and feels comfortable with its impact on their balance sheet, expecting no surprises.

Jack Matten asked about the Individual Retirement spread outlook, specifically whether the current lower end of the base spread profile is a 'new normal' or if an upward reversion is expected, and inquired about the potential implications of NAIC's VM-22 reserving changes for Corebridge Financial.

Answer

Elias Habayeb, Chief Financial Officer, explained that base spread compression is driven by relative margins between new business and in-force annuities (written in a lower interest rate environment), expecting this dynamic to play out through the end of 2026, with margins projected to grow beyond that point. Marc Costantini, President and Chief Executive Officer, stated that Corebridge Financial closely follows VM-22 changes, participates actively, and feels comfortable with the expected impact on its balance sheet, anticipating no surprises.

Jack Matten inquired about CNO Financial Group's capital deployment strategy, specifically regarding the $200 million above the holding company target and potential uses of cash. He also sought a directional outlook for unallocated net investment income (NII), asking if backing out a $12 million special dividend would represent a normal run rate. Finally, he asked for an ROE comparison between Medicare Supplement (distribution and underwriting economics) and Medicare Advantage (distribution only).

Answer

Paul McDonough, Chief Financial Officer, stated that CNO's capital deployment strategy remains unchanged, prioritizing shareholder returns through share repurchases in the absence of more compelling alternatives, while taking a measured approach to deploying excess capital. Regarding unallocated NII, he noted the $12 million dividend was off-trend and highlighted the volatility of alternative investment income, with guidance presuming long-term returns. Gary Bhojwani, Chief Executive Officer, explained that CNO is economically indifferent between Medicare Supplement and Medicare Advantage, having designed it that way. However, operationally, he prefers Medicare Supplement due to controlling the entire value chain and typically serving higher net worth clients who are more receptive to other products, within regulatory guidelines.

Jack Matten asked about CNO's capital deployment strategy, specifically if the company plans to reduce excess holding company liquidity closer to its target level by year-end and potential uses of cash. He also sought a directional outlook for unallocated net investment income (NII), excluding a special dividend. Finally, he inquired about the ROE comparison between Medicare Supplement (underwriting + distribution) and Medicare Advantage (distribution only).

Answer

CFO Paul McDonough stated that CNO's capital deployment strategy remains unchanged, primarily returning capital to shareholders via share repurchases, and that past practice indicates future behavior for reducing excess capital. He referred to the supplement for unallocated NII details, noting that a $12 million special dividend was off-trend and not expected to be repeated, with guidance assuming long-term returns from alternative investments. CEO Gary Bhojwani clarified that CNO is economically indifferent between Medicare Supplement and Medicare Advantage, but operationally prefers Medicare Supplement due to controlling the entire chain and better cross-sell opportunities.

Jack Matten of BMO Capital Markets asked if lower statutory earnings in the first half affected the full-year free cash flow outlook. He also requested an update on opportunities with CNO's Bermuda company and its potential for ROE accretion.

Answer

CFO Paul McDonough affirmed confidence in the full-year free cash flow guidance of $200M-$250M, explaining that the first-half shortfall was due to the timing of tax payments and that cash flow is often lumpy. CEO Gary Bhojwani stated that the Bermuda operation is developing well and discussions with the Bermuda Monetary Authority are progressing positively, but declined to share further details until those discussions are more definitive.

Jack Matten from BMO Capital Markets questioned if the lower statutory earnings in the first half would impact the full-year free cash flow outlook. He also asked for an update on CNO's consideration of opportunities with its Bermuda-based company.

Answer

CFO Paul McDonough reaffirmed the full-year free cash flow guidance, explaining that the lower first-half result was a timing issue related to tax payments that are expected to resume in the second half. CEO Gary Bhojwani commented on the Bermuda entity, stating that development is progressing well and discussions with regulators are ongoing, but declined to provide further details until those discussions are more definitive.

Jack Matten asked if the lower statutory earnings in the first half changed the outlook for full-year excess cash flow generation. He also requested an update on CNO's consideration of additional opportunities with its Bermuda company.

Answer

CFO Paul McDonough explained that free cash flow is often lumpy quarterly and reaffirmed the full-year guidance, noting that first-half results were impacted by the timing of tax payments which are expected to resume in the second half. CEO Gary Bhojwani stated that CNO is pleased with the development of its Bermuda entity and is in ongoing discussions with regulators, but will not provide further details until those discussions are more definitive.

Jack Matten requested details on the claims experience in the Supplemental and Voluntary business for Q4 and the basis for confidence in a stronger earnings run rate outlook for next year.

Answer

Rick McKenney, President and CEO, explained that the Supplemental and Voluntary business comprises several product lines (life, critical illness, accident, health). He noted that Q4's elevated loss ratio (around 48.5%) was not driven by any single line but was consistent with expectations and within normal quarterly fluctuations, following a strong prior year and Q3.

Jack Matten asked if an environment with strong persistency but potentially less growth in new sales would result in a near-term margin benefit for Unum, implying a reduced "new business penalty." He also requested an unpacking of the claims side of the supplemental and voluntary business for the current quarter and the basis for confidence in a stronger earnings run rate outlook for the next year.

Answer

Chris Pyne, EVP of Group Benefits, expressed excitement for a strong sales outlook in the coming year, emphasizing that the combination of new logos and persistency contributes to healthy block growth with great margins, driven by long-term technology investments. President and CEO Rick McKenney explained that the supplemental and voluntary business's elevated benefit ratio in Q4 was not due to any single line but was consistent with expectations, bouncing within 1-2% quarter-to-quarter, and nothing specific stood out as a driver.

Jack Matten asked about Unum's capital management plans, specifically if share buybacks could ramp up next year given the healthy excess capital after the assumption review, and if other uses of cash might come into play. He also inquired about the sustainability of Unum US's premium growth outlook (3%-6% underlying) and any changes in the natural growth rate due to potential labor market softening.

Answer

President and CEO Rick McKenney reiterated consistent capital deployment priorities: first, investing in core operations growth; second, selective M&A (capability acquisitions); and third, shareholder-friendly actions like increasing dividends and share repurchases. He noted they are at the top end of the $500 million-$1 billion buyback range for 2025. Regarding premium growth, Mr. McKenney confirmed natural growth around 3% plus or minus. EVP of Group Benefits Chris Pyne highlighted strong sales and persistency for Unum US. Tim Arnold, Head of Colonial Life and Voluntary Benefits, noted improving sales momentum and strong persistency for Colonial Life. Mark Till, CEO of Unum International, reported strong growth in Poland and the UK, driven by customer satisfaction and technology investments. CFO Steve Zabel emphasized that 3-6% growth translates to significant new premiums at good margins.

Jack Matten from BMO Capital Markets asked about Unum Group's capital management strategy post-assumption review, specifically if share buybacks could increase next year given healthy excess capital, and what other uses of cash might be considered. He also inquired about the sustainability of Unum US's 3%-6% underlying premium growth and any observed changes in natural growth rates due to potential labor market softening.

Answer

CEO Rick McKenney outlined consistent capital deployment priorities: investing in core operations, pursuing selective capability-focused M&A, and shareholder returns (dividends, share repurchases), noting they are at the top end of their 2025 share repurchase range. Regarding premium growth, McKenney confirmed natural growth around 3%±. Chris Pyne (EVP of Group Benefits) cited strong persistency and strategic investments. Tim Arnold (Heads of Colonial Life and Voluntary Benefits Lines) highlighted double-digit sales growth for Unum US and improving momentum for Colonial Life. Mark Till (CEO, Unum Group) reported strong international growth and record UK persistency. CFO Steve Zabel emphasized that 3-6% premium growth translates to significant new premiums at good margins.

Jack Matten asked for details on the elevated claims incidence in the Closed Block (LTC) segment and the reasons for management's confidence that it would moderate in 2025.

Answer

CFO Steve Zabel explained that while Q4 incidence was elevated, it was consistent with Q3 and is expected to normalize in 2025, a view supported by claims inventory levels. He noted the 2025 earnings outlook for the block is higher, driven by this expected moderation in incidence as well as better anticipated yields from the alternative investment portfolio.

Jack Matten from BMO asked for clarification on the statutory or economic margin changes in Aflac Japan, specifically how the benefit ratio trends differ between US GAAP and FSA accounting, considering the WAYS product and net premium ratio changes. He also inquired about Aflac's long-term strategy for its Bermuda reinsurance entity, particularly regarding the 10% in-force cession target from Japan.

Answer

Max Brodén, CFO of Aflac Incorporated, explained that about one-third of the Japan benefit ratio decline (due to net premium ratio changes) is specific to US GAAP, while the remaining two-thirds (from lapse/reissue and WAYS block runoff) impact both US GAAP and FSA earnings. Regarding Bermuda, Mr. Brodén confirmed they have ceded approximately 6% of Aflac Japan's balance sheet, with a 10% midterm target, and indicated that this 10% is not an absolute limit and could be revised higher in the future.

Jack Matten asked for insights into the statutory or economic margin changes for Aflac Japan's benefit ratio, considering the accounting differences for the WAYS product and net premium ratio adjustments. He also inquired about the future outlook for Aflac's Bermuda entity, specifically if the 10% in-force reinsurance limit for Japan could be revised higher.

Answer

Max Brodén (CFO, Aflac Incorporated) clarified that about one-third of the Japan benefit ratio decline is due to the US GAAP-specific net premium ratio adjustment, while the remaining two-thirds (lapse/reissue, WAYS runoff) impact both US GAAP and FSA earnings. Regarding Bermuda, Mr. Brodén stated that while 6% of Aflac Japan's balance sheet is currently ceded with a 10% midterm target, this is not an absolute limit and will be re-evaluated for potential increases, indicating significant capacity for continued ceding.

Jack Matten of BMO Capital Markets questioned if the consistent remeasurement gains would lead to changes in actuarial assumptions during the upcoming Q3 unlocking and inquired about capital deployment priorities, including potential M&A, given the high cash balance at the holding company.

Answer

An Aflac executive confirmed that the 2024 assumptions already included a small improvement in Japan's hospitalization trends and that forward-looking assumptions will be updated in Q3. Regarding capital, the executive reiterated Aflac's disciplined approach, prioritizing organic growth and shareholder returns through dividends and buybacks, which have demonstrated strong IRRs, over immediate M&A.

Jack Matten questioned whether the persistent remeasurement gains in both the U.S. and Japan might lead to assumption changes in the upcoming annual unlocking. He also asked about capital deployment priorities, particularly regarding potential M&A to accelerate U.S. group business growth.

Answer

An unnamed executive explained that while they true-up experience quarterly, forward-looking assumptions are unlocked in Q3. They noted that the 2024 assumptions already included a small improvement trend for hospitalization in Japan. Regarding capital, the executive reiterated Aflac's philosophy of prioritizing organic growth at good IRRs, followed by tactical deployment to shareholders via dividends and buybacks, which have yielded strong returns.

Jack Matten asked for an outlook on commercial real estate trends for Aflac's portfolio in 2025 and inquired about any other product launches in Japan that could affect the sales cadence.

Answer

Global CIO Brad Dyslin described the CRE market as having potentially bottomed but facing a long, slow recovery, with 2025 expected to resemble 2024. Koichiro Yoshizumi of Aflac Japan noted that beyond the major cancer launch, sales will be supported by a recently rebranded medical product and a growing force of newly hired agents from 2023 and 2024.

Jack Matten asked about the progress of distribution initiatives, the shift to a specialist model, and the outlook for P&C policy count growth, particularly if it will improve meaningfully in 2026. He also inquired about the moving pieces for the 2026 EPS outlook, including the expectation for accelerating growth into 2027 and beyond due to CML returns and expense actions. Finally, he questioned if the lower catastrophe loss assumption in the guidance reflects reinsurance program improvements or changes in property business terms and conditions.

Answer

CEO Marita Zuraitis highlighted 2025 as a strong year for distribution, noting significant increases in brand awareness, website traffic, and agency force. She confirmed expectations for auto risks in force to turn positive in the second half of 2026. CFO Ryan Greenier affirmed the directional thinking on accelerating growth, aligning with the 10% annual EPS growth target and accelerating top-line growth. He also clarified that the $90 million CAT target uses a consistent approach based on industry modeling and historical experience, and that prior year development is not included in planning assumptions, with 2025 releases primarily from shorter-tail coverages.

Jack Matten inquired about the progress of Horace Mann's distribution initiatives, including the shift to a specialist model, and the outlook for P&C policy count growth in 2026. He also asked about the moving pieces of the 2026 EPS outlook, potential acceleration into 2027, and the factors influencing the catastrophe loss assumption in the guidance.

Answer

Marita Zuraitis, President and CEO, highlighted 2025 as a strong year for distribution, with increased brand awareness, website traffic, and agent force. Ryan Greenier, Executive Vice President and CFO, confirmed the directional thinking on accelerating growth, emphasizing expected revenue growth and the timing of expense initiatives. Marita Zuraitis also clarified the normalization of 2025 earnings for guidance comparison. Ryan Greenier detailed the consistent approach to the $90 million CAT target and the prudent stance on prior year reserve development, noting the majority of 2025 releases were from shorter-tail coverages.

Jack Matton inquired about the drivers behind the muted life sales growth at Globe Life's exclusive agencies in recent quarters, specifically asking if it's due to customer demand or agent productivity, and sought confidence for reaccelerated life sales growth in upcoming quarters.

Answer

Matthew Darden, Co-CEO of Globe Life Inc, clarified that muted sales are not due to weakening consumer demand, noting an improvement in premium per sale. He attributed the challenge to agent count growth, explaining that years following significant growth often see a tempering as new agents are onboarded and move into middle management. Darden highlighted a 17% increase in hires for American Income Life as a positive leading indicator for future agent and sales growth in 2026, also mentioning incentive programs and middle management focus on recruiting.

Jack Matton asked about the drivers behind muted life sales growth in exclusive agencies, questioning if it's consumer demand or agent productivity, and sought confidence for future reacceleration.

Answer

Co-CEO Matthew Darden clarified that consumer demand is not weakening, with an improvement in premium per sale. He attributed the challenge to agent count growth, noting that new agents require onboarding and training. Darden expressed confidence in future growth based on increased hires (up 17% for American Income Life) and focused incentive programs for middle management. Co-CEO Frank Svoboda added that the decline in premium growth is linked to past sales declines, with current positive sales growth expected to turn premium earnings around.

Jack Matten of BMO Capital Markets inquired how the higher earnings guidance for 2025 translates to statutory earnings and future cash flows, and asked about the timeline and rationale for achieving the projected $200 million incremental cash flow benefit from the new Bermuda affiliate.

Answer

Executive VP & CFO Thomas Kalmbach clarified that favorable mortality experience directly boosts statutory income, whereas GAAP assumption changes do not. Regarding the Bermuda entity, both Kalmbach and Co-Chairman & Co-CEO J. Matthew Darden stated it was premature to provide a specific timeline for the cash flow benefits, promising updates once plans are finalized with regulators later in the year.

Jack Matten of BMO Capital Markets inquired about how the higher earnings guidance for 2025 would translate into statutory earnings and future cash flows, and sought details on the timeline and scope of the new Bermuda reinsurance affiliate, including the target of moving a quarter of life reserves.

Answer

Executive VP & CFO Thomas Kalmbach explained that favorable mortality trends directly boost statutory income, whereas GAAP assumption changes do not. He noted it was premature to provide a specific timeline for the Bermuda entity's full financial impact. Co-Chairman & Co-CEO J. Matthew Darden added that an updated business plan for the Bermuda affiliate will be finalized in Q3, allowing for more detailed updates on future calls.

Jack Matten of BMO Capital Markets inquired about the translation of higher 2025 earnings guidance into statutory earnings and cash flow, questioning if the benefit is from a one-time remeasurement gain or ongoing favorable experience. He also asked for details on the Bermuda reinsurance affiliate, including the timeline to achieve the projected $200 million in incremental cash flow and the rationale behind the target of ceding one-quarter of life reserves.

Answer

Executive VP & CFO Thomas Kalmbach clarified that ongoing favorable mortality trends directly boost statutory income, while the large assumption changes are primarily a GAAP-related event with no impact on statutory income. Co-Chairman & Co-CEO J. Matthew Darden added that a more detailed business plan for the Bermuda entity will be finalized in Q3, providing more clarity on timelines in upcoming calls.

Jack Matten sought more detail on the adjusted EBITDA margin outlook, asking about the relative impacts from the shrinking under-65 business and new P&C partner wins.

Answer

CFO Patrick Thompson explained that take rate compression is primarily driven by the reduced scale and lower margin of the under-65 business. He noted that within P&C, a spend shift to top carriers and a new, lower-take-rate supply partner also contributed. However, he highlighted that the conversion of contribution to EBITDA has been improving due to operational efficiency.

Jack Matten, on for Michael Zaremski, requested further detail on the adjusted EBITDA outlook, asking if the change was mainly due to the smaller under-65 business and the margin profile of new P&C supply partners.

Answer

CFO Patrick Thompson confirmed the primary driver of take rate compression was the reduced mix of the under-65 business. He noted that within P&C, take rates were also modestly impacted by a spend shift to top carriers and the onboarding of a large, lower-take-rate supply partner. He emphasized that the conversion of contribution to EBITDA continues to improve due to operational efficiency.

Jack Matten of BMO Capital Markets followed up on the Individual Retirement business, asking about the duration of the RILA roll-off dynamic and confirming the Q3 baseline assumptions. He also asked if the Bermuda entity could lead to a higher long-term payout ratio.

Answer

CFO Robin Raju explained the roll-off of the older, pre-2020 RILA book will continue for the next few quarters and confirmed the Q3 baseline of $220M-$225M excludes any MVA benefit. Regarding Bermuda, he stated its primary benefit is ensuring cash flow consistency by aligning with their economic hedging framework, rather than unlocking a material amount of new capital for a higher payout.