Jimmy Bhullar

Jimmy Bhullar questioned the Equitable block's performance, noting a lack of correlation between RGA's and Equitable's reported mortality results, and asked for clarification on which parts of the book RGA does not cover. He followed up by asking for specifics on the uncovered portions, such as older age business or IUL.

Answer

Axel André, EVP and CFO, clarified that the Equitable transaction generated earnings consistent with guidance ($60M-$70M for H2 2025, $160M-$170M expected for 2026). He outlined four key drivers of RGA's economic upside: repriced business with updated assumptions, uplift from higher asset yields, lower expenses, and capital efficiency. He also noted that RGA's share is a portion, not a 75% quota share of Equitable's entire life business, and declined to provide specific details on the uncovered parts, but confirmed performance was in line with RGA's expectations.

Jimmy Bhullar asked about the Equitable block, noting a divergence in mortality results between RGA and Equitable, and sought clarification on which specific parts of the book RGA is not covering.

Answer

EVP and CFO Axel André explained RGA's economic upside drivers for the Equitable transaction, including repriced business with updated assumptions, higher asset yields, lower expenses, and capital efficiency. He clarified that RGA's share is a portion, not 75% of Equitable's entire life business, and declined to provide specific details on uncovered parts, noting Equitable cited less reinsurance coverage on claims impacting them.

Jimmy Bhullar from JPMorgan Chase & Co. asked about the potential for a lag in health insurance results and if the situation could worsen before improving. He also questioned the large excess capital figure relative to traditional metrics and the lack of recent share buybacks, asking about capital priorities.

Answer

EVP & Global Chief Risk Officer Jonathan Porter expressed confidence in their health reserves, citing close client collaboration and the nature of large claims. President & CEO Tony Cheng and EVP & CFO Axel André addressed capital, confirming they will now consider share repurchases opportunistically as part of their 20-30% total payout target, and noted their capital metrics are consolidated across multiple regulatory frameworks.

Jimmy Bhullar questioned competition across RGA's businesses, especially from P&C companies, and how RGA can profit from Equitable's block when Equitable lost money.

Answer

CEO Tony Cheng emphasized RGA's Creation Re strategy and consistent market presence. CIO Leslie Barbee, CFO Axel André, and CEO Tony Cheng cited asset repositioning, expense differences, and accounting as factors.

Jimmy Bhullar questioned why disability margins are expected to settle in the mid-60s now, rather than reverting to the 70%+ levels seen pre-COVID, and what fundamental changes support this new normal.

Answer

Steve Zabel, CFO, clarified that the margin improvement wasn't solely COVID-driven but resulted from increased capabilities in getting people back to work, which he believes is sustainable. He cited stable incidence rates and reasonable pricing. Chris Pyne, EVP of Group Benefits, added that the "table stakes" for RFPs have changed, now requiring sophisticated leave services and tech connections, making it harder for new entrants to compete solely on price.

Jimmy Bhullar asked about the competitive landscape in the disability market, specifically addressing any observed price reductions during the 1/1/2026 renewal period. He also sought an explanation for why disability margins are expected to settle in the mid-60s (benefit ratio) post-COVID, rather than reverting to the pre-COVID 70%+ levels, given historical trends.

Answer

Chris Pyne, EVP of Group Benefits, acknowledged the traditional competitive market but emphasized Unum's disciplined pricing and capabilities in leave management and tech connections, which de-emphasize price. CFO Steve Zabel clarified that the improved margins are due to specific actions taken to increase recovery rates and sustainable claims performance, not solely COVID. He asserted that the underlying risk management and steady incidence rates support the new norm in the mid-60s, with projections not exceeding 65% outside of quarterly volatility.

Inquired whether Unum is seeing the disability market become more competitive with some pricing pressure, as peers have suggested, and asked if there are any external metrics that can help predict the need for future long-term care (LTC) reserve increases.

Answer

Management described the disability market as consistently competitive but did not signal a major shift, emphasizing their focus on capabilities over price. For LTC, they noted that while they provide several metrics (NPR, earnings, rate increase progress), the reserve review process is too complex for any single external indicator to reliably predict the outcome.

Jimmy Bhullar inquired about the dynamics between Medicare Supplement (MedSup) and Medicare Advantage (Med Advantage), the constructive outlook for MedSup growth, and whether further price increases would be necessary to normalize margins given elevated claim trends.

Answer

Tom Kalmbach, CFO, and Frank Svoboda, Co-CEO, stated that MedSup claim trends stabilized in Q3 and Q4 2024, and approved rate increases are deemed adequate to restore margins to the 10-12% range by 2026-2027, with Q4 being seasonally lower. Matt Darden, Co-CEO, added that market dynamics, including government reimbursement rates for Medicare Advantage and provider scaling back, are beneficial for MedSup, emphasizing Globe Life's focus on profitability over market share. Tom Kalmbach also noted CMS prior authorization requirements for traditional MedSup in six states in 2026.

Jimmy Bhullar inquired about the increase in first-year lapses across various channels, particularly direct-to-consumer, and sought clarification on the dynamics between Medicare Supplement and Medicare Advantage, including the outlook for MedSup growth and the necessity for further price increases given elevated claim trends.

Answer

Tom Kalmbach, CFO, explained that higher first-year lapses in direct-to-consumer (DTC) and Liberty National were observed, partly due to increased internet channel sales, but noted overall sales growth remains positive. Regarding Medicare Supplement, Tom Kalmbach stated that claim trends stabilized in Q3 and Q4, and approved rate increases are deemed adequate to restore normal margins by 2027. Frank Svoboda, Co-CEO, added a note on seasonal variations in Q4. Matt Darden, Co-CEO, discussed the favorable market dynamics for MedSup due to Medicare Advantage changes and reiterated Globe Life's focus on profitability over market share. Tom Kalmbach also mentioned CMS prior authorization requirements as a potential favorable impact.

Jimmy Bhullar asked about the implied Q4 EPS from the 2025 guidance, noting it's lower than recent quarters, and sought clarification on any conservative assumptions or specific business trends. He also inquired about health business claims trends, margin recovery, and the impact of Medicare Advantage pricing on Medicare Supplement demand.

Answer

CFO Tom Kalmbach explained that Q3 benefited from favorable timing on a research and development tax credit and exceptionally favorable mortality and health experience, which are not expected to fully recur in Q4. He noted that Q4 typically sees an uptick in claims due to seasonality. Regarding health trends, Kalmbach stated that medical claim cost trends have flattened, and rate increases implemented throughout 2026 are expected to restore target profitability. Co-CEO Matthew Darden added that Medicare Advantage price increases are creating a tailwind for Medicare Supplement sales, benefiting Globe Life's products.

Jimmy Bhullar questioned Globe Life's 2025 guidance, specifically the implied Q4 EPS, which appeared lower than recent quarters even after excluding remeasurement gains, asking for reasons behind this conservatism. He also inquired about claims trends and sales in the health business, margin recovery, and how Medicare Advantage plan changes are affecting demand for Medicare Supplement products.

Answer

Tom Kalmbach, EVP and CFO, explained that the Q4 implied EPS reflects favorable Q3 results, but Q3 benefited from timing (R&D tax credit) and exceptionally favorable mortality and health experience not expected to fully continue into Q4, which typically sees an uptick in claims due to seasonality. Regarding health, Kalmbach noted favorable Medicare Supplement and group retiree health trends, with medical claim cost trends flattening. He anticipates margin increases in Q2-Q4 2026 due to rate increases. Matthew Darden, Co-CEO, added that Medicare Advantage price increases and carrier exits are providing a tailwind for Medicare Supplement sales, though 2026 growth is projected moderately due to significant 2025 sales.

Jimmy Bhullar of JPMorgan Chase & Co. sought to quantify the earnings guidance increase, asking how much was a one-time Q3 impact versus ongoing earnings improvement. He also inquired about the sustainability of the recovery in direct-to-consumer sales and the potential EPS impact from the Bermuda entity's future cash flow.

Answer

Executive VP & CFO Thomas Kalmbach and Co-Chairman & Co-CEO Frank Svoboda attributed the guidance lift to ongoing favorable mortality, lower admin expenses, and Q2 share repurchases. Co-Chairman & Co-CEO J. Matthew Darden confirmed the direct-to-consumer turnaround is sustainable due to technology improving lead conversion. Kalmbach affirmed that using the $200M future cash flow for buybacks would imply a roughly two-percentage-point uptick in growth.

Jimmy Bhullar of JPMorgan Chase & Co. questioned the components of the increased earnings guidance, the sustainability of the turnaround in direct-to-consumer sales, and the potential EPS growth impact from the Bermuda entity's future cash flow benefits.

Answer

Executive VP & CFO Thomas Kalmbach attributed the guidance increase to ongoing favorable mortality trends, not just the one-time Q3 assumption update, and confirmed the potential EPS impact from using Bermuda cash flows for buybacks was calculated correctly. Co-Chairman & Co-CEO J. Matthew Darden stated the direct-to-consumer sales improvement is the start of a recovery, driven by new technology enhancing lead conversion and enabling higher marketing spend.

Jimmy Bhullar from JPMorgan Chase & Co. sought to quantify the drivers behind the raised earnings guidance, asking how much was attributable to the one-time Q3 reserve release versus ongoing earnings improvement. He also inquired if the recent uptick in direct-to-consumer sales marks a sustainable recovery and asked for confirmation on the potential EPS growth impact from the Bermuda entity's cash flow benefits.

Answer

Executive VP & CFO Thomas Kalmbach confirmed that ongoing favorable mortality and some health segment benefits contribute to the improved outlook, with fourth-quarter life margins expected around 41%. Co-Chairman & Co-CEO Frank Svoboda added that lower admin expenses and higher share repurchases also contributed. Co-Chairman & Co-CEO J. Matthew Darden stated the DTC sales improvement is a sustainable recovery driven by new technology. Kalmbach affirmed Bhullar's thinking on the potential buyback impact from Bermuda cash flows was correct.

Jimmy Bhullar also inquired about the competitive environment in the RILA market, specifically whether competition is disciplined or if new entrants, including PE-backed insurers, are being aggressive beyond introductory offers.

Answer

Nick Lane, President of Equitable Financial, acknowledged the growing demand for RILAs and Equitable's leadership position, with robust Q4 sales up 12% year-over-year, marking another record high. He noted that new players entered in late 2024, creating a 'new normal' competitive landscape. While new entrants often offer teaser rates before reverting to sustainable levels, Lane emphasized Equitable's 'flywheel' edge: differentiated distribution, attractive yields through AllianceBernstein, scale, and a track record of innovation. Mark Pearson, CEO and President, added that $600 billion annually flows from 401(k)s into this market, protecting it from economic issues, and that RILA's strong customer proposition works across low and high interest rate cycles.

Jimmy Bhullar asked for more detail on the individual life business, specifically what has caused results to worsen, whether it's an aberration or related to pricing/macro environment, and the rationale for increasing the loss assumption for that block. He also inquired about the competitive environment in the RILA market, asking if competition remains disciplined or if new entrants, including PE-backed insurers, are becoming more aggressive.

Answer

Robin Raju, CFO of Equitable Holdings, emphasized focusing on cash flow, which is projected to grow from $1.6 billion to $1.8 billion in 2026 and $2 billion by 2027. He explained that the individual life business experiences mortality volatility due to large face amounts and older issue ages, but underlying economics and cash flow are good. He noted the RGA transaction reduced 75% of this volatility, and the 2026 guidance is prudent. Nick Lane, President of Equitable Financial, and Mark Pearson, CEO and President of Equitable Holdings, addressed the RILA market. Nick highlighted growing demand and record sales, acknowledging new entrants but noting they often offer teaser rates before reverting to sustainable levels. He emphasized Equitable's 'flywheel' edge through differentiated distribution, attractive yields via AllianceBernstein, scale, and innovation. Mark added that $600 billion of assets annually flow from 401(k)s into this market, and RILA's strong customer proposition works across low and high interest rate environments.

Jimmy Bhullar of JPMorgan Chase & Co. asked about the execution of the $500M incremental buyback, specifically whether it would be opportunistic, and how the remaining undeployed capital would be prioritized between M&A and further buybacks.

Answer

CFO Robin Raju confirmed the $500M buyback will be actively and opportunistically executed starting in Q3. CEO Mark Pearson and Raju both emphasized that any potential M&A or other use of the remaining capital must be highly disciplined and accretive, beating the baseline value created by share repurchases, with deployment expected by 2026.

Jimmy Bhullar questioned whether the issues at Prudential in Japan, as an American company, had any impact on MetLife's sales, persistency, or recruiting efforts in the market.

Answer

Lyndon Oliver, Regional President of Asia, MetLife Services and Solutions, stated that MetLife had no specific comment on Prudential's situation but expressed optimism about MetLife's strong position in Japan, citing a robust platform, multi-channel distribution, and diversified product portfolio, which led to strong sales growth.

Jimmy Bhullar from JPMorgan Chase & Co. inquired about the Group Benefits renewal season, specifically regarding dental pricing adjustments and the competitive landscape. He also asked about the impact of macroeconomic volatility in Japan on MetLife's sales mix and persistency, and whether Prudential's company-specific issues affected MetLife's Japan operations.

Answer

Ramy Tadros, Regional President and U.S. Head of Business at MetLife Services and Solutions, noted robust Q1 persistency, particularly in dental, following 2025 pricing actions, and strong sales growth in disability. Lyndon Oliver, Regional President of Asia at MetLife Services and Solutions, explained that short-term sales fluctuations in Japan are due to customers waiting for market stabilization amidst FX and rate volatility, but MetLife's diversified portfolio and distribution remain strong. He added that MetLife is optimistic about its Japan position despite Prudential's issues, seeing no direct impact on their business.

Jimmy Bhullar questioned the basis for management's optimism on improving non-medical health results and sought clarification on Asia's earnings power, given that Q2 earnings seemed weak despite strong sales.

Answer

Ramy Tadros, Regional President - U.S. Business, based his optimism on established seasonal patterns in dental, stable disability trends, and the expected normalization of voluntary product claims, noting positive signs already in July. Lyndon Oliver, Regional President - Asia, explained that Asia's lower earnings were driven by below-target variable investment income and a short-term headwind from lower surrender income due to a strengthening yen, which simultaneously boosts sales and AUM for future earnings.

Jimmy Bhullar of JPMorgan Chase & Co. questioned the basis for optimism on non-medical health results improving in Q3, asking if it was based on expectations or actual July trends. He also asked if Asia's weaker Q2 earnings represented a new normal.

Answer

Ramy Tadros, Regional President - U.S. Business, confirmed his confidence is based on both established seasonal patterns in dental and the absence of macro impacts on disability, with trends inclusive of July data supporting the outlook. Lyndon Oliver, Regional President - Asia, explained that Asia's lower earnings were driven by below-average VII and a short-term headwind from lower surrender income due to a strengthening yen, but underlying full-year earnings are expected to remain strong and in line with guidance.

Jimmy Bhullar pressed for more specific details on what Voya Financial had observed in the loss environment over the past 3-6 months that specifically warranted the increased pace of reserve building for Stop Loss, beyond general conservatism or the wider range of outcomes.

Answer

Michael Katz, CFO, reiterated that the themes of higher frequency in cancer (especially younger ages) and higher severity from cell and gene therapy persist. He emphasized that the fourth quarter is when a 'real assessment' of the range of outcomes is made as claims development progresses, and that being on the higher end of the best estimate range is prudent given the wider range of outcomes. Heather Lavallee, CEO, added that the broader U.S. healthcare market trends, such as increased cancer claims and higher pharmaceutical costs, contribute to a wider cone of uncertainty for Stop Loss development, making the reserve adjustments prudent.

Jimmy Bhullar pressed for specific reasons behind the increased pace of Stop Loss reserve building, asking what Voya Financial had observed in the loss environment in recent months that warranted such actions, beyond general conservatism.

Answer

Mike Katz (CFO, Voya Financial) reiterated that the types of claims seen (higher frequency of cancer at younger ages, higher severity from cell and gene therapy) are consistent themes. He stressed that the critical assessment of the range of outcomes occurs as claims develop more fully in Q4 and Q1, making it prudent to reserve at the higher end of the best estimate range due to the wider range of outcomes. Heather Lavallee (CEO, Voya Financial) added that the broader U.S. healthcare market, with more cancer claims and higher pharmaceutical costs, contributes to a wider range of uncertain outcomes, justifying the reserve adjustments.

Jimmy Bhullar inquired about the observed shift of business from the E&S market to the standard market, its prevalence across specific lines, and the company's expectations for this trend over the next year. He also asked if the aggressive competition from Howden is a one-off or indicative of broader industry trends in poaching producers.

Answer

J. Powell Brown, CEO, noted that 'tweeners' accounts, particularly smaller ones, tend to move between E&S and standard markets based on cyclical changes, especially in property, but stated it's too early to confirm a trend. R. Andrew Watts, CFO, added that while cyclical shifts occur, the long-term trend shows more insured assets moving into the E&S space for flexibility. Regarding competition, Mr. Brown clarified that while many firms are aggressively hiring, the startup firm (Howden) is distinct in its approach to not abiding by contracts.

Jimmy Bhullar inquired about the observed shift of business from the E&S market to the standard market, its prevalence in specific lines, and expectations for this trend. He also asked if competition, particularly from firms like Howden, has intensified beyond this specific startup.

Answer

J. Powell Brown, President and Chief Executive Officer, noted that the shift from E&S to admitted markets is primarily seen in 'tweener' accounts, particularly in smaller binding authority business within Specialty Distribution, and suggested it's too early to call it a trend. R. Andrew Watts, Chief Financial Officer, added that while some migration occurs, the long-term trend shows more insured assets moving into E&S for flexibility. Mr. Brown confirmed that the startup firm is one of many aggressively hiring, but its methods differ from Brown & Brown's approach to respecting contracts.

Jimmy Bhullar questioned the current competitive landscape in personal auto, specifically if competitors are becoming more aggressive with pricing and marketing, and also asked about the growth potential and aspirations for Progressive's commercial lines business given recent modest growth.

Answer

President and CEO Tricia Griffith observed increased advertising and more competitive pricing across the market, which she views as beneficial for consumers. She highlighted Progressive's strategic pillars: a strong brand, broad coverage channels, and a robust culture. For commercial lines, Griffith expressed great long-term aspirations, acknowledging that For-Hire Trucking (FHT) has been a headwind. She noted growth in business owners and contractors, and mentioned complex plans to spur growth in other areas, affirming a strong runway for the segment.

Jimmy Bhullar with JPMorgan asked about the competitive landscape in personal auto, specifically if Progressive is observing increased marketing, price reductions, or aggressive pricing from competitors. He also inquired about the growth potential and aspirations for Progressive's commercial lines business over the longer term.

Answer

Tricia Griffith, President and CEO, confirmed observing increased advertising and more competitive pricing, which she views as beneficial for consumers. She highlighted Progressive's strategic pillars: brand, broad coverage, and strong culture, as key to navigating competition. For commercial lines, she acknowledged recent headwinds and slower growth but expressed strong longer-term aspirations, with complex plans to spur growth in various areas.

Jimmy Bhullar of JPMorgan Chase & Co. asked for an assessment of the competitive environment in personal auto as peers shift toward growth. He also inquired about the long-term impact of autonomous vehicle technology on the total addressable market for auto insurance.

Answer

Tricia Griffith, CEO, President & Director, acknowledged the environment is increasingly competitive but stated Progressive thrives in such conditions and will maintain its goal of growing as fast as possible at its target profit margin. On autonomous technology, she noted that while it reduces claim frequency, this is often offset by higher severity (repair costs), and slow fleet turnover means there is still a large addressable market for the next 5-10 years.

Jimmy Bhullar followed up on the impact of recent weaker performance across various asset classes on Principal Asset Management's net flows and pipeline.

Answer

Kamal Bhatia (President, Asset Management) acknowledged underperformance in multi-asset products, particularly certain target date funds, which impacted both on- and off-platform retirement flows. However, he highlighted stronger performance in international equity and a data center product. He mentioned ongoing efforts to enhance risk management and add talent, especially on the equity side. CEO Deanna Strable emphasized the long-term priority of alpha generation despite short-term market volatility.

Jimmy Bhullar asked about the sustainability of the turnaround in investment management flows, investor sentiment, and the impact of recent weaker investment performance on net flow expectations.

Answer

President Kamal Bhatia noted the high quality of current flows, driven by longer-term mandates in market troughs, and a 5% increase in management fee rate. He observed a shift in RFP questions towards new ideas. While multi-asset products, particularly some target date funds, have underperformed, international equity performance has strengthened, and efforts are underway to enhance risk management and talent.

Jimmy Bhullar from JPMorgan Chase & Co. asked about the outlook for asset management flows turning positive after a string of negative quarters. He also questioned if the guidance for performance fees to be flat with last year was overly conservative given the strong first half.

Answer

Kamal Bhatia, President & CEO of Principal Asset Management, noted that while the pipeline is strong, market volatility causes clients to defer decisions, impacting flows. He highlighted strong unfunded mandates as a positive indicator. On performance fees, he and CEO Deanna Strable explained that some Q3 fees were pulled into Q2 and that the real estate equity engine, a key historical driver, has not fully kicked in, justifying the more modest second-half outlook.

Jimmy Bhullar asked about Oliver Wyman's continued strong performance despite economic and geopolitical uncertainties, seeking insight into the pipeline and the sustainability of this growth level. He also inquired if the uptick in capital markets, M&A, and IPOs is providing a sufficient tailwind to Marsh and MMA's reported results, or if its impact is not yet significant enough for investors to observe in the near term.

Answer

President and CEO John Doyle expressed satisfaction with Oliver Wyman's growth, noting the third quarter benefited from favorable timing. Nick Studer, President and CEO of Oliver Wyman, highlighted it as the best quarterly growth in six quarters, driven by performance transformation work, strong growth in consumer telecoms and technology, insurance and asset management, and transportation practices, as well as AI-related client engagements. He expects moderating growth in Q4 but remains optimistic about the pipeline. Mr. Doyle confirmed an uptick in M&A activity was helpful to growth in the quarter, noting that middle market businesses like MMA are performing better, with growth in this segment surpassing that in the up-market.

Jimmy Bhullar followed up on the impact of an uptick in capital markets activity, such as M&A and IPOs, on Marsh and MMA's business, asking if it provides a sufficient tailwind to be visible in reported results over the next few quarters.

Answer

John Doyle, President and CEO of Marsh McLennan, confirmed that an uptick in M&A activity was helpful to growth in the quarter. He noted that middle market businesses, including MMA globally, are performing better, with growth in this segment surpassing that in the upper market. He expressed confidence in MMA's continued performance due to strategic capital deployment and investments in capabilities.

Jimmy Bhullar of JPMorgan Chase & Co. asked if the slowdown from M&A and IPO activity is troughing and questioned the drivers behind Guy Carpenter's strong growth despite a soft reinsurance pricing environment and tough comparisons.

Answer

President & CEO John Doyle stated it was too early to call a meaningful uptick in M&A or IPO activity. Dean Klisura, President & CEO of Guy Carpenter, attributed his segment's 5% growth to a record new business quarter, strong international performance, significant activity in the ILS and cat bond markets, and winning new M&A advisory mandates.

Jimmy Bhullar of JPMorgan Chase & Co. asked if the slowdown in M&A and IPO activity has troughed and questioned the drivers behind Guy Carpenter's strong growth, which occurred despite a soft reinsurance pricing environment and tough prior-year comparisons.

Answer

President & CEO John Doyle stated it was too early to determine if M&A and IPO activity has bottomed out, reiterating the company's full-year outlook. Dean Klisura, President & CEO of Guy Carpenter, attributed the segment's 5% growth to a record new business quarter, strong international performance, significant ILS and cat bond issuance activity, and continued demand for property cat limits.

Jimmy Bhullar of JPMorgan Chase & Co. asked about the company's plans for stock buybacks following the pause in May and management's confidence in the company's ability to thrive as a standalone entity amidst M&A rumors. He also questioned the reasons for the recent slowdown in Shield annuity sales.

Answer

President & CEO Eric Steigerwalt stated that the company historically uses 10b5-1 plans for repurchases and the last one expired in May, offering no further guidance. Regarding the company's strategy, Steigerwalt expressed confidence in their premier carrier status, product innovation, and operational capabilities, while declining to comment on market rumors. Executive VP & Chief Distribution & Marketing Officer Myles Lambert attributed the Shield sales performance to a competitive but rational market and noted the company is growing off a large base while maintaining pricing discipline.

Jimmy Bhullar pointed out the consistently weaker-than-expected U.S. sales growth over the last couple of years and asked for an explanation and future expectations. He also followed up on the dental product's sales performance.

Answer

Virgil Miller, President of Aflac, attributed the results to deliberate actions to improve business quality, evidenced by strong premium persistency and a lower expense ratio. He expects a stronger second half driven by a robust pipeline, particularly in the group life and disability business. On dental, Miller noted strong double-digit growth in H1, exceeding his high-range expectations. Chairman & CEO Daniel Amos added that dental and vision are key strategic door-openers and that early operational issues are now behind them.

Jimmy Bhullar of JPMorgan Chase & Co. asked for an explanation for the sluggish U.S. sales growth and the outlook for the business, and also inquired if the dental product has reached a normal level of sales.

Answer

Virgil Miller, President of Aflac, attributed the modest sales growth to deliberate actions to improve business quality, highlighting strong persistency and expense management. He anticipates a stronger second half driven by Q4 bookings. On dental, Miller noted that while sales growth was high, it was on a small prior-year base, but performance is at the high end of his expectations. CEO Daniel Amos added that dental is a strategic door-opener for supplemental products.

Jimmy Bhullar of JPMorgan Chase & Co. inquired about the primary tailwinds and headwinds for personal auto policies in force (PIF) growth, particularly concerning the impact of inactive brands and the potential for growth in New York and New Jersey. He also asked about the lifetime profitability of new business from the independent agent and direct channels compared to the traditional captive agent channel.

Answer

Tom Wilson, Chairman, President & CEO, emphasized Allstate's commitment to growth, citing the company's 28% return on equity and the success of its Transformative Growth strategy. Mario Rizzo, President of Property-Liability, added that the drag from inactive brands is diminishing and that New York and New Jersey are now profitable, with growth expected to resume upon approval of new products. Regarding profitability, Mr. Wilson stated that Allstate uses a sophisticated analytical system to ensure a positive lifetime value for all new business, regardless of the channel.

Jimmy Bhullar asked to differentiate between attractive growth areas and less compelling lines based on pricing adequacy, and questioned whether a decline in interest rates would be a net positive for the MI business.

Answer

CEO Nicolas Papadopoulo identified casualty lines, particularly specialty E&S, as attractive growth areas where pricing exceeds loss trends, while cyber and E&S property are more challenged by competition. CFO & Treasurer François Morin explained that a modest rate drop would be a net positive for the MI business, as new production would likely outweigh a small increase in refinancing from the high-quality in-force book.

Jimmy Bhullar of JPMorgan Chase & Co. asked about the growth contributions from M&A services and new talent hires, and also inquired about Aon's appetite for large-scale M&A as a use of free cash flow.

Answer

CEO Greg Case described the M&A services market as "better, but not back," noting it was a tailwind but that overall growth was broad-based. CFO Edmund Reese confirmed new hire contributions are on track, projecting 30-35 basis points to full-year organic growth from the 2024 cohort. Regarding capital allocation, Reese emphasized the priority of deleveraging post-NFP but stated Aon has the flexibility to evaluate strategic M&A that meets its strict financial criteria, a disciplined approach Case reiterated.

Jimmy Bhullar of JPMorgan Chase & Co. inquired about the growth contribution from capital markets activities and new hires, and the company's preferred uses of free cash flow, particularly regarding large-scale M&A.

Answer

CEO Greg Case described the M&A environment as "better, but not back," noting that while pipelines are improving, overall growth remains broad-based. CFO Edmund Reese added that new hire contributions are on track and that strong free cash flow provides flexibility, with the primary focus on deleveraging post-NFP acquisition while remaining open to strategic M&A that meets strict financial criteria.

Jimmy Bhullar of JPMorgan questioned the confidence in sustained rate adequacy amid recent price declines and asked whether the recent aggressive pace of share buybacks is sustainable.

Answer

President & CEO Kevin O'Donnell asserted that while prices fluctuate, the market remains at a highly adequate level following the 2023 structural reset. EVP & CFO Robert Qutub noted that the accelerated buybacks were fueled by freeing up trapped capital and capitalizing on attractive valuations, and while the company remains opportunistic, it will be mindful of deploying capital during the wind season.