Joe Hurwitz

Joe Hurwitz from Dowling inquired about the impact of assumption changes on the FairWind Premium Deficiency Reserve (PDR), asking what remains of the PDR after the reinsurance transaction and interest rate movements, and how the $2 billion protection is split between excess reserves and capital. He also sought details on Group Disability's Q3 incidence and recovery trends, and the rationale for expecting further reserve releases given five consecutive years of positive assumption reviews, including any statutory benefits.

Answer

CFO Steve Zabel stated that the PDR is less relevant as statutory reserves now exceed the PDR calculation. He clarified that the assumption changes primarily affected the best estimate reserve, not excess capital, with the protection reduction from $2.6 billion to $2.0 billion solely due to the best estimate reserve. For Group Disability, Zabel reported a strong Q3 benefit ratio around 62%, with consistent and sustainable recoveries. He confirmed a GAAP reserve adjustment for recoveries and noted that statutory reserve consideration in Q4 might offer a 'tailwind' without altering the capital outlook.