Joel Hurwitz

Joel Hurwitz from Dowling inquired about any material changes to MetLife's Long-Term Care (LTC) assumption set, adverse incident trends, and updates on the risk transfer market for this business.

Answer

John McCallion, CFO of MetLife, noted a very modest $2 million post-tax change in LTC from the actuarial review, indicating the block continues to perform well with actual-to-expected (ADE) experience in line. Ramy Tadros, President of U.S. Business at MetLife, added that MetLife continues to explore risk transfer opportunities but will remain disciplined. He highlighted their well-managed, well-capitalized, and well-reserved book, successful rate action program, and the requirement for any transaction to be accretive to shareholder value.

Joel Hurwitz inquired about the performance of MetLife Investment Management (MIM) this year, third-party flows, and any material changes to the assumption set for Long-Term Care (LTC), including incident trends and updates on the risk transfer market for that business.

Answer

John McCallion, CFO of MetLife, reported a good year for MIM, with strong second-half flows, total AUM over $630 billion, and third-party assets above $200 billion, expressing excitement for MIM becoming its own segment. For LTC, he noted a very modest $2 million post-tax change in the actuarial review, with the block performing well. Ramy Tadros, President of U.S. Business, added that MetLife continues to explore LTC risk transfer opportunities with discipline, emphasizing their well-managed, capitalized, and reserved book, and successful rate action program.

Joel Hurwitz of Dowling & Partners asked for more color on the strong sales growth in the regional market within the Group Benefits segment. He also inquired about the key drivers behind Latin America's better-than-expected top-line growth.

Answer

Ramy Tadros, Regional President - U.S. Business, highlighted that the regional market was a very important contributor to the 9% year-to-date sales growth in a competitive but rational market. Eric Clurfain, Regional President - Latin America, explained that LatAm's strong double-digit constant currency growth is broad-based across its six markets and diversified channels, with particularly rapid emergence from digital ecosystems and embedded insurance partnerships via its Accelerator platform.

Joel Hurwitz requested more color on the growth seen in the regional market for Group Benefits and asked about the key drivers behind Latin America's strong top-line performance.

Answer

Ramy Tadros, Regional President - U.S. Business, confirmed that the regional market was a significant contributor to the 9% year-to-date sales growth in a competitive but rational market. Eric Clurfain, Regional President - Latin America, attributed LATAM's success to strong, diversified fundamentals across its six key markets, with growth coming from all channels, particularly its regional embedded insurance digital platform, 'Accelerator'.

Joel Hurwitz asked for an analysis of the nonmedical health loss experience, particularly the drivers of the year-over-year increase, and requested details on the strong sales growth in the 'Other Asia' region.

Answer

Executive Ramy Tadros explained that the nonmedical health ratio was in line with expectations, as Q1 is a seasonally high utilization quarter for dental. He noted that disciplined underwriting actions taken on January 1st renewals position the business for a gradual decline in the ratio through the year. Executive Lyndon Oliver attributed the 41% constant currency sales growth in Other Asia primarily to the addition of new bank partners in China and strong performance from face-to-face channels in Korea.

Joel Hurwitz asked about the impact of the assumption changes on the Premium Deficiency Reserve (PDR) within Fairwind, what remains of the PDR given reinsurance and interest rate movements, and the breakdown of the $2 billion protection into excess reserves versus capital. He also sought color on Group Disability incidents and recoveries in the quarter, the comfort level for continued reserve releases, and any statutory benefit from the changes.

Answer

Chief Financial Officer Steve Zabel explained that the assumption changes affected Fairwind's protections, but reported statutory reserves didn't change as they already exceeded the PDR calculation, making PDR less of a consideration. He clarified that the reduction in protection from $2.6 billion to $2.0 billion was related to the best estimate reserve, not excess capital. For Group Disability, Mr. Zabel noted a strong benefit ratio, consistent and sustainable recoveries, and the adjustment of GAAP reserve assumptions for higher recovery levels. He indicated that statutory reserve consideration in Q4 might provide a 'tailwind' but wouldn't impact the capital outlook.

Joel Hurwitz asked for an explanation of the significant drop in group persistency and whether there are noticeable differences in persistency for clients using platforms like HR Connect or Total Leave.

Answer

EVP Chris Pyne explained the drop was anticipated as the market normalized post-COVID and confirmed that tech-enabled platforms do improve persistency by making Unum's services more integral. CFO Steven Zabel and CEO Richard McKenney emphasized that the ultimate goal is top-line growth, which was strong, and that current persistency near 90% remains a healthy level.

Joel Hurwitz asked for an update on the voluntary benefits (VB) loss ratio target and questioned how much of the strong U.S. group sales were driven by capabilities like HR Connect.

Answer

CFO Steven Zabel updated the forward-looking benefit ratio for the VB business to the mid-40s, a modest increase from the prior 40-43% target, while affirming confidence in the segment's returns and earnings power. Chris Pyne, head of Group Benefits, confirmed that sales tied to strategic capabilities like leave management and HCM platform integration were critical drivers of new business wins, particularly in the up-market segment where these solutions are highly valued.

Joel Hurwitz asked if Unum's prior benefit ratio target of 40-43% for voluntary benefits is still appropriate given competitor commentary. He also questioned how much of the strong U.S. group sales were driven by integrated capabilities like HR Connect and Total Leave.

Answer

CFO Steve Zabel updated the voluntary benefits guidance, stating they would now peg the benefit ratio closer to the mid-40s but remain confident in the line's returns and earnings power. Chris Pyne, Head of Group Benefits, confirmed that sales aligned with strategic capabilities were critical to winning new business, particularly in the upmarket segment where leave management solutions are a key focus.

Joel Hurwitz of Dowling & Partners sought more color on the confidence in achieving the full-year 5-10% sales growth target for Unum U.S., given the strong Q4 performance required. He also asked about persistency expectations.

Answer

Chris Pyne, head of Group Benefits, expressed confidence, citing a strong pipeline with an uptick in both the number and quality of RFPs, particularly in the large case market where Unum's capabilities are resonating. He noted that while persistency has been strong, there was a slight increase in market activity in 2024, which could put some pressure on the book but also creates new sales opportunities.

Joel Hurwitz asked Amy Friedrich for an early outlook on 1/1 renewals and new business in Specialty Benefits, the competitive landscape, and the path to return to the long-term growth range in 2026.

Answer

Amy Friedrich (President, Benefits and Protection) noted more opportunities for profitable business in the upcoming 1/1 renewals compared to last year, with successful bid wins. She highlighted multi-year technology initiatives starting to bear fruit in late 2025 and into 2026, positioning the business to move closer to the low end of its growth range. CEO Deanna Strable reiterated the balance between pricing discipline and competitive positioning, avoiding growth for growth's sake.

Joel Hurwitz asked for an update on Principal Financial Group's capital deployment outlook, specifically what would drive the company towards the higher end of its capital return range and the rationale for accelerating buybacks in Q4. He also sought an early outlook on Specialty Benefits' 1/1 renewals, new business, competitive landscape, and path to long-term growth.

Answer

CEO Deanna Strable emphasized a balanced and disciplined approach to capital deployment. CFO Joel Pitz confirmed a strong capital position, elevated share buybacks in Q3, and expected further elevation in Q4, driven by strong free capital flow. President Amy Friedrich noted that slower growth has driven profitability in Specialty Benefits, but sees more profitable 1/1 opportunities ahead, with multi-year technology investments positioning for future growth closer to the low end of the target range.

Joel Hurwitz of Dowling & Partners asked for the drivers behind the confidence in Specialty Benefits top-line growth picking up in the second half. He also questioned the strategy behind the sale of the Post Advisory Group boutique and its potential financial impact.

Answer

Amy Friedrich, President of Benefits & Protection, stated that while full-year growth will likely miss the 6-9% target, she expects improvement as brokers react to competitors' high dental renewal rates, favoring Principal's bundled offerings. Regarding Post Advisory, President & CEO Deanna Strable and Asset Management CEO Kamal Bhatia explained the divestiture is part of a strategy to reduce capability overlap, will have an immaterial impact on earnings, and does not change medium-term targets.

Joel Hurwitz of Autonomous Research questioned the viability of Principal's 9% to 12% EPS growth target amid current market volatility and asked for details on the company's expense management flexibility.

Answer

CEO Deanna Strable acknowledged the dynamic environment but emphasized the company's resilient, diversified portfolio and strong Q1 start. Interim CFO Joel Pitz added that while market volatility impacts fee revenue, the company is actively managing expenses and benefits from dissipating FX headwinds, keeping the EPS target achievable. Pitz noted that expense levers include reduced travel and delayed hiring, aligning with their historical practice of matching expenses to revenue.

Joel Hurwitz of Dowling & Partners asked for details on the stabilization of participant withdrawals in the RIS segment, the degree of improvement in contract lapses, and the outlook for the 2025 pipeline. He also inquired about 2025 expectations for real estate transactions, variable investment income (VII), and performance fees.

Answer

President of Retirement and Income Solutions Christopher Littlefield noted that while prioritizing profitable revenue growth, RIS flows improved due to healthy recurring deposits and record retention, though VAs with GMWB saw outflows. For 2025, he expects withdrawal rates to stabilize but flows to be impacted by strong 2024 equity markets. On real estate, President of Asset Management Kamal Bhatia sees an early, volatile recovery with rising transaction activity. Interim CFO Joel Pitz added that PFG expects improved VII returns in 2025, with real estate gains recognized upon sale, likely in the second half of the year.

Joel Hurwitz of Citigroup asked about the drivers behind the slowdown in Specialty Benefits' top-line growth and inquired about the elevated loss ratio in the dental business, including repricing expectations.

Answer

CEO Dan Houston provided a high-level endorsement of the business. An executive, Amy Friedrich, clarified that year-to-date growth remains strong at 7.5% and the quarterly slowdown was primarily due to the absence of lumpy Paid Family and Medical Leave (PFML) sales seen in the prior year. Regarding dental, Friedrich noted that while the loss ratio improved sequentially, it remains elevated due to inflation. She confirmed that consistent pricing actions are underway, with over 90% of the block repriceable annually, and expects the loss ratio to continue declining.

Joel Hurwitz asked about the increase in excess cash flow generation to $600 million-$700 million, its sustainability, and the drivers behind this increase. He also inquired if the 2026 guidance for life margins factors in any expectation for remeasurement gains.

Answer

CFO Tom Kalmbach confirmed the sustainability of the $600 million-$700 million excess cash flow, attributing the increase to improving mortality trends, anticipated health margin improvements, and a more favorable investment yield environment. Co-CEO Frank Svoboda clarified that the $600 million-$700 million is total excess cash flow, and after $80 million-$85 million in dividends, it aligns with previous guidance for share repurchases. Regarding 2026 life margin guidance, Kalmbach stated that continued favorable mortality experience, better than current assumptions, is anticipated, which would lead to continued remeasurement gains. He suggested focusing on normalized policy obligations as the underlying metric.

Joel Hurwitz inquired about the increase in Globe Life's excess cash flow generation to $600-$700 million, asking for the drivers behind this increase from the previously mentioned $500-$600 million run rate, and whether this higher level is sustainable before factoring in Bermuda benefits. He also asked if the 2026 guidance for life margins factors in any expectation for remeasurement gains.

Answer

Tom Kalmbach, EVP and CFO, confirmed the $600-$700 million is sustainable, attributing the increase to improving mortality trends, potential health margin improvements, and a more favorable investment yield environment. Frank Svoboda, Co-CEO, clarified that the $500-$600 million previously discussed was for share repurchases *after* dividends, while the $600-$700 million is total excess cash flow, which aligns with previous figures when accounting for $80-$85 million in dividends. Regarding 2026 life margin guidance, Kalmbach stated that the top end of the range could be indicative of an assumption update, and they anticipate continued favorable mortality experience leading to remeasurement gains relative to the newly set assumptions.

Joel Hurwitz of Dowling & Partners asked for details on the favorable mortality trends and whether this could lead to a change in mortality assumptions during the Q3 review. He also questioned the drivers behind the lower sales-based margin in the ISP segment.

Answer

EVP & CFO Tracy Tan explained that mortality has been favorable for over ten quarters and is stabilizing at a lower level, suggesting a potential change to long-term assumptions in the Q3 review. She attributed the ISP margin pressure to higher variable growth-related expenses, commission true-ups, and increased investment in technology to support strong sales volume.

Joel Hurwitz from Dowling & Partners asked for an explanation of the U.S. individual life experience, questioning potential lag effects or impacts from retention changes. He also sought more detail on the $2 billion value of in-force credit process and the binding capital framework.

Answer

EVP & Global Chief Risk Officer Jonathan Porter attributed the individual life results to large claims volatility, noting that year-to-date performance is in line with expectations. EVP & CFO Axel André explained the VIF credit was a process pursued with rating agencies, which are now a co-binding constraint with regulatory capital, and that further opportunities for VIF recognition exist.

Joel Hurwitz asked about the variable investment income (VII) assumption in RGA's earnings targets and for clarification on how alternative income is accounted for. He also requested more detail on potential future in-force management actions.

Answer

CFO Axel Andre confirmed a 6% VII return is assumed in the 2025 run-rate targets and clarified that while some unrealized gains are non-operating, all realized returns ultimately flow through operating income. CEO Tony Cheng described in-force actions as a normal, though lumpy, part of business where teams work to enforce treaty rights, and he expressed hope for some positive outcomes by year-end.

Joel Hurwitz asked about variable investment income (VII) embedded in operating earnings targets and in-force actions.

Answer

CFO Axel André stated the VII expectation is a 6% return, with all realizations flowing through operating income. CEO Tony Cheng noted in-force actions are lumpy but actively explored.

Joel Hurwitz asked for more detail on the favorable U.S. mortality updates from the annual assumption review and the company's outlook for excess mortality. He also sought to understand the accounting behind the $136 million impact from the retrocession recapture.

Answer

Chief Risk Officer Jonathan Porter explained the mortality update reflects recent experience and long-term views, with an expectation for excess mortality to continue for another 4-5 years. CFO Axel Andre clarified the $136 million charge is an accounting write-off of a reinsurance recoverable asset, which will be offset by future earnings benefits of approximately $20 million in 2025, growing over time.

Joel Hurwitz of Dowling & Partners sought more color on the drivers of direct-to-consumer (DTC) sales beyond web and digital, noting their strength. He also asked for details on statutory income and the RBC ratio, expecting a reversal of Q1's adverse impacts.

Answer

CEO Gary Bhojwani attributed the additional DTC strength to strong production from direct sales and successful experiments with select independent third-party partnerships. CFO Paul McDonough confirmed that a reversal of the Q1 adverse impact on statutory results did occur. He explained the RBC ratio was held essentially flat quarter-over-quarter by design, landing at 378%, which is near their 375% target.

Joel Hurwitz from Dowling & Partners sought more color on the drivers of direct-to-consumer sales strength beyond the web and digital channels. He also asked for details on statutory income and the RBC ratio during the quarter.

Answer

CEO Gary Bhojwani attributed the additional DTC strength to strong production from direct sales and successful experiments with a handful of independent third-party partnerships. CFO Paul McDonough explained that statutory income saw a reversal of the adverse Q1 impact but was slightly below expectations due to alternative investments. He noted the RBC ratio of 378% was essentially flat quarter-over-quarter by design, aligning with the company's target.

Joel Hurwitz sought more color on the drivers of direct-to-consumer sales strength outside of the web and digital channels. He also asked for clarification on statutory income and the RBC ratio during the quarter.

Answer

CEO Gary Bhojwani attributed the DTC strength beyond web and digital to strong production from direct sales and successful experiments with a handful of independent third-party partnerships. CFO Paul McDonough explained that an adverse impact on statutory income from Q1 was reversed in Q2. He noted the consolidated RBC ratio of 378% was by design, bringing it closer to the target of 375%.

Joel Hurwitz of Dowling & Partners sought to understand the drivers of direct-to-consumer sales strength beyond web and digital. He also asked about statutory income and the RBC ratio, questioning the lack of a larger positive reversal from Q1.

Answer

CEO Gary Bhojwani attributed the additional DTC strength to strong production from the direct sales force and successful experiments with third-party partnerships. CFO Paul McDonough explained that while there was a reversal of the Q1 impact, overall statutory income was moderated by alternative investment performance. He noted the resulting 378% RBC ratio was by design, aligning it closely with the 375% target.

Joel Hurwitz of Dowling & Partners asked for an update on expense initiatives, questioning if the favorable results were sustainable, and requested more detail on the drivers of the strong group disability results.

Answer

Chief Financial Officer Christopher Neczypor confirmed that the lower expenses are a direct, sustainable result of efficiency actions taken last year, with savings being reinvested into high-growth areas like the Group business. On disability, he attributed the strong performance to both lower incidence rates and strong recoveries but declined to quantify the specific contribution of each factor, noting they are somewhat linked.

Joel Hurwitz from Dowling & Partners asked about the slowdown in Voluntary top-line growth and sought an update on the build-out of retail wealth capabilities.

Answer

CEO Heather Lavallee explained the Voluntary growth moderation was due to tough comparisons against large, non-repeating case wins from the prior year. Jay Kaduson, CEO of Workplace Solutions, affirmed the business pipeline remains strong. Regarding retail wealth, Lavallee confirmed that modest, pre-forecasted investments are underway to hire advisors and enhance technology. Kaduson added that Voya is building on a strong foundation to capture the growing demand for holistic workplace advice.

Joel Hurwitz asked for more detail on the drivers of higher loss experience in the voluntary business and inquired if Voya plans to retain the disability business it will now administer or continue its reinsurance strategy.

Answer

CEO Heather Lavallee explained that the higher voluntary loss ratio is a deliberate strategy to increase client value and product utilization, not a reaction to competitive pressure. Regarding disability, she confirmed Voya will continue its long-standing reinsurance partnership to manage long-tail risk, while in-sourcing leave and short-term disability administration to control the customer experience.

Joel Hurwitz sought clarification on the expected 15% participant growth in Wealth Solutions for the upcoming year and its composition. He also questioned why the Stop Loss loss ratio target of 77%-80% hasn't been lowered, considering rising commission expenses.

Answer

Executive Rob Grubka confirmed the participant growth momentum is in both recordkeeping and full-service segments, supported by technology investments that enable scale. On Stop Loss margins, Grubka stated that while commissions are a factor, Voya leverages its scale and operational discipline to manage overall expenses effectively, and the company remains confident in its ability to achieve the 77%-80% loss ratio target.

Joel Hurwitz questioned the drivers of higher expenses in Individual Retirement and Corporate, asking about seasonality and the expected savings from the voluntary separation program. He also requested an update on organic growth in the Group Retirement out-of-plan and advisory businesses.

Answer

CFO Elias Habayeb attributed the Q1 expense increase to seasonality from equity grant vesting and payroll taxes. He noted the voluntary retirement program has an $85 million one-time cost, with savings partially reinvested and the full run-rate benefit expected by early 2026. CEO Kevin Hogan highlighted that advisory and brokerage assets grew 5% year-over-year to $16 billion and emphasized the large opportunity to convert 1.6 million in-plan-only customers to broader advisory relationships.

Joel Hurwitz from Dowling & Partners asked to quantify the favorable mortality impact in the Life Insurance segment to gauge earnings sustainability and inquired about the sales contribution from the new RILA product.

Answer

CFO Elias Habayeb provided a new quarterly run-rate earnings expectation for the Life business of $110-$120 million, with the first quarter typically being seasonally weaker. CEO Kevin Hogan reported that the new RILA product had a strong start, with over $90 million in applications by year-end, and he expects to gain market share as more distribution partners come online.

Joel Hurwitz of Dowling & Partners Securities, LLC asked for clarification on variable investment income (VII) pressure beyond alternatives, specifically negative call and tender income. He also requested an outlook for the Pension Risk Transfer (PRT) business.

Answer

CFO Elias Habayeb explained the negative call and tender income was a limited event caused by a specific bond, purchased at a premium, being called during the quarter. President and CEO Kevin Hogan addressed the PRT outlook, stating the pipeline remains very strong despite no transactions in Q2, as the company focuses on full plan terminations which occur episodically.

Joel Hurwitz asked about the earnings emergence in the retirement business, specifically why institutional retirement earnings contracted despite strong PRT activity, and about the state of the PRT market.

Answer

CFO Yanela Frias explained that the benefit from strong PRT sales was more than offset by an internal expense allocation shift, lower income on cash balances due to rate changes, and an accounting refinement. CEO Andy Sullivan commented that the PRT market remains robust long-term, with no impact from recent litigation, though he expects a normalization in transaction volume in 2025 due to market volatility.

Joel Hurwitz of Dowling & Partners inquired about the cause of spread compression in Individual Retirement and asked for an update on the company's Bermuda entity.

Answer

CFO Robin Raju attributed the quarterly spread noise to decreasing short-term rates on floating-rate assets, emphasizing the year-over-year growth trend. Regarding Bermuda, Raju confirmed the entity is set up and operational, providing capital management optionality, but offered no further specific updates.

Joel Hurwitz followed up on the market value adjustment (MVA) impact, asking if the quarterly decline was driven by lower rates and if it could be a recurring trend. He also asked about the drivers of the strong earnings in Group Retirement and the sustainability of that performance.

Answer

CFO Robin Raju reiterated that the MVA impact is subject to quarterly noise from multiple factors and advised using the historical $15 million average for modeling. Regarding Group Retirement, he attributed the strong results to high earnings leverage from equity markets and a 12% year-over-year increase in spread-related income, noting the business is stable and this performance should continue.

Joel Hurwitz inquired about the competitive pressures impacting Aflac's U.S. sales and sought clarification on the 2025 outlook for Japan's pretax margin, specifically the accounting for floating rate security hedges.

Answer

Virgil Miller, President of Aflac U.S., explained that U.S. sales faced tough comparisons and were impacted by a strategic adherence to underwriting discipline and a slower-than-expected recovery in dental sales following a system implementation issue. CFO Max Broden clarified that the Japan margin outlook is affected by lower expected floating rate income in 2025 due to anticipated rate cuts, noting that the company's interest rate swap hedge is currently out-of-the-money and not providing a benefit.

Joel Hurwitz inquired about the sales challenges in Aflac's Japan third sector products, specifically cancer and medical, and the expected impact of the 50th-anniversary promotions.

Answer

Koichiro Yoshizumi, in charge of Sales and Marketing in Japan, explained that the new Tsumitas product (asset formation + nursing care) is driving growth by attracting younger customers and enabling cross-selling of third sector policies. He noted that marketing for the 50th anniversary will focus on the unique value of their cancer insurance and concierge services, with a new product planned for next spring. For medical insurance, a rebranded product with unique coverage is showing a gradual sales recovery.