Michael Ward

Michael Ward asked Tony Cheng to elaborate on specific regions or product lines that appear incrementally attractive for RGA in the current year. He also inquired about U.S. traditional mortality trends, specifically if there was any insight into January's flu season activity following a solid Q4 result.

Answer

President and CEO Tony Cheng described a rich and diverse pipeline, highlighting strong momentum in Asia (product development, financial solutions), the UK longevity market, and the U.S. (industry realignment, biometric/underwriting-driven wins). EVP and Global Chief Risk Officer Jonathan Porter stated it's too early to predict the final flu season outcome but noted encouraging declining trends in population-level flu activity and that Q4 mortality experience was in line overall.

Michael Ward asked Tony Cheng to elaborate on any specific regions or product lines that appear incrementally attractive for RGA in the current year. He also inquired about U.S. traditional mortality, specifically if there was any insight into a potential uptick in January given the severe flu season, following a solid Q4 result.

Answer

Tony Cheng, President and CEO, described RGA's pipeline as rich and diverse across regions. He highlighted strong momentum in Asia from product development and financial solutions, continued strength in the UK longevity market, and U.S. opportunities from industry realignment and RGA's biometric/underwriting strengths. Jonathan Porter, EVP and Global Chief Risk Officer, stated it's too early to predict the final outcome of the flu season but noted encouraging declining trends in flu activity. He mentioned influenza hospitalizations peaked at year-end at the higher end of a normal range but have since substantially decreased, and Q4 results showed no material evidence of seasonality, with mortality experience overall in line with expectations.

Michael Ward of UBS asked for help framing the quarter's earnings variability and its impact on the 2026 outlook. He also inquired about the deal pipeline for biometric versus financial solutions and the effect of regulatory changes in Asia.

Answer

EVP & CFO Axel André reaffirmed confidence in long-term targets, citing significant earnings power from deployed capital and other tailwinds. President & CEO Tony Cheng described the global business pipeline as strong, emphasizing that biometric risk is a key differentiator in both traditional and asset-intensive transactions, which is central to their 'Creation Re' philosophy.

Michael Ward inquired about the new business pipeline and third party capital.

Answer

CEO Tony Cheng noted strong pipelines across all three regions. CFO Axel André discussed Ruby Re and potential capital issuances.

Michael Ward asked about the expected duration for the roll-off of the 'very profitable RILA' block, which constitutes 15% of the total. He also inquired about the recent uptake and trending of defined contribution products, such as in-plan annuities and LifePath Paycheck, in the context of a broader industry push towards different asset classes for employers and plan sponsors.

Answer

Robin Raju, CFO of Equitable Holdings, stated that the roll-off of the profitable RILA block is expected to cause 2-4 basis points of spread compression in the first half of 2026, but by the second half of the year, it should be immaterial and no longer drive spread compression. He expects spreads to stabilize thereafter, with Net Interest Margin (NIM) growing with the general account book value (excluding embedded derivatives). Nick Lane, President of Equitable Financial, expressed bullishness on secure income/in-plan annuities in the $8 trillion DC market, citing momentum from SECURE 1.0/2.0 and approaching Social Security 2030. He mentioned $920 million in sales in the broader institutional business for the year and $1.8 billion in AUM since launch, noting a strong pipeline for 2026 despite expected lumpy inflows.

Michael Ward also inquired about the trend in uptake for defined contribution (DC) products, including in-plan annuities and LifePath Paycheck, given the industry's push to open up to different asset classes and increase employer comfort.

Answer

Nick Lane, President of Equitable Financial, expressed bullishness on the untapped potential and long-term growth for secure income/in-plan annuities within the $8 trillion DC market, estimating an addressable market of $400 billion-$600 billion. He noted that while still in early innings, there is momentum driven by regulatory tailwinds (SECURE 1.0, 2.0) and existing products/partnerships with target date funds and recordkeeping platforms. Lane reported approximately $920 million in sales in the institutional business for the year and $1.8 billion in AUM since launch, with a strong pipeline for 2026, despite expected lumpy inflows.

Michael Ward from UBS Group asked about the sustainability of RILA sales growth and product innovation. He also inquired about the growth pipeline and competitive environment for the Wealth Management business.

Answer

President Nick Lane and CEO Mark Pearson expressed confidence in the RILA market's continued growth, driven by strong demographics and low market penetration. Lane highlighted customer-led innovation as a key differentiator. For Wealth Management, he noted strong demand for advice, a robust pipeline driven by productivity gains, and a disciplined hiring model that provides a competitive advantage.

Michael Ward of UBS inquired about the sustainability of strong net flows in the Individual Retirement and AllianceBernstein segments amid April's volatility, and asked about triggers for more aggressive capital deployment.

Answer

Nicholas Lane, President of Equitable Financial, highlighted strong structural drivers for Individual Retirement. Onur Erzan, Head of AB's Global Client Group, acknowledged April's challenges but pointed to a materially increased institutional pipeline. CEO Mark Pearson stated that they will wait for the RGA transaction to close before deploying proceeds but will evaluate more aggressive buybacks if the stock remains cheap.

Michael Ward of UBS inquired if Equitable would consider inorganic bolt-on acquisitions to accelerate growth in its Wealth Management business to capture the decumulation trend.

Answer

CFO Robin Raju confirmed M&A is focused on scaling wealth management and private credit. However, President of Equitable Financial Nicholas Lane specified that the current focus within wealth management is on the organic recruitment of experienced advisors, which is yielding attractive returns.

Michael Ward inquired about the continuation of GM's inventory discipline and its implications for cash flow, as well as the expected savings from GM Financial's Industrial Bank approval on the cost of capital.

Answer

Paul Jacobson, EVP and CFO, confirmed that inventory discipline will continue, aiming for the 50-60 day target, which contributes to consistent cash generation. Susan Sheffield, President and CEO of GM Financial, explained that the Industrial Bank will complement their funding platform by offering depository products, helping to lower the cost of funds and enhance competitiveness, though not expecting a 100 basis point reduction.

Michael Ward inquired about the continuation of General Motors' inventory discipline and its implications for cash flow, as well as the potential savings in cost of capital from GM Financial's recently approved Industrial Bank.

Answer

Paul Jacobson, EVP and CFO, confirmed continued inventory discipline, noting the strong December performance led to 48 days of inventory at year-end 2025, contributing to consistent cash generation. Regarding the Industrial Bank, Paul Jacobson and Susan Sheffield, President and CEO of GM Financial, explained it would be a complementary funding source to help lower the cost of funds, though not a massive basis point reduction.

Michael Ward from Citigroup Inc. asked for clarification on the accounting for the EV inventory adjustment and inquired about the potential impact of tariffs under different trade agreement scenarios.

Answer

EVP & CFO Paul Jacobson explained the EV inventory adjustment is a mark-to-market valuation reflecting future sales pressure, which he expects to improve over time. Chairman & CEO Mary Barra added that while lower tariffs with Canada, Mexico, and Korea would have an immediate positive impact, GM is prepared for the current situation and sees potential upside. She highlighted that new U.S. capacity coming online in 18 months will further mitigate tariff effects.

Michael Ward of Citi Research asked about the potential best-case scenario for GM if the USMCA were renegotiated early. He also inquired about the key drivers behind GM's strong cash generation in recent years and what conditions would be necessary to resume share repurchases.

Answer

Chair and CEO Mary Barra responded that GM is well-positioned for any USMCA renegotiation due to its high existing compliance and resilient supply chain. EVP and CFO Paul Jacobson attributed strong cash generation to a desirable vehicle portfolio, disciplined go-to-market strategy, and efficient capital expenditure. Regarding share repurchases, Jacobson noted the recent presidential actions have reduced uncertainty, and the company is evaluating the macro environment, suggesting a pause is temporary while the current ASR program concludes.

Michael Ward asked about the $250 sequential reduction in variable gross profit per unit from Q2 to Q3, inquiring about the split between unfavorable seasonal mix (luxury) and BEV sell-up, and the potential for reversal in Q4. He also questioned the sustainability of the record level of finance and insurance per unit.

Answer

CEO Mike Manley explained that the largest contribution to the reduction came from compression in domestic combustion and ICE sales, with BEV mix (10% of total) also having an effect. He noted an improved exit trajectory in September and expected a better dynamic for BEVs in Q4, along with a normal seasonal luxury premium mix. CFO Tom Szlosek concurred. Mike Manley also stated that the finance and insurance team is expected to continue their strong performance, particularly in value-added products like extended service contracts, which benefit future aftersales revenue and customer retention, though increased AN Finance penetration would mitigate periodic reporting of per-unit profitability.

Michael Ward of Citi inquired about AutoNation's M&A strategy, asking about the company's flexibility, potential deal sizes, market priorities, and whether it would consider overseas expansion.

Answer

EVP & CFO Thomas Szlosek noted that the M&A pipeline has improved and the company has built up 'dry powder' for potential deals while maintaining its commitment to share repurchases. CEO Michael Manley elaborated that AutoNation's primary M&A focus is on increasing density in existing markets to unlock reliable synergies, guided by the principle of maximizing long-term earnings per share for shareholders.

Michael Ward inquired if the strong Q1 demand and potential Q2 pull-forward would positively impact cash flow, offsetting typical second-quarter seasonality. He also asked how the upcoming ABS issuance would affect operating cash flow and sought guidance on floor plan interest expense for Q2.

Answer

CFO Tom Szlosek agreed that strong demand is positive for cash flow but reminded that Q2 is typically the lowest cash flow quarter due to seasonal tax payments. CEO Mike Manley added that the changing mix of inventory would also be a factor. Regarding the ABS, Szlosek explained it would replace warehouse financing and could improve the advance rate, freeing up some capital. For floor plan interest, he suggested modeling Q2 at a pace similar to Q1.

Michael Ward of Freedom Capital inquired about the impact of recent storms on 50 stores, asking for quantification and whether the service side was more affected. He followed up by suggesting that underlying After-Sales growth was significantly higher than reported once storm and CDK impacts were excluded.

Answer

CEO Mike Manley confirmed that the service business sees more lingering effects from storms than sales, with downtime ranging from 2 to 5 days. CFO Tom Szlosek estimated the storm impact on After-Sales growth was likely 100-200 basis points. Executive Derek Fiebig reminded that the CDK outage also negatively impacted After-Sales results. Manley agreed the underlying performance was stronger than the reported numbers indicated.

Michael Ward inquired about the impact of 4,000 US EV sales, noting their light margins, on the overall new vehicle gross profit, suggesting it might have remained relatively flat. He also asked about the USD 1 billion acquisition target by year-end, questioning if multiples have become more reasonable and if there are significant opportunities.

Answer

Bryan DeBoer, President and CEO, confirmed that EV margins are lighter, and the push to sell them helps manufacturers meet CAFE standards. He noted that Lithia is conquesting second and third-generation Tesla customers, and new competitive products from manufacturers are exciting. DeBoer agreed that profitability likely bottomed in Q3 for EVs. Regarding acquisitions, he stated that Lithia maintains its disciplined hurdle rates (15% ROI, 3-6x EBITDA) and is finding high-quality deals in Q4 due to long-term relationships, especially in the Southeast and South Central U.S.

Michael Ward inquired about the impact of US EV sales on new vehicle gross margins, particularly given the push to clear inventory. He also asked for an update on the acquisition pipeline, specifically if the $1 billion target for year-end is on track and if acquisition multiples have become more favorable.

Answer

Bryan DeBoer, President and CEO, confirmed that BEV margins were lighter due to the push to meet CAFE standards, suggesting that profitability likely bottomed in Q3. He affirmed that the company is on track for approximately $1 billion in acquisitions by year-end, emphasizing that deals are secured within their strict 15% ROI hurdle rates and 3-6x EBITDA multiples, driven by long-term relationships and a focus on network density.

Michael Ward from Citi followed up on SG&A, asking how the U.S. business performed when excluding the impact of UK operations. He also questioned if the current quarterly profit from Driveway Finance (DFC) represents a new sustainable run rate.

Answer

SVP & CFO Tina Miller confirmed the U.S. business remains strong on the SG&A front, with the blended number impacted by the higher UK cost structure. SVP of Finance Chuck Lietz affirmed that DFC is on a strong growth trajectory and the current profit level is an expected run rate going forward, while CEO Bryan DeBoer highlighted DFC's profit was three times the prior year's level.

Michael Ward asked about the potential impact of lower interest rates across the business and inquired about the integration progress and synergy opportunities with the Pendragon acquisition.

Answer

CEO Bryan DeBoer estimated that a 100-basis-point drop in interest rates would positively impact quarterly EPS by about $0.70. Regarding Pendragon, he reported strong progress, with the team adopting new performance mindsets, improving F&I, and advancing network optimization by divesting 40-50 assets. He believes achieving operating margins of 2.5-3% is achievable over time.

Michael Ward of UBS Group asked for the Investment Management flow outlook for the remainder of the year, the trend in fee rates, and whether equity market movements pressured revenue. He also inquired about the potential for a standalone wealth advisory segment.

Answer

CEO - Voya Investment Management Matt Toms expressed confidence in H2 2025 flows, citing the breadth of the platform and reaffirming the 2%+ long-term organic growth target. He noted the fee rate was stable at 27 bps and considered the Q2 equity market impact to be noise. CEO & Director Heather Lavallee clarified that while wealth management is an important growth lever within the Retirement business, Voya does not plan to establish it as a separate reportable segment.

Michael Ward from Citi Research asked if any current product lines are already achieving the 2030 margin targets, and questioned the feasibility of reaching a 10% margin exit rate by Q4 2025. He also sought details on cash restructuring in the first half, the expected unwind of working capital, and the potential interest rate reduction from a future debt refinancing.

Answer

Chairman & CEO Jeffrey Edwards confirmed that new programs currently being booked are already achieving the hurdle rates consistent with the 2030 margin targets. He affirmed his confidence in a 10% adjusted EBITDA margin exit rate for Q4 2025, suggesting current production schedules are tracking ahead of the conservative forecasts used for guidance. EVP & CFO Jonathan Banas estimated first-half cash restructuring was under $10 million and stated that working capital usage is expected to fully unwind, supporting the full-year positive free cash flow guidance. Regarding refinancing, Banas noted that an anticipated credit rating upgrade to single-B territory could lead to more favorable rates, but the exact improvement depends on future market conditions.

Michael Ward inquired about the production outlook for the next 30-90 days given strong sales and low inventory, and whether there were volume concerns in Europe due to tariffs. On the financial side, he asked about the cause of the Q1 increase in accounts receivable and the nature of the 'other income' item, specifically if it was a royalty payment.

Answer

Chairman and CEO Jeff Edwards stated that production releases remain consistent with their plan, supported by OEM incentive programs, and expressed confidence in the company's ability to manage volumes. EVP and CFO Jonathan Banas explained that the rise in receivables was due to normal seasonality and the timing of revenue within the quarter, which should balance out by year-end. Banas also confirmed the 'other income' item was indeed royalty payments from a previously divested business, which is why it was recorded under 'corporate eliminations and other'.

Michael Ward asked about the key factors needed to achieve the upper end of the Q4 guidance, which implies a double-digit margin. He also inquired about strategies to mitigate significant foreign exchange headwinds and the company's flexibility to refinance debt in a declining rate environment.

Answer

Chairman and CEO Jeffrey Edwards expressed confidence in the guidance, attributing potential success to flawless execution and cost reductions, which are delivering results ahead of schedule even without volume growth. EVP and CFO Jonathan Banas explained that foreign exchange headwinds, primarily from cost-only currencies like the Mexican peso and Polish zloty, are managed through a hedging program and are expected to lessen in Q4. Regarding debt, Banas noted that non-call provisions on notes expire in Q1 2025, which will increase flexibility for a potential refinancing to lower interest costs, contingent on favorable market conditions.

Michael Ward asked about the sustainability of the company's margin performance, seeking confirmation if the trend is heading towards double-digit rates. He also requested clarification on the full-year cash flow outlook and the timing of cash outflows for restructuring.

Answer

CEO Jeff Edwards confirmed the company is marching towards double-digit EBITDA and expects to be there in 2025. CFO Jon Banas clarified that the free cash flow outlook is now breakeven to slightly negative, a change driven by the strategic decision to make a $25 million cash interest payment in December instead of using the PIK option. Banas also noted that about $12.5 million in restructuring cash was already spent in the first half of the year and that working capital should turn positive in the second half, consistent with normal seasonality.

Michael Ward from Citi asked for quantification of the factors affecting unit sales in the U.S. and U.K. and sought clarification on the $150 million cash flow benefit from the 'One Big Beautiful Bill' tax changes.

Answer

EVP & CFO Shelley Hulgrave detailed that divested stores and the MINI agency model transition impacted unit volumes. COO of North American Operations Richard Shearing and Chairman & CEO Roger Penske added that a temporary halt in OEM shipments due to tariff uncertainty also affected Q2 sales but is now resolving. Regarding the tax benefit, Shelley Hulgrave and Roger Penske clarified it is an annual cash tax saving from bonus depreciation on Penske Transportation Solutions (PTS) assets, separate from dividend income, and could total $450 million over three years.

Michael Ward asked about the sustainability of SG&A as a percentage of gross profit, the potential for further improvement in the U.K. market, and the rationale behind recent share repurchases.

Answer

EVP and CFO Shelley Hulgrave affirmed the company's comfort with SG&A in the low 70s, citing disciplined cost control and headcount management. EVP Randall Seymore confirmed the U.K.'s performance is sustainable due to internal levers. Shelley Hulgrave and CEO Roger Penske noted that while the acquisition market has paused, share repurchases were executed opportunistically under a 10b5 plan.

Michael Ward asked about Penske's capital allocation strategy, questioning if the recent wave of acquisition opportunities would shift its focus in 2025 and 2026.

Answer

EVP and CFO Shelley Hulgrave reiterated the company's balanced strategy, targeting 5% growth from acquisitions and 5% internally. She highlighted the $2.1 billion in acquisitions made in 2024 across all business segments and geographies, while also emphasizing a continued commitment to shareholder returns, noting over $350 million returned in 2024 and an active share repurchase authorization.

Michael Ward from Citigroup asked how the UK's BEV mandates affect gross profit and questioned the current environment for large-scale acquisitions.

Answer

CEO Daryl Kenningham explained that UK BEV mandates negatively impact gross profit because a significant portion of BEV sales are directed to corporate fleets at lower margins compared to retail sales. Regarding M&A, Kenningham noted that while the year has been quiet due to uncertainty, he anticipates larger deals could emerge in the coming years and has seen a recent uptick in inbound inquiries.

Michael Ward asked about the long-term potential for the U.K. business to expand from one-third of total revenue to a 50/50 split with the U.S. He also inquired about the impact of weather on the U.S. business early in the quarter.

Answer

CEO Daryl Kenningham stated that while he would 'never say never,' there are no current plans for the U.K. to become 50% of the business, noting that more acquisition opportunities are currently seen in the U.S. CFO Daniel McHenry confirmed that weather in February did negatively impact business in the Northeast and Houston, and it was difficult to recover the lost service work as shops were already running at high capacity.

Michael Ward asked if there are any structural reasons preventing the acquired Inchcape business from achieving SG&A levels comparable to the corporate average. He also questioned if F&I per unit could see further upside in 2025 with the return of captive financing.

Answer

CFO Daniel McHenry stated there are no structural impediments and expects the Inchcape stores' SG&A to be as good as, if not better than, the legacy U.K. business over time. Executive Peter Delongchamps noted that while new vehicle finance penetration has benefited from captive rates, the real opportunity for F&I growth lies in improving used car finance penetration as rates potentially fall.

Michael Ward questioned the rapid integration timeline for the Inchcape acquisition and asked for an update on the company's strategy regarding business adjacencies, such as standalone used car operations or finance companies.

Answer

CEO Daryl Kenningham clarified that the Inchcape integration will be 'substantially' complete by year-end, with some IT and process training potentially extending into early 2025. Regarding adjacencies, Kenningham stated that while they are regularly evaluated, the company's current focus remains on franchised dealerships to avoid diluting focus and compromising critical OEM relationships, which are essential for growth.

Michael Ward requested an updated view on sensitivities to equity and interest rate shocks and asked how the common dividend fits into capital priorities.

Answer

CFO Yanela Frias provided updated sensitivities, noting a 10% equity shock would impact annual AOI by about $0.30 per share, and a 50 basis point rate decline would impact annual EPS by about 20%. She reiterated that capital priorities are unchanged: balancing financial strength, investing in growth, and shareholder distributions, with a particular focus on financial strength in the current macro environment.

Michael Ward asked about the impact of the recent guaranteed universal life (GUL) risk transfer deal on the individual life assumption charge and whether such updates encourage further risk transfer. He also requested more information on the disclosure that certain PGIM Quant funds were moved to runoff.

Answer

Chief Financial Officer Yanela Frias stated they could not quantify the impact of the GUL deal on the charge but affirmed that the company is always evaluating further derisking opportunities. Andy Sullivan, Head of International Businesses and PGIM, clarified that the Quant funds in question represent a non-material part of the business with less than $1 billion in AUM and that the move does not reflect any issues with PGIM's overall strong investment performance.

Michael Ward inquired about the business environment in Japan, asking if any anti-U.S. sentiment from trade tensions could create sales challenges. He also asked about the buyback strategy and if Aflac would be comfortable with repurchases exceeding operating income if sales headwinds persist.

Answer

Charles Lake, Chairman of Aflac International, stated that the company sees no anti-American sentiment, citing the strong U.S.-Japan alliance. Max Broden, CFO, reiterated that buybacks are a function of available capital and investment opportunities, with organic growth being the top priority. He noted that the current capital deployment framework, which has found buybacks to have good IRRs, remains consistent.

Michael Ward questioned the contribution of the Sumitas product to Japan's sales growth and asked if Aflac is becoming more reliant on first-sector products to meet its sales targets.

Answer

Koichiro Yoshizumi and Masatoshi Koide of Aflac Japan explained that while Sumitas sales are strong, it primarily serves as a 'hook' product to facilitate cross-selling of core third-sector medical and cancer insurance. CFO Max Broden added that the product is highly profitable on a post-reinsurance basis. CEO Daniel Amos praised the strong financial controls and monitoring surrounding the product.

Michael Ward of UBS asked about the company's approach to share buybacks in the volatile market and inquired if there were any specific pockets of weakness observed across credit asset classes.

Answer

CEO Deanna Strable and Interim CFO Joel Pitz confirmed their capital deployment plans are intact. Pitz noted the $200 million of buybacks in Q1 keeps them on track for their $700 million to $1 billion target for 2025. On credit, Executive Kamal Bhatia stated that while spreads have widened, it's driving a flight to quality, benefiting their fixed income business. He sees increased client activity in high-yield, preferreds, and infrastructure debt.

Michael Ward from Citi Research inquired about the impact of potential tariffs on the residual values of off-lease vehicles and how quickly those values might adjust. He also asked about the timeline for reopening closed EchoPark locations and whether it could be accelerated.

Answer

President Jeff Dyke stated that while residual values would adjust quickly, the benefit is muted by the ongoing low supply of lease returns, which he doesn't expect to normalize until next year. Regarding EchoPark expansion, CEO David Smith and Dyke confirmed they are actively evaluating properties and can open new stores efficiently. They indicated a potential restart of growth toward the end of the year or early next year, once market conditions stabilize.

Asked about manufacturing capacity flexibility in light of potential new business from tariffs, details on cash flow items like preferred dividends, and the specifics of the preferred share redemption option. He also sought clarification on the company's tariff exposure related to its Mexican operations.

Answer

The company has about 20% excess capacity in both Europe and Mexico and is in advanced talks to take on new localized business. Regarding the preferreds, dividends are being paid-in-kind (PIK), and the September redemption is optional and contingent on the company's ability to pay. The tariff exposure from Mexico is limited to less than 20% of North American production, as customers are the importer of record for the other 80%.

Michael Ward from Freedom Capital asked for details on Garrett's strategy in China, a definition of its adjusted free cash flow metric, and the company's current perspective on mergers and acquisitions.

Answer

President and CEO Olivier Rabiller detailed the China strategy, which focuses on new local players expanding from BEVs into hybrids, confirming new business wins for 2026-27. SVP and CFO Sean Giesen defined adjusted free cash flow as operating cash flow less CapEx, excluding one-time items. Both executives stated that while they actively review M&A, the focus remains on organic growth and any deal must clear a very high, non-dilutive bar for shareholders.

Michael Ward questioned why the Q3 interest expense didn't reflect the benefit from a May refinancing and inquired about the company's strategy for electrified solutions, particularly for commercial vehicles, and its long-term revenue mix.

Answer

SVP and CFO Sean Deason clarified that the interest expense was impacted by mark-to-market movements on interest rate and cross-currency swaps, not a lack of benefit from the refinancing. President and CEO Olivier Rabiller added that Garrett's electrified solutions are gaining traction in both passenger and commercial vehicles, highlighting a recent Stellantis innovation award. He noted the company targets $1 billion in non-turbo revenue by 2030 while emphasizing the long-term resilience of the core turbo business, supported by hybrids and industrial applications.

Inquired about the Q3 interest expense not reflecting the May refinancing benefit, the company's strategy and progress in electrified solutions for commercial and passenger vehicles, and the long-term revenue mix from electrification.

Answer

The higher interest expense was due to mark-to-market activity on interest rate and cross-currency swaps, not a lack of benefit from the refinancing. On electrification, Garrett is seeing significant progress and customer interest in its high-power density solutions for both passenger and commercial vehicles. The company targets $1 billion in non-turbo revenue by 2030, driven by these new technologies, while the core turbo business is expected to remain resilient due to industry consolidation, the rise of hybrids, and growth in industrial applications.

Michael Ward asked for details on the underlying product lines or claim types driving volatility in voluntary benefits. He also asked if Unum could quantify the positive impact of claim recoveries on the group disability loss ratio.

Answer

CFO Steve Zabel explained that the voluntary benefits volatility has not been concentrated in any single product line, with different products experiencing higher claims in different quarters, and he sees no consistent unfavorable trend. While not providing a specific number, he confirmed that improved claim recoveries have been a 'main driver' of the group disability benefit ratio's improvement from the low 70s pre-pandemic to the current low 60s.

Michael Ward asked for more detail on the underlying claim activity in voluntary benefits and requested a quantification of the impact of recoveries on the group disability loss ratio.

Answer

CFO Steven Zabel clarified that the voluntary benefits claims volatility has been across different product lines quarter-to-quarter (e.g., hospital indemnity, disability) with no single systemic trend, reinforcing the view that it's transitory. Regarding group disability, he quantified the improvement by noting the benefit ratio has moved from the low 70s pre-pandemic to the current low 60s, with improved claims recoveries being a primary driver of that change.

Michael Ward of Citigroup Inc. asked how management views the company's business mix and external risk transfer opportunities given internal changes like the Bermuda arrangement. He also sought clarification on Corebridge's outperformance in fixed annuity sales compared to the industry.

Answer

President and CEO Kevin Hogan stated that Corebridge has a strong position with its four market-leading businesses and is actively exploring both internal and external optimization opportunities. Regarding the outperformance in annuity sales, Hogan attributed it to the company's ability to execute, citing operational improvements to increase capacity, strong distribution partnerships, and the availability of attractive assets to support the growth.