Ryan Krueger • Keefe, Bruyette & Woods

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Executive VP & CFO Edward Spehar characterized the change as not being a 'blank sheet of paper' overhaul, noting the core principle of protecting the statutory balance sheet remains unchanged. He indicated revisions are more along the interest rate curve rather than overall duration and the delta position on equities won't change much. President & CEO Eric Steigerwalt added that while it was a significant internal effort, the external impact may not seem as large, partly due to the favorable market environment.

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CFO Ed Spehar stated that the primary goal of the hedging changes is simplification, now that the company has a more balanced risk profile between its VA and Shield blocks. He also noted that the changes would be implemented at once, not gradually. Regarding April's volatility, he explained that the company's models show very little impact for an equity market decline down to 30% and an impact below the $500 million max loss tolerance for a decline between 30% and 50%.

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CEO Eric Steigerwalt confirmed the company is always looking for capital-efficient transactions and will consider everything, including more complex legacy blocks, though they may require more work. CFO Edward Spehar stated that the stable RBC outlook does not factor in potential impacts from the upcoming 2026 economic scenario generator (ESG) changes or the final hedging strategy for the legacy block, as these frameworks are not yet finalized. He noted the goal is to simplify and a trade-off might be made for a clearer risk picture, which is not contemplated in the current outlook.

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CFO Ed Spehar explained that normalized statutory earnings (NormStat) have trailed expectations year-to-date, contributing to the in-force impact, but emphasized that NormStat is volatile and viewed over a multi-year framework. CEO Eric Steigerwalt confirmed they are exploring multiple in-force and flow reinsurance opportunities but declined to provide specific details on ongoing negotiations to protect the company's position.

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Lyndon Oliver, Regional President - Asia, attributed the strong sales in Japan and Korea to new foreign currency product launches, which have been well-received, and expects Asia to be at the top end of its sales guidance for the year. CFO John McCallion stated that core retirement spreads (ex-VII) are expected to remain stable, though he noted a few basis points of potential seasonality in Q3 before returning to the low 100s in Q4. He also detailed the short-term earnings impact from the Chariot Re transaction.

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Lyndon Oliver, Regional President - Asia, attributed the strong sales in Japan and Korea to the successful launch of new single premium foreign currency products and leveraging US dollar product expertise. John McCallion, EVP, CFO & Head of MetLife Investment Management, confirmed that core retirement spreads (ex-VII) are expected to remain stable, though he noted a few basis points of seasonality in Q3. He also mentioned a short-term headwind to RIS earnings from the Chariot Re transaction.

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CEO Michel Khalaf stated that MetLife's 'all-weather' strategy remains unchanged, though they are focusing on controllable levers like discretionary expenses while continuing to invest in growth. Executive Ramy Tadros explained that underlying Group Benefits PFO growth was around 4% after adjusting for the impact of favorable mortality on participating contracts. He added that disciplined rate actions on the dental block also impacted persistency, but the full-year outlook of 4% to 7% growth remains intact.

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Ramy Tadros, an executive at MetLife, stated that 1/1 renewals had a "really good start" with strong persistency, particularly in the dental business, supporting an increased PFO guidance range. Regarding the PRT market, Tadros noted that while it's hard to forecast lawsuit impacts, MetLife saw strong 2024 inflows of $6.4 billion and maintains a positive outlook, reaffirming its 3-5% liability balance growth guidance for the near term.

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CFO John McCallion confirmed that RIS spreads are expected to stabilize and could be flat to slightly up in Q4, and while hesitant to give a full 2025 outlook, he agreed a more stable environment is a fair assumption. For VII, he suggested Q4 results might land between the lower Q3 and higher Q2 levels, noting some one-off fund markdowns in Q3.

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CEO Glenn Williams explained that while momentum is strong, the year-over-year comparisons become more difficult in the second half, which moderates the expected growth rate. EVP & CFO Tracy Tan stated that aggregate lapse rates remain elevated but stable compared to the prior year, and the 5% ADP growth guidance already accounts for this.

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CEO Glenn Williams explained that the two business lines react differently to economic conditions. Cost of living pressures affect Term Life sales for new income families more immediately, while larger ISP transactions like rollovers are less sensitive. He noted that uncertainty is a headwind for both, but the guarantees in variable annuities are driving ISP strength. Williams confirmed the ISP outlook accounts for tougher year-over-year comparisons and assumes current economic uncertainty will persist.

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CEO Glenn Williams stated that strong recruiting momentum existed prior to the promotion and continued through October after the discount expired. CFO Tracy Tan confirmed that all expense guidance and historical comparisons now exclude the discontinued senior health business.

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EVP & CFO Michael Katz confirmed the base case for the Q3 voluntary loss ratio is around 50%, as Voya continues building reserves for Q4 seasonality despite favorable Q2 results. CEO - Workplace Solutions Jay Kaduson explained that premium comparisons are against a strong 2024 that included several jumbo cases. He noted that the 2025 top line is trending well, aided by the strategic bundling of in-sourced leave solutions with over 50% of life and disability cases.

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CFO Michael Katz explained that while spread-based assets were slightly high, the margin is a reasonable starting point, accounting for some expense seasonality. He clarified the Voluntary reserve increase is a prudent measure against potential economic uncertainty impacting utilization later in the year, with the high 40s loss ratio still a valid baseline. Jay Kaduson, CEO of Workplace Solutions, added that Voya is a top-3 leader in the expanding Voluntary market and has successfully deployed new tools to boost participation.

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CEO Heather Lavallee highlighted strong underlying momentum in Wealth Solutions, noting that while the OneAmerica integration assumes a lower retention rate (90%) than the core business (98.5%), this potential volatility is fully factored into financial guidance. CFO Michael Katz clarified that January claims data increases the completion rate for the 2024 Stop Loss cohort by an additional 5-10% from the 70% reported at year-end.

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CEO Heather Lavallee acknowledged the disappointing results, attributing them to underpricing the 2024 book and elevated claims across all categories, noting that medical trends of 8-9% are now factored into pricing. Executive Michael Katz added that Voya is targeting a return to the 77%-80% loss ratio range in 2025, citing successful repricing of non-January business and a similar rate push in 2017-2018 as reasons for confidence.

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CFO Don Cummings confirmed that managing capital strain from spread products could involve establishing a new affiliated reinsurer, either domestically or offshore, separate from BrookRe. Regarding reinsurance strategy, Cummings clarified that while they might use BrookRe for M&A, it would likely be to acquire complementary blocks like life insurance to boost capital generation, rather than entering the market as a reinsurer for spread-type business.

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CFO Don Cummings explained that scenarios requiring a capital injection into Brooke Re would involve extreme stress, similar to the Global Financial Crisis or the 2020 COVID shock, combining high volatility with deep equity and/or interest rate shifts. An unnamed executive, likely the Head of ALM, added that while longer durations of volatility are more problematic, the company's hedging program uses a flexible mix of futures and options to mitigate this risk, and they added options during Q1 and Q2 to protect against realized volatility.

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CFO Don Cummings explained that the Brooke Re capital result differs from consolidated hedge gains due to scope (RILA and New York VA business are excluded) and modified GAAP accounting rules, including a fixed volatility assumption. Regarding lapse rates, he clarified the assumption review focused on refining projections for withdrawal frequency, not overall lapse rates. He noted that while current outflows are elevated in a strong market, the long-term assumption accounts for varying market cycles, referencing a lower 7% surrender rate during the 2022 down market.

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CFO Don Cummings declined to provide specific financials for Brooke Re but confirmed its equity has grown through the first nine months. Regarding the MRB roll forward, he explained the negative impact is driven by higher-than-expected policy lapse and withdrawal activity. He noted this is typical in strong equity markets, as seen this year, and that the company's long-term actuarial assumptions will be updated in the fourth quarter.

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CFO Robin Raju provided a Q3 baseline of $220M-$225M for Individual Retirement earnings. He explained that while the runoff of the highly profitable, pre-2020 RILA book (about 15% of account value) will continue for 9-12 months, NIM spreads have stabilized. He noted that future growth will be supported by strong business momentum which benefits the entire company flywheel.

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CFO Robin Raju quantified the seasonal expense impact on Individual Retirement at about $10 million pretax, which should normalize in Q2. Regarding leverage, Raju stated that while the company is comfortable with the current GAAP ratio, any buybacks beyond the planned $500 million would likely be accompanied by debt repayment to align with rating agency expectations.

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CFO Robin Raju clarified the Bermuda entity provides optionality to support consistent cash flow and growth towards the company's 2027 targets. Regarding the C-Corp conversion, both Raju and AllianceBernstein CFO Jackie Marks stated the current partnership structure is superior for unitholders due to significant tax advantages, and a conversion would cause substantial EPS dilution.

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CEO Mark Pearson stated that flows from the BlackRock product are expected to be lumpy, with no flows anticipated in Q4 2024 but a restart expected in the first half of 2025. CFO Robin Raju noted that while minor quarterly noise is possible, floating-rate assets and liabilities are well-matched over a 12-month period, so any impact from rate changes is not expected to be material.

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An Aflac Japan executive explained that the MiRyto product's flexible design and unique support services are driving strong, sustainable traction across all channels. Another executive detailed that the improved net investment income was due to higher variable NII, a make-whole call, accelerated deployment, and strategic switch trades, while advising to adjust for the one-time make-whole in Q3 forecasts.

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An Aflac Japan executive, identified as Yoshizunmi, explained that the 'MiRyto' product's flexible design and unique support services are driving strong traction across all channels, which they expect to continue. An unnamed executive detailed that the improved net investment income was driven by variable NII from alternatives, a make-whole call, accelerated deployment, and 'switch trades' from lower to higher-yielding JGBs, noting the team is well-positioned for a solid third quarter.

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Max Broden, CFO, explained that while a stronger yen negatively impacts the ESR and holding company instruments, this is economically offset by the higher future U.S. dollar value of dividends from Aflac Japan. Alycia Slyck, SVP and Global Chief Actuary, confirmed the company expects a positive sales impact from the new cancer product launch.

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EVP and CFO Max Broden confirmed that the unlock will lower the future net premium ratio by approximately 100 basis points, meaning the benefit ratio for the in-force business is expected to be about 100 basis points lower going forward, including into 2025. For the Corporate segment, he indicated the run rate is profitable, suggesting analysts adjust the reported $15M pretax profit by adding back the $57M negative impact from tax credit investments.

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EVP & CFO Axel André confirmed the VIF credit was a recognition from rating agencies and did not involve any securitization or borrowing. President & CEO Tony Cheng affirmed that the transactions he referenced have already occurred, citing a large LTC block in Q1 and variable annuity/ULSG blocks in Q2 that did not fit RGA's risk appetite.

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CFO Axel Andre explained that the increase in capital sources was due to rolling the 12-month forecast forward to include Q1 2026 and refinements in projection models. On VIF, he confirmed it's an important concept with a proven track record of securitization, which helps in discussions with rating agencies. He noted that a portion is already recognized and RGA is in continued dialogue to increase that amount.

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Chief Financial Officer Axel Philippe Andre confirmed the deployable capital metric incorporates regulatory, rating agency, and internal frameworks, and that the company has high confidence in gaining rating agency recognition for the capital sources included. He added that the updated run rates reflect recent business momentum, with the 8-10% growth target assuming a continuation of similar new business volumes.

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President and CEO Tony Cheng stated that for broad portfolio optimization and in-force management actions, RGA is only in the "first few innings" and anticipates continued opportunities. Chief Risk Officer Jonathan Porter clarified that the 4-5 year excess mortality expectation is from the present day, not from the end of the pandemic.

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EVP & General Counsel Gregg Karawan detailed the UK appeals process, noting Santander has until August 15 to request permission to appeal from the appellate court, a process that could take 12-18 months if granted. Karawan clarified that while payment is due August 15, Genworth would not receive its share from AXA until all appeals are resolved. President, CEO & Director Thomas McInerney added that proceeds would prioritize share buybacks, and an Enact spin-off remains unviable until the CareScout business generates positive cash flow, which is projected to be in about five years.

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President and CEO Tom McInerney explained the AXA agreement aligns interests for a maximum recovery and detailed that future CareScout capital needs would be manageable after the initial regulatory funding. CareScout Services CEO Samir Shah added that while breakeven will take a few years, the network already provides significant value through claim savings and is building a strong pipeline with other insurers.

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President and CEO Thomas McInerney, along with another executive, detailed that CareScout Services already earns revenue from assessments and will generate new revenue by sharing in provider discounts. McInerney confirmed the U.K. court case is set for March. CFO Jerome Upton stated the $75 million for the new insurance entity will be funded from existing holding company resources, separate from any potential legal proceeds.

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CEO Ellen Cooper confirmed the strategic focus on higher-margin local markets and supplemental health products. CFO Chris Nezepore added that while macro trends are favorable, Lincoln-specific execution is driving margin improvement, and he expects a 9%+ margin for 2025. Regarding the Life captives, Nezepore stated it is too early to quantify the impact but confirmed it is a key focus for capital deployment, with any financial impact not expected until 2026 at the earliest.

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Chief Financial Officer Christopher Neczypor explained that the projected free cash flow accretion is driven by deploying the new capital into growing spread-based businesses and optimizing the legacy life block, not by anticipated share repurchases. Regarding the Life business, he confirmed that mortality was favorable compared to expectations but did not provide a specific dollar amount, instead directing analysts to previously released outlook materials for seasonality context.

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CFO Chris Neczypor explained that the improved 2026 free cash flow outlook is driven by a mix shift to the high-conversion Group business, capital efficiency from the new Bermuda reinsurer, and optimizations in legacy blocks. He noted the lower leverage target reflects greater confidence in equity growth. Regarding capital deployment, Neczypor stated that returning to share repurchases is a priority, contingent on achieving sustainable free cash flow and the new leverage targets.

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Kamal Bhatia, President & CEO of Principal Asset Management, attributed outflows to client rebalancing away from well-performing areas like REITs and some reallocation to non-traditional assets. Amy Friedrich, President of Benefits & Protection, noted the dental market remains competitive on new sales but is seeing some competitors raise renewal rates. She expects the dental loss ratio pattern to improve in the second half of the year, consistent with prior years.

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CEO Deanna Strable and Executive Kamal Bhatia addressed asset management, noting a material improvement in the pipeline with higher-fee mandates and increased RFP activity, which is strengthening business fundamentals. For retirement, Executive Christopher Littlefield stated that hardship withdrawals and loan rates have not seen a significant increase and remain stable. He clarified that while the dollar amount of withdrawals rises with market values, the underlying withdrawal rate has stabilized as expected.

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CEO Deanna Strable and President of Asset Management Kamal Bhatia stated they are optimistic about the Chilean reform, noting it reaffirms the defined contribution system. Regarding private assets in 401(k)s, President of Retirement and Income Solutions Christopher Littlefield sees significant potential but noted regulatory hurdles and liquidity issues need to be addressed, expecting innovation in target-date funds over the next 1-2 years.

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Executive Kamal Bhatia highlighted the strength of the global model, pointing to strong net inflows in Principal International that offset PGI outflows. He specified that PGI outflows were concentrated in public institutional mandates. Regarding performance fees, Bhatia reported $6 million in Q3 and noted that while a normal year might see $30-35 million, the current real estate cycle is different. He expects improvement in 2025 but not a rapid ramp-up, highlighting long-term potential from private credit.

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CEO Gary Bhojwani explained that the DTC momentum is expected to continue long-term, driven by a successful pivot to web and digital, which now comprise nearly a third of DTC sales. Regarding Medicare Supplement, he differentiated CNO's business by its captive agent distribution, premium-funded underwriting model with annual repricing, and lower regulatory risk compared to Medicare Advantage, which CNO only distributes.

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CEO Gary Bhojwani expects a D2C sales bounce-back but noted a broader media shift from broadcast TV to digital could temper it. He highlighted that web/digital channels now drive 36% of D2C sales. He also expressed optimism for continued growth in producing agent count, citing a strong career model that has delivered nine consecutive quarters of growth.

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CFO Paul McDonough stated that while specifics on Bermuda opportunities could not be shared, CNO is actively evaluating ways to leverage its established platform. On annuities, he noted surrender rates have moderated from their peak and stabilized. CEO Gary Bhojwani expressed a bullish long-term outlook for annuity sales, driven by favorable demographics and client needs, while cautioning that tough year-over-year comparisons could create quarterly headwinds.

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CFO Paul McDonough explained that while it's difficult to provide a specific sustainable run-rate for free cash flow due to many variables, the underlying business generates a very healthy level, and a more detailed outlook for 2025 will be given in February. Executive Eric Johnson addressed interest rates, stating that floating-rate assets are largely matched with floating-rate liabilities, resulting in no noticeable impact on the income statement from recent short-term rate changes.

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CEO Andy Sullivan explained that capital deployment is under continuous evaluation to optimize the balance sheet and cash flows, and plans will evolve with market changes. Regarding PGIM, he reiterated confidence in the long-term 30% margin target, attributing near-term pressure to market volatility and seasonality, but noted that maturing investments, market recovery, and expense discipline will drive future margin expansion.

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CFO Yanela Frias stated that capital deployment will remain balanced between financial strength, business investment, and shareholder returns, with the buyback level subject to market opportunities. Regarding the PRT lawsuit, Head of U.S. Businesses Caroline Feeney-Pfundstein asserted that while such litigation is harmful to the industry, Prudential is not a named party and she expects a continued active pipeline due to strong pension funded statuses and favorable market conditions.

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Rob Falzon, Vice Chairman, stated that Prudential has an active pipeline for Prismic and would be disappointed not to announce another transaction by year-end, with a potential focus on a back-book deal in Japan. Chairman and CEO Charlie Lowrey elaborated on capital deployment, emphasizing a disciplined approach focused on maintaining a strong balance sheet, investing in business growth, and returning excess capital to shareholders, noting over $700 million was returned in the quarter.

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Vice Chairman Rob Falzon confirmed that both Prudential and its Prismic investors aim to grow the platform significantly beyond the initial $10 billion transaction, noting an active pipeline of insurance deals. He stated they would be disappointed if another transaction wasn't executed before year-end. Chief Financial Officer Yanela Frias explained that changes in short-term rates have a minimal net impact on earnings due to offsetting derivative and collateral positions. She added that higher long-term rates have been a tailwind for portfolio yields.

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Chief Financial Officer Steven Zabel explained that disability incidence rates were high in January but normalized as the quarter progressed, and while he did not comment on April, he expects the benefit ratio to improve. President and CEO Richard McKenney added that while submitted claims can rise in a recession, paid claims do not necessarily follow, as the policies are not designed to be economically sensitive.

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CFO Steven Zabel attributed the premium growth variance to normal seasonality and affirmed confidence in the 4-7% growth outlook for 2025. Tim Arnold, head of Colonial Life, explained the expected 2025 sales resurgence is based on strong adoption of the Gather platform, new agent productivity tools, a 12% increase in Q4 new agent recruiting, and the appointment of a new, execution-focused sales leader.

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CFO Steve Zabel attributed the premium growth variance to normal quarterly fluctuations rather than a specific issue, expressing confidence in the 2025 outlook. Tim Arnold, Head of Colonial Life, explained the 2025 sales resurgence is expected due to strategic investments in platforms like Gather, strong agent recruiting (up 12% in Q4), and the appointment of a new, execution-focused SVP of Sales.

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Tim Arnold, head of Colonial Life, attributed the sales headwinds to execution issues in existing client sales, noting a new sales leader is in place to drive improvement. He highlighted strong new sales growth. CFO Steven Zabel explained that the supplemental and voluntary benefit ratio volatility is normal due to the mix of products, suggesting a quarterly earnings run rate around $120 million is a reasonable historical indicator.

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CFO Walter Berman projected that consolidated G&A expenses would be 'flattish' for the full year, balancing transformation savings with investments and activity-related growth. Chairman and CEO Jim Cracchiolo commented that despite increased market volatility in April, client behavior has remained consistent with no dramatic shifts observed, as the firm continues to encourage a long-term investment focus.

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Executive Jim Cracchiolo commented that while January is a difficult month to predict trends from, wrap flows looked consistent with Q4. Executive Walter Berman affirmed that the 29% AWM margin achieved in the fourth quarter is a reasonable expectation going forward.

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CFO Walter Berman clarified the flattish G&A outlook applied to both 2024 and 2025, though 2025 would have a lower level of severance costs. Regarding the bank, he explained that while some income will come down, the portfolio has been repositioned with a longer duration and floating-rate assets are earning a large premium, which will help preserve net interest income.

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CFO Elias Habayeb confirmed that 2025 EPS growth could indeed be less than 10%, but highlighted offsetting growth drivers like fee income and underwriting margins. He also clarified the baseline EPS should be normalized for both notable items and VII performance. CEO Kevin Hogan noted that while no new targets are set, the company sees further efficiency opportunities by digitizing finance and actuarial functions.

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CFO Elias Habayeb clarified that the portfolio's rate sensitivity is distinct from the actively managed macro hedges. He affirmed the focus on growing both earnings and EPS through various levers, despite short-term rate sensitivities. CEO Kevin Hogan added that the strength across all business segments provides diversification against the spread impact, supporting overall growth.

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CFO Elias Habayeb explained that the Bermuda strategy is a tool to efficiently fund growth, which in turn drives higher long-term earnings and distributable cash flows, while maintaining focus on optimizing the balance sheet. President and CEO Kevin Hogan added that Corebridge looks forward to welcoming Nippon Life as a supportive, value-aligned investor and will explore opportunities after regulatory approvals are complete.

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Executive Theodore Hanson stated that while ASGN is bullish long-term, near-term improvement depends on client confidence, which is tied to economic factors like interest rates and elections. He confirmed that Commercial Consulting growth is stable at low single-digits, and a solid book-to-bill ratio of 1.1x indicates future growth is a matter of 'when,' not 'if.'

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