Ryan Krueger

Ryan Krueger asked about the key drivers behind the strong Asia sales performance, the extent to which this momentum can continue, and the expected magnitude of expense seasonality in the fourth quarter.

Answer

Lyndon Oliver, Regional President of MetLife Asia, attributed strong Asia sales to new product launches (single premium FX Life, Yen Variable Life) and enhancements (single premium FX Annuity) in Japan, combined with distribution strength. He also noted strong performance in Korea and China, expecting momentum to continue. Michel Khalaf, CEO of MetLife, stated that while Q4 has some seasonality, the direct expense ratio is expected to be well below the 12.1% target for the full year, driven by belt-tightening and technology investments, including their proprietary AI platform, MetLife MetIQ.

Ryan Krueger from KBW asked for an estimated magnitude of MetLife's typical expense seasonality in the fourth quarter.

Answer

Michelle Khalaf, CEO of MetLife, stated that despite typical Q4 seasonality, the company expects to finish the year well below its 12.1% direct expense ratio target. She cited early-year belt-tightening efforts and significant investments in technology, including the proprietary AI platform MetLife MetIQ, as key drivers for productivity gains and efficiencies.

Ryan Krueger requested more detail on the drivers behind the strong sales growth in Japan and Korea and asked whether retirement spreads are expected to remain stable in the second half of the year.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods (KBW) requested more detail on the strong sales performance in Japan and Korea and its sustainability. He also asked for the outlook on retirement spreads for the second half of the year.

Answer

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.

Ryan Krueger asked a high-level question about whether the current uncertain environment is causing changes to MetLife's capital management or expense strategy. He also inquired about the drivers of Group Benefits PFO growth, which was at the low end of the target range.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods inquired about the competitive and pricing environment for 1/1 Group Benefits renewals and the potential impact of competitor lawsuits on the Pension Risk Transfer (PRT) market.

Answer

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.

Ryan Krueger asked if the projected stabilization of RIS investment spreads in Q4 would extend into 2025 and requested any early insight into fourth-quarter variable investment income (VII).

Answer

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.

Ryan Krueger asked about the statutory side of the Long-Term Care (LTC) assumption review, seeking color on the moving parts, how changes impacted statutory reserves, and the offset from future premium rate actions. He also inquired about the rationale for keeping $200 million of capital in Fairwind, rather than upstreaming it, following the LTC transaction.

Answer

Chief Financial Officer Steve Zabel explained that the assumption adjustments, including future rate increase adjustments, flowed through to the protections in Fairwind (80% of the block) without impacting reported statutory reserving levels. For the 20% of the block in the Tennessee company, updates around interest rates and hedging had a slight impact, but overall statutory impacts are expected to be de minimis with no capital plan changes. Regarding the Fairwind capital, Mr. Zabel clarified that upstreaming was never a stated intent, and the current view is to leave it in Fairwind, considering it the prudent thing to do given the $2 billion in protections.

Ryan Krueger from KBW inquired about the statutory impact of the Long-Term Care (LTC) assumption review, seeking details on how changes and future premium rate actions affected statutory reserves, particularly within the FairWind and Tennessee blocks. He also asked for clarification on the decision to retain $200 million of capital within FairWind post-LTC transaction.

Answer

CFO Steve Zabel explained that for the 80% of the LTC block in FairWind, assumption adjustments flowed through protections without impacting reported statutory reserving levels. For the 20% in the Tennessee company, a slight, de minimis impact on statutory reserves is expected in Q4. Regarding FairWind capital, Zabel clarified that Unum Group's current intent is to keep the $200 million within FairWind, citing robust protections and prudence.

Asked about the reasons for higher persistency where more plans are staying with existing carriers, and whether the abnormal long-term care (LTC) mortality in the quarter could be part of a broader trend of improving mortality.

Answer

Management attributed higher persistency to the incumbent carrier advantage and a market focus on integrated capabilities over just price. This trend is visible across group, voluntary, and international segments. The lower LTC claimant mortality was attributed to the random, low-value nature of claims that terminated in the quarter, and is considered an aberration rather than a new underlying mortality trend.

Ryan Krueger asked for more detail on the trend of disability incidence rates throughout the first quarter and into April, and also inquired about Unum's view on the economic sensitivity of disability claims.

Answer

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.

Ryan Krueger asked about the deceleration in Unum US premium growth during 2024 and the key drivers for the expected sales turnaround at Colonial Life in 2025.

Answer

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.

Ryan Krueger asked about the deceleration in Unum U.S. premium growth during 2024 and the drivers of its expected re-acceleration in 2025. He also sought color on the expected sales turnaround for the Colonial Life segment.

Answer

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.

Ryan Krueger from KBW asked about the drivers of sales growth challenges at Colonial Life and the potential for improvement in 2025. He also inquired about the elevated benefit ratios in the supplemental and voluntary lines.

Answer

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.

Ryan Krueger asked about client cash held in non-Ameriprise products, inquiring if any movement has been observed as the Fed enters another cutting cycle, or if it has remained stable. He also requested an update on the rollout of the Signature Wealth platform.

Answer

EVP and CFO Walter Berman and Chairman and CEO Jim Cracchiolo stated that client cash in non-Ameriprise products has remained stable, noting that small rate cuts haven't fundamentally changed behavior yet, but adjustments might occur as people rethink based on markets and fixed income. Jim Cracchiolo reported that the Signature Wealth platform launch is going very well, with advisors liking it, attracting new assets, and converting existing ones, calling it one of their best launches in early stages.

Ryan Krueger asked for an outlook on G&A expenses for the rest of the year, following a 5% decline in the first quarter. He also requested commentary on client behavior in April, specifically regarding transactional activity and new money deployment.

Answer

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.

Ryan Krueger of KBW followed up on strong wrap flow trends, asking if the 8% organic growth rate seen in Q4 continued into January, and questioned if the 29% AWM margin was a reasonable go-forward expectation.

Answer

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.

Ryan Krueger sought clarification on whether the 'flattish' G&A expense outlook was for 2024 or 2025 and asked how the bank's spread income could remain stable given its floating-rate assets and expected rate cuts.

Answer

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.

Ryan Kruger followed up on the expectation for performance fees in the fourth quarter, asking if anything had changed regarding their modesty.

Answer

Kamal Bhatia (President, Asset Management) stated that performance fees are still expected to be at similar levels to 2024, but noted a slight 10%-20% uptick in transaction and borrower fee activity year-over-year, though still below long-term potential. CEO Deanna Strable highlighted the 5% increase in management fees year-over-year as a key business momentum driver.

Ryan Kruger asked about changes in investor sentiment and appetite for Principal Asset Management's focus areas, the pipeline outlook, and whether performance fees are still expected to be modest in Q4.

Answer

President Kamal Bhatia reported strong positive net cash flow, particularly from non-affiliated long-term mandates in private markets, and noted growth across global institutions, U.S. retail, and active ETF businesses. He highlighted momentum in real estate and emerging market fixed income. Performance fees are expected to be similar to 2024 levels, with an uptick in transaction and borrower fees.

Ryan Krueger from Keefe, Bruyette & Woods (KBW) asked for more color on the elevated withdrawals in Investment Management that are offsetting strong gross sales. He also inquired about top-line and loss ratio trends in the dental insurance business.

Answer

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.

Ryan Krueger of KBW inquired about client behavior and pipeline trends in the asset management business due to market volatility, and also asked about participant hardship withdrawal rates in the retirement segment.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods inquired about the impact of Chile's recent pension reform and the industry trend of integrating private assets into 401(k) plans.

Answer

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.

Ryan Krueger of KBW asked for perspective on the net outflows in Principal Global Investors (PGI), noting that while gross inflows have improved, withdrawals have also increased. He also requested an outlook for PGI performance fees in the fourth quarter.

Answer

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.

Ryan Krueger requested more details on the 2026 guidance, specifically regarding administrative expenses and excess Net Investment Income (NII) growth. He also sought confirmation on the buyback assumptions for 2026.

Answer

Co-CEO Matthew Darden stated that administrative expenses are expected to remain stable at around 7.3% of premium in 2026. CFO Tom Kalmbach projected net investment income to be up around 3% and required interest closer to 4%. Co-CEO Frank Svoboda confirmed that the buyback assumption is the $600 million-$700 million of free cash flow minus the $85 million dividend, spread out over the year. He also noted an anticipated decrease in financing costs for 2026 due to floating rate exposure on CP balances and term loans, following economist forecasts for short-term rates.

Ryan Krueger requested more details on Globe Life's 2026 guidance, specifically regarding administrative expenses and excess Net Investment Income (NII) growth. He also sought confirmation on the assumption for share buybacks, expecting it to be the $600-$700 million free cash flow minus the $85 million dividend.

Answer

Matthew Darden, Co-CEO, stated that administrative expenses are expected to remain stable at around 7.3% of premium in 2026. Tom Kalmbach, EVP and CFO, projected net investment income to be up around 3% and required interest closer to 4%. Frank Svoboda, Co-CEO, confirmed that the buyback assumption is indeed the total excess cash flow minus the dividend, spread out over the year. Svoboda also noted an anticipated slight decrease in financing costs for 2026 due to floating rate exposure on CP balances and term loans, following economist forecasts for short-term rates.

Ryan Krueger of KBW inquired about the potential free cash flow conversion rate following the establishment of the Bermuda entity, suggesting a 60% level, and sought to confirm the timing for when these benefits would begin to emerge.

Answer

Executive VP & CFO Thomas Kalmbach and Co-Chairman & Co-CEO Frank Svoboda agreed that the math for a 60% conversion rate was reasonable but emphasized that plans are not yet finalized. They confirmed the current expectation is for benefits to start emerging in 2027, with more definitive guidance to be provided on future calls after plans are approved.

Ryan Krueger of KBW sought to clarify the potential free cash flow conversion rate following the establishment of the Bermuda entity, suggesting it could approach 60%, and confirmed that the financial benefits are expected to begin emerging in 2027.

Answer

Executive VP & CFO Thomas Kalmbach agreed that the analyst's math on the potential conversion rate was reasonable, though final figures are not yet determined. Co-Chairman & Co-CEO Frank Svoboda confirmed that achieving a higher conversion rate around 60% is a goal and that the Bermuda entity could be a key enabler. He also affirmed the 2027 timeline for initial benefits.

Ryan Krueger of Keefe, Bruyette & Woods (KBW) asked about the potential free cash flow conversion rate following the establishment of the Bermuda entity, suggesting it could reach around 60%. He also sought to confirm that the financial benefits from this initiative are expected to begin emerging in 2027 and beyond.

Answer

Executive VP & CFO Thomas Kalmbach acknowledged the math was in line with their thinking but noted it was too early to finalize a specific conversion rate. Co-Chairman & Co-CEO Frank Svoboda added that reaching a 60% conversion rate is a goal and the Bermuda entity could help achieve it, providing significant capital flexibility. Management confirmed that benefits are currently expected to start emerging in 2027, with more details to come after the business plan is finalized.

Ryan Krueger asked for the full-year free cash flow expectation for 2025 and clarification on the key moving pieces for cash flow in the following year.

Answer

CFO Thomas Kalmbach reaffirmed the full-year excess cash flow guidance of $785 million to $835 million. Co-CEO Frank Svoboda identified the key moving pieces for the next year as the absence of a reinsurance benefit and a lower impact from valuation manual changes, offset by business growth. He estimated a go-forward run rate for excess cash flow in the $500 to $600 million range.

Ryan Krueger from KBW asked about the reasons for elevated administrative expenses in the quarter, the outlook for these costs in 2025, and whether there are any associated costs or further opportunities related to the recent reinsurance transactions.

Answer

CFO Thomas Kalmbach attributed higher admin costs to increased employee, technology (SaaS), and legal expenses. Co-CEO Frank Svoboda elaborated that significant IT investments in data analytics, cloud migration, and digital customer experience are key drivers. For 2025, they expect admin expenses to remain around 7.4% of premium. Kalmbach stated there are no significant costs to consider from the reinsurance deals and that the company will continue to evaluate reinsurance as a capital and risk management tool.

Ryan Krueger of Keefe, Bruyette & Woods (KBW) questioned the day-one balance sheet implications of the upcoming hedging strategy change, asking if it was a major overhaul or a more minor adjustment.

Answer

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.

Ryan Krueger asked about the intended benefits of the hedging strategy changes and how the VA hedge program performed during the market volatility in April.

Answer

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%.

Ryan Krueger inquired if Brighthouse is looking to do more in-force reinsurance deals, potentially including SUL liabilities, and whether the 'stable RBC' outlook already contemplates future changes to hedging and upcoming regulatory capital requirements.

Answer

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.

Ryan Krueger of KBW asked for clarification on why the in-force block is still having a negative impact on the RBC ratio and sought more color on potential in-force reinsurance opportunities beyond the one expected to close by year-end.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods (KBW) sought clarification on the ISP sales outlook, noting that the full-year guidance for growth "above 10%" seems conservative given the over 20% growth in the first half. He also asked for an update on Term Life lapse rate trends.

Answer

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.

Ryan Krueger asked about the striking dynamic between pressure on Term Life sales and extremely strong Investment and Savings Products (ISP) sales, and questioned if the full-year ISP outlook implies ongoing headwinds.

Answer

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.

Ryan Krueger from Keefe, Bruyette & Woods asked about the sustainability of Primerica's strong recruiting momentum after a discounted fee promotion ended and sought clarification on the basis for the updated expense guidance.

Answer

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.

Ryan Krueger sought clarification on the use of captives for fixed annuity sales, asking if it would involve a new reinsurer separate from Brook Re. He also asked if Jackson would consider becoming a third-party reinsurer for spread-based business in the market.

Answer

CFO Don Cummings confirmed that using captives for spread business would likely involve establishing a new, separate reinsurance entity, either domestically or offshore. He clarified that while they might use Brook Re for M&A, it would be to acquire complementary blocks like life insurance, not to enter the third-party reinsurance market for spread business.

Ryan Krueger of Keefe, Bruyette & Woods sought clarification on the use of captives for fixed annuity sales, asking if this would involve a new reinsurer separate from Brook Re. He also asked if Jackson's diversification strategy included acting as a third-party reinsurer for spread-based business in the market.

Answer

CFO Don Cummings confirmed that managing fixed annuity strain would likely involve establishing a new, separate captive reinsurer, potentially offshore or domestic. Regarding reinsurance strategy, Cummings clarified that while they might use Brook Re to acquire complementary blocks like life insurance, it would likely not be used to reinsure spread-based business from third parties.

Ryan Krueger of Keefe, Bruyette & Woods followed up on the use of captives for fixed annuity sales, asking if it would involve a new reinsurer separate from Brookree. He also asked if Jackson would consider becoming a third-party reinsurer for spread-based business in the market.

Answer

CFO Don Cummings confirmed that managing fixed annuity strain could involve setting up a new, separate captive reinsurer, either domestically or offshore. Regarding reinsurance, Mr. Cummings clarified that while they might use Brookree to acquire complementary blocks like life insurance, it would likely not be used to reinsure spread-based business from third parties.

Ryan Krueger requested an update on the market stress scenarios, particularly involving interest rates and prolonged volatility, that could necessitate a capital contribution to the Brooke Re subsidiary.

Answer

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.

Ryan Krueger asked for more color on the components driving the $200 million capital increase at the Brooke Re captive reinsurer and questioned the decision to maintain the existing long-term lapse assumption despite recent adverse results.

Answer

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.

Ryan Krueger of Keefe, Bruyette, & Woods requested more quantification on the year-to-date capital movement at the Brooke Re captive. He also asked for details on the consistent negative impact from policyholder behavior seen in the market risk benefits (MRB) roll forward.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods asked about the voluntary benefits business, questioning if the loss ratio is still expected near 50% for the second half of 2025 and seeking an explanation for the recent decline in voluntary premiums.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods questioned the sustainability of Voya's Q1 Wealth Solutions margin and the rationale behind increasing reserves for the Voluntary business.

Answer

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.

Ryan Krueger asked for perspective on 2025 Wealth Solutions net flows, particularly the potential for volatility from the OneAmerica acquisition. He also sought clarification on the Stop Loss claims completion percentage after including January data.

Answer

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.

Ryan Krueger inquired about the underlying claim trends driving adverse Stop Loss results and the loss inflation assumptions for the 2024 book. He also asked if Voya expects the loss ratio to return to its target range in 2025 following repricing actions.

Answer

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.

Ryan Krueger of KBW inquired about the earnings growth outlook for the Individual Retirement segment beyond the Q3 baseline, considering the runoff of higher-margin legacy RILA business and the size of that older block.

Answer

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.

Ryan Krueger from Keefe, Bruyette & Woods asked for a quantification of the impact from seasonal expenses and lower fee days, and inquired about the strategy for the leverage ratio concerning incremental buybacks.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods inquired about the strategic purpose of the new Bermuda reinsurance entity and Equitable's stance on a potential C-Corp conversion for AllianceBernstein.

Answer

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.

Ryan Krueger asked for an update on the expected flow timing for the BlackRock LifePath Paycheck product in the fourth quarter. He also inquired about potential earnings noise from timing differences between floating-rate assets and liabilities, especially following a potential Fed rate cut.

Answer

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.

Ryan Krueger inquired about the sustainability of the strong cancer insurance sales in Japan following the new 'MiRyto' product launch and sought more detail on the drivers of the apparent step-up in Japan's net investment income.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods inquired about the sustainability of the strong cancer insurance sales in Japan following the launch of the new MiRyto product and asked for color on the drivers behind the increase in Japan's net investment income.

Answer

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.

Ryan Krueger asked for more detail on the offsets to yen sensitivity that make Aflac more economically insensitive on a consolidated basis. He also followed up on third-sector Japan sales, asking if a meaningful surge should be expected in Q2 from the new cancer product launch.

Answer

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.

Ryan Krueger asked if the Japan benefit ratio would improve from original expectations going forward due to the recent assumption unlock. He also requested the run-rate earnings expectation for the Corporate segment, excluding tax credit impacts.

Answer

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.

Ryan Krueger from Keefe, Bruyette & Woods asked for clarification on the value of in-force credit, specifically if it involved any borrowing. He also asked if the high-profile transactions RGA chose not to pursue had already been publicly announced.

Answer

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.

Ryan Krueger asked for color on the increase in capital sources within the deployable capital disclosure and inquired about the progress in getting the value of in-force (VIF) business recognized as a capital source by rating agencies.

Answer

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.

Ryan Krueger asked about the increase in capital sources and the inclusion of value of in-force with rating agencies.

Answer

CFO Axel André attributed the increase to rolling forward earnings and model updates. He noted RGA's track record of securitization and ongoing dialogue with rating agencies.

Ryan Krueger questioned the new 'deployable capital' definition, seeking confirmation that rating agencies have approved the approach and asking if the full $1.7 billion could be deployed. He also asked how much future in-force deal activity was assumed in the updated earnings run rates.

Answer

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.

Ryan Krueger asked how far along RGA is with its balance sheet optimization initiatives and sought clarification on the 4-5 year timeline for endemic mortality.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods (KBW) inquired about the AXA Santander lawsuit, focusing on the appeals process, potential timelines, and whether payment would be stayed. He also asked about the use of proceeds, the viability of an Enact spin-off, and the possibility of a settlement to avoid an appeal.

Answer

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.

Ryan Krueger of KBW inquired about the revised litigation agreement with AXA, future capital needs for the new CareScout insurance entity, and the profitability timeline for the CareScout Quality Network.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods inquired about the revenue model and timeline for CareScout Services, the status of the U.K. court case involving AXA, and the funding source for the new CareScout insurance entity's capital.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods (KBW) asked about the sustainability of margin expansion in the Group business, driven by shifts to local markets and supplemental health, and inquired about the potential earnings and free cash flow impact from restructuring Life Insurance captives.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods asked about the key drivers behind the guided 2027 free cash flow per share improvement from the Bain Capital partnership and the extent of favorable mortality in the Life business during the quarter.

Answer

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.

Ryan Krueger asked for details on the decision to raise the 2026 free cash flow outlook, the expected trajectory for 2025, and whether the lower leverage ratio target stems from equity growth or debt reduction. He also inquired about the use of capital above the company's RBC target.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods inquired about the sustainability of momentum in direct-to-consumer (DTC) sales, particularly from web and digital channels, and asked for an analysis of CNO's Medicare Supplement business in light of market-wide softness in other healthcare sectors.

Answer

CEO Gary Bhojwani confirmed that while quarter-to-quarter results will vary, the long-term momentum in DTC is expected to continue, driven by a successful pivot to web and digital channels which now represent nearly one-third of DTC sales. Regarding Medicare Supplement, Mr. Bhojwani differentiated CNO's business by highlighting its unique distribution profile with captive agents, a more stable underwriting risk profile as MedSup is premium-funded with annual repricing, and lower regulatory risk compared to Medicare Advantage, which CNO only distributes.

Ryan Krueger inquired about the sustainability of momentum in direct-to-consumer (DTC) sales, particularly from web and digital channels, and asked for commentary on CNO's Medicare Supplement business in light of industry-wide pressures.

Answer

CEO Gary Bhojwani explained that while quarter-to-quarter results will vary, the DTC momentum is expected to continue, driven by a strong recovery in lead generation and a successful pivot to web and digital channels, which now represent nearly one-third of DTC sales. Regarding Medicare Supplement, he differentiated CNO's business by highlighting its captive agent distribution, its premium-funded model (unlike government-reimbursed Medicare Advantage), annual repricing flexibility, and its role as a distributor, not a manufacturer, of Medicare Advantage products, which mitigates underwriting and regulatory risks.

Ryan Krueger from Keefe, Bruyette & Woods inquired about the sustainability of momentum in direct-to-consumer (DTC) sales, particularly from web and digital channels, and asked for commentary on CNO's Medicare Supplement business in light of industry-wide pressures.

Answer

CEO Gary Bhojwani confirmed strong DTC momentum driven by a successful pivot to web and digital, which now constitutes nearly a third of B2C sales, and expects continued long-term growth. Regarding Medicare Supplement, he differentiated CNO's business by highlighting its captive agent distribution, the premium-funded and re-priceable nature of the product (unlike Medicare Advantage), and lower regulatory risk, which insulates it from the issues affecting other carriers.

Ryan Krueger of Keefe, Bruyette & Woods asked for more color on the momentum in direct-to-consumer (DTC) sales, particularly from web and digital channels, and inquired about the dynamics of the Medicare Supplement business given recent industry headlines.

Answer

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.

Ryan Krueger of Keefe, Bruyette, & Woods questioned the outlook for a rebound in direct-to-consumer (D2C) life sales after headwinds from election ad costs and asked for color on consumer agent recruiting and retention trends.

Answer

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.

Ryan Krueger of Keefe, Bruyette, & Woods, Inc. asked for more details on potential additional Bermuda reinsurance opportunities and for color on fixed annuity surrender rates and sales trends.

Answer

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.

Ryan Krueger inquired about the sustainability of the updated free cash flow guidance for the year and asked about the company's sensitivity to recent short-term interest rate cuts by the Federal Reserve.

Answer

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.

Ryan Krueger asked for clarification on CEO Andy Sullivan's comments about reviewing capital deployment plans and inquired about the timeline for PGIM to reach its 25-30% adjusted margin target.

Answer

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.

Ryan Krueger asked why the 2025 share buyback authorization remained at $1 billion despite capital being freed from recent reinsurance transactions and questioned if a recent lawsuit involving a pension risk transfer (PRT) would impact Prudential's transaction pipeline.

Answer

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.

Ryan Krueger inquired about the current status and potential upcoming activity for Prudential's reinsurance vehicle, Prismic, and asked about the company's strategy for deploying capital freed up from reinsurance transactions.

Answer

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.

Ryan Krueger inquired about the progress of Prudential's reinsurance venture, Prismic, asking for an update on additional transactions and whether one could be expected by year-end. He also asked for a review of the company's earnings sensitivity to short-term interest rates and the contributing factors across different business segments.

Answer

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.

Ryan Krueger from KBW sought further clarification on the 2025 EPS growth outlook, suggesting it could be below 10%, and asked about the potential for meaningful expense efficiencies beyond the current Corebridge Forward program.

Answer

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.

Ryan Krueger of KBW sought clarification on the impact of short-term rates and macro hedges on net yield and asked if Corebridge expects to grow consolidated run-rate earnings in 2025 despite spread pressure.

Answer

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.

Ryan Krueger of Keefe, Bruyette & Woods, Inc. asked whether the Bermuda strategy and other efficiency initiatives could lead to higher growth within the existing payout ratio target or potentially increase the payout ratio itself. He also questioned if there were strategic opportunities with incoming shareholder Nippon Life.

Answer

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.

Ryan Krueger, on behalf of Jeff Silber, asked what trends ASGN is monitoring to become more bullish on the IT spending environment and whether the growth in commercial consulting has bottomed out.

Answer

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.'