Wesley Carmichael • Autonomous Research LLP

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CFO Ed Spehar quantified the mean reversion benefit as approximately $200 million. Head of Product and Underwriting David Rosenbaum noted that while the fixed annuity market is competitive, the company aims to build sales momentum while maintaining pricing discipline. Rosenbaum also explained that annuity outflows are driven by full surrenders as products exit their surrender charge periods, expecting 2025 flows to be at or above 2024 levels. Spehar concluded that the company's three-year plan includes dividends from subsidiaries to the holding company.

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Chief Financial Officer Edward Spehar provided a detailed breakdown of the RBC drivers, attributing a benefit of over $400 million to strategic initiatives like a life reinsurance deal and stand-alone hedging for new Shield business. He noted this was offset by a roughly $350 million negative impact from interest rate movements and a $200 million increase in asset adequacy testing reserves for a legacy fixed annuity block. Spehar confirmed work on the legacy VA/Shield hedging strategy is ongoing and that its completion is necessary before releasing long-term free cash flow projections, which may delay them past the previously targeted mid-year timeframe.

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CFO Ed Spehar stated it was too early to provide details on the legacy block hedging strategy, which is expected to be developed into 2025. He confirmed they would want the strategy 'buttoned up' before providing free cash flow projections. Regarding the Run-off segment, he noted that while the overall underwriting margin was normal, the Run-off segment experienced higher claims, which was offset by favorable results in the Life segment, with no significant change to the run-rate earnings power.

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Chief Financial Officer Christopher Neczypor clarified that the RBC ratio remains comfortably above the 420% target and the disclosure did not signal a material change. Regarding disability performance, he pointed to prior commentary indicating that approximately 100 basis points of the 2024 margin improvement was from the supportive macro environment, suggesting that portion could face pressure in an economic downturn.

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CEO Christopher Blunt stated the equity raise proceeds will be thoughtfully deployed into new business, noting their patience in Q1 has been rewarded with better spreads now. CFO Conor Murphy added the capital was raised at the end of Q1, with deployment occurring in Q2. Regarding the cost of funds, they attributed the rise to temporary factors like lower surrender income and cash yields. Murphy also clarified that within the alts portfolio, the direct lending book outperformed the LP portfolio, and that surrender activity in Q2 is expected to be similar to Q1.

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CEO Christopher Blunt expressed strong optimism for growth, citing secular demand from baby boomers and new distribution partners. CFO Wendy Young added that F&G continues to find solutions to fund this growth. On ROA, Young attributed the sequential dip to prepayments and expects it to rebound in 2025 through active management. Blunt noted the MYGA sales decline was a deliberate capital allocation choice to prioritize higher-return FIA products, not a sign of weakening demand. He also clarified that the leadership changes reflect the need for dedicated focus on the increasingly complex, and opportunity-rich, offshore and regulatory environment.

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CFO Wendy Young explained the assumption review included a minor, short-term update for elevated surrenders and an update for GMWB utilization that creates a one-time charge but reduces future volatility. Regarding Cayman, Young and CEO Chris Blunt emphasized that the entities are managed conservatively on a statutory basis, with all treaties approved by the Iowa regulator, and that the primary difference from onshore is the use of more specific mortality tables, not lower capital requirements. On investments, Blunt stated that new money allocation rotates between public and private assets based on opportunity and that the true alternatives portfolio is around 6%, slightly above the long-term target of ~5%.

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CFO Michael Katz explained that the reported mix between full-service and recordkeeping is a temporary reporting function of the transition period and doesn't alter the deal's economics. CEO Heather Lavallee and Workplace Solutions CEO Jay Kaduson confirmed the acquisition is performing as expected with positive client feedback. Katz attributed the higher spread yield to purchase accounting rules, which elevated the yield calculation without changing the dollar income, and noted that repositioning the general account portfolio will be a gradual process.

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CEO Heather Lavallee reported no surprises with the OneAmerica integration, citing positive feedback from clients and advisers, and confirmed retention is tracking in line with guidance. She stated Voya will remain disciplined but opportunistic regarding future M&A, seeking scale or new capabilities, while also focusing on capital-efficient partnerships. CEO of Investment Management Matt Toms highlighted the Sconset Re deal as an example of a targeted, strategic investment.

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Executive Michael Katz confirmed the $75 million earnings target for OneAmerica is unchanged and already accounts for a lower persistency rate of around 90%, which is protected by a deal earn-out. CEO Heather Lavallee added her excitement about the strategic fit. Regarding EPS, Katz stated it was too early for a specific 2025 guide but highlighted three key drivers: the $75M from OneAmerica, organic growth, and materially improved earnings from the Health Solutions repricing.

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CFO Axel Andre clarified that while a large portion of the Equitable block is not subject to LDTI, reinsurance accounting can provide some claims smoothing. Regarding LTC, Chief Risk Officer Jonathan Porter outlined RGA's disciplined approach, which considers partner quality, risk-return, product design, and maintaining a modest size for any single block. He confirmed RGA did not participate in a recent large industry LTC transaction.

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President and CEO Tony Cheng stated that deployment opportunities are strong across all three major regions—Asia, EMEA, and the U.S.—each driven by different factors. Regarding PRT litigation, he asserted the claims are baseless and that RGA has seen no impact on its pipeline, noting the company had won a new transaction just days prior.

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CFO Axel Andre clarified the weakness was due to a lower origination rate in classic asset-intensive business, not PRT. President and CEO Tony Cheng added that pure asset risk is not RGA's primary sweet spot. Regarding the recapture, Axel Andre stated ~90% of the business is in uncapped cohorts. Chief Risk Officer Jonathan Porter noted the added volatility is modest and can be favorable as well.

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CFO Yanela Frias confirmed the adjusted baseline for the EPS growth target is $13.67. She stated that Prismic's strategy is unchanged and it remains one of several tools for managing risk. Its pipeline is focused on financing new business, balance sheet optimization, and third-party blocks, though she noted these transactions are complex and take time.

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CFO Yanela Frias stated that capital levels in Japan are expected to remain strong post-ESR implementation. Incoming CEO Andy Sullivan noted it was premature to detail his strategy but that the transition is going well. On Japan, Mr. Sullivan explained that while yen appreciation is expected, the business is diversifying into yen products to mitigate surrender risk. On underwriting, Head of U.S. Businesses Caroline Feeney-Pfundstein attributed recent adverse results to episodic large claims and highlighted the successful derisking of the GUL block to improve stability.

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Yanela Frias, Chief Financial Officer, explained the shift to intermediate-term targets is to better align with the long-term nature of the business and will be implemented with Q4 results. Caroline Feeney, Head of U.S. Businesses, described the entry into medical stop-loss as a strategic diversification that will be scaled thoughtfully, expecting it to remain a small portion of the business mix in the near term.

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Chief Financial Officer Yanela Frias clarified that the negative impact in Individual Life was due to lower-than-expected surrender rates on guaranteed universal life policies post-COVID, which will have a small ongoing impact on operating income but is not expected to be meaningful for statutory capital. Controller and Principal Accounting Officer Rob Axel stated that Prudential's real estate group forecasts continued, though smaller, valuation declines for the remainder of the year, indicating the market may not have reached its trough yet.

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CFO John McCallion stated that predicting private equity returns is difficult in the current environment, and as a result, the company plans to provide preliminary information on Q2 VII in early July. Regarding Japan's ESR, he reiterated that MetLife feels good about its operational readiness. He emphasized that since the company has always priced under an economic framework, the new regime does not fundamentally change its operations or its dividend policy expectations for the Japan business.

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Executive Ramy Tadros noted constructive activity in the LTC risk transfer market but stressed that MetLife's own block is well-capitalized and performing as expected. CFO John McCallion clarified that the LTC block is currently a strain on cash flow as liabilities are still growing. Tadros attributed the favorable Group Life trends to improving mortality data for the working-age population, suggesting the full-year 2025 ratio could be in the lower half of guidance if trends persist.

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Executive Nicolas Alain Papadopoulo explained that cedents retaining more risk in well-performing lines like 'other property' is a normal part of the cycle. CFO François Morin stated it is 'too early' to see recessionary indicators in the mortgage portfolio, emphasizing that the book's strong fundamentals, high credit quality, and embedded equity make it resilient.

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Executive François Morin specified that reinsurance reserve releases were almost entirely from short-tail property lines, with casualty being flat. Executive Nicolas Alain Papadopoulo identified public D&O and excess cyber as areas with the most significant margin pressure. Morin explained that about half of the MI delinquency increase was expected and driven by catastrophe-affected areas, which historically have very high cure rates.

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CFO Steven Zabel explained that slightly elevated claim incidents in uncapped cohorts were offset by favorable mortality in capped cohorts, resulting in underwriting profitability meeting expectations. The earnings shortfall was due to lower alternative asset income, which is expected to normalize. He attributed the higher Q1 expense ratio to the timing of investments and incentive costs, which will trend down through the year.

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Chris Pyne, Head of Group Benefits, noted that while the market is competitive, Unum aims for fair, stable pricing over time and expects more normalized persistency in 2025 after a strong 2024. CFO Steve Zabel stated that while Unum is pleased with the LTC rate increase progress, the pace may slow, and a 3-to-5-year timeline is still reasonable. He did not rule out future rate increase programs, stating it depends on the block's emerging experience.

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Chris Pyne, head of Group Benefits, noted that while 2024 persistency was strong, he expects more normalized levels in 2025 as more cases come to market, but Unum's value-added solutions support stable, fair pricing. Regarding LTC, CFO Steven Zabel confirmed the rate increase program is over 50% complete, ahead of schedule due to large state approvals. However, he cautioned that the future pace would likely be slower and that decisions on new programs depend on emerging block experience.

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CFO Steven Zabel stated that the current level of operating performance and recoveries in group disability is sustainable, with a 60% benefit ratio being a good ongoing expectation, subject to market pricing dynamics. Regarding LTC, Zabel confirmed that elevated incidence has continued to dissipate, though at a slightly slower pace, giving them confidence in their existing long-term assumptions.

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CFO Paul McDonough stated CNO is inclined to 'lean in' on buybacks, citing $250 million in holdco liquidity against a $150 million minimum. He explained that the Medicare Advantage fee income decline was an accounting issue under ASC 606, where a sales mix shift to newer carriers required a temporary constraint on revenue recognition despite a 42% increase in policies sold. He expects this to reverse over time.

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CFO Paul McDonough explained that the 10% run-rate ROE for 2024 adjusts for outperformance in LTC, supplemental health, and other annuities, where experience was at the high end of expectations; 2025 guidance assumes a reversion to the mean. CEO Gary Bhojwani noted that while recently refreshed products have seen good demand, he does not anticipate major new product launches in the next 2-3 years as the company prioritizes the technology modernization initiative.

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CEO Gary Bhojwani explained that the D2C advertising pullback is typical for an election cycle and that spending will increase once ad costs normalize, likely in the next one to two quarters. He also highlighted a strategic shift, with 30% of D2C leads now coming from non-TV sources. CFO Paul McDonough stated that the current period's annuity margin is fairly reflective of the run rate after accounting for recent assumption changes related to surrenders.

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CEO Deanna Strable and Executive Amy Friedrich explained that lower sales were due to a tough comparison with a new PFML market in the prior year and disciplined pricing actions on dental. Friedrich expects the full-year 2025 loss ratio to improve over 2024. On VII, Interim CFO Joel Pitz stated that performance was pressured by lower hedge fund returns and expects most real estate transactions, a key VII driver, to occur in the latter half of the year, with the outlook dependent on market conditions.

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Executive Amy Friedrich stated that the current earnings run-rate for the Life segment is a good baseline and that ongoing impacts from the actuarial review are already embedded in Q3 results. President and COO Deanna Strable-Soethout explained that Q3 VII was pressured by negative private equity returns. She expects continued pressure but a gradual ramp-up, noting VII has improved in 2024 versus 2023.

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CEO Kevin O'Donnell stated that it would be 'false precision' to provide a timeline for subrogation or recoupment, as the underlying regulatory and investigative processes are complex and in early stages. To contextualize the ROE potential, he noted that if the Q1 catastrophe losses had occurred in Q4 2024, the company's full-year 2024 ROE would still have been above 15%, demonstrating the portfolio's strong underlying earning power.

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Daniel Frey, CFO, confirmed the favorable development was almost entirely driven by workers' compensation, with no other significant offsetting movements. On capital management, Mr. Frey stated the philosophy is unchanged. He noted Q1 buybacks were moderated due to the California wildfires but expects to continue repurchasing shares over time to manage excess capital, rather than timing short-term market moves.

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CFO Janice Hamilton declined to break out the individual components of the margin guidance but noted M&A benefits would merge into underlying margin expansion over time. CEO Tim Turner added that new business flow is very strong, led by firm casualty markets like transportation and construction, a rebound in professional liability, and 'fabulous' performance in binding and programs.

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CEO Kevin Hogan explained that while the company will provide a heads-up on known large account losses, recent outflows were primarily lower-margin mutual fund assets. He also stated that Blackstone managed approximately $69 billion in assets at year-end and originated nearly $4.5 billion in Q3 with a coupon of just under 6.6%.

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CFO Elias Habayeb noted that while the initial reception for the RILA product is very strong, the company is not providing specific 2025 targets yet. Regarding Bermuda, he described it as a key part of the capital management toolkit, currently focused on supporting new business, but with future potential for portfolio transactions or attracting third-party capital to enhance shareholder returns.

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President and CEO Kevin Hogan clarified that the cost of funds on new business is already higher than the in-force portfolio. He expressed confidence that demand for fixed and fixed index annuities will remain strong, as current crediting rates are attractive for long-term savings. Regarding distribution, Hogan stated that Corebridge is already on the shelf of every major distribution firm and highlighted recent strength in the broker-dealer channel, including wirehouses.

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CFO Max Broden stated that while underwriting has been favorable, remeasurement gains may be less significant going forward as claims utilization normalizes. Virgil Miller, President of Aflac U.S., described the recruiting environment as competitive but affirmed their goal of recruiting around 10,000 agents annually, leveraging compensation plans and strong broker partnerships.

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Koichiro Yoshizumi explained the dual strategy is to use reinsurance to ensure profitability on first sector products while using them to drive new third sector sales. EVP and CFO Max Broden added that due to Japan's aging society and focus on asset management, retirement products like Tsumitas will become a more meaningful part of the portfolio, but Aflac will remain a predominantly third sector company.

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CFO Mark Kociancic indicated that while there is no formal guidance, overall growth will be lower than in prior years due to casualty discipline, though the international insurance business is expected to continue its strong growth. He affirmed that the A+ financial strength rating is 'fundamental' and 'secure,' and while the S&P negative outlook is respected and will be managed, it is not a major concern.

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Executive James Williamson stated that while social inflation is not abating, he wouldn't say it's accelerating, and their conservative loss picks are built to thrive in the current environment. Regarding guidance, he explained the decision was straightforward: the time spent on detailed guidance has not created shareholder value, and he believes direct, plain-spoken transparency on results is a more constructive approach.

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