Reinsurance Timeline
Q: How long for reinsurance execution?
A: Management expects reinsurance initiatives to restore the target RBC range within 6–12 months, with several measures potentially coming online sooner.

Free Cash Flow Outlook
Q: What’s the free cash flow post-initiatives?
A: They noted that historically, free cash flow averages just under $400 million annually, though volatility remains and updated guidance is pending.

Capital Shoring
Q: Why not deploy capital and adjust buybacks?
A: They maintain a robust liquidity position of $1.2 billion and see no need to change the current buyback pace given strong cash buffers.

Hedging Strategy
Q: Are hedging methods for Shield and VA changing?
A: Management is implementing new hedging initiatives to reduce volatility—for example, mitigating a $250 million impact—while continuing to refine risk management.

RBC Volatility
Q: Was the RBC decline unexpected and risk further drops?
A: About 70% of the statutory loss was unanticipated, and while market volatility persists, management is making tactical adjustments to shore up capital.

Basis Risk Outlook
Q: Will basis risk continue to drag results?
A: They see basis risk as a volatile, quarter‐to‐quarter issue with no clear long‐term trend in either direction.

Capital Consumption
Q: How are new Shield sales affecting capital use?
A: The shift from Shield as a capital generator to a capital consumer is increasing capital usage, prompting targeted efficiency initiatives.

Internal Reinsurance
Q: Is internal reinsurance part of the plan?
A: They already benefit from their captive reinsurance structure and are leveraging external market options to enhance capital efficiency.

Liquidity Position
Q: What is the holding company’s liquidity target?
A: The company is comfortable with its $1.2 billion cash cushion, adjusting liquidity targets based on situational factors.

Floating Rate Exposure
Q: How sensitive are floaters if rates drop?
A: Their floating rate assets are well-matched to short-term liabilities, so any net margin impact from declining rates should be minimal.

External Partnerships
Q: Are there external partners for LPP capital ease?
A: While no specific external asset management partnerships for LifePath Paycheck are planned, management remains open to future opportunities.

BlackRock Flows
Q: What is the outlook for BlackRock deposits?
A: Deposits via BlackRock’s LifePath Paycheck are expected to be lumpy—with very little in Q3 and increased activity in Q4.

Corporate Expenses
Q: Will higher later expenses be seasonality-driven?
A: The anticipated uptick in expenses in the latter half is primarily due to seasonality, with disciplined cost control still in place.