Commercial Mortgage Loan Maturities
Q: How are you managing upcoming commercial mortgage loan maturities?
A: We have about $3 billion in office loans within our commercial mortgage loan portfolio. For the 11 loans maturing in 2024, we see no issues at this time. These loans have a 66% loan-to-value, a 3.8x debt service coverage ratio, and 94% occupancy with an average lease term remaining of 5.6 years. We're closely monitoring a small portion, about $200 million, but overall, the portfolio is in good shape.

Alternative Returns Outlook
Q: Do you expect alternative investment returns to be softer?
A: While our run-rate return for the portfolio is 8% to 8.5%, we achieved 6% to 7% in 2023 due to lower prepayments and real estate transactions. Given current conditions, we might run below expectations in the near term, but we see a path to reaching our run-rate basis late in 2024 or into 2025.

Real Estate Activity Expectations
Q: What are your expectations for real estate activities in 2024?
A: We are cautiously optimistic about real estate flows in 2024. We have a strong $6 billion real estate pipeline and see opportunities to deploy around $1 billion in private debt and growth areas like data centers. Investor interest is increasing in specialty fixed income and small to mid-cap equities.

Pension Risk Transfer Sales and Bermuda Subsidiary
Q: What's the outlook for pension risk transfer sales, and how does the Bermuda subsidiary impact growth?
A: We achieved $2.9 billion in pension risk transfer sales in 2023, exceeding expectations. For 2024, we're targeting $2.5 billion to $3 billion, focusing on returns over volume. The Bermuda subsidiary enhances our capital efficiency, supporting our pension risk transfer and term life insurance businesses, and released about $200 million in free capital in the fourth quarter.

Retirement Services Flows and Competition
Q: Why are RIS fee flows negative despite a favorable environment?
A: The competitive environment remains challenging. We've had some large plan lapses with negligible impact on revenue, as we're focusing on profitability over sheer flow numbers. Participant withdrawals have modestly increased due to retirements, but underlying fundamentals like deferrals (up over 8%) and employer matches are strong.

Exit of Guaranteed Product in Hong Kong
Q: Why did you exit the guaranteed product in Hong Kong, and what's the impact?
A: The guaranteed product was capital-intensive and not meeting return thresholds, so we decided to exit it. This move released $30 to $40 million in capital in the fourth quarter, with a similar benefit expected in early 2024. However, it will pressure our Hong Kong pretax earnings by about $10 million in 2024.

Pension Reform in Chile
Q: How might Chilean pension reform affect your business?
A: Pension reform discussions are ongoing, but Chileans prefer choice in their providers and have rejected the idea of a state-owned AFP. We're confident in our ability to continue serving the Chilean market and are working closely with regulators and legislators.

Supplemental Voluntary Products Opportunity
Q: What's your outlook on supplemental voluntary products?
A: There's strong demand for products like critical illness, accident, and hospital indemnity. We're expecting growth of 15% to 20% in these product lines, which complement core coverages and meet evolving customer needs.

Expense Management and Severance
Q: Was severance related to unifying operations under Principal Asset Management?
A: The severance is spread across the organization as part of aligning our expenses with revenues. It's part of our ongoing efforts to manage expenses efficiently.

Benefit Ratio Guidance
Q: Why is your benefit ratio guidance stable compared to peers?
A: Our dental products provide stability, and we've seen moderation in loss ratios returning to normal cycles. We expect 2024 loss ratios to be at the lower end of the 60% to 65% range across our portfolio.