Q4 2021 Principal Financial Group Inc Earnings Call

Yeah.

Speaker 1: Good morning and welcome to the principal financial group fourth quarter and full year 2021 financial results conference call. There will be a question and answer period after the speakers have completed their prepared remarks. If you would like to ask a question at that time, simply press star and the number one on your telephone keypad. We would ask that you be respectful of others and limit your questions to one and the follow-up so that we can get to everyone in the queue. I would now like to turn the conference over to John Egan, Vice President of Investor Relations.

Good morning, and welcome to the principal financial group fourth quarter and full year 2021 financial results Conference call. There will be a question and answer period. After the speakers have completed their prepared remarks, if you would like to ask a question at that time simply press Star and then number one on your telephone keypad, we would ask that you be risks.

Full of others and limit your questions to one and a follow up so that we can get to everyone. In the queue I would now like to turn the conference over to John Egan, Vice President of Investor Relations.

Thank you and good morning, welcome to principal financial group's fourth quarter and full year 2021 conference call.

As always materials related to today's call are available on our website at principal dotcom backslash investor.

There has been a key change to our financial supplement in the fourth quarter, but I want to mention.

We changed our definition of AUM to exclude assets managed by third parties on our retirement platforms.

It had an impact on our reported total company AUM and net cash flow from how we reported previously.

Additionally, we've broadened our definition of assets under administration to include AUM and other assets for which we earn a fee for providing administrative services.

A detailed definition for both AUM and AUC.

As included in our financial supplement.

We restated historical time periods in the fourth quarter supplement to reflect the new definitions.

Following a reading of the safe Harbor provision CEO , Dan Houston, and CFO , Deanna <unk> will deliver some prepared remarks.

Then we will open up the call for questions.

<unk> for the Q&A session include Renee Schaaf retirement and income solutions.

Pat Halter global asset management, and Amy Friedrich U.

Insurance solutions.

Some of the comments made during this conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act.

The company does not revise or update them to reflect new information.

Speaker 2: events or changes in

Subsequent events or changes in strategy.

Speaker 2: Risk and uncertainties that could cause actual results to differ materially from those expressed or implied.

Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's most recent annual report on Form 10-K filed by the company with the U S Securities and Exchange Commission.

Speaker 2: discussed in the company's most recent annual report on Form 10-K filed by the company with the U.S. Securities and Exchange.

Speaker 2: Additionally, some of the comments made during this conference call may refer to non-GAAP financial root cause for non-GAAP financial investment.

<unk> some of the comments made during this conference call may refer to non-GAAP financial measures reckon.

Speaker 2: Reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures may be found in our earnings release, financial supplement, and slide presentation.

Reconciliations of the non-GAAP financial measures to the most directly comparable U S. GAAP financial measures may be found in our earnings release financial supplement and slide presentation.

Speaker 2: We'll provide 2022 guidance on our upcoming outlet call scheduled for Wednesday, March 2nd. Dan.

We will provide 2022 guidance on our upcoming outlook call scheduled for Wednesday March 2nd.

Yeah.

Thanks, John and welcome to everyone on the call. This morning I'll review the successful milestones we achieved in 2021 sure.

Speaker 2: Thanks, John , and welcome to everyone on the call. This morning, I'll review the successful milestones we achieved in 2021.

Sure key performance highlights for the fourth quarter and full year 2021, and discuss our go forward strategy highlighting the growth drivers of our business.

Speaker 2: share key performance highlights for the fourth quarter and full year 2021, and discuss our go-forward strategy highlighting the growth drivers of our business.

Speaker 2: Deanna will follow with additional details on our fourth quarter and full year 2021 financial performance, as well as an update on our current financial and capital position.

Deanna will follow with additional details on our fourth quarter and full year 2021 financial performance as well as an update on our current financial and capital position.

Speaker 2: Reflecting on the year 2021 was truly transformational for principle filled with many.

Reflecting on the year 2021 was truly transformational for principal.

Filled with many milestone achievements.

Speaker 2: First in June , we successfully completed the integration of the IRT retirement business. One of the largest acquisitions in our history.

First in June we successfully completed the integration of the IRT retirement business one of the largest acquisitions in our history the.

Speaker 2: The remaining integration will be completed later this month when we migrate the trust and custody business to our plan.

The remaining integration will be completed later this month, when we migrate the trust and custody business to our platform.

Speaker 2: This acquisition solidified principle is a top three retirement provider in the US with a balanced footprint across small, medium, and large-sized plans and expanded platform capabilities to better serve our customers.

This acquisition solidified principle as a top three retirement provider in the U S with a balanced footprint across small medium and large size plans and expanded platform capabilities to better serve our customers.

Speaker 2: In October , we celebrated our 20th anniversary as a public company, a turning point that launched two decades of exponential customer and AUM growth.

In October we celebrated our 20th anniversary as a public company, our turning point that launched two decades of exponential customer and AUM growth as.

Speaker 2: As we look out over the next 20 years, I have no doubt that principle is well positioned to lead and continue meeting in anticipating the needs of our 51 million customers.

As we look out over the next 20 years I have no doubt that principal is well positioned to lead and continue meeting and anticipating the needs of our 51 million customers and.

Speaker 2: And perhaps our most significant milestone, we completed an intense strategic review of our business mix and capital management approach. We aligned on a clear Go Forward strategy, focused on our growth drivers of retirement in the US in emerging markets, global asset management, and US benefits and protection.

And perhaps our most significant milestone we completed an intense strategic review of our business mix and capital management approach, we aligned on a clear go forward strategy focus on our growth drivers of retirement in the U S and emerging markets global asset management, and U S benefits and protection.

Speaker 2: These are higher growth markets where we have established leadership positions and differentiated solutions to compete and win. We committed to a strengthened capital management approach improving capital efficiency and returning excess capital to shareholders. With this focus, we announce...

These are higher growth markets, where we have established leadership positions and differentiated solutions to compete and win we committed to a strengthened capital management approach improving capital efficiency and returning excess capital to shareholders with this focus we announced we would exit.

Speaker 2: The U.S. retail fixed annuity and retail individual life markets, pursuing strategic alternatives for our retail fixed annuity and ULSE blocks. Over the last seven months we did this and more. We see sales of retail fixed annuities and focus our individual life insurance segment on serving the business market in the third quarter of 2021.

The U S retail fixed annuity and retail individual life markets.

Pursuing strategic alternatives for our retail fixed annuity and UL SG blocks over the last seven months, we did this and more we see sales of retail fixed annuities and focus our individual life insurance segment on serving the business market in the third quarter of 2021.

Speaker 2: We entered into an agreement to re-insure our retail, fixed, nudy, and ULSG blocks last week. We increased our return of capital to shareholders, and we met or exceeded all of our financial targets from 2021 outlook for the enterprise and for each of our businesses.

We entered into an agreement to reinsure, our retail fixed annuity and UL SG blocks last week, we increased our return of capital to shareholders and we met or exceeded all of our financial targets for 2021 outlook for the enterprise and for each of our businesses.

Speaker 2: Turning to our financial highlights on slide four and five, in the fourth quarter, we delivered strong results, including non-gap earnings of $498 million, or $1.85 per diluted share, a 25% increase over the fourth quarter of 2020.

Turning to our financial highlights on slide four and five in the fourth quarter, we delivered strong results, including non-GAAP earnings of $498 million or $1 85 per diluted share a 25% increase over the fourth quarter of 2020.

Speaker 2: Reported full year non-gap operating earnings were over $1.8 billion or $6.77 per diluted chair. Full year 2021 earnings per share increased 37%.

Reported full year non-GAAP operating earnings were over $1 $8 billion or $6 77 per diluted share full year 2021 earnings per share increased 37% Cigna.

Speaker 2: significantly higher than our 18 to 20% guided range. Overall, our strong operating performance allowed us to return approximately $1.6 billion to shareholders in 2021, and more than $520 million in the fourth quarter alone, capping a robust year of capital deployment. Now turning to our growth draw.

Significantly higher than our 18% to 20% guided range.

Overall, our strong operating performance allowed us to return approximately $1 $6 billion to shareholders in 2021 .

And more than $520 million in the fourth quarter alone.

Tapping a robust year of capital deployment.

Now turning to our growth drivers and our go forward strategy.

In global asset management, we continue to achieve excellent performance across a breadth of in demand strategies.

Speaker 2: In global asset management, we continue to achieve excellent performance across a breadth of in-demand strategy.

Speaker 2: At the end of 2021, 63% of principal mutual funds, ETFs, separate accounts and collective investment trust were above median for the one-year time period.

At the end of 2021, 63% of principal mutual funds.

T apps separate accounts and collective investment trusts were above median for the one year time period.

Speaker 2: performance across our strategies improve significantly compared to the third quarter.

Performance across our strategies improved significantly compared to the third quarter.

Speaker 2: Importantly, our long-term performance for the three, five, and ten year period are all above 80%.

Importantly, our long term performance for the three five and 10 year period are all above 80% and.

Speaker 2: And 79% of fun level AUM is rated four or five stars for morning stars.

And 79% of fund level AUM is rated four or five stars from Morningstar.

Speaker 2: This strong performance positions us well to attract retain assets going forward.

This strong performance positions us well to attract retain assets going forward.

Speaker 2: For the full year, strong performance and differentiated solutions drove positive source PGI net cash flow of $2.9 billion.

For the full year strong performance and differentiated solutions drove positive source pgi net cash flow of $2 $9 billion.

Speaker 2: Positive institutional flows were partially offset by retail outflows. Investors continue to look to us for differentiated solutions within real estate, high yield, private assets, and emerging markets.

Positive institutional flows were partially offset by retail outflows investors continue to look to us for differentiated solutions within real estate high yield private assets in emerging markets Pgi managed net cash flow was a negative $500 million for the full year as we had outflows from our Pea.

Speaker 2: PGI Managed Net Cash Flow was a negative $500 million for the full year as we had outflows from our PGI Managed Retirement Assets.

G I manage their retirement assets. Despite this strong investment performance drove record Pgi managed AUM of $547 billion in Pgi sourced AUM of $276 billion, we continue to add new capabilities to provide forward thinking solutions to our customers.

Speaker 2: Despite this, strong investment performance drove record PGI managed AUM of $547 billion and PGI sourced AUM of $276 billion. We continue to add new capabilities to provide forward-thinking solutions to our customers.

Speaker 2: As an example, principal alternative credit closed 2021 with a more than eightfold increase in committed capital advancing on plans to expand our private debt capability.

As an example, principal and alternative credit closed 2021 with a more than eight fold increase in committed capital advancing on plans to expand our private debt capabilities.

Speaker 2: As John noted on the start of the call, we changed our AUM definition in the fourth quarter and reported $714 billion of AUM managed by principle, a 7% increase from 2020. Under our prior definition, fourth quarter AUM would have been over a trillion dollars compared to $981 billion at the end of the third quarter.

As John noted on the start of the call we changed our AUM definition in the fourth quarter and reported $714 billion of AUM managed by principal Ah.

<unk>, 7% increase from 2020.

Under our prior definition fourth quarter AUM would've been over a trillion dollars compared to 981 billion at the end of the third quarter.

Speaker 2: Outside the U.S., momentum continues across our asset management and retirement business.

Outside the U S momentum continues across our asset management and retirement businesses with record full year pre tax operating earnings in Asia as well as strong growth in retail equity net cash flow in China, and southeast Asia, our equity AUM in China, nearly doubled in 2021 and our digital.

Speaker 2: with record full year pre-tax operating earnings in Asia, as well as strong growth in retail equity net cash flow in China and Southeast Asia, our equity AUM in China nearly doubled in 2021, and our digital AUM grew more than 200% over year end 2020.

AUM grew more than 200% over year end 2020.

In Chile, we produced strong net cash flow for a second consecutive year, including positive net cash flow and coupon and record net cash flow in our mutual fund business.

Speaker 2: In Chile, we produce strong net cash flow for a second consecutive year, including positive net cash flow in Couprom and record net cash flow in our mutual fund business.

We recognize the recent election of president elect Boruc brings a level of uncertainty for the future of Chili's longstanding pension system.

Speaker 2: We recognize the recent election of President-elect Borick brings a level of uncertainty for the future of Chili's long-standing pension system.

Speaker 2: We're actively engaged with the new government regarding any potential legislation to reform the pension system. And we will leverage our retirement expertise to advocate for pension sustainability and policies that strengthen financial security for our customers.

We're actively engaged with the new government regarding any potential legislation to reform the pension system, and we will leverage our retirement expertise to advocate for pension sustainability and policies that strengthened financial security for our customers.

Turning to U S retirement, despite higher dollars a withdrawal in the fourth quarter, primarily due to favorable equity market performance and seasonally higher contract withdrawals.

Speaker 2: Turning to US Retirement, despite higher dollars of withdrawal in the fourth quarter, primarily due to favorable equity market performance and seasonally higher contract withdrawal.

Speaker 2: Full-year net cash flow was positive for RISV. On an account value basis, net cash flow benefited from strong transfer deposits, and the best contract retention rate in over a decade.

Full year net cash flow was positive for RIS fee on an account value basis net cash flow benefited from strong transfer deposits and the best contract retention rate in over a decade.

Speaker 2: reoccurring deposit increase nearly 40% compared to 2020, including a 15% increase on our legacy block in addition to deposits from the IRT retirement participants. The number of participants making deferrals increase approximately 60% compared to a year ago, including a 10% increase on our legacy block.

Reoccurring deposits increased nearly 40% compared to 2020, including a 15% increase on our legacy block. In addition to deposits from the IRT retirement participants the number of participants, making deferrals increased approximately 60% compared to a year ago, including a 10% increase on our legacy.

Block.

With the integration of the IRT retirement business now complete we have turned our full attention to capitalizing on synergistic opportunities both on the expense and revenue side, which are emerging in tangible ways. The transaction was done to grow scale and maximize the value of these assets and we have clear signs this is happening.

Speaker 2: With the integration of the IRT retirement business now complete, we have turned our full attention to capitalizing on synergistic opportunities, both on the expense and revenue side, which are emerging in tangible ways. The transaction was done to grow scale and maximize the value of these assets, and we have clear signs this has happened.

Speaker 2: Net expense center juice through the end of 2021 benefited earnings by $25 million. On a run rate basis, we've realized about $50 million. More than half of our $90 million target, these savings will increase after the trust and custody business migrates to our platform later this month. We're also realizing increasing revenues from automatic IRAs, IRA rollovers, and expanding relationships with existing customers across the enterprise.

Net expense synergies through the end of 2021 benefited earnings by $25 million on a run rate basis, we've realized about $50 million more than half of our $90 million target. These savings will increase after the trust and custody business migrates to our platform later this month, we're all.

So realizing increasing revenues from automatic iras are a rollovers and expanding relationships with existing customers across the enterprise.

Speaker 2: In U.S. benefits and protection, we deliver tremendous growth aided by increased demand for benefits, robust hiring, and favorable wage trends in our target market. Notably, group benefits full year in-group growth was a record 4% for the total block, and over 5% in business with under 200 employees.

And U S benefits and protection, we delivered tremendous growth aided by increased demand for benefits robust hiring and favorable wage trends in our target market.

Notably group benefits full year in group growth was a record 4% for the total block and over 5% in business with under 200 employees.

Full year sales for specialty benefits were up 10% and premium and fee growth was over 7%.

Speaker 2: Four years sales for specially benefits were up 10%. And premium and fee growth was over 7%. In group benefits, we are seeing increases in the number of products per customer, both for new and existing customers.

In group benefits, we are seeing increases in the number of products per customer both for new and existing customers.

Higher sales and excellent customer retention, coupled with a strong macro environment and competitive labor market give us a great deal of confidence in 2022 for continued market leading growth rates.

Speaker 2: Higher sales and excellent customer retention, coupled with a strong macro environment and competitive labor market, give us a great deal of confidence in 2022 for continued market leading growth rates.

Speaker 2: Overall, Principal Inter's 2022 was significant momentum. The execution of our strategic review has made us a better company, prepared to compete and win in an evolving market. Our transform portfolio was already driving terrific results both financially and for our customers.

Overall principal enters 2022 was significant momentum the execution of our strategic review has made us a better company prepared to compete and win in an evolving market. Our transformed portfolio is already driving terrific results, both financially and for our customers.

Speaker 2: As we look ahead, we will continue focusing on the right markets and the right customers leveraging our competitive advantages.

As we look ahead, we will continue focusing on the right markets and the right customers leveraging our competitive advantages.

Speaker 2: Executing on this strategy, we have great line of sight and confidence in achieving our long-term financial target.

Executing on this strategy, we have great line of sight and confidence and achieving our long term financial targets.

Speaker 2: Before I turn it over to Deanna, I want to thank our employees without whom we would not have had such an exceptional year. Their dedication to principle and their commitment to our mission is at the core of our success. We will continue to invest in our people and ensure that we are prepared as our industry evolves. I'd be remiss if I didn't also take a moment to recognize Renee Schof, our President of Retirement Income Solutions who announced her retirement last week after 42 years with principals.

Before I turn it over to Deanna.

Want to thank our employees without whom we would not have had such an exceptional year their dedication to principal and their commitment to our mission is at the core of our success. We will continue to invest in our people and ensure that we are prepared as our industry evolves.

Be remiss if I didn't also take a moment to recognize Renee schaaf, our president of retirement income solutions, who announced her retirement last week. After 42 years with principal Rene has held several leadership positions across the company with global and domestic responsibilities and most recently led the retirement business through a period of significant growth.

Speaker 2: René has held several leadership positions across the company with global and domestic responsibilities, and most recently led the retirement business through a period of significant growth and transformation with the acquisition and integration of the IRT business. Thank you, René, for your leadership, your passion, and your commitment to principles.

And transformation with the acquisition and integration of the IRT business. Thank you Rene for your leadership your passion and your commitment to principal.

Speaker 2: We also announce Chris Littlefield, our current general counsel, will assume leadership for our U.S. retirement and income solutions business.

We also announced Chris Littlefield, our current general Counsel will assume leadership for our U S retirement and income solutions business, Chris has been with principal since 2020 and joined US with significant C suite operational and leadership experience, having served as CEO and president at Aviva, USA and fidelity Guaranty.

Speaker 2: Chris has been with Principal since 2020 and joined us with significant C-suite operational and leadership experience having served as CEO and President at Aviva USA and Fidelity Guarantee Life Insurance Holding.

Life insurance holding.

I have all the confidence in chris's ability to grow the business create value across our lines of business and champion digital transformation.

Speaker 2: I have all the confidence and Chris's ability to grow the business, create value across our lines of business, and champion digital transformation.

Speaker 2: Mark Laghamasino, who previously served as Senior Vice President and Deputy General Counsel, will step into the General Council role as Chris moves into his new role. He will also serve as Corporate Secretary to the Board. Deanna?

Ark Lagomarsino, who previously served as senior Vice President and Deputy General Counsel will step into the general counsel role as Kris moves into his new role he.

He will also serve as corporate secretary to the board Diana.

Speaker 3: Thanks Dan, good morning to everyone on the call. This morning I'll share the highlights of our financial performance for the quarter and full year as well as an update on our current financial encaps-

Thanks, Dan Good morning to everyone on the call. This morning, I'll share the highlights of our financial performance for the quarter and full year as well as an update on our current financial and capital position.

Speaker 3: Full-year net income, a Tributable Depreence of $1.7 million, included $137 million of net-realized capital losses, with lower than expected credit losses of $31 million, 20 million of which were in the fourth quarter.

Full year net income attributable to principal of $1 $7 billion included $137 million of net realized capital losses with lower than expected credit losses of $31 million $20 million of which were in the fourth quarter.

Excluding significant variances full year non-GAAP operating earnings of $1 8 billion or $6 64 per diluted share increased 15, and 17% respectively compared to 2020 above our 8% to 10% guided range for EPS growth.

Speaker 3: Scluding significant variances full year non-gap operating earnings of $1.8 million or $6.64 per diluted share increased 15 and 17 percent respectively compared to 2020 above our 8 to 10 percent guided range for EPS growth. This included $470 million in the fourth quarter $1.75 per diluted share.

This included $470 million in the fourth quarter or $1 75 per diluted share.

Speaker 3: The non-GAP operating earnings effective tax rate was approximately 21% for the fourth quarter and 18% for the full year. The quarter was above our 16 to 19% guided range primarily due to state and guilty tax.

The non-GAAP operating earnings effective tax rate was approximately 21% for the fourth quarter and 18% for the full year.

<unk> was above our 16% to 19% guided range, primarily due to state and guilty taxes.

Since the end of 2020, we've increased <unk> 340 basis points to 14, 3% primarily through growth in earnings.

Speaker 3: Since the end of 2020, we've increased our OE 340 basis points to 14.3%, primarily through growth and earning.

Speaker 3: As shown on slide 17, we had several significant variances that impacted non-gap operating earnings during the fourth quarter.

As shown on slide 17, we had several significant variances that impacted non-GAAP operating earnings during the fourth quarter.

Benefits from favorable variable investment income inflation in Brazil.

Speaker 3: Benefits from favorable variable investment income, inflation in Brazil, higher than expected in CAHA performance, and lower DAC amortization in RISC were partially offset by COVID-related claims and IRT integration costs.

Than expected and high performance and lower DAC amortization in RIS fee were partially offset by Covid related claims and IRT integration cost.

Speaker 3: These had a net positive impact to reported non-gap operating earnings of $41 million pre-tax, $29 million after tax, and 10 cents per diluted share.

He's had a net positive impact to reported non-GAAP operating earnings of $41 million pretax $29 million after tax and 10 cents per diluted share.

Speaker 3: Variable investment income was $68 million pre-tax higher than expected in the quarter. Primarily driven by alternative investment returns and prepayments.

Variable investment income was $68 million pre tax higher than expected in the quarter, primarily driven by alternative investment returns and prepayment fees.

Speaker 3: For the full year, variable investment income was $234 million higher than expected.

For the full year variable investment income was $234 million higher than expected.

Speaker 3: COVID continues to impact results in RIS, spread and US insurance solutions.

Covid continues to impact results in RIS spread and U S insurance solutions with approximately 125000 U S. Covid related deaths in the quarter. The net $32 million after tax impact was higher than our rule of thumb.

Speaker 3: approximately 125,000 US COVID-related deaths in the quarter. The net $32 million after-tacks impact was higher than our rule of thumb.

Group life and individual life covered claims continue to be elevated as the delta in omicron variants have had a greater impact on the working age population.

Speaker 3: Group life and individual life COVID claims continue to be elevated. As the Delta and Omicron variants have had a greater impact on the working age population.

Speaker 3: We'll provide an update on our expected COVID impacts for 2022 on our March 2nd Outlook call.

We will provide an update on our expected COVID-19 impacts for 2022 on our March 2nd outlet Com.

While we adjust our earnings for the net positive significant variances, we experienced throughout the year, our free capital flow benefited from these net positive impact and contributed to the higher capital return in 2021 as well as our planned capital return in 2022.

Speaker 3: While we adjust earnings for the net positive significant variances we experienced throughout the year, our free capital flow benefited from these net positive impacts and contributed to the higher capital return in 2021, as well as our planned capital return in 2022.

Looking at macroeconomic factors in the fourth quarter. The S&P 500 index was up 11% and the daily average increased 4% compared to the third quarter.

Speaker 3: Looking at macroeconomic factors in the fourth quarter, the S&P 500 index was up 11% and the daily average increased 4% compared to the third quarter.

The daily average increased 29% from the year ago quarter benefiting revenue AUM.

Speaker 3: The daily average increased 29% from the year ago quarter, benefiting revenue, AUM, and a CAT values in RSV and PGI.

AUM and account values in RIS fee and Pgi.

Speaker 3: Foreign exchange rates were a headwind compared to the third quarter, but a tailwind on a trailing 12 month base.

Foreign exchange rates were a headwind compared to the third quarter, but a tailwind on a trailing 12 month basis impacts to reported pre tax operating earnings included a negative $4 million compared to third quarter 2021, a negative $3 million compared to fourth quarter, 2020, and a positive $11 million on.

Speaker 3: Impacts to reported pre-text operating earnings included, a negative $4 million compared to third quarter 2021, a negative $3 million compared to fourth quarter 2020, and a positive $11 million on a trailing 12 month base.

Trailing 12 month basis.

Speaker 3: Overall 2021 was a strong year, fueled by a favorable macro environment and growth in the business.

Overall 2021 was a strong year fueled by a favorable macro environment and growth in the businesses PCI delivered record full year pre tax operating earnings as revenue and margin benefited from strong management fees.

Speaker 3: PTI delivered record full year pre-tech operating earnings as revenue and margin benefited from strong management fees, performance fees, and discipline expense management.

<unk> fees and disciplined expense management.

Speaker 3: Pre-techs operating earnings and margin benefited by $28 million from net performance fees in the fourth quarter and $58 million for the full year.

Pre tax operating earnings and margin benefited by $28 million from net performance fees in the fourth quarter and $58 million for the full year exceed.

Speaker 3: and exceeding our expectations by approximately $35 to $40 million for the full year.

Exceeding our expectations by approximately $35 million to $40 million for the full year.

Excluding the higher than expected net performance fees <unk> margin was 42% for the full year.

Speaker 3: including the higher than expected net performance fees. PGI's margin was 42% for the full year.

Turning to capital and liquidity, we are in a strong financial position and are focused on returning excess capital to shareholders.

Speaker 3: Turning to capital and liquidity, we are in a strong financial position, and our focus on returning excess capital to shareholders.

Speaker 3: At year end, we had $2.6 billion of excess and available capital, including $2 billion at the holding company, higher than our $800 million to cover 12 months of obligations. $80 million in excess of our targeted 400% risk-based capital ratio, which ended the year at 405%. And approximately $500 million in our subsidiary.

At year end, we had $2 $6 billion of excess and available capital, including $2 billion at the holding company higher than our $800 million to cover 12 months of obligations $80 million in excess of our targeted 400% risk based capital ratio, which ended the year at 405%.

And approximately $500 million in our subsidiaries.

We will continue to maintain a 20% to 25% leverage ratio and expect to pay down $300 million of long term debt that is set to mature later this year.

Speaker 3: We will continue to maintain a 20 to 25% leverage ratio and expect to pay down $300 million of long-term debt that is set to mature later this year.

As shown on slide six we deployed approximately $1 $6 billion of capital in 2021, including more than $650 million of common stock dividend and approximately $920 million to share repurchases.

Speaker 3: As shown on slide six, we deployed approximately $1.6 billion of capital in 2021, including more than $650 million of common-sector dividends, and approximately $920 million through share reperto-

Speaker 3: This includes approximately $350 million of repurchases in the fourth quarter, and in total is higher than the $600 to $800 million guided range for repurchases in 2021.

This includes approximately $350 million of repurchases in the fourth quarter and in total is higher than the $600 million to $800 million guided range for repurchases in 2021.

Speaker 3: Last night we announced a 64 cent common stock dividend payable in the first quarter. A 14 percent increase from the dividend paid in the first quarter of 2021.

Last night, we announced a 64 common stock dividend payable in the first quarter, a 14% increase from the dividend paid in the first quarter of 2021.

Speaker 3: This is in line with our targeted 40% dividend payout ratio and is reflective of our strong business performance.

This is in line with our targeted 40% dividend payout ratio and is reflective of our strong business performance.

As announced last week, we now plan to return up to $4 $6 billion to shareholders between 2021, and 2022 through share repurchases and common stock dividends.

Speaker 3: As announced last week, we now plan to return up to $4.6 billion to shareholders between 2021 and 2022 through sharey purchases and common-stuck dividends.

Speaker 3: This includes 2.5 to $3 billion of capital to shareholders in 2022, reflecting our targeted 40% dividend payout ratio, and 2 to 2.3 billion dollars of share reperto-

This includes two $5 billion to $3 billion of capital to shareholders in 2022, reflecting our targeted 40% dividend payout ratio and tier $2 $3 billion of share repurchases.

Before turning to Q&A I wanted to address a question that came up on our transaction call last week, where we announced the reinsurance of our entire U S retail fixed annuity and U S. G box.

Speaker 3: Before turning to Q&A, I wanted to address a question that came up on our transaction call last week, where we announced the reinsurance of our entire U.S. retail fix annuity and ULSD block.

At Investor Day, we provided GAAP reserves for U S retail fixed annuities of $18 billion and you always see a $7 billion for a total of $25 billion as of March 31 2021.

Speaker 3: At investor day, we provided Gap Reserves for US retail fixed annuities of $18 billion and ULSC of $7 billion for a total of $25 billion as of March 31st of 2021.

Speaker 3: On our call last week, we referenced statutory reserves as of the end of the year for US retail fixed annuities of $16 billion and ULSG of $9 billion for a total of $25 billion.

On our call last week, we referenced statutory reserves as of the end of the year for U S retail fixed annuities at $16 billion and your C of $9 billion for a total of $25 billion.

Speaker 3: For retail fixed annuities, Gap reserves are relatively the same as statutory, but we had some expected runoff in the block, which reduced the reserve.

For retail fixed annuities GAAP reserves are relatively the same as statutory but we had some expected runoff in the block which reduced the reserves.

Speaker 3: For you all to see there is approximately a $2 billion difference between Gap and Statutory Reserve.

For you all see there is approximately a $2 billion difference between GAAP and statutory reserves.

Speaker 3: Due to the specifics of the transactions, statutory reserves is the more relevant matter.

Due to the specifics of the transaction statutory reserves. This is a more relevant metric.

As we move forward with a refined focus on strengthened capital deployment strategy. We will continue to invest in our growth drivers of retirement in the U S and select emerging markets global asset management and U S benefits and protection all with an aim to drive long term shareholder value.

Speaker 3: As we move forward with a refined focus in strength and capital deployment strategy, we will continue to invest in our growth drivers of retirement in the US and select emerging markets, global asset management, and US benefits and protection, always a name to drive long-term. We will continue to invest in our growth drivers of retirement in the US and select emerging markets, global asset management, and US benefits and protection, always a name to drive long-term.

This concludes our prepared remarks, operator, please open the call for questions.

Speaker 3: This concludes our prepared remarks. Operator, please open the call for questions.

At this time I would like to remind everyone that to ask a question you May press star and the number one on your telephone keypad now again, ladies and gentlemen that star one for any questions well pause for just a moment to compile the Q&A roster.

Speaker 1: At this time I would like to remind everyone that to ask a question you may press star and the number one on your telephone keypad now. Again, ladies and gentlemen, that's star one for any questions. We'll pause for just a moment to compile the Q&A roster.

Speaker 1: and your first question will come from Ryan Kruger with KBW. Please go ahead.

And your first question will come from Ryan Krueger with K B W. Please go ahead.

Speaker 4: Hi, thanks good morning. I had a question on RIS, Fred Margin's of 73% for the year on a normalized basis. That was above your guided range. Can you comment on if that was driven by, I guess, maybe favorable mortality experience during the year or...

Hi, Thanks, Good morning, I had a question on RIS.

Yes.

Brad's margin of 73% for the year.

On a normalized basis as above your guided range can you comment on if that was.

It's driven by I guess may be favorable mortality experienced during the year or.

Thank you.

Speaker 4: I think it was just better general trend in the business.

Space is just better general trends in the business.

Yes, Thanks, Brian really appreciate the question no question spread was strong this quarter and full year Renee the other specifics on them.

Speaker 5: Yeah, thanks Ryan, really appreciate the question and no question spread was throwing this this quarter in full year. I've been idea of the specific tone. No, absolutely. And Ryan, thank you for that question. When we look at the spread operating earnings throughout 2021, we're very pleased with the results, of course. And they were strengthened by very, very positive net investment income.

Ryan Thank you for that question.

We look at the spread.

Operating earnings throughout 2021.

We're very pleased with the results of course, then they were strengthened by very very positive net investment income. We also saw slightly better.

Speaker 5: We also saw slightly better at non-COVID experience play out through the year.

Non COVID-19 experience play out through the year.

Speaker 5: We will give you more guidance in terms of what to expect in 2022 and the upcoming outlook call. But the one thing that I would like to remind you of is that we remain very disciplined and how we manage this block of business. We're very careful about the risks that we take on to make sure that our pricing discipline creates the kinds of returns that we would expect long-term. So thank you for that question.

We will give you more guidance in terms of what to expect in 2022 any upcoming outlook call, but the one thing that I would like to remind you of is that we remain very disciplined in how we manage the sponsor business. We're very careful about the risks that we take on to make sure that our pricing discipline.

Create the kinds of returns that we would expect a return so thank you for that question.

Thanks, and then do you.

Speaker 4: Thanks, and then do you have any updated thoughts how to think about the sensitivity of short-term race on the IRT business going for it?

Any updated.

How to think about the sensitivity of short term rate.

Iot business going forward.

Speaker 5: All right, please. And I suspect you're referring to the sweet deposits there. Is that what you're asking about?

Okay.

I suspect you're referring to that the sweep deposits there is that what you're asking about.

Yes, that's right yes.

Speaker 5: Yes, that's right. Yes, okay. Yes, so let me explain what we've done with the sleep deposit. As you'll recall, when we announced this transaction, the acquisition of the IOT block of business,

Yes, okay.

Yeah. So let me explain what we've done with a sleep deposit.

As you'll recall when we announced this transaction the acquisition of the Iot you bought the business. This.

Speaker 5: The sweep deposits were tied very closely to the I-O-E-R rate.

The sweep deposit were tied very closely to the Io are right.

Speaker 5: And of course IOER rates quickly went to zero, which had an impact of about $70 to $80 million of revenue.

And of course, Iot high rate quickly went to zero, which had an impact of about $70 million to $80 million of revenue.

In the last half of 2021, we purposefully reached out to the trust and custody blocks of business and began to convert those deposit.

Speaker 5: In the last half of 2021, we purposefully reached out to the Trust and Custody Block of Business and began to convert those deposits accounts onto a principal deposit suite program that essentially moved those deposits onto our balance sheet. And so now we generate revenue on those deposits through net interest margin.

Onto our principal deposit sweep program that essentially move those deposits onto our balance sheet and so now we are we generate revenue on those deposit through yet.

Interest margin.

Speaker 5: The impact of this on our annual run rate basis is about $40 million of additional revenue, which helps significantly to shore up the financial for the IRT block of business. So we will again give you guidance on this in the Outlook call for 2022, but so far to this point we've had about $2 billion of sweet deposits come onto our balance sheet.

The impact of this on a annual run rate basis is about $40 million of additional revenue, which helped significantly to shore.

The financials for the Iot business.

So we will again give you guidance.

On this in the outlook call for 2022, but so far to this point, we've had about $2 billion of sweep deposits come onto our balance sheet.

Speaker 2: I appreciate the questions. It's a good example of Renée and her team looking at some of the challenges on the IRT block and ways to leverage current capabilities of principle. In this case, Principal Bank to receive those deposits and add more value to Cheryl. They're so really feel good about the innovation and the creativity of the team to get us to a healthier spot. Thank you.

I appreciate the questions. That's a good example of Renee and her team looking at some of the challenges on the IRT block and ways to leverage current capabilities of principal in this case principal bank to receive those deposits and add more value to shareholders. So really feel good about the innovation and the creativity of the team to get us to a healthier spot. Thank you.

Thank you.

The next question is from John Barnidge with Piper Sandler. Please go ahead.

Speaker 1: The next question is from John Barnage with Piper Sandler. Please go ahead.

Thank you very much all.

Speaker 2: Thank you very much. All inflows were at the highest level in really a very long time. Can you maybe talk about that opportunity?

Inflows were at the highest level and really.

Very long time.

Can you maybe talk about that opportunity.

To grow that and is that going to be a bigger focus for you. Thank you.

Speaker 2: grow that and is that going to be a bigger focus for you? Thank you.

Yes, Thanks, John and good here this morning, and I'll have Pat take that but again it's.

Speaker 2: Yeah, thanks John and good hearing this morning and I'll have Pat take that but again it's a NASA class we're all too familiar with with real estate and it is adding a lot of value at a time of very low interest rates.

An asset class, we're all too familiar with real estate and it is adding is adding a lot of.

Value at a time of very low interest rates.

Yeah. Thanks, Thanks for the question, Jon and as Dan mentioned real estate is a big part of that growth in the <unk>.

Speaker 2: Yeah, thanks, thanks for the question John . And as Dan mentioned, real estate is a big part of that growth in the outs AUM. As you probably know, we're one of the top real estate investment managers globally in terms of the size of our real estate footprint and the size of the assets under management we have.

As you probably know we're one of the top.

Real estate investment managers globally in terms of the size of our real estate footprint and the size of the assets as we have and we've seen like a lot of other alternative managers.

Speaker 6: And we've seen like a lot of other alternative managers really grow their real estate capabilities and their real estate presence.

Really grow their real estate capabilities and their real estate presence and we have continued to see some very very strong deposits. So very strong ability to take the dry powder of our clients' commitments and deploy that into the marketplace and continues to see some very very strong new commitments of capital from clients.

Speaker 6: And we have continued to see some very, very strong deposits.

Speaker 6: some very strong ability to take the dry powder of our client's commitments and deploy that into the marketplace and continue to see some very, very strong new commitments of capital from clients that we either serve today or new clients that we're generating a new relationship with. So you'll probably continue to see and hear more of the growth story around real assets, private equity real estate assets and private debt real estate assets as a part of our growth engine going forward, John .

We either served today, our new clients that were generating a new relationship with so youll, probably continue to see and hear more of a growth story around real assets.

That equity real estate assets and private debt real estate assets.

As a part of our growth engine going forward John .

John just a follow up.

Yes, please if I could thank you very much can you maybe talk about the coli opportunity in the backdrop of wage and benefits inflation and the fight for talent. Thank you.

Speaker 2: Yes, please, if I could, thank you very much. Can you maybe talk about the coley opportunity in the backdrop of wage and benefits in place in the fight for talent? Thank you.

Yeah.

Speaker 2: Yeah, you know, it's exciting because that certainly fits with our strategy of exiting the retail, a portion of life and doubling down on the business life insurance and we see that as a real growth opportunity. Amy, more details please. Yeah, so thanks for the question, John . We do see Coley of the great opportunity. And as you know, we've built up a huge market leading position in terms of being experts in the non-qualified market.

It's exciting because that certainly fits with our strategy of exiting the retail portion of life and doubling down on the business life insurance and we see that as a.

Real growth opportunity became even more details please.

So thanks for the question, John we do see equally as a great opportunity and as you know we've built up.

Huge market, leading position in terms of being experts in the nonqualified marketplace, So whether that nonqualified funding and again, that's going to be part of our Trs suite and it's going to help our retirement business as well as our U S. I S business and so that knowledge is built on not only knowing what coli business or insurance.

Speaker 5: So whether that non-qualified funding, and again, that's going to be part of our TRS suite, and it's going to help our retirement business as well as our USIS.

Speaker 5: And so that knowledge is built on not only knowing what Coley business or insurance products, we can put in place to help fund those plans, but also giving them alternative for mutual funds and other pieces of business. So when we look at that Coley opportunity where we've really distinguished ourselves, is we are consultants in that marketplace. We tend to know the market place best. We tend to also know the insurance placement products, the best as well in the industry.

Products, we can put in place to help fund those plans, but also giving them alternatives for mutual funds and other other pieces of business. So when we look at that coli opportunity, where we really distinguish ourselves is we our consultants in that marketplace. We tend to know the new marketplace that we tend to also know the insurance claim.

Net products, the best as well in the industry. So again with our new narrowed focus on the business market and employer opportunities for life insurance expect to hear more from us in terms of holding production.

Speaker 5: So again, with our new narrowed focus on the business market and employer opportunities for life insurance, expect you hear more from us in terms of co-lead production. Thanks, John .

Thanks, John .

The next question.

Speaker 1: The next question is from Alex Scott with Skolman Facts. He's go ahead.

The next question is from Alex Scott with Goldman Sachs. Please go ahead.

Hi, first question I had is on Pgi.

Speaker 6: The first question I had is on PGI. That's a place where there's no doubt your discipline on expenses and so forth has produced very strong earnings and margins.

Yeah, that's a place where there's no doubt you are disciplined on expenses and so forth has produced very strong earnings.

And margins and so I just wanted to understand how you're thinking about the sustainability of those margins as we think through some of the wage inflation impacts that are out there.

Speaker 6: And so I just wanted to understand how you're thinking about the sustainability of those margins as we think through some of the wage inflation impacts that are out there as well as potentially T&E maybe coming back into that business a little bit to any color you can provide there.

As well as potentially peony, maybe coming back into that business a little bit.

Any color you can provide there.

Speaker 2: I appreciate that question, Alex. One thing I will say about the asset management business, it's incredibly scalable and there is higher cost of...

I appreciate that question, Alex one thing I will say about the asset management business, it's incredibly scalable and there is higher cost of doing business, but we have a lot of capacity and a lot of ability to add assets to existing capabilities. In Pgi frankly has got a great track record as you point out of aligning there.

Speaker 2: doing business but we have a lot of capacity and a lot of ability to add assets to existing.

Speaker 2: Capabilities and PGI, frankly, has got a great track record as you point out of aligning their expenses with the revenues. And so with that, Pat, additional thoughts.

Expenses with the revenues and so with that path additional thoughts, yes. So Alex I. Appreciate the question first let me start with just on revenue side, we have I think broad death, a specialist investment capabilities. So I feel very good about the diversification of our revenue streams and diversification of the solutions, we can offer to clients that's wrong.

Speaker 6: Yeah, so Alex, appreciate the question. First let me start with this one on the other side. We have, I think, a broad depth of specialists in the industry.

Speaker 6: So I feel very good about the diversification of our revenue streams and diversification of the solutions we can offer to clients that's throughout the world, whether it's retail, retirement, or institutional. So I feel good about the revenue certified of the equation.

Whether it's retail retirement are institutional so feel good about the revenue sort of side of the equation.

Speaker 6: relative to the margins as you heard in our sort of discussions. We continue to see some very strong margins north of 40%. I think 2022 will be a year where we're going to try to continue to maintain strong margins. We'll probably at that look I'll discuss margins going forward in in terms of what we see, but we're going to continue to...

Relative to the margins.

As you heard in our sort of <unk>.

Discussions we continue to see some very strong margins north of 40%.

2022 will be a year, where we're going to try to continue to maintain strong margins.

We'll probably at the outlook call discuss margins going forward in terms of what we see.

Continuing to.

Speaker 6: to absolutely manage our business very aggressively in terms of both generating growth with that very gap and broad depth of specialist investment capabilities to be offered to the marketplace, but also to continue to have very strong expense management discipline.

Absolutely manage our business very aggressively in terms of both generating growth with that very dense and broad depth specialists investigate those will be offered to the marketplace. But also to continue to have very strong expense management discipline that being said, Alex we will continue to invest for growth we are developing a very strong alter.

Speaker 6: That being said, Alex, we will continue to invest for growth.

Speaker 6: We're developing a very strong alternative credit platform in terms of private credit to the marketplace and we're very excited about that platform and what may mean in terms of revenue growth in the future. We are investing in talent. You highlighted what you're doing.

Alternative credit platform in terms of private credit to the marketplace and we're very excited about that platform and what it may mean in terms of revenue growth in the future.

Our investment in talent, you highlighted wage wage increases and we're not immune to that but we believe we need to continue to invest and continue to nurture new talent into the organization and that will be a very keen focus for us.

Speaker 6: wage increases and we're not immune to that, but we believe we need to continue to invest and continue to nurture new town of the organization, and that will be a very keen focus for us.

Speaker 6: If you may recall in December , we actually were noted again for a 10th straight year as best places to work in money management.

Sure.

May recall in December we actually were noted again for the 10th straight year as best places to work in money management. We're one of only five asset managers in the globe and have achieved that recognition for 10 straight years. So we're very proud of the fact that we can attract and retain talent.

Speaker 6: We're one of only five Assa managers in the globe that have achieved that recognition for 10 straight years.

Speaker 6: So we're very proud of the fact that we can attract and retain talent and we're going to continue to...

We're going to continue to.

Speaker 6: I'll aspire for that in the future. We'll continue to invest in new technology to make sure that our client experience continues to be very strong. So we will continue to be investing for growth and for the retention of a very important client experience going forward. So I feel good about the earhead and for those reasons, Alex hopefully has helped you in terms of our story as we think about the profitability and sustainability organization.

Aspire for that in the future we will continue to invest in new technology to make sure that our client experience continues to be very strong. So we will continue to be investing for growth and for the retention of a very important client experience going forward. So I feel good about the year ahead.

For those reasons, Alex on Trop two in terms of our story as we think about.

Profitability and sustainability organization.

That's very helpful. Thank you.

Speaker 6: uh... that's very helpful thank you uh... and i had a follow-up question on international uh... i think mexico has some pension reform that that goes into effect at the beginning of the year that that's an impact on the commission rates and so i just wanted to see if you can help us think through a like quarter of a quarter what what that commission rate declined will do to revenue and you know i assume you know it may take some time to offset the expenses and what that can mean for the bottom line for that business and you know i think there's put some takes it sounds like a u m probably in terms of flows you'll benefit over the long term so i appreciate you know there's two aspects of it maybe you can comment on but i just wanted to make sure i had my hands around you know the the the immediate sort of decline in revenue that we should expect

I had a follow up question on international.

I think Mexico has some pension reform that goes into effect at the beginning of the year that has an impact on the commission rates and so I just wanted to see if you could help us think through like quarter over quarter.

What the commission rate decline or due to revenue and I assume it may.

It takes some time to offset the expenses.

And what that can mean for the bottom line for that business.

There's puts and takes it sounds like.

Probably in terms of flows youll benefit over the long term. So I appreciate there's two aspects of it but maybe you could comment on but I just wanted to make sure I had my hands around.

The immediate sort of decline in revenue that we should expect.

Speaker 2: Yeah, Alex, really appreciate the question. And there's been sort of two bites of the apple, if you will, in Mexico, because they had codified a new set of rules on what the fee structures could be and then with a change.

Yes, Alex really appreciate the question and there has been sort of two bites of the Apple If you will in Mexico because.

They had quantified a new set of rules on what the fee structures could be and then with the change with frankly, the stroke of a pen they adjusted them, even further downward and so we are well under way to aligning expenses with future revenues. We had a path that was charted in terms of as you pointed out growing our.

Speaker 2: with frankly the stroke of the pen they adjusted them even further downward. So we are well underway to aligning expenses with future revenues. We had a path that was charted in terms of

Speaker 2: As you pointed out, growing our AUMs at lower basis points and now we're sort of back at.

<unk> at lower basis points, and now we're sort of back at the table again looking at our expenses to ensure that we can align those expenses with the new projected revenues all of that is to say, we still believe that the Mexican afore business as <unk>.

Speaker 2: uh... table again looking at our expenses to ensure that we can line those expenses with the new projected revenues all of that is to say we still believe that the mexican for a business

Speaker 2: is one worth investing in and continuing to be part of.

One worth investing in and continuing to be part of scale matters capabilities matter, we do have a differentiated capability.

Speaker 2: Scale matters, capabilities matter. We do have a differentiated capability.

Speaker 2: And we streamline some of the operations down there with the divestiture of our life and annuity business that we mentioned last week on our call.

As you know we've streamlined some of the operations down there with the divestiture of our life and annuity business that we mentioned last week on our call when we get to the 2022 outlook call on March 2nd we will provide you with a little bit more color on <unk> and some of those challenging spots, but again, we feel that it's a business that we can.

Speaker 2: And when we get to the 2022 Outlook call on March 2nd, we'll provide you with a little bit more color on PI and some of those challenging spots. But again, we feel that it's a business that we can continue to participate in. Appreciate the question.

<unk> participated I appreciate the question.

Thanks.

Speaker 1: The next question is from Tracy Benjiji with Barclays. Please go ahead.

The next question is from Tracy <unk> with Barclays. Please go ahead.

Speaker 5: Good morning. It was nice to see you last week that you upsized your capital return target. And I'm curious when you're coming up with that, would you take into account some potential implications of the S&P proposed capital model? And I guess what I'm thinking specifically about is their treatment of structured assets, especially those not rated by S&P Moody's or FITs because it looks quite onerous and principles as holds more of that asset class.

Good morning.

Last week that you Upsized, our capital return target and I'm curious when you're coming up with that did you take into account pencil implication.

The S&P proposed capital model and I guess, what I'm thinking specifically about their treatment of structured assets, especially those not rated by S&P, Moody's or Fitch, because it looks quite onerous.

In principle.

More of that asset class.

Yes, Great question, that's right down the wheelhouse for D&O, Yes couple of things I would say there what we would do.

Speaker 2: Yeah, great question. That's right down the wheelhouse for Deanna.

Speaker 3: Yeah, a couple of things that I would say there, what we came out with last week would not contemplate any impacts. On that, I'd say we're still working through the model to understand changes, and it's really too early to speculate on how that would impact us.

Came out with last week would not contemplate any impacts on that I'd say, we're still working through the model to understand changes in it's really too early to speculate on how that would impact us as we think about our targeted capital as Youre aware, we have grounded ourselves on RBC.

Speaker 3: As we think about our targeted capital, as you're aware, we have grounded ourselves on RBC, as well as a certain amount at our home code, but we do look at.

RBC as well as a certain amount at our hone call, but we do look at.

Speaker 3: The rating agencies and there's capital formula as well, but I'd say it's still too early to speculate on how that will impact us as we go forward.

The rating agencies, and Theres capital Formula as well, but I'd say, it's still too early to speculate on how that will impact us as we go forward.

Speaker 7: Okay, so maybe you'll just be helpful to understand the proportion of your CNBS, RBS assets that are not rated by those big three rating agencies instead by the likes of our K upright.

Okay. So maybe it would just be helpful to understand the proportion of your C. MBS, our MBS asset Theyre not rated by the big three rating agencies.

So call our Morningstar.

Speaker 3: Yeah, I think that's a great question and we'll follow up with you after the call on that.

Yes, I think Thats a great question and we will follow up with you after the call on that.

Speaker 7: You can follow up questions. Yeah, my follow question. You mentioned Chila. I know we're really early in your reform discussion. Do you have any update on how AFP could be charged if they're no longer any mandatory contribution?

If you have a follow up question.

Yes. My first question you mentioned, Chile I know, we're really early in your reform discussion do you have any update on how asps can be charged if there are no longer any mandatory contribution.

Yes.

Speaker 2: Yeah, you know, I think the reality is there's been a lot of discussion around pension reform in Chile. And as you may have already also noticed, they did pass a universal guarantee pension, which is going to really help out sort of on pillar zero, making sure that lower income Chileans have a bit of more certainty about their retirement income.

I think the reality is theres been a lot of discussion around pension reform in Chile, and as you may have already also notice they did pass a universal guaranteed pension, which is going to really help out sort of on pillar zero, making sure that lower income chileans have a bit of more certainty about their retirement income.

<unk>.

Speaker 2: There seems to be support for the AFP model. We've been participating, Evleigh Roberto Walker, who leads our Latin American operations as well as right is located right there in Santiago, Chile. There's some, you know, recent statistics and we found very helpful. There were 28 million distributions that took place as part of that hardship and that was $50 billion that went back into the hands of Chileans and there's been a lot of survey work that's been done about

There seems to be support for the A&P model, we've been participating heavily Roberta Walker, who leads our Latin American operations as well as rate is located right. There in Santiago, Chile Theres. Some recent statistics, we found very helpful. There were $28 million distributions that took place as part of that hardship and that was <unk>.

$50 billion and went back into the hands of Chileans and Theres been a lot of survey work that's been done about AFP and their viability, but right now we know that 92% of Chilean favor keeping their pension savings in an individual account and we know that 73% of chileans want to choose their own pension provider.

Speaker 2: AFPs and their viability. But right now we know that 92% of Chileans favor keeping their pension savings in an individual account. And we know that 73% of Chileans want to choose their own pension provider.

So the ongoing dialogue with the regulators and the government is around how do we.

Speaker 2: So the ongoing dialogue with the regulators and the government is around how do we, um,

Peacefully coexist and ensuring that the AFP model.

Speaker 2: Peacefully coexist and ensuring that the AFP model

Speaker 2: continues to be in the private sector supporting the needs of the people of Chile and so again those conversations are ongoing It isn't without its challenges

Continues to be in the private sector supporting the needs of the people of Chile, and so again those conversations are ongoing it isn't without its challenges, but we feel as if there are options available to principle and we will continue to refine that work we have a lot of work going on to look at what is the most successful path forward.

Speaker 2: But we feel as if there are options available to principle and we'll continue to refine that work. We have a lot of work going on to look at what is the most successful path forward for our customers.

For our customers is also recognizing the impact it has on our on our shareholders hopefully that's helpful.

Speaker 2: is also recognizing the impact that has on our shareholders. Hopefully that's helpful.

Thank you.

Speaker 1: Then our question is from Tom Gallagher with Evercore. Let's go ahead.

The next question is from Tom Gallagher with Evercore. Please go ahead.

Good morning.

Speaker 8: good morning um... just curious i've always done on pg i have always thought of uh... that that business being well positioned in a low rate environment just because of the strength of your commercial role estate fixed income real estate broadly

Just curious.

On Pgi I've always thought of.

That business being well positioned in.

The low rate environment, just because of the strength of your commercial real estate fixed income real estate broadly.

And if I'm not mistaken your equities business has also done well from a growth over value standpoint.

Speaker 8: And if I'm not mistaken, your equity's business has also done well from a growth of a value standpoint. I don't even know if that's entirely still true today, but my question is if we're in a rising rate environment.

I don't even know if that's entirely still true today, but my question is if we're in a <unk>.

Rising rate environment.

Speaker 8: and we're seeing a broad shift from growth to value on the equity side. Is that, do you view that as a headwind for flows and the business model? Or do you believe you're more balanced? You'll still look good from a flow visibility standpoint.

And we're seeing a broad shift from growth to value on the equity side.

Is that do you view that as a headwind for flows and the business model.

Do you believe you're more balanced youll youre still look good from a flow visibility standpoint.

I think Tom it's been intentionally balanced and I don't even think that the observation on growth versus value. I think there has been a tendency to be cognizant of the marketplace and have solutions that fill all the gaps, but I think we're a bit of an all season manager of assets across a broad range of asset classes and so.

Speaker 2: I think that Tom has been intentionally balanced and I don't even think that the observation on growth versus value, I think there's...

Speaker 2: been a tendency to be cognizant of the marketplace and have solutions that fill all the gaps, but I think we're a bit of an all season.

Speaker 2: manager of asset across the broad range of asset classes and so

Speaker 2: with interest rates rising. I don't see that necessarily as a bad thing. As a matter of fact, I think I can see where it would be quite helpful, but let me turn it to Pat where he can provide some additional thoughts on where we think we can win in the future here, Pat. Yeah, Tom, I think, you know, from my perspective, I'd like to broaden this question a little bit because to Dan's point, we really want to make sure that we are intentionally very nimble in terms of the capabilities we can offer to the marketplace, as Dan mentioned, because you could address what has happened in last video. To bring to try and fail it just

With interest rates rising I don't see that necessarily is a bad thing as a matter of fact, I think I can see where it would be quite helpful. But let me turn it to Pat where he can provide some additional thoughts on where we think we can win in the future here Pat.

I think from my perspective, I'd like to broaden the discussion a little bit because to Dan's point.

We really want to make sure that we are intense intentionally very nimble in terms of the capabilities. We can offer to the marketplace as Dan mentioned in all seasons, we do have in general a high quality growth bias and our equity platforms, but we do have capabilities that are.

Speaker 2: We do have in general a high quality growth bias.

Speaker 2: in our equity platforms, but we do have capabilities that are diversified in terms of philosophy, diversified in terms of approach.

Diversified in terms of philosophy diversifying in terms of approach.

Speaker 2: And our original sort of intentions to create a boutique model in terms of different investment teams that operate a different and unique philosophy, approach and process within the organization. And it has served as well to be quite nimble in terms of different markets.

Our original sort of intention to create a boutique model in terms of different investment teams that operate a different and unique philosophy approach and process within the organization. I think has served us well to be quite nimble in terms of different markets. I would also sort of suggest to you. Though is that there is still a very strong interest in fixed income investment capabilities and <unk>.

Speaker 2: I would also sort of suggest to you though that there is still very strong interest in fixed income investment capabilities. And the suite of investment capabilities that we still offer in the marketplace are still very vital.

<unk> investment capabilities that we used to offer in the marketplace. There is still a very viable. So for instance in the fourth quarter one of our largest institutional flows was in emerging market debt.

Speaker 2: So for instance, in the fourth quarter, one of our largest institutional follows was an emerging market death.

Speaker 2: One additional sort of very large flow again in the fourth corner institution side was high yield.

Additional sort of very large flow again in the fourth quarter, our institutional side was high yield. So we continue to see some very strong interest in.

Speaker 2: So we continue to see some very strong interest in some of the more sort of higher returning, unique investment capabilities in fixed income.

Some of the more sort of higher returning unique investment capabilities in fixed income and then as I mentioned earlier, there is absolute significant growth going on in the broader private markets and we arent pivoting and position ourselves to build upon our strong very deep credit analytics to offer more.

Speaker 2: And then as I mentioned earlier, there is absolute significant growth going on in the broader private markets. And we are pivoting and positioning ourselves to build upon our strong, very deep credit analytics to offer more private capabilities going forward, more solutions in that space. So I think we're in a good place, both on the equity side, on the fixed income side, and then in the alternative side time.

Private capabilities going forward more solutions in that space. So I think we're in a good place both on the equity side and the fixed income side any alternative side, Tom Tom does that help that does thanks guys.

Speaker 8: That does, thanks guys. My follow-up is...

My follow up is when I look at specialty benefits and I strip out the COVID-19 impact.

Speaker 8: When I look at specialty benefits and I strip out the COVID impact.

Speaker 8: You're kind of unique somewhat in the industry. You've had good underlying performance below, I think below your guide, actually, if I look at it this quarter, this 60 to 65 Benefit Ratio Guide, any reason to think that this may be sustainable and why any sort of guesses you have at this point as to why PFG is seeing favorable experience, excluding COVID when a lot of your competitors are seeing adverse trends.

You are kind of unique somewhat in the industry you have had good underlying performance.

Hello, I think below your guide actually if I look at it this quarter, 60% to 65% benefit ratio guide.

Any reason to think that this may be sustainable.

Why any any sort of guess as you have at this point as to why PFG is seeing favorable experience excluding COVID-19 when a lot of your competitors are seeing adverse trend.

Speaker 2: Well, you might expect Amy's in a really good position respond. I would say this, Tom, you know, there is an advantage of that SMV space where you look at the...

As you might expect Amy is in a really good position to respond and I would say this.

There is an advantage of that SMB space, where you look at the small small employers and they have to go back to work as they are taking care of customers.

Speaker 2: small, small employers and they have to go back to work. They're taking care of customers.

Speaker 2: less flexibility and maybe the large plan market and Frankly good underwriting, but I think all of those sort of go into the mix and having very favorable result. I mean

Less flexibility and maybe the large plan market and frankly, good underwriting, but I think all of those sort of go into the mix and having very favorable results. Amy yes. Thanks for the question and I agree when you look across the industry our.

Speaker 5: Yeah, thanks for the question. And I agree, when you look across the industry, principles block that we've built and specially benefits really is a positive outlier. And what I would go back to is, you know, sometimes this isn't one factor, but a collection of factors. I think Dan's already hit on one of them, which is that small market focus.

Principals block that we felt in specialty benefits really as a positive outlier and what I would go back to is sometimes it isn't.

One factor, but a collection of factors I think dan's already hit on one of them, which is that small market. So guess what that means is we're not always doing.

Speaker 5: What that means is we're not always competing against another company for takeover, but sometimes we're establishing some of these benefits for the first time.

<unk> against another company for takeover, but sometimes we're establishing some of these benefits for the first time.

When you are establishing a benefit for the first time you often are in a position that you can help too.

So you can actually help the broker and advisor get educated about these products and you can help that business owner get educated so with that education in with that consulting side of the practice on building new market. You also get a relationship established and that relationship tends to pay off we mentioned.

Speaker 5: about these products and you can help that business owner get educated. So with that education and with that consulting side of the practice on building new market, you also get a relationship established. And that relationship tends to pay off. We mentioned existing cases in terms of how much we're penetrating in terms of number of products per case. When you look at 2020, we had in our existing cases 2.66 average number of products. When you look at 2021, that's gone up to 2.75.

Existing cases in terms of how much we're penetrating in terms of number of products per case. When you look at 2020, we had in our existing cases 266.

Speaker 5: We had in our juicing cases 2.66 average number of products.

Average number of products. When you look at 2021, that's gone up to $2 75.

Speaker 5: When you look at 2021, that's gone up to 2.75.

Speaker 5: That is unique in the industry as well. And so when you look at our ability to have multiple products that we touch, to have discipline, pricing, and underwriting, strong claims management, and then limited concentration risks, often because of that small and medium size focus, we have the ability to grow, but to do so in a way that has really stable results. So when I look at the industry, it probably is those collection of things that make us a bit different than everybody else. Okay, I hope Tom.

That is unique in the industry as well and so when you look at our ability to have multiple products that we touch to have disciplined pricing and underwriting strong claims management and then limited concentration risks often because of that small to medium size. Okay. We have the ability to grow but to do so in a way that.

Has really stable results. So when I look at the industry. It probably those collection of things that make us a bit different than everybody else.

Okay that helps.

It does thank you.

The next question is from Jimmy <unk> with J P. Morgan. Please go ahead.

Speaker 9: The next question is from Jimmy Bueller with JP Morgan. Please go ahead. Hey, good morning. So first just had a question on RISP flows and they were negative this quarter and I realized that the market going up with draws might have picked up. But if you just comment on what drove that and what you're seeing in terms of deferral rate matching contribution and stuff and what your outlook is for the business.

Hey, good morning. So first just had a question on the flows.

And there were negative this quarter.

But the market going up through the girls might have ticked up but.

If you could just comment on what drove that and what youre seeing in terms of deferral rate matching contributions and stuff and what your outlook is for the business.

Speaker 2: Thanks for the question, Jimmy. And, you know, I'd be remiss if I just didn't call out specifically how the strong underlying fundamentals are of this business, whether it's... All right.

Yes, thanks for the question Jim.

Be remiss, if I just didn't call out specifically, how the strong under line fundamentals are of this business whether it's.

Hello.

Okay.

Speaker 9: Okay. Not mine. Okay. Okay. Jimmy, you can still hear me. I can hear you.

[laughter], Okay. Jimmy you can still hear me.

Can hear you and that was in mind unless someone's in my room, but I don't know, but it's.

Speaker 9: and last few months in my room but I don't know. Oh, okay, it's okay, it's okay.

It's okay. It's okay, alright, so lost my train of thought there just for a second okay underlying fundamentals of that business remain incredibly strong whether it's reoccurring deposits the sales number doubling from a year ago.

Speaker 2: All right, so lost my train. It's not there just for a second. Okay, underlying fundamentals of that business remain incredibly strong, whether it's

Speaker 2: reoccurring deposits, the sales number doubling from a year ago, you know, $24 billion plus in total sales. And this net cash flow is worth spending a little bit of time on this morning to understand how these inflated equity markets look and have the appearance that the business fundamentals are not as good. But the reality is they're incredibly strong and Renek can walk us through the sort of the math.

$4 billion plus in total sales and this net cash flow is worth spending a little bit of time on this morning to understand how these inflated equity markets.

Look and have the appearance that the.

Business fundamentals are not as good but the reality is they are incredibly strong and Renee can walk us through the sort of the math of why the net cash flow look soft in spite of the strong underlying fundamentals.

Speaker 2: of why the net cash will look soft in spite of the strong underlying fundamentals, right? Yeah, absolutely. Thank you, Dan.

Billy Thank you Dan.

<unk>.

When you look at fourth quarter fourth quarter was impacted by seasonally higher contract withdrawals and of course as already mentioned strong equity markets tend to have an adverse impact on net cash flows because of the impact specifically on withdrawals.

Speaker 5: When you look at fourth quarter, fourth quarter was impacted by seasonally higher contract withdrawals. And of course, as already mentioned, strong equity markets tend to have an adverse impact on net cash flows because of the impact specifically on withdrawal.

When we think about net cash flow I think it is helpful to look at a trailing 12 month basis to eliminate some of the impact of seasonality.

Speaker 5: When we think about Nick Cashlow, I think it's helpful to look at a trailing 12 month basis to eliminate some of the impact and seasonality. And so to Dan's point, when you look at transfer deposits through the trailing 12 month period, they were of 87% over 2020. So a very strong result and it reflects.

So to Dan's point, when you look at transfer deposits for the trailing 12 months period.

They were up 87% over 2020, so a very strong result, and it reflects that our value.

Speaker 5: that our value proposition continues to resonate in the marketplace and that goes across small, mid and large plans. So our established footprint is really paying off and it's generating those important transfer deposits.

Competition continues to resonate in the marketplace and that goes across small mid and large plan.

So our established footprint is really paying off and it's generating those important transfer deposits.

Speaker 5: From a recurring deposit perspective on a trailing 12 month basis, we're seeing recurring deposits up 40% year over year.

From a recurring deposit perspective on a trailing 12 month basis, we're seeing recurring deposits up 40% year over year.

Speaker 5: When you isolate and you peel back the onion, you see that the legacy principal business had an increasing recurring deposits of about 15%.

You isolate any peel back the onion, you see that the legacy principal business had an increase in recurring deposits of about 15% and if you take that 15% and you drill down even further there are two primary factors that are creating this very positive and strong.

Speaker 5: And if you take that 15% and you're drilled down even further, there are two primary factors that are creating this very positive and strong recurring deposit result.

Our recurring deposit result, this first is simply the increase in the deferrals themselves. That's about a third of that of that 15% and the rest of it is an increase in the number of participants in our block.

Speaker 5: The first is simply the increase in the deferrals themselves. That's about a third of that, of that 15%. And the rest of it is an increase in the number of participants in our block.

So then you take a look at the withdrawal and of course this is where.

Speaker 5: So then you take a look at the withdrawal. And of course, this is where strong equity markets tend to have a really negative impact on net cash flow.

<unk> equity markets tend to have a really.

A negative impact on net cash flow.

Speaker 10: So the way to look at it then to help put that into context is to take your withdrawal.

So the way to look at it and to help put that into context is to take your withdrawals.

Speaker 10: and express that as a percentage of average account values.

And express that as a percent of average account values. When you do that for 2021, you see that withdrawals were 14% of average account values that compares favorably to what we saw in 2020, which was a 15% withdrawal rate and is that.

Speaker 10: When you do that for 2021, you say that with draws were 14% of average account values.

Speaker 10: That compares favorably to what we saw in 2020, which was a 15% withdrawal rate. And as Dan mentioned in his comments, we see record the best in the past 10 years in terms of contract retention. So we're very pleased to result. We think the underlying fundamentals of this business remain very strong. Yeah.

Dan mentioned in his comments to start.

The record.

The best in the past 10 years.

In terms of contract retention. So we're very pleased with the results we think the <unk>.

Underlying fundamentals of this business remain very strong.

Jeff one follow up.

Speaker 9: Yeah, just on the Chilean business with the presidential election, do you have a better idea on what some of the proposals could be or what some of the changes could be and how they would potentially impact your business?

Yes, just on the.

Your land business that the presidential election, do you have a better idea on what some of the proposals could be what some of the changes could be and how they would potentially impact your business.

Yes. So we're dissecting every one of those suggested proposals and the reality is today. There are a lot of ideas that are floated in the market one might put more constraints.

Speaker 2: Yeah, so we're dissecting every one of those suggested proposals. And the reality is today, there are a lot of ideas that are floated in the market. One might put more constraints if it remains a...

If it remains.

The private system, where you could have more constraints on the actual charges that you could make.

Speaker 2: private system where you could have more constraints on the actual charges that you could make.

Speaker 2: There's all the way to the range of where the government would have a competing AFP system.

There is all the way to the range of where the government would have a competing AFP system. So there are probably a half a dozen different.

Speaker 2: So there are probably a half a dozen different ideas ranging all the way from no change. The AFP stays at it is to a complete government run AFP. And as I said, choice is in between.

It is ranging all the way from no change the E&P stays as it is to a complete government run AFP and as I said choices in between the job of the industry and the job of principle is to work with the elected officials and regulators to find a sensible solution and as I said earlier the universal.

Speaker 2: The job of the industry and the job of the principal is to work with the elected officials and the regulators to find a sensible solution.

Speaker 2: And as I said earlier, the universal pension solution that has already been enacted, the guaranteed pension, I think is help.

Pension <unk>.

<unk> solution that has already been enacted the guaranteed pension I think has helped.

Speaker 2: where some of the concern was for lower income individuals. It does go a long way in helping provide them with a base.

Where some of the concern was for lower income individuals. It does go a long way in helping provide them with a base and now the question is how do we modify AFP to meet the needs of everyone hopefully that helps Jimmy.

Speaker 2: And now the question is how do we modify AFP to meet the needs of everyone? Hopefully that helps Jimmy.

Thank you.

Speaker 1: The next question is from Eric Bass with Economist. Please go ahead.

Thanks.

The next question is from Erik bass with autonomous. Please go ahead.

Speaker 2: Hi, thank you. I just had a follow up to Ryan's question on the sweep deposits and wanted to make sure following the answer correctly. So I think it said that the change that you made is adding about 40 million to revenue through offsetting about half of the decline from the lower IOER rate. But I'm wondering, do you still have sensitivity to short term interest rates where you benefit that sort of a locked in revenue stream at this point?

Hi, Thank you I just had a follow up to Ryan's question on the sweep deposits and wanted to make sure. It's following the answer correctly I think you said that the change that you made is adding about $40 million to revenue. So offsetting about half of the decline from the lower <unk>, but I'm wondering do you still have sensitivity.

Short term interest rates, where you benefit if they go up or is that sort of a locked in revenue stream at this point.

Go ahead please.

Yes so.

Speaker 10: Yeah, so the earnings that we will capture on these deposits are a function of the net interest margins. And so it's going to be less sensitive to short-term interest rates overall. But more importantly, it simply gives us that we store the revenue stream that we had lost when it was attached to IOER rates.

Yeah. The earnings that we will capture on these deposits are a function of the net.

Interest margin and so on.

It's going to be less sensitive to short term interest rates overall.

But importantly, it simply gives us it restores their revenues revenue stream that we had lost when it was attached to our rates.

Got it and that.

Speaker 6: got it and that should start coming through with that higher level kind of immediately in 2022.

It should start coming through with that higher level.

Kind of immediately in 2022.

Speaker 10: That's correct because we have $2 billion of those deposits, a little over $2 billion on our balance sheet right now. That will increase a little bit in 2022. There's a little bit more to come over, but we'll provide guiding signs what 2022 will look like in the upcoming outlook call.

That's correct, because we have $2 billion of those deposits a little over 2 billion on our balance sheet right now that will increase a little bit in 2022, theres a little bit more to come over but we will provide guidance on what 2022 will look like in the upcoming.

Hum.

Speaker 8: Perfect and they're just declared by all of that getting booked in RISD or does any of that show up as revenue in the bank

Perfect and then just to clarify all of that's getting booked in RIS fee or does any of that show up as revenue in the bank.

That is all being reported in RIS fee.

Speaker 10: That is all being reported in RIS feet.

Great. Thank you.

Thanks, Eric.

The next question is from Josh Shanker with Bank of America. Please go ahead.

Speaker 1: The next question is from Josh Shanker with Bank of America. Please go ahead.

Yes.

Speaker 11: Yeah, I'm looking over the benefits segment. If I compare to pre-pandemic eras, group life and disability have sold more the dental visions down, relative to pre-pandemic areas. Can we talk about what's been successful in selling, what the pipeline is and what whether or not you expect to grow in the various products and your benefits in 2022?

The benefit segment, if I compare to pre pandemic euros group.

Group life and disability have sold more.

Bob.

The gentle visions down.

<unk> pre pandemic here isn't it.

Can we talk about what's been successful in selling.

What the pipeline is and whether or not you expect to grow in the various product.

Capex in 'twenty two.

Some of that will of course, we will get at it 2022 outlook call, but you want to talk about your pipeline and your current opportunities we're happy to do that thanks, Josh.

Speaker 2: Some of that will, of course, will get added 2022 outlook, but you want to talk about your pipeline and your

Speaker 5: current opportunities for me. We're happy to do that. Thanks, Josh. So I think we'll get after again, Dan, said some of this in the outlook call. But when I look at kind of pipeline and I look at reestablishing sort of the pre-

So I think we'll get after again, Dan said some of this and that in the outlook call, but when I look at kind of pipeline and they look at reestablishing sort of the pre pandemic baseline you had characterized some things around dental vision in life and disability and here's the way I would I would think about it.

Speaker 5: pandemic baseline. You had characterized some things around dental vision and life and disability and here's the way I would I would think about it.

Speaker 5: Dental and vision and life and disability as well as are what I would consider sort of supplemental and work site products all play a role in meeting our employer customer needs.

Dental and vision and life and disability as well or what I would consider sort of supplemental and worksite products. All play a role in meeting our employer customer needs. So some of the things that we look at is what benefit design or are they trying to fill sometimes they're looking after dental vision first because they're the most.

Speaker 5: So some of the things that we look at is what benefit design are they trying to fill. Sometimes they're looking after dental vision first because they're the most utilized benefits. Sometimes they're doing something different in terms of life and disability. What we've seen post-pandemic is the heightened awareness of needing life and disability coverage has kind of brought those to the forefront. So we're seeing small employers almost start the conversations there and then fill in with some of the other benefits.

Utilized benefit sometimes theyre doing something different in terms of life and disability. What we've seen post pandemic is the heightened awareness of needing life and disability coverage has kind of brought this to the forefront. So we're seeing small employers almost start the conversation there and then fill in with some of the other benefit the piece I would pull some <unk>.

Speaker 5: The piece I would pull some attention to is we are going to continue to see build up in our portfolio of those things that are more work site or peer voluntary base. So accidents and critical illness, those pieces get reported through that disability line today and we're going to continue to see them make good progress as they position in our portfolio. So one of the things that probably doesn't get as much attention is sort of that voluntary period work site portfolio, we've been quietly and slowly building up those capabilities and we see those as a potential future margin, expansion opportunity as well as of high interest to our customers.

<unk> is we are going to continue to see buildup in our portfolio of those things that are more worksite or tier voluntary basis, so accident and critical illness. Those pieces get reported through that disability line today, and we're going to continue to see them.

Good progress as they position in our portfolio. So one of the things that probably doesn't get as much attention at sort of that voluntary worksite portfolio, we've been quietly and slowly building up those capabilities and we see those as a potential future margin expansion opportunities as well as of high interest to our customer base.

Sure.

Okay. Thank you very much for the thorough answer.

Speaker 11: Okay, thank you very much for the thorough answer.

Thanks, Josh.

One thing's for sure that's happening out there right now is with wage inflation Theres also.

Speaker 2: You know, one thing for sure the tapping out there right now is with wage inflation, there's also the built-in benefit that the value of life insurance goes up, and disability goes up, and employers are trying to attract retained talent and benefit historically and continue to be a way to differentiate out there. Next question, please.

Built in benefit that the value of life insurance goes up in disability goes up and.

Employers are trying to attract retain talent and benefits have historically and continue to be a way to differentiate out there next question. Please.

The final question is from Andrew <unk> with Credit Suisse. Please go ahead.

Speaker 1: The final question is from Andrew Klee-Grimman with Credit Suisse. Please go ahead.

Thank you.

Speaker 2: Thank you. Question on the transaction amounts last Monday, understand there was a closed block in their life insurance business. And as we looked it up, I think there was a reserve efficiency of $400 million. So my question is, is the 400 million part of that 800 million of capital freed up? Did you free up 400 million?

Question on.

The transaction announced last Monday I understand.

There was a closed block and their life insurance business and as we looked it up I think there was a reserve deficiency.

$400 million. So my question is.

Is the 400 million.

Part of that $800 million of capital freed up did you free up $400 million on the closed block and it's not.

Speaker 2: on the closed block and it's not what might have been.

What might have been.

Please.

Yes couple of things on there.

Speaker 3: Yeah, a couple of things on there. You know, as we talked about on the call, you know, we aren't going to itemize all of the things that go up to the 800 million of proceeds.

As we talked about on the call, we arent going to itemize all of the things that go up to the $800 million of proceeds.

Speaker 3: We had capital release, we had a net feeding commission that was negative. We had to kind of true up our economic reserves. We had one time negative impacts regarding loss of covariance benefits as well as financing break fees. And then what you're referring to is we did do some capital optimization on our remaining life insurance business.

Capital release, we had a net ceding commission that was negative we had to kind of true up our economic reserves. We had one time negative impact regarding loss of covariance benefits as well as financing break fees and then what you are referring to is we did do some capital optimization on our remaining life insurance.

Business part of which was the closed block, but not all of it.

Speaker 3: Part of which was the closed block, but not all of it. And so, you know, those all those pieces came together to get to the net proceeds of 800 million of the deployable proceeds, which was in line to slightly better than what we would have contemplated at the time of the investor day, but every transaction and financing that we did was contemplated back at the time of investor day. So all in line with what we had anticipated, net proceeds were at or better, and there were a lot of moving pieces that got to the 800 million of proceeds.

So.

Those are all of those pieces came together to get to the net proceeds of $800 million.

Of the deployable proceeds which was in line to slightly better than what we would have contemplated at the time of the Investor day, but every transaction and financing that we did was contemplated back at the time of Investor day. So so all in line with what we had anticipated net proceeds were at or better and there were a lot of moving pieces.

That got to the $800 million.

Proceeds Andrea follow up.

Speaker 12: Andrea, follow up.

Yes. Please.

Speaker 2: Yes, please. It sounds like you're somewhat more, or maybe a little bit optimistic about QA. And I was kind of thinking,

It sounds like you're somewhat more.

Or maybe a little bit optimistic about Chile.

And I was kind of thinking.

Speaker 2: and maybe a worst case scenario. I just like to size it. Would I be correct in that roughly 4% of operating earnings is attributable to Chile? And then I'm curious how much capital is allocated.

And maybe worst case scenario.

Just like to size it would I be correct in that roughly.

4% of operating earnings is attributable to Chile.

And then I'm just curious how much capital is allocated to that business.

So in Chile, it's actually let's talk specifically around Cooper them, it's about 4% of our earnings on just.

Speaker 2: Yeah, so in Chile, to actually, in, let's talk specifically around Couprom, it's about 4% of our earnings on just Couprom.

<unk> from and we'll get back to you on the capital allocation, but again I think we're a long way from.

Speaker 2: and we'll get back to you on the capital allocation. But again, I think we're a long way from that, because it relates to sort of a doomsday approach. We think there is a lot of.

From that as it relates to sort of a doomsday approach. We think there is a lot of road to travel.

Speaker 12: road to travel. We have, as I said earlier, Andrew had some very helpful dialogue with government officials and legislators and again with the passage of the universal guaranteed.

As I said earlier, Andrew we had some very helpful dialogue with government officials and legislators and again with the passage of the Universal guaranteed pension product. We think there is a viable path again, having said that we're not pollyanna ish, we're looking at all possible outcomes and we.

Speaker 12: pension product, we think there is a viable path. Again, having said that, we're not polyannish, we're looking at all possible out.

Speaker 12: and will continue to manage that effectively. And as things change and become more clear, we'll be sure and update investors. Appreciate the question.

Continue to manage that effectively and as things change and become more clear, we'll be sure and update investors. Appreciate the question.

Thank you.

We have reached the end of our Q&A session. Mr housing your closing comments please.

Speaker 1: We have reached the end of our Q&A session, Mr. Halcindr, closing comments please.

Yes, Thank you and again, we appreciate everyone tuning in this morning, I think what you've seen in the most recent quarter and year as strong results and it was benefited from being in the feed the spread and the risk businesses focused in on the business markets again as I said in my earlier prepared comments, we think that the strategic review was.

Speaker 12: Yeah, thank you. And again, appreciate everyone tuning in this morning. I think what you've seen in the most recent quarter in year is strong results. And it was benefited from being in the feed, the spread, and the risk businesses focused in on the business markets.

Speaker 12: Again, as I said in my earlier prepared comments, we think that the strategic review was very helpful in focusing our attention on high growth markets and opportunities across each of those areas. And again, we're very pleased with the capital deployment from the dividend to the share of buyback to the acquisitions as we see the value of IRT. So we look forward to visiting with all of you on March the 2nd.

Very helpful and focusing our attention on high growth markets and opportunities across each of those areas and again, we're very pleased with the capital deployment from the dividend to the share buyback to the acquisitions as we see the value of IRT. So we look forward to visiting with all of you on March the second one.

Speaker 12: One will have our outlook call and we appreciate your input in your insight. Thank you, have a great day.

Have our outlook call and we appreciate your your input and your insights. Thank you have a great day.

Thank you for participating in today's conference call. This call will be available for replay beginning at approximately <unk> PM Eastern time until end of day February 15th 2022 for $4 88026 is the access code for the replay the number to dial for the replay is 850 5859.

Speaker 1: Thank you for participating in today's conference call. This call will be available for replay beginning at approximately 1 p.m. Eastern time until end of day February 15th, 2022.

Speaker 1: 4488026 is the access code for the replay. The number to dial for the replay is 855-859-2056-US and Canadian callers or 404-537-3406 international callers. Ladies and gentlemen, thank you for participating in today's conference call. You may all disconnect.

2056, U S and Canadian callers or 404, 537, 3406 international callers, ladies and gentlemen, thank you for participating in today's conference call you may all disconnect.

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