Q3 2023 Voya Financial Inc Earnings Call

Speaker 1: Good morning. Welcome to Voya Financial's third quarter 2023 earnings conference call. All participants will be in a listen only.

Good morning, welcome to Voya Financial's third quarter 2023 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

Speaker 1: Should you need assistance, please signify the conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star two participants are limited to one question and one follow up. Please note. This event is being recorded.

Speaker 1: Participants are limited to one question and one follow-up. Please note this event is being recorded. I would now like to turn the call over to Mike Katz, Executive Vice President of Finance.

I would now like to turn the call over to Mike Katz Executive Vice President of Finance. Please go ahead Sir.

Speaker 2: Thank you and good morning. Welcome to Voya Financial's third quarter, 2023, earnings conference call. We appreciate all of you have joined us this morning. As a reminder, materials for today's call are available on our website at investors.voia.com.

Thank you and good morning.

Welcome to Voya Financial's third quarter 2023 earnings Conference call. We appreciate all of you who have joined US This morning.

As a reminder, materials for today's call are available on our website at investors Voya Dot com.

Speaker 2: Turning to slide two, some of the comments made during the call may contain forward looking statements or refer to certain non- GAAP financial measures within the meeting of federal securities law. GAP reconciliations are available in our press release and financial supplement found on our website. Now joining me on the call are Heather LeBalley, our chief executive officer, and Don Templin, our chief financial officer, after their prepared remarks.

Turning to slide two some.

Some of the comments made during the call may contain forward looking statements or refer to certain non-GAAP financial measures within the meaning of federal Securities law.

GAAP reconciliations are available in our press release and financial supplement found on our website now.

Joining me on the call are pivotal O'malley, our chief Executive Officer.

Don Templin, our Chief Financial Officer.

After their prepared remarks, we will take your questions.

Speaker 2: For the Q&A session, we've also invited the head of our businesses, specifically Christine Hurtsellers, Investment Management, Rob Grupka, Workplace Solutions.

For the Q&A session. We have also invited the heads of our businesses, specifically Kristine hurts sellers investment management Rob.

Rob Group.

Workplace solutions.

Speaker 2: With that, let's turn to slide three as I would like to turn the call over to Heather.

With that let's turn to slide three as I would like to turn the call over to Heather.

Speaker 3: Next, Mike. Let's begin on slide four with some key themes.

Thanks, Mike, let's begin on slide four with some key themes.

Speaker 3: Our results reflect the underlying strength of our businesses, the benefits of our diversified revenues, and our strong track record of executing on our targets, while continuing to invest for future growth.

Our results reflect the underlying strength of our businesses the benefits of our diversified revenues and our strong track record of executing on our targets, while continuing to invest for future growth.

Speaker 3: In the third quarter, we generated $1.74 per share of adjusted operating earnings, including notable items.

In the third quarter, we generated $1 74 per share of adjusted operating earnings including notable items.

We remain on track to achieve our EPS target of 12% to 17% for the three year period ending in 2024.

Speaker 3: We remain on track to achieve our target of 12 to 17% for the 3 year period ending in 2024.

Speaker 3: We've taken the steps necessary to protect margins and will continue to be disciplined on spend as a key lever to manage our businesses.

We've taken the steps necessary to protect margins and will continue to be disciplined on spend is a key lever to manage our businesses.

Speaker 3: As we look ahead, the robust pipelines across all three businesses will power our growth into 2024 and beyond. Our commercial

As we look ahead robust pipelines across all three businesses will power our growth into 'twenty 'twenty four and beyond.

Our commercial momentum continued to build in the third quarter.

Speaker 3: in Weld Solutions, full service recurring deposits for 10%, with positive net flows in both full service and record keeping.

And wealth solutions full service recurring deposits grew 10% with positive net flows in both full service and recordkeeping.

Speaker 3: In health solutions, annualized enforced premiums and fees were up 21% with growth across all product lines.

In health solutions annualized in force premiums and fees were up 21% with growth across all product lines.

Speaker 3: And while investment management flows continue to reflect a difficult market for asset management. As well, as the ongoing transition of our international distribution channels. The underlying business is strong.

And while investment management flows continue to reflect a difficult market for asset management as well as the ongoing transition of our international distribution channels. The underlying business is strong.

Speaker 3: Importantly, we head into the fourth quarter with most transition-related outflows now behind us and the expectation of even greater benefits from our new international distribution relationship with OLLI on CI.

Importantly, we head into the fourth quarter with most transition related outflows now it'll behind us and the.

Expectation of even greater benefits from our new international distribution relationship with Ali on G. I.

Speaker 3: The benefits of that relationship continue to emerge with international retail, contributing more than one billion of positive net flows in the quarter.

The benefits of that relationship continue to emerge with international retail contributing more than 1 billion of positive net flows in the quarter.

Speaker 3: As we look ahead to 2024, we're seeing a strong pipeline of growth across all of our businesses. A few examples.

As we look ahead to 'twenty 'twenty four.

Having a strong pipeline of growth across all of our businesses a few examples.

Speaker 3: In wealth, we already have 12 billion of plans and implementation for 2024.

In wealth, we already have 12 billion of plans and implementation for 2024.

Speaker 3: In health, our outlook includes premium growth at the high end of our 7% to 10% target range with a strong sales pipeline for 2024.

And health our outlook includes premium growth at the high end of our 7% to 10% target range with a strong sales pipeline for 2020 for.

Speaker 3: This includes known sales and life and disability, up more than 40% and voluntary sales, up almost 50% year-over-year.

This includes known sales in life and disability up more than 40% and voluntary sales up almost 50% year over year.

Speaker 3: In investment management, with the transition headwinds we experienced in 2023, now largely behind us, we are confident that our strong pipeline will support our return to at least 2% organic growth.

In investment management with a transition headwinds we experienced in 2023 now largely behind US we are confident that our strong pipeline will support a return to at least 2% organic growth.

Unknown Executive: Good morning.

Unknown Executive: Welcome to Voya Financial's third quarter, 2023 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question. You may press star then one on your touch tone phone to withdraw your question. Please press star to participants are limited to one question and one follow up. Please note this event is being recorded.

Speaker 3: That pipeline includes unfunded private credit commitments in the institutional channel.

That pipeline includes unfunded private credit commitments in the institutional channel.

Speaker 3: Robust projected flows in secondary private equity and continued growth opportunities in international markets.

Robust projected flows in secondary private equity and continued growth opportunities in international markets.

Speaker 3: With its preeminence and fixed income and strong investment performance, a voy investment management is well positioned. The benefit is cash that is currently on the sideline moves back into longer duration assets.

With its preeminence in fixed income and strong investment performance with Voya investment management is well positioned to benefit as cash that is currently on the sideline moves back into longer duration assets.

Mike Katz: I would now like to turn the call over to Mike Katz, Executive Vice President of Finance. Please go ahead, sir.

Mike Katz: Thank you, and good morning. Welcome to Voya Financial's third quarter, 2023 earnings conference call. We appreciate all of you have joined us this morning. As a reminder, materials for today's call are available on our website at investors.voia.com. Turning to slide two. Some of the comments made during the call may contain some of the questions. [inaudible] you very much. Thank you very much. [inaudible] The benefits of that relationship continue to emerge with international retail, contributing more than 1 billion of positive net flows in the quarter.

Speaker 3: The combination of our strong pipelines and robust expense disciplines will allow us to protect margins and deliver on our financial goals.

The combination of our strong pipelines and robust expense discipline will allow us to protect margins and deliver on our financial goals.

Speaker 3: Turning to capital management. We maintained a strong excess capital position at quarter end of approximately 400 million.

Turning to capital management, we maintained a strong excess capital position at quarter end of approximately 400 million.

Speaker 3: We deploy nearly 300 million of capital in the third quarter across debt extinguishment, share buybacks, dividends, and the completion of the transaction to take full ownership of voya India. More on that in a moment.

We deployed nearly $300 million of capital in the third quarter across debt extinguishment share buybacks dividends and the completion of the transaction to take full ownership of Voya, India more on that in a moment.

We generated an additional $200 million of excess capital this quarter contributing to over $800 million over the past 12 months exceeding our 90% free cash flow conversion target.

Speaker 3: We generated an additional 200 million of excess capital this quarter, contributing to over 800 million over the past 12 months, exceeding our 90% free cash flow conversion target. Don will share more on our results in performance shortly. Thank you.

Don will share more on our results and performance shortly.

Turning to slide five.

Speaker 3: After the strategic acquisitions we've made over the past year, we continue to keep our focus squarely on successful business integration.

After the strategic acquisitions, we've made over the past year, we continue to keep our focus squarely unsuccessful business integration.

Speaker 3: These acquisitions have diversified our revenues, helped us establish a strategic foothold in new markets, and positioned us to capitalize on strong growth opportunities.

These acquisitions have diversified our revenues helped us establish a strategic foothold in new markets and positioned us to capitalize on strong growth opportunities.

Speaker 3: Our acquisition of the US business of Alley-On's GI has reshaped lawyer investment management.

Our acquisition of the U S business of all he owns G I cause reshaped Voya investment management provider.

Speaker 3: providing access to high growth international markets and revitalizing our retail capability.

Providing access to high growth international markets and revitalizing our retail capabilities.

Speaker 3: With its international focus and retail oriented business, Alleyon's GI has diversified our revenue and earnings at a time when institutional demand for fixed income continues to adjust to last year's market dislocation.

With its international focus and retail oriented business Ali honest tea I has diversified our revenue and earnings at a time when institutional demand for fixed income continues to adjust to last year's market dislocations.

Speaker 3: Our international distribution partner, Stifle, continue to drive growth in investment management.

Our international distribution partnerships will continue to drive growth in investment management.

But I said focus provides boy with new capabilities and benefits administration access to new employer markets and a platform to advance our strategic vision for workplace benefits and savings.

Speaker 3: Benefit focus provides boy with new capabilities and benefits administration Access to new employer markets and a platform to advance our strategic vision for workplace benefits and savings

Speaker 3: With open enrollment season currently underway, we're focused on delivering outstanding service to our customers, which we see as a key driver of growth that will help us both retain and expand our customer base.

With the open enrollment season currently underway with focus on delivering outstanding service to our customers, which we see as a key driver of our growth that will help us both routine and expand our customer base.

Speaker 3: And even beyond our current base of benefit focused clients, the acquisition is bringing Boya's workplace benefits and saving strategy into sharper focus for customers.

Even beyond our current base of benefit focus clients. The acquisition is bringing voice workplace benefits and savings strategy into sharper focus for customers.

Speaker 3: It helps define our presence in the market with a message that is resonating with customers in supporting our strong sales pipeline.

It helps define our presence in the market with a message that is resonating with customers and supporting our strong sales pipeline.

Speaker 3: In the third quarter, we took full ownership of our global technology and operations subsidiary, which we have rebranded as Boya India.

In the third quarter, we took full ownership of our global technology and operations subsidiary, which we have rebranded as Voya India.

Speaker 3: By deploying capital in this manner, we've gained a significant strategic flexibility that will allow us to maximize the value of the VoIA India organization, which we've built from scratch in only four years, and today encompasses almost 2,000 VoIA employees.

By deploying capital in this manner, we have gained a significant strategic flexibility that will allow us to maximize the value of the Voya, India organization, which we built from scratch in only four years and today encompasses almost 2000 boy it employees.

Mike Katz: As we look ahead to 2024, we're seeing a strong pipeline of growth across all of our businesses. A few examples. In wealth, we already have 12 billion of plans and implementation for 2024. In health, our outlook includes premium growth at the high end of our 7 to 10 percent target range with a strong sales pipeline for 2024. This includes known sales and life and disability, up more than 40 percent, and voluntary sales up almost 50 percent year-over-year.

Speaker 3: Through Boy India, we are further building our capabilities in technology and customer experience and enhancing the value of our workplace and investment management businesses.

Your boy, India, we are further building our capabilities in technology and customer experience and enhancing the value of our workplace and investment management businesses.

Speaker 3: We are bringing innovative solutions to our customers, but also driving technology that is leading to greater automation, faster speed to market, improved performance, and a more efficient cost structure.

We are bringing innovative solutions to our customers. While also driving technology that is leading to greater automation.

Aster speed to market improved performance and a more efficient cost structure.

Turning to slide six.

Mike Katz: In investment management, with the transition headwinds we experienced in 2023, now largely behind us, we are confident that our strong pipeline will support our return to at least 2 percent organic growth. That pipeline includes unfunded private credit commitments in the institutional channel, robust projected flows in secondary private equity, and continued growth opportunities in international markets. With its preeminence and fixed income and strong investment performance, Voya Investment Management is well-positioned to benefit as cash that is currently on the sideline moves back into longer duration assets.

Speaker 3: Joyous purpose and vision continue to drive positive outcomes for our clients, our colleagues and the communities in which we live and work.

Boy its purpose and vision continue to drive positive outcomes for our clients our colleagues and the communities in which we live and work.

Speaker 3: to support employer and employee needs and recognizing the increasing importance of mental health to our customers. We recently introduced new mental health offerings to our critical illness and accident insurance products.

To support employer and employee needs and recognizing the increasing importance of mental health to our customers. We recently introduced new mental health offerings through our critical illness and accident insurance products.

Speaker 3: to support our communities who once again held our annual employee giving campaign in September . The campaign was a resounding success with approximately 75% of voyacolids participating in programs that collectively supported more than 1900 charitable causes. With that, Don will now provide more details on our performance and results. Don?

To support our communities, we once again held our annual employee giving campaign in September okay.

Campaign was a resounding success with approximately 75% of Voya colleagues participating in programs that collectively supported more than 1900 charitable causes.

Dan will now provide more details on our performance and results Don.

Mike Katz: The combination of our strong pipelines and robust expense discipline will allow us to protect margins and deliver on our financial goals. Turning to capital management, we maintained a strong excess capital position at quarter end of approximately 400 million. We deployed nearly 300 million of capital in the third quarter across debt extinguishment, share buybacks, dividends, and the completion of the transaction to take full ownership of Voya India. More on that in a moment.

Speaker 2: Thank you, Heather. Now let's turn to our results on slide eight.

Thank you Heather now, let's turn to our results on slide eight.

Speaker 2: We delivered a $1.74 of adjusted operating ETS in the third quarter.

We delivered $1 74 of adjusted operating EPS in the third quarter.

Speaker 2: This includes 21 cents of alternative and pre-payment income below our long-term expectations.

This includes 21 sensor alternatives and prepayment income below our long term expectations.

Speaker 2: and 12 cents of other unfavorable impacts within health solutions.

And 12 cents of other unfavorable impacts within health solutions.

Speaker 2: Beginning next quarter, we expect to pre-release our alternative and prepayment income experience to better inform consensus estimates.

Beginning next quarter, we expect to pre release, our alternative and prepayment income experience to better inform consensus estimates.

Mike Katz: We generated an additional 200 million of excess capital this quarter, contributing to over 800 million over the past 12 months, exceeding our 90 percent free cash flow conversion target. Don will share more on our results in performance shortly.

Excluding notable impacts third quarter 2023, adjusted operating EPS was $2 seven compared to $2.24 in the prior year quarter.

Speaker 2: excluding notable impacts. Third quarter 2023 adjusted operating EPS was $2.07 compared to $2.24 in the Power Year quarter.

Favorable loss ratios and health solutions moderated somewhat from exceptional levels in the prior year.

Speaker 2: favorable loss ratios and health solutions moderated somewhat from exceptional levels in the prior year.

Mike Katz: Turning to slide five, after the strategic acquisitions we've made over the past year, we continue to keep our focus squarely on successful business integration. These acquisitions have diversified our revenues, helped us establish a strategic foothold in new markets, and positioned us to capitalize on strong growth opportunities. Our acquisition of the U.S, business of Oliance GI has reshaped Voya investment management, providing access to high growth international markets, and revitalizing our retail capabilities.

Speaker 2: Current year results also reflect growth in fee-based revenues in wealth and investment management.

Current year results also reflect growth in fee based revenues in wealth and investment management.

This was further supported by disciplined spend and prudent capital management.

Speaker 2: This was further supported by discipline, spend, and proven capital management.

Speaker 2: Third quarter gap net income was $248 million reflecting the favorable impact of certain non-cash items.

Third quarter GAAP net income was $248 million, reflecting the favorable impact of certain noncash items.

Free cash flow generation was over $200 million in the quarter, demonstrating another quarter of above our 90% target.

Speaker 2: Recastflow generation was over $200 million in the quarter, demonstrating another quarter above our 90% target.

Mike Katz: With its international focus and retail oriented business, Oliance GI has diversified our revenue and earnings at a time when institutional demand for fixed income continues to adjust to last year's market dislocations. Our international distribution partnership will continue to drive growth and investment management. Management. Benefit focus provides boy with new capabilities and benefits administration, access to new employer markets, and a platform to advance our strategic vision for workplace benefits and savings. With open enrollment season currently underway, we're focused on delivering outstanding service to our customers, which we see as a key driver of growth that will help us both retain and expand our customer base.

Speaker 2: Turning to wealth solutions, we continue to make progress on our workplace benefits and savings strategy, which differentiates us in the marketplace and builds on our leading retirement franchise.

Turning to wealth solutions, we continue to make progress on our workplace benefits and savings strategy, which differentiates us in the marketplace and builds on our leading retirement franchise.

Speaker 2: We ended the quarter with $174 billion, a full service AUM and $510 billion of total client assets.

We ended the quarter with $174 billion of full service say U M and $510 billion of total client assets.

Our total client assets have increased meaningfully over the last 12 months.

Speaker 2: Our total client assets have increased meaningfully over the last 12 months.

Speaker 2: This includes a combined $3 billion in record keeping and full service net flows in the third quarter and $7.5 billion over the last 12 months

This includes a combined $3 billion in record keeping and full service net flows in the third quarter.

Seven $5 billion over the last 12 months.

Speaker 2: Our relentless focus on maximizing customer outcomes in the workplace has helped us win new business and retain key clients in both the corporate and tax-exempt markets.

Our relentless focus on maximizing customer outcomes in the workplace has helped us win new business and retain key clients in both the corporate and tax exempt markets.

Mike Katz: And even beyond our current base of benefit focus clients, the acquisition is bringing Voya's workplace benefits and savings strategy into sharper focus for customers. It helps define our presence in the market with a message that is resonating with customers in supporting our strong sales pipeline.

This focus on our customers has supported growth in full service recurring deposits, which exceeded $14 billion over the last 12 months.

Speaker 2: This focus on our customers has supported growth in full-service recurring deposits, which exceeded $14 billion over the last 12 months.

Turning to slide 10.

Speaker 2: We continue to drive profitable growth and maintain healthy operating margins.

We continue to drive profitable growth and maintain healthy operating margins.

Mike Katz: In the third quarter, we took full ownership of our global technology and operations subsidiary, which we have rebranded as Voya India. By deploying capital in this manner, we've gained a significant strategic flexibility that will allow us to maximize the value of the Voya India organization, which we've built from scratch in only four years and today encompasses almost 2,000 Voya employees. Through Voya India, we are further building our capabilities in technology and customer experience and enhancing the value of our workplace and investment management businesses. We are bringing innovative solutions to our customers, but also driving technology that is leading to greater automation, faster speed to market, improved performance, and a more efficient cost structure.

Speaker 2: Wealth Solutions generated $179 million of adjusted operating earnings in the quarter and $630 million over the last 12 months.

Wealth solutions generated $179 million of adjusted operating earnings in the quarter.

$630 million over the last 12 months.

Speaker 2: Net revenues were higher year over year and continue to reflect the benefit of our diverse revenue stream

Yes, the news were higher year over year and continue to reflect the benefit of our diverse revenue streams.

Speaker 2: In the quarter, we continue to see elevated fixed surrenders and lower transfers from variable investments to fixed accounts from our participants.

In the quarter, we continued to see elevated fixed surrenders and lower transfers from variable investments to fixed accounts from our participants.

Speaker 2: While we expect 4th quarter spread income to be consistent with the 3rd quarter, participant behavior is uncertain due to the macro environment which will drive trends heading into 2024.

While we expect fourth quarter spread income to be consistent with the third quarter participant.

Behavior is uncertain due to the macro environment, which will drive trends heading into 2024.

We continue to maintain margins within our target range of 36% to 40%.

Speaker 2: We continue to maintain margins within our target range of 36 to 40 percent.

Speaker 2: Administrative expenses were $12 million lower than the second quarter.

Administrative expenses were $12 million lower than the second quarter.

Mike Katz: Turning to slide six, Voya's purpose and vision continue to drive positive outcomes for our clients, our colleagues and the communities in which we live and work. To support employer and employee needs and recognizing the increasing importance of mental health to our customers, we recently introduced new mental health offerings through our critical illness and accident insurance products. To support our communities, we once again held our annual employee giving campaign in September. The campaign was a resounding success with approximately 75% of Voya colleagues participating in programs that collectively supported more than 1900 charitable causes.

Speaker 2: We expect fourth quarter expenses to increase back to second quarter levels, given the impact of seasonal spending.

We expect fourth quarter expenses to increase back to second quarter levels, given the impact of seasonal spending.

Speaker 2: Having in the 2024, we have taken the additional actions to ensure expenses support are targeted operating margin.

Heading into 2024, we have taken additional actions to ensure expenses support our targeted operating margins.

Speaker 2: While we expect full service net outflows of $2 to $3 billion next quarter, this is mostly driven by one large case departure.

While we expect full service net outflows of $2 billion to $3 billion next quarter. This was mostly driven by one large case departure.

Speaker 2: We have a robust pipeline, which includes $12 billion of plans and implementation for 2024. This is nearly 15% higher compared to the same time last year.

We have a robust pipeline, which includes $12 billion of plans and implementation for 2024. This is nearly 15% higher compared to the same time last year.

Turning to health solutions are excellent year to date results reflect our significant growth and favorable underwriting experience in the year.

Speaker 2: Turning to health solutions are excellent year-to-date results reflect our significant growth and favorable underwriting experience in the year.

Don Templin: With that, Don will now provide more details on our performance and results. Done? Thank you, Heather.

Annualized in force premium and fee growth was approximately 15% excluding benefit focus.

Speaker 2: annualized in-force premium and fee growth was approximately 15% excluding benefit focus.

Don Templin: Now let's turn to our results on slide eight. We delivered a $1.74 of adjusted operating ETS in the third quarter. This includes 21 cents of alternative and prepayment income below our long-term expectations and 12 cents of other unfavorable impacts within health solutions. Beginning next quarter, we expect to pre-release our alternative and prepayment income experience to better inform consensus estimates. Excluding notable impacts, third quarter 2023, adjusted operating ETS was $2.7 compared to $2.24 in the prior year quarter.

Speaker 2: This was substantially better than our 7 to 10% growth target.

This was substantially better than our 7% to 10% growth target.

Speaker 2: and was driven by strong sales and favorable retention across all product lines.

It was driven by strong sales and favorable retention across all product lines.

Speaker 2: Our total aggregate loss ratio was 66 percent on a trailing 12-month basis.

Our total aggregate loss ratio was 66% on a trailing 12 month basis.

Speaker 2: While some of the second-quarter favorability and stop-loss reversed this quarter, results remain favorable.

While some of the second quarter favorability in stop loss reverse this quarter results remain favorable.

We expect stop loss ratios will trend towards our long term target range of 77% to 80% in 2024.

Speaker 2: We expect stop loss ratios with trend towards our long-term target range of 77 to 80% in 2024.

Speaker 2: We are lowering our long-term total aggregate loss ratio target to 69 to 72% down from 70 to 73%.

We are lowering our long term total aggregate loss ratio target to 69% to 72% down from 70% to 73%.

Don Templin: Favourable loss ratios and health solutions moderated somewhat from exceptional levels in the prior year. Current year results also reflect growth in fee-based revenues in wealth and investment management. This was further supported by discipline spend and proven capital management. Third quarter gap net income was $248 million, reflecting the favorable impact of certain non-cash items. Recastflow generation was over $200 million in the quarter, demonstrating another quarter above our 90% target.

This was driven by strong underwriting and substantial growth in our voluntary block.

Speaker 2: This is driven by strong underwriting and substantial growth in our voluntary block.

Turning to slide 12.

Speaker 2: Our significant growth and favorable underwriting experience over the last year resulted in approximately $350 million of adjusted operating earnings over the trailing 12 month period.

Our significant growth and favorable underwriting experience over the last year resulted in approximately $350 million of adjusted operating earnings over the trailing 12 months period.

Speaker 2: Adjusted operating earnings in the quarter were $53 million.

Adjusted operating earnings in the quarter were $53 million.

Results in the quarter include one time unfavorable impacts from our annual assumption review and a nonrecurring legal reserve.

Speaker 2: Results in the quarter include one time unfavorable impacts from our annual assumption review and a non-recurring legal reserve.

Speaker 2: Excluding these impacts, adjusted operating earnings were $71 million.

Don Templin: Turning to wealth solutions, we continue to make progress on our workplace benefits and savings strategy, which differentiates us in the marketplace and builds on our leading retirement franchise. We ended the quarter with $174 billion of full service AUM and $510 billion of total client assets. Our total client assets have increased meaningfully over the last 12 months. This includes a combined $3 billion in record keeping and full service net flows in the third quarter and $7.5 billion over the last 12 months.

Excluding these impacts adjusted operating earnings were $71 million.

Speaker 2: Third quarter revenues from 36% year over year, reflecting strong, enforced premium growth, and the addition of benefit-focused revenues.

Third quarter revenues grew 36% year over year, reflecting strong in force premium growth and the addition of benefit focus revenues.

Adjusted operating margins were 32, 2% illustrating prudent expense management, while investing for growth.

Speaker 2: Adjusted operating margins were 32.2% illustrating prudent expense management while investing for growth.

Speaker 2: Looking ahead, we expect administrative expenses to increase by 10 to $15 million in the fourth quarter, reflecting seasonality and our first open enrollment season with benefit focus.

Looking ahead, we expect administrative expenses to increase by $10 million to $15 million in the fourth quarter.

Collecting seasonality and our first open enrollment season with benefit focus.

Speaker 2: We've had a strong start to the 2024 renewal of sales season.

We've had a strong start to the 2020 for renewal sales season.

Don Templin: Our relentless focus on maximizing customer outcomes in the workplace has helped us win new business and retain key clients in both the corporate and tax exempt markets. This focus on our customers has supported growth in full service recurring deposits, which exceeded $14 billion over the last 12 months.

Speaker 2: and remain confident in growing our book and bringing solutions to our customers that improve financial outcomes in the workplace.

And remain confident in growing our book and bringing solutions to our customers that improved financial outcomes in the workplace.

Turning to slide 13.

Investment management has a multi decade track record of generating significant value for our clients across the different market cycles.

Speaker 2: Investment management has a multi-decade track record of generating significant value for our clients across different market cycles.

Don Templin: Turning to slide 10, we continue to drive profitable growth and maintain healthy operating margins. Wealth solutions generated $179 million of adjusted operating earnings in the quarter and $630 million over the last 12 months. Net news were higher year over year and continue to reflect the benefit of our diverse revenue streams. In the quarter, we continue to see elevated fixed surrenders and lower transfers from variable investments to fixed accounts from our participants.

As Heather mentioned earlier our flows this year have been affected by challenging market dynamics and strategic decisions made to modernize and streamline our platform.

Speaker 2: As Heather mentioned earlier, our flows this year have been affected by challenging market dynamics and strategic decisions made to modernize and streamline our platform.

Speaker 2: Specifically, the transition away from our former international distribution partnership to Oliance GI contributed $3.3 billion of the overall $4.3 billion of net outflows in the third quarter.

Specifically the transition away from our former international distribution partnership to Ali <unk> contributed $3 $3 billion of the overall $4 $3 billion of net outflows in the third quarter.

With this transition now largely behind US we can build on the momentum with our audience Gi partnership, which has added $3 billion of net flows since inception.

Speaker 2: With this transition now largely behind us, we can build on the momentum with our Alley-Ons G.I. partnership, which has added $3 billion of net flows since inception.

Don Templin: While we expect fourth quarter spread income to be consistent with the third quarter, our participant behavior is uncertain due to the macro environment, which will drive trends heading into 2024. We continue to maintain margins within our target range of 36 to 40%. Administrative expenses were $12 million lower than the second quarter. We expect fourth quarter expenses to increase back to second quarter levels given the impact of seasonal spending. Having in the 2024, we have taken additional actions to ensure expenses support our target operating margins.

Additionally, a majority of the general account assets have now transitioned back to vulnerable.

Speaker 2: Additionally, a majority of the general account assets have now transitioned back to venerable.

Speaker 2: The remaining general count and variable portfolio assets will transfer over time and is included in our margin and revenue guidance.

The remaining general account and variable portfolio assets will transfer over time.

<unk> is included in our margin and revenue guidance.

Looking forward, we have a strong unfunded pipeline of over $10 billion from a diverse source of strategies and expect to return to our organic growth target of over 2% next year.

Speaker 2: Looking forward, we have a strong unfunded pipeline of over $10 billion from a diverse source of strategies and expect to return to our organic growth target of over 2% next year.

Turning to slide 14.

Investment management delivered adjusted operating earnings of $49 million in the third quarter.

Speaker 2: Investment management delivered adjusted operating earnings of $49 million in the third quarter, net of Allianz GI's non-controlling interest.

Don Templin: While we expect full service net outflows of $2 to $3 billion next quarter, this is mostly driven by one large case departure. We have a robust pipeline which includes $12 billion of plans and implementation for 2024. This is nearly 15% higher compared to the same time last year.

Net of all of <unk> Gis Noncontrolling interest.

Speaker 2: and $174 million on a trailing bulk month base.

And $174 million on a trailing 12 month basis.

Speaker 2: Net revenues grew 21.8% excluding notables on a trailing 12 month basis as we added AUM and revenues from Maliance GI.

Net revenues grew 21, 8% excluding notables on a trailing 12 month basis, as we added AUM and revenues from <unk> Gi.

Speaker 2: Third quarter adjusted operating margin, excluding notables, was 25.5% on a trailing 12-month basis.

Don Templin: Turning to Health Solutions, our excellent year-to-date results reflect our significant growth and favorable underwriting experience in the year. Analyzed in-force premium and fee growth was approximately 15% excluding benefit focus. This was substantially better than our 7-10% growth target and was driven by strong sales and favorable retention across all product lines. Our total aggregate loss ratio was 66% on a trailing 12-month basis. While some of the second quarter favorability and stop loss reverse this quarter results remain favorable.

Third quarter adjusted operating margin, excluding notables was 25, 5% on a trailing 12 month basis.

We continue to manage spend to position us for further margin expansion heading into 2024.

Speaker 2: We continue to manage spend to position us for further margin expansion heading into 2024.

Speaker 2: Looking ahead, we are well positioned to benefit from a rotation back into higher yielding fixed income strategy.

Looking ahead, we are well positioned to benefit from a rotation back into higher yielding fixed income strategies.

Speaker 2: Further, our diversified and differentiated product pipeline and international distribution position us well for future growth.

Further our diversified and differentiated product pipeline and international distribution position us well for future growth.

Turning to slide 15.

Speaker 2: We ended the quarter with excess capital of approximately $400 million.

We ended the quarter with excess capital of approximately $400 million.

Speaker 2: We generated $200 million of capital in the third quarter and $800 million over the last 12 months.

Don Templin: We expect stop loss ratios will trend towards our long-term target range of 77 to 80% in 2024. We are lowering our long-term total aggregate loss ratio target to 69 to 72% down from 70 to 73%. This is driven by strong underwriting and substantial growth in our voluntary block.

We generated $200 million of capital in the third quarter and $800 million over the last 12 months consistent.

Speaker 2: Consistent with our 90% free cash flow conversion target.

Consistent with our 90% free cash flow conversion target.

Speaker 2: In the third quarter, we deployed approximately $300 million of capital.

In the third quarter, we deployed approximately $300 million of capital.

Speaker 2: This included nearly $100 million of sharey purchases and dividends.

This included nearly $100 million.

Share repurchases and dividends.

Speaker 2: With the recent debt maturity behind us, our leverage ratio is now in the middle of our long-term reign.

With the recent debt maturity behind us our leverage ratio is now in the middle of our long term range.

Don Templin: Turning to slide 12, our significant growth and favorable underwriting experience over the last year resulted in approximately 350 million dollars of adjusted operating earnings over the trailing 12-month period. Adjusted operating earnings in the quarter were 53 million dollars. Results in the quarter include one time unfavorable impacts from our annual assumption review and a non-recurring legal reserve. Excluding these impacts, adjusted operating earnings were 71 million dollars. Third quarter revenues from 36% year over year reflecting strong, enforced premium growth and the addition of benefit-focused revenues.

Speaker 2: Given this, your return capital deployment will be focused on sharey purchases and dividends.

Given this.

Return capital deployment will be focused on share repurchases and dividends.

Our baseline expectations are to return approximately $200 million in the fourth quarter.

Speaker 2: Our baseline expectations are to return approximately $200 million in the fourth quarter.

Speaker 2: Looking ahead, we will continue to prudently manage our balance sheet and deploy capital as we generated.

Looking ahead, we will continue to prudently manage our balance sheet and deploy capital as we generated.

Turning to slide 16.

We remain on track to achieve our targeted EPS CAGR target of 12% to 17% for the three year period that will end in 2024.

Speaker 2: We remain on track to achieve our targeted EPS Kager target of 12 to 17% for the three-year period that will end in 2024.

We have taken additional expense action to ensure we protect margins and achieve our financial targets.

Speaker 2: We have taken additional expense action to ensure we protect margins and achieve our financial targets.

Don Templin: Adjusted operating margins were 32.2%, illustrating prudent expense management while investing for growth. Looking ahead, we expected administrative expenses to increase by 10 to 15 million dollars in the fourth quarter, reflecting seasonality, and our first open enrollment season with benefit-focused.

Speaker 2: We continue to generate commercial momentum, our strong pipelines across all three segments support our outlook for growth, and we will remain prudent with our capital.

We continue to generate commercial momentum.

Our strong pipelines across all three segments support our outlook for growth.

And we will remain prudent with our capital.

We will now begin the question and answer session to ask a question you may have.

Don Templin: We have had a strong start to the 2024 renewal sales season and remain confident in growing our book and bringing solutions to our customers that improved financial outcomes in the workplace.

Speaker 1: To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star.

Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press star two as a reminder, participants are limited to one question and one follow up.

Speaker 1: As a reminder, participants are limited to one question and one follow-up. One moment.

Don Templin: Turning to slide 13, investment management has a multi-decade track record of generating significant value for our clients. That's across different market cycles. As Heather mentioned earlier, our flows this year have been affected by challenging market dynamics and strategic decisions made to modernize and streamline our platform. Specifically, the transition away from our former international distribution partnership to Aliens GI contributed $3.3 billion of the overall $4.3 billion of net outflows in the third quarter.

One moment, please while we poll for questions.

Our first question.

Speaker 1: Our first question goes to Elise Greenspan with Wells Fargo. Please proceed with your question. Please proceed with your question.

It goes to Elyse Greenspan with Wells Fargo. Please proceed with your question.

Don Templin: With this transition now largely behind us, we can build on the momentum with our Aliens GI partnership, which has added $3 billion of net flows since inception. Additionally, a majority of the general account assets have now transitioned back to Venerable. The remaining general account and variable portfolio assets will transfer over time and is included in our margin and revenue guidance. Looking forward, we have a strong unfunded pipeline of over $10 billion from a diverse source of strategies and expect to return to our organic growth target of over 2 percent next year.

Okay.

Alicia you there.

Sorry, sorry, I was on mute My first question Amin on investment management.

Speaker 1: Sorry, I was on mute. My first question on is on investment management. I was just hoping to get some additional color. I know you guys spoke about the pipeline that you have in that business around 10 billion. If you could compare that to historical levels. And then second of all, how much more on outflows are you expecting from the NIP relationship and should that all come through your results in the fourth quarter, mostly?

I was just hoping to get some additional color I know you guys spoke about the pipeline.

You have in that business around 10 billion. If you can compare that to historical levels and then second of all.

How much more on outflows are you expecting from the NII and in IP relationship and does that all come through your results in the fourth quarter, mostly.

Yes.

Speaker 1: Thanks for your question. We'll jump in and talk about our optimism on the pipeline. Yeah, absolutely. Thank you, Elise. So let me actually start with the second question, then I'll pivot to the pipeline itself. So NNIP, yes, we are expecting outflows in the fourth quarter of half a billion to a billion dollars. And that will...

Thanks Christine.

Jump in and talk about our optimism on the pipeline yeah, absolutely. Thank you Alicia So let me actually start with the second question and then I'll pivot to the to the pipeline itself. So in an IP, but yes, we are expecting outflows in the fourth quarter of <unk>.

<unk> 1 billion $2 billion and that well.

Speaker 3: largely put n and i p behind us so think of that as a 2020 three event uh... for them now moving then to the the pipeline is we shared uh... over ten billion let me

Largely it really put in an IP behind us so think of that as a 2023 event for.

For Vim now moving then to the pipeline as we shared over 10 billion let me.

Don Templin: Turning to slide 14, investment management delivered adjusted operating earnings of $49 million in the third quarter, net of Oliance GI's non-controlling interest, and $174 million on a trailing 12-month basis. Net revenues grew 21.8 percent excluding notables on a trailing 12-month basis as we added AUM and revenues from Oliance GI. Third quarter adjusted operating margin excluding notables was 25.5 percent on a trailing 12-month basis. We continue to manage spend to position us for further margin expansion heading into 2024. Looking ahead, we are well positioned to benefit from a rotation back into higher yielding fixed income strategies. Further, our diversified and differentiated product pipeline and international distribution position us well for future growth.

Speaker 3: contextualize that for you as far as history. So compared to a year ago, we're over 3X, the size of the pipeline entering in 2024 versus 2023. And so really seeing a real pickup in momentum here. And one of the things to release that we've done for consistency is, it's rekeeping that discussion on that view.

Texture lies that for you as far as history, so compared to a year ago. We're over <unk>. The size of the pipeline entering 2024 versus 2023, and so really seeing a real pickup in momentum here and one of the things to release that we've done for consistency.

It's we're keeping that discussion on that view more on what the traditional pipeline view of vendors and what I mean by that is that U S distribution and what that doesn't include is.

Speaker 1: more on what the traditional pipeline view of them is, what I mean by that is that's US distribution and what that doesn't include is

Speaker 4: alliance and so again that and so obviously the opportunity when you think about their distribution reach the global demand for fixed income that we see notably out of asia we've got a lot of opportunities there so again wanted to keep it consistent what is that 10 billion dollars

Ali answer so against that and so obviously the opportunity when you think about their distribution reach the global demand for fixed income that we see notably out of Asia. We've got a lot of opportunities. There. So again wanted to keep it consistent what does that $10 billion unfunded wins and very high <unk>.

Speaker 4: unfunded wins and very high probability institutional wins where we are a finalist. So again, the opportunity pipelines growing every day is bigger. We have a lot of excitement and confidence to move into 24 and remain confident about our two plus organic growth next year.

<unk> ability institutional wins, where we are a finalist so again the opportunity pipeline is growing everyday it's bigger we have a lot of excitement and confidence.

Don Templin: Turning to slide 15, we ended the quarter with excess capital of approximately $400 We generated $200 million of capital in the third quarter and $800 million over the last 12 months, consistent with our 90 percent free cash flow conversion target. In the third quarter, we deployed approximately $300 million of capital. This included nearly $100 million of share repurchases and dividends. With the recent debt maturity behind us, our leverage ratio is now in the middle of our long-term range.

Move into 'twenty, four and remain confident about our two plus organic growth next year.

Speaker 4: Thanks. And then my second question, you guys gave a target for capital return to 200 million for the fourth quarter. And you also mentioned, right, you're within your target debt leverage. So should we expect capital return to improve from that 200 million level in 24, you know, as we think about your, your earnings growing from here.

Thanks, and then my second question you guys gave a target for capital return of 200 million for the fourth quarter.

And you also mentioned right, you're with and your target debt leverage.

So should we expect capital return to improve from that $200 million level.

And 24.

Think about your earnings growing from here.

Don Templin: Given this, your return capital deployment will be focused on share repurchases and dividends. Our baseline expectations are to return approximately $200 million in the fourth quarter. Looking ahead, we will continue to prudently manage our balance sheet and deploy capital as we generate it.

Yes, yes at least this is Don.

Speaker 2: Yeah, at least this is done. This 2023 was an interesting year because we had a debt retirement that came up in the third quarter. So we had to deal with that. We've historically been maybe a little bit more balanced around share repurchase and debt retirement quarter to quarter. This year was a little bit...

This 2023 was an interesting year, because we had a debt retirement that came up in the third quarter. So we had to deal with that we've historically been maybe a little bit more balanced around share repurchase and debt retirement quarter to quarter.

This year was a little bit different we had a $162 million of share repurchase in the first quarter. We had some debt retirement in the second quarter that limited a little bit.

Speaker 2: $162 million of share repurchase in the first quarter. We had some debt retirement in the second quarter that limited a little bit the amount of share repurchase. And now we're guiding around the $200 million of share repurchase and dividends in the fourth quarter. We are comfortably in our leverage metric range right now. So you should expect, obviously, fourth quarter what we've guided to.

Don Templin: Turning to slide 16, we remain on track to achieve our targeted EPS Kager target of 12 to 17 percent for the three-year period that will end in 2024. We have taken additional expense action to ensure we protect margins and achieve our financial targets. We continue to generate commercial momentum, our strong pipelines across all three segments to support our outlook for growth, and we will remain prudent with our capital.

The amount of share repurchase and now we're guiding.

We're guiding around the $200 million of share repurchase and dividends in the fourth quarter. We are comfortably in our leverage metric range right now so.

You should expect obviously fourth quarter, what we've guided to.

Speaker 2: But you should expect it in 2024. Our bias given where we are in our leverage metric right now. Our bias will be to share repurchase and return of capital to shareholders.

You should expect that in 2024, our bias given where we are and our leverage metric right now our bias will be to share repurchase and return of capital to shareholders and maybe simply put at least as you think about going into 'twenty four our focus is on integrations with strategic acquisitions, driving organic growth and as Don.

Speaker 3: And maybe simply put, Elise, as you think about going into 2024, our focus is on integrations of the strategic acquisitions, driving organic growth, and, as Don mentioned, the focus in on returning capital to shareholders in the form of shared buybacks and dividends.

Unknown Executive: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, to. As a reminder, participants are limited to one question and one follow-up.

You mentioned the focus is on returning capital to shareholders in the form of share buybacks and dividends.

Thank you.

Unknown Executive: One moment please, will we pull for questions.

Speaker 1: Our next question comes from Ryan Krueger with KVW. Please proceed with your question.

Our next question comes from Ryan Krueger with <unk>. Please proceed with your question.

Elyse Greenspan: Our first question goes to Elyse Greenspan with Wells Fargo. Please first question is on investment management. I was just hoping to get some, you know, additional color. I know you guys spoke about the pipeline that you have in that business around 10 billion. If you can compare that to historical levels. And then second of all, you know, how much more on outflows are you expecting from the NNIP relationship and should that all come through your results in the fourth quarter mostly? Thanks, Christine.

Hey, Good morning, My first question I suppose on the 12% to 17% EPS CAGR through 2024, I think last call you had talked about.

Speaker 5: Hey, good morning. My first question was just on the 12 to 17% EPS CAGR through 2024. I think in last call, you had talked about expecting to get the higher end of that range. And I'm curious, is that still your expectation at this point?

It could be at the higher end of that range and I'm curious is that still your expectation at this point.

Speaker 2: Yeah, thanks Ryan. So we are confident in being in that 12 to 17% three year EPS growth guidance

Yeah. Thanks, Ryan So we are confident in being in that 12% to 17% three year EPS growth guidance.

Speaker 2: the incremental macro headwinds since the second quarter and the moderating of the stop-loss favorability that occurred makes it, I think, a little bit more difficult to get to the top end of that range.

Incremental macro headwinds since the second quarter and the moderating of the stop loss favorability that occurred makes it I think a little bit more difficult to get to the top end of that range.

Speaker 2: To get us to the top end of that range, we'd likely need some combination of a reversal of the recent equity market declines, a more normal yield curve that's not inverted, and loss ratios at the bottom end of our revised targets. But having said that, our confidence around being in that 12 to 17 percent range

To get us to the top end of that range, we'd likely need some combination of a reversal of the recent equity market declines are more normal yield curve thats not inverted and loss ratios at the bottom end of our revised targets, but having said that our confidence around being in that 12% to 17% range.

Don Templin: We'll jump in and talk about our optimism on the pipeline. Yeah, absolutely. Thank you, Elyse.

Don Templin: So let me actually start with the second question. Then I'll pivot to the pipeline itself. So NNIP, yes, we are expecting outflows in the fourth quarter of half a billion to a billion dollars. And that will largely really put NNIP behind us. So think of that as a 2023 event for them. Now moving then to the pipeline as we shared over 10 billion, let me contextualize that for you as far as history.

Speaker 2: is driven by really a couple things. One, the commercial momentum that we're experiencing in all three business segments as Heather alluded to, the discipline, underwriting that we're experiencing in health and the strong, the really strong year-to-date results that we've had there, and then our continued focus on expense management.

It's driven by really a couple of things one the commercial momentum that we're experiencing in all three business segments as other alluded to the disciplined underwriting that we're experiencing in health and the strong really strong year to date results that we've had there and then our continued focus on expense management.

Got it thank you.

Speaker 5: Got it. Thank you. And my second question was on the investment management, just on the fee rate. Went up a fair amount this quarter. I think there might be some impacts from NNIT and revenue guarantees and whatnot. So.

Don Templin: So compared to a year ago, we're over 3x the size of the pipeline entering 2024 versus 2023. And so really seeing a real pickup in momentum here. And one of the things to Elyse that we've done for consistency is it's rekeeping that discussion on that view more on what the traditional pipeline view of them is and what I mean by that is that's US distribution. And what that doesn't include is alliance.

And my second question was on the investment management just on the fee rate.

Went up a fair amount this quarter I think there might be some impact from <unk> and revenue guarantees and whatnot. So.

Speaker 5: Can you give any more color and just how to think about the FIRAID as we move into 2024 there?

Can you give any more color on just how to think about the fee rate as we move into 2024 there.

Speaker 4: Sure, Ryan. This is Christine. So when you think about the basis points or the fees, you're absolutely right. It has been going up and really, I want you to think about it as far as, you know, outflows have been.

Sure Ryan This is Christine so when you think about the basis points of the fees, you're absolutely right. It has been going up.

And it may lead.

You just think about it as far as the <unk>.

Don Templin: And so again, that and so obviously the opportunity when you think about their distribution reach, the global demand for fixed income that we see notably out of Asia. We've got a lot of opportunities there. So again, wanted to keep it consistent. What is that 10 billion dollars unfunded wins and very high probability institutional wins where we are a finalist? So again, the opportunity pipelines going every day, it's bigger. We have a lot of excitement and confidence to move into 24 and remain confident about our two plus organic growth next year. Thanks.

Outflows have been lower basis point little bit lower margin business and then behind the scenes.

Speaker 4: lower basis point, a little bit lower margin business and then behind the scenes.

Speaker 4: you know, some of the things that we're winning in, like international retail, as well as private debt, those tend to have higher basis points under management. So think about that as the story. How to think about going forward, I mean, certainly given our strategy around growing and leveraging international retail.

Some of the things that we're winning in like international retail as well as private debt those tend to have higher basis points under management. So think about that is the story. How do you think about going forward I mean, it's certainly given our strategy around drilling and leveraging international retail private and alternatives growth you know we would over time expect to continue.

Speaker 4: Private and alternative growth, you know, we would over time expect to continue to see progress there, but I want to note We don't really manage the business to that metric

See progress there, but I wanted to note, we don't really manage the business to that metric, but we think about really as operating margin and growth.

Speaker 4: What we think about really is operating margin and growth.

Speaker 4: and I just want to let you know that you know we may see some quote-unquote pressure to that number next year for great reasons and why I'm saying that is.

Elyse Greenspan: And then my second question. You guys gave a target for capital return, the 200 million for the fourth quarter. And you also mentioned right here within your target debt leverage.

And I just wanted to let you know that we may see some quote unquote pressure to that number next year for great reasons, why im saying that is we are seeing real interest, particularly out of Asia. When you think about fixed income and I think that I want to say the first time in my career, but a long time, China is short rates are actually lower than U S and so I think that the.

Speaker 4: you know we are seeing real interest particularly out of Asia when you think about fixed income and i think that i want to take the first time in my career but a long time time there's short rates are actually lower than u.s. and so i think that the demand for high quality fixed income not only we see it in the u.s. but we're also seeing it in the world and so sometimes it'll be sovereign wealth funds as an example they bring a lot of assets that aggressive fees but we're super excited it's margin of creative

Don Templin: So should we expect capital return to improve from that 200 million level in 24, you know, as we think about your earnings growing from here? Yeah, yeah, at least this is done. This 2023 was an interesting year because we had a debt retirement that came up in the third quarter. So we know we had a deal with that. You know, we've historically been maybe a little bit more balanced around share repurchase and debt retirement quarter to quarter.

Demand for high quality fixed income not only are we seeing it in the U S. But we're also seeing it in the world and so sometimes the sovereign wealth funds as an example, they bring a lot of assets that aggressive fees, but we're super excited it's margin accretive and again, what we're managing to is that organic growth and we see great.

Speaker 4: And again, what we're managing to is organic growth and we see great opportunities in 2024.

Don Templin: This year was a little bit different. We had $162 million a share repurchase in the first quarter. We had some debt retirement in the second quarter that limited a little bit that amount of share repurchase. And now we're guiding, you know, we're guiding around the $200 million of share repurchase and dividends in the fourth quarter. We are comfortably in our leverage metric range right now. So, you know, you should expect, obviously, fourth quarter what we've guided to, but you should expect it in 2024. Our bias, given where we are in our leverage metric right now, our bias will be to share repurchase and return of capital to shareholders.

Opportunities in 2024.

Great. Thank you.

Speaker 1: Our next question comes from Alex Scott with Goldman Sachs, please proceed with your question.

Our next question comes from Alex Scott with Goldman Sachs. Please proceed with your question.

Hi, good morning.

Speaker 6: Hi, good morning. First one I had for you is just on the app.

First one I had for you is just on the <unk>.

Speaker 6: health benefit focus business and common set of pretty optimistic around the year end and it's just interesting if you could open more on you know how the cross selling is going I mean are you expecting this could potentially get a bigger bump in growth this year because of some of the cross selling efforts and you're you know across you different clients and you know is that something we should be thinking about how to end the next quarter

But if a focus business.

Comments that are pretty optimistic around the year end and I was just interested if you could opine moron.

The cross selling is going I mean are you expecting that this could potentially get a bigger bumping growth this year because of some of the cross selling efforts.

Yeah.

Don Templin: And maybe simply put, Elyse, as you think about going into 24, our focus is on integrations of the strategic acquisitions, driving organic growth, and as Don mentioned, the focus and on returning capital to shareholders in the form of share by vaccine dividends. Thank you.

Across your different clients in there or is that something we should be thinking about it in the next quarter.

Speaker 7: Alex, this is Rob of start and I guess Heather me want to chime in on the back end of this one. Look, we're really excited about the conversations that are going on, but I want to be clear that this is a business where sort of the cycle of sales.

Hey, Alex this is Ron.

Starting on I guess, how they may want to chime in on the back end of this one.

Look we're really excited about the conversations that are going on but I want to be clear that this is a business where sort of the cycle of sale.

Ryan Krueger: Our next question comes from Ryan Krueger with KVW. Please proceed with your question. Hey, good morning.

Speaker 7: And we talked about this at acquisition, is just longer, right? So at the technology-driven sale, those are big decisions, generally, or unseating some prior technology provider.

And we talked about this acquisition is just longer right. So it's a technology driven sale those are big decisions generally youre unseating some prior technology provider.

Don Templin: My first question was to sum the 12 to 17% EPS Tager through 2024. I think in last poll, you had talked about expecting to be at the higher end of that range as I'm curious, is that still your expectation at this point? Yeah, thanks Ryan. So, we are confident in being in that 12 to 17% three year EPS growth guidance. The incremental macro headwind since the second quarter and the moderating of the stop loss favorability that occurred makes it a little bit more difficult to get to the top end of that range.

Speaker 7: And so it tends to be more of a 12 to 15 month sort of sales cycle.

So it tends to be more of a 12 to 15 months sort of sales cycle. So I wouldn't think about things from a sort.

Speaker 7: So I wouldn't think about things from a, you know, sort of, hey, we're going through annual enrollment now, as we talked about, and then you're going to see some, you know, sort of major change in what you've seen quarter to quarter. It's really about, as we think about it, how are we building momentum into 2015?

Hey, we're going to wring NOL enrollment now as we talked about and then youre going to see some sort of age or change in what <unk> seen quarter to quarter. It's really about as we think about it how are we building momentum into 2015.

Don Templin: To get us to the top end of that range, we'd likely need some combination of a reversal of the recent equity market declines, a more normal yield curve that's not inverted and lost ratios at the bottom end of our revised targets. But having said that, our confidence around being in that 12 to 17% range is driven by really a couple things. One, the commercial momentum that we're experiencing in all three business segments, as Heather alluded to, the discipline underwriting that we're experiencing in health and the strong, the really strong year-to-date results that we've had there. And then our continued focus on expense management.

Ryan Krueger: Got it. Thank you.

Speaker 7: and that may sound like a long time away, but again when you factor in that 25, I should say, you should factor in just that sales cycle that's going on there. And so the conversations that we're having are different. Importantly, they all sort of lead into this confidence around bringing together benefits and savings.

And that May sound like a long time away, but again when you factor in that 25 I should say.

Should factor in just that sales cycle, that's going on there and so.

The conversations that we're having are different.

Fortunately, they all sort of lead into this confidence around bringing together benefits and savings.

Speaker 7: simplifying an environment for HR teams that is incredibly complex. Thinking about leveraging, you know, again, a technology decision with product decisions over time. Again, those things may not all happen at once, but the build over a long period of time is what we get really excited about and we have optimism around.

Simplifying and environment for HR teams. It is incredibly complex thinking about leveraging again, the technology decision with product decisions over time again, those things may not all happen at once but the build over a long period of time is what we get really excited about and we have optimism around.

We just had people in front of our board from our sales distribution team share. My are examples of the conversations and how they are different today than they would have been 12 months ago.

Speaker 3: We just had people in front of our board from our sales distribution team sharing live examples of the conversations and how they're different today than they would have been 12 months ago. So that leaves us in a really strong position from strategic alignment with where we're going and all that's Heather Chiming. Yeah, thanks, Rob. And I'll really emphasize a few key points. Do you think about it's been a year since we announced the acquisition?

Christine Hurtsellers: And my second question was on the investment management just on the fee rate went up a fair amount this quarter. I think there might be some impacts from NNIT and revenue guarantees and whatnot.

So that leaves us in a really strong position from strategic alignment with where we're going and I'll, let Heather China, yes, Thanks, Robyn and I would really emphasize a few key points do you think about it it's been a year since we announced the acquisition and this has been a highly strategic acquisition for us to be able.

Christine Hurtsellers: So can you give any more color on just how to think about the fee rate as we move into 2024 there? Sure. Ryan, this is Christine. So when you think about the basis points for the fees, you're absolutely right. It has been going up. And I want you to think about it as far as, you know, outflows have been lower basis point, a little bit lower margin business and then behind the scenes, you know, some of the things that the winning in like international retail as well as private debt, those tend to have higher basis points under management.

Speaker 3: And this has been a highly strategic acquisition for us.

Speaker 3: uh... to be able to bring on top benefit administration platform to the point one secondly you think about the benefits of voya is the owner of this and

Bring on top benefits administration platform set at that point.

Secondly, do you think about the benefits of Voya as the owner of this and we have been able to accelerate bringing new capabilities to market for benefit focus we did so on time to be able to hit the sales cycle third point is we've stabilized the service heading into open enrollment and four as Rob mentioned, we've got a.

Speaker 3: We have been able to accelerate bringing new capabilities to market for benefit focus. We did so on time to be able to hit the fail cycle.

Speaker 3: Third point is we've stabilized the service, heading into open enrollment. And for us, as Rob mentioned, we've got a strong pipeline with intermediaries, which is where we see the biggest growth. So we could not be more excited about what benefit focus will bring for us.

Christine Hurtsellers: So think about that as a story. How to think about going forward? I mean, certainly given our strategy around growing and leveraging international retail, private and alternative growth, you know, we would over time expect to continue to see progress there. But I want to note, we don't really manage the business to that metric. What we think about really is operating margin and growth. And I just want to let you know that, you know, we may see some quote-unquote pressure to that member next year for great reasons.

Strong pipeline with intermediaries, which is where we see the biggest growth. So we could not be more excited about what benefit focus will bring for us.

Speaker 3: as Rob mentioned, really thinking about it in terms of 25 and beyond. But, you know, we are super excited about this strategic acquisition.

Rob mentioned really thinking about it in terms of 25 and beyond that.

We are super excited about this strategic acquisition.

Speaker 6: Got it. The second question I had is on the Department of Labor producer rule. I know it's early, but just any thoughts on how it could impact your business? And I guess I'm particularly interested in, you know, if you have any views on if it would have any impact on sort of proprietary funds and the Wealth Solutions business or if any impact around like IRA rollovers, that kind of thing. Thanks.

Got it.

Second question I had is on the department of Labor Fiduciary rule I know I know, it's early but just.

Any thoughts on how it could impact your business and I guess im, particularly interested in if you have any views on if it would have any impact on sort of proprietary funds in the wealth solutions business.

Christine Hurtsellers: And why I'm saying that is, you know, we are seeing real interest, particularly out of Asia, when you think about fixed income. And I think that I want to say the first time in my career, but a long time, China or short rates are actually lower than U.S., and so I think that the demand for high quality fixed income, not only are we seeing it in the U.S., but we're also seeing it in the world.

Or if any impact around like IRA rollovers that kind of thing.

Speaker 8: Yeah, Alex, I'll take it and just to say, it's super early with it just coming out, our teams are certainly paying attention to it. We continue to focus in on delivering for our participants and doing right in the best interest. So, again, early days and stay tuned more to come once we get around to read it. Okay, thank you.

Yeah, Alex I'll take it and just to say, it's Super early with just coming out our teams are certainly paying attention to.

Christine Hurtsellers: And so sometimes, you know, the sovereign wealth funds is an example. They bring a lot of assets that address the fees, but we're super excited. It's margin accretive. And again, what we're managing to is organic growth, and we see great opportunities in 2024.

We continue.

Unknown Executive: Thank you.

Focusing on delivering for our participants and doing right in the best interest. So again early early days.

Stay tuned more to come once we get our arms around it.

Okay. Thank you.

Our next question comes from Sydney.

With Jefferies. Please proceed with your question.

Alex Scott: Our next question comes from Alex Scott with Goldman Sachs. Please proceed with your question. Hi, good morning. First one I had for you is just on the health benefit focus business and comments had a pretty optimistic around the year end. And it was just interesting if you could open more on how the cross selling is going. I mean, are you expecting that this could potentially get a bigger bump in growth this year because of some of the cross selling efforts and your across your different clients. And is that something we should be thinking about headed into the next quarter?

Speaker 5: uh... thanks for mornin um... a couple on well solutions um... i think you talked about it twelve billion dollar pipeline

Thanks, Good morning.

On wealth solutions.

You've talked about a $12 billion pipeline.

Should we think about that is essentially in flight in terms of onboarding or is there still some.

Speaker 9: We think about that as essentially in flight in terms of onboarding or is there still some, you know,

Is there still like a risk that you don't get that like Youre in final.

Negotiations are final contest with other players I just when we talk about these pipelines I just want to understand how we're sort of defining them like how confident can we be in closing on the pipeline.

Yes sure Sumit. This is Rob again. So this we feel very confident then we've got people sweating over implementation as we speak. So these will obviously come in over over the full year.

Speaker 7: Yeah, sure. Sunit, this is Rob again. So this we feel very confident in. We've got people, you know, sweating over implementation as we speak. So these will obviously come in over the full year period. But the way to think about them is clients in implementation. And so the level of uncertainty is, you know, very unlikely that those things change.

Rob Grubka: Hey, Alex, this is Rob of start and I guess Heather me want to chime in on the back end of this one. Look, we're really excited about the conversations that are going on, but I want to be clear that this is a business where sort of the cycle of sales. And we talked about this at acquisition is just longer right so it's a technology driven sale. Those are big decisions generally are unseating some prior technology provider.

Rob Grubka: And so it tends to be more of a 12 to 15 month sort of sales cycle. So I wouldn't think about things from a sort of hey, we're going through any one room that now as we talked about and then you're going to see some sort of major change in what you seem quarter to quarter. It's really about as we think about it, how we building momentum into 2015. And that may sound like a long time away, but again, when you factor in that 25 I should say you should factor in just that sales cycle that's going on there.

But.

The way to think about them as clients and implementation and so the level of uncertainty is very unlikely that those things change.

Speaker 7: You know, we feel really confident in what we're doing there and what we're seeing. And I would just add...

We feel really confident in what we're doing there and what we're seeing in and I would just add look this is a broad based conversation just stall from one segment of our business or whether you think about tax code as you think about sizes. This represents a 15% jump up over prior year and we really like.

Speaker 7: You know, look, this is a broad-based conversation, not just all from one segment of our business, so whether you think about tax codes, you think about sizes.

Speaker 7: This represents a 15% jump over prior year. And we really like the, you know, and it's consistent with our book of business, but the mix of the business and the strength that implies about the pipeline broadly speaking.

And it's consistent with our book of business, but the mix of the business and the strength that implies about the pipeline broadly speaking.

Yeah.

Speaker 9: Got it, okay. And then I guess for Don, as we think about capital deployment going forward, maybe a follow-up to Elise's question.

Got it Okay, and then I guess for Don as we think about capital deployment going forward, maybe a follow up to Lisa's question should we think about the capital deployment really being a function of the free cash flow you generate or would you be contemplating drawing down some of that $400 million of excess capital that you have at the end of the quarter.

Speaker 9: should we think about the capital deployment really being a function of the free cash flow you generate or would you be contemplating going down some of that four hundred million of excess capital that you have it

Rob Grubka: And so the conversations that we're having are different. Importantly, they all sort of lead into this confidence around bringing together benefits and savings, simplifying an environment for HR teams that is incredibly complex, thinking about leveraging, you know, again, a technology decision with product decisions over time. Again, those things may not all happen at once, but the build over a long period of time is what we get really excited about and we have optimism around. We just had people in front of our board from our sales distribution team sharing live examples of the conversations and how they're different today than they would have been 12 months ago.

Speaker 2: Yeah, yeah, Cindy. Great question there. So, you know, we've been particularly, I think, thoughtful and prudent this year, given some of the uncertainty around around the macro environment. So we've been very intentional about basically deploying in the current quarter, the capital that we generated in the prior quarter. I would expect that that will continue for some period of time. So we get a little bit more clarity on the macro.

So need great question. There. So we've been particularly I think thoughtful and prudent this year given some of the uncertainty around around the macro environment. So we've been very intentional about base.

Basically deploying in the current quarter the capital that we generated in the prior quarter I would expect that that will continue for some period of time till we get a little bit more clarity on the macro.

Speaker 2: but we define that as excess, and it's called excess for a reason, and our goal over the long term will be to return excess to our shareholders. So there's gonna be some period of time where we're probably having a bit of excess, so we're right now in the $400 million-ish range, but you should expect that as things crystallize a little bit more, some of the uncertainty goes away, that that excess will be trended down.

But we define that as excess and it's called excess for a reason and our goal over the long term will be to return excess to our shareholders. So theres going to be some period of time, where we're probably having a bit a bit of excess. So we're right now in the 400 million.

Heather Lavallee: So that leaves us in a really strong position from strategic alignment with where we're going and I'll let Heather chime in. Thanks, Rob. And I'll really, you know, emphasize a few key points. You think about it's been a year since we announced the acquisition. And this has been a highly strategic acquisition for us to be able to bring on top benefit administration platforms to the point one. Secondly, you think about the benefits of voya as the owner of this entity.

Dollars ish range, but you should expect that as things, but to crystallize a little bit more some of the uncertainty goes away that that excess will be will be.

Trended down yes, mainly build on Don's point is the fact that we've got a long term track record of returning capital to shareholders. When you think about what we've done in the last year alone we talked about resuming share repurchases in the second quarter. We did that we talked about increasing the dividend would double the dividend we brought down our leverage ratio. So you can certainly.

Speaker 3: Yeah, my only build on Don's point is the fact that we've got a long-term track record of returning capital to shareholders. And you think about what we've done in the last year alone. We talked about resuming share repurchases in the second quarter. We did that. We talked about increasing the dividend. We doubled the dividend. We brought down our leverage ratio. So you can certainly expect us to have that focus to continue on returning capital to shareholders into 24. And our confidence in that 90 plus percent free cash flow.

Heather Lavallee: We have been able to accelerate bringing new capabilities to market for benefit focus. We did so on time to be able to hit the fail cycle. Third point is we've stabilized the service heading into open enrollment. And for us, as Rob mentioned, we've got a strong pipeline with intermediaries, which is where we see the biggest growth. So we could not be more excited about what benefit focus will bring for us. As Rob mentioned, really thinking about it in terms of 25 and beyond, but we are super excited about this strategic acquisition. Got it.

Expect us to have that focus to continue on returning capital to shareholders into 24, and our confidence in that 90 plus percent free cash flow.

Got it that's helpful. Thanks.

Our next question comes from John Barnidge with Piper Sandler. Please proceed with your question.

Speaker 1: Our next question comes from John Barnage, which paper samler, please proceed with your question.

Speaker 10: Good morning. Thanks for the opportunity. You've talked about Boya India and talked about

Good morning, and thanks for the opportunity you've talked about boy, India talked about expense and admin admin expense, specifically discipline, maybe as we think about the fee based businesses investment management and wealth solutions can you talk about leveraging way, India within that and human capital.

Alex Scott: The second question I had is on the Department of Labor, producer, rule. I know it's early, but just any thoughts on how could impact your business, and I guess I'm particularly interested. And if you have any views on if they would have any impact on sort of proprietary funds and the wealth solutions business, or if any impact around like IRA rollovers, that kind of thing.

Speaker 10: and admin, admin expense specifically discipline, maybe as we think about the fee-based business investment management and wealth solutions, can you talk about leverage?

Speaker 10: of way India within that in human capital. Is there some dynamic you can talk about like hiring X percent of for new positions in that business or some framing would be helpful for that look there. Thank you.

Is there some dynamic you can talk about like hiring X percent of for new positions in that business or some framing would be helpful for the outlook there. Thank you.

Unknown Executive: Thanks. Yeah, yeah, Alex, I'll take it and just to say it's super early with it just coming out, our teams are certainly paying attention to it. We continue to focus in on delivering for our participants and doing right in the best interest. So again, early days and stay tuned more to come once we get around to read it.

Speaker 3: Yeah, John , I'll take the question. Thank you. So, you know, first, as we think about expense discipline, we've talked about this is not a new muscle. This is something that we have done for a decade. And you think about what we talked about earlier this year, very proud of our teams that we brought down expenses sequentially, particularly within asset management and within the wealth businesses. And, you know, much of those are really reflecting some opportunities we had within integrations, within AGI and benefits of focus.

Yes, John I'll take the question. Thank you. So first as we think about expense discipline. We've talked about this is not a new muscle. This is something that we have done we have done for a decade.

Unknown Executive: Okay.

And do you think about what we talked to we talked about earlier this year very proud of our teams that we brought down expenses sequentially, particularly within asset management and within the wealth businesses.

Unknown Executive: Thank you.

Suneet Kamath: Our next question comes from Sunni with Jeffries. Please proceed with your question. Thanks. Good morning. A couple on wealth solutions. I think you talked about a $12 billion pipeline. Should we think about that as essentially in flight in terms of onboarding, or is there still some, you know, is there still like a risk that you don't get that like you're in final negotiations or final contests with other players? I just when we talk about these pipelines, I just want to understand how we're sort of defining them, like how confident can we be in closing on the pipeline?

Much of that was just really reflecting some opportunities we had within integrations within agi and benefit.

Speaker 3: As we think about our expense actions, we can take going forward. Our focus is really around maintaining our operating margins within wealth and health.

As we think about our expense actions, we can take going forward. Our focus is really around maintaining our operating margins within wealth and health and that 1% margin improvement and investment management that Christine mentioned, so anytime to dimensionalize it feel a little bit to think about the opportunities we have with envoy India.

Speaker 3: and that 1% margin improvement in investment management that Christine mentioned. So, I need to do to to dimensionize it for you a little bit. Think about the opportunities we have with Envoy India.

Specifically within investment management as well as benefit focus on that across the organization that has been a tremendous asset for US also think about a year ago, we purposely brought together, our workplaces and benefit focus and so we continue to see some opportunities there to continue to optimize.

Speaker 3: specifically within investment management as well as benefit focus. I'm going to cross the organization that has been a tremendous asset for us.

Speaker 3: Also think about a year ago we purposely brought together a workplace scene and benefit focus and so

Suneet Kamath: Yeah, sure. Sunni, this is Rob again. So this we feel very confident in. We've got people, you know, sweating over implementation as we speak. So these will obviously come in over over the full year period, but the way to think about them is clients in implementation. And so the level of uncertainty is, you know, very unlikely that those things change. You know, we feel really confident in what we're doing there and what we're seeing.

Speaker 8: We continue to see some opportunities there to continue to optimize that organization to best serve our clients, as well as just, you know, levers we have around discretionary spend. And then finally, we see continued opportunities that will emerge in savings in automation, in AI, and in continuing to simplify our IT footprint. So hopefully that gives you some color.

<unk> to best serve our clients as well as just levers we have around discretionary spend and then finally, we see continued opportunities that will emerge and savings in automation and AI and then continuing to simplify our it footprint. So hopefully that gives you some color.

Suneet Kamath: And I would just add, you know, look, this is a broad based conversation, not just all from one segment of our business. So whether you think about tax codes, you think about sizes, this represents, you know, a 15% jump over prior year. And we really like the, you know, and it's consistent with our book of business, but the mix of the business and the strength that implies about the pipeline broadly speaking. Got it. Okay.

That is very helpful. Thank you very much.

Speaker 10: And then my follow-up question, around the new disclosure or around alternative or variable investment income performance.

And then my follow up question around the new disclosure on alternative or variable investment income performance.

Speaker 10: Can you provide a look forward and give it a one-quarter lag there and maybe talk about performance specifically in this third quarter? Thank you.

Can you provide a look forward in.

Given the one quarter lag there and maybe talk about performance specifically in the third quarter. Thank you.

Speaker 2: I'm sorry, John . I repeat that question. This is on the alternatives.

So I'm sorry, John repeat that question. This is on the alternatives.

Don Templin: And then I guess for down as we think about capital deployment going forward, maybe if follow up to Elise's question, should we think about the capital deployment really being a function of the free cash flow you generate, or would you be contemplating drawing down some of that 400 million of excess capital that you have at the end of the quarter? Yeah, it's a great question there. So, you know, we've been particularly I think thoughtful and prudent this year, given some of the uncertainty around around the macro environment.

Speaker 10: Yeah, so on alternate as you're now going to, sounds like you're going to prerelease it, going forward.

Yes, so on alternatives Youre now going to it sounds like youre going to pre release it.

Going forward.

Speaker 10: Can you talk about your performance in the third quarter specifically, it changed from the second quarter and within that, given it's a one quarter lag asset, is there a look forward you can provide at all into the fourth? Thank you.

Can you talk about your performance in the third quarter, specifically changed from the second quarter and within that given it's a one quarter lag asset is there a look forward you can provide at all into the fourth thank you.

Speaker 2: No, I think really what we're planning to do, you know, we give the information around, you know, the ALTS performance below our long-term expectations, right? So that's, you know, a 9% general expectation around that. We call that out as a notable item. And what we'd like to do is, you know, a few days after the end of the quarter, we will actually, as part of our 8K process, when we publish some other information, we will provide what we achieved in the current quarter so that you all can build that into sort of your consensus number or your expectations around our performance.

No I think I think really what we're planning to do we had we give the information around that.

The ops.

Don Templin: So we've been very intentional about basically deploying in the current quarter, the capital that we generated in the prior quarter. I would expect that that will continue for some period of time so we get a little bit more clarity on the macro. But we define that as excess and it's called excess for a reason and our goal over the long term will be to return excess to our shareholders. So there's going to be some period of time where we're probably having a bit of excess.

Ultra performance below our long term expectations right. So that's.

9% general expectation of our.

We call that out as a notable item and what we'd like to do is.

Few days after the end of the quarter, we will actually as part of our <unk> eight or 8-K process. When we published some other information we will provide.

What we what we achieved in the current quarter. So that you all can build that into sort of your your consensus number or your expectations around our performance. So what's happening now is you take a view around that we publish as part of our earnings and there is a 30 day period, there that you bet.

Don Templin: So we're right now in the 400 million dollars, just dollars of this range. But you should expect that as things crystallize a little bit more, some of the uncertainty goes away that that excess will be will be kind of down. Yeah, my only build on Don's point is the fact that we've got a long term track record of returning capital to shareholders. When you think about what we've done in the last year alone, we talked about resuming share repurchases in the second quarter, we did that, we talked about increasing the dividend, we doubled the dividend, we brought down our leverage ratio. So you can certainly expect us to have that focus to continue on returning capital to shareholders into 24 and our confidence in that 90 plus percent free cash flow. Got it, that's a helpful thanks.

Speaker 2: So what's happening now is you take a view around that, we publish as part of our earnings, and there's a 30-day period there that we may be misaligned on prepayment or the alternatives.

We may be misaligned on prepayments or the.

Alternative below or above expectation. So our goal here really is to give you that information early so that you can work it into your overall estimate.

Speaker 2: below or above expectation. So, our goal here really is to give you that information early so that you can work it into your overall estimate.

Thank you very much.

Speaker 1: Our next question comes from Wilma Burtis with Raymond James. Please proceed with your question.

Our next question comes from Omar <unk> with Raymond James. Please proceed with your question.

Speaker 3: Hey good morning, could you best provide a few additional details on the legal reserve?

Hey, good morning could you guys provide a few additional details on the legal reserves.

Quarter.

John Barnidge: Our next question comes from John Barnidge, which paper Sandler, please proceed with your questions.

Yeah.

Speaker 3: Yeah, this is Rob. It sits within the health business. We won't get into details. It's not at that stage of things, but we've done enough to size it and adjusted it in the results this quarter. And the only thing I'd add, Wilma, is that we do consider it a non-repeatable item.

Yes. This is rob it sits within the health business.

John Barnidge: Good morning, thanks for the opportunity. You've talked about Voya India, talked about expense and admin, admin expense specifically discipline. Maybe as we think about the fee-based business and investment management and wealth solutions, can you talk about leverage Voya India within that in human capital? Is there some dynamic you can talk about, like hiring X percent of the new positions in that business or some framing would be helpful for that look there.

We won't get into the details it's not at that stage of things but.

We don't know enough to the size of it and adjusted it in the results this quarter and the only thing I'd add on that is that we do consider it a non repeatable item.

Speaker 11: Thank you. And could you give a little bit more color on the improved outlook for the health benefit ratio on what's driving that?

Okay. Thank you.

Yes.

Could you give a little bit more color on the improved outlook for the health benefit ratio and what's driving that.

Okay.

Speaker 7: Yeah, so as you look at our business mix, the primary driver of bringing it down a percent, so 69 to 72 versus what was 73, 73, is really the mix of business.

Yes so.

You look at our business mix the primary driver of bringing it down a percent so 69% to 72 versus what was 70 273.

John Barnidge: Thank you. Yeah, John, I'll take the question. Thank you. So, you know, first, as we think about expense discipline, we've talked about this is not a new muscle. This is something that we have done for a decade. And do you think about what we talked about earlier this year? Very proud of our teams that we brought down expenses sequentially, particularly within asset management and within the wealth businesses. And, you know, much of those are just really reflecting some opportunities we had within integrations, within AGI and beneficial focus.

Really the mix of business.

Speaker 7: So as we've successfully grown for a number of years now at a really fast rate, our voluntary business, it's really a reflection of that shift. And obviously, this is a range we'll continue to look at over time as the mix shifts around further. And what we're trying to do is grow responsibly, do it in a way, and I think you're seeing that show up.

So as we successfully.

<unk> successfully grown for a number of years now at a really fast rate our voluntary business.

It's really a reflection of that shift and obviously, it's this is a range. We will continue to look at it over time is as the mix shifts around further.

John Barnidge: As we think about our expense actions, we can take going forward. Our focus is really around maintaining our operating margins within wealth and health, and that 1% margin improvement in investment management that Christine mentioned. So, maybe done to to dimensionize it for you a little bit. Think about the opportunities we have within Voya India, specifically within investment management, as well as benefit focus. I'm going to cross the organization that has been a tremendous asset for us.

What we're trying to do is grow grow responsibly do it in a way and I think youre seeing that show up.

Speaker 3: that is, uh, you know, going to lead a good bottom line. And if I can just add, you know, we're incredibly proud of the results that Robin team have delivered in health ish gear. If you just think about

It is.

Going to lead to good bottom line and if I can just add we're incredibly proud of the results that Rob and team have delivered in health care. If you just think about annualized in force premium growth of 15% well above our 7% to 10% target to 36, 36% growth in revenues and then to still on top of that deliver a loss ratio.

Speaker 3: annualized in-force premium growth 15% well above our 7% to 10% target, the 36% growth in revenues, and then to still on top of that deliver a loss ratio that's below our target. We'll take that all day long, and as Don mentioned, as we mentioned in our comments, we're excited about the pipeline that the team has in front of us.

It's below our target and we will take that all day long and as Don mentioned and as we mentioned in our comments. We're we're excited about the pipeline and that the team has in front of us.

John Barnidge: Also, think about a year ago, we purposely brought together a workplace team and benefit focus. And so, we continue to see some opportunities there to continue to optimize that organization to best serve our clients, as well as just, you know, levers we have around discretionary spend. And then finally, we see continued opportunities that will emerge in savings in automation, in AGI, and in continuing to simplify our IK footprint. So, hopefully that gives you some color. That is very helpful. Thank you very much.

Thank you.

Yes.

Speaker 1: Our next question comes from Tom Gallagher with Evercore ISI. Please proceed with your question.

Our next question comes from Tom Gallagher with Evercore ISI. Please proceed with your question.

Speaker 12: Good morning. Follow-up for Christine on IM, the $10 billion pipeline was related to the U.S., you said.

Good morning, a follow up for Christine on the.

The $10 billion pipeline was related to the U S. You said.

Speaker 12: Can you talk a little bit about what you're thinking about Europe X and NIP? How has it been performing X-excooting NIP? And based on what you're seeing lining up there, would you also expect that to be an inflow contributor for 2024?

Can you talk a little bit about what youre thinking about Europe X and in IP, how has it been performing excluding N and IP.

Unknown Executive: And then a follow-up question around the new disclosure or on alternative or variable investment income performance. Can you provide a look forward and give the one-quarter lag there and maybe talk about performance specifically in the third quarter? Thank you.

And based on what Youre seeing winding up there would you also expect that to be an inflow contributor for 2024.

Okay.

Unknown Executive: So, I'm sorry, John. Repeat that question. This is on all the alternatives. Yes. So, on alternatives, you're now going to, it sounds like you're going to pre-release it. Going forward. Can you talk about your performance in the third quarter specifically? It changed from the second quarter and within that given it the one-quarter lag asset. Is there a look forward? You can provide it all into the fourth. Thank you. No, I think really what we're planning to do, you know, we had, we give the information around, you know, the Alts performance below our long-term expectations, right?

Speaker 4: Yes, thanks. Thanks, Tom. So as far as, you know, what we're seeing.

Yes. Thanks, Thanks, Tom so as far as what we're seeing in the international flows from Allianz since closing the deal they delivered a $6 5 billion and that's predominantly our income and good growth franchise as well as some of our thematic equities. So.

Speaker 4: And the international flows from Oliant's coast and the deal they've delivered does six and a half billion. And that's predominantly our income and growth franchise as well as some of our thematic equities. So, you know, pointing out that income and growth has a $70 billion platform. It has brand recognition and scale and credibility in Asia where a lot of the flows are coming as well as Europe . So pivoting to the past forward, you know, we have launched some funds specifically, you know, the source of the outflows, the largest outflows within NIP with investment-grade credit. And we launched that use that with Oliant. So, if you know we're having conversations, some really important things are happening with that fund, it looks and it's performance. It's a top-desile performer for five years, the very competitive.

Note that income and growth at the $70 billion platform. It has brand recognition and scale and credibility in Asia, where a lot of the flows are coming as well as Europe. So so pivoting to the path forward, we have launched some funds specifically.

The source of the outflows the largest outflows within an IP was investment grade credit and we launched that youth.

Unknown Executive: So, that's, you know, a 9% general expectation around that. We call that out as a notable item. And what we'd like to do is, you know, a few days after the end of the quarter, we will actually as part of our 8K, you know, our 8K process when we publish some other information, we will provide what we achieved in the current quarter so that you all can build that into sort of your consensus number or your expectations around our performance.

He sits with <unk>. So as you know, we're we're having conversations some really important things are happening with that fund it listen it's performance. It's a top decile performer for five years, so very competitive.

Speaker 4: We're also, you know, early in this year, it'll be something called Title 8 for ESG. So we're upgrading that. And as you know in Europe , that designation for ESG is very important in order to compete. So again, and finally, you know, last quarter, we were able to port our long-term track route over to the new fund. So there are a lot of things, lots of great conversations happening. That's just one fund. And then broadly, I would say, you know, we're definitely seeing opportunities

So early in this year it'll be something called title eight for ESG. So we're upgrading that.

No in Europe that designation for ESG is very important in order to compete so again and finally, you know last quarter, we were able to support our long term track record over to the new funds. So there are lots of things lots of great conversations happening. That's just one fund and then broadly I would say we're definitely seeing.

Unknown Executive: So, what's happening now is you take a view around that. We publish as part of our earnings and there's a 30-day period there that, you know, we may be misaligned on prepayment or the alternative below or above expectations. So, our goal here really is to give you that information early so that you can work it into your overall estimate.

Wilma Burdis: Thank you very much.

<unk> not only in credit, but in a number of strategies securitize. This is another example.

Speaker 4: Not only in credit, but in a number of strategies to curatize this is another example.

Speaker 4: in institutional mandates through Ali and not to go on and on. But I just want to make one final final point here around this. What I'm really excited about, you know, this is a transitional year. And when you think about our partnership with NNIT, they only represented three products of ours globally.

Institutional mandates to Elliot.

And not to go on and on but I just want to make one final final point here around the desk I'm really.

Wilma Burdis: Our next question comes from Wilma Burdis with Raymond Jean. Please proceed with your question. Hey, good morning.

Excited about.

This is a transitional year and when you think about our partnership with Nike. They only represented three products of ours globally to credit and our mortgage hedge fund Ali on since a fulsome big funnel distribution relationship they own a little over 24% of them. They are leaning in I mean, they are our long run strategic.

Rob Grubka: Could you just provide a few additional details on the legal reserve recorder? Yeah, this is Rob. It sits within the health business. We won't get into details. It's not at that stage of things, but we don't enough to size it and adjust it in the results. The only thing I'd add, Wilma, is that we do consider it a non-repeatable item.

Speaker 4: to credit and our mortgage hedge fund. Allianz, it's a full, some big funnel distribution relationship. They own a little over 24% of them. They are leaning in. I mean, they are a long run strategic partner. And so I'm really excited about the opportunity to use it with them as we move into 2024 and beyond.

Rob Grubka: Thank you.

And so I'm really excited about the opportunities with that as we move into 2024 and beyond.

Speaker 3: And maybe just a quick build is that the reminder of the 24% ownership state, we have spent an immense amount of time together between teams and are incredibly aligned in terms of the growth of this business. And that's including even at the top of the house, I spent time with Oliver over in Germany, the teams are constantly back and forth. And we just couldn't be more excited about what this joint franchise can deliver going forward.

And maybe just a quick build as the reminder of the 24% ownership stake. We have spent an immense amount of time together between teams and are incredibly aligned in terms of the growth of this business and thats, including even at the top of the have spent time with Oliver over in Germany. The teams are constantly back and forth and we just couldn't be more excite.

Rob Grubka: Could you give a little bit more color on the improved outlook for the health benefit ratio and what's driving that? Yeah, so as you look at our business mix, the primary driver of bringing it down a percent, so 69 to 72 versus what was 73, is really the mix of business. So as we've successfully grown for a number of years now at a really fast rate, our voluntary business, it's really a reflection of that shift.

About what this joint franchise can deliver going forward.

Speaker 12: Appreciate the color on all of that. Just want to shift gears to medical stop loss, the volatility there. Can you peel back the onion a little bit? Was it several large claims?

Appreciate the color.

On all of that just wanted to shift gears to medical stop loss. The volatility there can you Peel back the onion, a little bit was it several large claims.

Was it more concentrated maybe the cause of claims any sign of that continuing.

Speaker 12: Was it more concentrated? Maybe the cause of claims any kind of that continuing? You know, obviously your guide

Rob Grubka: And obviously, this is a range we'll continue to look at over time as the mix shifts around further. And what we're trying to do is grow responsibly, do it in a way, and I think you're seeing that show up that is going to lead to good bottom line. And if I can just add, we're incredibly proud of the results that Rob and team have delivered in health this year. If you just think about annualized enforced premium growth, 15 percent well above our 7 to 10 percent target, the 36 percent growth in revenues, and then to still on top of that deliver a loss ratio that's below our target. And we'll take that all day long. And as Don mentioned, as we mentioned in our comments, we're excited about the pipeline that the team has in front of us.

Obviously your guide is improved longer term, but just want to understand near term whats going on with that business.

Rob Grubka: Thank you.

Speaker 12: longer term, but just want to understand near term what's going on with that business.

Yes sure Tom This is Rob again.

Speaker 7: Yeah, sure. Um, Tom, this Rob again. Um, look, the way to think about stop loss and I know it's a little bit hard and maybe lost on us. The last few years have been extremely good results.

Look the way to think about.

Ross.

I know, it's a little bit higher than may be lost on us. The last few years have been extremely good results.

Speaker 7: Look, it's a volatile business. It's a tail-based sort of risk business, and I know you understand that. So it's a big part of why we focus in on the trailing 12 month view. And so I just...

Look it's a volatile business, it's a tale based sort of risk business and I know you understand that so it's a big part of why we focus in on the trailing 12 month view and so I just redirect here in May.

Speaker 7: redirect you and make sure that we understand we're at tremendously strong results. We've got a 72% loss ratio in that business over the trailing club months. If you go back another year, it's 77%, which is at the very bottom edge of our 77% view. You know, as we said, 77% is how we feel about that business looking forward.

Sure that we understand.

Tremendously strong results, we've got a 72% loss ratio in that business over the trailing 12 months. If you go back another year at <unk>.

Thomas Gallagher: Our next question comes from Tom Gallagher with Evercore ISI. Please proceed with your question. Good morning. Follow up for Christine on I am the 10 billion pipelines related to the US. You said, can you talk a little bit about what you're thinking about your up X and NIP. How has it been performing at excluding NIP. And based on what you're seeing lining up there, would you also expect that to be an inflow contributor for 2024?

The 7%, which is at the very bottom edge of our 77% to 80% view.

As we said 70 someday it is how we feel about that business looking forward, which is really important that's based on exactly what youre talking about like what are you assuming claims and how does this compare to what you would've assumed you were going to be seen in claims. So all of those things are getting triangulated around tell us at this point in time 70.

Speaker 7: which is really important. It's based on exactly what you're talking about. Like, well, what are you seeing in claims? And how does this compare to what you would have assumed you were going to be seeing in claims? So all those things are getting triangulated around, to tell us at this point in time, 77 to 80 is how we feel about that business moving forward. And then, and again, reminder, we get a underwrite, re-underwrite this business on an annual basis.

700 ideas, how we feel about that business moving forward.

And again reminder, we underwrite re underwrite this business on an annual basis.

Speaker 7: We've got a really strong track record of running this in a disciplined way at the same time that we're growing the business and we'll keep both hands on the wheel and continue to do that as best we can.

We've got a really strong track record of running this in a disciplined way at the same time that we're growing the business and we'll we'll keep both hands on the wheel and continue to do that as best we can.

Thomas Gallagher: Yes, thanks. Thanks, Tom. So as far as what we're seeing in the international flows from Oliance and Coast of the Deal, they've delivered us $6.5 billion. And that's predominantly our income and growth franchise, as well as some of our thematic equities. So, you know, putting up that income and growth at the $70 billion platform, it has brand recognition and scale and credibility in Asia where a lot of the flows are coming as well as Europe.

Speaker 3: And I would just add that between Rob and I, we have a collective 12 years of running this business successfully with a team and feel very confident to continue to do that going forward.

And I would just add that between Robin I, we have a collective 12 years of running this business successfully with the team and feel very confident to continue to do that going forward.

Speaker 12: Thanks, and just one more if I could sneak it in. They just, is there more of a recency bias if I think about the way pricing and renewals are gonna work heading into year end on the stop loss business? Just given that, you know, I completely agree that trailing results have been great. This quarter was more elevated. Would you take a little bit of a recency bias in terms of the way that gets reprised or what would you expect from a pricing dynamic?

Thanks, and just one more if I could sneak it in the gist is there more of a recency bias. So if I think about the way pricing and renewals are going to work heading into year end on the stop loss business.

Thomas Gallagher: So pivoting to the past forward, you know, we have launched some funds specifically, you know, the source of the outflows, the largest outflows within NIP with investment-grade credit. And we launched that usage with Oliance. So if you know we're having conversations, some really important things are happening with that fund. It looks and it's performance. It's a top-death-style performer for five years, so very competitive. We're also, you know, early in this year, it'll be something called Title 8 for ESG, so we're upgrading that.

Just given that.

I completely agree the trailing results have been great. This quarter was more elevated would you take a little bit of a recency bias in terms of the way that gets repriced or what would you expect from a pricing dynamic.

Speaker 7: Yeah, so you know, great question. So as we think about, you know, what we turn underwriters list to do is assess the risk and and and put fresh eyes on each case every year. And so whether it's new business coming in the door or its existing business

Yes, so great question, so as we think about.

What we term underwriters list to do is assess the risk and put fresh eyes on each case every year and so whether its new business coming in the door or its existing business.

Thomas Gallagher: And as you know in Europe, that designation for ESG is very important in order to compete. So again, and finally, you know, last quarter, we were able to port our long-term track record over to the new fund. So there are a lot of things, lots of great conversations happening. That's just one fund. And then broadly, I would say, you know, we're definitely seeing opportunities not only in credit, but in a number of strategies, securities, this is another example.

Speaker 7: You know, we've got good line of sight and both the drivers have claimed activity and experience.

We've got good line of sight into the drivers of claims activity and experience, sometimes thats over shorter periods of time, but when we think about the manual and what we sort of calibrate to those or at least a three year view of what's been going on in market, whether we experience what are we seeing is the draw.

Speaker 7: sometimes that's over shorter periods of time, but when we think about the manual and what we sort of calibrate to, those are at least a three-year view of what's been going on in market, what have we experienced, what are we seeing as the drivers of claims and therefore, ultimately, loss ratio. So, you know, look as best we can. We don't sort of get fallen in love with the last 12 months.

Rivers' of claims and therefore ultimately loss ratio so.

Thomas Gallagher: And.., in institutional mandates through Aliens. And not to go on and on, but I just want to make one final point here around this, what I'm really excited about. You know, this is a transitional year, and when you think about our partnership with NNIT, they only represented three products of ours globally, two credit and our mortgage hedge fund. Aliens, it's a full, some big funnel distribution relationship. They own a little over 24% of them. They are leaning in. I mean, they are a long-run strategic partner, and so I'm really excited about the opportunity.

Look as best we can we don't sort of get fallen in love with the last 12 months, but at the same point, it's a piece of how we assess things and what we look at but there is a balance as you would expect between sort of near term results, but a long term view as best we can.

Speaker 7: but at the same point, it's a piece of how we assess things and what we look at, but there's a balance, as you would expect, between sort of near-term results but a long-term view as best we can.

<unk>.

Okay. Thanks.

Yep.

Our next question comes from Kenneth Lee with RBC Capital markets. Please proceed with your question.

Speaker 1: Our next question comes from Kenneth Lee with RBC Capital Markets. Please proceed with your question.

Speaker 13: Hi, good morning. Thanks for taking my question. Just one follow up on the $10 billion investment management pipeline there. What's been the historical?

Hi, good morning, Thanks for taking my question.

Christine Hurtsellers: So, at the end of this week, we move into 2024 and beyond. And maybe just a quick build is the reminder of the 24% ownership state we have spent an immense amount of time together between teams and are incredibly aligned in terms of the growth of this business. And that's including even at the top of the spent time with Oliver over in Germany, the teams are costly back and forth, and we just can be more excited about what this joint franchise can deliver going forward. I appreciate the color on all of that.

Just one follow up on the 10 billion dollar investment management pipeline there what's been the historical.

Speaker 13: experience in terms of time frames for funding those kind of mandates and would you expect a similar time frame for funding the mandates over the near term?

Spirits in terms of timeframe for funding those kind of mandates and would you expect a similar timeframe for funding the mandates over the near term.

<unk>.

Yeah sure Ken.

Speaker 4: Yeah, sure, Ken. This is Christine. So as far as the pipeline that we see or sharing with you, we have great confidence social fund in the calendar year. Now, obviously, there are some things that we don't include in there. What we would call from our insurance clients.

Christine so as far as the pipeline that we see are sharing with you we have great confidence those will fund in the calendar year obviously.

Thomas Gallagher: Just want to shift gears to medical stop loss, the volatility there. Can you peel back the onion a little bit? Was it several large claims? Was it more concentrated? Maybe the cause of claims? Any kind of that continuing?

There.

There are some things that we don't include in there.

What we would call you know from our insurance clients.

Speaker 4: committed but unfunded wins. A portion is in there, but, you know, why aren't we including all of it? Well, you know, insurance companies specifically have been a little slower to deploy capital, you know, this year getting the macro environment and everything. And so, you know, you know, you have to think about that is what the putting in the pipeline is stuff that we see as a calendar year. Again, the opportunity, you know, holistically when you think about beyond that number, you know, we see it as big for all the reasons we talked about. So again, you know, we feel very confident about delivering that. And also, I would say just a couple more positives real quick.

Committed but unfunded wins.

A portion is in there, but why don't we including all of it well.

Insurance company, specifically had been a little slower to deploy capital this year and given the macro environment and everything and so.

Rob Grubka: Obviously, your guide is improved, longer term, but just want to understand near-term what's going on with that business. Yeah, sure. Tom, I'll just wrap again. Look, the way to think about stop loss, and I know it's a little bit harder than maybe lost on us the last few years have been extremely good results. Look, it's a volatile business. It's a tail-based sort of risk business, and I know you understand that. So it's a big part of why we focus in on the trailing problem on view.

How to think about that is what we're putting in the pipeline is such that we see as a calendar year.

Again, the opportunity Holistically when you think about beyond that number.

We see at this stage for all the reasons, we talked about so again we.

We feel very confident about delivering that and also I would say just a couple more positives real quick.

Speaker 4: You know, we're seeing, you know, we flipped positive in US retail flows. We're seeing redemption rates go down markably, you know, the tree kind of faced really in the beginning of this year. It was a tough...

We're seeing we flipped positive in U S. Retail flows were seeing redemption rates go down markedly.

Rob Grubka: And so I just redirect you and make sure that we understand we're at tremendously strong results. We've got a 72% loss ratio in that business over the trailing problem. Once if you go back another year, it's 77%, which is at the very bottom edge of our 77-80% view. As we said, 77-80 is how we feel about that business looking forward, which is really important. It's based on exactly what you're talking about, like, what do you see in claims?

Really in the beginning of this year was a tough.

Speaker 4: a tough market, I think, for all my competitors as well. And we're actually seeing real green shoots in terms of retail interest starting to move into our high-performing fixed income strategy. So I think they're, you know, I'm feeling really excited. There are a lot of things, a lot of energy, a lot of good things. Just want to get 2023, the transitional year over, and stay focused on growing this business.

A tough market I think for all my competitors as well and we're actually seeing real green shoots in terms of retail interest star Huntington news into our high performing fixed income strategies. So I think I'm feeling really excited there are a lot of things a lot of energy a lot of good things just wanted to get 2023 of the transitional year over let's stay focused on.

Growing this business.

Got you very helpful. There and just one quick follow up.

Speaker 13: Got you, very helpful there. And just one quick follow up to your color, you prevent in terms of the net inflows there. The retail net inflows in the quarter fair to say that it was a larger dream by six income or just want to get a better sense of the complexion around the net flows there that you saw. Thanks.

Rob Grubka: And how does this compare to what you would have assumed you were going to be seeing in claims? So all those things are getting triangulated around the palace at this point in time. 77-80 is how we feel about that business moving forward. And then again, reminder, we get a re-underwrite this business on an annual basis. We've got a really strong track record of running this in a disciplined way at the same time that we're growing the business and we'll keep both hands on the wheel and continue to do that as best we can. And I would just say that between Rob and I, we have a collective 12 years of running this business successfully with the team and feel very confident to continue to do that going forward.

To your to your color you provide in terms of the net inflows there.

Rob Grubka: Thanks.

The retail net inflows in the quarter fair to say that it was largely driven by fixed income or just wanted to get a better sense of the complexion around the net flows there that you saw.

Speaker 4: Yeah, the flows in retail continue to be dominated from offshore money, you know, predominantly into income and growth. And again, some of our global tech with tech performing well, we're getting flows there too. But inside of that, actually, we're starting to see positive inflows within sort of the traditional US market, which I think we're really stand out. And this is the beauty of our JV is

Yeah.

In retail continued to be dominated from offshore money.

Dominantly into income and growth and again some of our global Tech with Tech performing well, we're getting flows there too but inside of that actually we are starting to see positive inflows within sort of the traditional U S market, which I think were really really stand out and this is the beauty of our.

Our JV is Asia didn't go through the sort of bump and problems that the domestic market and so you really saw the power of us having not only our U S business that was more challenged in retail, but the power of a really Asia dominating our flows. So overall I'm just excited because we see Asia as continuing and growing.

Rob Grubka: And just one more if I could sneak it in. Is there more of a recency bias if I think about the way pricing and renewals are going to work heading into year end on the stop loss business? Just given that, you know, I completely agree that trailing results have been great. This quarter was more elevated. Would you take a little bit of a recency bias in terms of the way that gets reprised or what would you expect from our pricing dynamics?

Speaker 4: Asia didn't go through the sort of bump and problems that the domestic market did and so you really saw the power of us having not only our U.S. business that was more challenged in retail but the power of really Asia dominating our flow. So overall I'm just excited because we see Asia is continuing or growing. Europe is improving in retail and also we're really seeing starting to see a green shoots and stability in the U.S.

Europe is improving in retail and also we're really starting to see green shoots and stability in the U S.

Got you very helpful. Thanks again.

Rob Grubka: Yeah, so, you know, great question. So as we think about, you know, what we turn underwriters list to do is assess the risk and put fresh eyes on each case every year. And so whether it's new business coming in the door or it's existing business, you know, we've got good line of sight and the drivers of claims activity and experience. Sometimes that's over a shorter period of time, but when we think about the manual and what we sort of calibrate to, those are at least a three year view of what's been going on in market, what have we experienced, what are we seeing as the drivers of claims and therefore ultimately lost ratio.

Hello.

Our next question comes from Josh Shanker with Bank of America. Please proceed with your question.

Speaker 1: Our next question comes from Josh Shankar with Think of America. Please proceed with your question.

Speaker 2: Yes, well, I don't mean to belabor the point for the little more medical stop loss. A lot of healthcare providers are seeing medical costs inflation. I realize we should look at a training 12 month basis and it's very good, but can you give us any confidence that what we're seeing in the third quarter isn't a result of the medical costs inflation we're seeing overall. And if it is in that summer, what's in between these wait 12 months?

Yes, Hello, I don't mean to belabor the point, but a little more medical stop loss a lot of.

Healthcare providers are seeing medical cost inflation.

I realize we should look at a trailing 12 month basis, and it's very good but can you give us any confidence that we're seeing in the third quarter isn't.

A result of the medical cost inflation, we're seeing overall.

And if it isn't that some work that we need to wait 12 months.

Speaker 14: for repricing of the business to occur to caption.

For re pricing of the business to occur to capture that.

Rob Grubka: So, you know, look as best we can, we don't sort of get fallen in love with the last 12 months. But at the same point, it's a piece of how we assess things and what we look at. But there's a balance as you would expect between sort of near term results but a long term view as best we can.

Speaker 7: Yeah, Josh, look, there's obviously a lot of dynamics around the inflation question. What I would say we've seen, it's really more the traditional, you know, what does the incidents look like? And then obviously, to your point, there can be noise and the...

Yes, Josh look there's there's obviously a lot of dynamics around the inflation question, what I would say we've seen it's really more of the traditional instead.

Unknown Executive: Okay, thanks. Yep.

Incidents look like and then obviously to your point there can be noise in the <unk>.

Speaker 7: The actual claim cost piece of it, but we're not seeing that as an unusual driver in our data. Now, could it change and evolve as we move forward? You know, absolutely it could. What I would say though, this is a business predicated on a long history of inflation. Right? So this has been a product set that, you know, you think about core inflation of medical costs, sort of first dollar of...

Actual claim cost piece of it but we're not seeing that as an unusual driver in our data now could it change and evolve as we move forward.

Kenneth Lee: Our next question comes from Kenneth Lee with RBC capital markets. Please proceed with your question. Hi, good morning. Thanks for taking my question. Just one follow up on the $10 billion investment measure and pipeline there. What's been the historical experience in terms of time frames for funding those kind of mandates? And would you expect a similar time frame for funding the mandates over the near term? Thanks. Yeah, sure Ken. This is Christine.

Absolutely it could what I would say, though this is a business predicated on a long history of inflation right. So this has been a product set.

You think about core inflation of medical costs sort of first dollar of six 7% is not an unusual range right. So.

Speaker 7: six, 7% is not an unusual range, right? So.

Speaker 7: It, it, it a minimum those sorts of things are always factored in how we think about the claims cost.

At a minimum those sorts of things are always factored in how we think about the claims cost moving forward.

Kenneth Lee: So, as far as, you know, the pipeline that we see or sharing with you, we have, you know, great confidence those will fund in the calendar year. Now, obviously, they're, you know, there's some things that we don't include in there. What we would call, you know, from our insurance clients committed but unfunded wins. A portion is in there, but, you know, why aren't we including all of it? Well, you know, insurance companies specifically have been a little slower to deploy capital, you know, this year getting the macro environment and everything.

Speaker 7: moving forward, you know, could be experience be driven a little bit better, because, well, okay, there's a blip waiting to come. Again, maybe, but the core fundamentals of the product, the long-term health of the product.

Could be experience be driven a little bit better because well. Okay. There is a blip waiting to come again, maybe but the core fundamentals of the product. The long term health of the product. We think the data is going to be there to support what we assess the risk at and what we need to price that in the market.

Speaker 7: We think, you know, the data is gonna be there to support what we assess the risk at and what we need to price at. And then the market long-term will absolutely be rational on this particular issue.

Long term, we will absolutely be rational on this particular issue, but we're not seeing it today and the data that we've got but again. This is why we keep both hands on the wheel and pay close attention to the actual experience that we're seeing and how we think about pricing moving forward.

Speaker 3: But we're not seeing it today in the data that we've got. But again, this is why we keep both hands on the wheel and pay close attention to the actual experience that we're seeing and how we think about pricing moving forward. And the bill I've mentioned, Josh, is that as you think about the cost of...

Kenneth Lee: And so, you know, you have to think about that is what the putting in the pipeline is stuff that we see as a calendar year. Again, the opportunity, you know, holistically, when you think about beyond that number, you know, we see it as big for all the reasons we talked about. So, again, you know, we feel very confident about delivering that. And also, I would say just a couple more positives real quick.

Build I've mentioned, Josh is that as you think about the cost of higher medical costs on consumers and on our participants.

Speaker 3: higher medical costs on consumers and on our participants.

Speaker 3: it's why we've got a strong demand for our supplemental health products as well as our HSA. These products are so important now to be able to help protect in time of need and so we're certainly seeing that demand and see that show up in our 2024.

Why we've got a strong demand for our supplemental health products as well as our HSA. These products are so important now to be able to help.

Kenneth Lee: You know, we're seeing, you know, we slipped positive in US retail flows. We're faced really in the beginning of this year. It was a tough, a tough market, I think, for all my competitors as well. And we're actually seeing real green shoots in terms of retail interest starting to move into our high-performing fixed income strategy. So, I think they're, you know, I'm feeling really excited. There are a lot of things, a lot of energy, a lot of good things.

Protect in time of need and so we're certainly seeing that demand and see that show up in our 2024 sales.

And only because it's the most popular topic in markets today.

Speaker 14: And only because it's the most popular topic in markets today, what should we think about the impact of GLP1 drugs on the medical stop loss industry? Is it a one that should reduce the cost of extreme healthcare intervention for employees in the future? Is it an on event? How are you thinking about it?

What should we think about the impact of <unk> one drugs on the medical stop loss industry is at a one that should reduce the crew.

Cost of extreme health care intervention for employees in the future is it a non event.

Christine Hurtsellers: Just want to get 2023, the transitional year over, and stay focused on growing this business. Gotcha. Very helpful there. And just one quick follow-up to your, to your color, you prevent terms of the net inflows there. The retail net inflows in the quarter, fair to say that it was the largest driven by fixed income, or just want to get a better sense of the complexion around the net flows there that you saw.

How are you guys thinking about it.

Yeah look it's a technical issue. So all acknowledge that upfront look these are going to be high cost.

Speaker 7: Yeah, look, it's it's a technical issue. So we'll acknowledge that up front. Look, these are going to be high cost.

Speaker 7: drug delivery, when you get into the whole genetic side of what's going on. And this is an area where the team actually, for the last couple of years, has been, you know, trying to, you know, as best as able, without much experience, like, what do we think usage is going to look like? And how do we think about usage, not just within a particular plan or a client, but how do we think about it across our book of business? And so, there's a lot of benefit to...

Drug delivery when you get into the whole genetic side of what's going on and this is an area where the team actually for the last couple of years has been.

Trying to as best as able without much experience like what do we think usage is going to look like and how do we think about usage not just within a particular plan or a client, but how do we think about it across our book of business and so there is a lot of benefit too.

Christine Hurtsellers: Thanks. Yeah, the flows in retail continue to be dominated from offshore money, predominantly into income and growth. And again, some of our global tech with tech performing well, we're getting flows there too. But inside of that, actually, we're starting to see positive inflows within sort of the traditional US market, which I think we really really stand out. And this is the beauty of our JV is Asia didn't go through the sort of bump and problems that the domestic market said.

Speaker 7: You know, what we've done the last few years and growing scale in this space.

What we've done in the last few years and growing scale in this space.

Speaker 7: I think, you know, the story will be written into the future for sure, but it's a topic that the team, from an underwriting and pricing perspective, is anticipating and making as smart a decision as we possibly can, getting outside perspective that feeds into how we think about layering in this pricing to the underwriting manual and those sorts of things.

I think the.

The story will be written into the future for sure, but it's a topic that the team from an underwriting and pricing perspective is anticipating and making smart decisions as we possibly can getting outside perspective that feeds into how we think about layering in this pricing to the.

Christine Hurtsellers: And so you really sell the power of us having not only our US business that was more challenged in retail, but the power of a really Asia dominating our flow. So overall, I'm just excited because we see Asia is continuing or growing Europe is improving in retail. And also, we're really seeing starting to see green shoots and stability in US. Gotcha, very helpful. Thanks again.

Underwriting model and those sorts of things. So I think we're doing our best and we're paying attention to it to your point it is.

Speaker 7: I think we're doing our best and we're paying attention to it. To your point, it's a it's a hot topic in the space.

Hot topic in the space.

Speaker 7: just because of the size of the cost that comes with it. But again, this is something we're paying close attention to and you have both hands on the wheel.

Just because of the size of the cost that comes with it but.

Joshua Shanker: Our next question comes from Josh Shankar with Think of America. Please proceed with your question. Yes, well, I don't mean to belabor the point for a little more medical stop loss. A lot of healthcare providers are seeing medical costs inflation. I realize we should look at a training 12 months basis and it's very good. But can you give us any confidence that we're seeing in the third quarter isn't a result of the medical cost inflation we're seeing overall.

Again, this is something we're paying close attention to and again both hands on the wheel.

Thank you.

Okay.

Our next question comes from Joel.

Speaker 1: Our next question comes from Joe Hertz with Delling and Partners. Please proceed with your question.

With Dowling and partners. Please proceed with your question.

Speaker 15: Hey, good morning. Just a follow up on the 12 billion wealth pipeline. How much of that is full service versus record keeping and sort of out of the pipeline in both of those businesses compare year over year?

Hey, good morning, just a follow up on the $12 billion pipeline, how much of that is full service versus record keeping and sort of.

Out of the pipeline in both of those businesses compare year over year.

Joshua Shanker: And if it is in that summer to what extent do we need to wait 12 months for repricing of the business to occur to capture that? Yeah, Josh, look, there's obviously a lot of dynamics around the inflation question. What I would say we've seen it's really more the traditional, you know, what does the incidents look like? And then obviously to your point, there can be noise and the actual claim cost piece of it, but we're not seeing that as an unusual driver in our data.

Speaker 7: Yeah, look, I would just think about it is consistent with our book. You know, the thing I keep coming back to with this is.

Yes look I would just think about it is consistent with our book.

The thing I keep coming back to with us as it is.

Speaker 7: You know, it's a powerful data point for sure. We're not done writing new business. We're not gonna, you know, sit around and wait for this thing to refill. You always just keep chill in the front of the funnel.

The powerful data point for sure we're not done right new business, we're not going to sit around and wait for this thing to refill you always just Keith Phil on the front of the funnel and we're not talking about things we know about for 25 and 26, but we got a lot of optimism is what we're seeing from.

Speaker 7: And we're not talking about things we know about for 25 and 26, but we've had a lot of optimism is what we're seeing from, in those cases more from a record-keeping perspective, the 12 billion that we're talking about again year over year, it's up 15%. We feel great about that.

In those cases more from a record keeping perspective, but the 12 billion that we're talking about again year over year, it's up 15%, we feel great about that and this sort of environment. We've gone through we were seeing a little bit slower to develop in the tax exempt side of the marketplace. We're seeing some of the negative effects of.

Joshua Shanker: Now, could it change and evolve as we move forward? You know, absolutely it could. What I would say though, this is a business predicated on a long history of inflation, right? So this has been a product set that, you know, you think about core inflation of medical costs, sort of first dollar of six, seven percent is not an unusual range, right? So it a minimum those sorts of things are always factored in how we think about the claims cost moving forward.

Speaker 7: In this sort of environment we've gone through, we were seeing a little bit slower to develop in the tax exempt side of the market.

Speaker 7: We're seeing some of the negative effects of that this year, but as we look forward, we're starting to see a much better trajectory on activity. I would tell you in the middle part of the market, really strong performance year over year is emerging there, building confidence.

Of that this year, but as we look forward, we're starting to see a much better trajectory on activity I would tell you in the middle part of the market.

Strong performance year over year as emerging there building confidence and importantly, enabling us to connect across health business wealth business and benefit focus where both health and benefit focus has been much more homebase has been middle market and we're really excited about that again.

Joshua Shanker: You know, could the experience be driven a little bit better because well, okay, there's a blip waiting to come again, maybe, but the core fundamentals of the product, the long term health of the product. We think, you know, the data is going to be there to support what we assess the risk at and what we need to price at. And then the market long term will absolutely be rational on this particular issue, but we're not seeing it today in the data that we've got.

Speaker 7: And importantly, it may be only us to connect across.

Speaker 7: health business, wealth business, and benefit focus. We're both health and benefit focus have been much more home base has been middle market. And we're really excited about that, again, being a leverage point for talking about how we drive benefits and savings strategically and drive and learning for the organization as we continue to get experience in that space.

Being a leverage point for talking about how we drive benefits and savings strategically and drive and learning for the organization as we continue to get experience in that space collectively across all three businesses, but look a lot of optimism you can hear that coming through and again. This isn't fall we're going to be doing.

Speaker 7: collectively across all three businesses. But look, a lot of optimism, you can hear that coming through. And again, this isn't all we're gonna be doing.

Joshua Shanker: But again, you know, this is why we keep both hands on the wheel and pay close attention to the actual experience that we're seeing and how we think about pricing moving forward. And the bill that mentioned Josh is that as you think about the cost of higher medical costs on consumers and on our participants, it's why we've got a strong demand for our supplemental health products as well as our HSA.

And simply put just keep in mind that we serve multiple markets across tax codes and we're a leader in this space and so that our value prop is resonating with our clients.

Speaker 3: And simply put, just keep in mind that we serve multiple markets across tax codes, and we're a leader in this space. And so our value prop is resonating with our clients. And as Rob mentioned, we're quite excited by what we're seeing.

As Rob mentioned, we're quite excited about what we're seeing.

Speaker 15: Great, very helpful. And then just staying on wealth, if I look at expenses for the full year, they look, you know, they look like they'll be up mid to high single digits. Can you just talk about actions you're taking as you head into 24 on expenses and how we should think about overall growth and expenses in wealth in 2024?

Great very helpful.

Rob Grubka: These products are so important now to be able to help protect in time of need.

And then just staying on Walter if I looked at expenses for the full year. They look they look like they'll be up mid to high single digits can you just talk about actions, you're taking as you head into 'twenty for unexpected and how we should think about the overall.

Rob Grubka: and only because it's the most popular topic in markets today, what should we think about the impact of GLP-1 drugs on the medical stop loss industry? Is it a one that should reduce the cost of extreme healthcare intervention for employees in the future? Is it a non-event?

Overall growth in expenses and wealth in 2024.

Yes look Heather I think hit a lot of the big drivers from a from a corporate perspective of how we're thinking about things whether it's continued leverage of <unk>, India. The technology side of things. We've got a lot of work that the team is doing to continue to simplify our technology environment that will continue into next year.

Speaker 7: Yeah, look, Heather, I think, hit a lot of the big drivers from a corporate perspective, how we're thinking about things, whether it's continued leverage, Avoya India, the technology side of things. We've got a lot of work that the team is doing to continue to simplify our technology environment. That will continue into next year. Importantly, as we, I think, have all said, margin is what we're focused in on. And so we want to be at the same time we're managing the expense numbers, be driving the growth numbers.

Rob Grubka: How are you thinking about it? Yeah, look, it's a technical issue, so we'll acknowledge that that up front, look, these are going to be high cost drug delivery when you get into the whole genetic side of what's going on. And this is an area where the team, actually for the last couple years has been, you know, trying to, you know, as best as able without much experience, like, what do we think usage is going to look like?

<unk>.

Importantly, as we I think have all said margin is what we're focused in on and so we wanted to be at the same time, we're managing the expense numbers be driving the growth numbers and in this environment. There is pressure from spread and what's going on there because we have certainly benefited prior.

Speaker 7: And in this environment, you know, there's pressure comes spread and what's going on there because we

Speaker 3: have certainly benefited, you know, prior year to this year on what is emerged there. We're going to continue to manage that in the balanced way, but I just come back to the operating margin focus that we've got, and we're going to again have both hands on the wheel and driving both top line and expenses. Yeah, and I just want to reiterate that point, and this isn't just for wealth. It's across the organization. It's what we've done for years and

Year to this year on what has emerged there we're going to continue to manage that in a balanced way, but I just come back to the operating margin focus that we've got and we're going to again have both hands on the wheel and driving both top line and expenses and I just want to reiterate that point and this is this isn't just for wealth, it's across the organization as to what.

Rob Grubka: And how do we think about usage, not just within a particular plan or a client, but how do we think about it across a book of business? And so there's a lot of benefit to, you know, what we've done the last few years and growing scale in this space. I think, you know, the story will be written into the future for sure, but it's a topic that the team from an underwriting and pricing perspective is anticipating and making the smarter decisions as we possibly can, getting outside perspective that feeds into how we think about layering in this process.

We've done for years.

Speaker 3: As Rob said, we've got two hands on the wheel in terms of expenses and will lean in as needed to manage margins.

As Rob said, we've got two hands on the wheel in terms of expenses and we will lean in as needed to manage margins.

Okay. Thank you.

We have reached the end of our question and answer session and I would now like to turn the conference call back over to Heather Lasalle, Okay any closing comments.

Rob Grubka: So I think we're pricing to the underwriting manual and those sorts of things. So I think we're doing our best and we're paying attention to it to your point. It's a hot topic in the space, just because of the size of the cost that comes with it. But, again, this is something we're paying close attention to and, again, both hands on the wheel.

To summarize a few key messages our results reflect the underlying strength of our businesses the benefits of our diversified revenues and our strong track record of executing on our targets, while continuing to invest for future growth.

Speaker 3: To summarize a few key messages, our results reflect the underlying strength of our businesses, the benefits of our diversified revenues, and our strong track record of executing on our targets while continuing to invest for future growth.

Unknown Executive: Thank you.

Speaker 3: We remain on track to achieve our EPS CAGR target of 12% to 17% for the three-year period ending in 2024. As we look ahead, robust pipelines across all three businesses will power our growth into 2024 and beyond. We look forward to updating you on our progress. Thank you for joining us today.

We remain on track to achieve our EPS CAGR target of 12% to 17% for the three year period ending in 2024 as we look ahead robust pipelines across all three businesses will power our growth into 2024 and beyond we look forward to updating you on our progress. Thank you for joining us today.

Joel Hurwitz: Our next question comes from Joel, her with Darling and partners. Please proceed with your question. Hey, good morning. Just a follow up on the 12 billion wealth pipeline. How much of that is is full service versus record keeping and sort of how do the pipeline in both of those businesses compare year over year? Yeah, look, I would just think about it as consistent with our book, you know, the thing I keep coming back to with this is, you know, it's a powerful data point for sure.

Yes.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Speaker 1: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker 16: The.

Yes.

Okay.

Okay.

Joel Hurwitz: We're not done writing new business. We're not going to, you know, sit around and wait for this thing to refill. You always just keep showing the front of the funnel. And, you know, we're not talking about things we know about for 25 and 26, but we've got a lot of optimism is what we're seeing from, you know, in those cases, more from a record keeping perspective, but the 12 billion that we're talking about, again, year over year, it's up 15%.

Okay.

[music].

Uh-huh.

Hum.

Joel Hurwitz: We feel great about that. And this sort of environment we've gone through, we were seeing a little bit slower to develop in the tax exempt side of the marketplace. We're seeing, you know, some of the negative effects of that this year, but as we look forward, we're starting to see a much better trajectory on activity. I would tell you in the middle part of the market, you know, really strong performance year over year is emerging there, building confidence.

[noise].

Yeah.

[music].

Joel Hurwitz: And importantly, enabling us to connect across health business, wealth business and benefit focus. We're both health and benefit focus has been much more home base has been middle market. And we're really excited about that, again, being a leverage point for talking about how we drive benefits and savings strategically and driving learning for the organization as we continue to get experience in that space collectively across all three businesses. Look a lot of optimism.

Yes.

Yeah.

Okay.

[music].

Okay.

[music].

Joel Hurwitz: You can hear that coming through. And again, this isn't all we're going to be doing. And simply put, just keep in mind that we serve multiple markets across tax codes, and we're we're a leader in the space. And so that our value prop is resonating with our clients. And as Rob mentioned, we're quite excited about what we're seeing. Great, very helpful. An interesting on walls, if I look at expenses for the whole year, they look, you know, they look like they'll be a bid to high single digits.

Okay.

Okay.

Yes.

Yeah.

Yeah.

[music].

Okay.

Okay.

[music].

Joel Hurwitz: Can you just talk about actions you're taking as you head into 24 on expenses and how we should think about overall growth and expenses in wealth in 2024? Yeah, look, Heather, I think a lot of the big drivers from a corporate perspective, how we're thinking about things, whether it's continued leverage, avoid India, the technology side of things. We've got a lot of work that the team is doing to continue to simplify our technology environment.

Yeah.

Hum.

[music].

Joel Hurwitz: That will continue in the next year. You know, importantly, as we, I think of all said, margin is what we're focused in on. And so we want to be at the same time, we're managing the expense numbers, be driving the growth numbers. And in this environment, you know, there's pressure comes spread and what's going on there because we, we have certainly benefited, you know, prior year to this year on what is emerged there, we're going to continue to manage that in a balanced way, but I just come back to the operating margin focus that we've got.

Joel Hurwitz: And we're going to again have both hands on the wheel and driving both top line and expenses. Yeah, and I just want to reiterate that point and this is this isn't just for wealth. It's across the organization is what we've done for years. And as Rob said, we've got two hands on the wheel in terms of expenses. And we'll lean in as needed to manage margins. Okay, thank you. We have reached the end of our question and answer session. And I would now like to turn the conference call back over to Heather.

Heather Lavallee: Any closing comments to summarize a few key messages. Our results reflect the underlying strength of our businesses, the benefits of our diversified revenues, and our strong track record of executing on our targets while continuing to invest for future growth. We remain on track to achieve our EPS Kager target of 12 to 17% for the three year period ending in 2024. As we look ahead, robust pipelines across all three businesses will power our growth into 2024 and beyond. We look forward to updating you on our progress. Thank you for joining us today. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Thank you.

Speaker 16: I.

Okay.

[music].

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