Q4 2023 Voya Financial Inc Earnings Call

February 7, 2024

Unknown Executive: Good morning. Welcome to Voya Financial's fourth quarter 2023 earnings conference call. All participants will be in a listen only mode.

Good morning, welcome to Voya financials fourth quarter 2023 earnings conference call.

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.

Unknown Executive: 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 the star key, then one on your touchtone phone.

Heather Hamilton Lavallee: Our results for the fourth quarter and for the full year demonstrate execution in the face of challenging headwinds, discipline in managing expenses, and the benefit of Voya's Diversified Capital Light Business Mix. For 2023, we generated $7.02 per share of adjusted operating earnings, including $1.63 in the fourth quarter. These results reflected a record year in health solutions. Although the fourth quarter was affected by elevated voluntary claims, our aggregate loss ratio remained well within expectations. Strong earnings in health helped offset lower earnings in wealth solutions, which is primarily related to alternative results well below our long-term expectations. Fourth quarter results were also affected by flows and investment management that were weaker than anticipated as broader industry headwinds continued.

After todays 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 two 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 EVP of Phi.

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

Michael Katz: Please go ahead.

Michael Robert Katz: Thank you and good morning. Welcome to Voya Financial's fourth 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.com. Turning to slide two, some of the comments made on 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.

Thank you.

Michael Katz: Good morning, welcome to Voya Financial's fourth quarter 2023 earnings Conference call. We appreciate all of you who have joined US This morning.

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

Michael Katz: Turning to slide two some of the comments made on 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.

Michael Robert Katz: Now joining me on the call are Heather Lavallee, our Chief Executive Officer, and Don Templin, our Chief Financial Officer. After their prepared remarks, we will take your questions. For the Q&A session, we have also invited the heads of our businesses. Specifically, Matt Toms, Investment Management, and Rob Grubka, Workplace Solutions. With that, let's turn to slide three, as I would like to turn the call over to Heather

Speaker Change: Now joining me on the call are Heather Law Valley, our Chief Executive Officer, and Don Templin, Our Chief Financial Officer.

Speaker Change: After their prepared remarks, we will take your questions for the Q&A session. We have also invited the heads of our businesses, specifically, Matt Toms investment management, and Rob group workplace solutions.

Speaker Change: With that let's turn to slide three as I would like to turn the call.

Speaker Change: Over to Heather.

Heather Hamilton Lavallee: Thanks, Mike. Before we turn to our key themes, I'd like to take a moment to recognize Rod Martin, who will begin his retirement at the end of the month. I speak on behalf of everyone at Voya when I say we are all thankful for Rod's vision, optimism, and wisdom over the past 13 years, and we wish him the very best as he transitions to retirement. I'd also like to acknowledge Christine Hurtsellers, who, after more than seven years leading Voya Investment Management, announced her retirement several weeks ago. Christine has been a transformational leader for Voya IM as it has undergone profound changes in its business, becoming the diversified international asset manager it is today. As she hands the reins over, I couldn't be more confident in Matt Toms and the team's ability to continue to deliver exceptional client service and superior investment performance for our customers. Now let's turn to slide four, with some key themes.

Heather: Thanks, Mike before we turn to our key themes I'd like to take a moment to recognize Rod Martin who will begin his retirement at the end of the month.

Heather: I speak for everyone.

Heather: When I say, we are all thankful for rods vision optimism and wisdom over the past 13 years, and we wish him the very best as he transitions to retirement.

Heather: I'd also like to acknowledge Kristine hurt sellers, who after more than seven years, leading Voya investment management announced her retirement several weeks ago.

Heather Hamilton Lavallee: In Wealth Solutions, the pipeline includes $15 billion of plans and implementation for 2024, diversified across all markets, and Health Solutions annualized enforced premiums and fees grew 20% in 2023, and we expect growth of at least 15% in 2024. And in investment management, we have a robust unfunded pipeline of over $10 billion for 2024. Strong investment performance will allow us to capitalize on cash moving off the sidelines as macro conditions normalize. Turning to capital.

Heather: Christine has been a transformational leader for Voya I N. As it has undergone profound changes in its business, becoming a diversified international asset manager it is today.

And she handed the reins over I couldn't be more confident in that Toms and the team's ability to continue to deliver exceptional client service and superior investment performance for our customers.

Now, let's turn to slide four with some key themes.

Heather Hamilton Lavallee: Our results for the fourth quarter and for the full year demonstrate execution in the face of challenging headwinds, discipline in managing expenses, and the benefit of Voya's Diversified Capital Light Business Mix. For 2023, we generated $7.02 per share of adjusted operating earnings, including $1.63 in the fourth quarter. These results reflected a record year in health solutions. Although the fourth quarter was affected by elevated voluntary claims, our aggregate loss ratio remained well within expectations. Strong earnings in health helped offset lower earnings in wealth solutions, which primarily related to alternative results well below our long-term expectations. Fourth quarter results were also affected by flows and investment management that were weaker than anticipated as broader industry headwinds continued.

Heather: Our results for the fourth quarter and for full year demonstrate execution in the face of challenging headwinds.

Heather: Disciplined in managing expenses and the benefit of voyage diversified capital light business mix.

Heather Hamilton Lavallee: In 2023, we generated $800 million of excess capital and ended the year with excess capital of approximately $400 million. We expect to generate at least $800 million of excess capital in 2024 and to deploy it through shareware purchases and dividends. Don will cover our financial results in more detail shortly. Turning to slide five.

Heather: For 2023, we generated $7 and <unk> per share of adjusted operating earnings, including $1 63 in the fourth quarter.

Heather: These results reflected a record year in health solutions.

So the fourth quarter was affected by elevated voluntary claims our aggregate loss ratio remained well within expectations.

Heather: Strong earnings in health helped to offset lower earnings in wealth solutions, which is primarily related to alternative results well below our long term expectations.

Heather Hamilton Lavallee: Voya's scale and reach across workplace benefits and savings distinguishes Voya in the marketplace and provides a compelling value proposition for our customers. Our strategy enables us to attract new customers and increase retention. It provides us with an expanded solution set to grow business with our customers and create new revenue opportunities. And it allows us to deepen our relationships with employers and employees as we provide tools and guidance to maximize the value of benefits and optimize savings. With a distribution reach few can match,

Heather: Fourth quarter results were also affected by flows in investment management that were weaker than anticipated as broader industry headwinds continued.

Heather Hamilton Lavallee: Looking ahead to 2024, we are reaffirming our EPS CAGR target of 12 to 17% for the three-year period ending in 2024. We intend to remain vigilant on spend, protecting margins and workplace solutions, and expanding them in investment management. Our longer-term outlook is for annual EPS growth that exceeds 10% beginning in 2025. Our ability to deliver profitable growth is driven by our compelling strategic positioning in capital-light businesses. Our track record for generating and deploying excess capital to maximize shareholder returns and a focus on providing outstanding experiences for our customers. As we head into the balance of 2024, our commercial momentum is strong. Robust Pipelines in Wealth and Investment Management, and a record-setting start to the year in health. In Wealth Solutions, the pipeline includes $15 billion of plans and implementation for 2024, diversified across all markets, and Health Solutions annualized enforced premiums and fees grew 20% in 2023, and we expect growth of at least 15% in 2024. And in investment management, we have a robust unfunded pipeline of over $10 billion for 2024. Strong investment performance will allow us to capitalize on cash moving off the sidelines as macro conditions normalize. Turning to capital.

Heather: Looking ahead to 2024, we are reaffirming our EPS CAGR target of 12% to 17% for the three year period ending in 2024.

Heather: We intend to remain vigilant on spend.

Heather: Checking margins in workplace solutions, and expanding them and investment management.

Heather Hamilton Lavallee: Our workplace solutions businesses operate across virtually every market and industry. Our compelling solution set is driving new sales. Within Wealth Solutions, for example, we are adding managed accounts and non-qualified plans to record-keeping customers.

Heather: Our longer term outlook is for annual EPS growth that exceeds 10% beginning in 2025.

Heather: Our ability to deliver profitable growth is driven by our compelling strategic positioning and capital light businesses.

Heather Hamilton Lavallee: Within Health Solutions, we are increasingly selling voluntary benefits alongside group life and disability. We spent much of 2023 integrating our benefit focus, which provides us with an important new workplace capability and opportunity to drive expansion. We recently concluded our first open enrollment season with benefit-focused customers, and the results have been a resounding success. BenefitFocus's Net Promoter Score, considered the gold standard for measuring customer experience and loyalty, rose an unprecedented 40 points in 2023 over the prior year. We hit 100% of our customer service standards over the open enrollment season.

Heather: Our track record for generating and deploying excess capital to maximize shareholder returns and are focused on providing outstanding experience for our customers.

Heather: As we head into the balance of 'twenty 'twenty four our commercial momentum is strong.

Heather: With robust pipelines in wealth and investment management and a record setting start to the year in health.

Heather: And while solutions. The pipeline includes 15 billion of plans and implementation issue for 2020 for diversified across all markets.

Heather: In health solutions annualized in force premiums and fees grew 20% in 2023, and we expect growth of at least 15% in 2024.

Heather Hamilton Lavallee: Those statistics reflect elite performance among benefit administration providers. They will drive improved customer retention, a significantly larger base of referenceable clients, and ultimately greater revenues and earnings. We deepen our customer relationships when we help employers optimize their benefit spend and employees build a more secure financial future. Our ability to connect workplace benefits and workplace savings drives better outcomes for our participants and their employers. Our market-leading Benefits Enrollment Guidance and our MyVoyage Integrated Benefits and Savings App are just two examples of our ability to drive better financial outcomes for employers and employees alike.

Heather: And in investment management, we have a robust unfunded pipeline of over 10 billion for 2024.

Heather: Strong investment performance will allow us to capitalize on cash moving off the sidelines as macro conditions normalize.

Heather: Turning to capital and.

In 2023, we generated 800 million of excess capital and ended the year with excess capital of approximately $400 million.

Heather: To generate at least $800 million of excess capital in 2024 and to deploy it through share repurchases and dividends.

Heather: Don will cover our financial results in more detail shortly.

Donald C. Templin: Turning to slide five.

Donald C. Templin: He is scale and reach across workplace benefits and savings distinguishes boy in the marketplace and provides a compelling value proposition for our customers.

Heather Hamilton Lavallee: We've transformed our investment management business into a diversified international asset manager with a broad array of investment strategies across institutional and retail markets. Voya IM enters 2024 in a position for long-term sustainable growth with strong fundamentals, diversification across markets, a well-established presence and attractive asset classes, and a robust sales pipeline. Success begins with strong investment performance. More than three-quarters of our AUM is in strategies that exceed the benchmark or peer median on a five or 10 year basis, and our performance in 2023 was exceptional. This positions us well to capture close in 2024 as cash comes off the sidelines.

Donald C. Templin: Our strategy enables us to land new customers and increase retention.

Donald C. Templin: Provides us with an expanded solution set to grow business with our customers and create new revenue opportunities.

Donald C. Templin: And it allows us to deepen our relationships with employers and employees as we provide tools and guidance to maximize the value of benefits and optimize savings.

Donald C. Templin: With the distribution reach few can match, our workplace solutions businesses operate across virtually every market and industry.

Donald C. Templin: Our compelling solutions that is driving new sales.

Donald C. Templin: Within wealth solutions. For example, we are adding managed accounts and nonqualified plans to record keeping customers.

Heather Hamilton Lavallee: We possess critical investment capabilities in high-growth strategies. Our private and alternative business continues to expand, with our strengths in private fixed income and private equity secondaries increasingly supported by additional strategies, including infrastructure debt and renewables. And we continue to be a leader in the insurance channel with a top 10 market position in North America and a top three in private fixed income strategies. Our distribution reach extends to more than 20 international markets, including high-growth Asia-Pacific markets with robust demand for U.S. credit and U.S. dollar-denominated assets.

Donald C. Templin: Within health solutions, we are increasingly selling voluntary benefits alongside group life and disability.

Donald C. Templin: We spent much of 2023 integrating benefit focus which provides us with an important new workplace capability and opportunity to drive expansion with.

Donald C. Templin: We recently concluded our first open enrollment season with benefit focused customers and the results have been a resounding success.

Donald C. Templin: Benefit focus is net promoter score considered the gold standard for measuring customer experience and loyalty rose an unprecedented 40 points in 2023 over the prior year.

Donald C. Templin: We had 100% of customer service standards over the open enrollment season.

Heather Hamilton Lavallee: In 2023, our retail net flows in these markets were almost $4 billion, with opportunity for further expansion as we add new strategies and markets to this channel. International markets have also catalyzed a turnaround in our retail franchise, further diversifying our business and creating opportunities to drive higher fee business. Turning to slide seven.

Donald C. Templin: Those statistics reflect elite performance among benefit administration providers.

Donald C. Templin: It will drive improved customer retention are significantly larger base of reference full clients and ultimately greater revenues and earnings.

Donald C. Templin: We deepened our customer relationships when we help employers optimize the benefits fund and employees build a more secure financial future.

Donald C. Templin: Our ability to connect workplace benefits and workplace savings drive better outcomes for our participants and their employers.

Donald C. Templin: With purpose and vision, we continue to drive positive outcomes for our clients, our colleagues, and the communities in which we live and work. Our customers remain at the center of all that we do. We are committed to continuously improving our customer experience through enhanced digital tools, research, and education. And we continue to win recognition for our strong culture and support of communities. Because of that, Don will now provide more detail on our performance and results. Don?

Donald C. Templin: Our market, leading benefits enrollment guidance and our my voyage integrated benefits and savings App are just two examples of our ability to drive better financial outcomes for employers and employees alike.

Donald C. Templin: Turning to slide six.

Matthew Toms: We've transformed our investment management business into a diversified international asset manager with a broad array of investment strategies across institutional and retail markets. Voya IM enters 2024 in a position for long-term sustainable growth, with strong fundamentals, diversification across markets, a well-established presence and attractive asset classes, and a robust sales pipeline. Success begins with strong investment performance. More than three-quarters of our AUM is in strategies that exceed the benchmark or peer median on a five or 10 year basis, and our performance in 2023 was exceptional. This positions us well to capture close in 2024 as cash comes off the sidelines.

We've transformed our investment management business into a diversified international asset manager with a broad array of investment strategies across institutional and retail markets.

Donald C. Templin: Boy I am interest 'twenty 'twenty four position for long term sustainable growth with strong fundamentals diversification across markets.

Donald C. Templin: Thank you, Heather. Now, on slide 9, we delivered $1.63 of adjusted operating earnings per share. This included 34 cents of alternative and prepayment income, below our long-term expectations.

Donald C. Templin: Well established presence in attractive asset classes and a robust sales pipeline.

Success begins with strong investment performance.

Donald C. Templin: More than three quarters of our AUM is in strategies exceed the benchmark or peer median on a five or 10 year basis and our performance in 2023 was exceptional.

Donald C. Templin: It also included higher-than-anticipated loss ratios in Voluntary and $0.15 of favorable compensation accrual adjustments in Corporate. Full year adjusted operating earnings per share, excluding the impact of alternative and prepayment income, increased 7%. This reflects record earnings in health solutions and net revenue growth in all of our businesses. Past generation for the quarter and year were approximately $200 million and $800 million, respectively, and we expect to generate over $800 million of capital in 2024. This will build on our consistent track record of generating cash above our 90% target. While we faced headwinds in part of our business, our financial results in the fourth quarter and for the full year demonstrate the benefits of our diverse revenue streams and the significant cash we can generate from our capital-light businesses. We continue to be disciplined with spend as we integrate new capabilities and invest for growth. Turning to Wealth Solutions.

Donald C. Templin: This positions us well to capture flows in 2024 as cash comes off the sidelines.

Matthew Toms: We possess critical investment capabilities in high-growth strategies. Our private and alternative business continues to expand, with our strengths in private fixed income and private equity secondaries increasingly supported by additional strategies, including infrastructure debt and renewables. And we continue to be a leader in the insurance channel with a top 10 market position in North America and a top three in private fixed income strategies. Our distribution reach extends to more than 20 international markets, including high-growth Asia-Pacific markets with robust demand for U.S. credit and U.S. dollar-denominated assets.

Donald C. Templin: We possess critical investment capabilities in high growth strategies.

Donald C. Templin: <unk>, an alternative business continues to expand with our strengths and private fixed income and private equity secondaries increasingly supported by additional strategies, including infrastructure debt and renewables.

Donald C. Templin: And we continue to be a leader in the insurance channel with a top 10 market position in North America and top three in private fixed income strategies.

Donald C. Templin: Our distribution reach extends to more than 20 international markets, including high growth Asia Pacific markets with robust demand for U S credit and U S dollar denominated assets.

Matthew Toms: In 2023, our retail net flows in these markets were almost $4 billion, with opportunity for further expansion as we add new strategies and markets to this channel. International markets have also catalyzed a turnaround in our retail franchise, further diversifying our business and creating opportunities to drive higher fee business. Turning to slide seven.

Donald C. Templin: In 2023, our retail net flows in these markets, where almost $4 billion with opportunity for further expansion as we add new strategies and markets to this channel.

Donald C. Templin: International markets have also catalyzed a turnaround in our retail franchise further diversifying our business and creating opportunities to drive higher fee business.

Donald C. Templin: Turning to slide seven.

Unknown Executive: With purpose and vision, we continue to drive positive outcomes for our clients, our colleagues, and the communities in which we live and work. [inaudible] We are committed to continuously improving our customer experience through enhanced digital tools, research, and education. And we continue to win recognition for our strong culture and support of communities. For that, Don will now provide more detail on our performance and results. Don?

Donald C. Templin: With purpose and vision continue to drive positive outcomes for our clients our colleagues and the communities in which we live and work.

Donald C. Templin: Our customers remain at the center of all that we do.

Donald C. Templin: We are committed to continuously improving our customer experience through enhanced digital tools research and education.

Donald C. Templin: This year demonstrated again the benefit of our diversified revenue sources, which supported strong capital generation. We continue to execute on our workplace benefits and savings strategy with a relentless focus on our customers. We ended the year with $544 billion in total client assets.

Donald C. Templin: And we continue to win recognition for our strong culture and support of communities with that Dan will now provide more detail on our performance and results Don.

Dan: Thank you Heather.

Dan: Now, let's turn to our financial results on slide nine.

Dan: Quarter, we delivered a $1 63 of adjusted operating earnings per share.

Donald C. Templin: This includes $185 billion of full-service AUM that benefited from recurring deposits approaching $15 billion annually. For the full year 2023, we had full service net outflows of $2.9 billion, which included an expected large plan surrender in the fourth quarter. In record keeping, we generated over $7 billion of flows in 2023. Looking forward, commercial momentum is robust. We have a $15 billion pipeline of plans that are won and in implementation. We expect approximately $5 billion of the pipeline to be implemented in the first half of the year, with the remaining $10 billion to be funded in the second. Turning to slide 11.

This included 34 cents of alternatives and prepayment income.

Dan: Below our long term expectations.

Dan: It also included a higher than anticipated loss ratios in voluntary and 15 cents, a favorable compensation accrual adjustments and corporate.

Full year adjusted operating earnings per share, excluding the impact of alternative and prepayment income increased 7%.

Dan: This reflects record earnings in health solutions, and net revenue growth in all of our businesses.

Cash generation for the quarter and year were approximately $200 million and $800 million respectively.

Dan: And we expect to generate over $800 million of capital in 2024.

Donald C. Templin: Wealth Solutions generated $187 million of adjusted operating earnings in the fourth quarter and $742 million for the full year. Net revenues were higher year over year, driven by fee-based revenues. We expanded our participant base, generated record keeping net inflows, and benefited from favorable equity markets. Spread based revenues were broadly consistent year over year. Higher crediting rates and lower spread-based assets offset improved net investment yield.

Dan: This will build on our consistent track record of generating cash above our 90% target.

Dan: While we faced headwinds in part of our business our financial results in the fourth quarter and for the full year demonstrates the benefits of our diverse revenue streams and the significant cash we can generate from our capital light businesses.

Dan: We continue to be disciplined spend as we integrate new capabilities and invest for growth.

Dan: Turning to wealth solutions.

Donald C. Templin: We expect spread-based assets to trend lower in 2024, but P-based revenues should favorably offset spread income trends such that overall net revenues will be 1-2% higher year over year. This is supported by our strong pipeline. Finally, we continue to be disciplined with our spend and have taken actions to maintain healthy margins while still investing in growth and delivering for our customers. Learning to Health Solutions.

Dan: This year demonstrated again the benefit of our diversified revenue sources, which supported strong capital generation.

Dan: We continue to execute on our workplace benefits and savings strategy with a relentless focus on our customers.

Dan: We ended the year with $544 billion of total client assets.

Dan: This includes a $185 billion of full service.

Dan: But benefited from recurring deposits approaching $15 billion annually.

Dan: For the full year 2023, we had full service net outflows of $2 9 billion.

Dan: Each included unexpected large claims to render in the fourth quarter.

Dan: And record keeping we generated over $7 billion of flows in 2023.

Dan: Looking forward commercial momentum is robust we have a $15 billion pipeline of plans that are won and in implementation.

Donald C. Templin: We experienced favorable loss ratios and stop loss due to continued favorableness in our 2022 business and 2023 experience that remains consistent with our long-term expectations. We also experienced higher-than-anticipated seasonal claims activity, involuntary. This was due to our continued efforts to further drive customer value and increase utilization of our products. Overall, we met our pricing targets for our January 1st business, and we affirm our 69 to 72% aggregate loss ratio guidance for the overall health book. Turning to slide 13.

Dan: We expect approximately $5 billion of the pipeline to be implemented in the first half of the year.

Dan: With the remaining $10 billion to fund in the second half.

Dan: Turning to slide 11.

Dan: Wealth solutions generated $187 million of adjusted operating earnings in the fourth quarter and $742 million for the full year.

Dan: Net revenues were higher year over year, driven by fee based revenues.

Dan: We expanded our participant base genera.

Dan: Generated record keeping net inflows and benefited from favorable equity markets.

Donald C. Templin: Adjusted operating earnings of $341 million were a record, including $48 million generated in the fourth quarter. Net revenues grew nearly 36% year over year, reflecting strong sales, favorable retention, and Added Fee-Based Revenues. Adjusted operating margins were approximately 28% for the year.

Dan: Spread based revenues were broadly consistent year over year.

Dan: Are your crediting rates and lower spread based assets offset improved net investment yields.

Donald C. Templin: We expect spread-based assets to trend lower in 2024, but P-based revenues should favorably offset spread income trends, such that overall net revenues will be 1-2% higher year-over-year. This is supported by our strong pipeline. Finally, we continue to be disciplined with our spend and have taken actions to maintain healthy margins while still investing in growth and delivering for our customers. Learning to Health Solutions.

Dan: We expect spread based assets to trend lower in 2024.

Dan: Fee based revenues should favorably offset spread income trends such that overall net revenues will be 1% to 2% higher year over year.

Donald C. Templin: As planned, our adjusted operating margins were lower year over year due to business mix. Our business now includes a strategic benefits administration capability that we added in 2023, which has a lower margin profile consistent with benefits administration peers. As Heather mentioned...

Dan: This is supported by our strong pipeline.

Dan: Finally, we continue to be disciplined with our spend and have taken actions to maintain healthy margins, while still investing in growth and delivering for our customers.

Dan: Yeah.

Turning to health solutions.

Donald C. Templin: 2023 was a record year for the health solutions business. We continue to grow our core business, expand into adjacent markets, and drive greater adoption and utilization of our solutions within the workplace. Annualized enforced premium and feed growth exceeded our 7 to 10% target, driven by strong sales and favorable retention across all products. [inaudible] We experienced favorable loss ratios and stop loss due to continued favorability in our 2022 business and 2023 experience that remains consistent with our long-term expectations. We also experienced higher-than-anticipated seasonal claims activity, involuntary.

Dan: 2023 was a record year for the health solutions business.

Donald C. Templin: Benefit Focus recently completed a successful open enrollment and experienced significantly improved net promoter scores. We expect overall 2024 adjusted operating margins to be in the range of 24 to 30%. And we expect margins to improve longer term as we integrate new capabilities and continue to deliver exceptional service. 2024 is off to a strong start. And our expectation is for a second consecutive year of annualized enforced premium growth of at least 15%. Turning to slide 14.

Dan: We continue to grow our core business <unk>.

Dan: Expand into adjacent markets.

Dan: And drive greater adoption and utilization of our solutions within the workplace.

Dan: In 2023.

Dan: Annualized in force premium and fee growth exceeded our 7% to 10% target.

Dan: Driven by strong sales and favorable retention across all product lines.

Dan: In the fourth quarter.

Dan: We experienced favorable loss ratios and stop loss due to continued favorability in our 2022 business in 2023 experienced that remains consistent with our long term expectations.

Donald C. Templin: 2023 has been a transformational year for investment management. We strengthened our global distribution and enhanced our investment solutions. We continue to serve our clients with excellence in what was a challenging year for the industry. Your net outflows represented an organic efficiency of 4.9%.

Dan: We also experienced higher than anticipated seasonal claims activity in voluntary.

Donald C. Templin: This was due to our continued efforts to further drive customer value and increase utilization of our products. Overall, we met our pricing targets for our January 1st business, and we affirm our 69 to 72% aggregate loss ratio guidance for the overall health book. Turning to slide 13.

Dan: This was due to our continued efforts to further drive customer value and increase utilization of our products.

Overall, we met our pricing targets for our January one business and we affirm our 69% to 72% aggregate loss ratio guidance for the overall health book.

Donald C. Templin: Consistent with the broader industry, we experience pressure on our institutional business. However, importantly, approximately one third of the net outflows in 2023 are one-time only and are now behind us. Specific to the fourth quarter, net outflows of $5.4 billion were higher than our expectation due to the timing of two client mandates, which are now expected to fund in the first half of 2024. It was also impacted by year-end profit taking in Japan, following a strong year in global AI and tech. Looking forward, we expect to return to positive flows in 2024. Our confidence is driven by several factors, including First, we continue to build on our long-term track record of investment performance in 2023, which was strong across a broad array of asset classes.

Dan: Turning to slide 13.

Donald C. Templin: Adjusted operating earnings of $341 million were a record, including $48 million generated in the fourth quarter. Net revenues grew nearly 36% year over year, reflecting strong sales. Favorable Retention and Added Fee-Based Revenues. Adjusted operating margins were approximately 28% for the year.

Dan: Adjusted operating earnings of $341 million were a record including $48 million generated in the fourth quarter.

Dan: Net revenues grew nearly 36% year over year, reflecting strong sales.

Dan: <unk> retention and added fee based revenues.

Dan: Adjusted operating margins were approximately 28% for the year.

Dan: As planned our adjusted operating margins were lower year over year due to business mix.

Dan: Our business now includes a strategic benefits administration capability that we added in 2023, which has a lower margin profile consistent with benefits administration peers.

Dan: As Heather mentioned.

Donald C. Templin: Benefitfocus recently completed a successful open enrollment and experienced significantly improved net promoter scores. We expect overall 2024 adjusted operating margins to be in the range of 24 to 30%. And we expect margins to improve longer term as we integrate new capabilities and continue to deliver on exceptional service. 2024 is off to a strong start, and our expectation is for a second consecutive year of annualized enforced premium growth of at least 15%. Turning to slide 14.

Dan: Benefit focus recently completed a successful open enrollment and experienced significantly improved net promoter scores.

Dan: We expect overall 2024, adjusted operating margins to be in the range of 24% to 30% and.

Donald C. Templin: Notably, our leading one-year performance in fixed income puts us in a position of strength to capture assets as clients rotate back into fixed income strategies. Second, we are seeing client confidence start to return as market volatility has improved. And finally... Our international retail distribution partnership continues to benefit from demand in the Asia-Pacific region for U.S. dollar-denominated solutions. Turning to slide 15.

Dan: And we expect margins to improve longer term as we integrate new capabilities and continue to deliver on exceptional service.

Dan: 2024 is off to a strong start.

Dan: And our expectation is for a second consecutive year of annualized in force premium growth of at least 15%.

Turning to slide 14.

Matthew Toms: 2023 has been a transformational year for investment management. We strengthened our global distribution and enhanced our investment solutions. We continue to serve our clients with excellence in what was a challenging year for the industry. Your net outflows represented organic attrition of 4.9%. Consistent with the broader industry, we experienced pressure on our institutional business. Importantly, approximately one third of the net outflows in 2023 are one-time only and are now behind us.

Dan: 2023 has been a transformational year for investment management.

Dan: We strengthened our global distribution and enhanced our investment solutions.

Dan: We continued to serve our clients with excellence and what was a challenging year for the industry.

Donald C. Templin: Investment management delivered adjusted operating earnings of $47 million in the fourth quarter and $180 million in full year 2023. Net revenues grew approximately 17% in full year 2023, driven by higher management fees from favorable equity markets and higher International Retail AUM, partially offset by the impact of lower institutional assets. In 2023, our adjusted operating margin was 24.9%, which was lower year over year. We took significant expense actions in 2023 to adapt to changing environments, while we integrated new teams and created greater investment capacity. We are taking further expense actions in 2024 and continuing to prioritize investment in growth initiatives. Looking ahead, our high probability pipeline remains steady from last quarter at $10 billion. This is diversified across all U.S. channels, including institutional and insurance, and includes unfunded client commitments expected to fund in 2024, and the $10 billion is nearly 70% higher compared to the same time last year. Turning to slide 16.

Dan: Full year net outflows represented organic attrition of four 9%.

Dan: Consistent with the broader industry, we experienced pressure on our institutional business.

Dan: Importantly, approximately one third of the net outflows in 2023 are one time and are now behind us.

Matthew Toms: Specific to the fourth quarter, net outflows of $5.4 billion were higher than our expectation due to the timing of two client mandates, which are now expected to fund in the first half of 2024. It was also impacted by year-end profit taking in Japan, following a strong year in global AI and tech. Looking forward, we expect to return to positive flows in 2024. Our confidence is driven by several factors, including First, we continue to build on our long-term track record of investment performance in 2023. [inaudible] Notably, our leading one-year performance in fixed income puts us in a position of strength to capture assets as clients rotate back into fixed income strategies. Second, we are seeing client confidence start to return as market volatility has improved. This has led to an increase in insurance client commitments, including commercial real estate and private credit. Our international retail distribution partnership continues to benefit from demand in the Asia-Pacific region for U.S. dollar denominated solutions. Turning to slide 15.

Dan: Specific to the fourth quarter net outflows of $5 4 billion were higher than our expectation due to the timing of two client mandates, which are now expected to fund in the first half of 2024.

Dan: It was also impacted by yearend profit taking in Japan, following a strong year in global AI and tech.

Dan: Looking forward, we expect to return to positive flows in 2024.

Dan: Our confidence is driven by several factors, including.

Dan: First we continued to build on our long term track record of investment performance in 2023.

Dan: Which was strong across a broad array of asset classes.

Dan: Notably our leading one year performance in fixed income puts us in a position of strength.

Dan: Capture assets as clients rotate back into fixed income strategies.

Dan: Second we're seeing client confidence start to return as market volatility has improved.

Dan: This has led to an increase in insurance client commit.

Dan: Including commercial real estate and private credit.

Donald C. Templin: Our strong capital generation continues to differentiate us from peers. We generated approximately $800 million of excess capital during the year, including approximately $200 million in the fourth quarter. And we expect to generate over 800 million of capital in 2024, which builds on our track record of generating free cash at over 90%. Our focus in 2024 will be on deploying capital to shareholders via Sherry Purchases and Dividends, given the actions taken to reduce debt in 2023. We will continue the practice of deploying in the current quarter the capital we generated in the prior quarter, and we expect to maintain our excess capital position until macro conditions become more constructive. Turning to slide 17.

Dan: And finally our.

Dan: Our international retail distribution partnership continues to benefit from demand in the Asia Pacific region for U S dollar denominated solutions.

Dan: Turning to slide 15.

Matthew Toms: Investment management delivered adjusted operating earnings of $47 million in the fourth quarter and $180 million in full year 2023. Net revenues grew approximately 17% in full year 2023, driven by higher management fees from favorable equity markets and higher International Retail AUM, partially offset by the impact of lower institutional assets. In 2023, our Adjusted Operating Margin was 24.9%, which was lower year over year. We took significant expense actions in 2023 to adapt to changing environments while we integrated new teams and created greater investment capacity. We are taking further expense actions in 2024 and continuing to prioritize investment in growth initiatives. Looking ahead, our high probability pipeline remained steady from last quarter at $10 billion. This is diversified across all U.S. channels, including institutional and insurance, and includes unfunded client commitments expected to fund in 2024, and the $10 billion is nearly 70% higher compared to the same time last year. Turning to slide 16.

Dan: Investment management delivered adjusted operating earnings of $47 million in the fourth quarter and $180 million in full year 2023.

Net revenues grew approximately 17% and full year 2023, driven by higher management fees from favorable equity markets.

Dan: And higher international retail AUM.

Dan: Partially offset by the impact of lower institutional assets.

Dan: When the 23 adjusted operating margin was 24, 9%.

Dan: Which was lower year over year.

Dan: We took significant expense actions in 2023 to adapt to changing environments, while we integrated new teams and created greater investment capacity.

Donald C. Templin: In 2023, we focused on integrating key acquired capabilities and executing on our workplace strategy. We also managed our spend to create additional capacity to invest in areas with the greatest opportunity for net revenue and earnings growth in 2024 and beyond. For 2024, we expect EPS to be in the range of $8.25 to $8.45.

Dan: We are taking further expense actions in 2024 and continue to prioritize investment in growth initiatives.

Dan: Looking ahead, our high probability pipeline remained steady from last quarter at $10 billion.

Dan: This is diversified across all U S channels, including institutional and insurance and.

Unknown Executive: In 2025 and beyond, we expect EPS growth of 10% plus, consistent with our historical track record. This is supported by Profitable Revenue Growth, improving operating margins, and strong capital return driven by our diversified and capital-light businesses, which continue to generate significant free cash flow. With that, let's turn to questions and answers. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.

Dan: It includes unfunded client commitments expected to fund in 2024.

Dan: And the $10 billion is nearly 70% higher compared to the same time last year.

Dan: Turning to slide 16.

Matthew Toms: Our strong capital generation continues to differentiate us from peers. We generated approximately $800 million of excess capital during the year, including approximately $200 million in the fourth quarter. And we expect to generate over $800 million of capital in 2024, which builds on our track record of generating free cash at over 90%. Our focus in 2024 will be on deploying capital to shareholders via Sherry Purchases and Dividends, given the actions taken to reduce debt in 2023. We will continue the practice of deploying in the current quarter the capital we generated in the prior quarter, and we expect to maintain our excess capital position until macro conditions become more constructive. Turning to slide 17.

Dan: Our strong capital generation continues to differentiate us from peers.

Dan: We generated approximately $800 million of excess capital in the year, including approximately $200 million in the fourth quarter.

Dan: And we expect to generate over $800 million of capital in 2024, which builds on our track record of generating free cash at over 90%.

Unknown Executive: If you are using a speakerphone, please pick up your handset before pressing the star key. To withdraw your question, please press star, then two. As a reminder, participants are limited to one question and one follow-up. Our first questions come from the line of John Barnidge with Piper Sandler. Please proceed with your question. Good morning.

Dan: Our focus in 2024 will be on deploying capital to shareholders.

Dan: Share repurchases and dividends.

Dan: The actions taken to reduce debt in 2023.

Dan: We will continue the practice of deploying in the current quarter the capital we generated in the prior quarter.

Dan: And we expect to maintain our excess capital position until macro conditions become more constructive.

Heather Hamilton Lavallee: Thank you very much for the opportunity. Can you talk about the increased strategic spend in corporate? What's the focus there? Is any of it on standing up the Voya India operation that was completed last year? Thanks, John. Good morning. It's Heather.

Dan: Turning to slide 17.

Dan: In 2023, we focused on integrating key acquired capabilities and executing on our workplace strategy.

Dan: We also managed our spend to create additional capacity to invest in areas with the greatest opportunity for revenue and earnings growth in 2024 and beyond.

Heather Hamilton Lavallee: I'll start. So, what's driving the increase in some of our strategic spend is a couple of different things, and I'll give the reminder that we continue to be focused on being disciplined with expense management, but we're really focused in on a few key areas. The first within our asset management business is making investments in technology to be able to support our client growth as we grow our private and alternative franchise, as well as international distribution and expand that client base. Second, in health, you've heard us talk about the record growths and the start to the year and record results. We have invested in growing our distribution teams and our underwriting team to support our stop-loss mid-market expansion, which has shown up in our 1-1 results in terms of the very, very strong sales growth, as well as within our wealth business, we have strategically made investments to build out our mid-market sales and client-facing teams to drive revenue growth and improve retention, as well as making investments in our field, phone-based advisors, as well as our managed account team to be able to drive deeper integration, are really focused on driving the revenue growth.

Dan: For 2024, we expect EPS to be in the range of $8 25 to $8 45.

Donald C. Templin: In 2025 and beyond, we expect EPS growth of 10% plus, consistent with our historical track record. This is supported by Profitable Revenue Growth, improving operating margins, and strong capital return driven by our diversified and capital-light businesses, which continue to generate significant free cash flow. With that, let's turn to questions and answers. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the star key.

Dan: In 2025, and beyond we expect EPS growth of 10% plus consistent with our historical track record.

Dan: This is supported by profitable revenue growth.

Dan: Improving operating margins and strong capital return driven by our diversified and capital light businesses, which continued to generate significant free cash flow.

Speaker Change: With that let's turn to question and answers.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the star keys.

Unknown Executive: To withdraw your question, please press star, then two. As a reminder, participants are limited to one question and one follow-up. Our first questions come from the line of John Barnidge with Piper Sandler. Please proceed with your question. Good morning.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: As a reminder, participants are limited to one question and one follow up question.

Our first questions come from the line of John Barnidge with Piper Sandler. Please proceed with your questions.

John Bakewell Barnidge: Good morning. Thank you very much for the opportunity can you talk about the increased <unk> spend in corporate.

John Bakewell Barnidge: What's the focus there is any of it on standing up the Voya India.

Heather Hamilton Lavallee: To your comment about Voya India, we continue to remain focused on leveraging Voya India to help us innovate, but also to focus on delivering on the strong margins we have across our business. And that will continue to be a focus, as we simplify our IT environment and footprint, and continue to find ways that we can drive efficiencies across our business. Thank you for that.

John Bakewell Barnidge: Operation that was completed last year.

Speaker Change: Thanks, John Good morning, Heather.

Speaker Change: Stark so.

Speaker Change: What's driving the increase in some of our strategic spend is a couple of different things and ill give the reminder, that we continue to be focused on being disciplined expense management, but we're really focused in on a few key areas first within our asset management business is making investments in technology to be able to support our.

Matthew Toms: And my follow-up question, you talked about an investment management pipeline, and it called out the US business. There's a component of international I think that's not captured, but I think distribution has been improved through some M&A there. So could you maybe talk about how you think about the international opportunity for the pipeline there? Absolutely. Thanks, John. This is Matt Toms.

Speaker Change: Client growth as we grow our private and alternative franchise as well as international distribution and expand that client base.

Speaker Change: Second in health, you've heard us talk about the record growth and the start to the year of record results.

Speaker Change: We have invested in growing our distribution teams and our underwriting team to support our stop loss mid market expansion.

Matthew Toms: I'll give you some background and color on that. So, extremely excited about the partnership that we have globally with AGI and will continue to build upon that in 2024, as we've really created that over the last year plus. Importantly, if we look at what we've achieved in the international channel, $4 billion of flows coming from overseas is really a game changer for us. It's expanded our capability to reach overseas, and we only continue to build upon that product array that we have. So you're right to call out the pipeline in the U.S. It's something that we have had historically, and we're really happy with the turn, but it's only building internationally, and we're very excited as we move through this year. Thank you.

Speaker Change: Which has shown up in our <unk> results in terms of the very very strong sales growth as well as within our wealth business. We have strategically made investments to build out our mid market sales and client facing teams to drive revenue growth and improved retention as well as making investments in our field.

Speaker Change: Home based advisors as well as our managed account team to be able to drive deeper integration and all of those.

Speaker Change: I really focused on driving the revenue growth.

Speaker Change: Your comment about delay in India. We continue to remain focused on leveraging delay of India to help us innovate, but also to focusing on delivering on the strong margins, we have across our business and that will continue to be a focus is how do we simplify our it environment and footprint continue to.

Unknown Executive: Our next questions come from the line of Tom Gallagher with Evercore ISI. Please proceed with your question. Good morning.

Speaker Change: Find ways that we can we can drive efficiencies across our business.

Speaker Change: Thank you for that and my follow up question.

Unknown Executive: First question is just on the lower health earnings. What drove the weaker supplemental health margins this quarter from a product perspective? And it looks like your guide is assuming that that gets better. Can you talk about whether your confidence level is that it's going to improve heading into 24? Hey guys, you might be, Unmuted. I'm sorry.

Speaker Change: <unk> talked about in investment management pipeline I called out the U S business.

Speaker Change: There is a component of international I think that's not captured but I think distribution has been improved.

Speaker Change: Through some M&A there so could you maybe talk about how you think about the international opportunity for the pipeline there.

Speaker Change: Absolutely. Thanks, John This is Matt Thompson.

Matthew Toms: I'll give you some background and color on that. So, extremely excited about the partnership that we have globally with AGI, and continue to build upon that in 2024, as we've really created that over the last year plus. Importantly, there, if we look at what we've achieved in the international channel, $4 billion of flows coming from overseas is really a game changer for us. It's expanded our capability to reach overseas.

Matt Thompson: I'll give you some background and color on that so we're extremely excited about the partnership that we have globally with with Agi continued to build upon that in 2024.

Unknown Executive: Oh, can you hear me now? We can hear you now. Okay, great. So this is Rob Grubka.

Robert Lawrence Grubka: Sorry, I'll start over, Tom. Thanks for your question. We had some technical difficulties. So the fourth quarter is where we typically see seasonality in the volunteer results. What I would say was different this quarter is just the amount of incidents that were recorded in the fourth quarter but actually occurred in the first, second, or third. And so that seasonality element looks more elevated this year than in prior years. So, you know, as we've talked about in the past, and Don highlighted in his comments around trying to strive for the right customer value, this is a business that we have grown dramatically over a long period of time at this point. We service this business really well, and that balancing act of margin for customer value is something I think across the industry; we aren't alone in this, trying to always strive for doing the right thing and making sure that We're doing things from a customer service perspective that helps support them, and we've talked in the past about medical claim integration as an innovation that we put in place and will continue to focus on making it easier to anticipate claims activity for a customer. And again, strike that right balance.

Matt Thompson: As we've as we've really created that over the last year plus.

Matt Thompson: Importantly, there if we look at what we've achieved.

Matt Thompson: In the international channel $4 billion of flows coming from overseas.

It's really a game changer for us it has extended our capability to reach internationally and we only continue to build upon that product today that we have so youre right to call out the pipeline in the U S is something that we have had historically and we're really happy with the turn.

Matthew Toms: And we only continue to build upon that product that we have. So you're right to call out the pipeline in the US is something that we have had historically, and we're really happy with the turn, but it's only building internationally, and we're very excited as we move through this year. Thank you.

Matt Thompson: But it's only building internationally and we're very excited as we move through this year.

Matt Thompson: Okay.

Unknown Executive: Our next questions come from the line of Tom Gallagher with Evercore ISI. Please proceed with your question. Good morning.

Matt Thompson: Thank you our next questions come from the line of Tom Gallagher with Evercore ISI. Please proceed with your questions.

Tom Gallagher: Good morning first question is just on the lower health earnings.

Tom Gallagher: What what drove the weaker supplemental health margins this quarter from a product perspective.

Tom Gallagher: And it looks like your guide is assuming that that gets better can you talk about whether your confidence level that that is going to improve heading into 'twenty four.

Speaker Change: Hey, guys you might be.

Speaker Change: I'm sorry.

Unknown Executive: Oh, can you hear me now? We can hear you now. Okay, great. So this is Rob Grubka.

Speaker Change: Can you hear me now.

Speaker Change: We can hear you now yes.

Robert Lawrence Grubka: I'd close with 69 to 72 for the business, which is where we expect to come in. As you step back and you look at the full year, I know results have felt a little bit choppy in health, but the full year results, record earnings. 67% loss ratio, well below what we think is sustainable, which is why we're guiding back into the 69 to 72 range. So, Rob, there's nothing in the 4Q results from a trend; you view that as more seasonal. And you would, I presume that means you would expect there to be a little bit of more consistent results throughout the course of 24, because it sounds like you also had some, 22 favorable developments, sort of Matt, at least in the stop loss business. But would you expect the results to be a little more consistent throughout the course of 24 on health? Yeah, so talking in totality. Yeah, look, I think it was a quarter to quarter more volatility than we would ultimately expect to see in 24. I think I can say that with a lot of confidence.

Speaker Change: Okay. Great. So this is Rob crypto, sorry, I'll start over time. Thanks for your question and then we had some technical difficulties.

Robert Lawrence Grubka: Sorry, I'll start over, Tom. Thanks for your question. We had some technical difficulties. So the fourth quarter is where we typically see seasonality in the volunteer results. What I would say was different this quarter was just the amount of incidents that were recorded in the fourth quarter but actually occurred in the first, second, or third. And so that seasonality element looks more elevated this year than in prior years. So, as we've talked about in the past, and Don highlighted in his comments around trying to strive for the right customer value, this is a business that we have grown dramatically over a long period of time at this point. We service this business really well, and that balancing act of margin for customer value is something I think across the industry; we aren't alone in this, trying to always strive for doing the right thing and making sure that we're putting processes in place.

Speaker Change: So fourth quarter is where we typically see seasonality in the voluntary results. What I would say was different this quarter is just the amount of incidents that was reported in the fourth quarter, but actually occurred in first second or third.

Speaker Change: So that seasonality element looks more elevated this year than in prior years. So.

Speaker Change: As we as we've talked about in the past and Don highlighted in his comments around trying to strive for the right customer value. This is a business that we should have grown dramatically over a long period of time at this point.

Speaker Change: We service this business really well and that balancing act of margin for customer value is something I think across the industry. We arent alone in this trying to always strive for doing the right thing.

Speaker Change: Making sure that we're putting process in place.

Robert Lawrence Grubka: We're doing things from a customer service perspective that helps support them. And we've talked in the past about medical claim integration as an innovation that we put in place and will continue to focus on making it easier to anticipate claims activity for a customer and again, strike that right balance. 67% loss ratio, well below what we think is sustainable, which is why we're guiding back into the 69 to 72 range. So, Rob, there's nothing in the 4Q results from a trend. You view that as more seasonal.

Speaker Change: We're doing things from a customer service perspective that help support them and we've talked in the past about medical claim integration.

Heather Hamilton Lavallee: But you know, look, these are products and stop loss, in particular, where there can be volatility period to period. But as we look at it, understand what was going on with the book of business that drove the results quarter by quarter, we see ahead a more consistent pattern to 24. And Thomas, Heather, if I can just add maybe one other point, I think it's important to do, as Rob kind of concluded with, a broader step back on health is that we have continued to drive outpaced organic growth in this business while managing loss ratios very effectively. Rob and his team have a tremendous track record of doing that, and we've got the confidence that we'll be able to do that going forward as proven by the 1 So we feel very, very good about the continued growth and ability to manage the loss ratio in health. Thank you.

Speaker Change: Innovation that we put in place and will continue to focus on making it easier being able to anticipate claims activity for our customer and again strike that right balance I'd close with 69% to 72% for the businesses, where we expect to come in.

Speaker Change: You should do this step back and you look at the full year I know results have felt a little bit choppy and health, but the full year results record earnings 67% loss ratio well below what we think is sustainable which is why we're guiding back end of the 69 to 72 range.

Speaker Change: So Rob there's nothing in the <unk> results from a trend.

Speaker Change: You view that as more seasonal.

Unknown Executive: And you would, I presume that means you would expect there to be a little bit of more consistent results throughout the course of 24, because it sounds like you also had some, 22 favorable developments, sort of Matt, at least in the stop loss business. But would you expect the results to be a little more consistent throughout the course of 24 on health? Yeah, so talking in totality. Yeah, look, I think it was a quarter to quarter more volatility than we would ultimately expect to see in 24. I think I can say that with a lot of confidence.

Unknown Executive: Our next questions come from the line of Ryan Krueger with KBW. Please proceed with your question. Hey, thanks. Good morning.

Rob: And you would I presume that means you would expect there to be a little bit of more consistent results throughout the course of 'twenty four because it sounds like you also had some.

Donald C. Templin: My first question was a higher level one on the EPS guidance. So, I think last quarter, you had pointed more towards the midpoint of the 12 to 17% EPS CAGR and had said there could be potential upside if the equity market rebounded, which ended up happening. But ultimately, I think the 24 guidance points more towards the lower half of the EPS CAGR. Seems like there were a few different things impacting that. But I guess I was just trying to understand maybe at a high level, kind of what you attribute the change to in your EPS outlook for 24 maybe versus what you were thinking, you know, the last couple of quarters. Sure, Ryan, this is Don.

Rob: 22 favorable development.

Sort of at least on the on.

Rob: On the stop loss business, but would you would you expect the results to be.

Rob: A little more consistent throughout the course of 'twenty four on Unhealth.

Speaker Change: Yes, so talking in totality, yes.

Speaker Change: Look I think it was it was.

Speaker Change: Quarter to quarter or more volatility than we would ultimately expect to see in 'twenty. Four I think I can say that with a lot of confidence.

Robert Lawrence Grubka: But you know, look, these are products, and stop-loss products, in particular, where there can be volatility period to period. But as we look at it, understand what was going on with the book of business that drilled the results quarter by quarter, we see ahead a more consistent pattern to 24. And Thomas, Heather, if I can just add maybe one other point, I think it's important to do, as Rob kind of concluded with, a broader step back on health is that we have continued to drive and outpace organic growth in this business while managing loss ratios very effectively. Rob and his team have a tremendous track record of doing that, and we've got the confidence that we'll be able to do that going forward as proven by So we feel very, very good about the continued growth and ability to manage the loss ratio in health. Thank you.

Speaker Change: But look these are products and stopped Boston in particular, where there can be volatility period to period, but as we look at to.

Speaker Change: Understand what was going on with the book of business that drove the results quarter by quarter, we see had a more consistent pattern to 'twenty four.

Donald C. Templin: So, you know, let me start by saying we're expecting profitable growth in all of our businesses in 2024. And as I said, we're expecting to generate significant cash from those capital-light businesses. But the pace of growth in our businesses in 2024 is slightly lower than maybe anticipated last quarter and also slightly lower than what we're anticipating going forward in 2025 and beyond. And really, that's impacted by, I think, three things in the business. First, on the health side, you know, we had record results, as Rob just talked about in health. And what we see is that normalizing back to loss ratios that are in that 69 to 72% range. In wealth, we continue to have participants surrender. So, as part of our look forward to 2024, we were modeling, or expecting, or guiding that we'd have surrenders in 2024 that are consistent with the second half of 2023. And obviously, that will impact our results. In IM, we had negative flows in the fourth quarter.

Speaker Change: And Tom as Heather if I can just add maybe one other point I think it's important to do as rod kind of concluded with a broader step back on health is that we continue to drive and outpaced organic growth in this business, while managing loss ratio is very effectively Rob and his team has a tremendous track record of doing that and we've got the confidence it will be.

Speaker Change: To do that going forward.

Speaker Change: As proven by the one one start we already had to the year. So we feel very very good about the continued growth and ability to manage the loss ratio in health.

Heather Hamilton Lavallee: Our next questions come from the line of Ryan Krueger with KBW. Please proceed with your question. Hey, thanks. Good morning.

Speaker Change: Thank you our next questions come from the line of Ryan Krueger with <unk>. Please proceed with your questions.

Ryan Krueger: Hey, Thanks. Good morning. My first question was a higher level one on the EPS guidance I think last quarter, you had pointed more towards the midpoint of the 12% to 17% EPS CAGR and had said there could be potential upside if the equity market rebounded.

Donald C. Templin: My first question was a higher level one on the EPS guidance. So, I think last quarter, you had pointed more towards the midpoint of the 12 to 17% EPS CAGR and had said there could be potential upside if the equity market rebounded, which ended up happening. But ultimately, I think the 24 guidance points more towards the lower half of the EPS CAGR. Seems like there were a few different things impacting that. But I guess I was just trying to understand maybe at a high level, kind of what you attribute the change to in your EPS outlook for 24, maybe versus what you were thinking, you know, the last couple of quarters. Sure, Ryan, this is Don.

Ryan Krueger: Which ended up happening, but but ultimately I think 24 guidance points more towards the lower half of the EPS CAGR. It seems like there were a few different things impacting that but I guess I was just trying to understand maybe at a high level kind of what you attribute the change too in your EPS outlook for 'twenty four maybe versus what you were thinking last.

Ryan Krueger: Couple of quarters.

Sure. Ryan. This is this is Don So let me let me start by saying, we're expecting profitable growth in all of our businesses in 2024, and as I said, we're expecting to generate significant cash from those capital light businesses.

Donald C. Templin: So, you know, let me start by saying we're expecting profitable growth in all of our businesses in 2024. And as I said, we're expecting to generate significant cash from those capital-light businesses. But the pace of growth in our businesses in 2024 is slightly lower than maybe anticipated last quarter and also slightly lower than what we're anticipating going forward in 2025 and beyond. And really, that's impacted by, I think, three things in the business. First, on the health side, you know, we had record results, as Rob just talked about in health, and we see that normalizing back to loss ratios that are in that 69 to 72% range. In wealth, we continue to have participants surrender.

Donald C. Templin: So we're starting with asset levels that are slightly below where we anticipated. So as it relates to the business, those are the key components. I might also point out that on the corporate side, there's a relatively big difference in expenses.

Speaker Change: But the pace of growth.

Speaker Change: In our businesses in 2024 is slightly lower.

Donald C. Templin: You know, we were roughly at $200 million, just slightly over $200 million for the full year 2023. And our guide for 2024 is $240 to $260 million. That's made up of maybe three primary components.

Speaker Change: Then maybe anticipated last quarter and also slightly lower than what we're anticipating going forward in 2025 and beyond.

Speaker Change: And really that's impacted by I think three things in the business first on the on the health side, we had record results as Rob just talked about and health and we see that normalizing back to loss ratios that are in that 69% to 72% range.

Donald C. Templin: The first relates to incentive compensation. So partly as a result, or largely as a result of the performance in all, in 2023, we actually recorded, booked, and are going to pay incentive compensation that's below target. For 2024, we expect that incentive compensation will come back up to target levels. And so that's embedded in our guidance and in our forecast. We also have two other things that are impacting our corporate expenses and our thinking about 2024. One is we're expecting about $10 million more in pension expense. This relates to service cost.

Speaker Change: In wealth, we continue to have participants surrenders so.

Donald C. Templin: So as part of our look forward to 2024, we were modeling, or expecting, or guiding that we'd have surrenders in 2024 that are consistent with the second half of 2023. And obviously, that will impact our results. For IM, we had negative flows in the fourth quarter.

Speaker Change: As part of our look forward to 2024, we are modeling or expecting or guiding that we'd have surrenders in 2024 that are consistent with the second half of 2023, and obviously that will impact our results.

And I am we've had negative flows in the fourth quarter. So we're starting with asset levels that are slightly below where we anticipated. So as it relates to the business those are the key components.

I might also point out that that on the corporate side. There is a relatively big difference in expenses.

Donald C. Templin: It's non-cash and primarily attributable to the increase in our employee population based on the addition of benefit focus. And then we also continue to – we have some amounts in corporate related to strategic investment. Heather talked a little bit about that in her opening comments, but we would expect to be investing in technology, and continuing to invest in technology. So that's embedded in corporate.

Speaker Change: We're roughly at $200 million, just slightly over $200 million for the full year 2023, and our guide for 2024 is $240 million to $260 million.

Speaker Change: That's made up of maybe three primary components. The first relates to incentive compensation. So partly as a result or largely as a result of the performance in alts.

Donald C. Templin: The first relates to incentive compensation. So partly as a result, or largely as a result of the performance in all, in 2023, we actually recorded, booked, and are going to pay incentive compensation that's below target. For 2024, we expect that incentive compensation will come back up to target levels, and so that's embedded in our guidance and in our forecast. We also have two other things that are impacting our corporate expenses and our thinking about 2024. One is we're expecting about $10 million more in pension expense. This relates to service cost.

Speaker Change: In 2023, we actually recorded booked at are going to pay incentive compensation. That's below target for 2024, we expect that incentive compensation will come back up to target levels, and so thats embedded in our guidance and in our forecast.

Donald C. Templin: So you have higher incentive compensation, $10 million or so of pension costs, and about $10 million or so of this incremental strategic investment. And that's impacting our guide on corporate expenses. Great, thanks. I appreciate the color.

Speaker Change: We also have two other things that are impacting our corporate expenses in our thinking on 2024. One is we're expecting about $10 million more of pension expense. This relates to service costs. It is noncash and primarily attributable to the increase in our in our.

Unknown Executive: That was helpful. And then just follow up, investment management: do you still think the margins can trend higher over time? Or do you think, at this point, 25 to 27 is kind of the right range for that business? Yeah, thanks, Tom. I think, Thinking about the 25 to 27 and where we've been and where we're growing, we're very confident in that margin. That's an increase from the prior year. And as we look forward, we look at the growth behind that margin and the breadth of that growth, both domestically and internationally, as our business partnership matures with AGI. We're very confident at that growth rate. We're more focused on the scope of the business that can grow. Our pipeline is incredibly strong, as Don mentioned, the 10 plus billion dollars that we have in place to deliver on through this year and beyond continue to broaden both domestically and globally. I'm more focused on the growth of the business at this point and expanding that margin further, but I'm also confident that you'll see that margin bounce back as we move into 2024. Thank you.

Donald C. Templin: It's non-cash and primarily attributable to the increase in our employee population based on the addition of benefit focus. And then we also continue to have some amounts in corporate related to strategic investment. Heather talked a little bit about that in her opening comments, but we would expect to be investing in technology and continuing to invest in technology. So that's embedded in corporate. So you have higher incentive compensation, $10 million or so of pension costs, and about $10 million or so of this incremental strategic investment, and that's impacting our guide on corporate expenses. Great, thanks. I appreciate the color.

Speaker Change: Employee Papa with population based on the additional benefit focus and then we also continue to two we have some amounts in corporate related to strategic investment Heather talked a little bit about that in her opening comments, but we would we would expect to be investing in.

Speaker Change: <unk> continuing to invest in technology, so thats embedded in corporate so you have.

Speaker Change: Higher incentive compensation $10 million or so of pension and cost at about $10 million or so of this incremental strategic investments and that's impacting our guide on corporate expenses.

Speaker Change: Great. Thanks, I appreciate the color that was helpful. And then just a follow up investment management do you still think the margins can trend higher over time or do you think at this point, 25% to 27% is kind of the right range for that business.

Matthew Toms: And then just follow up, investment management: do you still think the margins can trend higher over time? Or do you think, at this point, 25 to 27 is kind of the right range for that business?

Matthew Toms: Yeah, thanks, Tom. I think, thinking about the 25 to 27 and where we've been and where we're growing, we're very confident in that margin. That's an increase from the prior year, and as we look forward, we will look at the growth behind that margin and the breadth of that growth, both domestically and internationally, as our business partnership matures with AGI. We're very confident at that growth level, and we're more focused on the scope of the business that can grow. Our pipeline is incredibly strong, as Don mentioned, the 10 plus billion dollars that we have in place to deliver on through this year and beyond continue to broaden both domestically and globally. I'm more focused on the growth of the business at this point and expanding that margin further, but also confident that you'll see that margin bounce back as we move into 2024. Thank you.

Speaker Change: Yes, Thanks, Tommy I think thinking.

Thinking about the 20% to 27, and where we've been and where we're growing we're very confident in that margin thats an increase from the prior year and as we look forward, we look at the growth behind that margin and the breadth of that growth both domestically and internationally as the.

Matthew Toms: Our next questions come from the line of Jimmy Bhullar with J.P. Morgan. Please proceed with your question. Hey, good morning.

Speaker Change: Business partnership matures with Agi, we're very confident at that growth level.

Unknown Executive: I had a question on asset management and just your comments on the pipeline. I think you've been fairly upbeat about the pipeline for the past year, yet flows have been consistently negative. So what gives you the comfort that the pipeline will actually end up translating into net flows? And what's different this year versus, maybe last year? We knew this would create headwinds in the short term but really provides amazing opportunity in the longer term, and I'm really confident with the year plus we've got behind us, the building of products, and the development of channels to be able to deliver upon that. And I think that's really, that's really the game changer.

Speaker Change: We're more focused on the scope of the business that can grow our pipeline is incredibly strong as Don mentioned, the 10, plus $1 billion that we have in place to deliver on through this year and beyond continues to broaden both domestically and globally are more focused on the growth of the business at this point and expanding that margin further.

Speaker Change: But also confident that youll see that margin bounce back as we move into 2024.

Speaker Change: Thank you our next questions come from the line of Jimmy <unk> with Jpmorgan. Please proceed with your questions.

Matthew Toms: Our next questions come from the line of Jimmy Bhullar with JPMorgan. Please proceed with your questions. Good morning.

Matthew Toms: I had a question on asset management and just your comments on the pipeline. I think you've been fairly upbeat about the pipeline for the past year, yet flows have been consistently negative. So what gives you the comfort that the pipeline will actually end up translating into net flows? And what's different this year versus maybe last year? Yeah, thanks, Jimmy. I'll take that.

Jimmy: Good morning, I had a question on asset management and just your comments on.

Jimmy: And the pipeline I think <unk> been fairly upbeat about the pipeline for the past year, yet flows have been consistently negative. So what gives you the comfort that the pipeline will actually end up translating into net flows and what's different this year versus maybe last year.

Matthew Toms: We step back and look at that pipeline. There's also the diversity of the pipeline domestically and internationally. So we have the ability to deliver solutions in the US market as well as the global market. There's a lot of demand for dollar-based assets. There's also a pivot back into fixed income where we have very strong performance, as Don referenced in his remarks. Performance is what opens the door. And we have that and look forward to delivering both domestically and globally with a very strong partnership for many years to come. Are the NNIP withdrawals, are those already gone, or is there some more to go?

Speaker Change: Yes, thanks, Jamie.

Matthew Toms: I think the key here is that we're really through the transformation of the partnership with NNIP through to AGI. We knew this would create headwinds in the short term but really provides amazing opportunity in the longer term, and I'm really confident with the year plus we've got behind us, the building of products and the development of channels to be able to deliver upon that. And I think that's really, that's really the game changer.

Speaker Change: I'll take that I think the key here is that we're really through the transformation of the partnership.

Speaker Change: In IP through to Agi, we knew this would create headwinds in the short term, but really provides amazing opportunity longer term and really confident with the the year plus we have got behind us the building of products and the developing of channels to be able to deliver upon upon that and I think thats really.

Speaker Change: It's really the game changer, we step back and look at that pipeline. There is also the diversity of the pipeline domestically and internationally.

Speaker Change: So we have the ability to deliver solutions in the U S market as well as the global market Theres a lot of demand for dollar based assets. There is also a pivot back into fixed income that we have very strong performance as Don referenced in his remarks.

Matthew Toms: So the NNIP withdrawals are a 2023 event. So while it's a headwind for 2023, as we put it in 2024, and our confidence in that $10 billion plus pipeline, it's because that's behind us. And while we'll never fund to go through that transition, we're much more confident and excited about the growth trajectory with HDI over the years and decades to come. And that's behind us now, as far as NN.

Speaker Change: Formats is what opens the door and we have that and look we look forward to delivering both domestically and globally with a very strong partnership for many years to come.

Speaker Change: At the end of an IP withdrawals are those already gone or is there some more to go.

Speaker Change: So the NII result, withdrawals or a 2023 event, so wally while a headwind for 2023 as you put it into 2024 and our confidence in that $10 billion plus pipeline, it's because thats behind us and well never fun to go through that transition, we're much more confident and excited about the growth trajectory with <unk>.

Unknown Executive: Thank you. Our next questions come from the line of Suneet Kamath with Jeffries. Please proceed with your question. Thanks, good morning.

Donald C. Templin: Don, on cash generation, I think you said around 800 million for 2023 and maybe a bit above that in 2024. As we look out, maybe beyond this year, do you feel like that cash generation should be pretty stable? Or are you anticipating any kind of bigger moves as we kind of go into the out? Well, the cash generation is really reflective of sort of our 90% plus cash generation capabilities. We've had that in the past, and we expect that in the future.

Speaker Change: HDI over the years and decades to come.

Speaker Change: That's behind US now as far as the <unk>.

Heather Hamilton Lavallee: Thank you. Our next questions come from the line of Suneet Kamath with Jeffries. Please proceed with your question. Thanks, good morning.

Speaker Change: Thank you our next questions come from the line of <unk> come up with Jefferies. Please proceed with your questions.

Jefferies: Thanks, Good morning.

Jefferies: Don on the on the cash generation I think you said around $800 million for 2023, and maybe a bit above that in 2024 as we look out maybe beyond this year do you feel like that cash generation should be pretty stable or are you anticipating any kind of bigger moves as we kind of go into the out years.

Donald C. Templin: As we look forward, and you saw in our guidance, you know, for 2024, we're expecting that the businesses are going to grow at sort of two to 4%. I mean, I obviously talked about what was happening in corporate, but the businesses are we expect them to grow. In the years 2025 and beyond, we expect them to grow at a more accelerated pace.

Jefferies: Well.

Jefferies: The cash generation is really reflective of sort of our 90% plus cash generation capabilities, we have that in the past and we expect that in the future.

Jefferies: As we look forward and you saw in our guidance for.

Jefferies: For 2024, we are expecting that the businesses are going to grow at sort of 2% to 4% I mean, I, obviously talked about what was happening in corporate but the businesses are we expect them to grow.

Donald C. Templin: So we're, you know, guiding the four to 6%. We expect that that growth will then contribute to incremental cash generation because we're very comfortable with that 90 90% plus conversion ratio. So I would expect that over time, cash generation will grow in proportion to the growth of our business. Okay, that makes sense. And then I guess, somewhat related, when I'm looking at slide 17 and I'm looking at your adjusted operating margin targets for 24 and then 25, it seems sort of flattish to me, like kind of in that low 30% range.

Jefferies: In the years 2025, and beyond we expect them to grow at a more accelerated pace. So we're guiding to 4% to 6%. We expect that that growth will then contribute to incremental cash generation because we're very comfortable with that mind, you, 90% plus conversion ratio. So I would expect that over time.

Heather Hamilton Lavallee: So we're, you know, guiding the four to 6%. We expect that that growth will then contribute to incremental cash generation because we're very comfortable with that 90 90% plus conversion ratio. So I would expect that over time, cash generation will grow in proportion to the growth of our business. Okay, that makes sense. And then I guess, somewhat related, when I'm looking at slide 17 and I'm looking at your adjusted operating margin targets for 24 and then 25, it seems sort of flattish to me, like kind of in that low 30% range.

Jefferies: That cash generation will grow in proportion to the growth in our business.

Speaker Change: Okay that makes sense and then I guess.

Speaker Change: I guess somewhat related when I'm looking at slide 17, and I'm looking at your adjusted operating margin targets for 24, and then 25.

Speaker Change: It seems sort of flattish to me like kind of in that low 30% range and I would have thought just given the scale that you have in some of the businesses, we would see some sort of sort of positive operating.

Heather Hamilton Lavallee: And I would have thought, just given the scale that you have in some of the businesses, we'd see some sort of positive operating leverage. I acknowledge that it's 30% plus, which means there could be some upside, but maybe just some color around. Are we kind of seeing flattish margins over the near term, or should we expect some sort of inflection at some point? Yeah, thanks. This is Heather.

Speaker Change: Operating leverage.

Speaker Change: Knowledge that it's 30% plus which means there could be some upside, but maybe just some color around.

Speaker Change: Are we kind of flattish margins over the near term or should we expect some sort of inflection at some point. Thanks.

Speaker Change: Yes. Thanks. So this is how they route maybe I'll start with that and I think as you look at the operating margins, we've generated across our business and particularly within wealth. We're very proud of that margin and we've talked about the fact that we've delivered in that high 30% range. Since we've been a public company and for us to be able to continue to drive revenue growth.

Heather Hamilton Lavallee: Maybe I'll start with that. You know, I think as you look at the operating margins we've generated across our business, and particularly within wealth, we're very proud of that margin. And we've talked about the fact that we've delivered in that high 30% range since we've been a public company. And for us to be able to continue to drive revenue growth in that business and still deliver exceptionally strong operating margins, we're very proud of that.

In that business and still deliver exceptionally strong operating margins, we're very proud of that.

Heather Hamilton Lavallee: In Don's comment, when we talked about health insurance and provided the slightly lower guidance in the health care with the addition of benefit focus and, again, highly strategic but a lower operating margin for that specific Ben Admin business, we see an opportunity to continue to improve that margin over time. So what I would say is we certainly think that in 24 for health, you've got the moderation of the loss ratios, but we see opportunity to continue to leverage our expense discipline, our focus on innovation, our focus on just driving the integrations across workplace to be able to see some improvement in the operating margins. And then Matt already talked about investment management, as we do see a steady path. So, you know, I would think about that as a bit of a baseline, but we're always going to be focusing on how we can continue to grow margins across our business. Thank you.

Speaker Change: And Don's comment when we talked about the health insurance and providing.

Speaker Change: The slightly lower guidance in the health with the addition of benefit focus and again highly strategic but at a lower operating margin for that specific Ben admin business, we see an opportunity to continue to improve that margin over time, and so what I would what I would say is we certainly think.

Speaker Change: That in 'twenty four for healthy you've got the moderation of the loss ratios, but we see opportunity to continue to leverage our expense discipline, our focus on innovation our focus in on.

Speaker Change: Just driving the integrations across workplace to be able to.

Speaker Change: See some improvement in the operating margins and then Matt already talked about and investment management as we do see a steady path. So.

Speaker Change: I would think about that as a bit of a baseline, but we're always going to be focusing in on how we can continue to grow margins across our businesses.

Speaker Change: Thank you our next questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions.

Donald C. Templin: Our next questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question. Hi, thanks.

Unknown Executive: Our next questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question. Hi, thanks.

Elyse Greenspan: Hi. Thanks. My first question is on investment management. So you guys called out two mandates I guess in the fourth quarter that you said, where I'm moving to the Q1 can you just give us the size of those and then.

Matthew Toms: My first question is on investment management. So you guys called out two mandates, I guess, in the fourth quarter that you said we were moving to Q1. Can you just, you know, give us the size of those?

Unknown Executive: My first question is on investment management. You guys called out two mandates, I guess, in the fourth quarter that you said we're moving to Q1. Can you just, you know, give us the size of those?

Matthew Toms: And then how would you expect that $10 billion pipeline that you're talking about that you're talking about that you're talking about that you're talking about that you're, you know, coming online during 2020? Transcribed by https://otter.ai, [inaudible] So I can't put a precise number on any client. http://www.youtube.com.au [inaudible] And also, per the The size of the two mandates is, it's, well, there's always an array of mandates, right? So you're thinking on the order of a $10 billion pipeline. That's never going to be equally weighted through the year, so I don't have precise numbers.

Unknown Executive: And then how would you expect that 10 billion pipeline that you're talking about to come online during 2020? This is Matt.

Elyse Greenspan: How would you expect that $10 billion pipeline that you are talking about to come.

Elyse Greenspan: Come online during 2024.

Matthew Toms: I'll end. As far as timing goes, there are always a lot of moving parts around clients. Timing, So I can't put a precise number on any client. For more information, visit www.fema.gov, Client Behavior.

Elyse Greenspan: Hi, This is Matt I'll answer that for you so as far as timing of mandates always a lot of moving parts around clients and markets. So we're very confident about the pipeline we have moving forward.

Matt: <unk> first quarter fourth quarter, you've got really the peak in rates. If you think about it was middle of last quarter, so client behavior and around year end can be can be variables. It's always hard to be extremely precise but the size of the pipeline and the breadth of the pipeline continues to develop.

Matthew Toms: And also, per the prior, for some, MarketBulletin.com, and the size of those two mandates that moved. The size of the two mandates is, well, there's always an array of mandates, right? So you're thinking on the order of a $10 billion pipeline. That's never going to be equally weighted through the year.

Matt: I can't put a precise number on any client funding when and where but the importance of that is the diversity of that pipeline growing across fixed income equities in international and domestic demand.

Matt: And as far as timing through the year again likely to build some of this is a client behavior in the market stability comment, but we are very confident in that 10 plus billion dollar number.

Matthew Toms: So I don't have precise numbers. Client demands are always changing as well. But again, very confident in the size of the pipeline throughout the year, and we expect it to build quarter by quarter. Thank you.

Matt: And also for the prior questions. We look internationally. The time, we've had to build the relationship with Agi in the product array will continue to benefit as we move through the year. So look for some increase as we move through the year, it's always impossible to be perfectly precise with market volatility and client behavior, but it's a building trajectory.

Matt: We're very confident with the break we have out of the gate to start in 2024.

Unknown Executive: Our next questions come from the line of Wilma Burdis with Raymond James. Please proceed with your question. Hey, good morning.

Matt: And the size of those two mandates that moved.

Matt: The size of the two mandates.

Matt: Is it.

Matt: Well Theres always theres an array of mandates.

Unknown Executive: Could you talk a little bit about the capital return outlook for Q23? Is that that kind of a good run rate? 24?

Matt: Youre thinking on the order of $10 billion pipeline.

Matt: That's never going to be equally weighted through the year. So don't have precise numbers client demands are always moving as well, but again very confident in the size of the pipeline throughout the year and we expect that to build through the year quarter by quarter.

Donald C. Templin: Yeah, I think, you know, we want to make sure that we're focused on the practice that we have been carrying out throughout, you know, 2023. I mean, we thought it was prudent to be in a position where we were deploying capital in the current quarter that we generated in the prior quarter. So we generated about $200 million of capital in the fourth quarter. So, you know, I would expect that we would be deploying something in that neighborhood in the first quarter of 2024.

Matthew Toms: Client demands are always changing as well. But again, we are very confident in the size of the pipeline throughout the year, and we expect it to build quarter by quarter. Thank you.

Matthew Toms: Our next questions come from the line of Wilma Burdis with Raymond James. Please proceed with your question. Hey, good morning.

Speaker Change: Thank you our next questions come from the line of <unk> <unk> with Raymond James. Please proceed with your questions.

Rod Martin: Hey, good morning.

Donald C. Templin: Could you talk a little bit about the capital return outlook for Q23? Is that that kind of a good run rate? 24?

Rod Martin: You talk a little bit about the capital return outlook for Q2 'twenty three is that a is that kind of a good run rate in 'twenty four.

Rod Martin: Yes, I think we're sort of we want to make sure that we're focused on on the practice that we have been carrying out throughout.

Donald C. Templin: And I, we've, we've indicated that, you know, we expect to have a strong cash generation year. We've also indicated that our bias for 2024 will be on returning that capital through share repurchase and dividends. So think about that $800 million of excess capital will be biased toward those activities. Thank you.

Rod Martin: 2023, I mean, we thought it was prudent to be in a position, where we were deploying capital in the current quarter that we generated in the prior quarter. So we generated about $200 million of capital in the fourth quarter. So I would expect that we would be deploying something in that neighborhood in the first.

Rod Martin: Order of 2024.

Matthew Toms: And I, we've, we've indicated that, you know, we expect to have a strong cash generation year. We've also indicated that our bias for 2024 will be on returning that capital through share repurchase and dividends. So think about that $800 million of excess capital will be biased toward those activities. Thank you.

Rod Martin: And.

Wilma Carter Jackson Burdis: And then anything to note in terms of alternative investment returns heading into 2024? I know your outlook assumes, I think, a 9% rate, but maybe just give us some color on what you're seeing so far this year and how that will progress. Thank you.

Rod Martin: We've indicated.

Rod Martin: Decatur that we expect to have a strong cash generation year. We've also indicated that our bias for 2024 will be on returning that capital through share repurchase and through dividends. So think about that $800 million of excess capital will be biased to those activities.

Rod Martin: Okay.

Speaker Change: Thank you and then.

Speaker Change: To note in terms of alternative investment returns heading into 2024 I know your outlook assumes I think 9% rate, but maybe just give us some color on what youre seeing so far this year and how that will progress. Thank you.

Donald C. Templin: Our guidance, our long-term guidance continues to be at that 9% rate. We feel like, over the long term, that's been a return that is representative of our actual experience. So we have not adjusted that. We are confident in that over the long term. Obviously, in individual periods, you can deviate from that.

Speaker Change: Yes, Youre right.

Donald C. Templin: Our guidance, our long-term guidance continues to be at that 9% rate. We feel, we feel like over the long term, that's been a return that is representative of our actual experience. So we have not adjusted that we are confident in that over the long term. Obviously, in individual periods, you can deviate from that. But maybe I'll turn it over to Matt to talk a little bit more about, you know, we had a lot of conversation around this. And we felt really comfortable when we put it in our guidance and maybe have Matt give you a little bit of color around how we got to that conclusion or reaffirmed that conclusion. Right, no, no, thanks.

Speaker Change: Our guidance our long term guidance continues to be at that 9% rate, we feel we feel like over over the long term that's been.

Donald C. Templin: But maybe I'll turn it over to Matt to talk a little bit more about, you know, we had a lot of conversation around this, and we felt really comfortable when we put it in our guidelines. And maybe Matt can give you a little bit of color around how we got to that conclusion or reaffirmed that conclusion. Right, Don. No, thanks.

Speaker Change: A return that is representative of our or our actual experience. So we have not adjusted that we are confident in that over the long term obviously individual periods you can deviate from that but maybe I'll turn it over to Matt to talk a little bit more about the bill.

Matt: We have a lot of conversation around this.

Matthew Toms: And look, precisely forecasting the return of any market is a difficult thing to do. The long-term assumption, I think, is conservative and something, if you look at our historical track record, we're very confident in delivering. And if we look at market volatility, where we stand right now, and how markets perform across equity, fixed income, and into private equity and all, there's been a lot of transition over the last year and a half. So as we step back, and we look at the quality of our portfolio, what it's delivered over time, and the areas that it's oriented towards, those are the areas of strength and of resilience. So I think we're extremely confident because of the underlying asset quality within that portfolio. Thank you.

Matt: And we felt really comfortable when we put it in our guidance and maybe have Matt give you a little bit of color around how we got to that conclusion or reaffirm that conclusion right now.

Matthew Toms: And look, precisely forecasting the return of any market is a difficult thing to do. With a long-term assumption, I think it is conservative and something, if you look at our historical track record, we're very confident in delivering. And if we look at market volatility, where we stand right now, and how markets perform across equity, fixed income, and into private equity and all, there's been a lot of transition over the last year and a half. So as we step back, and we look at the quality of our portfolio, what it's delivered over time, and the areas that it's oriented toward, those are the areas of strength and resilience. So I think we're extremely confident because of the underlying asset quality within that portfolio. Thank you.

Matt: And look precisely forecasting the return of any market is a difficult thing to do over the long term assumption I think is conservative and something if you look at our historical track record, we're very confident in delivering.

Matt: And if you look at market volatility, where we stand right now and how markets perform across equity fixed income and into private as an office. There has been a lot of transition over the last year and a half so as we step back and we look at the quality of our portfolio, but it's delivered over time.

Matt: The area that is oriented towards those are the areas.

Matt: Strength in our resilient. So I think we're extremely confident because of the underlying asset quality within that portfolio.

Matt: Yeah.

Unknown Executive: Our next questions come from the line of Joel Hurwitz with Dowling and Partners. Please proceed with your questions. Hey, good morning.

Robert Lawrence Grubka: Our next questions come from the line of Joel Hurwitz with Gatling and Partners. Please proceed with your questions. Hey, good morning.

Thank you our next questions come from the line of Joel <unk> with Dowling and partners. Please proceed with your question.

Joel: Hey, good morning, So someone help you highlighted the 15% plus in force premium growth.

Robert Lawrence Grubka: So in health, you highlighted the 15% plus in-force premium growth. Can you just talk about your outlook across the product lines and what you saw with the 1.1 renewals? You know, Bill. This is Rob.

Unknown Executive: So in health, you highlighted the 15% plus in-force premium growth. Can you just talk about your outlook across the product lines and what you saw with 1.1 renewals? You know, Bill. This is Rob.

Joel: Just talk about your outlook across the product lines and what you saw with the one one renewals.

Joel: Yes, Joel described it look the guidance at a high level is sort of where our anchor us too and product by product, we'll let the dust settle a one one and there's things within that just that well feel nuances, but are important as well.

Robert Lawrence Grubka: Look, the guidance at a high level is sort of where I'll anchor us. And product by product, we'll let the dust settle one-to-one. And there are things within that just that, you know, will feel nuanced but are important, such as, you know, re-enrollment activity influences things. There are other elements of amendments within the book.

Robert Lawrence Grubka: Look, the guidance at a high level is sort of where I'll anchor us. And product by product, we'll let the dust settle one to one. And there are things within that just that, you know, will feel nuanced but are important, such as, you know, re-enrollment activity influences things, there are other elements of amendments within the book. And so it can move the numbers around a little bit more than you might otherwise

Re enrollment activity influences things. There is there is other elements of amendments within the book and so it can move the numbers around a little bit more than you might otherwise expect but look you should take from the 15% that we have momentum across all the products.

Robert Lawrence Grubka: And so it can move the numbers around a little bit more than you might otherwise expect. But look, you should take from the 15% that we had momentum across all the products. You know, we had a really strong stop-loss season. We had a really strong supplemental health season, and life wasn't too bad.

Robert Lawrence Grubka: But look, you should take from the 15% that we had momentum across all the products. You know, we had a really strong stop-loss season, we had a really strong supplemental health season, and life wasn't too bad. Again, to get us to 15%, we were firing on all cylinders for one-to-one, and the team worked really hard to get us there collectively. But, you know, we feel good about the number in totality. We'll give you the, obviously, the nitty-gritty details as we get into one cure. Okay.

Joel: We had a really strong stop loss season, we had a really strong supplemental health season and life wasn't too bad.

Robert Lawrence Grubka: Again, to get us to 15%, we were firing on all cylinders for one-to-one, and the team worked really hard to get us there collectively. But, you know, we feel good about the number in totality. We'll give you the, obviously, the nitty-gritty details as we get into one-to-one. Okay.

Joel: Again to get us to 15% we were firing on all cylinders for one one and the team is working worked really hard to get us there collectively.

Joel: Collectively, but we feel good about the number in totality will give you. The obviously the nitty gritty details as we get into <unk> reporting.

Joel: Okay.

Robert Lawrence Grubka: And then when I look at tax-exempt flows, it was almost 5 billion in outflows for the full year. I know you call that the one large mandate redeeming in Q4. But just what's going on there?

Joel: And then when I look at tax exempt flows.

Joel: It was almost $5 billion of outflows for the full year I know you called out the one large.

Joel: Mandate redeeming in Q4, but just what's going on there.

Robert Lawrence Grubka: And then is that business the majority of the concentration of the spread based AUM? And are you seeing some of these outflows pressuring the spread asset levels? Yeah, so look on TM is, you know, Heather knows well, and she may chime in here.

Joel: Oh.

Joel: Does that business have the majority of the concentration of the spread based on AUM and are you seeing.

Joel: Some of these outflows pressuring the spread asset levels.

Speaker Change: Yeah. So look on TM is.

Speaker Change: Heather knows well and she may chime in here, that's a business we've been in a long time, we've been extremely successful we got.

Robert Lawrence Grubka: That's a business we've been in for a long time, and we've been extremely successful; we have, you know, a market leadership position in that business. And it is one where general account plays a bigger role versus the corporate segment. So, and as a reminder, we called out sort of what happened in the fourth quarter. But as a reminder, in the first quarter, we also had a large case go there. So that's, you know, close to 4 billion from the number from those two particular cases that have been with us a long time, large general accounts; that was certainly part of the story.

Speaker Change: Our market leadership position in that business and it is one where general account plays a bigger role versus the corporate segment. So.

Speaker Change: As a reminder, we called out sort of what happened in fourth quarter, but as a reminder, in first quarter.

Speaker Change: Also had a large case go there so that's.

Speaker Change: Close to $4 billion of the number from those two particular cases that bandwidth is a long time large general accounts that was certainly a piece of the story.

Robert Lawrence Grubka: And then what we've seen, and Don highlighted this, you know, the participant behavior is an element that has been nudged. Given where rates have moved in this sort of unique environment, in our guide on, you know, our best view of things as we sit here today, is that we'll continue as we look out through 24. But obviously, quarter to quarter, we'll be able to update you on what we're seeing and how that's actually transpiring. But we think how we're guiding on it is prudent at this point. And again, this gets back to all the other guidance that we've given you around margins and growth; those things are embedded in it. But Heather, do you want to?

Robert Lawrence Grubka: And then what we've seen, and Don highlighted this, you know, the participant behavior is an element that has been nudged. Given where rates have moved in this sort of unique environment, in our guide on, you know, our best view of things as we sit here today, is that it will continue as we look out through 24. But obviously, quarter to quarter, we'll be able to update you on what we're seeing and how that's actually transpiring. But we think how we're guiding on it is prudent at this point. And again, this gets back to all the other guidance that we've given you around margins and growth; those things are embedded in it. But Heather, do you want to?

Speaker Change: And then what we've seen in bond highlighted the participant behavior is an element that has been huge.

Speaker Change: Given where rates have moved in this sort of unique environment.

Speaker Change: And our guide on our best view of things as we sit here today is that we'll continue as we look out through 'twenty, four, but obviously quarter to quarter, we'll be able to update you on what we're seeing and how that's actually transpiring, but we think how we're guiding on it is prudent at this point and again gets back to all the other.

Speaker Change: The guidance that we've given you around margins and growth.

Speaker Change: Things are embedded in it but Heather yes, I think that to me that in the us to the broader step back on the wealth business, you've heard us talk about for a number of years of the diversification of the markets that we serve from Mega client and standard micro there different growth trends that we've been able to capitalize and over time and that really emerges in not only the steady.

Heather Hamilton Lavallee: Yeah, I think that to me, the broader step back on the wealth business, you've heard us talk about for a number of years about the diversification of the markets that we serve, from mega clients down to micro, there are different growth trends that we've been able to capitalize on over time. And that really emerges in not only the steady revenue growth but the strong margins, the high free cash flow, and the business. And if you look at just last week's job report, one of the highest-growth sectors was in government.

Speaker Change: <unk> growth, but the strong margins the highest free cash flow of the business and if you look at just last week's job report one of the highest growth sectors within government and we happen to be the number one provider in the government market segment and that will shift from time to time, but we feel like we've got an at scale retirement franchise that is.

Heather Hamilton Lavallee: And we happen to be the number one provider in the government market segment. And that will shift from time to time. But we feel like we've got an at-scale retirement franchise that is going to continue to be able to drive steady growth for us across all different segments, not just tax-exempt but corporate markets as well. Thank you.

Speaker Change: Going to continue to be able to drive steady growth for us across in <unk>.

Speaker Change: Cross all different segments, not just tax exempt corporate market as well.

Speaker Change: Thank you our next questions come from the line of Alex Scott with Goldman Sachs. Please proceed with your questions.

Robert Lawrence Grubka: Our next questions come from the line of Alex Scott with Goldman Sachs. Please proceed with your. Hi, the first one I had is on wealth solutions, and I wanted to know if you could just help us think through sensitivity to the shorter end of the curve on interest rates. And, you know, I know you guys use the forward curve in your guide, so that's helpful, but just help us think about sensitivity, particularly to rate cuts and, you know, if they're greater than expected or if it ends up being, you know, fewer rate cuts this year. Well, look, Alex, I guess where I'd start with is that part of how we got to the participant behavior that we've seen was certainly driven by alternatives in the market that were, you know, exacerbated is maybe the right word for the, you know, different value that was either perceived or promoted to a participant on what might be available outside of the plan.

Unknown Executive: Our next questions come from the line of Alex Scott with Goldman Sachs. Please proceed with your. Hi, the first one I had is on wealth solutions, and I wanted to know if you could just help us think through sensitivity to the shorter end of the curve on interest rates. And I know you guys use the forward curve in your guide, so that's helpful, but just help us think about sensitivity, particularly to rate cuts and if they're greater than expected or if it ends up being fewer rate cuts this year. Well, look, Alex, I guess where I'd start with is that part of how we got to the participant behavior that we've seen was certainly driven by alternatives in the market that were, you know, exacerbated is maybe the right word for the, you know, different value that was either perceived or promoted to a participant on what might be available outside of the plan.

Alex Scott: Hi, first one I had is on wealth solutions and wanted to know if you could just help us think through sensitivity to the shorter end of the <unk>.

Alex Scott: Curve on interest rates and I know you guys used the forward curve in your in your guide.

Alex Scott: Helpful, But just help us think about.

Alex Scott: Sensitivity, particularly the rate cuts in.

Alex Scott: If there are greater than expected or if it ends up being.

Alex Scott: You were rate cuts this year.

Speaker Change: Well look.

Speaker Change: Alex I guess, where I would start with is.

Speaker Change: Part of how we got to the participant.

Speaker Change: Figure that we've seen was certainly driven by alternatives in the market that was exacerbated as maybe the right word for <unk>.

Speaker Change: Different value that was either perceived or promoted to a participant on what might be might be available outside of the plan now participants are sitting around necessarily trying to figure out how sensitive their behavior is going to be for short engine changes in what the fed this.

Unknown Executive: Now, participants aren't necessarily sitting around trying to figure out how sensitive their behavior is going to be for short ends and changes and what the Fed decides and how that plays itself out. Again, I think we're in a place where we're given a guide around our best view of participant behavior given the environment we're in. As you're saying, the environment is going to change. How sensitive it is, honestly, is very hard to sort of quantify in any meaningful way for you.

Robert Lawrence Grubka: Now, participants aren't sitting around necessarily trying to figure out how sensitive their behavior is going to be for short ends and changes and what the Fed decides and how that plays itself out. Again, I think we're at a place where we're given a guide around our best view of participant behavior given the environment we're in. As you're saying, the environment is going to change. How sensitive it is, honestly, is very hard to sort of quantify in any meaningful way for you.

Speaker Change: And how that plays itself out again I think we're at a place where we're given a guide around our best view of participant behavior given the environment. We're in as you're saying the environment is going to change how sensitive. It is honestly, it's very hard to sort of quantify in any meaningful way for you.

Robert Lawrence Grubka: I think what we're trying to do, and to Heather's point about the diversity of the business and the actions that were taken, we feel like we're at an inflection point. You went through a change in yields and markets and impacted the general account that is going to allow us and put us in a position to continue to grow the fee row of the income statement faster. As we do that, continue to drive diversity of how we earn money, how we make money moving forward, and importantly, continue to support the dividend approach and the free cash flow approach that we have overall. This all factors into what does that mix of general account?

Robert Lawrence Grubka: I think what we're trying to do, and to Heather's point about the diversity of the business and the actions that were taken, we feel like we're at an inflection point. You went through a change in yields and markets and impacted the general account that is going to allow us and put us in a position to continue to grow the fee row of the income statement faster. As we do that, continue to drive diversity of how we earn money, how we make money moving forward, and then importantly, continue to support the dividend approach and the free cash flow approach that we have overall. This all factors into what that mix of general account is, and what are the new solutions and services we're trying to provide. Heather talked about retail wealth as an area that we want to continue to invest in.

Speaker Change: I think what we're trying to do into Heather's point around diversity of the business and the actions that were taken where we feel like we're at a inflection point you went through a change in yields in markets.

Speaker Change: The impact of the general account that is going to allow us and put us in a position to continue to grow the fee row of the income statement faster.

Speaker Change: And as we do that continue to drive diversity of how we earn money, how we make money moving forward and unimportant, we continue to support the dividend approach in the.

Speaker Change: The free cash flow approach that we have overall in this all factors into what does that mix of general account what are the new solutions and services, we're trying to provide.

Robert Lawrence Grubka: What are the new solutions and services we're trying to provide? Heather talked about retail wealth as an area that we want to continue to invest in. We've got a lot of different ways to continue to drive growth and serve participants in the most effective way possible. I'm dodging the specifics of your question because it's a really hard one to answer, but those things are going to factor in, and we'll be able to give insight as it occurs quarter to quarter. And just, you know, sensitivity on like the specific net investment income and like exposure to floaters. I mean, we can see sort of the gross exposure to floaters, but it's a little hard to tell, you know, on the crediting rate side, like how much of it actually flows through to earnings.

Speaker Change: Have they talked about retail wealth is an area that we want to continue to invest in.

Robert Lawrence Grubka: We've got a lot of different ways to continue to drive growth and serve participants in the most effective way possible. I'm dodging the specifics of your question because it's a really hard one to answer, but those things are going to factor in, and we'll be able to give insight as it occurs quarter to quarter. And just, you know, sensitivity on like the specific net investment income and like exposure to floaters. I mean, we can see sort of the gross exposure to floaters, but it's a little hard to tell, you know, on the crediting rate side, like how much of it actually flows through to earnings.

Speaker Change: We've got a lot of different ways to continue to drive growth and serve participants as an effective way as possible.

Speaker Change: But I am dodging your specifics of your question because it's a really hard one to answer but those things are going to factor in and we will be able to give insight as that occurs quarter to quarter.

Speaker Change: And just since dividend like the specific.

Speaker Change: Net investment income and exposure to floaters I mean, we can see sort of the gross exposure to floaters, but it's a little hard to tell on the crediting rate side, Greg how much of it actually flows through to earnings.

Robert Lawrence Grubka: Alex, maybe we've been, let me just come out at a high level, and then you can maybe be more specific so I can make sure I'm hitting it. But look, we've been tactical in our approach around investment strategy and what we've been doing in this sort of rate environment to be thoughtful as participants are leaving the general account. You would imagine we're sitting there thinking about the cash that we have available in the general account. And so taking advantage of floating rates and the shorter end of the yield curve is something that is smart to do financially but also wise to do from a risk perspective. And so we've done some of that on the edges. But is that getting to your question? Well, Alex, maybe this is Don.

Donald C. Templin: Alex, maybe we've been, let me just come out at a high level, and then you can maybe be more specific so I can make sure I'm hitting it. But look, we've been tactical in our approach around investment strategy and what we've been doing in this sort of rate environment to be thoughtful as participants are leaving the general account. You would imagine we're sitting there thinking about the cash that we have available in the general account. And so taking advantage of floating rates and the shorter end of the yield curve is something that is smart to do financially but also wise to do from a risk perspective. And so we've done some of that on the edges. But is that getting to your question? Well, Alex, maybe this is Don.

Greg: So Alex maybe we've been let me just come out at a high level and then you can maybe be more specific so I can make sure I'm hitting it but look we have been tactical in our approach around investment strategy and what we've been doing in this sort of rate environment to be thoughtful as if its parts.

Alex Scott: Spencer, leaving the general account you would imagine we're sitting there thinking about the cash that we have available in the general account and so taken advantage of floaters and in the shorter end of the yield curve is something that was.

Alex Scott: Smart to do financially, but also wise to do from a risk perspective, and so we've done some of that on the edges, but is that getting at your question Eric Alex maybe this is Don I might add that sort of floating rate sensitivity is embedded.

Robert Lawrence Grubka: I might add that this sort of floating rate sensitivity is embedded in the sensitivities that we show around the interest rate changes. On our slide 23 that has guidance and assumptions, it's incorporated there. Okay. And if I could maybe sneak one more in.

Donald C. Templin: I might add that this sort of floating rate sensitivity is embedded in the sensitivities that we show around the interest rate changes. On our slide 23 that has guidance and assumptions, it's incorporated there. Okay. And if I could maybe sneak one more in.

Donald C. Templin: In our in the sensitivities that we show around the interest rate changes so.

Donald C. Templin: On our slide 2023, or 23 that has guidance and assumptions it's incorporated in there.

Donald C. Templin: Understood.

Eric: And if I could maybe sneak one more in I just wanted to see if you could update us on the commercial real estate portfolio and I know you've provided the slide which is very helpful is there any other color you can give to us just around how much is maturing in 2024.

Donald C. Templin: I just wanted to see if you could update us on the commercial real estate portfolio. And I know you provided the slide, which is very helpful. Is there any other color you can give us around, you know, how much is maturing in 2024 and progress or comments on how that will unfold and if you expect any headwinds to cash flow. Yeah, no, and thanks for the question.

Heather Hamilton Lavallee: I just wanted to see if you could update us on the commercial real estate portfolio. And I know you provided the slide, which is very helpful. Is there any other color you can give us around, you know, how much is maturing in 2024 and progress or comments on how that will unfold and if you expect any headwinds to cash flow. Yeah, no, thank you.

Donald C. Templin: No.

Donald C. Templin: Progress or comments on how that will unfold and if you expect any.

Headwind to cash flow.

Matthew Toms: And thanks for the question. Actually, a real pillar of strength in our opinion, as far as our positioning within our balance sheet broadly, but within commercial real estate very specifically. When we step back and look at our positioning in office relative to peers, 14% in office relative to the CLI peers at 21%, and also the diversity of that portfolio, a $12 million average loan size across 450 loans. We start from a position of strength, and we also start from a position of strength from CM1 to CM2 to go into detail. 71% CM1.

Speaker Change: Yes, no. Thanks, and thanks for the question actually a real pillar strengthen our opinion as far as our positioning within our balance sheet broadly, but within commercial real estate very specifically.

Matthew Toms: Actually, a real pillar of strength, in our opinion, as far as our positioning within our balance sheet broadly, but within commercial real estate very specifically. When we step back and look at our positioning in office relative to peers, 14% in office, relative to the ACLI peers at 21%, and also the diversity of that portfolio, a $12 million average loan size across 450 loans. We start from a position of strength, and we also start from a position of strength from CM1 to CM2 to go into detail, 71% of CM1.

Speaker Change: When we when we step back and look at our positioning in office relative to peers, 14% in office relative to the CLI peers at 21% and also the diversity of that portfolio of $12 million average loan size across 450.

Speaker Change: Loans, we start from a position of strength.

Speaker Change: We also start from a position of strength from <unk> to <unk> to go into details 71% <unk>. This is a differentiated portfolio relative to the market.

Matthew Toms: This is a differentiated portfolio relative to the market. It's very diversified. I think the stats speak for themselves.

Speaker Change: It is very diverse side I think the stats speak for themselves we provided more detail in the materials, you'll see that I think will drive to the point specifically.

Matthew Toms: We provided more detail in the materials you'll see that I think will drive this point specifically. But overall, we feel very confident in our commercial real estate portfolio, clearly a difficult environment for office. We think we're well positioned. Thank you. Our next questions come from the line of Michael Ward with Citi. Please proceed with your question. Thanks, maybe just a quick color on that last question. I'm curious about the deed in lieu that you mentioned where it sounds like that's kind of when you take the keys back. Any comment on how much that you have that you've done and maybe the capital impact of it? Yeah, no; let me maybe build on that a little bit.

Matthew Toms: We provided more detail in the materials. You'll see that I think will drive the point specifically. But overall, we feel very confident in our commercial real estate portfolio. Although it's clearly a difficult environment for office, we think we're well positioned. Thank you. Our next questions come from the line of Michael Ward with Citi. Please proceed with your question. Thanks, maybe just a quick color on that last question. I'm curious about the deed in lieu that you mentioned, where it sounds like that's like, kind of when you take the keys back, any comment on how much that you have that you've done and maybe the capital impact of it? Yeah, no. Let me maybe build on a little bit.

Speaker Change: But overall, we feel very confident in our commercial real estate portfolio clearly a difficult environment for office, we think we're well positioned.

Speaker Change: Yeah.

Speaker Change: Thank you our next questions come from the line of Michael Award with Citi. Please proceed with your questions.

Michael Award: Thanks, maybe just quick color on that last question I'm curious about the deed in lieu that you mentioned, Greg It sounds like that's like kind of when you take the keys back any any comment on like how much of that you've done and maybe the capital impact of that.

Michael Award: Yes.

Greg: Yes, let me, let me maybe build on a little bit and we put a call out in the in the presentation of it I think youre referencing a $16 million unpaid balance and just to put that in the context of our balance sheet of $37 billion.

We put a call out in the in the presentation that I think you're referencing a $16 million unpaid balance. And just to put that in the context of our of our balance sheet of $37 billion, that's meant to be a statement of strength. If we look at the guide forward as far as losses, and you look historically as far as our loss rates, very low, mid-single digits loss rate, we feel very confident with the portfolio, even going through the CML component of office, that we will continue to likely under-deliver what the market does as far as losses and what our long-term planning assumption is, so that $16 million is in non-accrual, as you referenced, but really don't anticipate any meaningful loss, Thank you. That's helpful. And then maybe just on the health guidance, curious if you can speak to benefit focus and if you can kind of call out the contribution from that within health just kind of want to try and figure out the organic sort of guide there. Yeah, this is Rob.

Michael Augustus Ward: We put a call out in the presentation that I think you're referencing a $16 million unpaid balance. And just to put that in the context of our balance sheet of $37 billion, that's meant to be a statement of strength. If we look at the guide forward as far as losses are concerned, and you look historically at our loss rates, very low, mid-single digit loss rates, we feel very confident with the portfolio, even going through the CML component of office, that we will continue to likely under-deliver what the market does as far as losses and what our long-term planning assumption is. So that's $16 million is in nonaccrual, as you referenced And then maybe just on the health guidance, curious if you can speak to benefit focus and if you can kind of call out the contribution from that within health. Just kind of want to try and figure out the organic sort of guide there. Yeah, this is Rob.

Speaker Change: It's meant to be a statement of strength.

Speaker Change: If we look at.

Speaker Change: The guide for it as far as losses, and you look historically as far as our loss rates very low mid single digits loss rate.

Speaker Change: We feel very confident with the portfolio, even going through the CML component of office that we will continue to likely under deliver what the market does as far as losses and what our long term planning assumption is so that's $16 million.

Speaker Change: Is it non accrual as you referenced but really don't anticipate any meaningful losses.

Speaker Change: Alright. Thank you that's helpful.

Speaker Change: And then maybe just on the health guidance curious if you can speak to.

Speaker Change: Benefit focus and if you can kind of call out the contribution from that within health just kind of want to.

Speaker Change: Trying to figure out the organic sort of.

Speaker Change: Got there.

Yes. This is rob so on benefit focus as we've alluded to in the conversation here incredibly excited about the strategic opportunity that continues to present as we talked about a quarter ago.

Robert Lawrence Grubka: So on benefit focus, and as we've alluded to in the conversation here, incredibly excited about the strategic opportunity that continues to present, as we talked about a quarter ago, you know, brought down on what we said the adjusted operating earnings would be, which played out a little bit lower in the fourth quarter. As you take a step back, what I would say is, you know, focus in on the fee row within the health business to capture the bulk of the momentum that we see from a revenue perspective in that business. We've also talked about the sort of patients required because of the longer sales cycle in that business. I would hone in on, you know, the strategic piece here is also getting exposure to the health business and the health market and the healthcare market in a bigger, broader way.

Rob: Brought down on what we said adjusted operating earnings and earnings would be that played out as a little bit lower in the fourth quarter. They should do the step back what I would say is focusing on the fee ROE within the health business to capture the bulk of the momentum that we see from a revenue perspective in that business.

Rob: We've also talked about sort of the patients required because of the longer sales cycle in that business.

I would I would hone in on.

Rob: The strategic piece here is also getting exposure to the health business in the health market in health care market in a bigger broader way so things that were in flight with and going to continue to talk about as we move forward just how does how do we influence healthcare spend the efficiency of the effectiveness of it for both participants.

Robert Lawrence Grubka: So things that we're in flight with and going to continue to talk about as we move forward are how do we influence healthcare spend, the efficiency of it, the effectiveness of it for both participants, as well as employers. So this is the thing that in an HR department, they're going to spend most days of the year talking about healthcare, what's going on, how do we influence it, how do we bend the cost curve, be more efficient, more effective, and drive better outcomes for their employees. And we think we're in the sweet spot to bring those things together as you look at the totality of our business in health, but then, importantly, how do we connect in with the wealth business and bring benefits and savings together?

Rob: As well as employer. So this is the thing the it and HR Department Theyre going to spend most days of the heap, you're talking about health care, what's going on how do we influence it how do we bend the cost curve be more efficient more effective and drive better outcomes for their employees.

Rob: And we think we're in the sweet spot to bring those things together as you look at the totality of our business and health, but then importantly, how do we connect in with the wealth business and bring benefits and savings together.

Robert Lawrence Grubka: We're really excited about what that can bring us. So coming back to your question, you know, under where we wanted to be but really excited about where we're going and how that's going to translate into growth. And as Don and Heather touched on, the Net Promoter Score effectiveness of open enrollment was a big reason why we continue to spend and invest in that business throughout the year, regardless of where the revenue was going. And that's just playing this thing in a strategic way, in a smart way, as we think about the future.

Rob: We're really excited about what that can bring to us so coming back to your question.

Rob: Under where we wanted to be but really excited about where we're going and how that's going to translate into growth.

Rob: And as Don and heavier touched on the net promoter score effectiveness of open enrollment was a big reason why we continue to spend and invest in that business throughout the year, regardless of where the revenue was going.

And Thats just plan this thing and the strategic way in a smart way as we think about the future.

Heather Hamilton Lavallee: Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Heather Lavallee for any closing remarks. To summarize a few key messages, we remain focused on executing our plan, profitably growing each capital light business, and delivering an outstanding experience for our customers. Our commercial strength continues to grow, supported by our robust pipelines across workplace solutions and investment management. We are confident in achieving our EPS growth and cash flow generation targets in 2024 and beyond.

Rob: Thank you. This concludes our question and answer session I would now like to turn the conference back over to Heather <unk> for any closing remarks.

Heather: To summarize a few key messages.

Heather: We remain focused on executing our plan profitably growing each capital light business and delivering an outstanding experience for our customers.

Heather: Our commercial strength continues to grow supported by a robust pipeline across workplace solutions and investment management.

Heather: We are confident in achieving our EPS growth and cash flow generation targets in 2024 and beyond.

Unknown Executive: Thank you, and we look forward to updating you on our progress throughout the year. Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day. Thanks for watching!

Speaker Change: Thank you and we look forward to updating you on our progress throughout the year.

Speaker Change: Thank you that does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.

Speaker Change: [music].

Speaker Change: Okay.

Q4 2023 Voya Financial Inc Earnings Call

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