Q1 2024 MetLife Inc Earnings Call

Ladies and gentlemen, thank you for standing by welcome to the Metlife first quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.

Unknown Executive: Ladies and gentlemen, thank you for standing by. Welcome to the MetLife First Quarter 2024 Earnings Conference Call.

Unknown Executive: At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to the risk factors discussed in MetLife's SEC filing. With that, I will turn the call over to John Hall, Global Head of Investor Relations.

John Arthur Hall: <unk> will be given at that time as a reminder, this conference is being recorded before we get started I refer you to the cautionary note about forward looking statements in yesterday's earnings release and to risk factors discussed in Metlife S. E C filings with that I will turn the call over to John.

John Arthur Hall: <unk> global head of Investor Relations.

John Arthur Hall: Thank you operator, good morning, everyone. We appreciate your participation unmet lifes first quarter 'twenty 'twenty four earnings call.

John Arthur Hall: Thank you, operator. Good morning, everyone.

John Arthur Hall: In addition to our earnings release, we issued a press release last night announcing a $3 billion increase to our share repurchase authorization.

John Arthur Hall: Before we begin I point, you to the information on non-GAAP measures on the Investor Relations portion of Metlife Dot com in our earnings release and in our quarterly financial supplements, which you should review.

John Arthur Hall: We appreciate your participation on Metlife's first quarter 2024 earnings call. In addition to our earnings release, we issued a press release last night announcing a $3 billion increase to our share repurchase authorization. Before we begin, I point you to the information on non-GAAP measures on the Investor Relations portion of Metlife.com, in our earnings release, and in our quarterly financial supplements, which you should review.

John Arthur Hall: On the call this morning are Michel Khalaf, President and Chief Executive Officer, and John McCallion, Chief Financial Officer. Also participating in the discussion are other members of senior management. As usual, last night we released our standard set of supplemental slides, which are available on our website. John McCallion will speak to them in his prepared remarks if you wish to follow along. An appendix to the slides includes disclosures, gap reconciliations, and other information which you should similarly review.

John Arthur Hall: On the call. This morning are Michel <unk>, President and Chief Executive Officer, and John Mccallion, Chief Financial Officer.

John Arthur Hall: Also participating in the discussion are other members of senior management.

John Arthur Hall: As usual last night, we released our standards set of supplemental slides, which are available on our website.

John Arthur Hall: John Mccallion will speak to them in his prepared remarks, if you wish to follow along.

John Arthur Hall: An appendix to the slides features disclosures GAAP reconciliations and other information, which you should similarly review.

John Arthur Hall: After prepared remarks, we will have a Q&A session given.

John Arthur Hall: Given the busy morning, Q&A will end promptly just before the top of the hour in fairness to everyone. Please limit yourself to one question and one follow up.

John Arthur Hall: After the prepared remarks, we will have a Q&A session. Given the busy morning, the Q&A will end promptly just before the top of the hour. In fairness to everyone, please limit yourself to one question and one follow-up. With that, I turn to Michel.

John Arthur Hall: With that over to Michele.

Michel A. Khalaf: Thank you, John, and good morning, everyone. As you can see from last night's report, Metlife is getting off to a good start for the year. We delivered another solid quarter of financial results, reflecting strong top-line growth, consistent execution, and sustained momentum across our market-leading portfolio of businesses. We achieve this mindful that change and uncertainty remain constant in the current environment.

John Dennis McCallion: Thank you John and good morning, everyone.

Michel A. Khalaf: As you can see from last Night's report Metlife is getting off to a good start for the year.

Michel A. Khalaf: We delivered another solid quarter of financial results, reflecting strong top line growth consistent execution and sustained momentum across our market leading portfolio of businesses.

Michel A. Khalaf: We achieved this mindful the change I don't certainty remained constant in the current environment, our resilience and consistency are made possible by the unwavering commitment of our associates are unabated its confidence in our all weather next horizon strategy and our unyielding focus on controlling those factors, we can control to drive.

Michel A. Khalaf: Our resilience and consistency are made possible by the unwavering commitment of our associates, our unabated confidence in our all-weather Next Horizon strategy, and our unyielding focus on controlling those factors we can control to drive value for our shareholders and other stakeholders. With change as a persistent backdrop, Metlife's 156-year track record of risk management is a stable stakes for our customers and shareholders. As I addressed in my shareholder letter, central to this notion is protecting our balance sheet so we can meet the promises we've made to our policyholders and shareholders, regardless of economic or geopolitical conditions. Risk management extends across virtually everything we do, the way we invest and manage our capital and liquidity, to the way we price, underwrite, and reserve for the products we sell.

Michel A. Khalaf: For our shareholders and other stakeholders.

Michel A. Khalaf: With change as a persistent backdrop Metlife 156 year track record of risk management is table stakes for our customers and shareholders.

Michel A. Khalaf: As I addressed in my shareholder letter central to this notion is protecting our balance sheet. So we can meet the promises we've made to our policyholders and shareholders, regardless of economic or geopolitical conditions risks.

Michel A. Khalaf: Risk management extends across virtually everything we do the way, we invest and manage our capital and liquidity to the way, we price underwrite and reserve for the products we sell.

Michel A. Khalaf: Another element of risk management at Metlife lies in our diversification.

Michel A. Khalaf: Another element of risk management at Metlife lies in our diversification. We operate across a range of products and geographies, many that have offsetting risk characteristics, such as mortality versus longevity, among others. Even within our business segments, we have diversification. For example, our group benefits business serves employers across a wide range of business sizes and industries and has customers in every state. A similar theme runs through retirement and income solutions and can be seen in the multiple liability streams we are able to originate, including capital markets, pension risk transfers, structured settlements, stable value, corporate-owned life insurance, and longevity reinsurance, among others.

Michel A. Khalaf: We operate across a range of products and geographies, many that have offsetting risk characteristics, such as mortality versus longevity among others.

Michel A. Khalaf: Even within our business segments, we have diversification.

Michel A. Khalaf: Group benefits business serves employers across a wide range of business sizes and industries and has customers in every state.

Michel A. Khalaf: Similar theme runs through retirement and income solutions and can be seen and the multiple liability streams. We are able to originate capital markets pension risk transfers structured settlements stable value corporate owned life insurance and longevity reinsurance among others.

Michel A. Khalaf: Our diversification is at the core of who we are and further differentiates Metlife. It is not coincident, but by design; we have constructed a platform to deliver for the long term and believe our diversification promotes both sustainable and responsible growth. Turning to the quarter, we reported adjusted earnings of $1.3 billion, or $1.83 per share, up 20% from the prior year period. This was aided by a partial rebound in variable investment income, led by private equity gains, which delivered a positive return of 2.1%. In the aggregate, net income for the first quarter was $800 million, well above $14 million for the prior year period.

Michel A. Khalaf: Our diversification is at the core of who we are and further differentiate smart life. It is not coincident, but by design, we have constructed a platform to deliver for the long term and believe our diversification promotes both sustainable and responsible growth.

Michel A. Khalaf: Turning to the quarter, we reported adjusted earnings of $1 $3 billion or $1.83 per share up 20 per cent per share from the prior year period.

Michel A. Khalaf: This was aided by a partial rebound in variable investment income led by private equity games, which delivered a positive return of two 1%.

Michel A. Khalaf: N D aggregate net income for the first quarter was $800 million well above $14 million from the prior year period.

Michel A. Khalaf: Top-line growth was strong across our market-leading set of businesses, with adjusted premium fees and other revenues, or PFOs, totaling $12 billion, up 4% compared to the first quarter of 2023. On a constant currency basis, PFOs were up 5%. Our unrelenting focus on execution continues to drive positive results across important key metrics. Metlife posted a 13.8% adjusted return on equity in the quarter, still within the 13 to 15% target range, despite VII not yet hitting a more normal quarterly run rate. Our direct expense ratio of 11.9% improved from a year ago and was lower than our 12.3% annual target.

Michel A. Khalaf: Topline growth was strong across our market, leading set of businesses with adjusted premium fees and other revenues or P. F o's totaling $12 billion.

Michel A. Khalaf: Up 4% compared to the first quarter of 2023 on.

Michel A. Khalaf: On a constant currency basis P F o's were up 5%.

Michel A. Khalaf: Our unrelenting focus on execution continues to drive positive results across important key metrics.

Michel A. Khalaf: Metlife posted a 13.8% adjusted return on equity in the quarter still within the 13% to 15% target range.

Michel A. Khalaf: Spite V I, a not yet hitting a more normal quarterly run rate.

Michel A. Khalaf: Our direct expense ratio of 11, 9% improved from a year ago and it was lower than our 12, 3% annual target the positive leverage captured by this ratio illustrates our ability to control cost as what is grow revenues at a faster rate than expenses.

Michel A. Khalaf: The positive leverage captured by this ratio illustrates our ability to control costs as well as grow revenues at a faster rate than expenses. Shifting to Metlife's business performance in the quarter, group benefits generated $6.3 billion of adjusted PFOs, up 5% or up 6% adjusting for participating policies from the prior year period, driven by solid growth across most products, including further expansion in voluntary benefits. Our premier national accounts franchise continues to demonstrate its differentiation and deliver value to customers through its comprehensive range of products and a customer experience enhanced by innovative technology platforms. In the quarter, group benefits adjusted earnings of $284 million were impacted by seasonally high life mortality and seasonally elevated non-medical health utilization, returning to a historical trend more recently masked by the pandemic.

Michel A. Khalaf: Shifting to a much larger business performance in the quarter group.

Michel A. Khalaf: Group benefits generated $6 $3 billion of adjusted P. F O's.

Michel A. Khalaf: 5% or up 6% adjusting for participating policies from the prior year period, driven by solid growth across most product, including further expansion in voluntary benefits.

Michel A. Khalaf: Our premier National accounts franchise continues to demonstrate its differentiation and deliver value to customers through its comprehensive range of products and a customer experience enhanced by innovative technology platforms.

Michel A. Khalaf: In the quarter group benefits adjusted earnings of $284 million was impacted by seasonally high life mortality and seasonally elevated nonmedical health utilization returning to our historical trend more recently masked by the pandemic showing the continued vitality of this flagship business sales were up.

Michel A. Khalaf: Showing the continued vitality of this flagship business, sales were up 25% from the prior year, propelled by our sustained efforts to drive enrollment, which pushed growth across core and voluntary products. Last month, Metlife launched its 2024 Employee Benefit Trend Study. In its 22nd year, the survey tracks evolving employer and employee dynamics and the impact that the microenvironment and other trends have on the workplace and the employee benefits ecosystem. Through the years, we've enjoyed tremendous engagement with our customers as a result of the survey's demonstrated thought leadership, and this year's survey, with its focus on employee care, was no different. The business case for employee care is clear.

Michel A. Khalaf: 25% from the prior year propelled by our sustained efforts to drive enrollment.

Michel A. Khalaf: You pushed growth across core and voluntary products.

Michel A. Khalaf: Last month, Metlife launched our 'twenty 'twenty four employee benefit trend study and its 22nd year. The survey tracks evolving employer and employee dynamics and the impact that microenvironment and other trends have on the workplace and the employee benefits ecosystem.

Michel A. Khalaf: Through the years, we've enjoyed tremendous engagement with our customers as a result of the surface demonstrated thought leadership.

Michel A. Khalaf: This year's survey with its focus on employee care was no different.

Michel A. Khalaf: The business case for employee care is clear.

Michel A. Khalaf: Our research and other studies show that when organizations offer a range of benefits, employees are more holistically healthy, and business performance is stronger. As the largest group benefits provider, this ties directly into our strategy to offer the widest array of products, which gives Metlife more opportunities to serve our customers and more avenues to drive growth. Our leading retirement and income solutions business reported adjusted earnings of $399 million, essentially flat with last year.

Michel A. Khalaf: Research and other studies show that one organizations offer a range of benefits employees are more holistically healthy and business performance is stronger.

Michel A. Khalaf: As the largest group benefits provider this ties directly into our strategy to offer the widest array of product, which gives metlife more opportunities to serve our customers and more avenues to drive growth.

Michel A. Khalaf: Our leading retirement income solutions business reported adjusted earnings of $399 million essentially flat with last year.

Michel A. Khalaf: Higher interest rates continue to increase the attractiveness of many of the products we offer within RIS. Overall, quarterly sales in RIS were $2.7 billion, up 49% from the prior year, led by structured settlements and corporate-owned life insurance production. Our business in Asia posted a 51% increase in adjusted earnings on better variable investment income and favorable underwriting, particularly in Japan. However, sales, while robust, were down relative to a strong quarter a year ago.

Michel A. Khalaf: Higher interest rates continue to increase the attractiveness of many of the products we offer within RIS.

Michel A. Khalaf: Overall quarterly sales in <unk> were $2 $7 billion up 49% from the prior year led by structured settlements and corporate owned life insurance production.

Michel A. Khalaf: Our business in Asia posted a 51% increase in adjusted earnings on better variable investment income and favorable underwriting, particularly in Japan.

Michel A. Khalaf: While robust we're done relative to a strong quarter a year ago yet.

Michel A. Khalaf: Yet, illustrating the strength of recent quarters, assets under management in Asia are up 6% year-over-year on a constant currency basis. In Latin America, our momentum continues across the region, particularly in our two largest markets of Mexico and Chile. The segment generated another record quarter of adjusted earnings with $233 million, rising 8% and 5% on a constant currency basis.

Michel A. Khalaf: Yet illustrating the strength of recent quarters assets under management in Asia are up 6% year over year on a constant currency basis.

Michel A. Khalaf: In Latin America, our momentum continues across the region, particularly in our two largest markets of Mexico and Chile the.

Michel A. Khalaf: The segment generated another record quarter of adjusted earnings were $233 million rising, 8% and 5% on a constant currency basis.

Michel A. Khalaf: Moving to capital and cash. Our operative philosophy on capital deployment relies on a balance between investing in organic and inorganic growth and returning capital to shareholders via common dividends and share repurchase. During the first quarter, Metlife leaned into capital management.

Michel A. Khalaf: Moving to capital and cash our operating philosophy on capital deployment relies on a balance across investing in organic and inorganic growth and returning capital to shareholders via common dividends and share repurchase.

Michel A. Khalaf: We paid $377 million to shareholders via common stock dividends, and we repurchased almost $1.2 billion of our common stock. After the quarter, we repurchased about another $300 million of common stock in April. Also in April, we boosted our common dividend per share by 4.8%. Year-to-date through April, we have repurchased about $1.5 billion of our common shares. Along with reporting our first quarter results, you saw that we also announced the addition of $3 billion to our repurchase authorization. Our total share repurchase authorization now stands at approximately $3.6 billion, which allows us to proceed with repurchases at a more measured pace for the balance of the year.

Michel A. Khalaf: During the first quarter Metlife leaned into capital management.

Michel A. Khalaf: We paid $377 million to shareholders via common stock dividends.

Michel A. Khalaf: And we repurchased almost one $2 billion of our common stock.

Michel A. Khalaf: After the quarter, we have repurchased about another $300 million of common stock on April one.

Michel A. Khalaf: Also in April we boosted our common dividend per share by four 8%.

Michel A. Khalaf: Year to date through April we have repurchased about $1 $5 billion of our common shares.

Michel A. Khalaf: Along with reporting our first quarter results you saw that we also announced the addition of $3 billion to our repurchase authorization.

Michel A. Khalaf: Our total share repurchase authorization now stands at approximately $3 $6 billion, which allows us to proceed with repurchase at a more measured pace for the balance of the year.

Michel A. Khalaf: Shifting to governance, we announced during the quarter that Laura Hay joined our board of directors, effective in February. Most recently, she was the global head of KPMG's insurance practice.

Speaker Change: Shifting to governance.

Michel A. Khalaf: We announced during the quarter that Laura he joined our board of directors effective in February.

Michel A. Khalaf: Most recently she was the global head of KPMG as insurance practice, we are excited to have Laura I bring her broad set of actuarial and financial skills and her business experience to our board.

Michel A. Khalaf: We're excited to have Laura bring her broad set of actuarial and financial skills and her business experience to our board. In closing, as we near the conclusion of our five-year Next Horizon framework, we are engaged in a thoughtful process to chart the next course of our strategic journey, building on a strong, well-established foundation. I don't anticipate an abrupt departure from what has successfully delivered on our purpose, always with you building a more confident future, but rather a further evolution.

Michel A. Khalaf: In closing as we near the conclusion of our five year next horizon framework. We are engaged in a thoughtful process to chart. The next course of our strategic journey building on a strong well established foundation I don't anticipate an abrupt departure from what has successfully delivered on our purpose always when you're building a more confidence.

Michel A. Khalaf: Future, but rather a further evolution.

Michel A. Khalaf: As we've sought to raise the bar during Next Horizon, asking more of ourselves and delivering more than our stated goals, we've already started advancing towards the next phase of our strategy. The core principles of Next Horizon anchor our future actions and will remain embedded in our strategic thinking as we move ahead. We are building on our strong foundation with a growth mindset and a range of opportunities that would not have been possible just a few years ago.

Michel A. Khalaf: As we start to raise the bar during next horizon.

Michel A. Khalaf: Asking more of ourselves and delivering more than our stated goals. We've already started advancing towards the next phase of our strategy.

Michel A. Khalaf: The core principles of next horizon anchor our future actions and we remain embedded in our strategic thinking as we move ahead.

Michel A. Khalaf: We are building on our strong foundation with a growth mindset and a range of opportunities that would not have been possible just a few years ago.

Michel A. Khalaf: We are well positioned to further differentiate ourselves and deliver additional value to customers, fueling higher levels of growth. We have a tremendous opportunity to leverage our scale and harness emerging technologies to drive margin expansion, all the while achieving greater overall operating consistency. Taken together, we believe these powerful factors will result in greater returns for our shareholders. To that end, I look forward to discussing our refreshed strategy at Investor Day here in New York on December 12, this year. Now I'll turn it over to John to cover our first quarter performance in greater detail.

Michel A. Khalaf: We are well positioned to further differentiate ourselves and deliver additional value to customers fueling higher levels of growth, we have a tremendous opportunity to leverage our scale and harnessing emerging technologies to drive margin expansion, all the while achieving greater overall operating consistency.

John: Taken together, we believe these powerful factors will result in greater returns for our shareholders to that end I look forward to discussing our refresh strategy at an Investor day here in New York on December 12 of this year.

Michel A. Khalaf: Now I'll turn it over to John to cover our first quarter performance in greater detail. Thank.

John Dennis McCallion: Thank you, Michel, and good morning. I will start with the 1Q24 supplementary slides, which provide highlights of our financial performance and an update on our liquidity and capital position. Starting on page three, we provide a comparison of net income to adjusted earnings in the first quarter. We had net derivative losses primarily due to the strengthening of the U.S. dollar versus the yen and Chilean peso, as well as favorable equity markets and higher interest rates.

John: Thank you Michelle and good morning, I'll start with the <unk> 24, a supplemental slides, which provide highlights of our financial performance and an update on our liquidity and capital position.

John Dennis McCallion: That said, derivative losses were mostly offset by market risk-benefit, or MRB, remeasurement gains due to higher interest rates and stronger equity markets. Net investment losses were mainly the result of normal trading activity for fixed maturity securities in a rising rate environment. Overall, the investment portfolio remains well-positioned, credit losses continue to be modest, and our hedging program performed as expected.

John Dennis McCallion: Starting on page three we provide a comparison of net income to adjusted earnings in the first quarter.

John Dennis McCallion: We had net derivative losses, primarily due to the strengthening of the U S dollar versus the yen and Chilean peso as well as favorable equity markets and higher interest rates.

John Dennis McCallion: It said derivative losses were mostly offset by market risk benefit our MRV remeasurement gains due to the higher interest rates and stronger equity markets net investment losses were mainly the result of normal trading activity for fixed maturity securities in a rising rate environment.

John Dennis McCallion: Overall, the investment portfolio remains well positioned credit losses continued to be modest and our hedging program performed as expected on page four you can see the first quarter year over year comparison of adjusted earnings by segment, which do not have any notable items in either period.

John Dennis McCallion: On page four, you can see the first quarter year-over-year comparison of adjusted earnings by segment, which do not have any notable items in either period. Adjusted earnings were $1.3 billion, up 13% on a reported and constant currency basis. Higher variable investment income, due to a rebound in private equity returns, drove the year-over-year increase. Adjusted earnings per share were $1.83, up 20% and up 21% on a constant currency basis. Moving to the businesses, group benefits adjusted earnings were $284 million, down 7% year-over-year, primarily due to less favorable underwriting margins.

John Dennis McCallion: Adjusted earnings were $1 $3 billion up 13% on a reported and constant currency basis higher variable investment income due to a rebound in private equity returns drove the year over year increase.

John Dennis McCallion: Adjusted earnings per share were $1.83 up 20% and up 21% on a constant currency basis.

John Dennis McCallion: Moving to the businesses group benefits adjusted earnings were $284 million down 7% year over year, primarily due to less favorable underwriting margins.

John Dennis McCallion: The group life mortality ratio was 90.2%, a slight improvement versus Q1 of 23 of 90.5% and above the top end of our annual target range of 84 to 89 percent as group life mortality ratio tends to be seasonally highest in the first quarter, regarding non-medical health.

John Dennis McCallion: The group life mortality ratio was 92% a slight improvement versus Q1 of 23 of 95%.

John Dennis McCallion: And above the top end of our annual target range of 84% to 89% as group life mortality ratio tends to be seasonally highest in the first quarter rigs.

John Dennis McCallion: Regarding non medical health the.

John Dennis McCallion: The Interest Adjusted Benefit Ratio was 73.9% in the quarter, at the top end of its annual target range of 69 to 74%, in line with our expectation of higher seasonal dental utilization in the first quarter. Turning to the top line, Group Benefits Adjusted PFOs were up 5% year-over-year, taking participating contracts into account, which dampened growth by roughly 100 basis points. The underlying PFOs were up approximately 6% year-over-year and at the top end of our 2024 target growth range of 4 to 6%. In addition, group benefit sales were up 25%, driven by strong growth across core and voluntary products.

John Dennis McCallion: The interest adjusted benefit ratio was 73, 9% in the quarter at the top end of its annual target range of 69% to 74% in line with our expectation of higher seasonal dental utilization in the first quarter.

John Dennis McCallion: Turning to the topline in group benefits adjusted PFS were up 5% year over year taking.

John Dennis McCallion: Taking participating contracts into account, which dampened growth by roughly 100 basis points. The underlying <unk> were up approximately 6% year over year and at the top end of our 2024 target growth range of 4% to 6%.

John Dennis McCallion: In addition group benefits sales were up 25% driven by strong growth across core and voluntary products are.

John Dennis McCallion: RAS Adjusted Earnings were $399 million, essentially flat, versus Q1 of 2023. Higher Variable Investment Income was offset by lower recurring interest margins, as well as less favorable underwriting margins. RAS investment spreads are 127 basis points, at the midpoint of our annual target range of 115 to 140 basis points.

John Dennis McCallion: RIS adjusted earnings were $399 million essentially flat versus Q1 of 'twenty three higher variable investment income was offset by lower recurring interest margins as well as less favorable underwriting margins RIS investment spreads were 127 basis points at the midpoint of our annual target range of 115 to 100.

John Dennis McCallion: 40 basis points.

John Dennis McCallion: This incorporates both the impact of the roll-off of our interest rate caps and the offsetting benefit of VAI re-emerging. RAS-adjusted PFOs were up 25% year-over-year, primarily driven by strong sales of structured settlement products, as well as growth in UK longevity reinsurance. With regard to pension risk transfers, while we did not complete any transactions in the first quarter, we continue to see an active market.

John Dennis McCallion: This incorporates both the impact of the roll off of our interest rate caps and the offsetting benefit of VII reemerging.

John Dennis McCallion: RIS adjusted <unk> were up 25% year over year, primarily driven by strong sales of structured settlement products as well as growth in U K longevity reinsurance with regards to pension risk transfers, while we did not complete any transaction in the first quarter, we continued to see an active market.

John Dennis McCallion: Moving to Asia, adjusted earnings were $423 million up, 51% and 57% on a constant currency basis, primarily due to higher variable investment income.

John Dennis McCallion: Moving to Asia, adjusted earnings were $423 million, up 51% and 57% on a constant currency basis, primarily due to higher variable investment income, favorable underwriting margins, and favorable tax benefits in Q1 of 24. For Asia's key growth metrics, general account assets under management on an amortized cost basis were up 6% year-over-year on a constant currency basis. Sales were down 8% on a constant currency basis versus a strong prior-year quarter.

John Dennis McCallion: Favorable underwriting margins and favorable tax benefits in Q1 of 'twenty four.

John Dennis McCallion: For Asia as key growth metrics Cherilyn kind of assets under management on an amortized cost basis were up 6% year over year on a constant currency basis.

John Dennis McCallion: Sales were down 8% on a constant currency basis versus a strong prior year quarter.

John Dennis McCallion: Latin America adjusted earnings for $233 million, up 8% and 5% on a constant currency basis, primarily due to volume growth and favorable underwriting margins. In addition, solid Chilean and Caje returns were 4.8% in Q1 of 24 compared to a negative 0.9% in Q1 of the prior year. Latin America's top line continues to perform well, as adjusted PFOs were up 9% and 8% on a constant currency basis, driven by growth across the region.

John Dennis McCallion: Latin America adjusted earnings were $233 million up, 8% and 5% on a constant currency basis, primarily due to volume growth and favorable underwriting margins. In addition, solid Chilean <unk> returns of four 8% in Q1 of 24 compared to a negative 0.9% in Q1 of the prior year.

John Dennis McCallion: <unk>.

John Dennis McCallion: Latin America's top line continues to perform well as adjusted <unk> were up 9% and 8% on a constant currency basis, driven by growth across the region EMEA.

John Dennis McCallion: Ami adjusted earnings worth $77 million, up 28% and 35% on a constant currency basis, driven by favorable underwriting, volume growth, and higher recurring interest margins. This was partially offset by less favorable expense margins year over year. While EMEA adjusted earnings were above trend this quarter, we still view the run rate to be $60 to $65 million per quarter for the remainder of the year. EMEA adjusted PFOs were up 7% and 9% on a constant currency basis, and sales were up 16% on a constant currency basis, reflecting strong growth in Turkey and the UK. Metlife Holdings' adjusted earnings were $159 million versus $158 million in the prior year quarter.

John Dennis McCallion: EMEA adjusted earnings were $77 million up, 28% and 35% on a constant currency basis, driven by favorable underwriting volume growth and higher recurring interest margins. This was partially offset by less favorable expense margins year over year.

John Dennis McCallion: Well EMEA adjusted earnings were above trend this quarter, we still view the run rate to be $60 million to $65 million per quarter for the remainder of the year.

John Dennis McCallion: EMEA adjusted <unk> were up 7% and 9% on a constant currency basis and sales were up 16% on a constant currency basis, reflecting strong growth in Turkey, and the U K.

John Dennis McCallion: Metlife Holdings, adjusted earnings were $159 million versus $158 million in the prior year quarter.

John Dennis McCallion: Higher private equity returns were offset by roughly $50 million in foregone earnings as a result of the reinsurance transaction that closed in November, in line with expectations. Adjusted earnings in the quarter were also pressured by a true-up associated with the reinsurance transaction. Corporate and other adjusted loss was $241 million versus an adjusted loss of $236 million in the prior year.

John Dennis McCallion: Higher private equity returns were offset by roughly $50 million in foregone earnings as a result of the reinsurance transaction that closed in November in line with expectations.

John Dennis McCallion: Adjusted earnings in the quarter were also pressured by a true up associated with the reinsurance transaction.

John Dennis McCallion: Corporate and other adjusted loss was $241 million versus an adjusted loss of $236 million in the prior year.

John Dennis McCallion: The company's effective tax rate on adjusted earnings in the quarter was approximately 23% below our 2024 guidance range of 24% to 26% due to several favorable tax items in the quarter.

John Dennis McCallion: The company's effective tax rate on adjusted earnings in the quarter was approximately 23 percent below our 2024 guidance range of 24 to 26 percent due to several favorable tax items in the quarter. On page five, this chart reflects our pre-tax variable investment income for the prior five quarters, including $260 million in Q1 of 24. The private equity portfolio, which makes up the majority of the VII asset balance, had a positive 2.1% return in the quarter, while real estate equity funds had a negative 5.8% return in Q1 of 24.

John Dennis McCallion: On page five this chart reflects our pretax variable investment income for the prior five quarters, including $260 million in Q1 of 'twenty four.

John Dennis McCallion: The private equity portfolio, which makes up the majority of the VII asset balance had a positive two 1% return in the quarter, while real estate equity funds had a negative five 8% return in Q1 of 'twenty for.

John Dennis McCallion: Both are reported on a one-quarter lag. In addition, as we've seen signs of improvement in the PE secondary markets, we have opportunistically divested roughly $750 million of private equity general account assets in Q1 of 2024 at a modest discount. The transaction structure will allow Metlife Investment Management to continue managing the assets from the sale.

John Dennis McCallion: Both are reported on a one quarter lag.

John Dennis McCallion: In addition, as we've seen signs of improvement in PE secondary markets, we have opportunistically divested roughly $750 million of private equity general account assets in Q1 of 24 at a modest discount.

John Dennis McCallion: The transaction structure will allow Metlife investment management to continue managing the assets from the sale.

John Dennis McCallion: We believe this transaction, which is similar to the roughly $1 billion divestment that we made in 2022, is a thoughtful approach to managing our investment allocation while supporting an important and growing fee-generating business for Metlife. Looking ahead, we continue to expect VII returns to move toward the upper end of our near-term outlook range in the second half of the year, and we remain comfortable with our full-year VII guidance of $1.5 billion.

John Dennis McCallion: We believe this transaction, which is similar to the roughly $1 billion divestment that we made in 2022 is a thoughtful approach to managing our investment allocation, while supporting an important and growing fee generating business for Metlife booking.

John Dennis McCallion: Looking ahead, we continue to expect the returns to move toward the upper end of our near term outlook range in the second half of the year and we remain comfortable with our full year VII guidance of $1 $5 billion.

John Dennis McCallion: On page six we provide VII post tax by segment for the fourth quarter of 2023 in Q1 of 'twenty four.

John Dennis McCallion: On page six, we provide VII post-tax by segment for the fourth quarter of 2023 and Q1 of 2024. As you can see in the chart, RAS, ASIA, and Metlife Holdings continue to hold the largest proportion of VII assets, given their long-dated liability profile. Now turning to page 7, the chart on the left of the page shows the split of our net investment income between recurring and VII for the past 3 years and Q1 of 23 vs. Q1 of 24.

John Dennis McCallion: As you can see in the chart our S Asia in Metlife Holdings continue to hold the largest proportion of V I a assets.

John Dennis McCallion: Given their long dated liability profile now.

John Dennis McCallion: Now turning to page seven the chart on the left of the page shows the split of our net investment income between recurring N V. I E for the past three years and Q1 of 'twenty three versus Q1 of 'twenty four.

John Dennis McCallion: Adjusted net investment income in Q1 of 24 was up roughly $500 million, or 10% year over year. While recurring investment income moderated in the quarter due to the roll-off of the interest rate caps, we did see a solid recovery in P.E. returns, driving the V.I.

John Dennis McCallion: Adjusted net investment income in Q1 of 24 was up roughly $500 million or 10% year over year, while recurring investment income moderated in the quarter due to the roll off of the interest rate caps, we did see a solid recovery in P returns driving the V I improvement year over year.

John Dennis McCallion: improvement year-over-year. Shifting your attention to the right of the page, which shows our new money yield versus roll-off yield since Q1 of 21, new money yields continue to outpace roll-off yields over the past eight quarters, consistent with rising rates.

John Dennis McCallion: Shifting your attention to the right of the page, which shows our new money yield versus roll off yield since Q1 of 'twenty, one new money yields continue to outpace rollout yields over the past eight quarters consistent with the rising rates.

John Dennis McCallion: In the first quarter of 2024, our global new money rate achieved a yield of 6.6%, 103 basis points higher than the roll-off rate. However, keep in mind the roll-off rate can fluctuate from period to period, as it did in the first quarter due to a greater volume of higher yielding floating rate assets paying off. We would expect this positive trend of new money yields outpacing roll-off yields to persist given the current level of interest rates. Now, let's switch gears to discuss expenses on page 8.

John Dennis McCallion: In the first quarter of 2024, our global new money rate achieved a yield of six 6% 103 basis points higher than the roll off rate.

John Dennis McCallion: Keep in mind, the roll off rate can fluctuate from period to period as it did in the first quarter due to a greater volume of higher yielding floating rate assets paying off well.

John Dennis McCallion: We would expect this positive trend of new money yields outpacing rollout feels to persist given the current level of interest rates now, let's switch gears to discuss expenses on page eight.

John Dennis McCallion: This chart shows a comparison of our direct expense ratio for the full year 2023 of 12.2% and Q1 of 24 of 11.9%. As we have highlighted previously, we believe our full year direct expense ratio is the best way to measure performance due to fluctuations in quarterly results. Our Q1 Direct Expense Ratio benefited from solid top-line growth and ongoing expense discipline. We were off to a good start, achieving a full year 2024 Direct Expense Ratio of 12.3% or below, demonstrating our consistent execution and a sustained efficiency mindset.

John Dennis McCallion: This chart shows a comparison of our direct expense ratio for the full year 2023, a 12, 2% in Q1 of 'twenty four of 11, 9%.

John Dennis McCallion: As we've highlighted previously we believe our full year direct expense ratio is the best way to measure performance due to fluctuations in quarterly results.

John Dennis McCallion: Our Q1 direct expense ratio benefited from solid topline growth and ongoing expense discipline, we were off to a good start achieving a full year 2024 direct expense ratio of 12, 3% or below demonstrating our consistent execution and the sustained efficiency mindset.

John Dennis McCallion: I will now discuss our cash and capital positions on page 9. Cash and liquid assets at the holding companies were $5.2 billion at March 31st, which is above our target cash buffer of $3 to $4 billion. This includes approximately $1.4 billion used in April for a debt maturity and a debt redemption. We do not have any further debt maturities for the balance of the year.

John Dennis McCallion: I will now discuss our cash and capital position on page nine cash and liquid assets at the holding companies were $5 2 billion at March 31, which is above our targeted cash buffer of $3 billion to $4 billion.

John Dennis McCallion: This includes approximately $1 $4 billion used in April for a debt maturity and the debt redemption.

John Dennis McCallion: We do not have any further debt maturities for the balance of the year.

John Dennis McCallion: Beyond this, cash with the holding companies reflects the net effects of subsidiary dividends, payment of our common stock dividend, and share repurchases of roughly $1.2 billion in the first quarter, as well as holding company expenses and other cash flows. In addition, we repurchased shares totaling approximately $330 million in April. Regarding our statutory capital for our US companies, our 2023 combined NAIC-RBC ratio was 407%, which is above our target ratio of 360%.

John Dennis McCallion: Beyond this cash at the holding companies reflects the net effects of subsidiary dividends payment of our common stock dividend.

John Dennis McCallion: And share repurchases of roughly $1 $2 billion in the first quarter.

John Dennis McCallion: As well as holding company expenses and other cash flows.

John Dennis McCallion: In addition, we have repurchased shares totaling approximately $330 million in April regarding our statutory capital for our U S companies. Our 2023 combined <unk> RBC ratio was 407%, which is above our target ratio of 360%.

John Dennis McCallion: For our U S companies preliminary first quarter 2024 statutory operating earnings were approximately $1 billion essentially flat year over year, while net income was approximately $570 million.

John Dennis McCallion: For our U.S. companies, preliminary first quarter 2024 statutory operating earnings were approximately $1 billion, essentially flat year over year, while net income was approximately $570 million. We estimate that our total U.S. statutory adjusted capital was approximately $18.3 billion as of March 31, 2024, down 6% from year-end 2023, primarily due to dividends paid and surplus notes repaid, partially offset by operating earnings. Finally, we expect the Japan solvency margin ratio to be approximately 725% as of March 31st, which will be based on statutory statements that will be filed in the next few weeks.

John Dennis McCallion: We estimate that our total U S statutory adjusted capital was approximately $18 $3 billion as of March 31 2024.

John Dennis McCallion: Down 6% from year end 2023.

John Dennis McCallion: Primarily due to dividends paid and surplus notes repaid partially offset by operating earnings.

John Dennis McCallion: Finally, we expect the Japan solvency margin ratio to be approximately 725% as of March 31.

John Dennis McCallion: Which will be based on statutory statements that will be filed in the next few weeks.

John Dennis McCallion: Before I wrap up, I would just highlight that we have an updated commercial mortgage loan slide as of March 31st in the appendix. Overall, the CML portfolio continues to perform as expected, with attractive loan-to-value and debt service coverage ratios, as well as the expectation of modest losses. Let me conclude by saying that Metlife delivered another solid quarter to begin the new year. The underlying strength of our business fundamentals was evident, with strong top-line growth, coupled with disciplined underwriting and expense management.

Speaker Change: Before I wrap up I would just highlight that we have an updated commercial mortgage loan slide as of March 31 in the appendix over.

John Dennis McCallion: Overall, the CML portfolio continues to perform as expected.

John Dennis McCallion: With attractive loan to value and debt service coverage ratios as well as the expectation of modest losses, let me conclude by saying that Metlife delivered another solid quarter to begin the new year, the underlying strength of our business fundamentals was evident with strong top line growth, coupled with disciplined underwriting and expense management.

John Dennis McCallion: In addition, our core spreads remain robust and sustainable given the higher yield environment. Additionally, we saw a nice rebound in our private equity returns. While the current environment remains uncertain, we are excited about the outlook and growth prospects of our businesses over the near term and beyond. Metlife continues to move forward from a position of strength with a strong balance sheet and a diversified set of market-leading businesses, which generates solid recurring free cash flow.

John Dennis McCallion: In addition, our core spreads remain robust and sustainable given the higher yield environment also we saw a nice rebound in our private equity returns while the current environment remains uncertain. We are excited about the outlook and growth prospects of our businesses over the near term and beyond.

John Dennis McCallion: <unk> continues to move forward from a position of strength with a strong balance sheet and a diversified set of market leading businesses, which.

John Dennis McCallion: Which generate solid recurring free cash flow and we are committed to deploying this free cash flow to achieve responsible growth and build long term sustainable value for our customers and our shareholders.

John Dennis McCallion: And we are committed to deploying this free cash flow to achieve responsible growth and build long-term sustainable value for our customers and our shareholders. And with that, I'll turn the call back to the operator for your questions.

John Dennis McCallion: And with that I'll turn the call back to the operator for your questions.

Unknown Executive: Thank you. Ladies and gentlemen, if you would like to ask a question, you may press 1 then 0 on your telephone keypad. You will hear acknowledgement that your line has been placed in queue. You may remove yourself from this queue at any time by pressing the 1-0 key once again.

Speaker Change: Thank you, ladies and gentlemen, if you would like to ask a question you May press. One then zero on your telephone keypad you will hear acknowledgment. That's your line has been placed in Q you may remove yourself from the queue at any time by pressing the one zero key once again one moment. Please for the first question.

Unknown Executive: One moment, please, for the first question. And we have a question from Suneet Kamath with Jefferies. Please go ahead.

Unknown Executive: Yeah.

Unknown Executive: And we have a question from Sydney to come up with Jefferies. Please go ahead.

Suneet Laxman L. Kamath: Hi, thanks. I just wanted to start with VII. John, you mentioned a real estate loss of 5.8%. Can you just unpack that a little bit? Was that actually losses on sales or appraisals? And how do you see that tracking as we move through the balance of the year?

Suneet Laxman L. Kamath: Hi, Thanks, I just wanted to start with VII, John you'd mentioned I think a real estate loss of five 8% can you just unpack that a little bit was that actually losses on sales or appraisals.

Suneet Laxman L. Kamath: And how do you see that tracking as we move through the balance of the year.

John: Sure good morning, so neat.

John Dennis McCallion: Sure. Good morning, Suneet.

John: Primarily appraisals and valuations. So we actually saw if you recall in the fourth quarter it was fairly flat.

John Dennis McCallion: Primarily appraisals and valuations. So we actually saw, if you recall, in the fourth quarter, it was fairly flat. Appraisals tend to, you know, they tend to lag a bit in terms of just, you know, market declines. And so we saw kind of a catch-up of that in the fourth quarter, which obviously gets reported here in the first quarter. You know, our view is that it will start to moderate. We probably still have some pressure in 2Q, but less so.

John Dennis McCallion: Appraisals they tend to they tend to lag.

John Dennis McCallion: A bit in terms of just you know market declines and so we saw kind of a catch up of that in the fourth quarter, which obviously gets reported here in the first quarter.

John Dennis McCallion: You know our view is that it will start to moderate we probably still have some pressure in <unk>, but less so.

John Dennis McCallion: And then moderates through the rest of this year, and then, we think, you start to see things start to pick up in a positive way towards the latter part of this year and into 25. That's kind of the outlook, if you will.

John Dennis McCallion: And then moderates through the rest of this do the rest of this year and and then we think.

John Dennis McCallion: You start to see things start to pick up in a positive way towards the latter part of this year into 25. So that's kind of the kind of the outlook if you will.

Michel A. Khalaf: Okay, that makes sense. And then, Michel, on your comments for future share buybacks, I think you used the word measured pace. Is that measured pace relative to what you did in the first quarter? Or is that relative to what you did in April? And is the plan to exhaust the $3.6 billion authorization in 2024? Yeah, hi, Suneet. Thanks for the question.

Speaker Change: Okay that makes sense and then I guess Michelle on your comments are for future share buybacks. I think you used the word measured pace is that measured pace relative to what you did in the first quarter or is that relative to what you did in April and is the plan to exhaust that $3 6 billion authorization in 2024.

Michel: Yeah, Hi, Sidney Thanks for the question.

Michel A. Khalaf: Yeah, hi, Suneet. Thanks for the question. So yeah, I did use the word measure, and I was referring to the first quarter. But, you know, I think, as you've seen in the first quarter, and what you've seen from us over time, is that, you know, we do move expeditiously and deliberately to return capital to shareholders, especially in the absence of other high-value capital deployment opportunities. You know, following divestments, we did so following the spinoff of our former retail business, following the sale of our auto business on home.

Michel A. Khalaf: So yeah I didn't use the word measure and Oh.

Michel A. Khalaf: I was referring to the first quarter.

Michel A. Khalaf: But you know I think as you've seen in the first quarter and what you've seen from US over time is that we do move expeditiously on deliberately to return capital to shareholders.

Michel A. Khalaf: You know, especially in the absence of other high value capital deployment opportunities. Following divestments, we did so following the spinoff of our former Ito business.

Michel A. Khalaf: Following the sale of auto and home.

Michel A. Khalaf: And you know we closed on our restaurants for data in the fourth quarter.

Michel A. Khalaf: And, you know, we closed on our risk transfer deal in the fourth quarter. So looking ahead, and without me getting overly prescriptive, I would say that we leaned into the first quarter at a pace that is greater than what you might see for the balance of the year.

Michel A. Khalaf: So looking ahead and you know without getting overly prescriptive.

Michel A. Khalaf: I would say that we leaned into the first quarter at a pace that is greater than what you might see for the balance of the year.

Speaker Change: Okay. Thanks, Michelle.

Michel A. Khalaf: Okay.

Michel A. Khalaf: Next we go to the line of Ryan Krueger with K B W. Please go ahead.

Unknown Executive: Next, we go to the line with Ryan Kruegger with KBW. Please go ahead.

Ryan Joel Krueger: Thanks, Good morning, first I just wanted to clarify one thing on the variable investment income comment John did you say that you expected to be.

Ryan Joel Krueger: Thanks. Good morning. First, I just wanted to clarify one thing on the variable investment income comment. John, did you say that you expected it to be towards the higher end of the range that you had given for the balance of the year?

Ryan Joel Krueger: Be towards the higher end of the range that you had given for the balance of the year.

Ryan Joel Krueger: Yeah, Hey, Ron.

John Dennis McCallion: Yeah. Hey, Ryan, it's John.

John: It's John.

Speaker Change: I think she needs question was focused on real estate and so I think what we were just trying to.

John Dennis McCallion: Regarding outlook in terms of the real estate funds and so we saw a negative.

John Dennis McCallion: I think Suneet's question was focused on real estate. And so I think what we're just trying to do, regarding Outlook in terms of the real estate funds. And so, you know, we saw a negative return this quarter of 5.8. I mentioned I thought it would be less negative next quarter, but we still think there will be a little pressure and just kind of the appraisals coming through. And then it will start; it will kind of moderate from there and start to have an upward trajectory is the way we put it.

John Dennis McCallion: Return this quarter of 5.8.

John Dennis McCallion: I mentioned I thought it would be less negative next quarter, but we still think there'll be a little pressure and just kind of the appraisals coming through and then it'll start ill kind of moderate from there and start to have an upward trajectory as kind of the way we put it.

Speaker Change: Okay got it.

Ramy Tadros: Another question was on the group benefits business. Can you talk more about the competitive environment you're seeing at this point? You know, as you went through January 1 renewals, as well as what you saw with persistency and pricing?

John Dennis McCallion: Other question was on the group benefits business can you talk more about the competitive environment, you're seeing at this point.

Ramy Tadros: As we went through January one renewals as well as what you saw with.

Ramy Tadros: Great.

Ramy Tadros: Sure Ryan its rami here good morning.

Ramy Tadros: Ramy Tadros, Lyndon Oliver, Tim Ring, Metlife Inc., Ryan Krueger, Elyse Greenspan, John Hall, uh... and one, because of the short-tailed nature of this business, is, on the whole, rational, and we also think and see that this is a market where there are many avenues for differentiation beyond price. And look, if you have the scale to invest in the business, So the price, while important, becomes one factor among multiple factors in the consideration set.

Ramy Tadros: You know I would say in terms of our view of the competitive dynamics of the group business. It really hasn't changed I mean, we've always talked about this is a competitive marketplace.

Ramy Tadros: And one because of the short tail nature of this business is on the whole rational.

Ramy Tadros: And we also think and see that this is a market where there are many avenues for differentiation beyond price.

Ramy Tadros: And look if you have the scale to invest in the business you can create true differentiation in this market and grow profitability and grow profitably. So no price while important becomes one of multiple factors in the consideration.

Ramy Tadros: Set.

Ramy Tadros: So with that background, our we're very pleased with our growth in sales. This year you saw the 25% increase in sales year over year.

Ramy Tadros: So with that background, we're very pleased with our growth in sales this year. You saw a 25% increase in sales year over year. And I should note that the strength of that momentum was across the board.

Ramy Tadros: I should note that the strength of that momentum was across the board so life disability dental as well as our voluntary suite of products.

Ramy Tadros: So life, disability, dental, as well as our voluntary suite of products. And from a pricing perspective, we're very pleased with the rate adequacy we got for that new business. And we're also very pleased with the rate increases that we got on renewals that were commensurate with our targets. So in all, a pretty solid picture, both in terms of growth and persistency, as well as pricing and rate increases.

Ramy Tadros: And from a pricing perspective, we were very pleased with the rate adequacy, we got for that new business and we're also very pleased with the rate increases that we got on renewals that were commensurate with our with our targets. So all in all a pretty solid picture both in terms of the growth persistency as well as the <unk>.

Ramy Tadros: <unk> and the rate increases.

Speaker Change: Great. Thanks, a lot.

Ramy Tadros: Next we move on to Wes Carmichael with Autonomous research. Please go ahead.

Unknown Executive: Next, we move on to Wes Carmichael with Autonomous Research. Please go ahead.

Wes Carmichael: Hey, good morning, and thanks for the question. I had a question on pension risk transfer. I know you guys didn't have any deals in the quarter, but there were some deals that were done that were of reasonable size, and it appears Met has plenty of capital to support this marketplace right now. And there's actually another ongoing call right now where, you know, one of your peers is saying that PRT is not that good of a business this year. There's not as much spread, so I'm just wondering if pricing is getting more competitive there, and if there's any dynamics changing in the marketplace.

Wesley Carmichael: Hey, good morning, and thanks for the question.

Wes Carmichael: Question on pension risk transfer I know you guys didn't have any deals in the quarter.

Wes Carmichael: But there were some deals that were done at a reasonable size and appears Matt has plenty of capital to go.

Wes Carmichael: To support this marketplace right now and there is actually another ongoing call right now.

Wes Carmichael: You know one of your peers is saying that PRT is not that good of a business. This year theres not as much spread so I'm just wondering if pricing is getting more competitive there if there's any dynamics changing in the marketplace.

Wes Carmichael: Thank you Ross its rami here again look the we're coming off a very successful 2023 year in terms of PRT.

Ramy Tadros: Thank you, it's Ramy here again. Look, we're coming off a very successful 2023 year in terms of PRT. We wrote five cases totaling more than $5 billion in premium, and that was off the back of a record year in 22 where we wrote more than $12 billion of premium. This business is lumpy, so I would remind you we did not win any deals in Q1 of 23 either, and we did not win any deals in Q1 of 24. But having said that, we continue to see a very robust pipeline ahead of us, particularly for the jumbo end of the market where we focus. And this is not surprising.

Ramy Tadros: Five cases totaling more than $5 billion in premium and that was off the back of a record year in 'twenty, two where we wrote more than $12 billion of of premiums are this business is lumpy.

Ramy Tadros: So I would remind you we did not win any deals in Q1 of 'twenty three either and we did not win any deals in Q1 of 'twenty four.

Ramy Tadros: But having said that we continue to see a very robust pipeline ahead of us, particularly for the jumbo end of the market, where we focus.

Ramy Tadros: We've got very healthy funding levels for defined benefit plans and the desire for large plan sponsors to de-risk. And we see this trend continuing for many, many years, and we're well positioned to win our fair share of the market here. From a pricing perspective, I would just emphasize what we've always said is that we look at these jumbo PRT deals with an M&A lens. And you kind of need to do that given the large quantum of capital that any given deal can consume.

Ramy Tadros: And this is not surprising we've got very healthy funding levels of defined benefit plans and the desire for large plan sponsors to derisk.

Ramy Tadros: And we see this trend continuing for many many years and we're well positioned to win our fair share of the market here.

Ramy Tadros: From a pricing perspective, I would just emphasize what we've always said is that we look at these jumbo PRT deals with an M&A lens and you kind of need to do that given the large quantum of capital with any given deal can consume and we're very disciplined to ensure that we deploy that capital to its best and highest.

Ramy Tadros: And we're very disciplined to ensure that we deploy that capital to its best and highest use. So we evaluate each transaction carefully. We will only deploy capital if the risk-adjusted returns are healthy and the ROEs are aligned with our enterprise targets. And as you look forward, we still see this as a large profit pool, a big opportunity, and one where we're going to get our fair share.

Ramy Tadros: To us so we evaluate each transaction carefully.

Ramy Tadros: We will only deploy capital if the risk adjusted returns are healthy in the auto ease are aligned with our enterprise targets and.

Ramy Tadros: As you look forward, we still see this as a large profit pool, there's a big opportunity and one where we're going to get our fair share.

Ramy Tadros: Yeah.

Speaker Change: Thanks, Rami and Michel I think you talked about higher rates, increasing the attractiveness of your products just wanted to get a little perspective on capital deployment, and how youre thinking about allocating capital towards growth in capital intensive businesses, where you can generate good irr's versus buying back more stock, which continues to be pretty strong.

Michel A. Khalaf: Thanks, Ramy, and Michel. I think you talked about higher rates increasing the attractiveness of your products. Just wanted to get a little perspective on capital deployment and how you're thinking about allocating capital towards growth and capital-intensive businesses, where you can generate good IRRs versus buying back more stock, which continues to be pretty strong. Yeah, sure, Wes. Thanks.

Michel A. Khalaf: Yeah sure Wes Thanks for the question. So you know our philosophy and approach is that.

Michel A. Khalaf: Yeah, sure, Wes. Thanks for the question. So, you know, our philosophy and approach is that we want to support organic growth. We've been doing so consistently, and you can see from our VMB disclosures the returns that we've been able to generate, high teens and, you know, paybacks, and sort of mid-single digits. You know, we like a good balance in terms of, you know, supporting organic growth and deploying capital in support of organic growth.

Michel A. Khalaf: We want to support our organic growth you know we've been doing so consistently and you can see from RV M. B disclosures are the you know the returns that we've been able to generate a high teens and paybacks in those sort of mid single digits, we like.

Michel A. Khalaf: A good balance in terms of Ah you know supporting organic deploying capital in support of organic growth. We continue to be under flow looking at potential M&A transactions. We can we consider M&A to be a strategic capability here, but we were extremely disciplined when it comes to.

Michel A. Khalaf: We continue to be in the flow looking at potential M&A transactions. We consider M&A to be a strategic capability here, but we're extremely disciplined when it comes to strategic fit and, you know, sort of a consistent basis globally by which we look at M&A transactions.

Michel A. Khalaf: The strategic fit and.

Michel A. Khalaf: A consistent basis globally by which we look at our M&A transactions and then.

Unknown Executive: And then, you know, excess capital, as we've said, belongs to our shareholders. We want to continue to have an attractive dividend yield. And you can see that we increased our dividend by 4.8%. And then, you know, share repurchases are also sort of part of the equation. And so it's, you know, it's that balance that we like to maintain. And, but, you know, we're certainly very keen on continuing to deploy capital in support of organic growth at attractive returns.

Unknown Executive: Excess capital as we've said belongs to share to all shareholders. We want to continue to have an attractive dividend yield and you can see that we increased our dividend by four 8%.

Unknown Executive: And then you know share repurchases. It's also sort of part of the equation and so it's you know it's that balance that we like to maintain and but we're certainly.

Unknown Executive: You know very keen on continuing to deploy capital in support of organic growth at attractive returns.

Unknown Executive: Yeah.

Speaker Change: Thank you.

Unknown Executive: And next we'll move on to Jimmy Buhler with J P. Morgan. Please go ahead.

Jamminder Singh Bhullar: And next, we move on to Jimmy Buhler with J.P. Morgan. Please go ahead. Hi, good morning.

Jamminder Singh Bhullar: Hi, good morning. First, I have a question for John on your spread in RIS. Healthy overall, but we saw a sequential decline in spread, excluding variable investment income, and I think you attributed that to the expiration of some of the interest rate caps. I'm wondering if you could give us some idea on the trajectory of that, and should we assume sort of a similar level of an impact from caps that are expiring in the next few quarters, and when should we assume that that dynamic is going to be over?

Jamminder Singh Bhullar: Hi, Good morning, So first a question for John on your spreads and R. I S.

Jamminder Singh Bhullar: Healthy overall, but we saw a sequential decline in spreads.

Jamminder Singh Bhullar: Excluding variable investment income and I think you attributed that to.

Jamminder Singh Bhullar: The exploration of some of the interest rate gap. So I'm wondering if you could give us some idea on the trajectory of that and should be a similar sort of a similar level of an impact from gaps that are expiring in the next few quarters than men should we assume.

Jamminder Singh Bhullar: That that dynamic is going to be over.

Jamminder Singh Bhullar: Yeah.

John: Good morning, Jimmy.

John Dennis McCallion: Good morning, Jimmy. Thanks for the question. Yeah, I think, you know, it was pretty much in line in terms of the roll-off of the cap. So in terms of XVI, that was generally in line. I think VII came in better than we expected. As you recall, we talked about a 115 to 140 range for the segment. So the middle of the range was 127 for the year. But we still think that's the right answer.

John: Thanks for the question, Yeah I think.

John Dennis McCallion: It was pretty much in line in terms of the roll off of the given the roll off of the cap. So in terms of X V. I that was generally in line.

John Dennis McCallion: I think V. I I came in better than we expected as you recall, we talked about a $1 15 to 140 spread range for this segment.

John Dennis McCallion: So the middle of the range was $1 27 for the year, we still think that's the right answer in the end the way we got there was that we.

John Dennis McCallion: And the way we got there was that we, you know, we have a kind of quarterly roll-off of these interest rate caps. Remember we bought these back a while ago when there wasn't a risk of rising rates, but it protects against a short end rise fairly quickly so that it allows the long end to kind of emerge over time. It's basically worked as planned, but they all effectively roll off for the most part throughout this year.

John Dennis McCallion: We have a kind of a quarterly roll off of these interest rate caps remember the we bought these back.

John Dennis McCallion: A while ago when there wasn't a risk of rising rates, but is to prep to protect against.

John Dennis McCallion: Short end rise a fairly quickly so that it allows the long end to kind of emerge in overtime. It's basically worked as planned but they all effectively roll off for the most part throughout this year. So in terms of expectations. We will see another you know so it was I think it was 10 bps maybe.

John Dennis McCallion: So in terms of expectations, we will see another, you know, so I think it was 10 bps maybe, I think 8 to 10 next quarter is not a bad estimate. It'll depend on what VII does next quarter. We still think VII has kind of a reemergence to occur. So we had a good quarter this quarter, but that can gradually grow throughout the year. Probably bigger growth in the second half.

John Dennis McCallion: <unk> decline between <unk> and <unk>.

John Dennis McCallion: I think eight to 10 next quarter is not a bad estimate.

John Dennis McCallion: Depending on what V. I I does next quarter, we still think VII has kind of a reemergence to occur. So we had a good quarter this quarter, but.

John Dennis McCallion: That can gradually grow throughout the year I'm, probably a bigger growth in the second half and then probably have one more quarter of of eight to 10, bips occurring and it flattens out between third and fourth quarter. It basically age you know.

John Dennis McCallion: And then probably have one more quarter of 8 to 10 BIPs occurring, and it flattens out between the third and fourth quarters. Basically, it's a minimal, if not immaterial, roll-off. So that's how we think about the roll-off, and that's how we get to the midpoint of that range when we give the guidance. So obviously, in the past, we've spent quite a bit of time in XVII, and we're happy to give that number, but we're really looking at the total spread all in now, and as you think about the reemergence of VII.

John Dennis McCallion: Minimal if not immaterial roll off so that's how to think about the the roll off and that's how we get to the midpoint of that range. When we gave gave the guidance. So we obviously in the past we've spent quite a bit of time on X V. I, we're happy to give that number but we're really looking at the total spread all in now and as you think about the re <unk>.

John Dennis McCallion: Regions of a V I a.

John Dennis McCallion: Yeah.

Ramy Tadros: And then for Ramy, on margins and group benefits, I think group life margins would be weak in one cue because of seasonality. Dental claims picked up as well. And do you attribute most of that to seasonality as well? Or are you seeing just higher incidence for some reason?

John Dennis McCallion: And then for Rami on margins and group benefits I think group life margin you'd assume that there'd be weak and one killed because of seasonality and dental claims are picked up as well and do you attribute most of that the seasonality as well or are you seeing them just higher incidence for some reason.

Unknown Executive: Hey Jimmy, um, it's...

Ramy Tadros: Hey, Jimmy it's basically seasonality story as you know.

Ramy Tadros: Hey Jimmy, it's basically a seasonality story. As you know, with dental claims, the benefits reset at the end of the calendar year. So come January, you just get to see more utilization as the claims reset. And therefore, that's just a seasonally higher ratio. If you look at our overall non-medical health ratio, this first quarter seasonality is baked into our guidance ranges. Mind you, these are annual ranges, and our expectations are, at this point, that we'll be well within our range.

Ramy Tadros: With dental claims the benefits reset at the end of the calendar year. So come January you just get to see more utilization as the claims reset and therefore, that's just a seasonally higher ratio.

Ramy Tadros: If you look at our overall non medical health ratio. This first quarter seasonality is baked into our guidance ranges are Jim mind. You. These are annual ranges and our expectations are at this point that would be well within our range.

Ramy Tadros: 69 to 74 for the full year, and I would also remind you that we did lower that range by a point earlier this year, so it is very much a seasonality story, and I feel very good about being within that range for the full year.

Ramy Tadros: 69 to 74 for the full year.

Ramy Tadros: And I would also remind you that we did lower that range by a point earlier. This year. So I'm very much seasonality story and feel very good about being within that range for the full year.

Speaker Change: Okay. Thanks.

Ramy Tadros: And next we move to Tom Gallagher with Evercore ISI. Please go ahead.

Unknown Executive: And next, we move to Tom Gallagher with Evercore ISI. Please go ahead.

Thomas George Gallagher: Good morning, just a few follow ups to Jimmy's questions. John If I, followed your math that would suggest about 20 basis points of lower base spreads for our I S.

Thomas George Gallagher: Morning, just a few follow-ups to Jimmy's questions. John, if I followed your math, that would suggest about 20 basis points of lower base spreads for RIS versus the Q1 level if I look at toward the end of 2024. Is that the direction you want it to go?

Thomas George Gallagher: Versus Q1 level, if I look at towards the end of 'twenty 'twenty four is that Directionally right.

Thomas George Gallagher: Yeah.

John Dennis McCallion: Yeah, 8 to 10. You took the top end of that range, but sure. It's close.

Thomas George Gallagher: Yeah eight to 10, you took the top end of that range, but sure.

Unknown Executive: Okay. So 16 to 20. 16 to 20. Yeah. Okay. And then for, and Ramy, for group benefits.

John Dennis McCallion: Close okay, so <unk> to 'twenty, yes.

Unknown Executive: Okay, and then for Rami for group benefits.

Ramy Tadros: I just want to make sure I have the right expectations here. If I look at last year and I look at the last three quarters of the year, I think earnings averaged around $450 million. That's probably $170, $180 million above what you did in Q1 this year. So, is it fair to say you still expect to grow above the $450 million earnings level for the next three quarters? In other words, it was just worse seasonality this year. And then, said another way, it sounds like dental utilization was quite high. You fully expect it to recover and see a big earnings snapback in dental for the balance of the year.

Speaker Change: I'm just I just want to make sure I have the right expectation here. The if I look at last year and I look at the last three quarters of the year I think earnings averaged around $450 million, that's probably 170 180 million above what you did in Q1 this year so.

Ramy Tadros: Is it fair to say you still expect to grow above the $450 million earnings level.

Ramy Tadros: The next three quarters, you know in other words, it always just worse seasonality this year and then as it and said another way.

Ramy Tadros: It sounds like dental utilization was quite high you fully expect to recover and see a big earning snapback in dental for the balance of the year. Thanks.

Ramy Tadros: Hey Tom, the way you can triangulate to an earnings number is you need to take our top line and our guidance ratios, so from a top line perspective, we're still very much within the four to six percent range. We had a six percent PFO growth this quarter, but think of that ratio being, you know, close to the midpoint of the range for the full year. And for sure, think of both non-medical health, which includes dental, moderating for the full year.

Speaker Change: Hey, Tom I mean, the way you can triangulate on earnings number and if you take our top line in our guidance ratios. So from a top line perspective.

Ramy Tadros: We're still very much within the 4% to 6% range. We we got a 6% <unk> growth this year this quarter.

Ramy Tadros: But think of that ratio being closer to the midpoint of the range for the full year.

Ramy Tadros: And for sure think of both Nonmedical health, which includes dental are moderating for the full year, so think of that going towards the midpoint of the range.

Ramy Tadros: So think of that coming towards the midpoint of the range. And think of the same thing happening with the life underwriting ratio. So, very much a seasonality story for this quarter. You know, remember, as Michel alluded in his remarks, that seasonality has been kind of masked in the last few years with COVID and different behaviors on the dental side and clearly on the mortality side in terms of what we've seen. And that's just now returning to a more regular pattern, if you will. So I hope that helps you think through the guidance growth, both given the top line number that I've articulated as well as the midpoint of these ratios for the full year.

Ramy Tadros: Think of the same thing happening with the life underwriting ratio, so very much a seasonality story.

Ramy Tadros: For this quarter.

Ramy Tadros: Remember as Michelle alluded in his remarks that seasonality was kind of a masked.

Ramy Tadros: In the last few years with Covid and different behaviors on the dental side and clearly on the mortality side in terms of what we've seen and that's just not returning to a more regular pattern. If you will so that I hope that helps you think through the guidance growth. Both are given the topline number that I've articulated as well as the.

Ramy Tadros: The midpoint of these ratios for the full year.

Thomas George Gallagher: That that does, and if I could just sneak in one other follow-up, so dental utilization, you would fully expect that to be far lower in 2q than 1q, or is there going to be some tail on that where you might see some level of higher utilization and lower earnings into 2q as well? Would you say, I mean, it cues

Speaker Change: That does and if I could just sneak in one other follow up so dental utilization you would fully expect that to be far lower into Q1, Q or is there going to be some tail on that where you might see some level of higher utilization and lower earnings into two two as well would you say.

Ramy Tadros: Q3 tends to be the lightest, so you'd expect it to come down in the second quarter; Q3 will be a lot lighter, so there will always be a decrease, whether it's going to happen as a sharp cliff in Q2 and then another one in Q3 or different patterns; it's hard to predict, but again, think of it as a full-year range and think of that ratio coming to the midpoint for Okay, thanks.

Thomas George Gallagher: Q3 tends to be the lightest so you'd expect it to come down in the second quarter Q3 will be a lot lighter. So there's going to be always there will be a decrease whether it's going to happen as a sharp cliff in Q2, and then another one in Q3 or different patent, it's hard to predict but but again think of.

Ramy Tadros: It is a full year range and think of that ratio coming through the midpoint for the full year.

Speaker Change: Okay. Thanks.

Speaker Change: And Tom maybe I'll, just just a follow up again on the on your first question I mean, I think also just you know you only focused on ex VII, but as I said I think what's really important is that you know we think of the all in spread here and that's all of that is very much in line with what we gave in the outlook for the midpoint of the range.

John Dennis McCallion: And Tom, maybe I'll just, just to add, follow up on your first question. I mean, I think, also, you only focused on XVII, but as I said, I think what's really important is that, you know, we think of the all-in spread here, and that's, you know, all of that is very much in line with what we gave in the outlook for the midpoint of the range.

Speaker Change: Okay. Thanks.

John Dennis McCallion: Next we move on to Brian Meredith with UBS. Please go ahead.

Unknown Executive: Next, we move on to Brian Meredith with UBS. Please go ahead.

Unknown Executive: Hi, This is Justin Tucker on for Brian Thanks for taking my call.

Brian Meredith: Hi, this is Justin Tucker. I'm on behalf of Brian. Thank you for taking my call.

Unknown Executive: My first question is about RIS.

Justin Tucker: My first question is about RIS. When looking at the structured settlement results, could you kind of help us understand how much of the demand is driven by the favorable interest rate environment and then how much of it is driven by the court's opening and social inflation? And then furthermore, just curious about the sensitivity to those factors. If interest rates do decrease, do you think that has a bigger impact on structured settlement demand versus dampening social inflation? Thank you.

Unknown Executive: Look when looking at the structured settlement results could you kind of help us understand how much of the demand is driven by the favorable interest rate environment and how much of it is driven by the courts opening and social inflation and then Furthermore, just curious about the sensitivity to those factors.

Justin Tucker: Just rates do decrease do you think that has a bigger impact on structured settlement demand versus.

Justin Tucker: Dampening of social inflation. Thank you.

Speaker Change: Hi, it's from here I mean, I would say interest rates as the primary driver of this.

Ramy Tadros: Hi, it's Ramy here. I mean, I would say interest rates are the primary driver of this. You have seen, coming out of the pandemic, call it pent-up demand, with the courts being closed, and some of that clearly kind of caused an increase in volumes earlier on. That's now stabilized, and it's very much an interest rate-driven volume increase. And you do have, given court settlements have increased, you do have some social inflation component, but I would say interest rates are the primary one.

Ramy Tadros: You have seen coming out of the pandemic call. It pent up demand with the courts being closed in and some of that clearly kind of the cause of an increase in volumes earlier on that's.

Ramy Tadros: That's now stabilized and it's very much an interest rate interest rate driven volume increases.

Ramy Tadros: And you do have given court settlements increase you do have some social inflation component, but I would say interest rates is the is the primary one.

Unknown Executive: We are a major player in this market. The market has grown substantially over the last few years, and we have maintained a pretty good share in that market. And it's a very specialized market in terms of the distribution channel, the underwriting, etc. And, you know, we're extremely pleased both with the volume, but, more importantly, with the ROEs and the returns we're able to achieve in this market.

Ramy Tadros: We are a major player in this market.

Unknown Executive: The market has grown substantially over the last few years and we have a we will maintain a pretty good share in that market.

Unknown Executive: And it's a very specialized market in terms of the distribution channel the underwriting et cetera, and we're extremely pleased both with the volume, but as importantly, with the <unk> and the returns we're able to achieve in this market.

Unknown Executive: Yeah.

Speaker Change: Great. Thank you and then my follow up question is just on Latin America sales were flat year over year, and just kind of curious about what youre seeing in the overall market for demand and what you expect with sales going forward. Thank you.

Justin Tucker: Great, thank you. And then my follow-up question is just on Latin America, sales were flat year over year, and I'm just kind of curious about what you're seeing in the overall market for demand and what you expect with sales going forward. Thank you.

Justin Tucker: Yes, Hi, Hi, Justin Thanks for the question this is Eric.

Justin Tucker: So overall, we were pleased really with our results. This quarter. This is a good start of the year. After what was a record year in 2023.

Unknown Executive: our results this quarter. This is a good start to the year after what was a record year in 2023.

Unknown Executive: The quarter's results are primarily driven by, you know, favorable underwriting, some of which we don't expect to recur, strong and caché returns, and solid volume growth. And to your question, from a top-line perspective, we've seen all key markets contributing to the high solid, high single-digit PFO growth, and that was supported by solid sales and strong persistency. So from a sales perspective specifically, this quarter is a tough compare, given that last year we had 36% growth, which included two large employee benefits and corporate pension sales in Mexico and Brazil.

Unknown Executive: The quarters results are primarily driven by our bi kind of favorable underwriting some of which we don't expect to recur stronger coffee returns and solid volume growth and.

Unknown Executive: To your question from a topline perspective, we've seen all key markets contributing to the high solid high.

Unknown Executive: High single digit <unk> growth and that was supported by a solid sales and strong persistency. So from a sales perspective, specifically this quarter is a tough compare given that last year, we had a 36% growth which included the two large employee benefits and corporate pension sales in Mexico.

Unknown Executive: Now if you exclude these two sales from 2023, our sales are up roughly 10% year over year. So all in all, we're really pleased with the growth trajectory and the momentum in the region. And we believe that, you know, the outlook guidance we provided is still a reasonable run rate for the remainder of the year.

Unknown Executive: Nickel and Brazil now if you exclude these are these two sales from 2023 of.

Unknown Executive: Our sales are up roughly 10% year over year. So all in all we're we're really pleased with our with the that the growth trajectory and the momentum.

Unknown Executive: In the region and we believe that you know the outlook guidance. We provided is still a reasonable run rate for the remainder of the year.

Speaker Change: Great. Thank you.

Unknown Executive: And we have no other questions I'll be turning the conference back to John Hall for closing comments.

John Arthur Hall: And we have no other questions. I'll be turning the conference back to John Hall for closing comments.

John Arthur Hall: Great, thank you very much, Operator, and thank you everybody for joining us this morning on a very busy, busy day. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.

John Arthur Hall: Great. Thank you very much operator, and thank you everybody for joining us this morning on a very busy busy day.

Operator: Ladies and gentlemen that does conclude your conference for today. Thank you for your participation you may now disconnect.

Unknown Executive: Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect. We're sorry, your conference is ending now. Please hang up.

Unknown Executive: Okay.

Unknown Executive: We're sorry your conferences ending now please hang up.