Q1 2024 F&G Annuities & Life Inc Earnings Call
Ladies and gentlemen.
Good morning, and welcome.
Two F N G first quarter earnings call.
During today's presentation, all parties will be in a listen only mode.
Following the presentation the confidence there'll be open for questions with instructions to follow at that time.
As a reminder, this conference call is being recorded.
Speaker Change: I would now like to turn the call over to Lisa Foxworthy Buckle.
Speaker Change: <unk> <unk> <unk>.
Speaker Change: Relations. Please go ahead.
Speaker Change: Great. Thanks, operator, and welcome everyone. Joining me today are Chris Blunt, Chief Executive Officer, and Windy Young Chief Financial Officer.
Speaker Change: Forward to addressing your questions following our prepared remarks.
Speaker Change: Today's earnings call May include forward looking statements and projections under the private Securities Litigation Reform Act, which do not guarantee future events or performance.
Speaker Change: Do not undertake any duty to revise or update such statements to reflect new information subsequent events or changes in strategy.
Speaker Change: Please refer to our most recent SEC filings for a discussion of the factors that could cause actual results to differ materially from those.
Speaker Change: Expressed or implied.
Speaker Change: This morning's discussion also includes <unk> financial measures that we believe maybe meaningful to investors non-GAAP measures have been reconciled to gap where required in accordance with F. C. C rules within our earnings release financial supplement an investor presentation, all of which are available on the company's website today's.
Speaker Change: Call is being recorded and will be available for webcast replay F. Two life Dot com.
Speaker Change: It will also be available through telephone replay beginning today at one P. M. Eastern time do may 16th 2024 and.
Speaker Change: And now I'll turn the call over to our C E O Chris month.
Christopher Owsley Blunt: Good morning, everyone. Thanks for joining us to discuss our first quarter results are.
Christopher Owsley Blunt: I'm pleased to share that we're off to a terrific start in 2024, having delivered another strong quarter as we execute on our strategic initiatives. We can send you to focus on our growth strategy, maintaining a disciplined and balanced capital management process and diversifying our earnings into more capital light strategies overtime.
Christopher Owsley Blunt: Starting with sales, we continue to see sustainable momentum across our multichannel new business platform and strong demand for our products in the volatile at a higher rate environment.
Christopher Owsley Blunt: Coming off record sales in the fourth quarter, we reported gross sales of 3.5 billion in the first quarter or second highest on record, which was up 6% over the first quarter of 2023, which was the third highest on record.
Christopher Owsley Blunt: Retail channel sales through our agent bank and broker dealer channels, where 2.8 billion in the first quarter.
Christopher Owsley Blunt: We reported record fixed indexed annuities sales.
Christopher Owsley Blunt: And lower multi year guaranteed annuity sales leading to a higher percentage of net sales retained as compared to the sequential quarter.
Christopher Owsley Blunt: We also began the rollout of our new registered index linked annuity or while a product in the quarter, which we expect will become a significant contributor to sales over the next few years.
Christopher Owsley Blunt: In fact industry <unk> sales were nearly 45 billion last year, which was a record level.
Christopher Owsley Blunt: We believe our product offering is differentiated in the market and will uniquely meet the needs of a relatively younger demographic.
Christopher Owsley Blunt: Pension <unk> transfer sales set a new first quarter record at 584 billion, reflecting a healthy pipeline out of the gate this year.
Christopher Owsley Blunt: <unk>, we have crossed the 5 billion dollar mark for cumulative pension <unk> transfer sales with over 100000 plan participants.
Christopher Owsley Blunt: This milestone it is especially impressive given our market entry was a bit of 2021, just under three years ago.
Christopher Owsley Blunt: We rounded out gross sales with 105 million a S. H L. B funding agreements of the quarter. We continued to monitor opportunities to return to the market for finding agreement back notes or F. A b N issuances, although conditions remain challenging in the first quarter.
Christopher Owsley Blunt: Net sales were 2.3 billion in the first quarter, reflecting accretive third party Florey insurance 90 per cent of our Maiga sales in line with our capital targets.
Christopher Owsley Blunt: As a reminder flow reinsurance generates fee based earnings and freeze up incremental capital to be deployed to the highest returning retained business.
Christopher Owsley Blunt: Noted the higher interest rates have been driving strong product demand over the last few quarters, while also leading to a higher level of index annuity surrenders.
Christopher Owsley Blunt: Fixed index annuity terminations are up over the prior year quarter is expected, although relatively in line with the fourth quarter of 2023.
Christopher Owsley Blunt: New business continues to well outpace surrenders, providing positive net cash flows that are enforced annuity account balance continues to steadily grow.
Christopher Owsley Blunt: As a reminder for insurance companies like F. A G surrenders typically provide a boost to earnings from higher surrender charge fees and freed up capital from the policy lapse.
Christopher Owsley Blunt: Further a record new business volumes effectively replace older contracts with newer contracts, having higher surrender charges and lager surrender periods further improving a liability profile.
Christopher Owsley Blunt: We have profitably grow and retained assets under management to a record 49.8 billion at March 31. This is an increase of four and a half billion or 10% over the first quarter of 2023.
Christopher Owsley Blunt: Driven by net new business flows stable enforce retention and net debt and equity proceeds over the last 12 months.
Christopher Owsley Blunt: Retained a you're one of them was up nearly 700 million over the fourth quarter of 2023, primarily driven by net new business flows.
Christopher Owsley Blunt: AUN before Florey insurance was 58 billion adjusting for the approximately 8.2 billion of cumulative do business eat it.
Christopher Owsley Blunt: Looking ahead, we continue to target gross sales growth at a double digit clipped, while managing net sales routine to a level that continues to grow or S et cetera management.
Christopher Owsley Blunt: I would also highlight that the new department of Labor Fiduciary rules had been released we view the new structure is manageable and are prepared to make necessary compliance enhancements when they become effective.
Christopher Owsley Blunt: A reminder of the industry has been monitoring this development over the past eight years, and making enhancements to comply with the N E. I C state based best interest regulation.
Christopher Owsley Blunt: R. I M. O's are very sophisticated firms and many have their own R. I as in broker dealers approximately 21% of our total gross sales were from producers that do not have a registered license.
Christopher Owsley Blunt: With 15% being from qualified accounts, which we expect to have the most impact.
Christopher Owsley Blunt: Overall, we do not expect a momentum in our business to be impacted although we do worry that it will discourage agents from serving middle market clients.
Christopher Owsley Blunt: Our investment portfolio as well diversified actively manage through our selective derisking programs and well positioned to perform in varying market conditions.
Christopher Owsley Blunt: Importantly are invested assets are well matched to her clean and stable liability profile.
Christopher Owsley Blunt: Are fixed income yield excluding alternative investment volatility and variable investment income is expanded to 4.56% in the first quarter as compared to 4.33 per cent in the first quarter of 2023.
Christopher Owsley Blunt: This reflects upside from higher yields a new investments and floating right assets.
Christopher Owsley Blunt: The portfolio remains high quality with 95% of fixed maturity is being investment grade and credit related impairments worry modest two basis points in the first quarter.
Christopher Owsley Blunt: We have hedged nearly 60 per cent of our 10 billion in floating rate asset portfolio due to the potential for interest rate decreases in the future.
Christopher Owsley Blunt: This is locked in about 185 basis points of incremental yield beyond and what was originally priced in in translates to approximately 15.
Christopher Owsley Blunt: To 20 basis points of annual incremental investment margin above our pricing over the next three to five years.
Christopher Owsley Blunt: I'd like to put a brief spotlight on our 2.6 billion alternatives L. P portfolio, which is performed extremely well since inception.
Christopher Owsley Blunt: The portfolio is generated an average historical return of 13% <unk>.
Christopher Owsley Blunt: Comprised of return on investment Mark to market in return of capital and returns within less volatile than the S and P 500 index.
Christopher Owsley Blunt: Since inception, we've received back nearly 1.3 billion or almost half the capital we invested since 2017, providing it approximates 7% yield distributions alone.
Christopher Owsley Blunt: And we've experienced approximately 30 per cent appreciation and the value of capital that we invested since 2017, including both distributions and residual value for the portfolio, which is expected to grow as the ultra portfolio matures.
Christopher Owsley Blunt: Turning next to our results for the quarter, excluding significant items, we delivered adjusted net earnings of 154 million.
Christopher Owsley Blunt: Generated and adjusted R O a of 125 basis points.
Christopher Owsley Blunt: We reported and adjusted <unk> of 11%.
Christopher Owsley Blunt: Notably our our way is above 110 basis point baseline that we shared it or investor day back in October.
Christopher Owsley Blunt: When do you will get into the results more than a few minutes, but the quarter. Once again demonstrates that we are positioned to perform across market cycles and that we can consistently deliver strong results with attractive at expanding orchards over time.
Christopher Owsley Blunt: We have plenty of momentum to continue to deliver sustainable asset growth from a retail and pension <unk> transfer growth strategies and ongoing margin expansion from enhanced investment margin opportunities operational scale benefits and fee based earnings from accretive flow reinsurance.
Christopher Owsley Blunt: We are also well positioned to diversify our earnings given the strong growth of our middle market life insurance business and one distribution strategies.
Christopher Owsley Blunt: Our strategic investment in one distribution stakes will generate a meaningfully higher risk adjusted return on capital then retain business and provides a diversifying source of earnings.
Christopher Owsley Blunt: Oh and distribution further strengthens our relationships with key partners.
Christopher Owsley Blunt: And with the industry consolidation under way. We believe we are uniquely positioned partner is a distribution consolidator.
Christopher Owsley Blunt: To date, we've invested 530 million and we expect EBITDA for the portfolio to be $45 billion to $50 billion in 2024 with double digit growth over the medium term.
Christopher Owsley Blunt: Wrapping up I am very proud of our team's accomplishments the business is hitting on all cylinders and we remain focused on our strategic priorities fulfilling the commitments, we made in connection with our Investor day, and creating longterm value for all of our stakeholders. Let me now turn the call over to Wendy to provide further details on F. M. G. 's first <unk>.
Wendy: <unk> financial highlights.
Wendy: Crash.
Wendy: Pleased with <unk> overall financial performance for the first quarter.
Wendy: I'd like to point out before we get into our results that we've updated our quarterly financial supplement this quarter to highlight results from our core product Martin slow reinsurance fees and Ellen distribution among other enhancements.
Christopher Owsley Blunt: Starting with her name.
Christopher Owsley Blunt: Net earnings attributable to common shareholders for the first quarter or 108 $9.86 per share and included $109 or 77 cents per share of investment income Uhm alternative investments and six nine or five cents per share, let's yellow redemption games and by prepayment income.
Christopher Owsley Blunt: <unk> investment income based on management Longterm expected return approximately 10% was 152 nine alright dollar and 18th cents for sure.
Christopher Owsley Blunt: Adjusted net earnings for the first quarter of 2023, and we're 61 $9.49 per share and included 99, nine or 79 cents per share of investment income from alternative investment, partially offset by 37, nine or 30 cents per share tax valuation allowance at.
Christopher Owsley Blunt: Alternative investments and that's an income based on management longterm expected return up approximately 10% was 139 or a dollar five cents per share.
Christopher Owsley Blunt: For comparison adjusting for these significant items in both periods suggested that our answer 154 nine in the first quarter of 2024 up 18% from 131 nine in the first quarter of twenty-three. This increase reflects asset growth and diversification of Martin from a credit flow reinsurance fee and one distribution.
Christopher Owsley Blunt: <unk>, which are partially offset by an increase in interest expense you could plan capital market activity and higher operating costs in line with the growth in sales and assets and continued investments in our operating platform or just to return on assets, excluding significant items with 125 basis points in the quarter comfortably above.
Christopher Owsley Blunt: 110 basis point baseline of shared an investor day in October 2023.
Christopher Owsley Blunt: Current quarter includes five basis points of favorable actuarial liability movement that is within our expected range and reflects the effects of our methodology, which can be lumpy for enter quarter their ability.
Christopher Owsley Blunt: Next turning to our balance sheet.
Christopher Owsley Blunt: Ended the quarter with F and G equity attributable to common shareholders. Excluding a M. C. I, a 5.2 billion or $41.10 per share with 126 nine common shares outstanding as of March 31st.
Christopher Owsley Blunt: There are a couple of pages in an investor presentation, providing an analysis of book value for sure.
Christopher Owsley Blunt: <unk> capitalization ratio excluding L. C. I was 24% as of March 31st. This is in line with our longterm target at 25% and includes the 250 million preferred stock issuance. In January 2024 are annualized interest expense is approximately 120 million or roughly six.
Christopher Owsley Blunt: Six per cent blended yield on the 1.8 billion a total debt outstanding.
Christopher Owsley Blunt: We continue to target holding company cash and invest in assets at two times <unk> charge coverage.
Christopher Owsley Blunt: Strong capitalization supports both growth and distributable cash during the first quarter of F. M. G pay 26 million of common dividends and a 4 million data then on his preferred stock held by as in F. F.
Christopher Owsley Blunt: F and G as well positioned to South bend, it continued growth with positive and growing in forest capital generation available that capacity as our balance sheet Delevers with book value growth over time and ample opportunity for future reinsurance program for 2024, specifically are stable profitable enforced is expected to generate more.
Christopher Owsley Blunt: 1 billion in capital and we have strong capital generation in the range of 500 million from existing reinsurance arrangements in summary, we have great momentum and executing us on our strategy and delivered a terrific first quarter. In addition, we continue to maintain strong capitalization and financial flexibility to successfully.
Christopher Owsley Blunt: Execute on our growth strategy.
Speaker Change: This concludes our prepared remarks, let me now turn the call back to our operator for questions.
Speaker Change: Thank you Lady.
Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please Beth star and one on your telephone keypad <unk>.
Operator: Confirmation tone will indicate your line isn't the question Q U.
Operator: You May press start and two if you would like to remove your question from the queue.
Operator: Four participants using speaker equipment, it may be necessary to pick up your handset before pressing this <unk>.
Operator: Ladies and gentlemen, we will wait for a moment, while we pull for question.
Operator: First question is from the line of John <unk> with Piper Sandler. Please go ahead.
John: Good morning, Thank you for the opportunity.
John: My first questions all the while a product how should we be thinking about contribution in 24, how meaningful was it in the first quarter.
Speaker Change: That it was rolled out thanks.
unknown: Sure. Thanks, John This is <unk> I would say not very meaningful in the quarter, we rolled out <unk>.
Speaker Change: Literally with one or two distribution partners. We've got a number of additional partners in the queue that I will expect that I expect will roll out in the second quarter in the third quarter. So.
John: No I I don't think this is going to be a big needle mover for some this year, but it should be meaningful for us as we head into 2025 and given the environment right. Now you know we've got plenty of sales opportunities. So yeah, I would say would be relatively modest this year, and but should start becoming a meaningful contributor to.
John: Next year.
Speaker Change: Thank you for that and my follow up question, Chris competitive dynamics in the P. R T market.
Speaker Change: Talked about finally crossed and a big threshold in sales to the cumulative basis and some participants I've talked about this year being a bit more competitive and that institutional products.
Christopher Owsley Blunt: Yeah, I I wouldn't say that we've seen a dramatic change, but obviously it was a tremendous there was a record first quarter for us. So the the team is executed really well we.
Speaker Change: Tend to be Super selective in terms of what we bid on.
Speaker Change: So the process is pretty.
Speaker Change: Thorough for deciding where where you can crank up the edge of the bed and then we'll be bad we've had a decent.
Speaker Change: Hit right there so I I think it will always be competitive because it's such an attractive.
Speaker Change: Market, but more obviously still.
John: Our fair share and.
John: Haven't seen a big change in terms of return dynamics.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, a reminder, if you wish to ask a question please Beth star and one.
John: Our next question is from the line of <unk> Carmichael with autonomous. Please go ahead.
Carmichael: Hey, good morning, Thanks, Uhm, so it'd be our way baseline in the quarter I guess suggested for all its was 125 basis points and that's about it gives you a recent target of 110. So maybe just hoping you could talk about if you see that as a sustainable level going forward and and maybe the drivers are a little bit of that outperformance would be great.
Speaker Change: Yeah, I was starting to know whether you'll jump in I think there was probably a little bit of positive tailwind to that but not.
Speaker Change: Not a lot. So yeah, we feel really good about what we laid out.
Speaker Change: Our Investor day, It was a baseline of 110 basis points. So we thought.
John: We could grow that 15 to as much as 30 basis points through a few levers optimizing the investment portfolio, that's feeling quite optimistic for US right now slower insurance, you're already seeing the impact of that.
John: Some operating scale as we continue to grow so yeah, we feel pretty good about that and I don't know when did your work there may be a little more of the dynamics of the quarter itself.
John: I, even go back to last quarter West there is based on our reserving methodology, we're gonna get a little bit of fluctuation quarter to quarter last last quarter. It was a little bit of a hit this corner, it's a little better positive.
John:
John: So we're we're basically indicated in the script that there's about a five basis points, maybe of positive noise and in that mechanics that we have.
John: So we feel really good about uhm expansion from here and in addition to let stressed out about slow and scalability, Oh, <unk> really popped in the quarters and that that definitely is sustainable.
Speaker Change: Got it thanks.
Speaker Change: Just wanted to maybe follow up on Jon's question on P. R. T. I think one of your private equity Slash insurance peers made some comments on their earnings call. This quarter that there's some recent lawsuits that are likely to chill some of the volumes and the purity market in 2024, and they also mentioned that they said spreads weren't very attractive this year versus last year. So I just wanted to get any additional perspective on if you.
John: You can see some lower volumes or if that's not the case and and if you still see decent spread in that market.
Speaker Change: Sure Yeah, I think there's there's clearly the potential for that to cast a bit of a pall over the markets were watching for we haven't really seen that yet I mean, there are quite a few deals in in.
Speaker Change: In the queue for us and everybody to go get on to the spread piece, it's really hard to compare across firms because the single biggest driver is do you have access to unique longer duration originated credit and if you do we're still earning good spreads. If you don't then it's tough it's going to be difficult.
Speaker Change: You know that's everything from Triple net leases to infrastructure data et cetera. So you know it can be very.
Speaker Change:
John: Spoke asset specific types of opportunities and so again, I think it's kind of hard to generalize across across the industry, but yeah. It's something that we clearly are on <unk>.
John: I'll look out for and raising our profile on you know everything from how we use reinsurance to you know transparency about everything that we do.
John: Nothing Sir and maybe just one more on funding agreements, but you did a little bit of that they shall be borrowing and quarter. You mentioned that conditions were challenging for F. A b and in the first quarter. I think there was some peers that kind of return to that market, but I just wanted to get your perspective on the rest of the year, if it looks more attractive and your outlook for F it'd be an issue.
Speaker Change: Yeah, I think it does you know it's a it's a good environment right now to be an issue, where so I think during the quarter. It was on the cusp I think it's looking definitely looking more attractive right now whether you if you want to add to that.
Speaker Change: Yeah, I was just gonna say, where we monitor it last just to.
Speaker Change: See how we're doing from the <unk> perspective, you know our our rating is a little bit lower than some of the ones that have gone out in the first quarter and that impacts the spread but we are monitoring and it looks like it's getting better every day.
Speaker Change: Yeah, and what one other thing I would say <unk>. Obviously, we're we're trying to maximize return on capital right. That's that's the goal and so right now given me attractive opportunities in retail and P. R. T. So we we look at all of them is funding sources and cost of <unk> waiting or try to optimize that.
Speaker Change: At at all times, but you know looking at the quarter I I actually walking around feeling like this might've been best quarter, we've ever had.
Speaker Change: Inflows continues to be strong in the mix was really positive you know so.
Speaker Change: Nick shift towards Fia's from Maiga, obviously F. I E. As you know our most profitable product, it's a longer duration products, we were walking and.
Speaker Change: Spread for longer than we are already starting to see as you said expansion on the margin front. So you know never declare victory in the third inning of the game, but relative to what we put out there for Investor day, we're off to a really good start feeling feeling really good about it.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: My next question is from the <unk>.
Speaker Change: <unk> <unk>. Please go ahead.
Speaker Change: Yeah. Thank you good morning, I'm, sorry, if I might've your motor touched on this I joined late.
Speaker Change: But I think you'd.
Speaker Change: Come in and <unk>, you're optimistic on right it looks sales or to become a bigger part of your your mix could you talk about you know kind of kind of how you see the longterm dynamic between <unk> and fixed indexed annuities and how your distribution kind of matches up to <unk>.
Speaker Change: Support one of the other how it may evolve over time to support the Royal a sales if it needs to.
Speaker Change: Sure Yeah, no great question, Mark So I'd say a couple of things do you think about a fixed index annuity.
Speaker Change: It's got a you know a floor of zero and an opportunity to participate in markets, but by definition, it's got a capped upsized.
Speaker Change: <unk> allows someone to take a risk level below zero right typically in the form of a buffer say 510, even 20 per cent.
Speaker Change: Downside absorbed.
Speaker Change: By the carrier with just allows for a lot more upside. So uhm typically it's a younger demographic if someone will either with a higher risk tolerance or in many cases of younger demographics. So it's a market. We've never played in it all right and so all of this is greenfield and really should be incremental.
Speaker Change: Sales and incremental margin for us so in any other from distribution channel perspective, not surprisingly <unk>.
Speaker Change: Tends to be more popular in the broker dealer channel, whereas F. I as her tend to be more popular in the I M. O and then the bank channels and so a lot of our activity and adding distribution partner, starting a coupla years ago had been to add more broker dealers in anticipation of the arrival launch.
Speaker Change: So hopefully that helps a little bit.
Speaker Change: <unk> younger demographic quiet with a higher risk tolerance I've said this before you know it opens up a massive pool because you know.
Speaker Change: You have to ask the question.
Speaker Change: Yes, everybody should probably on some mutual funds if they've got a very long term <unk>.
Speaker Change: Time horizon, and some equities would that comes with a tremendous amount.
Speaker Change: The amount of volatility and so I think a lot of people like the peace of mind of knowing that there is some constrained outcomes and so yeah. This is this is a category, but I think for the industry is going to be really attractive, but lastly, I will say, it's playing to the same strikes.
Speaker Change: Again, we're just buying a different colored option with a wider.
Speaker Change: Band about of outcomes, but it's at the end of the day, it's spread based product and the key drivers that have made a successful me up I space.
Speaker Change: Should translate in the wireless space.
Speaker Change: And then I think.
Speaker Change:
Speaker Change: Somewhat competitor of yours is talk to a bit more about.
Speaker Change: Integrating their annuity products into these retirement the data <unk>.
Speaker Change: Starting to see some.
Speaker Change: Movement there.
Speaker Change: Can you talk on that opportunity, whether that's something that you're pursuing directly.
Speaker Change: As a another distribution channels source of growth.
Speaker Change: Yeah, I would say, it's not top of the queue for US there are a lot of it is you know complications within and challenges within.
Speaker Change: That market, it's it's been kind of slow boat coming I do think the.
Speaker Change: The products can have a big impact for for society to be able to do that for folks to be able to participate in their four one K plans, but I would say right now with all of the distribution opportunities. We have both an institutional and retail that feels like a better priority for us, but you know we continue to look at it and why.
Speaker Change: To stay close to it.
Speaker Change: If appropriate we think that's a market we could compete in if we if we choose to.
Speaker Change: Yeah would you think the economics at this point or not.
Speaker Change: Not quite there yet or is it just.
Speaker Change: There's not as much demand and that 401k Margaret.
Speaker Change: Yeah, I'm, probably not the best expert on this topic, although I studied it uhm years ago at a different firm quite.
Speaker Change: Intensively I think the biggest issues are record keeping.
Speaker Change: So it's kind of the expensive complications getting plan sponsors too adopted and more importantly record keepers to pay for all the enhancements to make it work and then the other is for it to be get broad based acceptance you do end up with a lot of smaller.
Speaker Change: Smaller accounts now that can be solved for through some sort of omnibus structure, but.
Speaker Change: But yeah. It's just it's just a little more complicated I would also think carriers with a big recognise brand name and or retirement plans presence of their own probably will have a little bit of a leg out there.
Speaker Change: Hopefully that'll yeah understood.
Speaker Change: Yeah. It sure does thank you appreciate it.
Speaker Change: Thank you <unk>.
Speaker Change: Our next question comes from the line of <unk> Carmichael Autonomous. Please go ahead.
Wesley Collin Carmichael: Hey, Thanks for taking my call up you had a question on the capital consumption on the Rhode Island product versus an F. I E or M. I <unk> I imagine there's the same C. Four charge on the premium but when you look at our D. C is is the right product favorable relative to a fixed annuity.
Speaker Change: Fail or is there not much of a difference there.
Speaker Change: When do you want a tackle that one sir.
Speaker Change: Sure. Thank you yeah, there's not much of a difference as Chris said it.
Speaker Change: Basically the difference between the product is the option that we purchase on there is really no difference in a capital charge on that.
Speaker Change: Okay.
Speaker Change: Great and then it just made me just following up on on the D. O L. In the final rule, obviously, your new business origination capabilities are much more diversified than the last time, we saw this but I think you mentioned, 15% or so of gross sales might be the most impacted <unk> can you maybe just give us any additional perspective on what change. This time around with this version and if there's any way to kind of dimension that potential.
Speaker Change: You'll experience impact that'd be that'd be great.
Speaker Change: Yeah, I mean, the honest answer is not much changed and I think that's the frustration of the industry as it hits eerily similar to the rule that was put forth.
Speaker Change: Before so there will be enhanced compliance expense I don't think any of it is get a rise to a level that's gonna cause us to you.
Speaker Change: Question before cast so we've put out et cetera, So uhm I put it more in the.
Speaker Change: You know it's annoying the number of people feel that it's unnecessary given all the other regulations that are in place the bigger concern that I have which I mentioned in the notes.
Speaker Change: Is it could be an impediment for agents surveying the middle market and just moving upstream I do think I should take a time, that's gonna take awhile for that impact to be felt and so again, given you know we'd probably have more probably we have more sales opportunity.
Speaker Change: Then then capital right now that's the constraint does not opportunity for sale. So again, there's there's nothing in this is gonna cause us to change.
Speaker Change: Our plans the the concern on my end is it will be impactful to certain agents and I think I'm.
Speaker Change: <unk> it would be disproportionate impactful too agents that are serving in the middle market.
Speaker Change: I don't know, whether if there's anything you want to add to that.
Speaker Change: I think I'll be just add less.
Speaker Change: Biggest difference is that F. M G is different.
Speaker Change: Back in the original rule, we weren't in the bank and broker dealer market. So that that has significantly improved.
Speaker Change: First time, just at Christmas talking about in L. A.
Speaker Change: It would be impacted.
Speaker Change: Yeah, and then we also went into P or T or F. A b N market. So you know if you go back five years ago, we were doing probably three billing themselves. It was Paul.
Speaker Change: Through independent agents and now as you see where you know 13 billion plus and would continue to grow the I M O space and a number of those imo's I think actually will thrive. During this because they are fairly sophisticated it may force and to pay independent agents to need to affiliate with one eye above.
Speaker Change: Versus multiple.
Speaker Change: So I think I think the best players actually look at this and say.
Speaker Change: You know we can.
Speaker Change: We can we can build some nice moods for ourself uhm.
Speaker Change: Uhm adapting to this but there's just a lot of agents and a lot of smaller agents, calling a middle market clients that.
Speaker Change: This is gonna be quite disruptive for.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, this will conclude a question and answer session.
Speaker Change: I will now turn the conference back over to see Ya, Chris Blunt for his closing remarks, Chris.
Christopher Owsley Blunt: Great. Thanks, everybody, but we're really pleased with our overall results, which demonstrates the competitive strength and resilience of our business <unk> physician to perform through the cycle and were successfully executing.
Christopher Owsley Blunt: On our strategic priorities to January continued growth and profitability.
Christopher Owsley Blunt: Thanks for joining us we appreciate your interest enough in G and look forward to updating you on our second quarter earnings call.
Speaker Change: The confidence of S. N. G has now concluded. Thank you for your participation you may now disconnect your lines.
Speaker Change: [noise].