Q2 2024 Principal Financial Group Inc Earnings Call

Operator: Good morning, and welcome to the Principal Financial Group second quarter 2024 financial results conference call. There will be a question and answer period after the speakers have completed their prepared remarks. If you would like to ask a question at that time, simply press the star and the number one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Unknown Executive: Good morning and welcome to the Principal Financial Group, 2nd Quarter, 2024 Financial Results Conference Call. There will be a question and answer period after the speakers have completed their prepared remarks. If you would like to ask a question at that time, simply press star and the number one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Good morning, and welcome to the principal financial Group second quarter 2024 financial results Conference call.

There will be a question and answer period. After the speakers have completed their prepared remarks.

If you would like to ask a question at that time simply press star and the number one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

Unknown Executive: We would ask that you be respectful of others and limit your questions to one and a follow-up. So we can get to everyone in the queue.

We would ask that you'd be respectful of others and limit your questions to one and a follow up so we can get to everyone. In the queue I would now like to turn the conference call over to Humphrey Lee Vice President of Investor Relations.

Humphrey Lee: I would now like to turn the conference call over to Humphrey Lee, Vice President of Investor Relations. Thank you and good morning. Welcome to Principal Financial Group's 2nd quarter, 2024 earnings conference call. As always, materials related to today's calls are available on our website at investors.principle.com.

Operator: We would ask that you be respectful of others and limit your questions to one and a follow-up so we can get to everyone in the queue. I would now like to turn the conference call over to Humphrey Lee, Vice President of Investor Relations. Thank you and good morning. Welcome to Principal Financial Group's second quarter 2024 earnings conference. As always, materials related to today's call are available on our website at investors.principal.com. Following a reading of the Safe Harbor Provision,

Humphrey Lee: CEO Dan Houston and CFO Deanna Strable will deliver some prepared remarks, and we will then open up the call for questions. Other members of senior management will also be available for Q&A. Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, and the company does not revise or update them to reflect new information, subsequent events, or changes in strategy.

Humphrey Lee: Thank you and good morning, welcome to principal financial group's second quarter 2024 earnings Conference call.

Speaker Change: As always materials related to today's call are available on our website at investors <unk> principal dot com following a reading of the safe Harbor provision CEO.

Unknown Executive: Following a reading of the Safe Habba Provision, CEO Dan Hauston and CFLDNS Rebo will deliver some prepared remarks. We will then open up the call for questions. Other members of senior management will also be available for Q&A.

Speaker Change: Oh, Dan Houston, and CFO, Deanna Strabo will deliver some prepared remarks.

Speaker Change: We will then open up the call for questions.

Speaker Change: The members of senior management will also be available for Q&A.

Unknown Executive: Some of the comments made during this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. The company does not revise or update them to reflect new information, subsequent events, or changes in strategy, risks, and uncertainties that could cause actual results. To differ materially from those expressed or implied, I'll discuss in the company's most recent annual report on Form 10-K, filed by the company with the U.S. Securities and Exchange Commission.

Humphrey Lee: Risks and uncertainties that could cause actual results to differ materially from those expressed or implied are discussed in the company's most recent annual report on Form 10-K, filed by the company with the U.S. Securities and Exchange Commission. Additionally, some of the comments made during this conference call may refer to non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures may be found in our earnings release, financial supplement, and slides presentation. As a reminder, we are hosting our 2024 Investor Day on Monday, November 18th in New York. We look forward to seeing many of you at this event.

Speaker Change: Some of the comments made during this conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act. The company does not revise or update them to reflect new information subsequent events or changes in strategy risks and uncertainties that could cause actual results to differ materially.

Speaker Change: Really from those expressed or implied are discussed in the company's most recent annual report on Form 10-K filed by the company with the U S Securities and Exchange Commission. Additionally, some of the comments made during this conference call may refer to non-GAAP financial measures.

Unknown Executive: Additionally, some of the comments made during this conference call may refer to non-GAAP financial measures. Reconciliation of the non-GAAP financial measures to the most directly comparable U.S. Gap financial measures may be found in our earnings release, financial supplements, and slides presentation.

Speaker Change: Reconciliations of the non-GAAP financial measures to the most directly comparable U S. GAAP financial measures maybe found in our earnings release financial supplement and slide presentation. As a reminder, we are hosting our 2020 for Investor Day on Monday November 18th in New York.

Unknown Executive: As a reminder, we are hosting our 2024 Invested Day on Monday, November 18, in New York. We look forward to seeing many of you at this event.

Speaker Change: We look forward to seeing many of you at this event.

Daniel Houston: Dan? Thanks, Humphrey, and welcome to everyone on the call. This morning, I will discuss key milestones and highlights from the second quarter as we continue executing our strategy with discipline and focus to deliver strong results for our customers and shareholders. Dan will follow with additional details on our results and our capital position. Starting with results for the second quarter, we reported $386 million of non-GAAP operating earnings, or $1.63 per diluted share, a 7% increase in EPS over the second quarter of 2023. The year-over-year growth in earnings was driven by a 6% increase in net revenue due to business growth and favorable markets compared to a year ago.

Speaker Change: Dan.

Daniel Joseph Houston: Thanks, Humphrey, and welcome to everyone on the call. This morning, I will discuss key milestones and highlights from the second quarter, as we continue executing our strategy with discipline and focus to deliver strong results for our customers and shareholders. Deanna will follow with additional details on our results and our capital position. Starting with the results for the second quarter, we reported $386 million of non-GAAP operating earnings, or $1.63 per diluted share, a 7% increase in EPS over the second quarter of 2023.

Daniel Joseph Houston: Thanks, Humphrey and welcome to everyone on the call.

Daniel Joseph Houston: Good morning, I will discuss key milestones and highlights from the second quarter as we continue executing our strategy with discipline and focus to deliver strong results for our customers and shareholders.

Speaker Change: Deanna will follow with additional details on our results and our capital position.

Deanna Dawnette Strable: Starting with our results for the second quarter, we reported $386 million non-GAAP operating earnings were $1.63 per diluted share a 7% increase in EPS over the second quarter of 2023.

Daniel Joseph Houston: The year-over-year growth in earnings was driven by a 6% increase in net revenue due to business growth in favorable markets compared to a year ago. Having said this, we are in a very bifurcated market environment. While the performance of the S&P 500 has been very strong this year, performance has been heavily concentrated in a handful of large technology stocks. Meanwhile, mid-cap, small-cap, and international equities have lagged the market-weighted S&P 500 throughout the first half of 2024 and were mostly negative in the second quarter.

Deanna Dawnette Strable: The year over year growth in earnings was driven by a 6% increase in net revenue due to business growth and favorable markets compared to a year ago.

Daniel Houston: Having said this, we are in a very bifurcated market environment. While performance of the S&P 500 has been very strong this year, performance has been heavily concentrated in a handful of large technology stocks. Meanwhile, mid cap, small cap, and international equities have lagged the market-weighted S&P 500 throughout the first half of 2024, and we are mostly negative in the second quarter. This is impacted diversified active asset managers, like Principal. Market performance for our total managed AUM was 0.4% in the second quarter, and 8% on a trailing 12 month basis. Despite this mixed market performance, we have confidence in the second half of the year, and we expect our four-year results to be aligned with our 2024 outlook.

Deanna Dawnette Strable: Having said this we are in a very bifurcated market environment, while performance of the S&P 500 has been very strong. This year performance has been heavily concentrated in a handful of large technology stocks.

Deanna Dawnette Strable: Meanwhile, mid cap small cap and international equities have lagged the market weighted S&P 500 throughout the first half of 'twenty 'twenty, four and were mostly negative in the second quarter.

Daniel Joseph Houston: This has impacted diversified active asset managers like Principal. Market performance for our total managed AUM was 0.4% in the second quarter and 8% on a trailing 12-month basis. Despite this mixed market performance, we have confidence in the second half of the year, and we expect our full year results to be aligned with our 2024 outlook. We returned $415 million of capital to shareholders in the second quarter, including $250 million of share repurchases.

Speaker Change: This has impacted diversified active asset managers like principal market performance for our total managed AUM was 0.4% in the second quarter and 8% on a trailing 12 month basis.

Speaker Change: Despite this mixed market performance, we have confidence in the second half of the year and we expect our full year results to be aligned with our 2020 for outlook.

Daniel Houston: We return $415 million of capital to shareholders in the second quarter, including $250 million of share repurchases. We also raise our common stock dividend for the fifth consecutive quarter, aligning with our targeted 40% dividend payout ratio. We ended the quarter with total company managed AUM of $699 billion, foreign currency translation headwinds of $9 billion in the quarter, and $20 billion over the last 12 months impacted AUM.

Speaker Change: We returned $415 million of capital to shareholders in the second quarter, including $250 million of share repurchases we.

Daniel Joseph Houston: We also raised our common stock dividend for the fifth consecutive quarter, aligning with our targeted 40% dividend payout ratio. We ended the quarter with total company-managed AUM of $699 billion. Foreign currency Translation headwinds of $9 billion in the quarter and $20 billion over the last 12 months impacted AUM.

Speaker Change: We also raised our common stock dividend for the fifth consecutive quarter aligning with our targeted 40% dividend payout ratio.

Speaker Change: We ended the quarter with total company managed AUM of $699 billion.

Speaker Change: Foreign currency translation headwinds of $9 billion in the quarter and $20 billion over the last 12 months impacted AUM.

Daniel Houston: Now turning to the businesses. In retirement, we continue to experience positive fundamentals; reoccurring deposits increased by more than 7% compared to a year ago quarter. This was driven by 10% growth in reoccurring deposits for small and mid-size businesses, as well as strong growth and average. This was again driven by the growth in the SMB market. Contract retention has improved significantly and is helping to offset elevated participant withdraws in the second quarter. withdraws are higher in the quarter primarily due to impact of favorable markets on account values, along with a slight increase in withdrawal rates. We generated another strong quarter of pension risk transfer sales, with nearly $1 billion in the second quarter. Year-to-date sales have surpassed $1.7 billion and attractive returns.

Daniel Joseph Houston: Now turning to the business, in retirement, we continue to experience positive fundamentals. Reoccurring deposits increased by more than 7% compared to a year ago quarter. This was driven by 10% growth in reoccurring deposits for small and mid-sized businesses, as well as strong growth in average participant deferrals and employer matches across the entire block. While year-over-year plan sales have been impacted by fewer large plans in motion, we continue to generate strong growth in transfer deposits, which were up 13% in the quarter.

Speaker Change: Now turning to the businesses and.

Speaker Change: In retirement, we continue to experience positive fundamentals reoccurring deposits increased by more than 7% compared to a year ago quarter.

Speaker Change: This was driven by 10% growth in reoccurring deposits for small and mid size businesses as well as strong growth in average participant deferrals and employer matches across the entire block.

While year over year planned sales have been impacted by fewer large plans in motion. We continued to generate strong growth in transfer deposits, which were up 13% in the quarter.

Daniel Joseph Houston: This was again driven by the growth in the S&B market. Contract retention has improved significantly and is helping to offset elevated participant withdrawals in the second quarter. Withdrawals were higher in the quarter primarily due to the impact of favorable markets on account values along with a slight increase in withdrawal rates.

Speaker Change: This was again driven by the growth in the SMB market.

Speaker Change: Contract retention has improved significantly and is helping to offset elevated participant withdrawals in the second quarter.

Speaker Change: Withdrawals are higher in the quarter, primarily due to the impact of favorable markets on account values, along with a slight increase in withdrawal rates.

Daniel Joseph Houston: We generated another strong quarter of pension risk transfer sales. With nearly $1 billion in the second quarter, year-to-date sales have surpassed $1.7 billion at attractive returns. Importantly, our Defined Benefits business continues to be a valuable source of PRT new business, with nearly 25% of our year-to-date contracts coming from existing Defined Benefit customer relationships. We remain an industry leader in PRT, ranking third in both premium and contracts, according to Limerick's first quarter report.

Speaker Change: We generated another strong quarter of pension risk transfer sales with nearly $1 billion in the second quarter year to date sales have surpassed $1.7 billion at attractive returns and importantly, our defined benefits business continues to be a valuable source of PRT, new business with nearly 25% of our year to date contracts coming.

Daniel Houston: Importantly, our defined benefits business continues to be a valuable source of PRT, new business, with nearly 25% of our year-to-date contracts coming from existing defined benefit customer relationships. We remain an industry leader in PRT, ranking third in both premium and contracts according to LEMRUS's first quarter report. We also strengthen our leadership position in ESOP and the second quarter announcing the acquisition of a census's Employee Stock Ownership Plan business. This acquisition closed on July 1st, solidifying our position as the number one ESOP provider in the U.S. with a 30% market share. We added 800 more employer customers and over 165,000 new ESOP participants.

Speaker Change: From existing defined benefit customer relationships, we remain an industry leader in PRT ranking third in both premium and contracts. According to <unk> first quarter report, we also strengthened our leadership position in Aesop and the second quarter announcing the acquisition of our censuses employee stock ownership plan business.

Daniel Joseph Houston: We also strengthened our leadership position in ESOP in the second quarter, announcing the acquisition of a census' Employee Stock Ownership Plan business. This acquisition closed on July 1st, solidifying our position as the number one ESOP provider in the U.S. with a 30% market share.

Speaker Change: This acquisition closed on July 1st solidifying our position as the number one aesop provider in the U S with a 30% market share. We added 800 more employer customers and over 165000, New Aesop participants. This acquisition is aligned with our focus on small to medium sized businesses and expands.

Daniel Joseph Houston: We added 800 more employer customers and over 165,000 new ESOP participants. This acquisition is aligned with our focus on small to medium-sized businesses and expands our current ESOP offering, a critical piece of our full suite of workplace retirement offerings. It also adds talent to our workforce and provides greater value and enhanced products and services for our customers. Turning to principal asset management, PGI continues to build on the sales momentum from the first quarter.

Daniel Houston: This acquisition is aligned with our focus on small to medium-sized businesses and expands our current ESOP offering, a critical piece of our full suite of workplace retirement offerings. It also adds talent to our workforce and provides greater value and enhanced products and services for our customers.

Speaker Change: Current aesop offering a critical piece of our full suite of workplace retirement offerings. It also adds talent to our workforce and provides greater value and enhanced products and services for our customers.

Daniel Houston: Turning to principal asset management, PGI continues to build on the sales momentum from the first quarter. We are seeing continued strong retail demand for our suite of mutual funds and ETF offerings. On the institutional side, private real estate and specially fixed income capabilities remain in demand. We add approximately 500 million dollars of net cash flow into private real estate. This level of net cash flow is consistent with the average over the past six quarters.

Speaker Change: Turning to principal asset management Pgi continues to build on the sales momentum from the first quarter. We are seeing continued strong retail demand for our suite of mutual funds and ETF offerings.

Daniel Joseph Houston: We are seeing continued strong retail demand for our suite of mutual funds and ETF offerings. On the institutional side, private real estate and special fixed income capabilities remain in demand. We add approximately $500 million of net cash flow into private real estate. This level of net cash flow is consistent with the average over the past six quarters. Despite the second quarter momentum, we reported a negative net cash flow of just over $2 billion.

Speaker Change: On the institutional side private real estate and specialty fixed income capabilities remain in demand, we had approximately $500 million of net cash flow into private real estate. This level of net cash flow is consistent with the average over the past six quarters.

Daniel Houston: Partners. Despite the second quarter momentum, we reported negative net cash flow of just over $2 billion. The net outflows was driven by a large, lower fee fixed income redemption from a corporate client, as well as stable value products outflows. We expect a second half of the year to improve as investors are increasingly looking to move money out of cash and into risk-based assets across both public and private markets. We continue to look for opportunities to invest for our clients to remain optimistic about this growing momentum. During the quarter, we launched the Principal Private Credit Fund, offering exposure to middle-market loans with enhanced yield and return to retail investors.

Speaker Change: Despite the second quarter momentum, we reported negative net cash flow of just over $2 billion. The net outflows was driven by a large lower fee fixed income redemption from our corporate clients as well as stable value products outflows, we expect a second half of the year to improve as investors are increasingly looking to move money out of cash in <unk>.

Daniel Joseph Houston: The net outflows were driven by a large, lower-fee, fixed income redemption from a corporate client as well as stable value product outflows. We expect the second half of the year to improve as investors are increasingly looking to move money out of cash and into risk-based assets across both public and private markets. We continue to look for opportunities to invest for our clients and remain optimistic about this growing momentum. During the quarter, we launched the Principal Private Credit Fund, offering exposure to middle market loans with enhanced yield and return to retail investors.

Speaker Change: The risk based assets across both public and private markets. We continue to look for opportunities to invest for our clients and remain optimistic about this growing momentum.

Speaker Change: During the quarter, we launched the principal private credit funds offering exposure to middle market loans with enhanced yield and return to retail investors.

Daniel Houston: We are also saying increased institutional interest in the team, resulting in $150 million of sales in the quarter. We also announced the launch of our new private infrastructure debt capability and the hiring of an industry veteran to lead this venture. These actions add to our expertise in public listed infrastructure, real estate debt, and alternative credit. Finally, we have enhanced our investment performance disclosure to include both equal-weighted and asset-weighted performance against the Morningstar peer group and composite benchmarks. We continue to be focused on providing strong long-term performance across our investment lineup.

Daniel Joseph Houston: We are also seeing increased institutional interest in the team, resulting in $150 million of sales in the quarter. We also announced the launch of our new private infrastructure debt capability and the hiring of an industry veteran to lead this venture. These actions add to our expertise in public-listed infrastructure, real estate debt, and alternative, Finally, we have enhanced our investment performance disclosure to include both equal weighted and asset weighted performance against the Morningstar Peer Group and composite benchmark. We continue to be focused on providing strong, long-term performance across our investment lineup. Principal International ended the quarter with $171 billion in total reported AUM.

Speaker Change: We are also seeing increased institutional interest in the team, resulting in a $150 million of sales in the quarter.

Speaker Change: We also announced the launch of our new private infrastructure debt capability and the hiring of an industry veteran to lead. This venture these actions add to our expertise in public listed infrastructure real estate debt and alternative credit.

Speaker Change: Finally, we have enhanced our investment performance disclosure to include both equal weighted and asset weighted performance against the Morningstar peer groups and composite benchmarks. We continue to be focused on providing strong long term performance across our investment lineup.

Daniel Houston: Principal International ended the quarter with $171 billion of total reported AUM. Favorable market performance was more than offset by foreign currency headwinds, primarily in Brazil. Net cash flow was slightly positive in the second quarter, with contributions from Southeast Asia and Hong Kong, offsetting small outflows in Latin America. As a reminder, flows are strongest in the first and third quarter for Principal International. Primarily due to the seasonality of sales in Brazil, we expect to have a strong net cash flow in the second half of the year. In benefits and protection, we generated above-market premium and fee growth and specially benefits.

Speaker Change: Principal international ended the quarter with $171 billion of total reported AUM favorable market performance was more than offset by foreign currency headwinds primarily in Brazil.

Daniel Joseph Houston: Favorable market performance was more than offset by foreign currency headwinds, primarily in Brazil. Net cash flow was slightly positive in the second quarter, with contributions from Southeast Asia and Hong Kong, offsetting small outflows in Latin America. As a reminder, flows are strongest in the first and third quarters for Principal International, primarily due to the seasonality of sales in Brazil. We expect to have a strong net cash flow in the second half of the year, and in Benefits and Protection, we generated above market premium and fee growth and specialty benefits.

Speaker Change: Net cash flow was slightly positive in the second quarter with contributions from southeast Asia, and Hong Kong offsetting small outflows in Latin America.

Speaker Change: As a reminder flows are strongest in the first and third quarter for principal international primarily due to the seasonality of sales in Brazil, we expect to have a strong net cash flow in the second half of the year and.

Speaker Change: And benefits and protection, we generated above market premium and fee growth in specialty benefits. This growth is being driven by record year to date sales and strong retention along with employment and wage growth once again more than half of our growth came from our net new business, demonstrating our competitive advantage and leadership position in the <unk>.

Daniel Houston: This growth is being driven by record year-to-date sales and strong retention, along with employment and wage growth. Once again, more than half of our growth came from our net new business, demonstrating our competitive advantage and leadership position, and the underserved small to mid-sized market. We continue to grow faster than the industry by deepening relationships with key distribution partners and with our customers. To highlight this, the average number of coverage is per-inforced customer continues to increase and now exceeds three coverage per group benefits customer for the first time. I'm excited about the opportunities across Principal and remain confident.

Daniel Joseph Houston: This growth is being driven by record year-to-date sales and strong retention, along with employment and wage growth. Once again, more than half of our growth came from our net new business, demonstrating our competitive advantage and leadership position in the underserved small to mid-sized market. We continue to grow faster than the industry by deepening relationships with key distribution partners and with our customers. To highlight this, the average number of coverages per enforced customer continues to increase and now exceeds three coverages per group benefits customer for the first time.

Speaker Change: Underserved small to mid sized market.

Speaker Change: We continue to grow faster than the industry by deepening our relationships with key distribution partners and with our customers to.

Speaker Change: To highlight this the average number of coverages per enforced customer continues to increase and now exceeds three coverage per group benefits customer for the first time.

Daniel Joseph Houston: I'm excited about the opportunities across principal and remain confident our focus on higher growth markets, combined with our integrated product portfolio and important distribution partnerships, will continue to create value and drive growth. I'm incredibly proud of the way our company and our 20,000 employees continue to meet the changing needs of approximately 64 million customers. We remain focused on providing access to financial security for more people, businesses, and communities around the world. Deanna?

Speaker Change: I'm excited about the opportunities to cross principle and remain confident our focus on higher growth markets combined with our integrated product portfolio, an important distribution partnerships will continue to create value and drive growth.

Daniel Houston: Our focus on higher growth markets combined with our integrated product portfolio and important distribution partnerships will continue to create value and drive growth.

Daniel Houston: Before turning it over to Deanna, I'd like to highlight that Principal celebrated its 145th anniversary earlier this month. I'm incredibly proud of the way our company and our 20,000 employees continue to meet the changing needs of approximately 64 million customers. We remain focused on providing access to financial security for more people, businesses, and communities around the globe.

Speaker Change: Before turning it over to Deanna I'd like to highlight that principal celebrated its 145th anniversary earlier. This month I'm incredibly proud of the way our company and our 20000 employees continue to meet the changing needs of approximately 64 million customers. We remain focused on providing access to financial security for more people.

Businesses and communities around the globe Diana.

Deanna Strable: Deanna?

Deanna Dawnette Strable: Thanks, Dan. Good morning to everyone on the call. This morning I'll share the key contributors to our financial performance for the quarter as well as details of our capital position. Second quarter reported net income was $353 million. Excluding exited business, net income was $356 million, with minimal credit losses of $25 million.

Deanna Strable: Thanks, Dan.

Deanna Strable: Good morning to everyone on the call. This morning, I'll share the key contributors to our financial performance for the quarter, as well as details of our capital positions.

Thanks, Dan Good morning to everyone on the call. This morning, I'll share the key contributors to our financial performance for the quarter as well as details of our capital position.

Deanna Strable: Action. Second quarter reported net income was $353 million; excluding exited business, net income was $356 million, with minimal credit losses of $25 million. Non-GAAP operating ROE of 13.1% improved by 80 basis points compared to the year-ago period. We continue to trend toward our 14-16% target. Excluding significant variances, second quarter non-GAAP operating earnings were $415 million or $1.76 per diluted share. EPS increased 4% compared to the second quarter of 2023. This was driven by top line growth and improved markets, partially offset by foreign currency translation impacts and a higher effective tax rate. During the quarter, we had one-time expenses, including state tax items and severance costs, impacting our results by approximately 9 cents per share.

Deanna Dawnette Strable: Second quarter reported net income was $353 million, excluding exited business net income was $356 million with minimal credit losses of $25 million non.

Deanna Dawnette Strable: Non-GAAP Operating ROE of 13.1% improved by 80 basis points compared to the year-ago period. We continue to trend toward our 14-16% target. Excluding significant variances, second quarter non-GAAP operating earnings were $415 million, or $1.76 per diluted share.

Deanna Dawnette Strable: non-GAAP operating ROE of 13, 1% improved by 80 basis points compared to the year ago period, we continue to trend toward our 14% to 16% target.

Deanna Dawnette Strable: Excluding significant variances second quarter non-GAAP operating earnings were $415 million or $1 76 per diluted share.

Deanna Dawnette Strable: EPS increased 4% compared to the second quarter of 2023. This was driven by top-line growth and improved markets, partially offset by foreign currency translation impacts and a higher effective tax rate. During the quarter, we had one-time expenses, including state tax items and severance costs, impacting our results by approximately $0.09 per share. These one-time expenses impacted both PGI and the corporate segment. While we are not considering these as significant variances, our second quarter earnings per share growth would have been over 9% compared to the second quarter of 2023, adjusting for these expenses. Foreign exchange rates continue to be a headwind to earnings compared to both the sequential and year-ago quarter as the U.S. dollar strengthened against Latin American currencies.

Deanna Dawnette Strable: EPS increased 4% compared to the second quarter of 2023. This was driven by topline growth and improve markets, partially offset by foreign currency translation impacts and a higher effective tax rate.

Deanna Dawnette Strable: During the quarter, we had one time expenses, including state tax items and severance costs impacting our results by approximately nine cents per share.

Deanna Strable: The one-time expenses impacted both PGI and the corporate segment. While we are not considering these as significant variances, our second quarter earnings per share growth would have been over 9% compared to the second quarter of 2023, adjusting for these expenses. Foreign exchange rates continue to be a headwind to earnings compared to both the sequential and year-ago quarter as the US dollar strengthened against Latin American currencies. Based on our earnings for the first half of 2024 and our forecast for the remainder of the year, we remain on track to deliver full-year EPS growth on both a reported and adjusted basis aligned with our 2024 guidance of 9 to 12%.

Deanna Dawnette Strable: The one time expenses impacted both pgi and the corporate segment.

Deanna Dawnette Strable: While we are not considering these are significant variances our second quarter earnings per share growth would have been over 9% compared to the second quarter of 2023 adjusting for these expenses.

Deanna Dawnette Strable: Foreign exchange rates continued to be a headwind to earnings compared to both the sequential and year ago quarter as the U S dollar strengthened against Latin American currencies.

Deanna Dawnette Strable: Based on our earnings for the first half of 2024 and our forecast for the remainder of the year, we remain on track to deliver full-year EPS growth on both a reported and adjusted basis aligned with our 2024 guidance of 9-12%. This implies strong growth across our businesses in the second half of the year. Turning to the significant variances for the quarter as detailed on slide 12, these impacted non-GAAP operating earnings by a net negative $38 million pre-tax, $29 million after-tax, and approximately $0.13 per diluted share.

Deanna Dawnette Strable: Based on our earnings for the first half of 'twenty 'twenty, four and our forecast for the remainder of the year. We remain on track to deliver full year EPS growth on both a reported and adjusted basis aligned with our 'twenty 'twenty four guidance of 9% to 12%. This implies strong growth across our businesses in the second half of the year.

Deanna Strable: This implies strong growth across our businesses in the second half of the year.

Deanna Strable: Turning to the significant variances for the quarter is detailed on slide 12. These impacted non-GAAP operating earnings by a net negative $38 million pre-tax, $29 million after tax, and approximately 13 cents per diluted share. Significant variances in the quarter include lower variable investment income in RIS and benefits and protection, unfavorable and CAHA performance in principle international, and a small gap only regulatory closed block dividend adjustment in life insurance. Variable investment income improves sequentially on stronger alternative returns. Real estate transactions were muted, and we had no pre-payment fees in the quarter. The second quarter non-GAAP operating earnings effective tax rate was higher than guided range.

Speaker Change: Turning to the significant variances for the quarter is detailed on slide 12. These impacted non-GAAP operating earnings by a net negative $38 million pretax $29 million after tax and approximately 13 cents per diluted share.

Deanna Dawnette Strable: Significant variances in the quarter include lower variable investment income in RAS and benefits and protection, unfavorable CAHE performance in Principal International, and a small gap-only regulatory closed block dividend adjustment in life insurance. However, variable investment income improved sequentially on stronger alternative returns. Real estate transactions were muted, and we had no prepayment fees in the quarter.

Deanna Dawnette Strable: Significant variances in the quarter include lower variable investment income and I asked them benefits and protection unfavorable <unk> performance in principal international and a small GAAP only regulatory closed block Devin and adjustment in life insurance variable investment income improve sequentially on stronger alternative returns.

Deanna Dawnette Strable: Real estate transactions were muted and we had no prepayment fees in the quarter.

Deanna Dawnette Strable: The second quarter non-GAAP operating earnings effective tax rate was higher than our guided range. This was primarily due to a decrease in the Iowa corporate tax rate resulting in a non-cash remeasurement of our deferred tax assets. While this impacted our tax rate in the current quarter, it is a net long-term benefit. For the full year, we still expect to be within the 17-20% guided range. Turning to the business units, the following comments exclude significant variances.

Deanna Dawnette Strable: The second quarter non-GAAP operating earnings effective tax rate was higher than our guided range. This was primarily due to a decrease in the Iowa corporate tax rate, resulting in a noncash remeasurement of our deferred tax assets.

Deanna Strable: This was primarily due to a decrease in the Iowa corporate tax rate, resulting in a non-cash remeasurement of our deferred tax assets. While this impacted our tax rate in the current quarter, it is a net long-term benefit. For the full year, we still expect to be within the 17 to 20 percent guided range.

Deanna Dawnette Strable: While this impacted our tax rate in the current quarter. It is a net long term benefit for the full year, we still expect to be within the 17% to 20% guided range.

Deanna Strable: Turning to the business units, the following comments exclude significant variances. RIS pre-tax operating earnings increased 10 percent over the second quarter of 2023, driven by growth in the business, higher net investment income, and favorable market performance. Net revenue grew by nearly 8 percent, and margins remained strong and at the high end of our guided range, while we continue to invest in the business to drive future growth. PGI's pre-tax operating earnings increased 2% over the second quarter of 2023. Higher management fees from increasing AUM were partially offset by the impact of recent redemptions, as well as immaterial performance fees.

Deanna Dawnette Strable: Turning to the business units the following comments excludes significant variances.

Deanna Dawnette Strable: RIS pre-tax operating earnings increased 10% over the second quarter of 2023, driven by growth in the business, higher net investment income, and favorable market performance. Net revenue grew by nearly 8%, and margins remain strong and at the high end of our guided range while we continue to invest in the business to drive future growth. PGI's pre-tax operating earnings increased 2% over the second quarter of 2023.

Speaker Change: Our I S pretax operating earnings increased 10% over the second quarter of 2023, driven by growth in the business higher net investment income and favorable market performance.

Speaker Change: Net revenue grew by nearly 8% and margins remained strong and at the high end of our guided range, while we continue to invest in the business to drive future growth.

Speaker Change: Pgi's pre tax operating earnings increased 2% over the second quarter of 2023 higher management fees from increasing AUM or partially offset by the impact of recent redemptions as well as immaterial performance fees.

Deanna Dawnette Strable: Higher management fees from increasing AUM were partially offset by the impact of recent redemptions as well as immaterial performance fees. Adjusted margin of approximately 35% is flat relative to the year-ago quarter, an increase from a seasonal low in the first quarter. In the quarter, earnings and margins were impacted by approximately $6 million of severance and other one-time expenses. For Principal International, pre-tax operating earnings decreased by 7% compared to the second quarter of 2023. On a constant currency basis, operating earnings were flat.

Speaker Change: Adjusted margin of approximately 35% is flat relative to the year ago quarter and increased from a seasonal low in the first quarter in the corner earnings and margins were impacted by approximately $6 million of severance and other one time expenses.

Deanna Strable: In Principal International, pre-tax operating earnings decreased by 7% compared to the second quarter of 2023. On a constant currency basis, operating earnings were flat. Strong growth in Latin America was offset by lower earnings from Asia. We are starting to see improvements in the macro climate in Asia. Combined with the continued strong performance in Latin America, we feel very good about a strong second half of the year. Special benefits pre-tax operating earnings increased 11% from the second quarter of 2023. This was driven by continued growth in the business and more favorable underwriting experience. Underwriting results improved by 50 basis points compared to a year ago and highlights the diversification across product lines.

Speaker Change: In principal international pre tax operating earnings decreased by 7% compared to the second quarter of 2023.

Speaker Change: On a constant currency basis operating earnings were flat.

Deanna Dawnette Strable: Strong growth in Latin America was offset by lower earnings from Asia. However, we are starting to see improvements in the macroclimate in Asia. Combined with the continued strong performance in Latin America, we feel very good about a strong second half of the year. Specialty benefits pre-tax operating earnings increased 11% from the second quarter of 2023. This was driven by continued growth in the business and more favorable underwriting experience. Underwriting results improved by 50 basis points compared to a year ago and highlight the diversification across product lines. Improved results in group life and group disability more than offset the higher dental seasonality.

Speaker Change: Growth in Latin America was offset by lower earnings from Asia.

Speaker Change: We are starting to see improvements in the macro climate in Asia combined with the continued strong performance in Latin America, we feel very good about our strong second half of the year.

Speaker Change: Specialty benefits pre tax operating earnings increased 11% from the second quarter of 2023. This was driven by continued growth in the business and more favorable underwriting experience.

Speaker Change: Underwriting results improved by 50 basis points compared to a year ago and highlights the diversification across product lines improved results in group life and group disability more than offset the higher dental seasonality, we expect the seasonality to moderate in the second half of the year.

Deanna Strable: Improve results in group life and group disability more than offset the higher dental seasonality. We expect a seasonality to moderate in the second half of the year. In life insurance, we negotiated two risk-reducing YRT re-insurance contracts in the quarter for our existing business as well as our transacted ULSG block. These actions locked in guaranteed rates and reduced our overall YRT risk, resulting in an immaterial impact on earnings. Excluding the impact of these YRT-related activities, premium and fees grew 4% compared to the year-ago quarter at the top of our guidance range. This was driven by continued business market strength, where premium fees grew 15% in the quarter.

Deanna Dawnette Strable: We expect the seasonality to moderate in the second half of the year. In life insurance, we negotiated two risk-reducing YRT reinsurance contracts in the quarter for our existing business as well as our transacted ULSG blocks. These actions locked in guaranteed rates and reduced our overall YRT risk, resulting in an immaterial impact on earnings.

Speaker Change: And life insurance, we negotiated to risk, reducing why our T reinsurance contracts in the quarter for our existing business as well as our transacted you ask G block.

Speaker Change: These actions locked in guaranteed rates and reduced our overall wire T risk, resulting in an immaterial impact on earnings.

Deanna Dawnette Strable: Excluding the impact of these YRT-related activities, premium and fees grew 4% compared to the year-ago quarter, at the top of our guidance range. This was driven by continued business market strength, where premium fees grew 15% in the quarter. Across the businesses, we remain confident in delivering on our revenue growth and margin guidance for the full year, anchored to our long-term financial targets. Turning to capital and liquidity, after thoughtful evaluation of our capital levels based on our business mix and capital at risk profile, we have revised our RBC target to a range of 375 to 400 percent.

Speaker Change: Excluding the impact of these wire T related activities premium and fees grew 4% compared to the year ago quarter at the top of our guidance range.

Speaker Change: This was driven by continued business market strength, where premium fees grew 15% in the quarter.

Deanna Strable: Across the businesses, we remain confident in delivering on our revenue growth and margin guidance for the full year, anchored to our long-term financial targets. Turning to capital and liquidity after thoughtful evaluation of our capital levels based on our business mix and capital-at-risk profile, we have revised our RBC target to a range of 375 to 400%. We believe this new target is more suitable for our liability profile and gives us additional flexibility to manage our capital based on external conditions and new business opportunities. We have no immediate plan to lower our RBC level and will operate prudently within this range.

Speaker Change: Yeah.

Speaker Change: Across our businesses, we remain confident in delivering on our revenue growth and margin guidance for the full year anchored to our long term financial targets.

Speaker Change: Turning to capital and liquidity after thoughtful evaluation of our capital levels based on our business mix and capital at risk profile, we have revised our RBC target to a range of 375% to 400%.

Deanna Dawnette Strable: We believe this new target is more suitable for our liability profile and gives us additional flexibility to manage our capital based on external conditions and new business opportunities. We have no immediate plan to lower our RBC level and will operate prudently within this range. Our estimate of the second quarter RBC ratio was 405%.

Speaker Change: We believe this new target is more suitable for our liability profile and gives us additional flexibility to manage our capital based on external conditions and new business opportunities.

Speaker Change: We have no immediate plan to lower our RBC level and will operate prudently within this range our estimate of second quarter RBC ratio was 405%.

Deanna Strable: Our estimate of second quarter RBC ratio was 405%. Based on this new target, we have approximately $1.6 billion of excess and available capital, including approximately $800 million at the holding company, $450 million excess above 375% RBC, and $300 million in our subsidiaries. As shown on slide three, we returned $415 million to shareholders in the second quarter, including $250 million of share repurchases and $165 million of common stock dividends. This brings our year-to-date capital return to nearly $800 million. We expect to deliver on our targeted 75 to 85% free capital flow for the full year. As discussed on previous calls, due to timing of capital generation, free capital flow tends to increase throughout the year.

Deanna Dawnette Strable: Based on this new target, we have approximately $1.6 billion of excess and available capital, including approximately $800 million at the holding company, $450 million excess above 375% RBC, and $300 million in our subsidiaries. As shown on slide 3, we returned $415 million to shareholders in the second quarter, including $250 million of share repurchases and $165 million of common stock dividends. This brings our year-to-date capital return to nearly $800 million. We expect to deliver on our targeted 75-85% free capital flow for the full year.

Speaker Change: Based on this new target, we have approximately $1.6 billion of excess and available capital, including approximately $800 million at the holding company $450 million excess above, 375% RBC and $300 million in our subsidiaries.

Speaker Change: As shown on slide three we returned $415 million to shareholders in the second quarter, including $250 million of share repurchases and $165 million of common stock dividends.

Speaker Change: This brings our year to date capital return to nearly $800 million.

Speaker Change: We expect to deliver on our targeted 75% to 85% free capital flow for the full year as discussed on previous calls due to timing of capital generation free capital flow tends to increase throughout the year.

Deanna Dawnette Strable: As discussed on previous calls, due to the timing of capital generation, free capital flow tends to increase throughout the year. We are committed to returning excess capital to shareholders and continue to expect $1.5 to $1.8 billion of capital deployments for the full year, including $800 million to $1.1 billion of share repurchases. The previously mentioned ESOP acquisition had an immaterial impact on our capital deployment plan.

Deanna Strable: We are committed to returning excess capital to shareholders and continue to expect 1.5 to 1.8 million dollars of capital deployments for the full year. Between 800 million to 1.1 billion dollars of sharey purchases, the previously mentioned ESOP acquisition had an immaterial impact to our capital deployment plans.

Speaker Change: We are committed to returning excess capital to shareholders and continue to expect $1.5 billion to $1.8 billion of capital deployments for the full year, including 800 million to $1.1 billion of share repurchases. The previously mentioned Aesop acquisition had an immaterial impact to our capital deployment plan.

Speaker Change: <unk>.

Deanna Strable: Last night we announced a 72 cent common stock dividend payable in the second quarter, a 1 cent increase from the dividend paid in the second quarter, and an 11% increase over the third quarter 2023 dividend. This continues to align with our targeted 40% dividend payout ratio and demonstrates our confidence in continued growth and overall performance. We remain focused on maintaining our capital and liquidity targets at both a life company and the holding company and will continue a balanced and disciplined approach to capital deployment. Our investment portfolio remains high quality, aligned with our liability profile, and well positioned for a variety of economic conditions.

Deanna Dawnette Strable: Last night, we announced a $0.72 Common Stock Dividend payable in the second quarter, a $0.01 increase from the dividend paid in the second quarter, and an 11% increase over the third quarter 2023 dividend. This continues to align with our targeted 40% dividend payout ratio and demonstrates our confidence in continued growth and overall performance. We remain focused on maintaining our capital and liquidity targets at both the life company and the holding company and will continue a balanced and disciplined approach to capital deployment. Our investment portfolio remains high-quality, aligned with our liability profile, and well-positioned for a variety of economic conditions. The Commercial Mortgage Loan Portfolio remains healthy.

Speaker Change: Last night, we announced a 72 sat common stock dividend payable in the second quarter, a one cent increase from the dividend paid in the second quarter and an 11% increase over the third quarter 2023 dividend.

Speaker Change: This continues to align with our targeted 40% dividend payout ratio and demonstrates our confidence in continued growth and overall performance.

Speaker Change: We remain focused on maintaining our capital and liquidity targets at both the life company and the holding company and will continue a balanced and disciplined approach to capital deployment.

Speaker Change: Our investment portfolio remains high quality aligned with our liability profile and well positioned for a variety of economic conditions, the commercial mortgage loan portfolio remains healthy.

Deanna Strable: The commercial mortgage loan portfolio remains healthy. Coming into the year, we had 510 million dollars of office loan maturities in 2024. All maturities to date have been paid off or resolved, and we have $290 million remaining. The underlying metrics on these loans remain strong, and we continue to work with our borrowers to pay off or refinance the remaining maturities.

Operator: Coming into the year, we had $510 million of office loan maturities in 2024. All maturities to date have been paid off or resolved, and we have $290 million remaining. The underlying metrics on these loans remain strong, and we continue to work with our borrowers to pay off or refinance the remaining maturities. In closing, we are confident of our ability to deliver on our Enterprise 2024 target. These include a 9-12% growth in earnings per share, increasing return on equity, and 75-85% free capital flow conversion.

Speaker Change: Coming into the year, we had $510 million of office all maturities in 'twenty 'twenty four.

Speaker Change: All maturities to date have been paid off are resolved and we have $290 million remaining.

Speaker Change: The underlying metrics on these loans remained strong and we continue to work with our borrowers to pay off or refinance the remaining maturities.

Deanna Strable: In closing, we are confident of our ability to deliver on our enterprise 2024 targets. These include a 9 to 12% growth in earnings per share, increasing return on equity, and 75 to 85% free capital flow conversion. We are encouraged by the underlying fundamentals of our businesses and expect growth to accelerate in the second half of the year. We are grounded in our growth drivers of retirement, asset management, and benefits and protection and executing on a strategy focused on continuing to drive long-term shareholder value.

Speaker Change: In closing we are confident of our ability to deliver on our enterprise 'twenty 'twenty four targets. These include a 9% to 12% growth in earnings per share increasing return on equity and 75% to 85% free capital flow conversion.

Operator: We are encouraged by the underlying fundamentals of our businesses and expect growth to accelerate in the second half of the year. We are grounded in our growth drivers of retirement, asset management, and benefits and protection and executing on a strategy focused on continuing to drive long-term shareholder value. This concludes our prepared remarks. Operator, please open the call for questions. At this time, I would like to remind everyone that to ask a question, press the star and then the number one on your telephone keypad.

Speaker Change: We are encouraged by the underlying fundamentals of our businesses and expect growth to accelerate in the second half of the year.

Speaker Change: We are grounded in our growth drivers of retirement asset management and benefits and protection and executing on a strategy focused on continuing to drive long term shareholder value.

Unknown Executive: This concludes our prepared remarks, operator.

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

Unknown Executive: Please open the call for questions. At this time, I would like to remind everyone that to ask a question, press star and then the number one on your telephone keypad. It will pause for just a moment to compile the Q&A roster.

Operator: We'll pause for just a moment to compile the Q&A roster. The first question comes from Joel Hurwitz of Dowling and Partners. Please go ahead. Hey, good morning.

Speaker Change: At this time I would like to remind everyone that to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.

Joel Hurwitz: The first question comes from Joel Horowitz of Downing and Partners. Please go ahead. Hey, good morning. In retirement, Firevenue looked a little light of what I was expecting, and it looks to be on some further fee rate compression. I know last quarter we discussed the impact of some of the business having non-assetized fees, but even factoring that, it looks like there's a bit of an acceleration of the fee rate decline. Anything unusual in the quarter or any other dynamic that I should be thinking about with retirement T levels?

Speaker Change: The.

Speaker Change: First question comes from Joel Horowitz of telling and partners. Please go ahead.

Joel Hurwitz: In retirement, fee revenue looked a little light on what I was expecting, and it looks to be on some further fee rate compression. I know last quarter we discussed the impact of some of the business having non-asset based fees, but even factoring that in, it looks like there was a bit of an acceleration of the fee rate decline. Anything unusual in the quarter? Any other dynamic that I should be thinking about with retirement fee levels? Yeah, good morning, Joel. I appreciate the question. I'll just have Chris go ahead and queue that up for you.

Hey, good morning in retirement fee revenue looked a little light of what I was expecting and it looks to be on some further fee rate compression I know last quarter, we discussed the impact of some of the business, having non asset based fees, but even factoring that and it looks like there was a bit of an acceleration of the fee rate decline anything unusual in the quarter any.

Speaker Change: Other dynamic that I should be thinking about with retirement fee levels.

Christopher Littlefield: Yeah, good morning, Joel. Appreciate the question. I'll just have Chris go and keep that up for you. Thanks for the question, Joel. I mean, I think again I'd start with when we look at our net revenue growth of 8%, we feel really good about where net revenue is; it's coming in for the year. But when we look at fee rate, we were down less than a bit sequentially and down about two bits on a trailing 12-month basis during a period of significant market performance. And we think the trailing 12-month view is the best way to view fee revenue rate given the fluctuations that occurred in between the quarter.

Speaker Change: Yes, good morning, Joel I appreciate the question I'll, just have crystal and tee that up for you.

Unknown Executive: Thanks for the question, Joel. I mean, I think, again, I'd start with, when we look at our net revenue growth of 8%, we feel really good about where net revenue is coming in for the year. But when we look at the fee rate, we were down less than a BIP sequentially and down about 2 BIPs on a trailing 12-month basis during a period of significant market outperformance. And we think the trailing 12-month view is the best way to view the fee revenue rate given the fluctuations that occur between the quarters, whether that's market performance or timing of consulting and other billable services.

Crystal: Thanks for the question Joel I mean, I think again I'd start with when we look at our net revenue growth of 8%, we feel really good about where net revenue as it's coming in for the year, but when we look at fee rate, we were down less than a bit sequentially and down about two bps on a trailing 12 month basis during a period of significant market outperformance.

Crystal: And we think the trailing 12 months view is the best way to view fee revenue rate given the fluctuations that occur.

Crystal: In between the quarters, whether that's market performance or timing of consulting.

Christopher Littlefield: So that's market performance or timing of consulting and other billable service. Services. But if I were to highlight sort of four things, I'd highlight four things with respect to the fee revenue rate. First, as you noted, that fee-based revenue is not all; it's not all tied to assets. So that average AV, which is the denominator, increases faster than the numerator, particularly when you have significant market performance, like we've seen over the last couple quarters. Second, the pattern of market performance matters. And that market, the decline in April resulted in a notable difference in monthly average AV.

Crystal: Other billable services, but if I were to highlight sort of four things I'd highlight four things with respect to the fee revenue rate first as you noted that fee based revenue is not all it is.

Unknown Executive: But if I were to highlight sort of four things, I'd highlight four things with respect to the fee revenue rate. First, as you noted, that fee-based revenue is not all; it's not all tied to assets. So the average AV, which is the denominator, increases faster than the numerator, particularly when you have significant market outperformance like we've seen over the last couple of quarters. Second, the pattern of market performance matters. And that market decline in April resulted in a notable difference in monthly average AV.

Crystal: Not all tied to assets so that average.

Crystal: Which is the denominator increases faster than the numerator.

Crystal: <unk> when you have significant market outperformance like we've seen over the last couple of quarters.

Crystal: Second.

The pattern of market.

Crystal: Lawrence matters and.

Crystal: And that market decline in April resulted in a notable difference in monthly average.

Christopher Littlefield: So that's another factor at highlight. Third, you know, while point to point and look at the S&P 500s, a conventional gauge for looking at market performance, as we pointed out in our investor slides, our equity exposure is more diversified, and we saw less correlation to the S&P 500. And so we outline those specific exposures in fee-based in the investor presentation, excuse me. The investor presentations, and while large cap performed well during the second quarter, small cap, mid cap, international fixed income, and real estate, we're all flat to negative. So we didn't see anything notable. We continue to sort of be confident in our guidance at two to three bits over a full year in normal markets, and out performance in the markets can can fluctuate that a bit.

Crystal: So that's another factor I would highlight third.

Unknown Executive: So that's another factor I'd highlight. Third, you know, while a point-to-point look at the S&P 500 is a conventional gauge for looking at market performance, as we pointed out in our investor slides, our equity exposure is more diversified, and we saw less correlation to the S&P 500. And so we outlined those specific exposures in fee-based in the investor presentation. The Investor Presentations, and while large cap performed well during the second quarter, small cap, mid cap, international, fixed income, and real estate were all flat to negative. So we didn't see anything notable.

Crystal: While point to point and look at the S&P five hundreds of conventional gauge for looking at market performance as we pointed out in our investor slides, our equity exposure is more diversified and we saw less correlation to the S&P 500, and so we outlined those specific exposures and and fee basically.

Crystal: And in the Investor presentation, excuse me, the investor presentations, and while large cap performed well during the second quarter small cap mid cap international fixed income and real estate were all flat to negative so.

Crystal: So we didn't see anything notable we continue to sort of be confident in our guidance at two to three bps over a full year in normal markets and outperformance in the markets can can fluctuate that a bit and I reiterate again with respect to our guidance.

Unknown Executive: We continue to sort of be confident in our guidance of two to three dips over a full year in normal markets, and outperformance in the markets can fluctuate that a bit. And I'd reiterate again, you know, with respect to our guidance, we believe that we're gonna be at or above our net revenue guidance for the full year and at the top of our margin guidance. So I feel really good about our plan. Unknown Speaker 0, Yeah, that was helpful.

Joel Hurwitz: And I'd reiterate again, you know, with respect to our guidance, we believe that we're going to be at or above our net revenue guidance for the full year, and at the top of our margin guidance. We'll feel really good about our performance. Help go. Yeah, that was helpful. Thank you.

Crystal: We believe that we're going to be at or above our net revenue guidance for the full year and at the top of our margin guidance. So feel really good about our performance.

Joe: Hello, Joe.

Joel Hurwitz: Thank you. I guess, just Chris, I'll stick with you in retirement. How much of your defined contribution business is now in guaranteed or spread based products? And, I guess, how has that grown in recent years? Yeah, I think you can, you know, that's actually another factor I actually should have pointed out. We are seeing an increase in the use of guaranteed account products in WSRS. And that's been something that we've been really focused on trying to get a better penetration of.

Joe: Yeah that was helpful. Thank you.

Christopher Littlefield: I guess just Chris. I'll stick with you in retirement. How much of your defined contribution business is now in guaranteed or spread-based products? And I guess how has that grown in recent years? Yeah, I think you can; you know, that's actually another factor. I actually should have pointed out with respect to the fee revenue rate. Joel, so thank you for the prompt there. We definitely are seeing an increase in the use of guaranteed account products in WSRS. So that's been something that we've been really focused on trying to get a better penetration of. And so what you're seeing is some of that is coming to economics are coming out of fee and they're showing up in spread.

Joe: Yes, just Chris I'll stick with you and retirement, how how much of your defined contribution.

Joe: <unk> business is now in guaranteed or spread based products and I guess, how has that grown in recent years.

Speaker Change: Yes, I think you can.

Speaker Change: That's actually another factor I actually should have pointed out about with respect to the fee revenue right. Joel. So thank you for the prompt there we definitely are seeing an increase in the use of guaranteed account product.

Speaker Change: Nwf's are us and that's been something that we've been really focused on trying to get a better penetration of.

Joel Hurwitz: So what you're seeing is some of that is coming; the economics are coming out of fee, and they're showing up in spread. So it is growing. We're definitely seeing an increase in our ability to earn placements of our guaranteed products in WSRS and seeing good success there. Okay. Thank you.

Speaker Change: So what youre seeing is some of that is coming the economics are coming out of fee and they're showing up in spread. So it is growing we're definitely seeing an increase in our ability to earn placements of our guaranteed products Nwf's Russ and seeing good success there.

Christopher Littlefield: So it is growing. We're definitely seeing an increase in our ability to earn placements of our guaranteed products in WSRS and seeing good success there. Okay, thank you.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Unknown Executive: Thank you.

Joel Hurwitz: Thanks Joel.

Operator: Thanks Joel. Thank you. The next question is coming from Ryan Krueger of KBW. Please go ahead. Hey, good morning.

Ryan Krueger: The next question is coming from Ryan Krueger of KBW.

Speaker Change: Thank you. The next question is coming from Ryan Krueger of K B W. Please go ahead.

Ryan Krueger: Please go ahead.

Ryan Krueger: Hey, good morning. Your full-year guidance and what in the EPS for the first half of the year seems to imply a pretty good step up in EPS in the second half of the year. I'm hoping you could touch on some of the heat factors that's driving that. I know there's dental seasonality, but what other factors are causing you to take that step up? Yeah, before I have the answer to that question, Ryan, just know that we spent a lot of time looking at the underlying businesses themselves to understand what the growth is. And we've got a lot of historical precedence relative to how these tend to mature and to get to where we're at today.

Ryan Joel Krueger: Your full-year guidance and what the EPS for the first half of the year seems to imply a pretty good step up. Transcribed by https://otter.ai. Yeah, before I have Deanna answer that question, Ryan, just know that we spent a lot of time looking at the underlying businesses themselves to understand what the growth is. And we've got a lot of historical precedents relative to how these tend to mature and get to where we are today.

Ryan Joel Krueger: Hey, good morning, your full year guidance.

Speaker Change: And what.

Speaker Change: And EPS for the first half of theaters Kingston.

Speaker Change: Pretty good step up in <unk>.

Speaker Change: EPS in the second half of the year, hoping you could touch on some of the key factor that's driving that.

Dental seasonality, but but what other factors are causing you to take that step up.

Speaker Change: Yes, before I answer that question Ryan just know that we spent a lot of time looking at the underlying businesses themselves to understand what the growth is and we've got a lot of historical precedents relative to the to the.

David: How these tend to mature and to get to where we're at today and we feel as I said in my earlier comments quite confident on our ability to hit that with that I'll have David answer.

Daniel Houston: And we feel, as I said in my earlier comments, quite confident on our ability to hit that with that. I'll have to answer that specifically.

Deanna Strable: Yeah, thanks, Ryan, for the question. You know, let me spend a little bit of time sizing kind of that step up that you referred to and then talk about the drivers that make it still confident in our full-year on performance. First, I do acknowledge that there, like you mentioned, appears to be the need for a meaningful increase in our second half results for us to meet guidance. But I also want you to understand that we would not be reconforming our outlook if we didn't have the business and financial fundamentals to support it. Second, I want to just make sure we're all thinking of the numbers in the right way.

David: To answer that specifically yeah. Thanks, Ryan for the question let.

Ryan Joel Krueger: And we feel, as I said in my earlier comments, quite confident in our ability to hit that. With that, I'll have Deanna answer that specifically. Yeah, thanks, Ryan, for the question. You know, let me spend a little bit of time sizing, kind of that step up that you referred to, and then talk about the drivers that make us feel confident in our full year performance. First, I do acknowledge that, like you mentioned, there appears to be the need for a meaningful increase in our second half results for us to meet guidance.

David: Let me spend a little bit of time sizing kind of that step up that you referred to and then talk about the drivers that make us feel confident in our full year performance. Firstly I do acknowledge that there like you mentioned appears to be the need for a meaningful increase our second half results for us to meet guidance, but I also want you to understand that we would not be reached.

David: Firming our outlook, if we didn't have the business and financial fundamentals to support it.

Ryan Joel Krueger: But I also want you to understand that we would not be reaffirming our outlook if we didn't have the business and financial fundamentals to support it. Second, I want to just make sure we're all thinking of the numbers in the right way. So our 9 to 12 percent EPS growth refers to our adjusted EPS growth off of the adjusted $6.92 in 2023. And so if you do the math on that, that would imply an average of slightly over $2 per quarter in the next two quarters to get us within that range compared to the actual average of $1.76 per quarter in the first half of the year or $1.80 if you factor out the one-time expenses and taxes in the second quarter that we don't expect to recur.

David: Second I want to just make sure we're all thinking of the numbers in the right way so.

Deanna Strable: So our 9 to 12 percent EPS growth refers to our adjusted EPS growth off of the adjusted $6.92 in 2023. And so if you do the math on that, that would imply an average of slightly over $2 per quarter in the next two quarters to get us within that range compared to the actual average $1.76 per quarter in the first half of the year or $1.88 if you factor out the one-time expenses and taxes in the second quarter that we don't expect to recur. There are a number of factors that naturally cause our EPS to be higher in the second half.

David: So our 9% to 12% EPS growth refers to our adjusted EPS growth off of the adjusted $6 92 in 2023, and so if you do the math on that that would imply an average just slightly over $2 per quarter in the next two quarters to get us within that range compared to the actual average of $1 70.

David: Fixed per quarter, and the first half of the year or a $1 a day if you factor out the one time expenses and taxes in the second quarter that we don't expect to recur.

Ryan Joel Krueger: There are a number of factors that naturally cause our EPS to be higher in the second half. The most meaningful of these is one of those that you just mentioned, the seasonality, but not just in SBD but also in PGI, that impacts those two segments' performance in the first half of any year.

Speaker Change: There are a number of factors that naturally cause our EPS to be higher in the second half on the most meaningful of these is one of those that you just mentioned is the seasonality, but not just in SPD, but also in pgi and that impacts there those two segments performance in the first half of any year.

Deanna Strable: The most meaningful of these is one of those that you just mentioned: the seasonality, but not just an SPD, but also in PGI that impacts those two segments' performance in the first half of any year. In addition, the natural growth of all of our businesses, as well as our share count, will also contribute to a second higher EPS as the year progresses. And then I think by last point, which could be helpful and add further support to this, is I point you back to the pattern of our EPS in 2023. In that year, we averaged $1.65 in the first half and $1.82 in the second half, so that's a delta of 17 cents.

Deanna Dawnette Strable: In addition, the natural growth of all of our businesses, as well as the reduced share count, will also contribute to a higher EPS as the year progresses. And then, I think my last point, which could be helpful and add further support to this, is that I point you back to our EPS in 2023. In that year, we averaged $1.65 in the first half and $1.82 in the second half.

Speaker Change: In addition.

Speaker Change: The natural growth of all of our businesses as well as the reduced share count will also contribute to a second a higher EPS as the year progresses, and then I think my last point with which could be helpful and add further support to this as I point you back to the pattern of our EPS in 2023.

Speaker Change: In that year, we averaged $1 65 in the first half and $1 82 in the second half. So that's a delta of 17 cents and if you adjust that for our share buyback activity that would add an additional five cents to that amount, making a 20 cent increase this year a continuation of a pattern we've experienced as recently as last.

Deanna Dawnette Strable: So that's a delta of $0.17. And if you adjust that for our share buyback activity, that would add an additional $0.05 to that amount, making a $0.20 increase this year. This is a continuation of a pattern we experienced as recently as last year. I am hopeful that that additional detail provides further support to our confidence. And, bottom line, as long as MACRO continues to cooperate, I see a clear path to our full-year guidance of 9% to 12%. Thanks, Deanna. Thanks Deanna, that was great.

Deanna Strable: And if you adjust that for our share buyback activity, that would add an additional 5 cents to that amount, making a 20-cent increase this year a continuation of a pattern we've experienced as recently as last year. So hopeful that that additional DPL provides further support to our confidence and bottom line as long as macro continues to cooperate. I see a clear path to our full year guidance of 9 to 12 percent.

Speaker Change: Yeah, so hopeful that that additional detail provides further support to our confidence and bottom line as long as macro continues to cooperate I see a clear path to our full year guidance of 9% to 12%.

Deanna Strable: Thank you. Thanks. Yeah, that was.

Thanks, Ken.

Ken: Thanks, Dan.

Wesley Carmichael: Any other questions? The next question is coming from Wesley Carmichael of Autonomous Research.

Speaker Change: And then you'll Brian's question.

Speaker Change: Okay.

Operator: Anything else for Ryan's question? The next question is coming from Wesley Carmichael of Autonomous Research. Please go ahead. Hey, good morning.

Speaker Change: The next question is coming from Wesley Carmichael of Autonomous Research. Please go ahead.

Wesley Carmichael: Please go ahead.

Wesley Carmichael: Hey, good morning. Thanks for taking my question on PGI and expenses. I know you mentioned there were some severance costs, but it seems like expenses didn't come down quite as much as you're expecting last quarter. So just want to give any color on what drove expense is higher this quarter and how we should think about that for the rest of the year.

Wesley Collin Carmichael: Thanks for taking my question. Um, on PGI and expenses. I know you mentioned there were some severance costs, but it seems like expenses didn't come down quite as much as you're expecting last quarter. So just wondering if you have any color on what drove expenses higher this quarter and how we should think about that. Wesley, good morning.

Wesley Collin Carmichael: Hey, good morning, Thanks for taking my question.

Wesley Collin Carmichael: On Pgi and expenses I know you mentioned there were some severance costs, but it seems like expenses didn't come down quite as much as you were expecting last quarter. So just wondering if you have any color on what drove expenses higher this quarter and how we should think about that for the rest of the year.

Daniel Joseph Houston: I appreciate the question. And, as you might expect, you also have investments in the business that we have to continue to make as we think about how we pivot, in part from the public to the private. So with that, I'll have Kamal add some additional color.

Wesley Carmichael: Well, some good morning. Appreciate the question. And as you might expect, you also have investments in the business that we have to continue to make as we think about how we pivot and part from the public to the private.

Wesley Collin Carmichael: Wes and good morning, appreciate the question and as you might expect.

Wesley Collin Carmichael: You also have investments in the business that we have to continue to make as we think about how we pivot in part from the public to the private so with that I'll have Tom will add some additional color.

Wesley Carmichael: So that I'll have compilates and additional color. Thank you.

Kamal Bhatia: Thank you, Dan. Thank you, Wes. So I think, as you mentioned, this quarter, we did have, as we mentioned in the notes to you, that we did have some severance costs of roughly $6 million that were staff-related. But before I go there, I think it's worth reminding you that the asset management business is a highly competitive business, and we are constantly adapting our investment model. So one of the things we'll continue to do. But we remain confident in our expense management capability, and we also remain confident in the outlook guidance we gave you on margin. What is your follow-up, Wes? Yeah, no, thank you.

Deanna Strable: Thank you, Wes. So I think, as you mentioned, we, we, we, this quarter, we did have, as we mentioned in the notes to you, that we did have some severance cost of roughly $6 million that was staff related. But before I go there, I think it's worth reminding that the asset management business is a highly competitive business, and we're constantly adapting our investment model. So one of the things we'll continue to do is look at our capabilities and talent, we're appropriate and adjusted. So, to your question, the expenses were elevated also with respect to the reinvestments.

Tom: Thank you Dan.

Tom: Thank you Ross.

Tom: So I think as you mentioned.

Tom: This quarter, we did have as we mentioned in the notes to you that we did have some severance cost of roughly $6 million that was staff related but before I go there I think it's worth reminding that the asset management business is a highly competitive business and we're constantly adapting our.

Tom: Our investment model.

Tom: One of the things we will continue to do is is look at our capabilities and talent when appropriate and adjusted so to your question. The L. A expenses were elevated.

Daniel Joseph Houston: So with respect to the Reinvestments, we are making back into the business in particular I'll point, you to Dan's comments around infrastructure that we are particularly focused on making sure. We have the capabilities for the future as we adjust our business mix. In addition to that I think permanently perspective, you will see there were some market adjustments due to the nature of it.

Deanna Strable: We are making back in the business; in particular, I'll point you to dance comments around infrastructure that we are particularly focused on making sure we have the capabilities for the future as we adjust our business mix. In addition to that, I think from an only perspective, you will see there were some market adjustments due to the nature of our AUM, but we remain confident in our expense management capability. And we also remain confident in the outlook that is we gave you to on margin.

Speaker Change: But we remain confident in our expense management capability and we also remain confident in the outlook guidance. We gave you two on margin.

Wesley Carmichael: Yeah, follow-up, Wes?

Speaker Change: Follow up question.

Wesley Collin Carmichael: In pension risk transfer, I guess you guys had, you know, a billion dollars in sales last quarter. Last quarter, some competitors were making some comments and mostly related to, I think, private equity-related companies, but around lawsuits against plan sponsors, kind of chilling volumes in that market. So just wondering what you're seeing in the pipeline, if that still looks pretty, Chris. Would you like to provide some color on that?

Wesley Carmichael: Yeah, no, thank you.

Speaker Change: Yeah no. Thank you.

Wesley Carmichael: In pension risk transfer, I guess you guys had a, you know, a billion dollars in sales in the quarter. Last quarter, some competitors were making some comments and mostly related to, I think, private equity related companies, but around lawsuits against plan sponsors, kind of chilling volumes in that market. So just wondering if you're seeing in the pipeline, that still looks pretty robust. Pressure and production color on that.

Speaker Change: Pension risk transfer I guess, you guys had a $1 billion in sales in the quarter last quarter. Some competitors were making some comments and mostly related to I think private equity related companies, but.

Speaker Change: Around lawsuits against plan sponsors kind of chilling volumes in that market. So just wondering what youre seeing in the pipeline if that still looks pretty robust.

Speaker Change: The crusher and provide some color on that yes. Thanks, Wes yes, no. We still see the market is pretty robust I think the market overall is industry expectations are 30% to 40 billion and PRT for the year and we don't we don't see that really.

Wesley Carmichael: Yeah, thanks, Wes. Yeah, no, we still see the market as pretty robust. I think the market overall is industry expectations are the 30 to 40 billion in PRT for the year. And we don't see that really slowing down. And certainly, we took an opportunity to, in the second quarter, put on some additional nice PRT business where we're exceeding our targeted returns and getting nice opportunities on PRT. And so not seeing anything from a macro basis. So I would suggest that the PRT market is slowing down.

Unknown Executive: Yeah, no, we still see the market as pretty robust. I think the market overall is industry expectations are 30 to 40 billion in PRT for the year, and we don't see that really slowing down. And certainly, we took an opportunity in the second quarter to put on some additional nice PRT business. We're exceeding our targeted returns and getting nice opportunities on PRT. And so, I am not seeing anything from a macro basis that would suggest that the PRT market is slowing down. Thank you. Thank you, Wes.

Speaker Change: Slowing down and certainly we took an opportunity to.

Speaker Change: In the second quarter to put on some additional nice PRT business, where we're exceeding our targeted returns and getting a nice opportunities on PRT.

Speaker Change: So not seeing anything from a macro basis that would suggest the PRT market is slowing down.

Wesley Carmichael: Thank you. Thanks, Wes.

Speaker Change: Thank you.

Louis: Thanks Louis.

Jimmy Bueller: Thank you. The next question is coming from Jimmy Bueller of JP Morgan.

Operator: Thank you. The next question is coming from Jimmy Buhler of J.P. Morgan. Please go ahead. Hey, good morning.

Speaker Change: Thank you. The next question is coming from Jimmy Buhler of J P. Morgan. Please go ahead.

Jimmy Bueller: Please go ahead. Hey, good morning. So first, just a question on PGI net flows. I think each of the past few quarters, you've outlined a sort of low-fee mandates, pressuring your flows. I'm just wondering if the business that you've lost that that become low fee mandate over time, or was it such when it came on? And how is your approach to such blocks of business different than when you might have put these at this business on? That's a great question. And you certainly have different generations of these investments. And they all have a little bit of a unique story, but I'll have common provides some additional detail on the most recent quarter.

Jamminder Singh Bhullar: So first, just a question on PGI net flows. I think each of the past few quarters, you've outlined a sort of low fee mandate pressuring your flows. I'm just wondering if the business that you've lost, did that become a low fee mandate over time, or was it such when it came on?

Hey, Good morning, first just a question on the Pgi net flows I think each of the past few quarters, you've outlined a sort of low fee mandates.

Jamminder Singh Bhullar: Pressuring your flows I'm just wondering if.

Speaker Change: The business that you've lost did that become dolfi mandate overtime or was it a missed.

Speaker Change: Such when it came on at.

Speaker Change: And how is your approach to such.

Speaker Change: Blocks of business different than when you might've put this business on.

Speaker Change: Yeah, It's a great question and you certainly have different generations of these investments.

Tom: You all have a little bit of a unique story, but I'll have Tom will provide some additional detail on the most recent quarter absolutely Jimmy that's a great question. So so let me just start with this quarter and I think your question was both on what the net cash flows looks like but the luxury nature of these net cash flows. So as we highlighted we had we had all of them.

Daniel Joseph Houston: And how is your approach to such blocks of business different than when you might have put this business on? That's a great question. And you certainly have different generations of these investments, and they all have a little bit of a unique story. But I'll have Kamal provide some additional detail on the most recent quarter. Absolutely. Jimmy, that's a great question.

Kamal Bhatia: Absolutely. Jimmy, that's a great question. So let me just talk with this quarter. And I think your question was both on what the net cash flows look like, but the low-fee nature of these net cash flows. So, as we highlighted, we had almost a 900 million outflow in a single mandate along duration, fixed and commanded. To your question, these were always low fee. They did not become low fee over a period of time. And they were with us for a while. In addition, I think it is worth highlighting that if you look at our net cash flow, and I've done mentioned this, I think our durable forces of net cash flow remain quite strong; in particular, almost 500 million of real estate flows, which are very high revenue and high margin for us.

Kamal Bhatia: So let me just start with this quarter. And I think your question was both about what the net cash flows looked like and the low fee nature of these net cash flows. So, as we highlighted, we had almost a 900 million outflow in a single mandate, a long-duration fixed income mandate. To your question, these were always low fees. They did not become low fees over a period of time, and they were with us for a while.

Speaker Change: The 900 million outflow in the single minded long duration fixed income mandate.

Speaker Change: To your question. These were always low fee. They did not they come a little P. Over a period of time and they were they were with us for a while.

Kamal Bhatia: In addition, I think it is worth highlighting that if you look at our net cash flow, and Dan mentioned this, I think our durable sources of net cash flow remain quite strong. In particular, almost $500 million of real estate flows, which are very high revenue and high margin for us. And we also highlighted that as we continue to expand our business mix, 150 million flows in private credit, which is obviously both high revenue and high margin as well.

Don: In addition, I think it is worth highlighting that if you look at our net cash flow and Don mentioned is I think our durable sources of net cash flow remained quite strong in particular, almost $500 million of real estate flows, which are very high revenue and high margin for us and we also highlighted that as we continue to it.

Kamal Bhatia: And we also highlighted that as we continue to expand our business, makes 115 million of flows in private credit, which are obviously both high revenue and high margin as well. So we do feel good about the mix of our business with respect to the assets we are bringing in are in asset classes that have a durable trend and high revenue, and unfortunately the mandates we did lose were in lower revenue mandates.

Speaker Change: Expand our business makes 115 billion of flows and private credit, which are obviously, both high revenue and high margin as well. So we do feel good about the mix of our business.

Kamal Bhatia: So we do feel good about the mix of our business with respect to the assets we are bringing in are in asset classes that have a durable trend and have high revenue. And unfortunately, the mandates we did lose were in lower revenue mandates. Hopefully, that answers the question. Unknown Speaker Sure.

Speaker Change: With respect to the assets, we are bringing in other asset classes that have ideas that will trend and then high revenue and unfortunately, the mandates we did lose one lowered revenue mandates.

Kamal Bhatia: Hopefully, that answers the question.

Speaker Change: That answers the question.

Kamal Bhatia: Sure, and just relatedly, if I look at your performance, it's still good, but not as great as it had been, and the five-year, ten-year track records look better than the most recent years. Is that having any impact on your ability to retain or generate new inflows? Yeah, that's a great question. And obviously, that gets a lot of attention as well. In fact, Deanna and I, and Kamal and his leaders, get together frequently to interrogate the sources of underperformance where they are. And I have very robust conversation. I'll ask a couple of weeks; it's why we've enhanced the slide deck to provide you with a different perspective on asset weighted and equal weighted perspective.

Unknown Speaker: And just relatedly, if I look at your performance, it's still good, but not as great as it used to be. And the five-year, 10 year track records look better than the most recent years. Is that having any impact on your ability to retain or generate new inflows? Yeah, that's a great question. And obviously, that gets a lot of attention.

Speaker Change: Sure and just Relatedly, if I look at your performance, it's still good but not as great as it had been in.

The five year 10, New aircraft records look better than the most recent years is that having any impact on your ability to retain or generate new inflows.

Daniel Joseph Houston: As a matter of fact, Deanna and I and Kamal and his, his leaders get together frequently to interrogate the sources of underperformance where they are. And I had a very robust conversation the last couple of weeks. It's why we've enhanced the slide deck to provide you with a different perspective on asset weighted, equal weighted perspective. But again, I think Kamal and his team have done a really good job of truly understanding where these sources of underperformance are.

Deanna Dawnette Strable: Yeah, that's a great question, and obviously that gets a lot of attention as matter of fact, deanna and I and Kam.

Kam: <unk> and his his leaders get together frequently.

Kam: To interrogate the sources of underperformance, where they are in.

Deanna Dawnette Strable: Had a very robust conversation last couple of weeks, that's why we've enhanced the.

Deanna Dawnette Strable: The slide deck to provide you with a different perspective on an asset weighted equal weighted perspective, but again I think combo and his team have done a really good job of truly understanding worthy sources of underperformance are and frankly frankly, how good performances in many of our strategies come we want to provide some additional info.

Kamal Bhatia: But again, Kamal and his team have done a really good job. Now, of truly understanding where these sources of underperformance are. And frankly, frankly, how good performances in many of our strategies. Kamal, you want to provide some additional insights? Absolutely. So Jimmy, first living acknowledge investment performance is very important to us. I think, as a top tier investment manager, so I do acknowledge your comments, but I will go further. I think to your question, we haven't really seen a direct correlation to short-term performance on flows. Particularly across our business mix. I'll point you to two data points.

Kamal Bhatia: And frankly, frankly, how good the performance is in many of our strategies. Kamal, you want to provide some additional insights? Absolutely. So Jimmy, first, let me acknowledge that investment performance is very important to us, I think, as a top-tier investment manager. So I do acknowledge your comments.

Kamal Bhatia: But I will go further, I think, to your question; we haven't really seen a direct correlation to short-term performance on flows, particularly across our business mix. I'll point you to two data points we provided you this quarter. One, we have added asset-weighted values to our updates to you asset-weighted values for this quarter because they better reflect where our clients are invested to provide you with a complete picture of our business. And if you look at that data, which we are providing to you both on a peer-relative basis and an alpha basis, the numbers are quite strong. You can see, in particular, two strategies I would highlight for you, the mid cap strategy, which is which is a large strategy for us and has taught quartile short and long term performance.

Jamminder Singh Bhullar: Absolutely. So Jimmy first let me acknowledge investment performance is very important to us I think as a top tier investment managers. So I do acknowledge your comments, but I Wouldnt go further I think to your question, we haven't really seen a direct correlation to short term performance on flows particularly.

Deanna Dawnette Strable: Across our business mix.

Speaker Change: Aren't you two data points. We provided you this quarter one we have added to our updates to you as it related values for this quarter, because they better reflect what our client side investors to provide you a complete picture of our business and if you look at that data, which we are providing to you both on peer relative basis, an alpha basis, but.

Kamal Bhatia: We provided you this quarter. One, we have added to our updates to you, asset weighted values for this quarter, because they better reflect where our clients are invested to provide your complete picture of our business. And if you look at that data, which we are providing you both on a peer relative basis and alphabets, the numbers are quite strong. You could see, in particular, two strategies. I would highlight for you mid cap strategy, which is, which is a large strategy for us has taught quarter and short and long term performance innovation hybrid target dates, which is an area of strength for us has very strong long term performance.

Speaker Change: Others are quite strong and you could see in particular to extract disease I would highlight for you. The midcap strategy riches, which is which is a large strategy for us has talked quartile short and long term performance. In addition, hybrid target dates which is an area of strength for US has really strong long term performance.

Kamal Bhatia: In addition, hybrid target dates, which is an area of strength for us, and has very strong long-term performance. The other thing I would point out, and you'll see this in your charts, is that almost 80% of our strategies are beating their benchmarks, almost 150 basis points of alpha through the most recent period, which is a key decision for our institutional clients. So that gives me comfort that we are producing the investment results that we would keep there.

Kamal Bhatia: The other thing I would point to you, and you'll see this in your charts, is almost 80% of our strategies are beating their benchmark almost 150 basis points of alpha through the most recent period, which is the key decision for our institutional clients. So that gives me comfort that we are producing the investment results that we will keep there. And then lastly, as you know, we continue to be focused on our market position in real estate and our marquee real estate private equity strategy that all has beaten their peers.

Speaker Change: Other thing I would point to you and you'll see this charge is almost 80% of our strategies are beating their benchmark almost 150 basis points of alpha through the most recent period, which is a key decision for our institutional clients. So that gives me comfort that we are producing the investment for those that do will keep there.

Kamal Bhatia: And then lastly, as you know, we continue to be focused on our market position in real estate and our marquee real estate private equity strategy, which all have beaten their peers; the peer-based benchmark had its first absolute positive net return of three to 22. So I do feel that we are focused on performance, but the data doesn't give me cause for concern at this stage. Thank you.

Speaker Change: And then lastly, as you know we continue to be focused on our market position in real estate and our marquee real estate private equity strategy. They don't.

Speaker Change: Has beaten their peers peer based benchmark hi.

Speaker Change: It's first absolute positive net return to 322, so I do feel that we are focused on performance, but the data doesn't give me concern at this stage.

Kamal Bhatia: So I do feel that we are focused on performance, but the data doesn't give me concern at this stage. Thank you.

Thank you.

Jamie: Thanks, Jamie.

Operator: Thank you. The next question is coming from John Barnidge of Piper Sandler. Please go ahead. Good morning.

John Barnidge: The next question is coming from John Barnage of Piper Sandler. Please go ahead. Good morning. Thank you for the opportunity. Given your exceeding targeted returns on the RIS PRT volume and maybe some headwind to the fee business flows. Is this going to be a bigger focus for flows and business growth as you look in the remainder of the year? Thank you.

Speaker Change: Thank you. The next question is coming from John Barnidge of Piper Sandler. Please go ahead.

John Bakewell Barnidge: Thank you for the opportunity given. You exceeded targeted returns on that RIS PRT volume and maybe some headwinds to the fee business flows. Is this going to be a bigger focus for flows and business growth as you look ahead for the remainder of the year? Yeah, and good morning, John. The first thing I would say is that we take a very disciplined approach as we think about the overall portfolio of our business between fee spread and risk.

John Bakewell Barnidge: Good morning, Thank you for the opportunity given.

John Bakewell Barnidge: You're exceeding targeted returns on that the R. S PRT volume and maybe some headwinds to the feed business flows.

John Bakewell Barnidge: Is this can be a bigger focus for flows and business growth.

Speaker Change: If you look at the remainder of the year. Thank you.

Daniel Houston: Yeah, and good morning, John. What the first thing I would say is we take a very disciplined approach is we think about the overall portfolio of our business between fees, bread and risk. And we do that very intentionally for enterprise risk management; having said that, in the area of PRT. The opportunity set right now, it's very attractive and the return profiles we really like and like the liability. Just that we're seeing, but with that, I'll have Chris add some additional perspective on his outlook for the second half on PRT.

John Bakewell Barnidge: And we do that very intentionally for enterprise risk management. Having said that, in the area of PRT, the opportunity set right now is very attractive. And the return profiles we really like, and we like the liability that we're seeing. But with that, I'll have Chris add some additional perspective on his outlook for the second half here on PRT. to achieve our targeted returns. And so we do see some opportunities in the second half for us.

John Bakewell Barnidge: Yes.

John Bakewell Barnidge: Good morning, John What's the first thing I would say is we take a very disciplined approach as we think about the overall portfolio of our business between fee spread and risk and we do that very intentionally for enterprise risk management, having said that in the area of PRT the opportunity set right now it's very attractive in the REIT.

Speaker Change: <unk> profiles, we really like and we liked the liability.

Speaker Change: We're seeing but with that I'll have Chris add some additional perspective on his outlook for the second half.

Speaker Change: On PRT.

Christopher Littlefield: Yeah, thanks. Thanks, Dan. Thank you, John, for the question. Yeah, I mean, again, we're seeing nice momentum in our PRT business through 23 and in the first half of 24, with 1.7 billion PRT sales through the first half. But we're previously guided that we would sort of be in that range of two and a half to three billion for the full year. We now believe that we'll pretty much be close to that three billion. Then the midpoint will be at the upper end of the range. As long as we can continue to achieve our target returns.

Chris: Thanks, Dan and thank you John for the question, Yeah, I mean again, we're seeing nice momentum in our PR team business through 23 in the first half of 'twenty forwards.

At $1 7 billion of PRT sales through the first half.

Speaker Change: Previously guided that we would sort of be in that range of two and a half to 3 billion for the full year. We now believe that we will pretty much be closer to that 3 billion all Ben.

Then the midpoint will be at the upper end of the range.

Speaker Change: As long as we can continue to achieve our targeted returns and.

Unknown Executive: But, as we always do with this business, we really do balance growth with return and focus on the capital that we're investing, making sure we get an appropriate return on that investment. I think, as Dan pointed out as well, we're the number three provider of PRT in the industry. So we see a lot of opportunities coming our way, and our existing defined benefit capabilities and our complete pension solutions are really a differentiator for us, because we are able to provide a full set of solutions for our customers that have defined benefit plans, whether it's record keeping, actuarial consulting, custody, OCI, and asset management.

Christopher Littlefield: And so we do see some opportunities in the second half for us, but as we always do with this business, we really do balance growth with return and focus on the capital that we're investing. Make sure we get an appropriate return on that investment. I think it's down point out as well where the number three provider and PRT in the industry. So we see a lot of opportunities coming our way, and our existing defined benefit capabilities and our complete pension solutions are really a differentiator for us because we are able to provide a full set of solutions for our customers that have defined benefit plans.

And so we do see some opportunities in the second half for us, but as we always do with this business, we really do balanced growth with return and focus on the capital that we're investing to make sure we get an appropriate return on that investment I think as Dan pointed out as well we're the number three provider in PRT in the industry. So we see a lot of opportunities coming our way in.

Daniel Joseph Houston: Our existing defined benefit capabilities and our complete pension solutions.

Daniel Joseph Houston: Really a differentiator for us because we are able to provide a full set of solutions.

Unknown Executive: And all of that allows us to really bring those capabilities to bear. And when they want to de-risk their plans, we're able to take advantage of that and capture that in PRT. So I feel really good about PRT. And again, I expect to be close to $3 billion for the full year. Thank you for those comments.

For our customers that have that have defined benefit plans, whether it's recordkeeping actuarial consulting costs of the OCI on asset management and all of that allows us to really bring those capabilities to bear and when they want to derisk. Their plans, we're able to take advantage of that and capture that in PRT.

Christopher Littlefield: Whether it's record keeping, actual consulting, custody, OCI, and asset management. And all of that allows us to really bring those capabilities to bear in them when they want to de-risk their plans. We're able to take advantage of that and capture that in PRT. So feel really good about PRT and again, expect to be closer to the three billion for the full year.

Daniel Joseph Houston: Feel really good about P. R T and again expect to be close to the $3 billion for the full year.

Christopher Littlefield: Thank you for those comments. My follow-up question. Given that opportunity with the full suite of products, if I to provide those solutions, are you, as you look at your pipeline, is average transaction size getting larger? Thank you. We lead in both the number of PRT contracts centered into as well as the amount of premium. And so, you know, as Dan pointed out, the existing defined benefit and complete pension solutions is a nice source of opportunities for us. We got about 25% of opportunities from existing defined benefit customers. And so we really look at still in that small, the midsize, the market. We will go up if the returns are there, but we actually find more opportunities, better close rates, better returns in the areas where we focus.

John Bakewell Barnidge: My follow-up question: Given that opportunity with the full suite of products to provide those solutions, are you, as you look at your pipeline, seeing an average transaction size getting larger? Thank you, on the PRT side specifically. Yeah, no, honestly, again, if you, if you John, when you look at our one of the things that differentiates us is that we, we lead in both the number of PRT contracts entered into as well as the amount of premium.

Speaker Change: Thank you for those comments my follow up question.

Speaker Change: Given that opportunity with the full suite of products if I could.

Speaker Change: Provides a solution.

Speaker Change: Are you as you look at your pipeline is average transaction size is getting larger thank you.

Speaker Change: On the PRT side specifically.

John Bakewell Barnidge: And so, you know, as Dan pointed out, that the existing defined benefit and complete pension solutions are a nice source of opportunities for us; we got about 25% of opportunities from existing defined benefit customers. And so we really look at the market still in that small to mid-size category; we will go up if the returns are there. But we actually find more opportunities, better close rates, and better returns in the areas where we focus.

Speaker Change: No.

Speaker Change: Again.

John Bakewell Barnidge: If you John when you look at our one of the things that differentiates US is we we do we lead in both the number of PRT contracts entered into as well as the amount of premium and so you know what as Dan pointed out.

Speaker Change: The existing defined benefit and complete pension solutions is a nice source of opportunities for us we got about 25% of opportunities from existing defined benefit customers and so we really look at still in that small to mid size of the market. We will go up if the returns are there, but we actually find more opportunities better close rates better.

John Bakewell Barnidge: And the other point of differentiation for us is we have better and more robust onboarding capabilities than many of our competitors, where many of our competitors focused on retirees only really large, really highly competitive bid plans that don't require a lot of onboarding.

Speaker Change: Our returns in the areas, where we focus and the other point of differentiation for us since we have better and more robust onboarding capabilities than many of our competitors, where many of our competitors focused on retiree only really large really highly competitive bid plans that don't require a lot of onboarding, we focus in a different area of the market that allows us to get attractive.

Daniel Houston: And the other point of differentiation for us is we have better and more robust onboarding capabilities than many of our competitors, where many of our competitors focused on retire only really large, really highly competitive bid plans that don't require a lot of onboarding, but we focus in a different area of the market that allows us to get attractive economics. And down just a pile on that. Also remember, this is just part of our QRS suite. So a lot of those defined benefit clients, they know us from being a 401k client, they know us from being a deferred income, an unqualified deferred compensation client for even ESOP.

Unknown Executive: But we focus on a different area of the market that allows us to get attractive economics. And just to pile on that, also remember that this is just part of our TRS suite. So a lot of those defined benefit clients know us from being a 401k client, they know us from being a deferred income, a non-qualified deferred compensation client, or even an ESOP. So there really is a symbiotic relationship across this platform.

John Bakewell Barnidge: Economics, and John just to pile on that also remember that this is just part of our Trs suite. So a lot of those defined benefit clients. They know us from being a 401K client they know us from being a deferred.

John Bakewell Barnidge: Income non qualified deferred compensation client or even aesop. So there really is a symbiotic relationship across this platform and we are an obvious provider of the PRT on these defined benefit existing customers.

Daniel Houston: So there really is a symbiotic relationship across this platform, and we're an obvious provider of the PRT on these defined benefit existing customers. Thank you.

John Bakewell Barnidge: Sure.

Speaker Change: Thank you.

Speaker Change: That's right.

Unknown Executive: And we're an obvious provider of the PRT on these defined benefit existing customers. Thank you. Thank you. The next question is coming from Elyse Greenspan of Wells Fargo. Please go ahead. Hi, thanks. Good morning.

Elyse Greenspan: The next question is coming from Elise Greenspan of Wells Fargo.

Speaker Change: Thank you. The next question is coming from Elyse Greenspan of Wells Fargo. Please go ahead.

Elyse Greenspan: Please go ahead. Hi, thanks.

Elyse Beth Greenspan: My first question is just on your use of Bermuda; if you can just provide an update there and just expectations going forward, and any capital relief, incremental capital relief, we should be thinking about, and whether you guys use that entity for any pension risk transfer deals yet. Yeah, I think Deanna is in a good position to respond to this. And remember, we've got some term life and some PRT business that was there, or some annuity business as a result of our transactions, and she can give us an update on how we're going to use it in the future.

Elyse Greenspan: Hi, Thanks. Good morning. My first question is just on your use of Bermuda. If you could just provide an update there and just expectations going forward and any capital relief.

Elyse Greenspan: Good morning. My first question is just on your use of remuda. If you can just provide an update there and just expectations going forward and any capital relief incremental capital relief, we should be thinking about. And if you guys use that entity for any pension risk transfer deals yet. Yeah, I think the end is in a good position to respond. If you remember, we've got some term life and some PRT business that was there in some new business as a result of our transactions, and she gives nothing on how we're using the future. Yeah, thanks, Elise, for that question.

Speaker Change: Mental capital relief, we should be thinking about and if you guys use that entity for any pension risk transfer deals yet.

Speaker Change: Yes, I think Dan is in a good position to respond to this thing to remember we've got some term lights and some guarantee business that was there.

Daniel Joseph Houston: Some annuity business as a result of our transactions and she can give us an update on how we're going to use it yeah.

Elyse Beth Greenspan: Yeah, thanks, Elyse, for that question. As we've discussed previously, our Bermuda entity was created for new business, both term and PRT. But to seed the entity, we seeded it with some in-force business of both of those product lines as well. Our term life new business all year has continued to be reinsured to Bermuda; that just kind of happens naturally. For PRT, that new business is evaluated on a case by case basis as case specifics really matter to determine if Bermuda is optimal from a capital efficiency and operational perspective. None of our first half PRT sales have utilized Bermuda, but we expect to be in a position to leverage Bermuda for some of our sales in the second half of the year.

Daniel Joseph Houston: Yeah. Thanks for that question as we've discussed previously that our Bermuda entity was created for new business, both term and PRT.

Elyse Greenspan: As we discussed previously, that our remuda entity was created for new business, both term and PRT. But to seed the entity, we seeded it with some enforced business of both of those product lines as well. Our term life new business all year has continued to be reinsured to Remuda that just kind of happens naturally for PRT that new business is evaluated on a case by case basis as case specifics really matter to determine if Remuda is optimal from a capital efficiency and operational perspective.

Daniel Joseph Houston: To see the entity, we seeded it with some enforced business.

Daniel Joseph Houston: Both of those product lines as well our term life new business. All year has continued to be reinsured to Bermuda that just kind of happens naturally.

Daniel Joseph Houston: For PRT that new business is evaluated on a case by case basis as case specifics really matter to determine if Bermuda is optimal from a capital efficiency and operational perspective, none of our first half PRT sales.

Elyse Greenspan: None of our first half PRT sales have utilized Remuda, but we expect to be in a position to leverage Remuda for some of our sales in the second half of the year. Thanks.

Speaker Change: Hum have utilized Bermuda.

Speaker Change: But we expect to be in a position to leverage Bermuda for some of our sales in the second half of the year.

Deanna Dawnette Strable: Thanks. And then maybe just on VII, do you guys have, you know, expectations for the back half of the year? Yeah, just a couple of comments on that. You know, I do think if you look at what we have identified as pressured VII relative to prior quarters or even on a TTM basis, we are seeing some improvement in that metric. But we are still seeing pressure on the overall volume of variable investment income.

Speaker Change: Thanks.

Deanna Strable: And then maybe just on VII, do you guys have expectations for the back half of the year? Yeah, just a couple of comments on that. I do think if you look at what we have identified as pressured VII relative to prior quarters or even on a TTM basis, we are seeing some improvement in that metric. But we are still seeing pressure and an overall volume of variable investment income. If we look at the improvement in the drivers in the current quarter, the improvement was really driven by the actual return of our old portfolio, that performed as expected in the quarter; whereas in previous quarters, it had actually returned at a level lower than what we would have expected.

Speaker Change: Then maybe just on VII do you guys have expectations for the back half of the year.

Speaker Change: Yeah, Yeah, just a couple of comments on that you know I do.

Speaker Change: Do think if you look at what we have identified as pressured VII.

Speaker Change: Relative to prior quarters or even on a TTM basis, we are seeing some improvement in that metric, but we are still seeing pressure and in overall volume.

Deanna Dawnette Strable: If we look at the improvement in the drivers in the current quarter, the improvement was really driven by the actual return of our ALTS portfolio that performed as expected in the quarter, whereas in previous quarters, it had actually returned at a level lower than what we would have expected. But we are continuing to see pressure in really two areas. One is prepays.

Speaker Change: Variable investment income if we look at the improvement and the drivers in the current quarter. The improvement was really driven by.

Speaker Change: The actual return of our alts portfolio that performed as expected in the quarter, whereas in previous quarters has hit it actually returned at a level lower than what we would've expected, but we're continuing to see pressure in really two areas. One is prepays, obviously, given the current interest rate.

Deanna Strable: But we're continuing to see pressure in really two areas. One is pre-pays, obviously given the current interest rate environment, as well as kind of uncertainty on when interest rates are going to start to increase. We virtually had no pre-pays yet this year, or we've actually had pre-pays but not fees from pre-pays relative to that. And then the other place, and it is a place where we're a little bit different than our peers, is that a more sizable impact of BII is actually real estate, and in particular real estate transactions. And that component has been minimal as we look at where we were at the first two quarters of the year.

Deanna Dawnette Strable: Obviously, given the current interest rate environment, as well as the kind of uncertainty about when interest rates are going to start to increase, we virtually had no prepays yet this year, or we have actually had prepays, but not fees from prepays relative to that. And then the other place, and this is a place where we are a little bit different than our peers, is that a more sizable impact of VII is actually real estate, and in particular, real estate transactions. And that component has been minimal as we look at where we were in the first two quarters of the year. Obviously, ALT performance can be pretty volatile.

Speaker Change: <unk> as well as kind of uncertainty on when interest rates are going to start to increase.

Speaker Change: Virtually had no prepays yet this year, we've actually had prepays, but not fees from prepays.

Speaker Change: Relative to that and then the other place and it is a place where we're a little bit different than our peers is that a more sizable impact.

Speaker Change: Hi, it's actually real estate, and then particular real estate transactions.

Speaker Change: And it's that that component has been minimal as we look at where we were at the first two quarters of the year.

Elyse Beth Greenspan: I do think we see a constructive potential increase in real estate transactions as we look into the second half of the year. But I think real step change improvement in variable investment income levels will likely necessitate a beginning of the decrease in the interest rate environment, and probably more substantial improvement will occur in 2025. Thanks for the questions, Elise.

Deanna Strable: Obviously, all performance can be pretty volatile. I do think we see a constructive potential increase in the real estate transactions as we look into the second half of the year.

Speaker Change: Obviously, all performance can can be pretty volatile I do think we see a constructive potential.

Speaker Change: Potential increase in the real estate transactions as we look into the second half of the year, but I think real step change improvement in variable investment income levels will likely necessitate a beginning of the decrease in the interest rate environment and probably more of a substantial improvement will occur.

Deanna Strable: But I think real step change improvement in variable investment income levels will likely necessitate a beginning of the decrease in the interest rate environment, and probably more substantial improvement will occur in 2025.

Speaker Change: In 2025.

Deanna Strable: Thanks for the questions, always.

Speaker Change: Thanks for the question as always.

Suneet Kumar: Thank you. The next question is coming from Sunit Kumar of Jeffries.

Operator: Thank you. The next question is coming from Suneet Kamath of Jeffries. Please go ahead.

Speaker Change: Thank you. The next question is coming from so need to come off of Jefferies. Please go ahead.

Suneet Kumar: Please go ahead. Thanks.

Suneet Laxman L. Kamath: Thanks, good morning, everyone. Dan, I wanted to talk about participant withdrawals and 401ks. You mentioned in your prepared remarks that, being at an elevated level, one of your peers recently alluded to the impact advisors are having on rollovers. So can you just maybe unpack what you're seeing in terms of participant withdrawals? Yeah, I'll take that part of that and then throw it over to Chris.

Daniel Houston: Good morning, everyone. Dan, I wanted to talk about participant withdrawals in 401(k). You mentioned that in your prepared remarks, being in an elevated level. You know, one of your peers recently alluded to the impact advisors are having on rollovers. So can you just maybe unpack what you're seeing in terms of participant withdrawals? Yeah, I'll take that part of that and then throw it over to Chris. But the way I would look at it is, number one, you've got these elevated withdrawals in large part because the market performance has been so good over the last several years.

Suneet Laxman L. Kamath: Thanks, Good morning, everyone.

Speaker Change: And I wanted to talk about participant withdrawals in 401K. You know you mentioned that in your prepared remarks being in an elevated level. One of your peers recently alluded to the impact advisers are having on rollovers. So can you just maybe unpack what you're seeing in terms of participant withdrawals.

Daniel Joseph Houston: But the way I would look at it is, number one, you've got these elevated withdrawals, in large part because the market performance has been so good over the last several years. Secondly, as you point out, advisors are very much being opportunistic as it relates to retirees. So a benefit event, job changers or retirees, those with really large average account balances will generally seek outside professional advice for their insights. Oftentimes, it's an existing relationship that they have outside the qualified retirement plan.

Speaker Change: Yeah, I'll take the part of that and then throw it over to Chris but the way I would look at it is number one you've got these elevated withdrawals in large part because the market performance has been so good over the last several years.

Daniel Houston: Secondly, as you point out, advisors are very much being opportunistic as it relates to retirees, so a benefit event, job changes are retirees. Those with really large average account balances will generally seek outside professional advice for their insights. Oftentimes, it's an existing relationship that they have outside the qualified retirement plan. So I don't think any of us are surprised at that. For a lot of the individuals with lower average account balances, our capabilities within Principal Connection have served to be a really good way for us to provide guidance and advice, and our ability to retain many of those dollars, but it's skewed towards the higher average account balances, which is only natural.

Chris: <unk> as you point out advisors are very much being opportunistic as it relates to retirees.

John Changers: He then John Changers, where retirees those with really large average account balances will generally seek outside professional advice for their insights oftentimes, it's an existing relationship that they have outside the qualified retirement plans. So I don't think any of us are surprised it down for a lot of the individuals.

Unknown Executive: So I don't think any of us are surprised at that. For a lot of the individuals with lower average account balances, our capabilities within principal connection have served to be a really good way for us to provide guidance and advice and our ability to retain many of those dollars. But it's skewed towards the higher average account balances, which is only natural. And I'll see if I didn't take too much of the frosting of that cupcake, Chris, before I pass it to you. Yeah, no, no, I think that's perfect. No, no, no, it's perfect.

John Changers: Lower average account balances our capabilities within principal connection have served to be a really good way for us to provide guidance and advice and our ability to retain many of those dollars, but it's skewed towards the higher average account balances.

Christopher Littlefield: So, and I'll see if I didn't take too much of the frosting off that cupcake curse for capacity. Yeah, no, no, I think that's pretty good. No, no, no, perfect.

Speaker Change #101: It's only natural and I'll see if I didn't take too much of the.

Speaker Change: The frosting up that cupcake crisp for capacity you know.

Speaker Change: No I think that's pretty much it.

Speaker Change #100: No no no that's perfect.

Christopher Littlefield: Yeah, thanks to the thing I'd add is that's an area where we continue to invest and continue to get better in terms of driving improvements in our IRA, earning more IRA rollovers and keeping those assets either in plan or in an IRA with principal. And we've seen success on that over the last couple of course, specifically with the straws. Though, I just want to make sure I'm clear, though, we're only seeing a very slight uptick in rate. It's so it's much more about market impact on what we're seeing in the draws than it is on rate of participant withdrawals.

Unknown Executive: The thing I'd add is that's an area where we continue to invest and continue to get better in terms of driving improvements in our IRA, earning more IRA rollovers, and keeping those assets either in the plan or in an IRA with principal. And we've seen success on that over the last couple quarters. Specifically with withdrawals, though, I just want to make sure I'm clear.

Speaker Change #102: Thanks to me the thing I'd add is that's an area, where we continue to invest and continue to get better in terms of driving improvements in our Iowa, earning more IRA rollovers in keeping those assets either in the plan or in our rig with principal and we've seen success on that over the last couple of quarters, specifically with the strong. So I just wanted to make sure I'm clear, though we're all.

Unknown Executive: We're only seeing a very slight uptick in rate, so it's much more about the market impact on what we're seeing in withdrawals than it is about the rate of participant withdrawals. And so that market is inflationizing account values, and when the withdrawals are taken, it's just larger amounts being taken. And it's also, while it's anecdotal, people tend to retire in up markets.

Speaker Change #103: And we've seen a very slight uptick in rate. So it's much more about market impact on what we're seeing in withdrawals than it is on right off participant withdrawals and so that market inflating account values and linear draws were taken interest larger amounts being taken and it's also while it's anecdotal but people tend to retire and upmarket.

Daniel Houston: And so that market inflating account eyes, and when the draws are taken, it's just larger amounts being taken. And it's also, while it's anecdotal, you know, with people tend to retire in up market. And so you would expect to sort of see people maybe taking advantage of high account values at that point in time and taking opportunity. But again, this is much more; I call it more than 75% of the attribution is to market, and then a little bit more on the sliding increase in rate. So you just really too quick, other additional comments, remember with Principal Financial Network, our PFN advisors, we've benefit directly from their ability to gather these sorts of assets.

Unknown Executive: And so you would expect to sort of see people maybe taking advantage of high account values at that point in time and taking opportunities. But again, this is much more, I'd call it more than 75% of the attribution is to market and then a little bit more on the slight increase in rate. Suneet, just really two quick other additional comments.

Speaker Change #103: And so you would expect to sort of see people may be taking advantage of high values at that point in time and taking opportunity, but again. This is much more I'd call it more than 75% over the attribution as to market and then a little bit more on the slight increase in rates can you just really two quick other additional.

Unknown Executive: Remember, with Principal Financial Network, our PFN advisors, we benefit directly from their ability to gather these sorts of assets. And then, within PGI, I know that we have a lot of these investment products sitting on our distribution partners' platforms that are gathering rollover IRAs equally. So principals participating at a variety of different levels; our comments coming out of the gates were primarily focused on our record-keeping platform. Hopefully, that helps. It does, and I think there are some things that you guys have that maybe others don't, so that's helpful.

Speaker Change #104: Comments remember with principal financial network, our PFM advisers, we benefit directly from their ability to gather these sorts of assets and then within Pgi and know that we have a lot of these investment products sitting on our distribution partners' platforms that are gathering rollover iras equally so principals participating.

Daniel Houston: And then within PTI, I know that we've had a lot of these investment products sitting on our distribution partners' platforms that are gathering rollover IRAs equally. So, first of all, participating on a variety of different levels are comments coming out of the gaze who are primarily focused on record keeping platform. Hopefully, that helps. It does, and I think there are some things that you guys have that maybe others don't, so that's helpful.

Speaker Change #104: On a variety of different levels our comments.

Speaker Change #105: Coming out of the gains were primarily focused on our record keeping platform hopefully that helps it does and I think there are some things that you guys have that maybe others don't so that's helpful. My follow up and it's related is if we think about our I S. You gave us the net revenue growth target, but obviously that combines two John Barnidge his question PRT.

Suneet Laxman L. Kamath: My follow-up, and it's related, is if we think about RIS. You give us the net revenue growth target, but obviously that combines with John Barnidge's question about PRT as well as the fee business. So if we were to just look at the defined contribution business at principle, can you give us a sense of what revenue growth looks like there and maybe how it compares to the industry? That may be a follow-up question, unless you've got that handy, Chris.

Christopher Littlefield: My follow up, and it's related, is if we think about RIS, you give us the net revenue growth target. But obviously that combines to John Barnage's question, PRT as well as the fee business. So if we were to just look at the defined contribution business at Principal, can you give us a sense of what revenue growth looks like there and maybe how it compares to the industry? History? Yeah, maybe a follow-up unless you've got that handy, Chris. Well, I think what we've done as we've gone to the segment reporting is we don't break down specifically the fee and the spread revenue components.

Speaker Change #106: As well as the fee business. So if we were to just look at the defined contribution business at principal can you give us a sense of what revenue growth looks like there and maybe how it compares to the industry.

Speaker Change #107: Maybe a follow up.

Speaker Change #108: Unless you got that handy Chris.

Unknown Executive: I think what we've done as we've gone through the segment reporting is we don't break down specifically the fee and the spread revenue components. What I would say is we feel good about where we are. We believe that we're growing at or above the industry average in terms of revenue. But yeah, we're sort of looking at all of our retirement businesses together because that's how we operate, manage, and lead that business.

I think what we've done as we've gone through the segment reporting as we don't break down specifically about feet on the spread revenue components. What I would say is we feel good about where we're at we believe that we're growing at or above the industry average in terms of revenue right.

Christopher Littlefield: What I would say is we feel good about wherever we're at. We believe that we're growing out or above the industry average in terms of revenue rate. But yeah, we're sort of looking at all of our retirement business together, because that's how we operate and manage and leave that business. So, again, if I were to think about sort of dynamics, we've sort of pointed out, you know, the core strength of principle and that small-to-mid market continues. We're at a head-of-plan with respected sales and revenue rates on our small-to-mid business. Large tends to be a little bit more open arc, and so the revenue profiles a little bit different.

Speaker Change #109: Yeah, we were sort of looking at all of our retirement business together, because that's how that's how we.

Speaker Change #109: Operate and manage and lead that business. So again, if I were to think about sort of dynamics, we sort of pointed out.

Unknown Executive: So again, if I were to think about sort of dynamics, we sort of pointed out, you know, the core strength of principle and that small to mid market continues. We're ahead of plan with respective sales and revenue rates for our small to mid business. Large tends to be a little bit more open arc, and so the revenue profile is a little bit different.

Speaker Change #109: The core strength of principal in that small to mid market continues we're at or ahead of plan with respect to sales and revenue rates on our small to mid business.

Speaker Change #109: Large tends to be a little bit more open Arkansas. The revenue profile is a little bit different.

Christopher Littlefield: But in our core markets, you know, if we think about recurring deposits on small-to-mid, up 10 percent in small-to-mid versus overall at 7 percent, we think about new business net revenue is up; our pipeline is up. So, we actually feel really good about the overall performance of our fee business. And so, Nate, you've heard this as we've been out talking to investors. Principle really has, within the last 18 months, adopted an enterprise strategy in doing that. We think about retirement across the entire organization. We also think about SMB across the organization. So, again, we want to make sure we capture those profits and revenues for the enterprise where we actually capture them and would fuck it is less important.

Speaker Change #109: But in our core markets. If we think about recurring deposits on the small to mid up 10% and small to mid versus overall at 7%. We think about new business net revenue was up our pipeline is up so we actually feel really good about the overall performance of our fee business as you've heard this as we've been out talking to investors.

Unknown Executive: But in our core markets, you know, if we think about recurring deposits on small to mid-sized accounts up 10% in small to mid versus overall at 7%, we think about new business net revenue is up, and our pipeline is up. So we actually feel really good about the overall performance of our fee business. You've heard this as we've been out talking to investors. Principal really has, in the last 18 months, adopted an enterprise strategy.

Speaker Change #110: Principal really has within the last 18 months adopted an enterprise strategy and doing that we think about retirement across the entire organization. We also think about SMB across the organization. So again, we want to make sure we capture those profits and revenues 40 enterprise, where we are.

Operator: In doing that, we think about retirement across the entire organization. We also think about SMB across the organization. So again, we want to make sure we capture those profits and revenues for the enterprise, where we actually capture them in which bucket is less important. So hopefully that helps. Thanks.

Speaker Change #110: Actually capture them in which bucket is less important so hopefully that helps.

Christopher Littlefield: Hopefully, that helps.

Unknown Executive: It does.

Tom Gallagher: Thanks. Thank you.

Speaker Change #111: It does thanks.

Speaker Change #111: Thanks.

Thomas George Gallagher: Thank you. The next question is coming from Tom Gallagher of Evercore ISI. Please go ahead. Good morning.

Tom Gallagher: The next question is coming from Tom Gallagher of Evercore ISI. Please go ahead. Good morning. I had a few questions related to Sunit's line of questioning. Can you talk a bit about plan-wobble retention this quarter? I know in some prior quarters where RIS fee flows were weaker. You had talked about losing some large cases.

Speaker Change #112: Thank you. The next question is coming from Tom Gallagher of Evercore ISI. Please go ahead.

Unknown Executive: I had a few questions related to Suneet's line of questioning. Can you talk a bit about plan level retention this quarter? I know in some prior quarters where RAS fee flows were weaker, you talked about losing some large cases. So can you talk about just the overall level of plan retention this quarter and whether you had any of those large case losses? I want to brag on Chris and his team because they've made significant improvements with the full integration of the acquisition and the most recent acquisition on the ESOP side.

Thomas George Gallagher: Good morning.

Thomas George Gallagher: A few questions related to <unk>.

Wyden: Wyden of questioning the can you talk a bit about planned level retention this quarter I know in some prior quarters where Rnas.

Thomas George Gallagher: The flows were weaker you had talked about losing some large cases. So can you talk about just overall level.

Christopher Littlefield: So, can you talk about just overall level of plan retention this quarter and whether you had any of those large case losses? Yeah. Right. I got on Christmas team because they've had significant improvement with the full integration of the acquisition and the most recent acquisition on the ESOP side. And we're really excited about our retention with small media and large Christmas. Yeah. Thanks to the question, Tom. Again, we've seen very favorable contract retention at probably all-time positive levels for principle. So, no significant large losses and very, very strong contract retention across all segments this year.

Speaker Change #115: A planned retention this quarter and whether you had any of those large case losses.

Speaker Change #115: Yeah. This is Greg on Christmas team, because they've had significant improvement with the full integration of the acquisition and the most recent acquisition on the Aesop side.

Unknown Executive: And we're very excited about our retention, small, medium, and large. Yeah, yeah, thanks for the question, Tom. Again, we've seen very favorable contract retention at probably all-time positive levels for principal. So no, no significant large losses, and very, very strong contract retention across all segments this year. So really good.

Chris: And we're very excited about our retention more small medium and large Chris.

Unknown Executive: In addition, customer satisfaction, and advisor NPS scores are all trending positive and in a good direction. So, you know, I feel really good about where we sit from a contract retention perspective. So you feel like you've gotten through the whole pig through the python from the Wells transaction; you don't see a lot of risk to those going forward. Is that fair? I think that's fair. I mean, you're always going to have a couple that you're working on.

Chris: Yeah. Thanks for the question Tom again, we've seen very favorable contract retention, probably all time positive levels for principal so no no significant large losses and very.

Chris: Very strong contract retention across all segments. This year, so really good in addition customers.

Daniel Houston: So, really good. In addition, customer satisfaction, advisor, and PS scores are all trending positive in a good direction. So, you know, I feel really good about where we sit from a contract retention perspective. So, you feel like you've gotten through the whole pick through the Python from the Wells transaction. You know, you know, see a lot of risk to those going forward as that fair. I think that's fair. I mean, you are always going to have a couple that you're working on, but in terms of overall, like a broad-based comment, feel really good about retention.

Chris: Customer satisfaction adviser NPS scores are all trending positive in a good direction. So.

Chris: Feel really good about where we sit from contract retention perspective.

So you feel like you've gotten through the whole picture the Python from from the Wells transaction, you don't see a lot of risk to those going forward is that fair.

Thomas George Gallagher: But in terms of overall, like a broad-based comment, feel really good about retention. But I do think we're through a lot of that volatility from that integration talk. Great.

Speaker Change #116: I think that's fair I mean, you always are going to have a couple that you're working on but in terms of overall like a broad based comment and feel really good about retention, but also I do think we're through a lot of that volatility from from that integration Tom.

Daniel Houston: But so, I do think we're through a lot of that volatility from that integration.

Daniel Houston: Great, and then just my follow-up is considering that and just listening to your comments about participant level retention and outflows, would you say the and grant that I I think your comments are totally fair like it's part of this just based on asset levels. When the market goes up a lot year, you know the same level of participant account value results in a larger redemption, so I totally get that. But having said that, when I look at the three and a half billion dollars of quarterly outflows this quarter, considering there's very good planned level retention, is that a reasonable sort of glide path to think about going forward here for a while? So obviously, aside from the Q seasonally stronger Q1, is that like a decent run rate that we should be thinking about just given all those dynamics.

Unknown Executive: And then just my follow-up question is, considering that and just listening to your comments about participant level retention and outflows, would you say, and granted, I think your comments are totally fair, like it's part of this just based on asset levels. When the market goes up a lot, the same level of participant account value results in a larger redemption. So I totally get that.

Speaker Change #116: Great and then just my follow up is.

Speaker Change #118: So considering that and just listening to your comments about participant level.

Speaker Change #117: Retention in outflows.

Speaker Change #119: Would you say the grant that I I think your comments are totally fair like it's part of this just based on asset levels.

Unknown Executive: But having said that, when I look at the $3.5 billion of quarterly outflows this quarter, considering there's very good plan level retention, is that a reasonable sort of glide path to think about going forward here for a while? Obviously, aside from the seasonally stronger Q1, is that like a decent run rate that we should be thinking about, just given all those dynamics? Yeah, I think that's a fair question.

Speaker Change #120: When the market goes up a lot year.

Speaker Change #120: The same.

Speaker Change #122: Level of participant account value resulted in a larger redemption, so I totally get that but having said that when I look at the $3 $5 billion of quarterly outflows.

Speaker Change #121: This quarter, considering theres very good planned level of retention is that a reasonable sort of glide path to think about going forward here for a while.

Speaker Change #121: So obviously aside from the Q seasonally stronger Q1 does that sounds like a decent run rate that we should be thinking about just given given all those dynamics.

Daniel Houston: Yeah, I think that's a fair question. If we kind of look at the trends that impacted second quarter, whether it's the strong equity market, the volatility of large planned sales, as well as a slightly elevated participant withdrawals, offset by, again, one point out strong deposits, both recurring and transfer, as well as strong contract retention, we think those trends will continue and that run rate. We expect to see some pressure and that cash flow to the balance of the year. Okay, thanks.

Unknown Executive: If we kind of look at the trends that impacted the second quarter, whether it's the strong equity market, the volatility of large plan sales, as well as slightly elevated participant withdrawals, offset by again, I want to point out strong deposits, both recurring and transfer, as well as strong contract retention, we think those trends will continue, and at that run rate, we expect to see some pressure in that cash flow for the balance of the year. Okay, thanks. Thank you. The next question is coming from Wilma Burdis of Raymond James. Please go ahead. Hey, good morning.

Speaker Change #123: Yeah, I think that's a fair I think that's a fair question. If we kind of look at the trends that impacted second quarter, whether it's the strong equity market volatility of large plan sales.

Speaker Change #123: As well as a slightly elevated participant withdrawals offset by again I want to point out strong deposits, both recurring and transfer as well as strong contract retention. We think those trends will continue and that run rate, we expect to see some pressure in that cash flow through the balance of the year.

Speaker Change #124: Okay. Thanks.

Loma Berta: Thank you. The next question is coming from Loma Berta of Raymond James. Please go ahead.

Thomas George Gallagher: Thanks, Tom.

Speaker Change #125: Thank you. The next question is coming from him a burden of Raymond James. Please go ahead.

Deanna Strable: Hey, good morning. Could you talk a little bit about why you felt comfortable lowering the RBC target at this time? What's the full 500 million of excess capital that's freed up by the change? And do you think, I know these are a lot of questions all the one, but do you think at some point you could start to feel comfortable operating in a lower RBC in the near term? And how long would it take to evaluate that? Thanks. Yeah, well I really appreciate the question. I'll have to give a response. Yeah, thanks. Well, man, there was quite a few different components of that, so I'll try to touch on all of it. So if you just go back to our prepared remarks, I think we talked about the reason for the change. You know, obviously, a few years ago, we made the strategic decision to exit mean sure. We felt this new days in U L S G that change our liability profile; it changed our risk profile. And so, as a follow-up to that, we have been evaluating what our target RBC level should be. We considered business mix, we considered risk profile, we considered our extensive capital risk analysis. We also looked at what our competitors target and also had a lot of conversations with our rating agencies and regulators as well. And so, you know, the outcome is what you saw is that we lowered our target RBC level from the previous 400% to a range of 375 to 400 percent. You mentioned the quantification of that difference; you were a little high. It was really about 360 million is the difference between that 375 and the 400 percent. We have no plans to immediately lower RBC to that level, and we're going to remain prudent in the current environment, which we expect is going to continue to be volatile and uncertain. So you'll likely see us operate in the upper portion of that targeted range for the foreseeable future, but you will see some volatility quarter to quarter, primarily driven by just that volume of attractive organic growth opportunities. But again, feel very good overall with our capital levels and also feel really good about being able to continue to return a significant amount of capital back to our shareholders. Thank you.

Wilma Carter Jackson Burdis: Could you talk a little bit about why you felt comfortable lowering the RBC target at this time? Was the full $500 million of excess capital of the subs freed up by the change, and do you think that, I know these are a lot of questions all in one, but do you think at some point you could start to feel comfortable operating at a lower RBC in the near term, and how long would it take to evaluate that? Thanks. Yeah, Wilma, I really appreciate the question. I'll have Deanna respond.

Hima Inguva: Hey, good morning could you talk a little bit about why you felt comfortable or in the RBC target at this time.

Speaker Change #127: The full $500 million excess capital of subs freed up by the change and do you think that any of these.

Speaker Change #128: There are a lot of questions all in one but do you think at some point you can start to feel comfortable operating at a lower RBC in the near term and how long would it take to that thanks.

Daniel Joseph Houston: Well I really appreciate the question I'll have Dan respond yes. Thanks, one month, there was quite a few different components of that so I'll try to touch on all of it so.

Deanna Dawnette Strable: In prepared remarks, I think we talked about the reason for the change. You know, obviously, a few years ago, we made the strategic decision to exit and reinsure retail FISC annuities and ULSG. That changed our liability profile; it changed our risk profile, and so as a follow-up to that, we have been evaluating what our target RBC level should be. We considered business mix, we considered risk profile, and we considered our extensive capital at risk analysis.

Daniel Joseph Houston: So if you just go back to our prepared remarks, I think we talked about the reason for the change.

Daniel Joseph Houston: You know obviously, a few years ago, we made the strategic decision to exit reinsure retail fixed annuities and you see that changed our liability profile it changed our risk profile and so as a follow up to that we have been evaluating what our target RBC levels should be we.

Daniel Joseph Houston: Consider the business mix, we considered risk profile, we considered our.

Daniel Joseph Houston: Extensive capital at risk analysis.

Deanna Dawnette Strable: We also looked at what our competitors were targeting and also had a lot of conversations with our rating agencies and regulator as well. And so, you know, the outcome is what you saw is that we lowered our target RBC level from the previous 400 percent to a range of 375 to 400 percent. You mentioned the quantification of that difference. You were a little high.

Daniel Joseph Houston: We also looked at what our competitors target and also had a lot of conversations with our rating agencies and regulators as well and so you know the outcome as what you saw is that we lowered our target RBC level from the previous 400% to a range of 375% to 400%.

You mentioned the quantification of that difference you're a little high it was really about the $360 million is the difference between that 375 and the 400%.

Deanna Dawnette Strable: It was really about $360 million, the difference between that $375 million and $400 million. We have no plans to immediately lower RBC to that level, and we're going to remain prudent in the current environment, which we expect is going to continue to be volatile and uncertain. So you'll likely see us operate in the upper portion of that targeted range for the foreseeable future, but you will see some volatility quarter to quarter, primarily driven by just that volume of attractive organic growth opportunities. But again, I feel very good overall with our capital levels and also feel really good about being able to continue to return a significant amount of capital back to our shareholders.

Daniel Joseph Houston: We have no plans to immediately lower RBC to that level.

Daniel Joseph Houston: We're going to remain prudent in the kind of environment, which we expect is going to continue to be volatile and uncertain. So you'll likely see us operate in the upper portion of that targeted range for the foreseeable future, but you will see some volatility quarter to quarter, primarily driven by.

Daniel Joseph Houston: Just that volume of attractive organic growth opportunities.

Daniel Joseph Houston: But again feel very good overall with our capital levels and also feel really good about being able to continue to return a significant amount of capital back to our shareholders.

Deanna Dawnette Strable: Thank you. And could you help us size or quantify the potential capital benefits from using the Bermuda Entity for PRT? And I know you mentioned a little bit earlier how you're thinking about using that, but maybe help us think about how you would think about it over the next 18 months or two years or so. Thanks. Yeah, well, I probably wouldn't think about it as freeing up a lot of capital. I would think about it more as giving us the ability to go after a slightly higher volume of PRT cases for similar amounts of capital. And so, you know, that's how I would term it, up and kind of size it.

Speaker Change #129: Thank you and could you help us size or quantify the potential capital benefits from using the Bermuda entity for PRT and I know you mentioned a.

Deanna Strable: Could you help us size or quantify the potential capital benefits from using the permutantity for PRT? And I know you mentioned a little bit earlier how you're thinking about using that, but maybe help us think about how you would think about it over the next 18 months or two years or so. Thanks. Yeah, well, I probably wouldn't think about it as freeing up a lot of capital. I would think about it more as giving us the ability to go after a slightly higher volume of PRT cases for similar amounts of capital. And so, you know, that's how I would like to give you a little bit of time.

Speaker Change #130: A little bit earlier, how youre thinking about using that but maybe maybe help us think about how you would think about it over the next 18 months or two years or so.

Speaker Change #131: Yeah, well I, probably wouldn't think about it is freeing up a lot of capital I would think about it more as giving us the ability to go after a slightly higher volume.

Speaker Change #131: T cases for similar amounts of capital and so you know that's how I would permit often kind of size it.

Deanna Strable: It often kind of size it, you know, the elevated to give you a little bit of color, the outsize PRT volume in the current quarter, maybe had 50 to 70 million of capital usage. And maybe that gives you a little bit of an idea relative to that, but I wouldn't expect it to be massive amounts of free up, but again, the ability to allow us to grow the company, grow our business, take advantage of attractive return opportunities that align with our target markets of retail SMB. Thank you.

Deanna Dawnette Strable: You know, the elevated, to give you a little bit of color, the outsized PRT volume in the current quarter maybe had $50 to $70 million of capital usage. And maybe that gives you a little bit of an idea relative to that, but I wouldn't expect it to be massive amounts of free up, but again, the ability to allow us to grow the company, grow our business, and take advantage of attractive return opportunities that align with our target markets of retirees. Thank you, Wilma.

Speaker Change #131: Elevated to give you a little bit of color. The that's the outsized PRT volume in the current quarter, maybe had $50 million to $70 million of capital usage.

And maybe that gives you a little bit of an idea relative to that but I wouldn't expect it to be massive amounts of free up but.

Speaker Change #131: Again, the ability to allow us to grow the company grow our business to take advantage of attractive return opportunities that align with our target markets are retired.

<unk>.

Rommel: Thank you Rommel.

Wilma Carter Jackson Burdis: Thank you. The next question is coming from Josh Shanker of Bank of America. Please go ahead.

Josh Shanker: The next question is coming from Josh Shanker of Bank of America. Please go ahead. Yes, thank you. You know, I think you answered mostly specifically.

Thank you. The next question is coming from Josh Shanker of Bank of America. Please go ahead.

Joshua David Shanker: Yes, thank you. You know, I think the answer mostly suffices. I want to go back to Ryan's question about the EPS trend. I have no doubt in your confidence that you're on track for the nine to 12% growth. But when I look out to 2025, how much of the seasonality factor that you're experiencing in 24 is going to repeat? And how much did the seasonality surprise you in 24 that you would not expect to recur in 24?

Joshua David Shanker: Thank you you know I think you answered mostly personally I want to go back to Ryan's question about the EPS trend I have no doubt and your confidence that you're on track for the 9% to 12% growth, but when I look out to 2025, how much of the seasonality factor that you're experiencing in 'twenty four is going to repeat.

Daniel Houston: I want to go back to Ryan's question about the EPS friend. I have no doubt in your confidence that you're on track for the 9 to 12 percent growth. But when I look out to 2025, how much of the seasonality sector that you're experiencing in 24 is going to repeat. And how much do the seasonality surprise you in 24 that you would not expect to recurrent 25? Yeah, Josh, you know, that will be something that we spend a little bit more time thinking about prior to Outlook. But one fact that I would say is if you look at our performance for the first half of the year, we're operating pretty much exactly on top of what we would have expected.

Ryan Joel Krueger: And how much did the seasonality surprise you.

Ryan Joel Krueger: In 24 that you would not expect to recur in 'twenty five.

Deanna Dawnette Strable: Yeah, Josh, you know, that'll be something that we spend a little bit more time thinking about prior to Outlook. But one fact that I would say is, if you look at our performance for the first half of the year, we're operating pretty much exactly on top of what we would have expected. And so from that perspective, I don't see anything that would change that kind of pattern of earnings. But you know, one of the commitments we have is as we go into Outlook in early 25, we want to make sure we are more transparent on that level of seasonality that we expect in total but also for a few of the key businesses like PGI and SBB. You know, obviously, one wildcard to that that, you know, I know we continue to talk about is the dental pattern of seasonality continuing to be different than what we experienced pre-COVID.

Josh: Yeah Josh.

Speaker Change #135: That'll be something that we spend a little bit more time thinking about prior to outlook, but one fact that I would say is if you look at our.

Performance for the first half of the year, we're operating pretty much exactly on top of what we would've expected and.

Daniel Houston: And so from that perspective, I don't see anything that would change kind of that pattern of earnings. But, you know, one of the commitments we have is, as we go into outlook in early '25, we want to make sure we are more transparent on that level of growth. And I think we have a one wild card to that, that, you know, I know we continue to talk about is the dental pattern of seasonality. It's continuing to be different than what we experienced, you know, pre-COVID. I think we thought it might materialize a little bit different.

Speaker Change #135: So from that perspective, I don't see anything that would change.

Speaker Change #135: Kind of that pattern of earnings, but you know one of the commitments we have as we go into outlook in early 'twenty five we want to make sure. We are more transparent on that level of seasonality that we expect them in total but also for a few of the key businesses like P. G. I N S. P. D. Obviously, one wild card to that.

Speaker Change #135: But you know I I know, we continue to talk about is the dental pattern of seasonality is.

Speaker Change #135: It's continuing to be different than what we experienced pre COVID-19 I think we thought it would might materialize a little bit different we were fortunate in the current quarter that any of that elevated seasonality was offset by positive.

Deanna Dawnette Strable: I think we thought it might materialize a little bit differently. We were fortunate in the current quarter that any of that elevated seasonality was offset by positive underwriting trends in both life and disability. But I'd say that's probably the one wildcard relative to that.

Daniel Houston: We were fortunate in the current quarter that any of that elevated seasonality was offset by positive, underwriting trends in both life and disability. But I'd say that's probably the one wild card relative to that. But, you know, our commitment to you is to be a little more transparent as we come into the year of 2025.

Speaker Change #135: Underwriting trends in both life and disability, but I'd say, that's probably the one wildcard.

Joshua David Shanker: But you know, our commitment to you is to be a little more transparent as we come into the year of 2025. I think when we get to our November 18th investor day, we'll also be able to provide additional thoughts and perspective on those business trends into 2025. So just to be clear that the seasonality wasn't well enough vocalized during the outlook, but things are actually in line with how you'd expect the patterning of earnings with the exclusion of that dental item. Yeah, so what I would say, in total, it was not unexpected.

Speaker Change #135: Wildcard relative to that but you know our commitment to you is to be a little more transparent as we come into the year of 2025.

Daniel Houston: That is going to be it to our November 18th investor; they will also be able to provide additional thoughts and perspective on those business trends in 2025. So just to be clear, that the seasonality wasn't well enough vocalized during the outlook but things are actually in line with how you'd expect the patterning of earning with the exclusion that dental item. Yeah, so what I would say in total, it was not unexpected. I think we were pretty clear about PGI seasonality and SBD seasonality, but we didn't bubble it up to talk about how that impacted overall EPS from a quantification, and again, that's what we'll look to refine as we move into 2025 outlook.

Speaker Change #135: We get to our November 18th Investor Day will also be able to provide additional thoughts and perspective on on those business trends into 2025.

Speaker Change #135: So just to be clear that the seasonality wasn't well enough vocalized during the outlook, but but things are actually in line with how you'd expect the pattern of earnings with the exclusion of that dental item.

Speaker Change #136: Yeah, So what I would say in total it was not unexpected I think we were pretty clear about pgi seasonality and SPD seasonality, but we didnt bubble it up to talk about how that impacted overall EPS from a quantification.

Deanna Dawnette Strable: I think we were pretty clear about PGI seasonality and SPD seasonality, but we didn't bubble it up to talk about how that impacted overall EPS from a quantification point of view. And again, that's what we'll look to refine as we move into 2025 Outlook. Okay, thank you very much.

Speaker Change #136: And again, that's what we'll look to refine as we move into 2025 outlook.

Daniel Houston: Okay, thank you very much.

Speaker Change #137: Okay. Thank you very much.

Mike Ward: Thank you. The next question is coming from Mike Ward of City. Please go ahead. Okay, thank you.

Speaker Change #136: Yeah.

Josh: Thanks, Josh.

Operator: Thank you. The next question is coming from Mike Ward of Citi. Please go ahead.

Speaker Change #138: Thank you. The next question is coming from Mike Ward of Citi. Please go ahead.

Michael Augustus Ward: Hey guys, thank you. I was wondering if you could discuss some of the details around the resolutions and in office maturities so far. Yes, we can definitely do that. Deanna, do you want to take it?

Michael Augustus Ward: Hey, guys. Thank you I was wondering if you could discuss some of the any detail around the resolutions in office maturities so far.

Mike Ward: I was wondering if you could discuss some of the any detail around the resolutions in the office, no charities so far. Yeah, we can definitely do that. You want to take it? Yeah, we did some color on the prepared remark. You know, we came into the year with about 510 million of maturities. We paid off it or resolved everything that have come to bear thus far this year. We have about 290 million remaining underlying metrics; of those, remain strong, and we continue to work to bring those to a positive outcome. You may have noticed that our CML losses in the second quarter did have about 23 million dollars of impact.

Speaker Change #140: Yes, we can.

Speaker Change #141: We do that you want to take it yeah. We gave some color on that on the prepared remarks, you know we came into the year with about $510 million of maturities and we paid off that are resolved everything that have come to bear. Thus far this year, we have about $290 million remaining underlying metrics of those remained strong and we can.

Deanna Dawnette Strable: Yeah, we did some color on the prepared remarks. You know, we came into the year with about $510 million in maturities. We have paid off or resolved everything that has come to bear thus far this year. We have about $290 million remaining. Underlying metrics of those remain strong, and we continue to work to bring those to a positive outcome. You may have noticed that our CML losses in the second quarter did have about $23 million of impact.

Speaker Change #142: You need to work to bring those to a positive outcome you may have noticed that our CMO losses in the second quarter.

Speaker Change #142: It did have about $23 million of intact I do want to point out that that was almost entirely due to reserves.

Deanna Strable: I do want to point out that that was almost entirely due to reserves increasing, with about a 15 million dollar increase in our loan specific reserve, which is across four properties, and about a 10 million dollar increase in our general reserve. So, again, on a gap basis, we have about 170 million of reserves relative to our CML portfolio and still feel really good about the high quality of our overall commercial mortgage loan portfolio and the office portfolio in particular. Okay, that helps Mike. Yeah, no, that does.

Deanna Dawnette Strable: I do want to point out that that was almost entirely due to reserves increasing, with about a $15 million increase in our loan-specific reserve, which is across four properties, and about a $10 million increase in our general reserve. So again, on a gap basis, we have about $170 million of reserves relative to our CML portfolio and still feel really good about the high quality of our overall commercial mortgage loan portfolio and the office portfolio in particular. Hopefully, that helps. Mike. Yeah, no, that does not sound right.

Speaker Change #142: Increasing what's about a $15 million increase in our loan specific reserve, which is across four properties and about a $10 million increase in our general reserve.

Speaker Change #142: So again on a GAAP basis, we have about $170 million of reserves relative to our CML portfolio.

Speaker Change #142: And still feel really good about the high quality of our overall commercial mortgage loan portfolio in the office portfolio in particular.

Speaker Change #143: Hopefully that helps Mike.

Michael Augustus Ward: Yeah, no that does.

Kamal Bhatia: Okay, and then maybe, maybe for, maybe for Commal just on PGI flows. I know you've gotten a couple questions on this, but just curious, you know, what, what you're seeing more recently. It seems like there's a Fed cut sort of more likely, at least on the horizon, wondering if that is driving an uptick in clients wanting to put money to work today. Yeah, Mike, that's a great question.

Michael Augustus Ward: <unk>.

Michael Augustus Ward: Okay, and then maybe, maybe for maybe for Kamal just on PGI flows, I know you've gotten a couple questions on this, but I'm just curious, you know, what you're seeing more recently. It seems like there's a Fed cut sort of more likely, at least on the horizon. Wondering if that is why I'm driving an uptick in clients wanting to put money to work today. Yeah, Mike So, like many other economists, our own view is that we are going to see a rate cutting cycle start here.

Speaker Change #144: Okay, and then maybe.

Speaker Change #144: Maybe for maybe for Tom I'll, just on Pgi flows I know you've gotten a couple of questions on this but.

Speaker Change #148: Just curious you know what what Youre seeing more recently it seems like there's a fed cut sort of more likely at least on the horizon and wondering if that is.

Speaker Change #145: Driving an uptick in <unk>.

Speaker Change #146: Clients wanting to put money to work.

Speaker Change #145: Today.

Michael Augustus Ward: But maybe to your question, I'll answer it from two perspectives, how it impacts our current book of business, but also how we see that helping or what we are hearing from clients in terms of engagement. What I would point out to you is that I do think there is an increasing conversation now that we are having with clients in anticipation of that on the fixed income side, there is a view that we are fairly sanguine in terms of the economic outlook.

Speaker Change #145: Yes.

Speaker Change #147: That's a great question. So so I think like like many other economists are our own view is we are going to see.

Kamal Bhatia: So, so I think like, like many other economists, our own view is we are going to see a rate cutting cycle start here, but maybe your question, I'll answer it from two perspectives: how it impacts our current book of business, but also how we see that. But helping or what we are hearing from clients in terms of engagement, what I would point out to you is, I do think there is increasing conversation. Now we are having with clients in anticipation on that, on the fixed income side, there is a view that we are fairly sanguine in terms of the economic outlook.

Speaker Change #145: Cutting.

Speaker Change #145: Cutting cycle start here, but maybe to your question I'll answer it from two perspectives, how it impacts our current book of business, but also how do you see that helping with what we are hearing from clients in terms of engagement.

Speaker Change #145: What I would point out to you is is I do think there is increasing conversation now we are having with clients.

Michael Augustus Ward: And as rate cut cycles begin, historically, clients look to longer duration strategies. And one of the areas we see a lot of interest in is our high quality, high yield franchise, which obviously has excellent performance, but that's an area we continue to see more interest in. With respect to the equity side, clearly, our REIT franchise, which is a big portion of our business, would benefit from that cycle starting. And, traditionally, equities move faster in anticipation of rate cuts than private equity real estate. So I wouldn't expect it to be any different this time.

Speaker Change #145: In anticipation on that on the fixed income side that is a view that we are fairly sanguine in terms of the economic outlook.

Kamal Bhatia: And as rate cuts cycles begin, historically, clients look to longer duration strategy, and one of the areas we see a lot of interest is in our high quality, high yield franchise, which obviously has excellent performance. But that's an area we continue to see more interest with respect to the equity side. We clearly are read franchise, which is a big portion of our business, would benefit from that cycle starting, and traditionally, equities move faster in anticipation of rate cuts than private equity real estate. So I would expect it to be any different this time. When you look at the macro trends in real estate, there are new sources of refinance capital emerging when you look at the marketplace.

Speaker Change #149: Great coach side, because began historically clients look to longer duration strategy and one of the areas. We see a lot of interest as the amount of high quality high yield franchise, which obviously has excellent performance, but that's an area. We continue to see more interest.

Speaker Change #149: With respect to the equity side, clearly a REIT franchise, which is a big portion of our business would benefit from that cycle, starting and traditionally equities move faster in anticipation of rate cuts than private equity real estate. So I wouldn't expect it to be any different this time when you look at the macro trends.

Kamal Bhatia: When you look at the macro trends in real estate, there are new sources of refinance capital emerging. When you look at the marketplace, you do see an increase in CNBS new issuance, both SASB and Conduit deals are improving, and you do see new entrants coming in to do refinancing. So I generally do think the anticipation of the rate cuts is creating more volume in the marketplace, but also more engagement. Hopefully that helped you, Mike. It does indeed.

Speaker Change #149: Real estate, there is new sources of refinance capital emerging when you look at the marketplace.

Kamal Bhatia: You do see an increase in CNBS, new issuance, what's as we and conduit deals are improving and you do see new entrance coming in to do the financing. So I generally do think the anticipation of the rate cuts is creating more volume in the marketplace, but also more engagement. Hopefully that has to mic. It does, thank you guys.

Speaker Change #149: The increase in C. M. B S. New issuance works has been conduit deals.

Speaker Change #149: Proving and you do see new entrants coming in to do the financing. So I generally do think the anticipation of the rate cards is creating more more volume in the marketplace, but also more engagement.

Speaker Change #149: Hopefully that helped too Mike.

Michael Augustus Ward: Thank you, guys. Thank you. We have reached the end of our Q&A. Mr. Houston, your closing comments, please.

Michael Augustus Ward: It does thank you guys.

Daniel Houston: Thank you.

Speaker Change #149: Okay.

Speaker Change #149: Yeah.

Speaker Change #149: Thank you we have reached the end of our Q&A Mr. Houston Your closing closing comments. Please.

Daniel Houston: We have reached the end of our Q&A, Mr. Houston. Your closing, closing comments, please. Thanks, Nana. We'll continue to leverage our integrated product portfolio with our distribution partners around the globe. Additionally, we'll focus on our high growth market and deploy our capital very judiciously, as we've discussed today. Lastly, we know the importance of aligning our expenses with our revenues and investing for the future. That is top of mind for us, if you would expect.

Daniel Joseph Houston: Thanks, Donna. We'll continue to leverage our integrated product portfolio with our distribution partners around the globe. Additionally, we'll focus on our high-growth market and deploy our capital very judiciously, as we've discussed today. Lastly, we know the importance of aligning our expenses with our revenues and investing for the future.

Daniel Joseph Houston: We will continue to leverage our integrated product portfolio with our distribution partners around the globe are definitely will focus on our high growth market and deploy our capital very judiciously as we've discussed today.

Operator: That is top of mind for us, as you would expect. Thanks for your time today. I hope to see you on the road in the next few months and certainly at Investor Day on November 18th. Thank you. Thank you. This concludes today's conference call. You may disconnect your lines at this time, and we thank you for your participation.

We know the importance of aligning our expenses with our revenues and investing for the future that is top of mind for us as you would expect.

Unknown Executive: Thanks for your time today. I hope to see you on the road in the next few months and certainly to Investor Day on November the 18th. Thank you.

Daniel Joseph Houston: For your time today I hope to see on the road in the next few months and certainly at Investor Day on November the 18th Thank you.

Unknown Executive: This concludes today's conference call. You may disconnect your lines at this time, and we thank you for your participation. Thank you.

Speaker Change #150: Thank you. This concludes today's conference call you may disconnect. Your lines at this time and we thank you for your participation.

Speaker Change #150: Okay.

Speaker Change #150: [music].