Q2 2024 Voya Financial Inc Earnings Call

Operator: Good morning, welcome to Voya Financial's second quarter 2024. All participants will be in a listen-only mode should you need assistance. Please email a conference specialist by pressing the star key followed by zero. There will be an opportunity to ask questions. If you would like to ask a question, you may press star then 1.

Good morning, welcome to Voya financials second quarter 2024 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press star two.

Operator: If you would like to withdraw your question, please press start. All participants are limited to one question and one follow-up. Transcription by Trans-Expert at Fiverr.com. I would now like to turn the call over to Mike Katz, Vice President of Finance. Thank you and good morning.

Participants are limited to one question and one follow up question. Please note. This event is being recorded I would now like to turn the call over to Mike CATT Executive Vice President of Finance. Please go ahead.

Mike CATT: Thank you and good.

Michael Robert Katz: Welcome to Voya Financial's second quarter 2024 earnings conference call. We appreciate all of you who have joined us this morning. As a reminder, materials for today's call are available on our website at investors.voya.com. Turning to slide two.

Yeah.

Speaker Change: Welcome to Voya financials second quarter 2024 earnings Conference call. We appreciate all of you who have joined US. This morning as a reminder, materials for today's call are available on our website at investors Voya Dot com.

Speaker Change: Turning to slide two.

Michael Robert Katz: Some of the comments made during the call may contain forward-looking statements or refer to certain non-GAAP financial measures within the meaning of federal securities law. Gap Reconciliations are available in our press release and financial supplement, found on our website. Now, joining me on the call are Heather Lavallee, our Chief Executive Officer, and Don Templin, our Chief Financial Officer. After their prepared remarks, we will take your questions. For the Q&A session, we have also invited the heads of our businesses. Specifically, Matt Toms, Investment Management, and Rob Grubka, Workplace Solutions. With that, let's turn to slide three, as I would like to turn the call over to Heather. Good morning, and thank you for joining us today.

Speaker Change: Some of the comments made during the call may contain forward looking statements, we will refer to certain non-GAAP financial measures within the meaning of federal Securities law.

Speaker Change: GAAP reconciliations are available in our press release and financial supplement found on our website.

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

Speaker Change: After their prepared remarks, we will take your questions before.

Speaker Change: For the Q&A session. We have also invited the heads of our businesses, specifically, Matt Toms investment management and.

Speaker Change: Rob group workplace solutions with that let's turn to slide three as I would like to turn the call over to Heather.

Heather: Good morning, and thank you for joining us today.

Heather Hamilton Lavallee: Our second quarter results reflect our success in strategic execution and sound capital management. We achieved our financial targets in the second quarter and remain on track to achieve our targeted full year results for 2024. We are executing our strategy, driving robust growth and commercial momentum in both workplace solutions and investment management, and we continue to demonstrate strong excess capital generation and high free cash flow conversion in line with our targets for 2024. Turning to slide five.

Heather: Our second quarter results reflect our success in strategic execution and sound capital management.

Heather: We achieved our financial targets in the second quarter and remain on track to achieve our targeted full year results for 2024.

Heather: We are executing our strategy driving robust growth in commercial momentum in both workplace solutions and in investment management.

Speaker Change: And we continue to demonstrate strong excess capital generation and high free cash flow conversion in line with our targets for 2024.

Speaker Change: Turning to slide five.

Heather Hamilton Lavallee: Our second-quarter adjusted operating EPS was $2.18. We generated strong fee-based revenues and wealth in investment management, offsetting higher-than-target aggregate loss ratios in health. As Don will discuss in more detail, we are actively addressing loss ratios by adjusting pricing on new business and renewals in order to return to our target range in 2025. While loss ratios have presented a headwind, we remain on track to deliver our full year EPF target of $8.25 to $8.45.

Speaker Change: Our second quarter adjusted operating EPS was $2 18.

Speaker Change: We generated strong fee based revenues in wealth and investment management.

Speaker Change: Offsetting higher than target aggregate loss ratios and health.

Speaker Change: As Don will discuss in more detail, we are actively addressing loss ratios by adjusting pricing on new business and renewals in order to return to our target range in 2025.

Don: Well loss ratios have presented a headwind we remain on track to deliver our full year EPS target of $8.25 to $8 45.

Heather Hamilton Lavallee: This is the result of the strong actions we have taken throughout the year to drive revenue growth and control spend while continuing to invest in the business. We have grown net revenues in line with our targets and maintained strong margins, driving higher earnings in investment management and wealth. These results reflect the transformation of our workplace solutions and investment management businesses over the past several years. Diversified revenues and robust commercial momentum across a breadth of markets and distribution channels are driving profitable growth and resiliency.

Speaker Change: This is a result of the strong actions, we have taken throughout the year to drive revenue growth and controlled spend while continuing to invest in the business.

Speaker Change: We have grown net revenues in line with our targets and maintain strong margins.

Speaker Change: Driving higher earnings in investment management and wealth.

Speaker Change: These results reflect the transformation of our workplace solutions and investment management businesses over the past several years.

Speaker Change: Diversified revenues and robust commercial momentum across a breadth of markets and distribution channels are driving profitable growth and resiliency.

Heather Hamilton Lavallee: And our capital light and high free cash flow businesses continue to demonstrate their capacity to generate excess capital, which has allowed us to further increase our dividend this quarter. Turning to slide six, with a market-leading presence across retirement and employee benefits, our Workplace Solutions business is uniquely positioned to help employers optimize their investments in workplace benefits and savings while providing their employees with comprehensive health and wellness solutions.

Speaker Change: And our capital light and high free cash flow businesses continue to demonstrate their capacity to generate excess capital, which has allowed us to further increase our dividend this quarter.

Speaker Change: Turning to slide six.

Speaker Change: With market, leading presence across retirement and employee benefits our workplace solutions business is uniquely positioned to help employers optimize our investments and workplace benefits and savings.

Speaker Change: Providing their employees with comprehensive health and wealth solutions.

Heather Hamilton Lavallee: Our strategy enables multiple paths for growth in the workplace by landing and retaining customers, by expanding our solution set, and by deepening our engagement. Across Workplace Solutions, we are landing new business, driven by the scale and breadth of our solutions and distribution across markets, tax codes, and employer sizes.

Speaker Change: Our strategy enables multiple paths for growth in the workplace.

Speaker Change: By landing and retaining customers.

Speaker Change: Expanding our solution set and by deepening our engagement.

Speaker Change: Across workplace solutions, we are landing new business, driven by the scale and breadth of our solutions and distribution across markets tax codes and employer sizes.

Heather Hamilton Lavallee: We continue to grow in full-service retirement, with a strengthening presence in the mid-market, continued momentum in the emerging market, and high retention rates. We expect positive full service flows throughout the second half of 2024 and into 2025.

Speaker Change: We continue to grow and full service retirement.

Speaker Change: With our strengthening presence in the mid market.

Speaker Change: <unk> momentum in the emerging market and high retention rates.

Speaker Change: We expect a positive full service flows throughout the second half of 'twenty 'twenty four and into 2025.

Heather Hamilton Lavallee: We're expanding our reach with customers through the solutions and capabilities we provide. We continue to build on expansion opportunities through BenefitFocus. Benefits Administration customers now represent our largest channel for HSA sales.

Speaker Change: We are expanding our reach with customers, who the solutions and capabilities we provide.

Speaker Change: We continue to build on expansion opportunities through benefit focus.

Speaker Change: And if its administration customers now represent our largest channel for HSA sales.

Heather Hamilton Lavallee: We're also delivering on the customer service enhancements needed to maximize the value of this platform with net promoter scores of 26 points year over year for the most recent renewal cycle. And to enhance our solution set in group life and voluntary, we are investing in leave management to meet employers' growing needs for a differentiated solution in this space. Our deepening engagement with customers is shown through the increased adoption of managed accounts and growth in our retail wealth management platform.

Speaker Change: We're also delivering on the customer service enhancements needed to maximize the value of this platform with net promoter scores up 26 points year over year for most recent renewal cycle.

Speaker Change: And to enhance our solution set in group life and voluntary we are investing in lead management to meet employers' growing needs for a differentiated solution in this space.

Speaker Change: Yeah.

Speaker Change: Our deepening engagement with customers is shown through the increased adoption of managed accounts and growth in our retail wealth management platform.

Heather Hamilton Lavallee: Turning to slide seven, managed account revenues are up 30% year over year, and retail wealth management continues to grow as a key distribution channel. We are investing in our advisor platform and our retail presence, with plans to further expand our team of field and phone-based professionals. Voya has over $100 billion in total client assets, with our advisors serving both the in-plan and out-of-plan wealth needs of our customers.

Speaker Change: And its account revenues are up 30% year over year and.

Speaker Change: In retail wealth management continues to grow as a key distribution channel.

Speaker Change: We are investing in our advisor platform and our retail presence with plans to further expand our team of field and phone based professionals.

Speaker Change: Boy has over $100 billion in total client assets with our advisers, serving both the in plan and out of planned wealth needs for our customers.

Speaker Change: Turning to slide seven.

Heather Hamilton Lavallee: Voya Investment Management's diversified and globally distributed investment strategies position us for continued growth across institutional and retail markets. With Institutional Fixed Income as our strategic anchor, we are focused on delivering exceptional solutions that are grounded in strong investment performance. Our clients are responding with greater demand, driving strong net inflows and growth expectations, supporting our outlook for 2% organic growth for the year. Strong flows in insurance for the first half of 2024 were driven by the breadth of our institutional client relationships.

Speaker Change: Boy investment management diversified and globally distributed investment strategies position us for continued growth across institutional and retail markets.

Speaker Change: With institutional fixed income as our strategic anchor we are focused on delivering exceptional solutions that are grounded in strong investment performance.

Speaker Change: Our clients are responding with greater demand driving strong net inflows and growth expectations supporting our outlook for 2% organic growth for the year.

Speaker Change: Strong flows in insurance for the first half of 2024 were driven by the breadth of our institutional client relationships.

Heather Hamilton Lavallee: Our income and growth franchise continues to support robust international retail flows. And with a refined intermediary channel strategy and new distribution leadership, we can continue to scale and strengthen our distribution of investment products and services globally in the institutional, sub-advisory, and intermediary channels. We also continue to expand into adjacent private and alternative strategies by delivering differentiated solutions and continued growth in our private funds, including plans to launch three funds during the second half of 2024.

Speaker Change: For all our income and grow the franchise continues to support robust international retail flows.

Speaker Change: Anywhere with a refined intermediary channel strategy and new distribution leadership.

Speaker Change: We continue to scale and strengthen our distribution of investment products and services globally, and the institutional sub advisory and intermediary channels.

Speaker Change: We also continue to expand into adjacent private and alternative strategies.

Speaker Change: Delivering differentiated solutions and continued growth in our private funds, including plans to launch three funds during the second half of 2024.

Heather Hamilton Lavallee: Voya Investment Management enters the second half of 2024 focused on execution and position for long-term sustainable growth. Turning to slide eight, at Voya, we are living our purpose and vision to drive positive outcomes for our clients, colleagues, and the communities in which we live and work.

Speaker Change: Boy investment management interest the second half of 2024 focus on execution and positioned for long term sustainable growth.

Speaker Change: Turning to slide eight at Voya.

Speaker Change: Living our purpose and vision to drive positive outcomes for our clients colleagues and the communities in which we live and work.

Heather Hamilton Lavallee: For example, by improving access to comprehensive financial guidance and education, we are having a positive influence on the decisions our customers are making about their savings and benefits. We are also expanding the solutions available to our customers that support caregiving, mental health, and emotional well-being. And in May, we celebrated our 11th annual National Days of Service, with over 70% of Voya employees participating in events that benefited a diverse set of charitable organizations across the country. With that said, Don will now provide more details on our performance and results. Don?

Speaker Change: For example by improving access to comprehensive financial guidance and education, we are having a positive influence on the decisions our customers are making about their savings and benefits.

Speaker Change: We're also expanding the solutions available to our customers that support caregiving mental health and emotional well being.

Speaker Change: And in May we celebrated our 11th annual National days of service with over 70% of Hawaii employees participating in events that benefited a diverse set of charitable organizations across the country.

Speaker Change: With that Dan will now provide more details on our performance and results Don.

Donald C. Templin: Thank you, Heather. Now, let's turn to our results on slide 10. We delivered $2.18 of adjusted operating earnings per share in the second quarter, compared with $2.21 a year ago. Our results reflect higher fee-based margins in wealth and investment management, offset by lower underwriting in health. We expect higher loss ratios in health to persist this year. That said, we are actively incorporating the elevated claims data into the January 2025 pricing to return loss ratios to our target range next year.

Dan: Thank you Heather.

Dan: Now, let's turn to our results on slide 10, we.

Dan: We delivered $2.18 of adjusted operating earnings per share in the second quarter compared with $2.21 a year ago.

Dan: Our results reflect higher fee based margins in wealth and investment management.

Dan: Offset by lower underwriting and health.

Dan: We expect higher loss ratios and health to persist this year.

Dan: That said, we are actively incorporating the elevated claims data into the January 2025 pricing to return loss ratios to our target range next year.

Donald C. Templin: Our focus on management actions, including diligence on spend, is helping us remain on track to achieve $8.25 to $8.45 of adjusted operating EPS in 2024. Second quarter adjusted net income was $201 million, compared to $154 million in the prior year quarter, due to more favorable investment gains and lower acquisition and integration costs.

Dan: Our focus on management actions, including diligence on spend is helping us remain on track to achieve $8 25.

Dan: To $8 45.

Dan: Of adjusted operating EPS in 2024.

Dan: Second quarter GAAP net income was $201 million compared to $154 million in the prior year quarter due to more favorable investment gains and lower acquisition and integration costs.

Donald C. Templin: Excess capital generation in the quarter remains robust at approximately $200 million, consistent with our track record of generating above our 90% target. And we remain on track to generate $800 million for the full year. Turning to wealth on slide 11.

Dan: Excess capital generation in the quarter remains robust at approximately $200 million consistent with our track record of generating above our 90% target and.

Dan: And we remain on track to generate $800 million for the full year.

Speaker Change: Turning to wealth on slide 11.

Donald C. Templin: We continue to improve outcomes and deliver value for our customers, driving growth in both assets and participants. Our participant count exceeds 7 million, representing a 6% TAGR growth since 2019, defined contribution client assets have grown to over $519 billion as of June 30. Full service and record keeping net outflows were $597 million and $1 billion, respectively, in the second quarter.

Speaker Change: We continue to improve outcomes and deliver value for our customers driving growth in both assets and participants.

Speaker Change: Our participant count exceeds 7 million, representing a 6% CAGR growth since 2019.

Speaker Change: Defined contribution client assets have grown to over $519 billion as of June 30.

Speaker Change: Full service and Recordkeeping, net outflows were $597 million and $1 billion, respectively in the second quarter.

Donald C. Templin: While improved equity markets are a net positive for retirement, they do have a counterintuitive effect on net flows by increasing the average account values of each participant's surrender even though our surrender rates have improved. We continue to retain 98% of all full-service plans, and sales are up, powered by the mid-market, where sales in the quarter were three times higher year over year. Looking forward, we continue to build a strong pipeline and expect positive net flows and full service for the second half of the year. Moving to slide 12. Wealth generated $214 million in adjusted operating earnings in the second quarter.

Speaker Change: While improved equity markets are a net positive for retirement, they do have a counterintuitive effect on net flows by increasing the average account values of each participants surrender, even though our surrender rates have improved.

Speaker Change: We continue to retain 98% of all full service plans and sales are up powered by the mid market where sales in the quarter are three times higher year over year.

Speaker Change: Looking forward, we continue to build a strong pipeline and expect positive net flows in full service for the second half of the year.

Speaker Change: Moving to slide 12.

Speaker Change: Wealth generated $214 million of adjusted operating earnings in the second quarter.

Donald C. Templin: This was meaningfully higher than the prior year due to strong fees and expense discipline. Net revenues were 3% higher year over year, driven by strong management actions and favorable markets. Fee-based revenues reflect consistent growth in our participants and strong equity markets in 2024. For spread income, our actions to drive higher margins in the current rate environment have helped to offset the effect of lower spread based assets. The spread income guidance we have provided assumes rates follow the forward curve prospectively.

Speaker Change: This was meaningfully higher than the prior year due to strong fees and expense discipline.

Speaker Change: Net revenues were 3% higher year over year, driven by strong management actions and favorable markets.

Speaker Change: Fee based revenues reflect consistent growth in our participants and strong equity markets in 2024.

Speaker Change: For spread income our actions to drive higher margin in the current rate environment has helped to offset the effect of lower spread based assets.

Speaker Change: The spread income guidance, we have provided assumes rates follow the forward curve prospectively.

Donald C. Templin: Our adjusted operating margin of 39.7% is the outcome of net revenue growth and discipline on spend. The second quarter did include some timing benefits for administrative expenses, which contributes to the higher expense guidance we are providing for next quarter. We continue to be disciplined with our spend and have taken actions to further integrate our business while still investing for growth. This includes capabilities in the mid-market and retail wealth management. Turning to slide 13 on health.

Speaker Change: Our adjusted operating margin of 39, 7% is an outcome of the net revenue growth and disciplined on spend.

Speaker Change: Yeah.

Speaker Change: The second quarter did include some timing benefits for administrative expenses, which contributes to the higher expense guidance, we are providing for next quarter.

Speaker Change: We continue to be disciplined with our spend and have taken actions to further integrate our business, while still investing for growth.

Speaker Change: This includes capabilities in the mid market and retail wealth management.

Speaker Change: Turning to slide 13 on health.

Donald C. Templin: Our immediate focus is to return aggregate loss ratios to within our 69 to 72% targeted range. In the second quarter, the total aggregate loss ratio was 72.9 percent, primarily driven by loss ratios for stop loss, which were above our 77 to 80% target range. While we feel good about the rate increases achieved on the non-January 2024 business, the impact on this year's results will be modest. Voya has a strong track record in stop loss.

Speaker Change: Our immediate focus is to return the aggregate loss ratios to within our 69% to 72% targeted range.

Speaker Change: In the second quarter, the total aggregate loss ratio was 72, 9%.

Speaker Change: Primarily driven by loss ratios for stop loss, which were above our 77% to 80% target range.

Speaker Change: While we feel good about the rate increases achieved on the non January 2024 business the.

Speaker Change: The impact on this year's results will be modest.

Speaker Change: Voya has a strong track record in stop loss.

Donald C. Templin: We also have an experienced team that helped correct the book in 2018 when our 2017 loss ratios were above target. As a result, we are confident in our ability to achieve target loss ratios in 2025. We continue to find the fundamentals of the stop-loss business attractive, as it can be repriced annually, has a natural tailwind for growth due to medical inflation, and is a growing market as companies move to self-fund their employee health care plans. Enforced premium growth remains robust and is supported by expanded quoting capabilities. Success in the Mid-Market and Greater Adoption of Voluntary Solutions. Moving to slide 14. Health Adjusted Operating Earnings were $60 million in the second quarter.

Speaker Change: We also have an experienced team that help correct. The book in 2018, when our 2017 loss ratios were above target.

Speaker Change: As a result, we are confident in our ability to achieve target loss ratios in 2025.

Speaker Change: We continue to find the fundamentals of the stop loss business attractive.

Speaker Change: As it can be repriced annually.

Speaker Change: <unk> has a natural tailwind for growth due to medical inflation.

Speaker Change: And there is a growing market as companies move to self fund their employee health care plans.

Speaker Change: In force premium growth remains robust and is supported by expanded quoting capabilities.

Speaker Change: Success in the mid market and.

Speaker Change: And greater adoption of voluntary solutions.

Speaker Change: Moving to slide 14.

Speaker Change: Health adjusted operating earnings were $60 million in the second quarter.

Donald C. Templin: This compares to exceptionally favorable results in 2023 when loss ratios were well below target ranges. Looking ahead, we feel confident with our ability to restore loss ratios back to our target range in 2025 while continuing to profitably grow our health business. Moving to investment management, slide 15. The successful transformation of our business into a diversified global investment manager with an enhanced platform of investment solutions is allowing us to deliver strong results today and enable opportunities to scale new growth markets.

Speaker Change: This compares to exceptionally favorable results in 2023, when loss ratios were well below target ranges.

Speaker Change: Looking ahead, we feel confident with our ability to restore loss ratios back to our target range in 2025, while continuing to profitably grow our health business.

Speaker Change: Moving to investment management on slide 15.

Speaker Change: The successful transformation of our business into a diversified global investment manager with an enhanced platform of investment solutions is allowing us to deliver strong results today and enabling opportunities to scale with new growth markets.

Donald C. Templin: We generated positive net inflows of $4.8 billion in the second quarter, putting us on track to meet our 2% organic growth expectation for the full year. In institutional, we saw significant improvement and a return to positive net cash flows of approximately $3 billion. This was led by strong demand for core fixed income in the insurance channel.

Speaker Change: We generated positive net inflows of $4 $8 billion in the second quarter, putting us on track to meet our 2% organic growth expectation for the full year.

Speaker Change: In institutional we saw significant improvement in our return to positive net cash flows of approximately $3 billion.

Speaker Change: This was led by strong demand for core fixed income in the insurance channel.

Donald C. Templin: In retail, positive net cash flows of approximately $2 billion reflect continued momentum in both U.S. and international intermediary channels, including demand for income and growth solutions, such as the Retail Private Equity Fund and Core Fixed Income. As a reminder, management of the remaining legacy assets connected to our annuity divestiture in 2018 is expected to transfer to Venerable over the next 12 months, starting this September. These transfers will complete the runoff of approximately $14 billion in assets under management and an additional $4 billion in assets under administration. These assets were generally lower-fee, indexed-oriented solutions.

Speaker Change: In retail positive net cash flows of approximately $2 billion reflect continued momentum in both U S and international intermediary channels include.

Speaker Change: Including demand for income and growth solutions.

Speaker Change: Retail private equity fund and core fixed income.

Speaker Change: As a reminder, management of the remaining legacy assets connected to our annuity divestiture in 2018 is expected to transfer to venerable over the next 12 months starting this September.

Speaker Change: These transfers will complete the run off of approximately 14 billion in assets under management and an additional $4 billion in assets under administration.

Speaker Change: These assets were generally in lower fee indexed oriented solutions.

Donald C. Templin: These flows have no impact on our general account and continue to be reflected in current guidance, which remains unchanged. Our leading positions in institutional fixed income and third-party insurance asset management serve as competitive advantages and will support continued client and asset growth. Turning to slide 16, Investment Management delivered adjusted operating earnings of $50 million in the second quarter.

Speaker Change: These flows have no impact on our general account and continue to be reflected in current guidance, which remains unchanged.

Speaker Change: Our leading positions in institutional fixed income and third party insurance asset management serve as competitive advantages and will support continued client and asset growth.

Speaker Change: Turning to slide 16.

Speaker Change: Investment management delivered adjusted operating earnings of $50 million in the second quarter.

Speaker Change: Net of all <unk> non controlling interest.

Donald C. Templin: Net of Allianz GI's non-controlling interest, second quarter net revenues were 5% higher year over year, reflecting strong growth in intermediary and insurance assets under management and favorable equity markets. Adjusted operating margin was 26% on a trailing 12-month basis. Reflecting Continued Expense Discipline While Investing for Growth. We remain on track to achieve our goal of expanding operating margins by at least 100 basis points on a full-year basis in 2024. We are encouraged by our commercial momentum, and we expect our diverse pipeline and strong investment performance will support our outlook for 2% organic growth for the year. Turning to slide 17.

Speaker Change: Second quarter net revenues were 5% higher year over year.

Speaker Change: Reflecting strong growth in intermediary and insurance assets under management.

Speaker Change: And favorable equity markets.

Speaker Change: Adjusted operating margin was 26% on a trailing 12 month basis.

Speaker Change: Reflecting continued expense discipline, while investing for growth.

Speaker Change: We remain on track to achieve our goal of expanding operating margins by at least 100 basis points on a full year basis in 2024.

Speaker Change: We are encouraged by our commercial momentum.

Speaker Change: And we expect our diverse pipeline and strong investment performance will support our outlook for 2% organic growth for the year.

Speaker Change: Turning to slide 17.

Donald C. Templin: Our strong capital generation differentiates us from peers. We continue to build on our track record of generating excess capital above 90% of earnings while still investing for growth. In the second quarter, we returned $214 million of capital to shareholders, including $174 million of share repurchases and $40 million of dividends.

Speaker Change: Our strong capital generation differentiates us from peers.

Speaker Change: We continue to build on our track record of generating excess capital above 90% of earnings while still investing for growth.

Speaker Change: In the second quarter, we returned $214 million of capital to shareholders, including $174 million of share repurchases and $40 million of dividends.

Donald C. Templin: As Heather mentioned, we increased our quarterly dividend by 5 cents, or 12 and a half percent. Raising the dividend is driven by confidence in our business mix and our track record of consistent high free cash generation. It is also another step to regularly grow our dividend over time. Our leverage ratio sits comfortably in our targeted range of 25 to 30% today. Looking ahead, we have $400 million of debt maturing in 2025, which we intend to refinance subject to market conditions. Turning to slide 18.

Heather: As Heather mentioned, we increased our quarterly dividend by <unk>, <unk> or 12, 5%.

Heather: Raising the dividend is driven by confidence in our business mix and our track record of consistent high free cash generation.

Speaker Change: It is also another step to regularly grow our dividend over time.

Speaker Change: Our leverage ratio sits comfortably in our targeted range of 25% to 30% today.

Speaker Change: Looking ahead, we have $400 million of debt maturing in 2025, which we intend to refinance subject to market conditions.

Speaker Change: Turning to slide 18.

Donald C. Templin: Management actions are keeping us on track to meet our full-year adjusted operating EPS target of $8.25 to $8.45. Wealth delivered strong revenue growth and profitability in the second quarter. In health, we have a clear plan to address lower than expected underwriting performance. In investment management, we have transformed the business into a diversified global asset manager, and we remain confident in our ability to achieve 2% organic growth with expanded margins. Finally, we are on track to generate and return over $800 million of excess capital to shareholders in the form of share repurchases and dividends in 2024.

Speaker Change: Management actions are keeping us on track to meet our full year adjusted operating EPS target of $8 25 to $8 45.

Speaker Change: Wealth delivered strong revenue growth and profitability in the second quarter.

Speaker Change: In health, we have a clear plan to address lower than expected underwriting performance.

Speaker Change: In investment management, we have transformed the business into a diversified global asset manager and we remain confident in our ability to achieve 2% organic growth with expanded margins.

Speaker Change: Finally, we are on track to generate and return over $800 million of excess capital to shareholders in the form of share repurchases and dividends in 2024.

Donald C. Templin: With that, I will turn the call back to the operator so that we can take your questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone.

Speaker Change: With that I will turn the call back to the operator, so that we can take your questions.

Speaker Change: Thank you.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Operator: If you are using a speakerphone, please pick up your handset before pressing. If you would like to withdraw your question, please press. As a reminder, participants are limited to one question and one follow-up question. Our first question is from John Barnidge with Piper Sandler. Please proceed. Good morning, thank you for the opportunity.

Speaker Change: You're using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press star two.

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

Speaker Change: Our first question is from John Barnidge with Piper Sandler. Please proceed.

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

Robert Lawrence Grubka: Can you talk about the investment in lead management for health that was called out, maybe the opportunity set and the path to delivery there? Thank you.

John Bakewell Barnidge: Can you talk about the investment in lead management for health that was called out maybe the opportunity set in the path to delivery there. Thank you.

Robert Lawrence Grubka: So lead management is an area where we've had a partnership approach to the solution we provide. What we've learned, and seen, and then I'll give you market context is that experience around that is a real pain point for employers. So when you think about sort of the frequency of activity that goes on versus short-term disability and long-term disability, leave is much higher frequency than both of those, for sure.

Speaker Change: Yes, sure good morning, John.

Speaker Change: Lead management is an area, where we've had a partnership approach to the solution we provide.

Speaker Change: What we've learned and seen and then I'll give you a market context is it just the experience around that as a real pain point for employers. So when you think about sort of the frequency of activity that goes on versus short term disability long term disability leave as much higher frequency than both of those for sure.

Robert Lawrence Grubka: And so from an employer's standpoint, it's an area where, like, communication and handoffs and clarity and needing to stay aligned with, you know, what the employee is experiencing, who goes out on leave, their manager, the HR team. There's a lot of communication and opportunity for things to not be communicated well. And so what we're calling out here is really building our own capability, having it completely ingrained and embedded in our platforms, in our experience, in such a way that we can be, you know, ever more important to the employer ultimately, and then, you know, deliver a good experience for them and the employee throughout.

Speaker Change: So from an employer standpoint, it's an area, where like communication and Handoffs and clarity and needing to stay aligned with what the employee his experience. His goes out on leave their manager the HR team, there's a lot of communication and opportunity for things to not be communicated well.

Speaker Change: And so what we're calling out here is really built on our own capability.

Speaker Change: That completely ingrained and embedded in our platforms and our experience in such a way that we can be ever more important to the employer ultimately and then.

Speaker Change: Deliver a good experience for them and the employee throughout so for US we look at this as certainly a long term decision and investment.

Robert Lawrence Grubka: So, you know, for us, we look at this as certainly a long-term decision and investment, but a really important one, and where the market is going to see more and more bundling of solutions and HR teams wanting to get to fewer providers, we think it's a really smart investment, and we're really excited about the opportunity that will emerge from it. And John, the only comment I would make on Rob's comments is that, you know, this is really a critical part of our workplace strategy to ensure that we're best serving the employers and then helping to drive better outcomes for their employees across the workplace spectrum. My related follow-up question, thank you for that, would be what's the timeframe for this investment in lead management, and when do you think it'll be up and running? Thank you.

Speaker Change: A really important one and where the market is going into more and more bundling of solutions and HR teams wanted to get to fewer providers.

Speaker Change: We think it's a really smart investment and we're really excited about the opportunities that will emerge from it and.

John Bakewell Barnidge: And John the only build I would have on Rob's comments is that this is really a critical part of our workplace strategy to ensure that we are best serving the employers and then helping to drive better outcomes for their employees across the workplace spectrum.

John Bakewell Barnidge: My related follow up thank you for that.

Speaker Change: Would be whats the timeframe for this investment for lead management and when do you think it'll be up and running.

Robert Lawrence Grubka: Yeah, we're gonna be in a position to transition things, actually, next year, but then more fully the following year. So we'll do some work throughout the coming 12 plus months. And then, you know, we'll have technology that does what technology does takes a little time to implement and continue to invest in the experience. We'll get most of it right the first time out.

Speaker Change: Yes, we're going to we're going to be in a position to transition things.

Speaker Change: Actually next year, but then more fully the following year.

Speaker Change: So we will do some work throughout throughout the coming 12 plus months and then.

Speaker Change: We will have technology work that does what technology does it takes a little time to implement and continue to invest in the experience we will get most of it right. The first time out, but theres always refinement and things that we're doing just like any other investment we make.

Elyse Beth Greenspan: But there's always refinement and things that we're doing, just like any other investment we've made. Our next question is from Elyse Greenspan with Wells Fargo. Please proceed. Hi, thanks, good morning.

Speaker Change: Our next question is from Elyse Greenspan with Wells Fargo. Please proceed.

Robert Lawrence Grubka: My first question is on just the flows within wealth. You know, in your prepared remarks, you pointed to, you know, positive flows in the back half of the year. Can you just comment on the pipeline and how you would expect that to transpire in the third and the fourth quarter? Yeah, sure.

Elyse Beth Greenspan: Hi, Thanks. Good morning. My first question is on just the flows within wealth.

Elyse Beth Greenspan: Your prepared remarks, you pointed to positive flows in the back half of the year can you just comment on the pipeline and how you would expect that to transpire in the third and the fourth quarter.

Robert Lawrence Grubka: So as we talked about, even last quarter was all about, you know, focusing in on the second half of the year. So just want to make sure that's a point of consistency for us. And let me talk about, you know, full service record keeping, but I'll start with record keeping. And, you know, the big thing here, actually across both, we see it, we see what's coming at us, which is why we're reinforcing the guidance around the billion for full service and 3 billion for record keeping. But in record keeping, you know, obviously, the timeline to implement or deconvert is long and lengthy.

Speaker Change: Yes, sure. So as we talked about even last quarter was all about focus in on the second half of the year. So just want to make sure. That's a point of consistency for us. So let me talk about full service record, keeping but I'll start with record keeping and the big thing here actually across both we see it we see what's coming at us which is.

Speaker Change: Why we're reinforcing the guidance around 1 billion for full service and $3 billion for record keeping but in record keeping obviously, the timeline to implement or D conferred as long and lengthy and so those we have really strong <unk>.

Robert Lawrence Grubka: And so we have really strong, you know, insight and know that those things are going to come to fruition both on the ins and the outs, but obviously more in than out. And on a full service perspective, you know, I hit a few points here and we called it out in the material RFP activity is up, you know, 7%. So the front door is certainly moving well.

Speaker Change: Site perspective, and knowing that those things that didn't come to fruition, both on the ins and outs.

Speaker Change: But obviously more and then I'll.

Speaker Change: And on a full service perspective.

Speaker Change: Few points here and we called it out in the material RFP activity is up.

Speaker Change: 7%, so the front door is certainly moving well.

Robert Lawrence Grubka: On the emerging side of it, it's a more fluid market, obviously, versus record keeping. So that tends to ebb and flow a little bit more. But as you build momentum, obviously, we can see that coming at us. And what I'd call out broadly around full service is that sales are up 30%. And within that, we called out the mid market being, you know, 4x what it was the prior year. And then I'd also call out government, which is 3x the prior year. So we got a really good view of what's in motion and coming in the front door.

Speaker Change: On the emerging side of it it's a more fluid market obviously versus record keeping.

Speaker Change: So that tends to ebb and flow a little bit more but as you build momentum obviously, we can see that coming at us and what I'd call out.

Speaker Change: Broadly around full services known sales are up 30% and within that we called out mid market being four X. What it was the prior year and then I'd also call out government, which was three <unk>. The prior year. So we got a really good view into whats in motion and coming in the front door and then we've talked about in the material.

Robert Lawrence Grubka: And then we talked about in the material, participant lapses or case lapses being around 2%. So you feel really good about the case level activity. And again, as we're at this point in the year, we know a lot. And then, finally, as we think about the continued activity, the momentum as we move forward, we've talked about participants as an area where participant lapse has been elevated. We continue to expect it to be. So that's built into the numbers that we're giving you and the guidance. So I'll pause there for a moment.

Speaker Change: All participants lapses or case lapses being around 2%.

Speaker Change: So feel really good about the case level activity and again as we're at this point in the year, we know a lot.

Speaker Change: And then finally as we think about the continued activity the momentum as we move forward. We've talked about participants is an area where purchasing Atlanta apps has been elevated we continue to expect to be so that's that's built into the numbers that we're giving you in the guidance. So I'll pause there and I think the only point I'd build on it.

Robert Lawrence Grubka: And I think the only point I'd build on, Elyse, just to emphasize is the point that Rob made about known sales up 30% across all markets. So we continue to have a leadership position in the market and confidence in that second half slow guidance. And then my second question is on the investment management flow guidance, right? The 2% target for the year, and if we look at the flows in the second quarter, that does imply, you know, somewhat of a slowdown in the back half. I just want to see if maybe there's some level of conservatism there.

Speaker Change: So just to emphasize is the point that Rob made about loan sales up 30% across our market. So we continue to have a leadership position in the market and confidence in that second half guidance.

Speaker Change: And then my second question is on the investment management for guidance right.

Speaker Change: The 2% target for the year.

Speaker Change: We look at the flows in the second quarter that does imply.

Speaker Change: Somewhat of a slowdown in the back half I just wanted to see maybe there is some level of conservatism there or are you expecting a slowdown within net flows in the second half of the year within that within the 2% full year I Am guide.

Matthew Toms: Are you expecting, you know, a slowdown within net flows in the second half of the year within the 2% full year IM guide? Thanks, Elyse. Obviously, we're very happy with the $4.8 billion in the quarter and $5.3 billion for the year. As we look forward, we're also pleased by both the backward look at the diversity of those flows and the forward look. The 2% we're trying to give is a number that's repeatable, because quarter to quarter flows are very difficult to forecast.

Speaker Change: Thanks, Elyse, obviously very happy with the $4 8 billion in the quarter and five three for the year.

Speaker Change: As we look forward. We're also pleased by both the backward look on the diversity of those flows and the forward look the 2%. We're trying to give a number that is repeatable quarter to quarter flows are very difficult to forecast, we want a sustainable flow rate and growth rate for the business.

Matthew Toms: We want a sustainable flow rate and growth rate for the business. If we look forward to the rest of this year and the momentum we have across both the institutional channels, where two and a half billion dollars for the quarter in insurance is a big mover. There's also some meaningful momentum on our pension side, but those are lumpy.

Speaker Change: We look forward for the rest of this year and the momentum we have across both the institutional channels were $2 5 billion for the quarter at insurance is a big mover.

Speaker Change: There's also some some meaningful momentum on our pension side those are lumpy, we pointed that out in prior quarters, but beyond that the breadth of that retail flows both U S and international.

Matthew Toms: We've pointed that out in prior quarters. But beyond that, the breadth of retail flows, both U.S. and international, of nearly a billion each, really builds our confidence around that 2% growth target over the longer term. And then lastly, we've mentioned multiple times, and Don mentioned in his prepared remarks, the private fund launches in the second half of the year. We still expect those to come, and that breadth of activities will build that confidence. I would just add that I am really proud of the transformation that Matt and his team have delivered, and really, really pleased with the quarterly results and the guide for the full year.

Donald C. Templin: Nearly 1 billion each really builds our confidence around that 2% growth target longer term and then lastly, we've mentioned multiple times and Don mentioned in his prepared remarks.

Donald C. Templin: The private fund launches in the second half of the year, we still expect those to come.

Speaker Change: And that breadth of activities that build that confidence.

Thomas George Gallagher: And the other point I would add to Matt's comment is the strength of the investment performance. So it really goes to the breadth of the solutions, the demand we have, and the investment performance really giving us confidence in that full-year outlook. Our next question is from Tom Gallagher with Evercore ISI, please. Good morning, a few questions on the health business.

Donald C. Templin: Really proud of.

Speaker Change: And the transformation that Matt and team has delivered really really pleased with the quarterly results and the guide for the full year and the other point I would add on Matt's comment is the strength of the investment performance. So it really goes to the breadth of the solutions. The demand we have in the investment performance really giving us confidence in that full year outlook.

Speaker Change: Our next question is from Tom Gallagher with Evercore ISI. Please proceed.

Robert Lawrence Grubka: First one is what kind of rate increases are you planning on stop loss? um, you know when you think about 25 renewals and what would you expect that to do to top line? I presume we're not going to see 20 plus top line when you think about how this plays out in 2025, but curious how you see the interplay between those variables. Yeah, sure. Thanks, Tom.

Thomas George Gallagher: Good morning, a few questions on the health business.

Thomas George Gallagher: First one is what kind of rate increases are you planning on stop loss.

Speaker Change: When you think about 25 renewals and what would you expect that to do to top line I presume.

Speaker Change: We're not going to see 20% plus top line when you.

Speaker Change: When you think about how this plays out in the 2025, but curious how you see the interplay between those variables.

Robert Lawrence Grubka: So on stop loss, we've laid out, we're sort of guiding to that higher end of the loss ratio and what we expect to see. So you can imagine that's going to put pressure on as to your question, what we're going to go out and get from a renewal perspective. What I do is really just without giving you an exact number to take you back to 2017 and the transition into 2018, we're, we're, targeting a very similar overall increase in rate. And so, you know, what you saw at that point in time was basically flat growth and stop loss.

Speaker Change: Yes sure. Thanks, Tom So on stop loss is is.

Speaker Change: We've laid out we're sort of guiding to that higher end of the loss ratio and what we would expect to see so you can imagine that's going to put pressure on us to your question, what we're going to go out and get from a renewal perspective, what I do is really just without giving you an exact number to take you back to 2017 and the transition into <unk>.

Speaker Change: 2018, we're targeting a very similar overall increase in rate and so what you saw at that point in time was basically flat growth in stop loss, but what I think about in this environment given the size of our business is obviously very different overall, we've started and we have been reinforcing the <unk>.

Robert Lawrence Grubka: But what I think about in this environment, given the size of our business is obviously very different overall, we've started, and we have been reinforcing the growth of 7 to 10% overall. And so, you know, will it be less than that? Probably as we push on, but at the same point, we don't expect it to be zero.

Speaker Change: Growth of 7% to 10% overall.

Robert Lawrence Grubka: So, as we think about the book of business, we still expect to grow it. You know, we'll see how that plays itself out in the third and fourth quarter as we go get the rate, and we're going to completely prioritize getting the margin where we want it to be, as you would imagine, expect us to say. But we'll see how it plays out. We'll be able to come back and give you perspective as we get through the third and fourth quarter, obviously, and dial that in a little bit more deliberately. That's a very helpful call, Rob. I appreciate it.

Speaker Change: So will it be less than that probably as we push on rate, but at the same point, we don't expect it to be zero. So as we think about the book of business, we still expect to grow it.

Speaker Change: We'll see how that plays itself out in the third and fourth quarter as we go get the rate and we're going to completely prioritize getting the margin where we want it to be as you would imagine expect us to say, but we will see how it plays out we'll be able to come back and give you perspective, as we get through third and fourth quarter are obviously and dial that in a little.

Speaker Change: More deliberately.

Robert Lawrence Grubka: My follow-up question is just on the fee margin in the health business. I noticed that it was down, down a little bit year over year. And I'm assuming that's mainly benefit focus. But maybe, can you comment on maybe overall how benefit focus is playing out? Heather, I think you mentioned 20% plus growth in net promoter scores, but how's that translating into revenue and margin growth? Thanks.

Speaker Change: That's helpful color Rob appreciate it.

Speaker Change: My follow up is just on the fee margin in the health business I noticed that was down down a little bit year over year.

Speaker Change: And I'm, assuming that's mainly benefit focus, but maybe can you comment on maybe overall how benefit focus is playing out Heather I think you mentioned, 20% plus growth in net promoter scores, but how is that translating into revenue and margin growth.

Heather Hamilton Lavallee: So let me start with the quick one on the fee level. Within BenefitFocus, there's a service they provide around the Affordable Care Act and IRS reporting that needs to be done. And so there's a blip in fees in the first quarter. But I wouldn't, you know, read into that as anything other than normal seasonality. And I'll let maybe Heather just hit the high level on BenefitFocus and the excitement we've got around that business.

Heather: So let me start with the.

Speaker Change: Quick one on the fee level within benefit focus there is the services they provide around affordable care Act and IRS reporting that needs to be done and so theres a blip in fees in the first quarter. So I wouldn't read into that as anything other than normal seasonality.

Heather: I'll, let maybe Heather just hit the high level on benefit focus and the excitement we've got around that business. Yeah. Tom May now I'll build on as you know we've been talking about for a good year and a half now as we really like the strategic.

Heather Hamilton Lavallee: Yeah, Tom, maybe I'll build on what we've been talking about for a good year and a half now is that we really like the strategic capabilities that BenefitFocus brings to our broader workplace solutions. And it's beyond just the fee revenues we're able to drive from BenefitFocus, but you heard in my prepared remarks, it is going to be a significant driver of our HSA sales. It's also a driver in some health sales and really gets us at the center of participant engagement more broadly across the, particularly within the health ecosystem, but across all of the workplace.

Heather: Capabilities that benefit focus brings to our broader workplace solutions and it's beyond just the fee revenues were able to drive and benefit but you heard in my prepared remarks.

Heather: Is going to be a significant driver of our HSA sales.

Jan: It's also a driver in some telesales really gets us at the center of participant engagement more broadly across that and particularly within the health ecosystem by cross all of workplace. So I really go back to Jan just a fee revenues that show up within in health, it's the bigger strategic capabilities that will emerge in the coming years from these capable.

Heather Hamilton Lavallee: So I really go back to beyond just the fee revenues that show up within health. It's the bigger strategic capabilities that will emerge in the coming years from these capabilities. Our next question is from Jimmy Bhullar with J.P. Morgan. Please proceed.

Heather: Please.

Heather: Yeah.

Heather: Alright.

Speaker Change: Our next question is from Jimmy <unk> with Jpmorgan. Please proceed.

Jamminder Singh Bhullar: First, just a question on medical stop-loss. Could you go into a little bit more detail on what are the cohorts by year that are actually driving the bad performance? Because I think we've been talking about medical stop-loss for almost a year now. And then I have a couple of follow-ups on that. Yeah, sure. I'll give you a high level, then you can certainly pull me deeper where it's

Heather: Hi.

Jimmy: Just a question on medical stop loss could you go into a little bit more detail on what are the cohorts.

Speaker Change: By your better actually.

Speaker Change: Driving the bad performance, because I think we've been talking about medical stop loss for almost a year now.

Speaker Change: And then I have a couple of follow ups on that.

Speaker Change: Yes, sure I'll give the high level of them you can certainly pulmonary deeper where it's helpful.

Robert Lawrence Grubka: So, Jimmy, as we looked at and talked about things sort of as the year finished, we got into the first quarter, and then again in this quarter, the biggest driver has been, you know, or change from what we had expected was 2023. So that's still the case. So you can think about that being in that 80 to 83% range, but at the lower end of it, we're seeing the results really firm up and finish up.

Speaker Change: So Jimmy as we look at and talked about things sort of as the year finished we got into first quarter and then again in this quarter. The biggest driver has been.

Jimmy: The change from what we had expected with 2023. So that's still the case or you can think about that being in that 80% to 83% range, but at the lower end of it as well.

Jimmy: We're seeing the results really firm up and finish up there is always a sort of <unk>.

Robert Lawrence Grubka: There's always a, you know, sort of, you know, 15-ish plus month timeline for the business. And so that's really getting close to completion at this point and won't be a surprise as we move forward. And then you connect that to 24, and what we saw happen before we set the targets and the renewal expectations was really the 23 performance and how that heated up at the end, given the deductible levels that we use in our business.

Speaker Change: <unk> mesh plus months.

Speaker Change: Timeline for the business and so that's really getting close to completion at this point and won't be a surprise as we move forward.

Speaker Change: And then you connect that to 24 and what we saw.

Speaker Change: Happen before we set the targets in the renal expectations was really the 23 performance and how that heated up at the end given the deductible levels that we used in our business and so that influences our view then.

Robert Lawrence Grubka: And so that influences our view then of 24 and where that's running. The guide that we've given you of the 80 to 83 is really, you know, that's our best guess at this point. It's very early in the 24 experience.

Speaker Change: 24, and where that's running the guide that we've given you have the 80 to 83 is really that's our best guess at this point, it's very early in the 'twenty four experience. So you're really talking about 20% of the experiences emerged so you've got another 80% to go.

Robert Lawrence Grubka: So you're really talking about 20% of the experiences that have emerged. So you have another 80% to go. So we'll learn some more in the third quarter, fourth quarter; it'll really show itself. And then we'll have more completion as we get into the first quarter. So hopefully that's helpful on, you know, sort of the underlying pieces of it. But again, I think about that 88-83 as we think about the full year

Speaker Change: So we'll learn some more in third quarter fourth quarter. It will really show itself and then we will have more completion as we get into first quarter. So hopefully thats helpful on sort of the underlying pieces of it.

Speaker Change: But again I think about that 80 to 83 as we think about the full year I, then step back and think more broadly about the health business, we talked about the 69% to 72% aggregate loss ratio being north of and so I would think about that the in between 72 and 73%.

Robert Lawrence Grubka: I then step back and think more broadly about the health business. We talked about the 69 to 72% aggregate loss ratio being north of. And so I would think that being between 72 and 73% is our best view at this point. And then is it reasonable to assume that, like, assuming that you're repricing up the 25 years, and that's, I think almost 80% of the business will renew at one, that in 25, assuming you price at a normal margin, your reported margin might still not be normal, given what happens with 24 and 26, and 26 might be the first year where Yeah, no, I appreciate the push on that, Jimmy.

Speaker Change: As our best view at this point.

Speaker Change: And then is it reasonable to assume that like assuming that the repricing up to 25 years and that's like I think almost 80% of the business that will renew at one one.

Speaker Change: In 25, assuming you're right that a normal margin.

Speaker Change: <unk> margin might still not be normal given what happened with 24 and 26 might be the first year, where you get to a place for margin.

Speaker Change: On a reported basis.

Robert Lawrence Grubka: As I think about it, and our plans and expectations are to get back into the target loss ratio range. So as we think about that 77 to 80, that is absolutely the marching orders, the goal, and the expectation. Now it's a market, it's competitive, and we'll see how things ultimately play out over the next quarter or two quarters. And we will continue to update as best we can. But the main point I want you to walk away with is that we're going to strive very hard to get to 77 to 80.

Speaker Change: Yes, no I appreciate the push on Jimmy is I would think about it in our plans and expectation is to get back into the target loss ratio range. So as we think about that 77% to 80 that is absolutely the marching orders the goal and the expectation now it's a market is competitive we will see how.

Speaker Change: Things ultimately play out over the next quarter or two quarters.

Speaker Change: And it will continue to update as best we can but the main point I want you to walk away with is is we're going to strive very hard to get to the 77 to 82.

Robert Lawrence Grubka: Yeah, and Jimmy, if I can build on and just add a few more points, we provided in the appendix that Rob and this team have a track record of managing this business driving growth while managing the loss ratios within the 77 to 80% range. In fact, many of those years, the loss ratios actually came below.

Speaker Change: Amy if I can build and just add a few more clients as we provided in the appendix that that Rob and his team has a track record.

Speaker Change: Managing this business driving growth, while managing the loss ratios within the 787% to 80% range. Many of those years. The loss ratio is actually came below and as.

Speaker Change: As we've talked about the team also has a track record of being able to get rate increases in the one year that loss ratio is relevant and so I have incredible confidence the team will be able to execute on that this year, but I think about our setback for folks to take away is why do we like this business and why do we continue to like the business and it really goes to the point of emphasis.

Heather Hamilton Lavallee: And as we've talked about, the team also has a track record of being able to get rate increases in the one year that loss ratios were elevated. And so I have incredible confidence the team will be able to execute on that this year. But I think the broader setback for folks to take away is why do we like this business? And why do we continue to like it? And it really goes to the point that Don emphasized on the call. The fact that we have secular headwinds; we see more and more employers that are choosing to self-fund. There's a natural, natural medical trend in terms of the health health trend increases.

Speaker Change: On the call. The fact that we have secular headwinds, we see more and more employers that are choosing to self fund as a natural natural medical trend in terms of the.

Speaker Change: Health Health trend increases and we also have the protections on the book of business in terms of our ability to reprice it and reinsurance on the book and it has continued to be a positive net grow of earnings for us and we expect it to be going forward.

Heather Hamilton Lavallee: And we also have protections on the book of business in terms of our ability to reprice it and reinsurance on the book. And it has continued to be a positive net growth of earnings for us. And we expect it to continue going forward. Our next question is from Ryan Krueger with KBW. Please proceed. Hey, thanks. Good morning.

Speaker Change: Okay.

Speaker Change: Our next question is from Ryan Krueger with <unk>. Please proceed.

Ryan Joel Krueger: I have one more on stop loss. Maybe just directly to ask, can you just tell us, if you just remove 2023 development, what is the 2024 stop loss ratio year to date? Well, look, you should think about it is in that 80 to 83, you know, range that we've given you. I won't say more at this point, just given the early nature of the actual experience. We're really looking at, you know, 23, how that ultimately finished up. And so that's influenced what we see today. Again, as a reminder of the higher deductibles, you just don't see a lot of the actual experience develop until later in the year.

Ryan Joel Krueger: Hey, Thanks, good morning.

Ryan Joel Krueger: I had one more on stop loss.

Ryan Joel Krueger: Maybe just directly to ask can you just tell us if you just remove 2023.

Speaker Change: <unk> what is the 2020 for stop loss.

Speaker Change: Loss ratio year to date.

Speaker Change: Well look you should think about it is about 80 to 83 range that we've given you I won't say more at this point just given the early nature of the actual experience.

Speaker Change: We're really looking at 'twenty three how that ultimately finished up.

Speaker Change: And so thats influence and what we see today again as a reminder of the higher deductibles you.

Speaker Change: Just don't see a lot of the actual experience develop until later in the year. So that's the clearest answer I can give you at this point, but obviously, we will be back in three months and we will be able to talk more about what we've seen and how it's evolved from there.

Robert Lawrence Grubka: So that's the clearest answer I can give you at this point. But obviously, we'll be back in three months, and we'll be able to talk more about what we've seen and how it's evolved from there. Okay, thanks. On the 14 billion dollars of venerable at AUM that's expected to leave, can you give us some sense of what the fee rate is on that?

Speaker Change: Okay. Thanks on the $14 billion of Venerable.

Speaker Change: Thats expected to leave.

Speaker Change: You give us some sense for what the fee rate is on that and anything on like the Meg.

Speaker Change: The pace of how that will will come through over the next year.

Ryan Joel Krueger: Anything on like the mags on kind of the pace of how that will come through over the next year. Yeah, Ryan, thanks. Thanks for the question. Venerable, of course, you know, we've seen this coming for some time.

Speaker Change: Yes, Ryan Thanks for the question.

Speaker Change: The Venerable of course, we've seen this coming for some time. This was the divestiture of our annuity business back in 2018, and largely passive quant equity related lower fee products.

Matthew Toms: This was the divestiture of our annuity business back in 2018, and largely passive quant equity related lower fee products. So think of that as being meaningfully below our average fee rate as a blend of products. The total book, as Don mentioned, $14 billion AUM, $4 billion AUA.

Speaker Change: So think of that as being meaningfully below our average fee rate is a blend of products.

Donald C. Templin: The total book as Don mentioned $14 billion four.

Matthew Toms: We've been working closely with Venerable over the last six plus years to coordinate. We anticipate half of that, so $7 billion AUM in the second half of this year, and half the AUA, so $2 billion AUA. The remainder will be in the middle of 2025. Now, importantly, these assets are legacy assets that have been in runoff, and are not part of the primary growth initiative of the company.

Donald C. Templin: $4 billion.

Speaker Change: We've been working closely with venerable over the last six plus years to coordinate we anticipate half of Thats, a $7 billion AUM in the second half of this year and have the AUR, so $2 billion and the remainder will be in the middle of 2025 now importantly, these assets our legacy assets.

Speaker Change: I've been in run off are not part of the primary growth initiative of the company.

Matthew Toms: And as Don mentioned, the financial impact, both revenue and earnings, has been fully embedded in our guidance and continues to be fully embedded in the guidance. So again, something we plan for, well-coordinated. The growth areas are clearly more in the U.S. institutional, intermediary, and international areas that we've referenced that are driving the growth currently.

Speaker Change: And as Don mentioned, the financial impact both revenue and earnings has been fully embedded in our guidance and continues to be fully embedded in the guidance.

Donald C. Templin: Again, something we planned for well coordinated the growth areas are clearly more than the U S institutional intermediary international.

Donald C. Templin: Areas that we referenced that are driving the growth currently.

Wilma Carter Jackson Burdis: Our next question is from Wilma Burdis with Raymond James; please proceed. Hey, could you guys talk about the decision to refinance the $400 million of debt that was coming due in 1-2-25? And will that have any impact on 2025 earnings? Thanks.

Welles Burgess: Our next question is from wellness Burgess with Raymond James. Please proceed.

wellness Burgess: Could you guys talk about the decision to refinance the $400 million of debt coming due in 'twenty five.

Welles Burgess: And will that have any impact on 'twenty 'twenty primary thanks.

Donald C. Templin: So as you know, we have that $400 million that's coming due in early 2025. As I said, we expect to fully refinance the full amount. And that was really the decision based upon the fact that our balance sheet is really well positioned. We've been very prudent about how we position the balance sheet.

Speaker Change: Yes. Thanks wellness. So as you know we have that $400 million that's coming due in early 2025 as I said, we expect to fully to refinance the full amount.

Speaker Change: And that was really that decision was based upon the fact that our balance sheet is really well positioned we've been very prudent about how we position the balance sheet. Our leverage ratio is 28%. So it's comfortably in the range of that 25% to 30%.

Donald C. Templin: Our leverage ratio is 28%. So it's comfortably in the range of that 25 to 30%. And, you know, I think sometimes people ask the question about, you know, what could be a barrier.

Speaker Change: And I think sometimes.

Donald C. Templin: I see really no barriers at this point to refinancing that full amount. Thank you. And then looking into 2025 EPS growth, do we should expect any tailwinds from the improvements in the stop loss business? Thanks. I'm sorry, I missed a little bit of that. Oh, yeah. In 2025 EPS growth, are there any possible tailwinds from stop-loss starting to normalize? Thanks.

Speaker Change: People ask the question about what could be a barrier I see really no barriers at this point to refinancing that full amount.

Speaker Change: Thank you and then looking into 2025 EPS growth.

Speaker Change: Should we expect any tailwind from the improvements in the stop loss business.

Speaker Change: I'm sorry.

Speaker Change: I missed a little bit about.

Speaker Change: Oh.

Speaker Change #107: Yes into 2025 of EPS growth are there any possible tailwind from stop loss.

Speaker Change: Turning to normalize thanks.

Donald C. Templin: Yeah, sure. You know, but the results that we've delivered this year have really been, you know, with that headwind that we've had around stop loss, we fully expect, and Rob and the team are committed to getting us in that, you know, in that target range, aggregate loss ratio target range of 77 to 80%. And when they're successful doing that, that will obviously be very beneficial and helpful to our EPS for 2025.

Speaker Change: Yes sure sure.

Speaker Change #102: That we've delivered this year have really been.

Speaker Change: With that headwind that we've had around stop loss, we fully expect and Rob and the team are committed to getting us in that.

Speaker Change: In that target range aggregate loss ratio target range of 77% to 80% and when we're successful doing that that will obviously be very beneficial and helpful to our EPS for 2025.

Donald C. Templin: And I think one thing I would build on is if you look at what we're expecting for EPS growth, and we're close to double digits over actual from prior years, and one of the things that I would say we're particularly proud of is the ability of this team to actively manage both our revenues and our spend, as well as our capital, which is helping to drive the EPS growth within this year. And we'll come back and, as we know more, give you more guidance going into 2025. Our next question is from Wes Carmichael with Autonomous Research. Good morning.

Speaker Change: And I think when we went one thing I would build on is if you look at what we're expecting for EPS grow with him were close to double digits over actual from prior years and one of the things that I would say, we're particularly proud of is the ability of this team to actively manage both our revenues and our spend as well.

Speaker Change: As our capital that is helping to drive the EPS growth within this year and we'll come back and as we know more and give you more guidance going into 'twenty five.

Speaker Change: Our next question is from Wes Carmichael with Autonomous research. Please proceed.

Wesley Carmichael: I had a question on the reiteration of the EPS guide. It seems to imply that there is a little bit of a sequential slowdown in the second half of the year, at least relative to the second quarter. I think there might be a little bit of earnings compression coming in, but are there any other drivers that you would kind of point to to get to maybe the midpoint of that range? Yeah, I guess, you know, there's a couple questions that have come out since we, you know, since we actually put the deck out.

Wesley Carmichael: Hey, good morning, I had a question on the reiteration of the EPS guide it seems to imply that there is a little bit of a sequential slowdown in the second half of the year at least relative to the second quarter.

Speaker Change: I think there might be a little bit of earnings compression coming in wealth, but is there any other drivers that you can kind of point to to to get to maybe the midpoint of that range.

Donald C. Templin: One was, you know, what is the starting point for that EPS guidance? So, you know, I want to make sure that people know the starting point for that EPS guidance is actuals for the first six months of 2024, and then the forward look for, you know, the remainder of the year. And, you know, the items that are impacting that look, I mean, I think we've tried to be very transparent around providing sort of a modeling considerations for both the third quarter and the year, so a lot of that information is on page 21 of the deck, as well as the items that, you know, could potentially, you know, impact that guidance. So you think about, you know, we have sensitivities on page 21.

Speaker Change: Yes, I guess.

Speaker Change: A couple of questions that have come out since we since we actually put the deck out one was what is the starting point for that EPS guidance. So I want to make sure that people know the starting point for that EPS guidance is actuals for the first six months of 2024 and then the forward look for for the remainder.

Welles Burgess: Of the year.

Welles Burgess: And the items that are impacting that look I mean, I think we've tried to be very transparent around providing sort of a modeling considerations for both.

Welles Burgess: In the third quarter. So a lot of that information is on page 21 of the deck as well as the items that could potentially impact that guidance. So you think about.

Welles Burgess: But we have sensitivities on page 21.

Donald C. Templin: Health underwriting, obviously, is an item that we're watching closely. Equity markets have been very favorable, but we're watching that closely, too. And then, you know, alternatives, they've been performing, you know, close to our long-term expectations, but we are monitoring that as well. So those are the things that I believe are impacting our view for the remainder of the year. But the team has done really, I think, an amazing job of, you know, taking management actions, managing expenses, still investing in growth, and delivering that $8.25 to $8.45. They got it done.

Welles Burgess: Health underwriting obviously is an item that we're watching closely equity markets have been very favorable, but we're watching that closely and then alternatives they've been performing close to our long term expectations, but we are monitoring that as well. So those are the things that I believe are impacting the view around the remainder.

Speaker Change: There are the year, but the team has done really I think an amazing job.

Speaker Change: Taking management actions managing expenses still investing in growth and delivering that $8 25 to $8 45.

Donald C. Templin: So the first half of 2024, that's based on actuals, and then going forward, it'll be on a normalized basis, right? Is that the right way to think about it? Yeah, I mean, our long-term assumptions assume sort of 9% for all on a normalized basis, but the starting point is actual, not normalized. It's actual for the first six months. And then just my follow up, just on stop loss, I just want to make sure I'm thinking about it like mathematically correctly, right, the 80 to 83. I think in the first quarter, it was a little bit over 84.

Speaker Change: Got it so the first half of 2024 and Thats based on actuals and then going forward. It will be on a normalized basis right is that the right way to think about it.

Speaker Change #101: Yes, I mean, our long term assumptions assume sort of the 9% for <unk>.

Speaker Change #100: Normalized basis, but the starting point is actual not normalized actual for the first six months.

Speaker Change: Understood. Thanks.

Robert Lawrence Grubka: And the second quarter, a little bit over 83. Should we think Rob, like it should come in, you know, below 83% in the third and fourth quarter? Yeah, to end up at 8883, you've got to have that help. And so the context I'd give you on the first and second quarter is, again, back to the timing of how experience emerged. And so there's an element of catch-up that occurred in the first and second quarters across the 23 book, given, you know, the more data that came in on that and then more tightly aligning what we were seeing initially emerge in 24.

Speaker Change: And then just my follow up.

Speaker Change: Just on the stop loss I, just want to make sure I'm thinking about it like mathematically correctly right. The 80 to 83.

Speaker Change: I think in the first quarter it was a little bit over 84 in the second quarter, a little bit over 83 like should we think Rob like it should come in.

Rob: Below the 83% in the third and fourth quarter.

Rob: Yes to end up at the $80 83, you've got to have that help and so the context I'd give you on first and second quarter is again back to the timing of how experience emerge.

Speaker Change: And so theres an element of catch up that occurred in first and second quarter across the 23 book given the more data that came in on that and then more tightly aligning what we're seeing.

Speaker Change: Initially emerge in 'twenty four.

Speaker Change: So that pushed up those numbers a bit you can think about it within the quarters, but again, a big part of that was just getting the ending point right and so the pace through the quarters showed itself a bit more in first and second.

Robert Lawrence Grubka: So that pushed up those numbers a bit; you can think about it within the quarters. But again, a big part of that was, you know, just getting the ending point right. And so the pace through the quarters showed itself a bit more in first and second. But again, 8883 is what we'd orient you around. Thanks.

Speaker Change: But again the 80 to 83 is what we'd already year round.

Speaker Change: Thanks.

Speaker Change: Yes.

Operator: Our next question is from. [inaudible] Yeah, thanks. So I guess, Rob, on the stop loss, is what's happening now similar to what happened in 2017, when you had to correct? Because I'd imagine the book is much bigger.

Speaker Change: Our next question is from Sydney Kamath with Jefferies. Please proceed.

Suneet Laxman L. Kamath: Yes. Thanks.

Suneet Laxman L. Kamath: I guess, Rob on the stop loss is what's happening now similar to what happened in 2017, when you had to correct because I'd imagine the book is much bigger so I'm just trying to figure out if that's really the rate.

Suneet Laxman L. Kamath: So I'm just trying to figure out if that's really the right, you know, precedent to use when we think about this business improving going forward. Yeah, so look, I would think about it from the perspective of, you know, getting an achieving rate. We're going after a similar rate. So we'll start there. Is the book a lot different? Is it a lot bigger?

Rob: Precedent to use when we think about this business.

Rob: Improving going forward.

Speaker Change: Yes, so look I would think about it from the perspective of.

Suneet Laxman L. Kamath: No.

Speaker Change: Getting in achieving rate.

Suneet Laxman L. Kamath: We're going after a similar rate.

Speaker Change: So we'll start there as the book a lot of different is it a bigger absolutely. What is also a bit different from that point in time is just and we've talked about this a call ago, but 23 rents 22 ran so well and then you had 23 the move to the higher end of it.

Robert Lawrence Grubka: Absolutely. What is also a bit different from that point in time is just, and we talked about this on the call last time, but 23 rants or 22 rants so well, and then you had 23 that moved to the higher end of the range beyond the range at this point. And so there was a different dynamic between just the book and the market that I would call out. And so what do I mean by that?

Suneet Laxman L. Kamath: The range beyond the range at this point.

Suneet Laxman L. Kamath: So there was a different dynamic and just the book and the market that I would call out.

Suneet Laxman L. Kamath: And so what do I mean by that well when you've got your book running really really well from the 22 fitness going and getting in achieving rate base.

Robert Lawrence Grubka: Well, when you've got your book running really, really well from the 22 businesses going, and getting an achieving rate based on that is just different, right? You've got a different set and mix of business that were, you know, cases running really well, and cases running, you know, not great, but not as bad as we would tend to see in a normal kind of environment. So it was a bit more barbell than a barbell business always is because those cohorts look very different as we sit here today, though what I'd give you and what we view as a confidence point is that we understand what we have to go get. We're very clear on that.

Suneet Laxman L. Kamath: Based on that is just different right you've got a difference in mix of business that was cases running super well in some cases running or.

Suneet Laxman L. Kamath: Not great, but not as bad as we would tend to see in a normal kind of environment. So it was a bit more barbell than what a barbell business always is because those cohorts look very different as we sit here today, though what I would give you and what we view as a confidence point as we understand what we got.

Suneet Laxman L. Kamath: To go get.

Robert Lawrence Grubka: We're aligned from underwriting to distribution. We've been very clear in the market about what we're trying to do and achieve and why. And then as we think about, you know, the execution, what we've seen around our 7-1 renewal business is that we got a significantly higher rate than we did for 1-1, we had decent retention, and so those things start to give you the confidence, give me the confidence that, you know, we're moving, the market's also moving, we're hearing noise from other competitors, and so I don't think we're alone in going to But let me stop there, or Heather, do you want to add on?

Suneet Laxman L. Kamath: Clear on that we are aligned from underwriting the distribution, we've been very clear in market, what we're trying to do and achieve and why.

Suneet Laxman L. Kamath: And then as we think about.

Suneet Laxman L. Kamath: The execution, what we've seen around our seven one renewal business was we got significantly higher rate than we did for one one we had decent retention and so those things start to give you. The confidence gives me the confidence that we're moving in the market is also moving we're hearing noise from other competitors.

Suneet Laxman L. Kamath: And so I don't think we're alone and going to get more rate than we might in a traditional year, but let me stop there or however, you want to add on.

Heather Hamilton Lavallee: Yeah, the only thing I want to add, Suneet, is that I think what is the same is this is the same management team that was able to execute on that rate action back in 2017 heading into 2018, and that gives Rob and I an incredible amount of confidence in our ability to do so now and the fact that we're already demonstrating that execution with the mid-year increase. Okay, and then maybe just pivoting to Wealth Solutions, Don. I think you referenced... The Decline in Spread-Based Assets and Wealth Can you just remind me kind of what's driving that? Yeah, I'll go ahead and start. Don may want to add color, though, as well.

Speaker Change #111: Gonna add CDN is that I think what is the same is this is the same management team that was able to execute on that rate action back in 2017 heading into 2018 and and that gives our F&I incredible amount of confidence in our ability to do so now and the fact that we're already demonstrating that execution with the with the midyear increases.

Suneet Laxman L. Kamath: Okay.

Suneet Laxman L. Kamath: And then maybe just pivoting to wealth solutions, Don I think you referenced.

Speaker Change #103: A decline in spread beta based assets and wealth can you just remind me kind of what's what's driving that.

Robert Lawrence Grubka: But, you know, look, as we, as we well, you look at the result, and like, well, it's a great result. We've had two quarters of great results, I'd give Matt and team a lot of credit around what they've done to reposition the general account, you know, reflecting what we've talked about over a number of quarters, not now around the participant, you know, lapses that we've been seeing and putting pressure on the overall level of AUM, we've gotten smarter and more disciplined around how we manage cash and float.

Donald C. Templin: Yeah I'll go ahead and start of Don May want to add color, though as well, but look as we as we well you look at the results Mike. It's a great result, we've had two quarters of great results I'd give Matt and team a lot of credit around what they've done to reposition the general account, reflecting what we've talked about.

Suneet Laxman L. Kamath: Over a number of quarters now now around the participant lapses that we'd been seeing the putting pressure on the overall level of AUM, we've gotten smarter and more disciplined around how we manage cash flow.

Robert Lawrence Grubka: So I think there have been a number of actions, and we'll continue to seek out and take action as we move forward. But the guidance, as we think about the forward view, factors in, as I alluded to before, the forward curve and then a continuation of what we've been seeing from a participants' perspective to get us back in that, you know, 220 to 230 range. Okay, I just wanted to clarify one thing, because I thought your conversations last night that you guys were talking about the withdrawals being sort of driven by higher equity markets and that sort of drives up the nominal amount of withdrawals, but that wouldn't be affecting the spread-based asset thing, so I just, I was a little confused by that commentary relative to the spread-based piece. Yeah, Heather, I'll jump in and take that.

Suneet Laxman L. Kamath: So I think it's been a number of actions and then we will continue to seek out and take actions as we move forward, but the guidance as we think about the forward view.

Suneet Laxman L. Kamath: Factors and as I alluded to before you know the forward curve and then a continuation of what we've been seeing from our participants out perspective.

Suneet Laxman L. Kamath: To get us back in that $2 20 to $2 30 range.

Suneet Laxman L. Kamath: Just wanted to clarify one thing because I thought.

Suneet Laxman L. Kamath: Conversations last night.

Speaker Change #106: That you guys were talking about the withdrawals being sort of driven by higher equity markets and that sort of drives up the nominal amount of withdrawals, but that wouldn't be affecting the spread based asset thing. So I just I was a little confused by that commentary relative to the spread based piece.

Heather Hamilton Lavallee: So what we've been referring to there is that in elevated equity markets, you're going to see participant account balances that are higher. So when they do a surrender, you're going to see higher participant surrenders. And so that was one of the things that we would point to for 2Q. I think your point, which is that it's sort of separate from the general account. What we have been talking about for the first half of the year is seeing lower general account assets that were the result of participant surrenders being able to get higher crediting rates in other products.

Suneet Laxman L. Kamath: Yeah, Heather I'll jump in and take that so.

Heather: What we've been referring to there is that an elevated equity markets.

Speaker Change #110: Youre going to see participant account balances balances that are higher so when they do a surrender youre going to see higher participants surrenders and so that was one of the things that we would point to for two Q I think to your point, which is that that's sort of separate from the general account, what we have been talking about.

Speaker Change #110: For the first half of the year is seeing lower general account assets.

Speaker Change #110: That were the result of participants vendors being able to get a higher crediting rates than other products than what we would point to is we did start to see some marginal improvement in participant surrender rates in second quarter.

Heather Hamilton Lavallee: Now, what we would point out is that we did start to see some marginal improvement in participant surrender rates in 2Q. But what we're giving you is our best guide for the second half is that we still expect to see participant surrenders a bit elevated on the general account. And then we'll begin to see what happens with interest rates normalizing.

Speaker Change #108: But what we're giving you is our best guide on the second half is that we still expect to see participant surrenders a bit elevated on the general account and then we will begin to see what happens with interest rates normalizing, but again I go back to the point that Bob mentioned, which is.

Donald C. Templin: But again, I go back to the point that Rob mentioned, which is our ability to drive really strong spread revenues and Matt's team being able to generate really strong returns on the general account. We're overall incredibly pleased with our wealth results. Our next question is from Joel Hurwitz with Dowling and Partners. Please proceed. Hey, good morning.

Speaker Change #108: Our ability to drive really strong spread revenues and Matt's team being able to generate real strong returns on the general account, where overall incredibly pleased with our wealth results.

Speaker Change #108: Our next question is from Joel Horowitz with Dowling and partners. Please proceed.

Joel Hurwitz: Just to follow up on that question, can you actually give us a number of where you expect the wealth spread assets to end the year? And then is there anything you could do to, I guess, drive higher retention or new business to the spread business there? Yeah, I don't think we've given an absolute number on the AUM ending point. I think what we've tried to say is, you know, assume a pretty consistent level of activity similar to what you've seen over the last handful of quarters. I think it'll get you to a reasonable number.

Joel Hurwitz: Hey, good morning, just to follow up on that question can you actually give us a number of where you expect.

Joel Hurwitz: But well spread assets at the end of the year and then is there anything you could do to I guess drive higher retention or new business to the spread business there.

Robert Lawrence Grubka: And I'm sure offline, the IR team could help validate the math with you. You know, look at it from a drive and activity perspective; let me spend a little bit of time there. You know, we've introduced new products here over the last number of months. Both a fixed rate product, as well as an improvement or evolution of our stable value offering. We continue to remain focused on, you know, how do we help educate, guide, and help employees make a decision when they're facing decisions to either stay or go in plan.

Joel Hurwitz: Yes, I don't think we've given an absolute number on the AUM ending point I think what we've tried to say is you know assume a pretty consistent level of activity to what you've seen over the last handful of quarters I think it will get you to a reasonable number and I am sure.

Speaker Change #121: Offline the IR team can help them help validate the math with you.

Speaker Change #120: Look from a drive and activity perspective, let me spend a little bit of time there.

Speaker Change #108: We've introduced new product.

Suneet Laxman L. Kamath: Over the last number of months, both a fixed rate product as well as also improvement in their evolution of our stable value offering.

Robert Lawrence Grubka: Something you may not necessarily think about, we talked about and highlighted the focus around manage account. What we've actually seen in the data is that it influences people to stick around and stay within the product. And so once they get used to getting guidance and advice around the decisions they're making, they tend to be a bit stickier. So that's a lever.

Suneet Laxman L. Kamath: We continue to remain focused on how do we help educate guide and help employees make a decision when they are facing decisions to either stay or go in plan something you may not necessarily think about we've talked about and highlighted the focus around managed account.

Suneet Laxman L. Kamath: What we've actually seen in the data is that influences people sticking around and staying within the product and so once they get used to giving guidance and advice around the decisions. They are making they tend to be a bit stickier. So that's that's a lever I think the important point here is there is no simple answer to this we're taking the <unk>.

Robert Lawrence Grubka: I think the important point here is there's no, you know, simple answer to this. We're taking a number of different actions. We study the data. We're going to study how, you know, different approaches to marketing and education certainly help us. And then we've also talked about and highlighted the focus that we have on the retail wealth management business. So that's at a really important lever for us, as you, as we called out in the material, they touch, in one shape or form, 100 million of our assets.

Speaker Change #112: Number of different actions, we study the data we're going to study how different approaches to marketing and educating certainly help us and then we've also talked about and highlighted the focus that we got on the retail wealth management business. So that's a really important level lever for us as you as we called out in the material.

Robert Lawrence Grubka: And so it's a really important lever for us that we have 500 employees that are focused on that and how they can, again, help, you know, educate, guide, and engage employees, not only at the time of decision to leave, but, you know, why they're in plan well before that. And then, you know, even opportunities outside of plan.

Speaker Change #112: They touch in one shape or form you know $100 million of our assets and so it's a really important lever for us that 500 employees that we've got focused in on that and how they can again help educate guide and engage employees.

Speaker Change #112: Not only at the time of decision to leave but why they are in plan well before that and then even the opportunity outside of plant. So it.

Speaker Change #112: It'll take a number of actions, but we're focused on executing around didn't have an impact.

Robert Lawrence Grubka: So it'll take a number of actions, but we're focused on executing around it and having an impact. Okay, maybe sticking on that retail and wealth management, what are you seeing from the ability to capture out of plan assets or, or even retain assets? you know, at retirement.

Speaker Change #118: Okay, and maybe sticking on that on the retail wealth management, what are you seeing from from ability to capture out of plan assets or or even retain assets.

Speaker Change #114: You know at a retirement.

Robert Lawrence Grubka: Yeah, sure. So it's a bit of a, you know, sort of two stories, I guess. One is that we've made the decision to keep the strategic part of the retail asset advisor business. You know, that's a team that's long been focused on the workplace; they've long been focused around the tax exempt market. And so there are, we would call our results around retention, you know, strong to certainly market comparable. And when you get to the corporate side of the house, though, that's the area where I really think there's a ton of opportunity, not only within full service but record keeping as well.

Speaker Change #109: Yes, sure so it's a bit of.

Speaker Change #109: Sure.

Speaker Change #117: Sort of two stories I guess.

Speaker Change #109: As we've made the decision to keep the strategic part of the retail advisor business.

Speaker Change #109: That's a team that's long been focused in the workplace. They have long been focused around the Texas market and so there are we would call our our results around retention strong too certainly market comparable.

Speaker Change #109: When you get to the corporate side of the house. So thats the area, where really think there's a ton of opportunity not only within full service, but record keeping as well and so we see a lot of opportunity as we look at investment both from a technology and the people perspective that we've got a lot of room to grow the impact of that team, but let me.

Robert Lawrence Grubka: And so we see a lot of opportunity as we look at investment, you know, both from a technology and a people perspective, that we've got a lot of room to grow the impact of that team. But let me see if Heather wants to add some more overarching comments.

Heather: CF Heather wants to add some more overarching comments, yes. I mean this is one of the areas that we've been talking about where we're investing for growth and as Rob mentioned, its adding field in ton based advisor, it's improving the technology for them to have a better experience and drive a better outcome for customers, but I would point you to specifically is it.

Heather Hamilton Lavallee: Yeah, I mean, this is one of the areas that we've been talking about investing in for growth. And as Rob mentioned, it's adding field and fund-based advisors, and improving the technology for them to have a better experience and drive a better outcome for customers. But what I would point you to specifically is if you look in the investor stuff, we talk about retail assets, and you'll see year over year 10% growth in retail assets. And so that's one of the areas that it shows up.

Speaker Change #116: If you look in the investors. So can we talk about retail assets and you'll see year over year of 10% growth in retail assets and so that's one of the areas that it shows up.

Heather Hamilton Lavallee: We also have IRA solutions that are sold to other retirement participants outside; we've got some competitive proprietary products. And then, as a broker dealer, we also offer other companies products like life and annuities that allow our advisors to still participate in the growth, where we're able to generate some additional fees, but we don't necessarily have to incur the tail risk of those products. So there are a lot of different levers for us to pull, and this is going to continue to be a focus for us.

Speaker Change #105: Also have iras solutions that are sold to other retirement participants outside we've got we've got some competitive proprietary products and then across our broker dealer. We also offer a.

Speaker Change #105: Other companies products like life and annuities that allows our advisers to still participate in those in the growth and where we're able to generate some additional fees, but we don't necessarily have to incur the tail risk of those products. So a lot of different levers for us to talk.

Heather Hamilton Lavallee: And it goes back to, at the end of the day, doing the right thing to meet the needs of the end consumer, who are looking for more holistic education, advice, and guidance. Our next question is from Mike Ward with Citi, please. Thank you. Good morning.

Speaker Change #105: Paul and this is going to continue to be a focus for us and it goes back to at the end of the day doing right to meet the needs of the end consumer which are looking for more holistic education advice and guidance.

Speaker Change #105: Our next question is from Mike Ward with Citi. Please proceed.

Michael Augustus Ward: I was, I was hoping we could maybe dig a little bit into the investment management influence. Super strong rebound. I guess wondering if there's any more color around the composition of the assets that came in this quarter. Yeah, yeah, Mike, let me, let me unpack that a little bit for you.

Michael Augustus Ward: Thank you good morning.

Michael Augustus Ward: I was hoping we could maybe dig a little bit.

Speaker Change #123: Two the investment management levels.

Speaker Change: Super strong rebound just I guess wondering if theres any more color around the.

Speaker Change: The composition of the assets that came in.

Michael Augustus Ward: This quarter.

Matthew Toms: So we mentioned the breadth, and we were obviously very happy with the $4.8 billion flow for the quarter. Fixed income through the insurance and pension channel really stood out. We have very strong performance at the right time and in the fixed income cycle, where we see demand quite strong on the institutional side, and we believe growing as we look forward on the more intermediary retail side. So fixed income is clearly a standout.

Speaker Change: Yes, Mike Let me, let me unpack that a little bit for you. So we mentioned, Nebraska, obviously very happy with the $4 8 billion.

Michael Augustus Ward: For the quarter.

Speaker Change #119: Fixed income through the insurance and pension channel really stood out we have very strong performance at the right time in the fixed income cycle, where we see demand.

Speaker Change #119: Quite strong on the institutional side and we believe.

Michael Augustus Ward: Growing as we look forward on the more the intermediary retail side, so fixed income clearly.

Matthew Toms: Also, our privates and ALTS businesses continue to perform quite well. We have more fund launches coming at the end of the year, and we continue to grow new capabilities there. That's a key underlying driver.

Michael Augustus Ward: Handout also our privates and health business as it continues to perform quite well we have more fund launches coming at the end of the year and we continue to to grow new capabilities. There that is a key underlying driver and then.

Michael Augustus Ward: The change on the quarter was the bigger inclusion of our U S retail business. So international retail has been quite strong on the back of the broader array of strategies, we acquired a couple of years ago.

Matthew Toms: And then really the change in the quarter was the bigger inclusion of our U.S. retail business. So international retail has been quite strong on the back of the broader array of strategies we acquired a couple of years ago. Within the U.S., we're seeing our model business, our fixed income business, and our private equity secondary interval fund business continue to resonate in the marketplace. So really, it's the breadth that's driving that as we look forward, we see more of the same. The one I've mentioned that I'd have there is internationally retail oriented.

Michael Augustus Ward: Within the U S. We're seeing our model business, our fixed income business and our private equity secondary interval fund business continue to have.

Michael Augustus Ward: Resonated in the marketplace. So really it's the breadth that's dry.

Speaker Change: Moving that as we look forward, we see more of the same coming the one I've mentioned that I would have there is internationally has been retail oriented.

Matthew Toms: I'm excited about the future of that expanding into the institutional space as well through a broader array of products, both fixed income, private equity, and so quite excited about that. Awesome. Thank you so much.

Cited in the future about that expanding into the institutional space as well through a broader array of <unk>.

Michael Augustus Ward: <unk>, both fixed income private equities.

Michael Augustus Ward: Quite excited about that.

Michael Augustus Ward: Yeah.

Michael Augustus Ward: And then I was hoping you guys could maybe discuss any update on what you're seeing in terms of your office, your commercial mortgage loan portfolio, and any resolutions that you next come up with. Yeah, so it continues to be a story of resilience. I think the overall market is finding a bit of a clearing level and a bottom equity valuation starting to stabilize there. You've actually seen and read indices showing some bottoming, so the visibility is improved.

Speaker Change: Awesome. Thank you so much and then.

Speaker Change #115: I was hoping you guys could maybe discuss.

Michael Augustus Ward: Any update on what Youre seeing in terms of your.

Michael Augustus Ward: Office commercial mortgage loan portfolio in any resolutions that U S.

Speaker Change #115: Executed in the quarter.

Speaker Change #115: Yes.

Speaker Change: So it continues to be a story of resilience I think the overall market is finding a bit of a clearing level in a bottom equity valuations starting to stabilize there you've actually seen and read into see some some bottoming. So the visibility is improved.

Matthew Toms: From our portfolio, it continues to be the same positioning, very well diversified, and higher quality. Our CM scores, our ratings, and our coverage continue to hold up very well. Everything about our AVR experience over the quarter, $6 million in the quarter, really not a lot of movement. There's always going to be individual properties that you manage through, but we just don't see a real delta or change in the direction of what is a high-quality portfolio performing well and well-managed.

Speaker Change: From our portfolio continues to be the same positioning very well diversified higher quality, our cm scores in our ratings and our coverage has continued to hold up very well.

Speaker Change #115: If anything about what our AVR experience over the quarter $6 million on the quarter really not a lot of movement. There is always going to be individual properties that you manage through but.

Matthew Toms: We just don't see a real delta or change in the direction of what is a high quality portfolio performing well.

Matthew Toms: And well managed.

Operator: This concludes our question and answer session. I would now like to turn the conference call back over to Heather Lavallee for any closing remarks. With the benefit of Voya's diversified, capitalized business mix, we are well positioned to achieve our financial targets and remain focused on strategic execution. We are on track to deliver our full year financial targets and are taking the necessary action in our stop loss business to improve our loss ratios in 2025.

Speaker Change #122: This concludes our question and answer session I would now like to turn the conference call back over to Heather the Weil for any closing remarks.

Operator: So the benefit of boy, it's diversified capital light business mix, we are well positioned to achieve our financial targets and remain focused on strategic execution.

Operator: We are on track to deliver our full year financial targets and are taking the necessary action in our stop loss business to improve our loss ratios in 2025.

Operator: We have strong commercial momentum and are focused on spend discipline and prudent capital management while continuing to invest in growth. And we will be relentless in our customer focus, exceeding service expectations and innovating to meet their needs. Thank you, and we look forward to updating you on our progress. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Operator: We had strong commercial momentum and are focused on spend discipline and prudent capital management, while continuing to invest in growth.

Operator: And we will be relentless in our customer focus exceeding service expectations and innovating to meet their needs. Thank you and we look forward to updating you on our progress.

Speaker Change: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Speaker Change #115: Yes.

Operator: [music].

Speaker Change #115: Okay.

Speaker Change #115: Okay.

Speaker Change #115: [music].

Operator: Okay.

Operator: [music].

Operator: Yeah.

Operator: [music].

Operator: Yes.

Operator: Yeah.

Operator: [music].

Operator: Okay.

Operator: [music].

Operator: Yeah.

Operator: [music].

Operator: Yeah.