Q2 2025 Aflac Inc Earnings Call
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After today's remarks, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please.
Please note. This event is being recorded I would now like to turn the conference over to David Yang. Please go ahead.
Good morning, and welcome. Thank you for joining us for Aflac incorporated second quarter 2025 earnings call.
This morning, Dan Amos Chairman and CEO of Aflac incorporated will provide an overview of our results and operations in Japan, and the United States.
Then Max Broden Senior Executive Vice President and CFO of Aflac incorporated will provide more detail on our financial results for the quarter current capital and liquidity.
These topics are also addressed in the materials, we posted with our earnings release financial supplement and quarterly CFO update on our investors' Dot Aflac Dot com.
For Q&A today, we are joined by virtual Miller, President of Aflac incorporated and Aflac U S.
Charles Lake Chairman and representative director President of Aflac International.
Masatoshi <unk>.
President and representative director Aflac life insurance, Japan, and Brad disciplined Global Chief Investment Officer, President of Aflac Global investments.
Before we begin some statements in this teleconference are forward looking within the meaning of federal Securities laws.
Although we believe these statements are reasonable we can give no assurance that they will prove to be accurate because they are prospective in nature.
Actual results could differ materially from those we discussed today.
We encourage you to look at our annual report on Form 10-K for some of the various risk factors that could materially impact our results.
As I mentioned earlier the earnings release with reconciliations of certain non U S. GAAP measures and related earnings materials are available on investors thought aflac dot com.
I'll now hand, the call over to Dan Dan.
Thank you David and good morning, everyone. We're glad you joined us.
At Black incorporated reported net earnings per diluted share of $1 11, and adjusted earnings per diluted share of $1 78 for the second quarter of 2025.
We believe that these are solid results for the quarter, leading to a very good first half of the year.
Max will expand upon these results in a moment, but before he does I'd like to comment on our operations.
Beginning with Aflac, Japan, I am very pleased with Aflac, Japan's 23, 2% year over year sales increase.
Especially the 53% increase in the cancer insurance sales.
These strong sales were driven largely as expected sales of our newest cancer insurance product <unk>.
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They include the final stage of the launch of Japan Post insurance and Japan post in April.
We also saw positive overall sales growth across all distribution channels.
This positive results also reflects our new marketing and sales structure in Japan that integrates members of the actuarial.
<unk> and policy service into agile teams focused on bringing a specific product line to the market like cancer medical asset formation and.
And nursing care.
We also continue to introduce the need for the third sector protection to new and younger customers with our innovative first sector products.
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Which has third sector optional benefits.
Overall I believe we have the right strategy to meet our customers' financial protection needs throughout their different life stages.
Our ability to maintain strong premium persistency is a testament to our strategy aflac.
<unk> reputation and our customer recognition of the value of our products.
By maintaining this level of persistency and adding new premium through sales were partially offsetting the impact of reinsurance and policies, reaching paid up status.
Maintaining strong persistency will be vital to the future of Aflac Japan.
Being where customers want to buy insurance as always been an important element of our growth strategy in Japan, our broad network of distribution channels, including agencies Alliance partners banks continually optimize opportunities to help provide finance.
Protection to Japanese consumers.
We will continue to work hard to support each channel as we evolve to meet the customers' changing needs.
Turning to Aflac U S. We generated $340 million of new sales during the second quarter, which was a two seven year over year increase more importantly, we maintained strong premium persistency of 79, 2% and.
And increased net earned premium of three 4%.
We continue to see momentum within all areas of our group business, especially our group life and disability as well as our network dental.
In addition, we believe our efforts to drive more profitable growth with a stronger underwriting discipline have contributed to our strong premium persistency and net earned premium growth at the same time Aflac U S has continued its prudent approach to expense management and maintenance.
Painting, a strong pre tax margin as Max will expand upon in a moment.
In both Japan, and the United States I believe the consumers' need the products and solutions Aflac offers more than ever.
Policyholders, who have become climates aflac is more than an insurance company, we are a partner and hill.
Quarter of families during their times of need and a pioneer and leader in the industry.
We are leveraging every opportunity to convey our products can help fill the gap during challenging times, providing not just financial assistance, but also compassion and care.
As well as our Network Dental.
At the same time, we continue to generate strong capital and cash flows while maintaining our commitment to prudent liquidity and capital management we.
We have been very pleased with our investments, which have continued to produce solid net investment income.
In addition, we believe our efforts to drive more profitable growth with a stronger underwriting. Discipline have contributed to our strong premium persistency and net earned premium growth. At the same time Aflac us has continued as prudent approach to expense management and maintaining a strong pre-tax margin as Max will expand upon in a moment.
As an insurance company our primary responsibility is to build the promises we make to the policyholders while being responsive.
In both Japan and the United States, I believe the consumers need the products and solutions Aflac offers more than ever.
To the needs of our shareholders are solid portfolio supports our promise to the policyholders as does our commitment to maintaining strong capital ratios, we balance this financial strength and tactical capital deployment.
For our policyholders who become claimants Aflac is more than an insurance company. We are a partner in health, a supporter of families during their times of need and a Pioneer in leader in the industry.
I am happy.
With how management has handle capital deployment and the liquidity in the second quarter Aflac incorporated deployed $829 million in capital to repurchase seven 9 million shares of our stock and paid dividends of $312 million.
We are leveraging every opportunity to convey our products can help fill the Gap during challenging times. Providing not just financial assistance, but also compassion and care.
At the same time we continue to generate strong capital and cash flows while maintaining our commitment to prudent liquidity and Capital Management.
Combined with dividends that meetings that we delivered $1 1 billion back to shareholders in the second quarter of 2025.
Additionally, we treasure our track record of 42 consecutive years of dividend growth.
As an insurance company, our primary responsibility is to fill the promises, we make to the policyholders while being responsive.
To the needs of our shareholders.
At the same time, we have maintained our position among companies with the highest return on capital and the lowest cost of capital in the industry.
our solid portfolio supports our promise, to the policyholders, as does our commitment to maintaining strong Capital, ratios,
2025 March three important milestones for Aflac in June we just celebrated the 30th anniversary of what is now known as the Aflac cancer and blood disorders Center of children's healthcare of Atlanta.
We balance this financial strength and tactical Capital deployment.
I am happy.
We look forward to celebrating the 70 <unk> anniversary of the company's founding in November.
And we also are celebrating the 25th anniversary of the Aflac Duck this year.
With how management has handled Capital deployment and the liquidity in the second quarter alike. Incorporated deployed 829 million in capital to repurchase 7.9 million shares of our stock and paid dividends of 312 million.
Even though these milestones are noteworthy it's not the number of years that matters. Most is the privilege of benefiting the lives of millions of people. We are reminded that one thing has not changed since the founding and $19 55.
Combined with dividends that means that we delivered 1.1 billion back to the shareholders in the second quarter of 2025.
Additionally, we treasure our track record of 42 consecutive years of dividend growth.
Families and individuals still seek to protect themselves from financial hardship.
At the same time, we have maintained our position among companies with the highest return on Capital and the lowest cost of capital in the industry.
Not even the best health care insurance can cover.
Today's complex health care environment has produced incredible medical advancements.
That have come with incredible costs.
It's more important than ever for people to have a partner in their time of need we believe our approach to offering relevant products makes us that partner. We also believe in the underlying strengths of our business and our potential for continued growth in Japan, and the United States.
2025 marks, 3, important Milestones per athlete, in June, we just celebrated the 30th anniversary of what is now known as the Aflac cancer and blood Disorders Center of Children's. Healthcare of Atlanta.
We look forward to celebrating the 70th anniversary of the company's founding, in November.
And we also are celebrating the 25th anniversary of the athletic duck this year.
Two of the largest life insurance markets in the world.
On an ongoing basis, we are taking actions to reinforce our leading position and building on our momentum.
Even though these Milestones are noteworthy, it's not the number of years that matters. Most, it's the privilege of benefiting the lives of millions of people. We are reminded that 1 thing has not changed since the founding in 1955
I'll now turn the program over to Max to cover more details of the financial results Max.
Thank you Dan I will now provide a financial update on Aflac Incorporated's results.
Families and individuals still seek to protect themselves from financial hardship that not even the best health care insurance can cover.
For the second quarter of 2025 adjusted earnings per diluted share decreased two 7% year over year to $1 78.
Today's complex Health Care environment has produced incredible medical advancements.
With a <unk> <unk> positive impact from FX in the quarter.
In this quarter re measurement gains on reserves totaled $37 million reducing benefits.
Variable investment income ran a $35 million below our long term return expectations, while one make whole call generated income of $35 million.
That have come with Incredible costs. It's more important than ever for people to have a partner in their time of need. We believe our approach to offering relevant products makes us that partner. We also believe in the underlying strengths of our business and our potential for continued growth in Japan and the United States,
2 of the largest life insurance markets in the world.
Adjusted book value per share excluding foreign currency re measurement increased five 2%. The adjusted ROE was 13, 7% and 16, 4%, excluding foreign currency re measurement and acceptable spread to our cost of capital.
On and ongoing basis. We are taking actions to reinforce our leading position and building on our momentum.
I'll now turn the program over to Max to cover more details of the financial results. Max
Overall, we view these results in the quarter as solid.
Thank you, Dan. I will now provide a financial update on Aflac Incorporated results.
Starting with our Japan segment net earned premiums for the quarter declined four 8%.
Now I'd like Japan's underlying earned premiums, which excludes the impact of deferred profit liability.
For the second quarter of 2025, adjusted earnings per diluted share decreased 2.7% year-over-year to $1.78.
Paid up policies and reinsurance declined one 1%.
In the quarter.
We believe this metric better provides insight into our long term premium trends.
In this quarter rematch gains on reserves totaled. 37 million, reducing benefits.
Japan's total benefit ratio came in at 6% to six 5% for the quarter down 40 basis points year over year.
Variable investment income, ran a 35 million below. Our long-term return expectations.
While 1 Mae call call generated income of 35 million.
The third sector benefit ratio was 57, 4% for the quarter also down approximately 40 basis points year over year.
We estimate the impact from re measurement gains to be 83 basis points favorable to the benefit ratio in Q2 2025.
Long term experience trends as they relate to treatments of cancer and hospitalization continued to be in place leading to continued favorable underwriting experience.
Adjusted book value per share, excluding foreign currency remeasurement. Increased 5.2%, the adjusted Roe was 13.6% and 16.4% excluding foreign currency remeasurement, an acceptable spread to our cost of capital.
Overall, we view these results in a quarter as solid.
with our Japan segment, net and premiums for the quarter declined 4.8%
Persistency remained solid at 93, 7%, which was up approximately 40 basis points year over year in line with our expectations.
Athlete. Japan's, underlying earned premiums. Which excludes the impact of deferred profit liability. Paid up policies and reinsurance the client 1.1%.
Our expense ratio in Japan was 26% for the quarter up 280 basis points year over year, driven primarily by an increase in technology expenses.
We believe this metric better provides insight into our long-term premium trends.
Japan's total benefit ratio came in at 66.5% for the quarter.
For the quarter adjusted net investment income in yen terms was down 10, 5%, primarily driven by lower floating rate income the impact of foreign currency on your installer investments in yen terms.
Down 40 basis, points year-over-year.
Is ratio was 57.4% for the quarter. Also down approximately 40 basis points year-over-year,
And lower variable investment income.
Somewhat offset by higher call income and higher returns on U S dollar fixed rate portfolios.
We estimate the impact from re-measurement gains to be 83 basis points favorable to the benefit ratio in Q2 2025.
The pre tax margin for Japan in the quarter was 32% down 330 basis points year over year, but a very good result.
Long-term experience Trends as they relate to treatments of cancer and hospitalization continue to be in place leading to continued favorable underwriting experience.
Turning to U S results net earned premium was up three 4% persistency.
Persistency increased 50 basis points year over year to 79, 2%.
Persistency remains solid at 93.7%, which was up approximately 40 basis points year over year, in line with our expectations.
Our total benefit ratio came in at 47, 3%.
60 basis points higher than Q2 2024.
Our expense ratio in Japan was 20.6% for the quarter up 280 basis, points. Year-over-year, driven primarily by an increase in technology expenses.
Driven by business mix.
We estimate that re measurement gains were in line with a year ago.
And favorably impacted the benefit ratio by 160 basis points in the quarter as claims have remained below our long term expectations.
For the quarter adjusted, net investment income in Yen. Terms was down 10.5%. Primarily driven by lower floating rate income, the impact, on foreign currency on, un staller investments in Yen terms.
And lower variable investment income.
In the quarter, we benefited from favorable underwriting on our small but growing long term disability block.
Somewhat offset by higher call income and higher Returns on US dollar. Fixed rate portfolios.
Our expense ratio in the U S was 36, 3% down 60 basis points year over year, primarily driven by platforms improving scale and continued focus on expense efficiency.
The pre-tax margin for Japan in the quarter, was 32% down 330 basis, points year-over-year, but a very good result.
Turning to us results. Net and premium was up 3.4%
Our growth initiatives group life, and disability network dental and vision and direct to consumer increased our total expense ratio by 70 basis points for the quarter.
Persistency increased 50 basis points year-over-year to 79.2%.
This is in line with our expectations and we would expect this impact to decrease as we continue to approach scale.
Or total benefit ratio came in at 47.3%.
60 basis points higher than Q2 2024.
Driven by business mix.
Adjusted net investment income in the U S was down 5% for the quarter, primarily driven by lower floating rate income.
We estimate that remeasurement gains were in line with a year ago.
Profitability in the U S segment was very strong with a pretax margin of 22, 5% of.
In favorably impacted the benefit ratio by 160 basis points in the quarter, as claims have remained below our long-term expectations.
20 basis points decline compared with a strong quarter a year ago.
In our corporate segment, we recorded a pretax gain of $20 million.
In the quarter, we benefited from favorable underwriting on our small but growing long-term disability block.
Adjusted net investment income was $37 million higher than last year due to a combination of lower volume of tax credit investments and higher asset balances.
Our expense ratio in the U.S. was 36.3%, down 60 basis points year-over-year.
By platforms improving scale and continual focus on expense efficiency.
Which included the impact of the internal reinsurance transaction in Q4 of 2024.
Our tax credit investments impacted our corporate net investment income line for U S. GAAP purposes negatively by $8 million in the quarter with an associated credit to the tax line.
Our growth initiatives, group life and disability Network dental, vision and directed consumer increase. Our total expense ratio by 70 basis points for the quarter.
This is in line with our expectations and we would expect this impact to decrease as we continue to approach scale.
The net impact to our bottom line was a positive $1 million in the quarter.
To date these investments are performing well and in line with our expectations.
adjust the net investment income in the US was down 5% for the quarter primarily driven by lower floating rate income,
Higher total adjusted revenues were offset by higher total benefits and adjusted expenses of $90 million driven primarily by internal reinsurance activity.
Profitability in the US segment was very strong with a pre-tax margin or 22.5%.
A 20 basis points decline compared with a strong quarter a year ago.
Higher costs pertaining to business operations and higher interest expense.
In our corporate segment, we recorded a pre-tax gain of 20 million.
During the quarter, we raised debt of 150 billion yen, which translates into slightly over $1 billion.
adjusted net investment income was 37 million higher than last year due to a combination of lower volume of tax, credit Investments, and higher asset balances,
To pre fund, our 2026 maturities and to create liquidity and capital flexibility at the parent company.
which included the impact of the internal reinsurance transaction in Q4 of 2024.
This debt issuance combined with a significant dividend from Aflac, Japan increased our unencumbered holding company liquidity to $5 1 billion.
Our tax credit investments impacted a corporate net investment income line for us, GAAP purposes, negatively by $8 million in the quarter, with an associated credit to the tax line.
Which is $3 4 billion above our minimum balance.
Ion dollars in the quarter.
Our capital position remains strong and we ended the quarter with SME above 900%.
Today, these Investments are performing. Well and in line with our expectations
And an estimated regulatory ESR about 240%.
Following the previously mentioned and dividend.
While not finalized we estimate our combined RBC to be greater than 600%.
Higher total adjusted revenues were offset by higher total benefits and adjusted expenses of 90 million driven primarily by internal reinsurance activity.
These are strong capital ratios, which we actively monitor stress and managed to withstand credit cycles as well as external shocks.
Higher costs pertaining to business operations and higher interest expense.
We repurchased $829 million of our own stock and paid dividends of $312 million in Q2.
During the quarter, we raised debt of 150 billion yen which translates into a slightly over 1 billion dollars.
To pre-fund our 2026 maturities and to create liquidity and capital flexibility at the parent company.
Offering good relative IRR on these capital deployments, we will continue to be flexible and tactical in how we manage the balance sheet and deploy capital in order to drive strong risk adjusted Roe.
This debt issuance combined, with a significant dividend from athletic, Japan.
Increase our unencumbered holding company, liquidity to 5.1 billion dollars.
With a meaningful spread to our cost of capital.
Which is 3.4 billion dollars above our minimum balance.
During the quarter, we increased our seasonal reserves associated with our commercial real estate portfolio by $33 million net of charge offs as property values remain at distressed valuations.
Our Capital position remains strong and we ended the quarter with an SMR about 900%.
And an estimated regulatory ESR about 240%.
Following, the previously mentioned dividend.
We also foreclosed on three loans, adding them to our real estate owned portfolio consistent with our strategy for maximizing recovery values.
Well, not finalized. We estimate our combined RBC to be greater than 600%.
Our portfolio of first lien senior secured middle market loans continue to perform well.
These are strong capital ratios, which we actively monitor, stress, and manage to withstand credit cycles as well as external shocks.
With decreased seasonal reserves of $23 million in the quarter net of charge offs.
For U S. Statutory we recorded a $7 million valuation allowance on mortgage loans as an unrealized loss during the quarter.
On our Japan FSA basis, there were no security impairments in Q2, but we did book a net realized gain of 17 million yen related to transitional real estate loans.
We repurchased 829 million of our own stock and pay dividends of 312 million in Q2 offering good relative irr on these Capital deployments. We will continue to be flexible and tactical in how we manage the balance sheet and deploy capital in order to drive strong risk. Adjusted Roe
With a meaningful spread to our cost of capital.
This is well within our expectations and has a limited impact on regulatory earnings and capital.
Our leverage was 22, 5% for the quarter, which is within our target range of 20% to 25%.
During the quarter, we increased our seasonal reserves associated. With our commercial, real estate portfolio by 33 million net of charge jobs, as property values. Remain at this risk valuations.
As we hold approximately 65% of our debt in yen. This leverage ratio is impacted by moves in the yen dollar exchange rate.
We also foreclosed on 3 loans, adding them to our real estate owned portfolio. Consistent with our strategy for maximizing recovery values.
This is intentional and part of our enterprise hedging program protecting the economic value of Aflac, Japan in U S dollar terms.
Our portfolio of first lean senior secured Middle Market loans, continue to perform well.
With decreased season reserves of 23 million in the quarter, net of charge offs.
I would like to reiterate our approach to managing foreign currency exposure.
Fundamentally we size, our unhedged U S dollar exposure to the estimated economic surplus associated with our Japanese business.
For us statutory. We recorded the 7 million valuation allowance on mortgage loans as an unrealized loss during the quarter.
At the end of Q2, we held $27 $1 billion of used all our assets in our Japan General account.
On a Japan FSA basis. There were no security impairments in Q2 but we did book a net realized gain of 17 million yen related to transitional. Real estate loans
Forward contracts at Inc. With a notional balance of $1 9 billion and $5 $7 billion of yen denominated debt.
This is well within our expectations and has a limited impact on regulatory earnings and capital.
We also hold $25 billion.
Our leverage was 22.5% for the quarter, which is within our target range of 20 to 25%.
Notional of out of the money put options.
Which provide tail protection against the large appreciation in the yen.
As we hold approximately 65% of our debt in yen.
Adding this up we feel we're very well positioned on an economic basis.
This leverage ratio is impacted by moves in the Yen dollar exchange rate.
Thank you I will now turn the call over to David.
Thank you Max.
This is intentional and part of our Enterprise hedging program, protecting the economic value of athletic, Japan in US dollar terms.
Before we begin our Q&A, we ask that you. Please limit yourself to one initial question and a related follow up you May then rejoin the queue to ask additional questions.
I would like to reiterate our approach to managing foreign currency exposure.
We will now take the first question.
As a reminder to ask a question you May Press Star then one on your Touchtone phone for using a speakerphone. Please pick up your handset before pressing the keys.
Fundamentally. We size our unhedged US dollar exposure to the estimated economic surplus, associated with our Japanese business.
At this time, we'll pause momentarily to assemble our roster.
At the end of Q2, we held $27.1 billion of U.S. dollar assets in our Japan general account.
And our first question comes from.
For what contracts at Inc, with a notional, balance of 1.9 billion.
Ryan Krueger from <unk>. Please go ahead.
And 5.7 billion dollars of Yin denominated debt.
Hey, Thanks. Good morning, My first question was on cancer sales.
We also hold 25 billion notional of out of the money put options.
You, obviously had a really nice pickup following the launch of the Morocco.
Which provide tail protection against a large appreciation in the yen.
Hi, My question is more on that.
Adding this up. We feel we're very well positioned on an economic basis.
You could take the benefit from the new product could have on sales.
Thank you. I will now turn the call over to David.
Thank you, Max.
Understanding that you tend to get the biggest benefit initially, but do you think you'll continue to see stronger cancer sales for the balance of the year because of the new product launch.
Before we begin our Q&A, we ask that you, please limit yourself to 1 initial question and a related follow-up, you may then rejoin the queue to ask additional questions.
We'll now take the first question.
In Kurdistan.
Okay.
As a reminder to ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker-phone, please pick up your handset before pressing the keys.
Youll see this.
Scott.
At this time, we'll pause momentarily to assemble our roster.
Thank you for your question. This is Susan Lee, Let me answer.
enter our first question comes from
Keys to hotel utility maths.
We are feeling.
That has got attraction and it is doing very well so far.
Ryan Krueger from KBW, please go ahead.
Can you talk a little bit earlier.
<unk> just a little more carefully refill promote is doing.
Cancer sales.
Right I was responding to the diverse customers and maintaining a high high competitiveness.
You obviously had a really nice pickup following the launch of the Morocco product. My my question is more
Can you talk to lots of local show almost no Juno.
The biggest feature of me right, though is it flexible protection design it.
What do you do garneau Hogan to even a lot.
On how long you think the benefit from the new product could could have on sales. I I, you know, understanding that you tend to get the biggest benefit initially. But, you know, do you think you'll continue to see stronger cancer sales to the balance of the year because of the new product launch?
You also.
So the data packaging it up.
So it gets a little too soon our wholesale medical social agenda.
So they all start small silicon to Stefan <unk>.
Finally, the cancer lesion offered at other companies there are generally offered offer.
Package, so that means even if the policyholder is not be filing in particular coverage. It is already included too, but they buy offered us going to mirror is going very well.
Lola Horse show Cornell.
Juno film Ultimate, but when it comes to FX me right. So customers can purchase only the necessary coverage that is how flexible. It is designed for sold jujitsu exxonmobil.
Thank you for your question. This is Yoshi Zammy. Let me answer. We are feeling it. The product has got the traction, and it is doing very well so far. Let me write that with responding to the diverse customers and maintaining the high competitiveness.
Exxonmobil sure. So for those who are wishing to have a rich coverage. They can buy a lot of coverage for sure. They look at on your side.
No for sure and for those who already have enough coverage. They can buy a minimum level of coverage will get from our customers is critical to articulate docks.
Biggest feature of Miro is its flexible protection design.
<unk> children people can purchase the policy in a customized way.
Biggest characteristic of me right now.
Alright, I would look at the whole show more Switzerland.
It also means either carry is the kind of rates that was not available by FX in the past.
Product not showing anymore.
That was about the product characteristics for any call it the <unk>.
<unk> gone further support total U.
Proposal subs.
And along with that product carries a supporting service statistical EOD cancer consolidations.
<unk> got good.
Scott.
Very well.
Got it got it.
The photos are these proposals and this assumes that the electronics to 50 50 years of expertise and the relationship with a specialist.
And normally the cancer reentry and offered at other companies were generally offered are offered as 1 package. So that means even if the policy holder is not required in particular coverage, it is already included to what they buy. But when it comes to approximately customers can purchase only the necessary coverage that is how flexible it is designed. So for those who are wishing to have a rich coverage, they can buy a lot of coverage.
Gross orders for both the customer and unite.
And this consolidation support is not available.
So let them so that was another characteristics.
Again as I said at an alternate nearly did then thank you put us volatility.
Ill take optimal surplus.
And therefore, the performance is that at all channels plus year on year.
And for those who already have enough coverage, they can buy a minimum level of coverage. People can purchase the policy in a customized way. That is the biggest characteristic of me and also me to carry is the coverage that was not available by Aflac in the past. So that was about the product.
And also positive versus the plan.
Characteristics.
Startup.
A couple of Carnival cancer, working full dose almost three.
<unk> from <unk>.
Okay.
Vehicle to all customers. So we anticipate the strong performance.
Continue.
For the time being Inc, or <unk>.
Longer than that of the past cancer insurance product, but also make the most of it I understand a little more <unk>. So let me reiterate once again that he has got attraction and needed successful so far.
And along with that, this product carries are supporting uh, service which is called cancer consultation, sir. And this has been developed, thanks to a 50 50 years of expertise and the relationship with a specialist.
Hugh.
Great. Thank you and then one separate question on Japan investment income it seems like even if you make the adjustments for FX.
And May calls just that there was there was it seems.
Seems to be a step up in NII in Japan can you give a little bit more color.
Good afternoon.
Trajectory there.
This quarters.
Favorable going forward sure.
Sure. Thank you Ryan good morning.
We did have a nice.
Strong second quarter. It was a nice improvement over first quarter and there were a few things that drove this.
Larger contributor was our variable NII from our alternatives book that was about half the improvement there.
There was a little there's a little bit of seasonality there in second quarter because of the timing of some of the marks we get on on fourth quarter.
And this consultation support is not available outside access. So that was another characteristic. So that's the and therefore, the performance is that at all channels, we are plus ear on ear and also positive versus the plan. So we anticipate the strong performance uh, to continue for the time being and all longer than that of the past cancer insurance products. So let me reiterate once again that it has got attraction and needed successful so far. Thank you.
Comes in a little bit late in the first half of the year.
Also just had better marks on the portfolio overall, there's a make whole, which you mentioned that was a nice pick up second quarter over first quarter and then the rest was a combination of things we accelerated some deployment we pulled forward some activity to capture attractive opportunities that we saw in the first half.
And then we were quite active in what we call switch trades, where we sold lower yielding <unk> and we bought correct current yield <unk>.
Thank you. And then, uh, 1 separate question on Japan investment income. It, it seems like, um, you know, even if you make the adjustments for FX and the AI and make holes just so there was like there was seems to be a step up in in the knee in Japan can you give a little bit more color on things benefited your trajectory there? And if you do this course um, sustainable going forward.
At current higher yields and we also swapped into some some nice credit assets to pick up there.
In terms of the outlook for third quarter.
We do think you should probably adjust for the make whole. Although we've had to this year. Those are one off items that are very difficult for us to.
To predict with any certainty on the variable NII. We are optimistic that we will see a good solid second half of the year. There is a lot of reasons to be optimistic for a pickup there, but that does remain very difficult to predict Q on Q.
And then the benefit from the acceleration in the switch trade should continue to roll through for the back half of the year.
So net net we think we are.
Very well positioned for a solid third quarter.
Alternative book that was about half the Improvement. Um, there was a little, there's a little bit of seasonality there in second quarter because of the timing of some of the marks we get on on fourth quarter, uh, comes in a little bit late in the first half of the year, but we also just had better marks on the portfolio overall. Uh, there's the make hole, which you mentioned, uh, that was a nice pickup second quarter over first quarter and then the rest was a combination of things. Uh, we accelerated, uh, some deployment, we pulled forward some activity to capture attractive opportunities that we saw in the first half.
Our next question comes from Sunil Kumar from Jefferies. Please go ahead.
Thanks, Good morning.
Max I wanted to ask on ESR for a minute.
One of your competitors disclose their view that some of the companies in Japan are using sort of adjusted metrics that arent true to the FSA has I guess formulas I just wanted to get your thoughts on that and how you're approaching this.
And then we were quite active in what we call switch trades. Uh where we sold lower yielding jgbs and we bought current Uh, current yield jdbs that that the current higher yields. And we also swapped into some, uh, some nice credit assets to to pick up yields there.
<unk> as you gave us.
The disclosure every quarter. Thanks.
Thank you Nathan I'll kick it off and on.
Also ask if the STB ever in Japan have any comments as well so.
He is our overall you have two day three versions all the ESR you have the regulatory ESR, yet the regulatory ESR with USP and you have the internal models.
Yes, we do.
Use the regulatory model with USP.
In terms of the outlook for third quarter, um, we do think you should probably adjust for the make hole. Although we've had 2 this year. Those are the 1 off items that are very difficult for us to uh to predict with any certainty on the variable knee. We are optimistic that we'll see a a good solid second half of the year. There's a lot of reasons to be optimistic for a pickup there, uh, but that does remain very difficult to predict q1q. Uh, and then the benefit from the acceleration in the switch trades. Should continue to roll through for the back half of the year. Uh, so net, net. We think we're we're very well positioned for a
A third quarter.
The reason why is because.
This is what we believe that we should manage to.
Our next question comes from Sunni. Kamath from Jeffrey's please go ahead.
And that gives us the opportunity to adjust our regulatory model using risk factors. There are specific to our business and that means that they are more realistic on our business than the regulatory model latest.
Yeah, right now that gives us roughly an uplift over the regulatory model of about 30 points.
And over time, we would hope that.
Uh, thanks. Good morning. Um, Max, I wanted to ask um, ESR for a minute. Um, you know, one of your competitors disclosed their view that some of the companies in Japan are using sort of adjusted metrics that, you know, aren't true to the um, FSAs, I guess, formulas. Uh, just wanted to get your thoughts on that and how you're approaching, um, you know, this ESR as you give us the uh, the disclosure every quarter. Thanks.
There will be an approval all of our internal model as well, which obviously is closer to the real economics of the underlying business because they're in the internal model, we would use our full.
Thank you, Samantha and I'll I'll kick it off and I'll also ask if the Steve beaver in Japan have any comments as well. So,
An.
Internal experience.
ESR overall, you have today, 3 versions, all the ESR, you have the regulatory ESR. You have the regulatory ESR with USP and you have the internal models.
So we believe that this is the right approach and this is the right model to use.
Yeah, we use the regulatory model with USP.
Okay. That's helpful. Thank you and then I guess on the cancer sales can.
The reason why is because if this is what we believe, then we should manage to.
Can you just talk about how much of a impact was lapsed re issue if at all in the quarter.
And are you targeting these sales to newer healthier newer customers or are you sort of going back to your in force customer base and selling the cancer policy. Thanks.
and that it gives us the opportunity to adjust the regulator model using risk factors that are specific to our business. And that means that they are more realistic on our business than the regulatory model is
Yeah, right now that gives us roughly an uplift over the regulatory model of about 30 points.
Let me kick it off on that.
um, and over time, we would hope that um,
In Japan might want to give some more color.
The early data that we have on lapse and reissue.
Indicates that we are roughly in line or slightly below our internal expectations. So we have not seen as spike greater than what we normally would expect when we have a refreshed product out in the marketplace as it relates to lapse and reissue now you always have a little bit of an uptick in that as expected.
There will be an approval of our internal model as well, which obviously is closer to the real economics of the underlying business? Because there in the internal model, we would use our full, um, internal experience.
so,
We believe that this is the right approach, and this is the right model to use.
But so far the data is indicating that we are in line with our expectations.
There is always a little bit of a lag, though and that means that as we go into the third quarter, we wouldn't be surprised if we see a little bit of an uptick in lapse AC.
Yes.
Excellent.
So.
Okay, that that's helpful. Thank you. And then I guess on the cancer sales, um, can you just talk about uh, how much of a an impact was lapse reissue? If at all, uh, in the quarter. Um, and and are you targeting these sales to newer, um, policy newer customers or are you sort of going back to your enforced, customer base and and selling the cancer policy? Thanks.
Japan over to Humberto contended, let me answer from the sales perspective from Japan.
Going to get someone who does the more generally thinking we'll get someone touched at mcdonalds, we are selling both to our existing customers and new customers.
<unk> going to get some nikola motor or motor to look at the whole shall see caustic fukudome wants it on deaconess exist.
Existing customers, we can offer additional coverage.
Policyholders do not have.
Let me kick it off uh on that and and Japan might want to give some more caller, the early beta that we have on that sir and reissue indicates that we are roughly in line or slightly below our internal expectations. So we have not seen a spike greater than what we normally would expect. When we have a refreshed product out in the marketplace as it relates to
Total Juno Philip <unk> from <unk>.
And with this flexible nature of this product, we can develop a new customer base commercial heme.
Johnny Hello immediately.
<unk>.
From a detached chordoma.
Although more prudent.
Lapse and reissue. Now you always have a little bit of an uptick and that is expected. But so far, the data is indicating that we are in line with our expectations. That there is always a little bit of a lag though and that means that as we go into the third quarter, we wouldn't be surprised if we see a little bit of an uptick in in lapsation.
He is joining us who can do the hi, Peter.
And one of the characteristic of this me right, though is the plan for children. The premiums are extremely low and thinking and relative to the service.
Thank you.
None of them are this could open a new height data.
They can continually evolving until the children that age of 'twenty, three sort of almost a little garbled.
Existing customers and new customers.
So you can set up for them.
And they can fill choctaw optimal the policy to the regular cancer insurance quarter seasonally.
<unk>.
And this product is gaining a great deal of attention from customers the opportunity for La <unk> will get some other assay will get somewhat.
And for existing customers, we can offer additional coverage that the policy holders do not have presents.
Can you speak and we are seeing new enrollment, especially from the younger and middle aged customers, although not book two weakest financing market, we are seeing strength.
And with this flexible nature of this product, we can develop the new customer base.
By leveraging such characteristics that I, just mentioned, we anticipate to expand.
And their business to the new policy holders in the future.
And 1 of the characteristic of this Mito is the plan for children, the premiums are extremely low and they can enroll to the service.
Thank you for your question.
The next question comes from Jack Meehan from BMO. Please go ahead.
Good morning.
Just one on the re measurement gains that <unk> been continuing to see in both Japan and the U S. I guess I guess given us should we be thinking about any kind of change in your assumptions as part of unlocking next quarter and I'm just curious.
They can continue enrolling until the children becomes the age of 23.
And they can switch the policy to the regular Chancellor insurance.
Pan.
So your assumption to assume for further improvement in cancer and hospitalization trends or are you already assuming some degree of improvement, but the actual experience continues to be doing even better than your expectations.
So yes.
Yes, let me just remind you of.
Our policy so each quarter, we true up the experience in that quarter and that will then flow.
In this product, is gaining a deal of attention from customers or no. And we are saying you enrollment, especially from the younger and middle-aged customers by leveraging such characteristics that I just mentioned. We anticipate
Through as re measurement gain losses.
From the new if and the business to new policies holders in the future too. So thank you for your question.
In the reported quarter and then obviously in the third quarter of each year.
Unlock our actuarial assumptions as it relates to our forward looking assumptions.
The next question comes from Jack Matten from BMO. Please go ahead.
When we look forward what kind of go back to 2012 through Q3 of 2000.
24 in our assumptions that we set back then there is a small improvement in the forward looking trend hospitalization trends in Japan, it's relatively small but it is not flat there is a small small improvement expected in those assumptions and we incorporate.
When we set those actuarial assumptions in 2024.
Hey, good morning. Um just just 1 of the the remeasurement gains that you've been to see in both Japan. Um in the US I guess I guess given ocean would be thinking about any kind of change in your assumptions as part of the unlocking um next quarter. And then just just curious in in in Japan. Um, do your assumptions assume kind of further Improvement in in cancer and hospitalization Trends. Or are you already assuming some degree of improvement? But the actual experience just continues to be even even better than your expectations.
so,
And obviously, we will often game.
These assumptions in the next quarter.
Got it that makes sense. Thanks.
Maybe just one on <unk>.
Capital deployment.
We're running $3 4 billion above your target at the holding company healthy levels. The subs to I guess can you just remind us where rapid might be interested in terms of potential M&A unless it's something to accelerate growth in the U S group business as a priority, maybe maybe asked M&A and maybe kind of alternatives that you'd be thinking about in terms of capital deployment.
Just let let me just remind you of a, um, our policy. So each quarter, we threw up the experience in that quarter and that will then fall flow through as re-measurement. Gain losses in that reported quarter. And then obviously, in the third quarter of each year, we unlock our actual assumptions as it relates to our forward-looking assumptions.
Well.
Our philosophy as it relates to capital deployment is that it is a function of the capital generation that we see from the operating companies going forward. The capital that we have at hand, and the future capital generation.
When we look forward and I'm going to go back to 2020 to Q3 of 2024 in our assumptions that we set back. Then there is a small Improvement in forward-looking trend of hospitalization Trends in Japan. It's relatively small but it is not flat. There is a small small Improvement expected in those assumptions that we incorporated when we set those actual assumptions in 2024.
And then we try to deploy that.
Firsthand into our operations and grow where we can grow at good Irr's and then we also use capital to extend our business and that can be.
And obviously, we will update these this assumptions in the next quarter.
<unk> M&A.
That is predominantly lately that has come through.
Deploying capital back to shareholders through dividends and buybacks and we believe that we have achieved very good irr's on those capital deployment actions.
The next question comes from Jimmy Jeweler from J P. Morgan. Please go ahead.
Got to make that makes sense. Thanks. And, um, it's just 1 on, um, capital deployment. Um, you're running with, I think, $3.4 billion above your target of the holding company, healthy levels of Subs to, I guess. Can you just remind us where graphic might be interested in terms of potential M&A? I don't know if there's something to accelerate growth in the U.S. Group business is a priority. Maybe, maybe after 7 Day, any kind of alternatives that you'd be thinking about in terms of capital?
An appointment.
Hey, good morning, So I had to.
Question first on U S sales.
Sure.
We thought the business would be growing the last couple of years, but it.
Sales of that stay consistently been weaker than expected I think last year you were down.
Well, our philosophy as relates to Capital deployment is that it is a function of the capital generation that we see from the operating companies going forward. The Capital that we have at hand and the future Capital generation.
Here they are.
Been positive, but fairly sluggish slow things so maybe you could.
yeah, and then we try to deploy that
Just talk about what's going on business and just general expectations for.
Sales results over the next year or so.
Yes. Thank you good morning, Jeremy.
Let me give a macro view first and just say that we're continuing to take some deliberate actions to drive long term sustainable value.
Firsthand into our operations and grow where we can grow at good irrs and then we also use Capital to extend our business and that can be evaluating m&a. And but that is predominantly lately that has come through as
So some of this is some deliberate intentional actions, where we're really looking to get the right type of business. We want on the books and you can see that when you look at our overall performance for the quarter. When you look at our earned premium has been up three 4% looking at the persistency, we continue to move on that.
Uh, deploying Capital, back to shareholders through dividends and BuyBacks and we believe that we have achieved very good irrs on those Capital deployment actions.
The next question comes from Jimmy Bueller, from JP Morgan. Please go ahead.
It was up about 50 basis points for the quarter and then you look at our expense ratio expense ratio is one of the best we've had in about five quarters in a row, but really looking at the overall totality now the two 7% increase for the quarter was certainly at the low end of our range what im expecting Jimmy is a stronger second half really drill.
By fourth quarter bookings, our pipeline looks strong we are seeing good performance.
The question first, On Us sales, um, we thought the business would be growing the last couple of years, but it's it, it sales have actually consistently been weaker than expected. I think last year you were down. Um, this year. They've been positive but fairly sluggish low single did. So, maybe Virgil, you could just talk about what's going on business and just general expectations for, um, sales results over the next year or so.
Lab business.
We have built a strong reputation there.
You may have seen our press release, we did recently, where we are now taken over with the state of Maine for <unk>.
Management.
We are currently doing with our renewal for the state of Connecticut.
We're also pleased with the performance we saw what our dental property I mentioned before that we have some operational concerns that we have now overcome strong momentum double digit growth in the first half of the year I expect that to continue throughout the second half and we continue to see a bright spot with our consumer markets, our direct to consumer platform.
So all in all I expect to see a stronger second half driven really by a four quarter enrollment.
Our focus will be on recruiting.
Got to pick it up in our traditional business, that's driven by our career channel I'm looking to increase right now were relatively flat for the first half of the year I am looking to put up some positive numbers where recruitment.
Uh, yeah, thank you. Good morning. Jamie, uh, let me give a macro view first and just say that we're continuing to take some deliberate actions to drive long-term sustainable value. Uh, so some of this is some deliberate intentional actions, where we are really looking to get the right type of business that we want on the books. And you can see that when you look at our overall performance for the quarter, when you look at our earned premiums being up, 3.4%, look at the persistency, we continue to move on that. Uh, it was up about 50 basis points for the quarter. And then you look at our expense ratio, uh, expense ratio is 1 of the best we've had in about 5, quarters in a row, so I'm really looking at the overall totality. Now, the 2.7% increase for the quarter was certainly at a low end of our range. Uh, what I'm expecting Jimmy is a stronger. Second half, really driven by 4 quarter bookings. Our pipeline looks strong. We're seeing good performance in our lab business. Uh, we have
Those.
Pleased to see the trend that we have a higher productivity, we're getting out of our our field. So overall I hope that helps Jimmy just let me know if you have any more questions on that.
Yeah.
And just maybe a little bit on the dental product is adapting to what you'd expect to be a normal level of sales of that business or is it still.
Built a strong reputation there. Uh, you may have seen a press release. We did recently where we are now taking over with the state of Maine. For uh FML pfml management. Just like we're currently doing with renewal from the state of Connecticut. So we're also pleased with the performance. We saw when I was Dental property, I mentioned before that, we had some operational concerns that we have now overcome
The catch up related to the.
Platform change.
Yes.
I will tell you they are in the second quarter and again the cause of the underperformance last year. This you have to be careful with the numbers and we were up 43%, but again, it's only on a small base last year I will tell you. We are certainly at a high rate of my expectations for this year I don't expect that to continue.
Strong momentum, double digit growth. In the first half of the year, I expect that it continues throughout the second half and we continue to see a bright spot. With our consumer markets are the direct to Consumer platform. So all in all I expect uh to see a stronger second half driven really by 4 quarter enrollments
I think it's important Jim made a note.
<unk>.
Dental and vision.
Part of the overall strategy, we have going forward. So I think it's a number you can look to that we're counting on we think it.
Because it's the number one number two choice among consumers.
I would focus uh will be the recruiting. Uh we've got to pick it up in our traditional business, that's driven by our career Channel. I'm looking to increase right now. We're relatively flat for the first half of the year. I'm looking to put up some positive numbers with recruitment, convert those and they could continue to see the trend, we have a high productivity that we're getting out of our our field so over. Now I hope that helps Jimmy and just let me know if you have any more questions on that.
It's a door opener for us in the supplemental area about putting it in <unk>.
Monitoring that you will be important as we believe it is and we're monitoring it.
No, and just maybe a little bit on the dental product has it gotten to what you'd expect to be a normal level of sales for that business. Or is it still? Um, there's a catch up related to the, uh, platform change.
Yeah.
Even weekly to see Alex picking up because.
We're frustrated with some of the issues. We had early on and that said learning curve that you have when you get into things new and.
We're glad we're there.
Uh, we during the second quarter. Again, the cost of the underperformance of last year. This uh you have to be careful with the numbers now we're up 43% but again it's on a on a small base last year, I will tell you which certainly at a high rate of my expectations for this year and I'm expecting that to continue.
Hopefully all of the major issues are behind us and it will just stay positive going forward with it.
Our next question comes from Elyse Greenspan from Wells Fargo. Please go ahead.
Hi, Thanks. Good morning, My first question I guess is on the expense ratio with within Japan.
Or not, I, I think it's important Jimmy to note that, um, Dental, uh, and vision is part of the overall strategy we have going forward. So I think it's a number. You can look to that, we're counting on, we think it, uh, because it's the number 1 number 2 Choice among consumers.
Trended favorable I guess relative to your guide and I think expenses are somewhat typically higher in the back half. So just how are you thinking about that.
That ratio trending trending from here over the course of the year.
A door opener for us and the supplemental area by putting it in first. So I think, uh, monitoring that you will be important as we believe it is and we're monitoring it.
So we still expect to be within our guidance range of 20% to 23% for that expense ratio. Obviously in the first half we are at the lower end of that range.
That includes obviously a product refreshment marketing campaign associated with our cancer launch.
So as we look out into the second half there are some continued new technology projects that will continue to drive expenses.
Even weekly to see how it's picking up. Because, uh, we're frustrated with some of the issues we had early on and and um, that's that earning curve that you have when you get into things new and um, uh, we're glad we're there. Uh, we're glad that hopefully all the major issues are behind us and that we'll just see positive going forward with it.
Our next question comes from Elise. Greenspan from Wells, Fargo, please, go ahead.
Higher year over year.
But in terms of the range of 20% to 23% would probably be in the middle or lower end of that range.
Thanks, and then my second question.
It goes back to capital obviously.
Weighted holdco cash right now.
Is there a certain time period that you guys would look to take that down whether thats organic inorganic growth.
Hi, thanks. Um, good morning. My first question, um, I guess, um, is on the, you know, expense ratio within Japan. Um, that's trended favorably, I guess, you know, relative to your guide, and I think, um, expenses are somewhat typically higher in the back half. So just how are you thinking about, um, you know, that ratio trending from here over the course of the year?
As well as repurchases.
And how should we think about I guess.
No buybacks in the second half of the year should we think about that elevated relative to the first half just given the higher holdco cash.
So the timing of it.
Done for that extension ratio. Obviously, in the first half, we are at the lower end of that range. Um, that includes obviously a product refreshment marketing campaign associated with our cancer launch.
Right now you have a U S dollar yield curve that is essentially flat.
Which means that the so called if you can call. It the tax of holding cash right now is not what it used to be so we're earning a decent yield on that cash obviously the yields are below our cost of equity capital, which means that over time, we would certainly expect to deploy the capital, but the rush to do so is not in that.
Yeah, so as we look out into the second half, there are some uh, continued technology projects that will continue to drive expenses uh higher year-over-year. Uh but in terms of the range of 20 to 23% uh would probably be in the middle or lower end of that range.
Fairly there to the same extent that it may have been in the past when yields were much much lower at the short end of the yield curve. So I think we're in a very good spot.
In fact.
Good.
Intentionally move up in terms of Holdco cash this quarter through the debt issuance that we did and this was a debt issuance that we did denominated in yen and we.
Had room for having more again debt on our balance sheet and that helps with our overall foreign exchange exposure.
Thanks. Um, and then my second question, um, you know, I guess you know goes back to Capital obviously elevated whole Co cash right now. Um is there a you know certain time period that you guys would look um to take that down? Um, you know whether that's organic inorganic growth, um, you know, as well as as we purchases. Um, and how should we think about, I guess? Um, you know, Buybacks in the second half of the year. Should we think about that elevated relative to the first half just given? Um, the higher whole Co cash?
And it also gives us a policy to carry.
So if you think about our cost of that debt is about $232 35, and we can invest in low fours in U S dollars right now so we actually have a positive carry on it so it made sense for us to pre.
So the timing of it. Um, right now, you know, when you have a US dollar you get the curve that is essentially flat and which means that the so-called if you can call it the the tax of holding cash right now, it's not what it used to be. So we're earning a decent yield on that cash. Obviously, the yields are below our cost of equity Capital, which means that over time,
Pre funded those debt maturities and go early.
As it relates to deployment going forward. It continues to be our capital deployment process, where we will look across the company in the enterprise to look for where we have opportunities to deploy capital at good irr's that being organically or deploying it into tactically into dividends.
And we would certainly expect to deploy the capital, but the rush to do so is not necessarily there to the same extent that it may have been in the past when yields were were much much lower at the short end of the yield curve.
So I think we're in a very good spot. In fact, we did
Buybacks.
The next question comes from Tom Gallagher from Evercore ISI. Please go ahead.
Good morning, one one on Japan sales and then a follow up on the ESR.
So I guess my question is.
21 billion yen sales.
That's if I, if I annualize that.
We're back to pre pandemic levels now I don't want to get ahead of ourselves here, who has one very good quarter.
Can you provide some perspective on how you're viewing this I mean do you think there was a.
Intentionally move up in terms of hold Co cache, this quarter through the definitions that we did. And this was a debt issuance that we did denominated in Yen and we had room for having more Yin debt on our balance sheet that helps with our overall foreign exchange exposure. Um, and it also gives us a positive carry. Um, so if you think about our cost of that debt is about 230 235 and we can invest in low force in US dollars right now. So, we actually have a positive carry on it, so it made sense for us to pre-fund those debt maturities and go early. Um,
A big kind of onetime benefit or do you think we might see a higher level of sales sustained here for a while because the other thing I noticed was.
Your <unk> product also held up normally when you see a new.
Product launch like the cancer product, you'll see a falloff of some of the other products, but you do seem to theres, some sustainability and assume it tops as well but anyway.
As it relates to deployment going forward, it continues to be our Capital deployment process where we will look across the company. And the enterprise, we look for where we have opportunities to deploy Capital, that's good. IRS that being organically or deploying it into tactically into dividends and BuyBacks.
The next question comes from Tom Gallagher from evercore isi, please. Go ahead.
Main question on all of that is where do you see do you think it's sustainable and if so.
What does it mean for premium revenue growth.
Is it a game changer or is it too early to tell whether we might start to see a flattening out or actually improvement or growth.
Good morning, 1. 1 on Japan sales and then a follow-up on ESR. Um so I I guess my question is you know, 21 billion yen sales
Premium in 'twenty six 'twenty seven from what Youre seeing right now thanks.
That's if I if I annualize that, um, we're back to pre-pandemic levels. Now, I don't want to get ahead of ourselves here. Who is 1 very good quarter.
Yes.
<unk>.
Sales of dentistry.
Thank you for your question this discussion and in charge of Sam.
Muscle for Corona.
<unk>.
But can you provide some perspective on how you're viewing this? I mean, do you think there was a big kind of 1 time benefit, or do you think we might see a higher level of sales sustained here for a while? Because the other thing I noticed was, um,
Personal or volume when you model to control what I wanted more Mezz estimates, yes, we are.
I'm going to make a recovery to the level of pre COVID-19 in terms of sales.
Muscle Shoals.
<unk>.
Or volatility.
Until then.
<unk> closed Q2.
Key drink, China look how much Niels and Janet <unk>.
Your Sumas product also held up normally, when you see a new product launch like the cancer product, you see a fall off of some of the other products but you do seem to there's some sustainability in the Sumas as well. But anyway, um, main question on all of that is, where do you see? Do you think it's sustainable? And if so,
And when the state initiatives in order to further increase our sales is to focus on the cancer insurance Milito, which is doing very well. So far we will continue to make efforts throughout the channel.
For the alfalfa sooner.
What does it mean for premium Revenue growth? Uh, is it a game changer or is it too early to tell whether we might start to see a flattening out, or actually Improvement or growth on on earned premium in 2627 from what you're seeing right now? Thanks.
Peter and tinnitus, which is supporting that sales.
Colin Moore at dental home loans, our goalkeepers demos and some of that is also maintaining a certain level of sales.
It is a little humble critical pillar <unk>.
Thank you for your question. This is Yoshi in charge of sales.
Mr Mas.
Jimmy Thats been successful also knew that there was a positive contribution to the third sector product distribute understood somebody does not pumping somebody will feature some of it we are not.
Yes, we are. Aiming to make a recovery to the level of preco in terms of sales.
Not recommending distributors offer or sell to me that on a standalone basis, Canada does on being I don't know if anybody will stick with union local digital expansion.
For.
Truck and train them, so that they will only offer together with a third sector product line detail soon enough political full boosted somewhat of whole foods.
And 1 of the initiative, in order to further, increase your sales is to focus on the cancer insurance M, which is doing very well so far. We will be of continued to make effort throughout the channel.
And it does not harm by talking to you on a good die.
Is that even though we do and with that not only with us, but I also had a third sector sales it is growing.
Joe Hogan and about the medical insurance the usual Nicola senior debt.
The competition is that intensified in this market Nonetheless.
I think it does.
Medical instrument sales is yet to reach two I expect that level discuss another key new Jamba, Inc.
However, any new product required speculatively approval <unk> changed.
Susan Gorilla.
And as the owner for consumable Silicon won't launch stay tuned, but we expect to launch a new medical product within a year, which will carry the similar characteristic with me right, though at alternative content and another point about the channel.
Which is supporting that sales is also maintaining a certain level of sales and has been successful. Also means that there is a positive contribution to the third sector products. We are not recommending uh Distributors to offer or sell tumas on a standalone basis.
What I want to keep on going up also.
It is tentative our mainstay channel SMC channel.
Homebase courtyard and assessed the channels are doing very well and their sales are growing let that is secondary.
We instruct and train them so that they will always offer together with a third sector product when they sell Sumas. And with that effort, not only us but also the third sector sales is growing.
Associates from <unk> and from two years ago, we started an effort to reinforce.
And about the medical insurance.
Solicitors.
And lastly, we hired 1100 <unk> for Asia.
And this year, we're trying to be at the same level or more.
Comparison is very intensified in this market and it does medical insurance sales is yet to reach to or expected levels.
<unk> will soon become successes.
Regulatory approval.
Speaking of course, a number of agents will have an impact to our productivity.
And also I thought the organization.
But we expect to launch a new medical product.
Photo CAGR through working on our marketing costs.
Which will carry the.
And this January we have rolled out a major marketing and sales transformation.
Tennessee market <unk>.
But by the new Chief Marketing Officer.
Leland.
We are working in a data driven methodology.
And Doug or Neill agile, taking up and those are conducting an end to end initiative with agility.
We're taking a call for that at all.
But this all in mind.
Corona Miami.
It's got total sneak title.
And another point about the channel, uh, our main State Channel associate Channel, an associate channels are doing very well in their sales are growing. And from 2 years ago, we started in the effort to reinforce our our solicitors and last year, we hired 1100 Asian. And this year we are trying to be of the same level or more.
We will not seek titled demos.
Expect that we reached to the pre COVID-19 level as early as possible.
of course, a number of
to our product.
Okay.
Edison Castilla.
All right.
But that loan optical.
So I am confident that the 2025 sales will exceed that of 2024.
That's all thank you for your question.
Hey, Mike.
And this January, we have brought out a major marketing and sales transformation.
You want to go into that well I was just going to say that just Tom keep in mind that our forward guidance for premiums still remains negative one to negative 2% for the guidance period.
but by the new Chief marketing officer,
we are working in a data driven methodology.
Obviously, we're very encouraged by the launch of them, you're right, though and in Q2, we were down on an earned premium by one 1%. So it is certainly pushing us towards the lower end of that range, but clearly we still remain in negative territory.
And those are contacting an end to end initiative with agility.
with this all in mind,
But I want to say that.
<unk>.
As I've been watching Japan all of these years.
There was a shift in my opinion in marketing and sales in terms of the job that they are doing they are doing a better job overall than they were doing a year and a half ago.
We expect that we reach to the preco level as early as possible.
And they had a wake up call when we saw the stock dropped a little bit and we had some discussions about it and things pick back up in <unk>.
I think as as we said just a minute ago, we had a new director of marketing.
So I am confident that the 2025 sales will exceed that of 2024, that's all. Thank you for your question. Well, I was just gonna say that it is. Tom keep in mind that our forward guidance for a premium, Still Remains negative 1 to negative -24,
<unk>.
The variety of product.
Is different.
Debt.
They are outside forces that are helping us with people on how to deliver the product and to make sure they've got abilities to talk to people and worked through processes from doctors to whatever it might be it's just a little bit of a shift I don't.
Yeah, that the guidance period and obviously we're very encouraged by the launch of me right though and in Q2 we were down on a premium by 1.1%. So it certainly pushing us towards the lower end of that range. But clearly we we still remain in negative territory.
but but I I want to say that that
We know exactly how long or what.
But not fences.
It is we are better today than we have been in a long time, and we are prepared and the merits of the product is.
It is also doing very well for us.
<unk> is bringing on younger people, which is one of the things we hope would happen and that has been reinforced that it has helped and we will continue to help.
Pick back up. And and uh, I think as as was said, just a minute ago, we had a new director of marketing. We we, um,
And that is as Matt said, we are cautious about the number change because it's such a big number to move but all in all I think we've writing better business.
And we're growing and.
We'll just have to monitor it going forward, but I am I give them kudos for the job that they've done in terms of picking back up the patient turning things around.
Okay. Thanks for that color Dan just one quick follow up on the ESR if I could.
Are you managing to $1 70 to 230 <unk>.
Including the.
The marido product, uh, is different in that. Um, uh, they're outside forces that are helping us with people and on how to deliver the product. And to make sure they've got abilities to talk to to people and work through processes from doctors to whatever. It might be. It, it's just a little bit of a shift. I, I don't think, we know exactly how long or what, but, but my sense is it. It is we are better today than we we have been in a long time and we are prepared and the marital product is um,
Internal modeling benefits or should I knock 30 points off of that until you get the FSA to approve that.
So in other words is the real number for now 210.
<unk>, plus which would put you in the middle of your range or are you still well in excess of your range that you're managing too I just wanted to understand how youre thinking about that thanks.
Yes so.
The ranges set base with our including all of our USP. So 170 to $2 30 includes the USP and Thats, what we obviously are managing towards.
Is also doing very well for us and is bringing on younger people, uh, which is 1 of the things we hope would happen. And, and that has been reinforced, that it has helped and will continue to help. Uh, saying that is is Max said, we are cautious about the number change because it's such a big number to move, but all in all, I think we've riding Better Business uh and we're growing and um we we'll just have to monitor it going forward but I I am I I give them kudos for the job.
The next question comes from John Barnidge from Piper Sandler. Please go ahead.
That they've done in terms of picking back up the pace and turning things around.
Good morning, Thank you for the opportunity.
My question is on the distribution for the <unk> product was it completely rolled out in totality by the end of 225 for all distribution that'll be selling it.
Thank thanks for that color. Dan just 1 quick, follow up on ESR. If I could Max, are you managing to 170 to 230, including the
Hi.
Okay.
Internal modeling benefits or should I knock 30 points off of that until you get the FSA to approve those? So in other, in other words is the real number for now. 210,
Let me take that question, it's got 100 tank cars still do with Afinitor alternate Opal.
Additional staff did you mean that whether we are rolling out to all channels. This is to confirm your question.
210 plus, which would put you in the middle of your range, or are you still well in excess of your range that you're managing to? I just want to understand how you're thinking about that. Thanks.
Okay.
The weather.
It's been rolled out to all channels that are planned to be rolled out too.
By the end of the second quarter.
Yeah so uh the the range is set based with with our including of our USP so the 170 to 230 includes the USP and that's what we obviously are managing towards.
Hi.
Hi.
Yes. So the answer is yes to that question.
The next question comes from John barnidge from Piper Sandler, please go ahead.
Summing up the margin on <unk>, that's a nice start.
We launched me like March 17, the key.
Are you going to channel.
<unk> will bring into group currently <unk>, Colorado, Homebuyers and for Bank channel in Japan.
Good morning, thank you for the opportunity. My question is on the distribution for the Maria ATO products. Um, was it completely rolled out in totality by the end of 2225 for all distribution and I'll be selling it.
Post we have started to offer this.
So there are some.
<unk> is absolutely that's it that's it.
<unk> actually is still demand.
It is available at all channels now.
By launching in March and also in April.
Let me take that question. Do you mean that whether we're rolling out to all channels, this is to confirm your question.
Whether?
Great. Thank you for that and then my follow up question.
It's been rolled out to all.
Plan to be.
How do you think about the frequency with needing to refresh products now that you are trying to bundle products and solutions together is it a annual and every other year cycle.
By the end of the second quarter.
I,
I'm asking maybe in relation to the product that you introduced in late last year, that's all quite well how should we be thinking about for refresh cycle for that.
Hi.
The girl, who came with <unk>.
For cancer initial insurance the cycle is in three years.
I think he meant digital and fully cycled the Netherlands medical insurance the refresh cycle in two years.
Dana Gioia.
And the prerequisite is to get.
Thank you Praful.
Yes.
I saw the answer is yes to that question. We launched me right now on March 17th, and for the bank channel in Japan, Japan Post, we have started to offer this in April. So all of it is available at all channels now, by launching in March and also in April.
Yes.
The next question comes from Wes Carmichael from Autonomous Research. Please go ahead.
Great, thank you for that. And then my follow-up question.
Hey, good morning, I had one follow up on ESR again, and next you confirmed on using the USP. This undertaking specific parameter.
How do you think about the frequency with needing to refresh products? Now that you're trying to bundle products and solutions together? Is it a annual? And every other year cycle? Um,
Adding about 30 points I guess.
Just maybe a little bit of color on what that USP adjustment is in your view of the likelihood and timing of that and then I guess separately. The internal model. You mentioned is that timeline a few years down the road or how should we think about that.
I'm asking maybe in relation to the product that you introduced in late last year that sold quite well. How should we think about the refresh cycle for that?
Yes so.
Just to remind everybody the USB it gave us an uplift of about 30 points.
We do expect to have that approved.
Show Insurance. The cycle is in 3 years, medical insurance. The refresh cycle is in 2 years.
By March 31, 2026 or very shortly thereafter.
Is to get the FSA approval.
And we think we're in a very good shape in order to.
Have all of those approvals done.
The next question comes from West, Carmichael, from autonomous research, please go ahead.
So that's why we feel confident that we can continue to manage and report out based on on this metrics.
As it relates to the full internal approval of sort of full approval all of our internal model.
We will have something similar to the rollout of solvency II, where it will take it takes some time until.
That is the case and that is why we have chosen to even though we obviously produce and we also use it for management decisions our internal model today already.
Hey, good morning. Um had 1 follow up on on ESR again and and Max you confirmed on using the USB this undertaking specific parameter and that adding about 30 points. I guess. Can I just get maybe a little bit of color on what that USP adjustment is and your view of the likelihood and timing of that and then I guess separately, the internal model you mentioned is that timeline a few years down the road or how, how should we think about that?
We will not report out on the internal model until that is.
That has been approved.
And I think where we're quite some time away from that.
Yeah.
Got it that's helpful.
And maybe just a macro question on Japan, but we've obviously seen long J GB rates pretty significantly higher this year seen a billion strengthening even if that's reversed a little bit I guess more recently, but just curious overall.
Yeah, so a um, just to remind everybody the the USP gives enough lift though, about 30 points and we do expect to have that approved by a March 31st 2026 or very shortly thereafter. Um, and we think we're in a very good shape in order to have all of those approvals done. And so that's why we feel confident that we can continue to man manage and Report out based on on this metrics.
On your view of first sector savings products. In this environment is is it macro changing that either at the margin are materially your.
um, as it relates to the full internal approval of the sort of full approval of our internal model,
Your appetite to sell additional products outside of third sector.
Let me.
First I'll comment and then I'll wrap Aflac, Japan also comment on it but clearly higher yen.
Yields is good for our yen denominated savings products and especially at the long end of the curve.
In mind, that's what we are selling is a product that is priced off of the long end of the curve a lot of the savings products and it goes into retirement accounts are.
I think we we will have something similar to the roll up of solvency 2, where it will take take some time. Until that is the case. And that is why we have chosen to even though we obviously produce and we also use it for management decisions, our internal model today already. Um we will not report out on the internal model and until that is that is has been approved.
And I think what? What what, what quite some time away from that,
Being sold by banks asset managers et cetera, they price their products from the short end of the curve. So with the steepening of the yield curve of it creates advantage for life insurance companies to manufacture and sell long duration yen denominated products so from that standpoint.
What we've seen recently in the market is beneficial for for our products.
Yes.
Upon located if you don't.
Caramel incremental stapling us this is going to speak from Aflac, Japan, let Japan's health and comment a little bit.
Can you just on the <unk>.
<unk>, yes.
And we must vacate at the mall.
The <unk> the massive financial markets are stabilizing and recovering from the yen sharp appreciation when stock prices decline in early April.
And also can you think its getting any magnitude.
For the comparable quarter, they're going at it.
<unk> also seen an adult basket as a key tecogen all kinds of complicity bulwark sales occurring.
We did say that themis. Additionally, after the late July announcement of the agreement reached in the U S, Japan tariff and trade negotiation.
Calling is a product that is priced off of the long end of the curve. A lot of the savings products uh that goes into retirement accounts, uh, being sold by Banks as a managers, Etc. They price their products from the short end of the curve. So, with the steepening of the yield curve, it creates a Advantage for life insurance companies to manufacture and sell long duration, Yen, denominated products. So from that standpoint the, uh, what we've seen recently, uh, in the market is beneficial for for our products.
This represents a new record high however, uncertainty related to U S trade policies centered on high tariffs continue.
<unk> I think in that sense, and echo that but it doesn't get us the conoco that I can't see you on the side of the handle condensate mile assets at <unk>.
Uh this is going to speaking from math, like Japan, let Japan size, comment a little bit.
Our cash outlook, yeah, so humane demand or a sense that I think that it's good to see is the excitement I think implications for exports and global protection becomes clearer, we will closely monitor potential risk to the domestic economy, particularly regarding household income and consumer sentiment along with a possibility of further market volatility.
D C. Some cases I'll handle this getting them all and ask the host of the impact of asset formation product ophthalmic Brattily keynote.
<unk>, you're in the lab, and that's where they cut the chunky quoted ingenuity and they're taking that zain KSA, which is against it.
Uh, can you see your financial markets are stabilizing and recovering from the yen's sharp appreciation and stock prices declined in early April? Additionally, after the late July announcement of the agreement reached in the U.S. and Japan regarding tariffs and trade negotiations.
Semi test many ties that are thank god, given that tactile medical also I got to tell me Themis. We then secondly, and volatility in the markets customers may look towards Sydney pathway telephone stable yen denominated long term fixed rate asset Foundation also sanco atacamite, thereby for the Google amortize that semi test I was talking about <unk> <unk>.
Those prices have risen to near-record heights. However, uncertainty related to U.S. trade policies, including high tariffs, continues.
Get customer Carlos at Universal.
This will also mean that this dynamic may attract competitors to consider offering similar products to tinnitus, which will contribute to increased competition, but also <unk> data took a pass on a local or a case Arctic anymore. It in English.
If you don't take any Hogan.
Hi, Ted <unk>, when you think of it.
We monitor interest rate and competitive environment trends and are prepared to revise premiums in an agile manner such that you don't think amortize annual policy.
Okay summit ethanol Dougherty till I get it.
So my second animal I'll call normal course, the key message on a go call. It <unk>.
You don't think entire stakes type multi months with this antibody manner, we have decided to revise our premium rate for tinnitus, and we will continue to closely monitor the trend in the financial market and respond promptly ethylene unit.
That's all.
And as regards to the impact of asset formation products, we done certainly in volatility in the markets. Customers, may look towards Sumas which offer stable Yen, denominated long-term fixed rate asset formation.
The next question comes from William <unk> from Raymond James. Please go ahead.
Hey, good morning was there any pause in U S. Due to the data breaches that happened in the quarter.
Hi, This is virtually no we saw no impact.
Not seeing anything material that comes to operational tour on the financials.
Operational currently and continue to service our customers.
Okay. Thank you and some of your competitors have reported higher claims due to the increasing cost of cancer treatments.
Is it correct that aflac wouldn't be exposed to this type of inflation due to the FX benefit nature of the product.
This increase the attractiveness of the product given extensive but effective treatments are becoming more widely available.
Also means that this Dynamic may drive competitors to consider offering similar products to Sumas, which we contribute to increased competition. We regularly monitor interest rate and competitive environment, Trends and are prepared to revise premiums in a larger manner. With this agility manner, we have decided to revise, the premium rate for that, and we will continue to closely monitor the trends in the financial market and respond promptly as needed.
That's all.
Yes.
The next question comes from William, bertis from Raymond James, please go ahead.
As you pointed out.
We are primarily exposed to frequency of cancer diagnosis, not necessarily the severity of treatments or cost of treatment that.
Hey um, good morning. Was there any pause in Us sales due to the data breach that happened in the quarter? Thanks.
Tend to fall on the primary insurance coverage that policyholders have our car air products our supplemental.
And because we sell products with pre defined benefits with premiums that do not increase over it a lot for the lifetime of the policy that means that we are not necessarily exposed to inflation risk and therefore, the severity that some other insurance companies that sell other types of health insurers are seeing.
Hey, this is, uh, Virgil know we, we saw no impact. We, we are not seeing anything material that comes to operational to our financials. Uh, we are operational currently and continue to service our customers.
Okay, thank you. And some of your competitors have reported higher claims due to the increase in cost of Cancer. Treatments, is it correct that Affleck wouldn't be exposed to this type of inflation due to the fixed benefit nature of the products?
One of the things that we do.
Carry out as is.
When we.
And could this increase the attractiveness of the products given expensive, but effective treatments are becoming more widely available. Thanks,
Revamp or change our new product.
We take into account any new treatments that are out there to make sure we're paying for those particular treatments if possible.
If approved by the American Medical Association and whatever so as these new things are coming we are updating our policies and allowing them to buy it if they wanted by the additional coverage for that so that's very important in that style. We go back and rework our accounts and add additional business.
Yeah, as you will, my, as you pointed out, um, we are primarily exposed to frequency of cancer diagnosis, not necessarily the the severity of treatments or cost of treatment that time that tend to fall on the primary insurance coverage that a policy holders have. Our car products are supplemental and and because we sell products with pre.
Do that taking care of that what people ask me what if.
You find a cure for cancer and my answer is there.
Theyre, finding cures everyday for cancer, but hits the treatment of those cures that we have to cover and Thats, what we do in our business and want to continue to do going forward.
Define benefits with premiums that do not increase over a lot for the lifetime of the policy. That means that we are not necessarily exposed to the inflation risk and therefore the severity that that some other insurance companies that sell other types of health insurance are seeing
Oh, 1 of the things that we do. Uh, carry out is is we when we
The next question comes from Alex Scott from Barclays. Please go ahead.
Revamp or change our new product.
Hey, Thanks for taking the question.
I wanted to ask about the larger dividend out of Japan.
It seemed more significant this quarter I just wanted to see if any is there any.
Underlying that is kind of changing the dividend policy there.
Does it have any impact on appetite for reinsurance the way that you guys have done towards the end of the year.
Just decision making around that.
Alex said Theres really no change in either of the appetite for reinsurance or dividend policy here.
Primarily a function of very strong regulatory FSA results.
Uh, we take into account any new treatments that are out there to make sure we're paying for those particular treatments as possible, uh, that are approved by the American Medical Association and whatever. So, as these new things are coming, we're updating our policies and allowing them to buy it if they want to buy the additional coverage for that. So, that's very important and that's how we go back and rework our accounts and add additional business to that by taking care of that. What people ask me, what? What if, uh, you find a cure for cancer? And my answer is...
We close the books.
For the fiscal year of 2025.
On March 31, 2025, and because of those strong results and we then pay the final dividend.
They're finding cures every day for cancer, but it's the treatment of those cures that we have to cover and that's what we do in our business and want to continue to do going forward.
The next question comes from Alex. Scott from barklay. Please go ahead.
In Q2 of 2026% as a function of that so it's really the function of very strong results that we had in the previous year on that on an FSA earnings basis.
Got it okay. That's helpful.
And then maybe my last one on <unk>.
Some of the things Youre doing to invest in Digitization in Japan does this means just maybe comment a little bit more about that is that something that can be sped up just given.
Hey, thanks for taking the question. Uh, I wanted to ask about the larger dividend out of Japan. Um, it seemed more significant this quarter. I just wanted to see if any you know is there anything underlying that's kind of changing the dividend policy there. And you know, does it have any impact on you know, appetite for reinsurance the way that you guys have done towards the end of the year uh and you know just decision making around that
Does it.
More advanced tools using AI around some of the things you need to.
Take policy forms and maybe digest them into it.
System et cetera.
Okay.
Yes.
Hi, Chris.
Okay.
This is going to from Aflac, Japan digital transformation.
And all by the way.
<unk>, we are working on the two areas and the digital transformation <unk> kept some undertaking cut steel closures.
Total your attendance.
It.
Is to improve the customer experience with Valeant.
Time for reinsurance all dividend policy here. It's uh, primarily a function of very strong, uh regulatory FSA results and we close the books, um, for the fiscal year of 2025 in on March, 31st 2025 and because of those strong results and we then pay the the final dividend uh, in Q2 of 2026 as a function of that. So, it's really the function of very strong results that we had in the previous year on uh, on an FSA earnings basis.
Digital is hardly saw.
Kate Hudson.
Okay.
Davidson.
So they've got a site <unk> I'll go to the service side you saw some of them are not take a seamless we are providing various types of digital services to our customers associates and employees the colonial.
No single study hematology reiterated all of this so therefore, we're making sure to incorporate the new <unk>.
Got it. Okay, that's helpful. Uh, and then maybe my last 1 on. Uh, some of the things you're doing to invest in digitization in Japan, just being just to become a little bit more about that. You know, is that something that can be sped up, just given, you know, I think there's, you know, more advanced tools using an AI around. Some of the things you'd need to, you know, take policy forms and maybe digest them into a system Etc.
<unk> on a Saturday this hang that Scott.
Could you.
When you take a step.
No.
Scott on our liquidity.
Losses on sale again, let me articulate that Themis and destiny is making a great deal of contribution not only to our employees, but also to a part of our associates. They use this tool to improve their productivity and sort of that going to unlock the total Colgate Scot I will take some tylenol and taking that pay us any titles.
Hi, this is this is a transformation. Oh, 1 area is to improve the customer.
Digital humor about Anasazi still Hudson Bay Master and just this month, we have started to rollout of digital human Avatar savvy services to respond to the part of the inquiries from our customers.
And I'll tell you is anytime there in England, operator, Nikola Mackay told vacated the user this scalable according your sand.
<unk>, Okay somebody will pay us <unk> youth and <unk>.
And outside of Thailand, So I'll get the equipment in order to kind of 18 months. We believe this service will increase the overall customer experience or services as this human avatar will be able to respond to customers in client inquiries 27, and most of them ideally kiva openness, so I'll call the Dx.
Experience of value. We are providing various type of digital services to our customers associate and our employees so therefore we're making sure to incorporate the New Gen Ai. And this die is making a great deal of contribution. Not only to our employees but also to part of our Associates as they use at this tool to improve their productivity,
<unk> core discuss take.
Another point is two.
Regarding the operation efficiency improvement by utilizing.
It took into care Contigo move let's say.
Hey, Joe Matt Kuchar.
Pneumonia alethia.
In store of yesterday.
Sawyer corridor.
<unk> and <unk>.
And just from this month, we have started to roll out the digital human avatar service to respond to a part of an inquiry sent from our customers.
How could that demo.
Q&A coastal <unk>.
The Dx.
Our decade, Neocolonial Yamana crocodile slip as Ronnie.
<unk> I've got it <unk>.
Our projects for the particular demos cocoa demo.
I think all three electrical Toyota and thoughts on our projects or cut out isn't it.
K Cup.
Christine we are now moving ahead of our original schedule in terms of the implementation of the journey I ended the movement for the policy administration services normally when the operation and expand we have to increase the resources are costs. However, along with the utilization of Dx, even if the operational next.
We did not increase the people at the Dx will do the job by itself. So this will contribute to our cost reduction.
That's all for me.
This concludes our question and answer session I would like to turn the conference back over to David Young for any closing remarks.
We believe this service will increase the overall customer experience or Services as the human Avatar. Will be able to respond to customers in inquiries 24/7. Another point is to is regarding the operation efficiency Improvement, by utilizing the DX. So,
Thank you and thank you all for joining US today, we hope that you will reach out to us. If you have any follow up questions and we look forward to talking to you then have a great rest of your day.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
And we are now.
Think ahead of our original schedule in terms of the implementation of the Jai and its evolvement for the policy Administration Services. Normally, when the operation expand, we had to increase the resources or cost however, along with the utilization of DX, even if the operation makes fans, we do not to increase the people as the DX will do the job by itself. So this will contribute to our cost reduction
but for me,
This concludes our question and answer session. I would like to turn the conference back over to David young for any closing remarks.
Thank you and thank you all for joining us today. We hope that you will reach out to us if you have any follow-up questions and we look forward to talking to you then have a great rest of your day.
The conference has now concluded, thank you for attending today's presentation. You may now disconnect