Q2 2026 MetLife Inc Earnings Call

Speaker #1: Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session; instructions will be given at that time.

Speaker #1: As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to risk factors discussed in METLIFE's SEC filings.

Speaker #1: With that, I will now turn the call over to John Hall, Treasurer and Head of Investor Relations.

Speaker #2: Thank you, Operator, and good morning, everyone. We appreciate you joining METLIFE's second quarter 2026 call. Before we begin, I direct your attention to the information on non-GAAP measures on the investor relations section of metlife.com in our earnings release, in our quarterly financial supplement, and in our earnings call and investor presentations which you should review.

Speaker #2: On the call today, our Michel Khalaf, President and Chief Executive Officer, and John McCallion, Chief Financial Officer, and Head of METLIFE Investment Management. Also available to participate in the discussion are other members of senior management.

Speaker #2: This morning, John McCallion will speak to the earnings call presentation we released last night. The deck is available on our website. An appendix to the deck features disclosures, GAAP reconciliations, and other information which you should also review.

Speaker #2: After prepared remarks, we will have a Q&A session which will end promptly at the top of the hour. As a reminder, please limit yourself to one question and one follow-up.

Speaker #2: Now to Michel.

Speaker #3: Thank you, John, and good morning, everyone. This was an outstanding quarter, and another clear demonstration of how our new frontier strategy is working as intended and how repeatable our model is, built on a powerful recurring revenue base and the flexibility to invest where we see the most compelling global risk-adjusted opportunities.

Speaker #3: At the heart of our new frontier strategy are two complementary earnings engines that contribute roughly equally: one is capital light, where businesses like group benefits, Latin America, EMEA, and asset management generate attractive fee and underwriting income with strong cash generation; the other is capital-driven, where our retirement and spread-based businesses leverage our origination, investment, and risk management capabilities to put our balance sheet to work at attractive risk-adjusted returns.

Speaker #3: Importantly, the two engines reinforce one another. Our capital-driven businesses originate assets that are managed by METLIFE Investment Management, supporting the growth of our asset management platform and expanding our capital light earnings over time.

Speaker #3: Together, they create a company that's more balanced, more resilient, and better positioned to perform through different market environments. And that's exactly what we saw this quarter.

Speaker #3: Adjusted earnings increased in every business segment compared with a year ago. Underwriting performance was strong, volume growth was broad-based, and we continued to fund promising growth opportunities while returning excess capital to shareholders.

Speaker #3: This is new frontier in action, leveraging our scale, market-leading businesses, and strategic diversification to generate durable growth and attractive returns across a range of economic conditions.

Speaker #3: Turning to second quarter results, we reported adjusted earnings of approximately $1.6 billion or $2.43 per share. Adjusted earnings increased 15% from the prior year period.

Speaker #3: Adjusted earnings per share increased 20%, faster than earnings growth, reflecting our measured and consistent approach to capital management. Adjusted premiums, fees, and other revenues—excluding pension risk transfers—increased 5% year over year.

Speaker #3: Sales rose 7%, led by strong growth across our international businesses. Variable investment income totaled $231 million pre-tax and was higher than the prior year period.

Speaker #3: Adjusted return on equity was 17% at the top end of our 15 to 17% annual target range for the second quarter in a row and well above our cost of capital.

Speaker #3: Our direct expense ratio—which is a product of both revenues and expenses—was 12.1%, in line with our full-year target. We achieved this despite approximately 50 basis points of impact from the addition of PineBridge Investments—a fee-based business with a structurally higher expense profile—even as we integrate that business.

Speaker #1: Year over year. Sales rose 7%, led by strong growth across our international businesses. Variable investment income totaled $231 million pre-tax, and was higher than the prior year period.

Speaker #3: We remain on target through rigorous expense management and productivity gains from AI and other technologies. To that point, AI is becoming a structural advantage for METLIFE and our scale sets us apart.

Speaker #1: Adjusted return on equity was 17%, at the top end of our 15 to 17% annual target range for the second quarter in a row, and well above our cost of capital.

Speaker #3: The sheer volume of new policies, service interactions, and claims we handle every day gives us more places to apply AI and more data to make it smarter.

Speaker #1: Our direct expense ratio—which is a product of both revenues and expenses—was 12.1%, in line with our full-year target. We achieved this despite approximately 50 basis points of impact from the addition of PineBridge Investments—a fee-based business with a structurally higher expense profile—even as we integrate that business.

Speaker #3: Over time, we expect that to be a meaningful and durable tailwind to both growth and productivity while creating an even more seamless experience for our customers.

Speaker #3: Critically, we carefully monitor our AI-related investments and expenses, including model usage and token costs. They're held to the same return standards we have for any other investments we make, or expenses we have.

Speaker #1: We remain on management and productivity gains from AI and other technologies. To that point, AI is becoming a structural advantage for MetLife, and our scale sets us apart.

Speaker #3: And the gains we're achieving in growth, productivity, and customer service—which is evident in our direct expense ratio—far exceed the costs. And above all, governance and risk oversight remain central to how we deploy AI, consistent with the trust our customers place in METLIFE.

Speaker #1: The sheer volume of new policies, service interactions, and claims we handle every day gives us more places to apply AI, and more data to make it smarter.

Speaker #1: Over time, we expect that to be a meaningful and durable tailwind to both growth and productivity, while creating an even more seamless experience for our customers.

Speaker #3: Turning to the performance of our business segments, starting with group benefits, the segment generated adjusted earnings of $503 million, up 25% year over year, life underwriting was particularly favorable.

Speaker #1: Critically, we carefully monitor our AI-related investments and expenses, including model usage and token costs. They're held to the same return standards we have for any other investments we make, or expenses we have.

Speaker #3: The group life mortality ratio was 79%, reflecting continued improvement in mortality among the working-age population. Adjusted PFOs increased 1%, excluding participating contracts, adjusted PFOs rose 4%.

Speaker #1: And the gains we're achieving in growth, productivity, and customer service—which is evident in our direct expense ratio—far exceed the costs. And above all, governance and risk oversight remain central to how we deploy AI, consistent with the trust our customers place in MetLife.

Speaker #3: Year-to-date sales are up 9%, with regional business advancing 11%, led by the under 1,000 employee market. We saw double-digit sales gains year-to-date in disability and voluntary products, with particular strength in A&H.

Speaker #1: Turning to the performance of our business segments, starting with group benefits, the segment generated adjusted earnings of $503 million—up 25% year over year—life underwriting was particularly favorable.

Speaker #3: These results demonstrate the quality of this flagship franchise. Our scale, broad product set, and long-standing customer relationships set us apart and position us well to meet the evolving needs of employers and employees while delivering responsible growth over time.

Speaker #1: The group life mortality ratio was 79%, reflecting continued improvement in mortality among the working-age population. Adjusted PFOs increased 1%. Excluding participating contracts, adjusted PFOs rose 4%.

Speaker #3: Moving to retirement and income solutions, or RIS, we reported adjusted earnings of $377 million, up 2% from a year ago. Adjusted PFOs excluding pension risk transfers increased 19%, driven primarily by UK longevity reinsurance and structured settlement sales.

Speaker #1: Year-to-date sales are up 9%, with regional business advancing 11%, led by the under $1,000 employee gains year-to-date in disability and voluntary products, with particular strength in A&H.

Speaker #3: The long-term retirement opportunity remains compelling. Aging populations are increasing demand for retirement income and risk transfer solutions, and METLIFE has the origination capabilities. Investment expertise and product breadth to serve that demand across key global markets.

Speaker #1: These results demonstrate the quality of this flagship franchise. Our scale, broad product set, and long-standing customer relationships set us apart and position us well to meet the evolving needs of employers and employees, while delivering responsible growth over time.

Speaker #3: Our portfolio spans risk transfer, pensions, and annuities, stable value, and other global risk solutions. This breadth affords METLIFE the capacity to be selective in deploying capital—choosing to pursue only the highest returning risk-adjusted opportunities.

Speaker #1: Moving to Retirement and Income Solutions, or RIS, we reported adjusted earnings of $377 million, up 2% from a year ago. Adjusted PFOs—excluding pension risk transfers—increased 19%, driven primarily by UK longevity reinsurance and structured settlement sales.

Speaker #3: Turning now to Asia, adjusted earnings of $420 million increased 21% on a reported basis and 25% on a constant currency basis. Sales advanced 17% on a constant currency basis, reflecting strong performance across markets, particularly in Korea, where we continue to see momentum.

Speaker #1: The long-term retirement opportunity remains compelling. Aging populations are increasing demand for retirement income and risk transfer solutions. And MetLife has the origination capabilities, investment expertise, and product breadth to serve that demand across key global markets.

Speaker #3: And Japan countered a solid year-ago sales quarter for life and annuities, with almost 90% A&H growth on a constant currency basis, following a newly launched medical product.

Speaker #1: Our portfolio spans risk transfer, pensions, and annuities, stable value, and other global risk solutions. This breadth affords MetLife the capacity to be selective in deploying capital—choosing to pursue only the highest-returning risk-adjusted opportunities.

Speaker #3: And the roughly even mix of US dollars and yen product sales points to the balanced growth we're delivering, not reliant on any single product or currency.

Speaker #1: Turning now to Asia, adjusted earnings of $420 million increased 21% on a reported basis, and 25% on a constant currency basis. Sales advanced 17% on a constant currency basis, reflecting strong performance across markets, particularly in Korea, where we continue to see momentum.

Speaker #3: And with favorable demographics, deep distribution, and continued product innovation, we see meaningful opportunities ahead. In Latin America, adjusted earnings of $268 million represented a quarterly record and an increase of 15% and 4% on a constant currency basis.

Speaker #3: Adjusted PFOs increased 6% on a constant currency basis, reflecting robust growth and solid persistency across the region. Sales rose 9% on the same basis.

Speaker #1: And Japan countered a solid year-ago sales quarter for Life and annuities, with almost 90% A&H growth on a constant currency basis, following a newly launched medical product.

Speaker #3: Latin America continues to demonstrate the value of our leading market positions, multi-pronged distribution, and ability to serve a growing need for protection, health, and retirement solutions.

Speaker #1: And the roughly even mix of US dollars and yen product sales points to the balanced growth we're delivering, not reliant on any single product or currency.

Speaker #1: And with favorable demographics, deep distribution, and continued product innovation, we see meaningful opportunities ahead. In Latin America, adjusted earnings of $268 million represented a quarterly record and an increase of 15% and 4% on a constant currency basis.

Speaker #3: Turning to EMEA, adjusted earnings of $108 million increased 8%, or 11% on a constant currency basis. Adjusted PFOs grew 12% on a constant currency basis, supported by sales and renewal activity across the region.

Speaker #3: Sales increased 15%, reflecting sustained and broad-based growth. Now shifting to METLIFE Investment Management, or MEM, the segment generated adjusted earnings of $57 million up 6%, growth reflected the contribution from integrating PineBridge Investments and expense management.

Speaker #1: Adjusted PFOs increased 6% on a constant currency basis, reflecting robust growth and solid persistency across the same basis. Latin America continues to demonstrate the value of our leading market positions, multi-pronged distribution, and ability to serve a growing need for protection, health, and retirement solutions.

Speaker #3: Other revenues increased 34%, and total assets under management reached approximately $748 billion. Our second-quarter performance illustrates the advantage of diversification. Different businesses contribute in different ways, but together they each benefit from the scale and capabilities of the broader METLIFE Enterprise.

Speaker #1: Turning to EMEA, adjusted earnings of $108 million increased 8%, or 11% on a constant currency basis. Adjusted PFOs grew 12% on a constant currency basis, supported by sales region.

Speaker #1: Sales increased 15%, reflecting sustained and broad-based growth. Now shifting to MetLife Investment Management, or MEM, the segment generated adjusted earnings of $57 million up 6%.

Speaker #3: Shifting to cash and capital, METLIFE continues to operate from a position of financial strength. During the quarter, we repurchased approximately $700 million of common shares.

Speaker #3: Year-to-date, through July, we have returned over $2.4 billion to METLIFE shareholders through a combination of stock buybacks and common dividends. Last night, we announced a new $3 billion share repurchase authorization, reflecting our confidence in METLIFE's capital generation and long-term outlook.

Speaker #1: Growth reflected the contribution from integrating PineBridge Investments and expense management. Other revenues increased 34%, and total assets under management reached approximately $748 billion. Our second quarter performance illustrates the advantage of diversification.

Speaker #3: And we ended the quarter with $3.4 billion of cash and liquid assets at our holding companies, firmly within our 3 to 4 billion target buffer.

Speaker #1: Different businesses contribute in different ways, but together they each benefit from the scale and capabilities of the broader MetLife enterprise. Shifting to cash and capital, MetLife continues to operate from a position of financial strength.

Speaker #3: Our approach to capital deployment and allocation remains consistent. Our first priority is to fund responsible organic growth, where METLIFE has structural advantages and opportunities to earn attractive risk-adjusted returns.

Speaker #1: During the quarter, we repurchased approximately $700 million of common shares. Year-to-date, through July, we have returned over $2.4 billion to MetLife shareholders, through a combination of stock buybacks and common dividends.

Speaker #3: We will pursue inorganic investments when they add strategic capabilities, meet our financial criteria, and create value. Beyond those opportunities, we return excess capital to shareholders over time.

Speaker #1: Last night, we announced a new $3 billion share repurchase authorization, reflecting our confidence in MetLife's capital generation and long-term outlook. And we ended the quarter with $3.4 billion of cash and liquid assets at our holding companies, firmly within our 3 to 4 billion target buffer.

Speaker #3: We are also using reinsurance and third-party capital to support additional retirement origination, while creating assets for MEM to manage. This enables us to pursue customer demand in a more capital-efficient manner, and extend the value of our platform across the enterprise.

Speaker #1: Our approach to capital deployment and allocation remains consistent, our first priority is to fund responsible organic growth, where MetLife has structural advantages and opportunities to earn attractive risk-adjusted returns.

Speaker #3: Most importantly, growth is translating into tangible shareholder value. Disciplined strategic capital deployment fuels future earnings, and strong recurring free cash flow enables us to invest in our businesses and also return capital consistently.

Speaker #1: We will pursue inorganic investments when they add strategic capabilities, meet our financial criteria, and create value. Beyond those opportunities, we return excess capital to shareholders over time.

Speaker #3: In closing, this was an excellent quarter that once again demonstrated the investment case for METLIFE under new frontier. Our complementary earnings engines, Capital Light and Capital Driven, are working together as intended.

Speaker #1: We are also using reinsurance and third-party capital to support additional retirement origination, while creating assets for MEM to manage. This enables us to pursue customer demand in a more capital-efficient manner, and extend the value of our platform across the enterprise.

Speaker #3: They create a more balanced and durable earnings profile, along with a stronger foundation for long-term value creation. We are pleased with our progress. We have confidence in the strengths we have built over time, the momentum across our businesses, and our ability to execute through a range of environments.

Speaker #1: Most importantly, growth is translating into tangible shareholder value. Disciplined strategic capital deployment fuels future earnings, and strong recurring free cash flow enables us to invest in our businesses and also return capital consistently.

Speaker #3: New frontier is the right strategy for METLIFE, and we are moving forward with speed and purpose. With that, I'll turn it over to John to walk through the results in more detail.

Speaker #1: In closing, this was an excellent quarter that once again demonstrated the investment case for MetLife under new frontier. Our complementary earnings engines, Capital Light and Capital Driven, are working together as intended.

Speaker #1: Thanks, Michelle, and good morning, everyone. This quarter is another strong demonstration of METLIFE's earnings power, and the strength of our business model. We generated broad-based growth across the enterprise, delivered excellent underwriting results, maintained disciplined expense management, and continued to deploy capital prudently.

Speaker #1: They create a more balanced and durable earnings profile along with a stronger foundation for long-term value creation. We are pleased with our progress. We have confidence in the strengths we have built over time, the momentum across our businesses, and our ability to execute through a range of environments.

Speaker #1: So I'll start on page 3, the earnings call presentation, and walk through the key drivers of the second quarter performance. It was an excellent quarter, and the combination of growth, returns, and execution enabled us to meet or exceed our key financial commitments, once again.

Speaker #1: New frontier is the right strategy for MetLife, and we are moving forward with speed and purpose. With that, I'll turn it over to John to walk through the results in more detail.

Speaker #1: Adjusted EPS grew 20%, while adjusted ROE reached 17% at the top end of our 15 to 17% target range. Our direct expense ratio was 12.1%, and keeping us on track to beat our 12.1% 2026 annual target.

Speaker #2: Thanks, Michel, and good morning, everyone. This quarter is another strong demonstration of MetLife's earnings power, and the strength of our business model. We generated broad-based growth across the enterprise, delivered excellent underwriting results, maintained disciplined expense management, and continued to deploy capital prudently.

Speaker #1: Net income totaled $705 million, or $1.09 per share, while adjusted earnings were $1.6 billion, or $2.43 per share. The difference between net income and adjusted earnings was primarily driven by mark-to-market accounting on our derivatives, and net investment losses.

Speaker #2: So I'll start on page 3, the earnings call presentation, and walk through the key drivers of the second quarter performance. It was an excellent quarter, and the combination of growth, returns, and execution enabled us to meet or exceed our key financial commitments, once again.

Speaker #1: Overall, our outlook on credit remained stable, and our hedging program continues to perform as expected. Moving to page 4, adjusted earnings increased 15% year-over-year, or 14% on a constant currency basis.

Speaker #2: Adjusted EPS grew 20%, while adjusted ROE reached 17% at the top end of our 15 to 17% target range. Our direct expense ratio was 12.1%, and keeping us on track to beat our 12.1% 2026 annual target.

Speaker #1: Growth was balanced across the enterprise, driven by favorable underwriting margins, strong volume growth across all segments, and higher investment margins, partially offset by less favorable expense margins.

Speaker #2: Net income totaled $705 million, or $1.09 per share, while adjusted earnings were $1.6 billion, or $2.43 per share. The difference between net income and adjusted earnings was primarily driven by mark-to-market accounting on our derivatives, and net investment losses.

Speaker #1: Adjusted earnings per share were up 20% and 19% on a constant currency basis, with strong earnings growth supported by disciplined capital management. Now moving to the businesses, group benefits had an outstanding quarter.

Speaker #2: Overall, our outlook on credit remained stable, and our hedging program continues to perform as expected. Moving to page 4, adjusted earnings increased 15% year over year, or 14% on a constant currency basis.

Speaker #1: Generating adjusted earnings of $503 million, up 25% year-over-year. Driven by favorable underwriting margins and volume growth. The group life, mortality ratio was 79% for the quarter, better than our 2026 target range of 83 to 88%, reflecting continued favorable mortality trends among the working-age population.

Speaker #2: Growth was balanced across the enterprise, driven by favorable underwriting margins, strong volume growth across all segments, and higher investment margins, partially offset by less favorable expense margins.

Speaker #1: The non-medical health interest adjusted benefit ratio was 73.9%, within our annual target range of 70 to 75 percent, and a 190 basis point improvement sequentially.

Speaker #2: Adjusted earnings per share were up 20% and 19% on a constant currency basis, with strong earnings growth supported by disciplined capital management. Now moving to the businesses, group benefits had an outstanding quarter.

Speaker #1: Consistent with our seasonal utilization patterns. Growth remains healthy across the franchise. Sales were up 9% year-to-date, and adjusted PFOs increased 1% and up 4%, excluding participating contracts.

Speaker #2: Generating adjusted earnings of $503 million, up 25% year over year. Driven by favorable underwriting margins and volume growth. The group life mortality ratio was 79% for the quarter, better than our 2026 target range of 83 to 88%, reflecting continued favorable mortality trends among the working-age population.

Speaker #1: Reflecting growth in both national accounts and regional business. Turn to RAS. Adjusted earnings were $377 million, up 2% year-over-year, driven by favorable recurring interest margins and volume growth, partially offset by lower variable investment income.

Speaker #2: The non-medical health interest adjusted benefit ratio was 73.9%, within our annual target range of 70 to 75 percent, and a 190 basis point improvement sequentially.

Speaker #1: Total investment spread was $97 basis points in the second quarter, below our guidance range of 100 to 120 basis points, driven by weaker private equity returns within VII.

Speaker #2: Consistent with our seasonal utilization patterns. Growth remains healthy across the franchise. Sales were up 9% year to date, and adjusted PFOs increased 1% and up 4%, excluding participating contracts.

Speaker #1: While core spread, excluding VI, was 100 basis points, up 5 basis points sequentially, reflecting the benefit of asset deployment along with improved real estate equity income.

Speaker #1: RAS continues to benefit from the strength of its origination platform. RAS adjusted PFOs, excluding pension risk transfers, were up 19%, driven by strong growth in UK longevity reinsurance and structured settlements.

Speaker #2: Reflecting growth in both national accounts and regional business. Turn to RAS. Adjusted earnings were $377 million, up 2% year over year, driven by favorable recurring interest margins and volume growth, partially offset by lower variable investment income.

Speaker #1: Retained liability exposures grew 3% year-over-year, at the low end of our 2026 outlook range, consistent with our expectation that growth would build over the year.

Speaker #2: Total investment spread was $97 basis points in the second quarter, below our guidance range of 100 to 120 basis points, driven by weaker private equity returns within VII.

Speaker #1: Importantly, even with a lighter PRT market in the first half of 2026, the team has continued to advance other sources of growth across the platform.

Speaker #2: While core spread, excluding VII, was 100 basis points, up 5 basis points sequentially, reflecting the benefit of asset deployment along with improved real estate equity income.

Speaker #1: UK funded re is a strong example. It underscores our ability to leverage existing capabilities, develop new solutions, and create attractive growth opportunities even when certain markets become more limited.

Speaker #2: RAS continues to benefit from the strength of its origination platform. RAS adjusted PFOs, excluding pension risk transfers, were up 19%, driven by strong growth in UK longevity reinsurance and structured settlements.

Speaker #1: Asia adjusted earnings were $420 million, up 21% and 25% on a constant currency basis, results reflect strength across the business. Supported by favorable equity markets, higher variable investment income, and continued volume growth.

Speaker #2: Retained liability exposures grew 3% year over year, at the low end of our 2026 outlook range, consistent with our expectation that growth would build over the year.

Speaker #1: Asia's key top-line growth metrics continued their strong momentum in Q2. General account assets under management at amortized costs were up 6% on a constant currency basis.

Speaker #2: Importantly, even with a lighter PRT market in the first half of 2026, the team has continued to advance other sources of growth across the platform.

Speaker #2: UK funded re is a strong example. It underscores our ability to leverage existing capabilities, develop new solutions, and create attractive growth opportunities even when certain markets become more limited.

Speaker #1: Sales rose 17% on a constant currency basis. Fueled by equity market tailwinds in Korea, plus traction from recent product launches. In Japan, sales increased 2% year-over-year, against a strong prior year comparison.

Speaker #2: Asia adjusted earnings were $420 million up 21% and 25% on a constant currency basis, results reflect strength across the business. Supported by favorable equity markets, higher variable investment income, and continued volume growth.

Speaker #1: And 13% sequentially. Taken together, these results reinforce our confidence in Asia's long-term growth trajectory and the strength of our franchise across the region. Latin America delivered adjusted earnings of $268 million, up 15% year-over-year, or 4% on a constant currency basis.

Speaker #2: Asia's key top-line growth metrics continued their strong momentum in Q2. General account assets under management had amortized costs, were up 6% on a constant currency basis.

Speaker #1: Results were driven by strong volume growth, as well as favorable market factors, including an elevated encaje return of 5.6% in the second quarter, and lower taxes.

Speaker #2: Sales rose 17% on a constant currency basis. Fueled by equity market tailwinds in Korea, plus traction from recent product launches. In Japan, sales increased 2% year over year, against a strong prior year comparison.

Speaker #1: This was partially offset by the impact of the Mexico VAT change. Top-line momentum remained strong, with sales up 9% on a constant currency basis, and adjusted PFOs up 16%, or 6% on a constant currency basis.

Speaker #2: And 13% sequentially. Taken together, these results reinforce our confidence in Asia's long-term growth trajectory, and the strength of our franchise across the region. Latin America delivered adjusted earnings of $268 million, up 15% year over year, or 4% on a constant currency basis.

Speaker #1: Growth was broad-based across the region, led by Brazil, Mexico, and Chile. And we continue to see attractive growth opportunities across the region, supported by strong distribution capabilities, favorable product demand, and the increasing reach of our MetLife accelerator platform.

Speaker #2: Results were driven by strong volume growth, as well as favorable market factors, including an elevated encaje return of 5.6% in the second quarter and lower taxes.

Speaker #1: AMEA delivered adjusted earnings of $108 million, up 8% year-over-year, or 11% on a constant currency basis. Results were driven by strong volume growth, partially offset by higher expenses in the quarter.

Speaker #2: This was partially offset by the impact of the Mexico VAT change. Top-line momentum remained strong, with sales up 9% on a constant currency basis, and adjusted PFOs up 16%, or 6% on a constant currency basis.

Speaker #1: AMEA's top-line remained strong, with adjusted PFOs up 12%, supported by ongoing sales momentum and solid renewal activity across the region. Sales increased 15% on a constant currency basis, reflecting broad gains across markets and geographies.

Speaker #2: Growth was broad-based across the region, led by Brazil, Mexico, and Chile. And we continue to see attractive growth opportunities across the region, supported by strong distribution capabilities, favorable product demand, and the increasing reach of our MetLife Accelerator platform.

Speaker #1: Importantly, as the business has continued to scale, we are seeing that growth translate into increasingly consistent and durable earnings power. Turning to MetLife investment management, or MIM, adjusted earnings were $57 million, up 6%, driven by solid business growth and expense management.

Speaker #2: AMEA delivered adjusted earnings of $108 million, up 8% year over year, or 11% on a constant currency basis. Results were driven by strong volume growth, partially offset by higher expenses in the quarter.

Speaker #1: Momentum is building across the platform, and as integration benefits continue to emerge, we expect adjusted earnings to maintain their upward trajectory through the second half of the year.

Speaker #2: AMEA's top-line remained strong, with adjusted PFOs up 12%, supported by ongoing sales momentum and solid renewal activity across the region. Sales increased 15% on a constant currency basis, reflecting broad gains across markets and geographies.

Speaker #1: Total AUM increased $12 billion, sequentially, to $748 billion at June 30th, including a notable $7 billion increase in institutional client AUM. This growth, combined with a 410 basis point improvement in operating margin during the quarter, positions MIM to deliver full-year adjusted earnings within its guidance range of $240 to $280 million.

Speaker #2: Importantly, as the business has continued to scale, we are seeing that growth translate into increasingly consistent and durable earnings power. Turn into MetLife Investment Management, or MIM, adjusted earnings were $57 million, up 6%, driven by solid business growth and expense management.

Speaker #1: Though likely toward the low end, we remain confident in the sustained success of this business and our 2027 guidance remains intact. Corporate outlet reported an adjusted loss of $160 million, in the second quarter, compared with a loss of $142 million a year ago.

Speaker #2: Momentum is building across the platform, and as integration benefits continue to emerge, we expect adjusted earnings to maintain their upward trajectory through the second half of the year.

Speaker #1: The year-over-year change primarily reflected foregone earnings from the prior year's strategic reinsurance transactions. And market-related employee costs. These impacts were partly offset by favorable life underwriting margins.

Speaker #2: Total AUM increased $12 billion, sequentially, to $748 billion at June 30th, including a notable $7 billion increase in institutional client AUM. This growth, combined with a 410 basis point improvement in operating margin during the quarter, positions MIM to deliver full-year adjusted earnings within its guidance range of $240 to $280 million.

Speaker #1: And the company's effective tax rate on adjusted earnings in the quarter was 23%, below our 2026 guidance range of 24 to 26 percent. Now moving to page five, pre-tax variable investment income was $231 million, in the second quarter, of 2026.

Speaker #2: Though likely toward the low end. We remain confident in the sustained success of this business, and our 2027 guidance remains intact. Corporate outlet reported an adjusted loss of $160 million, in the second quarter, compared with a loss of $142 million, a year ago.

Speaker #1: Results were below the implied quarterly run rate, primarily reflecting lower private equity returns. With an average return of 0.8% and real estate and other funds average returns of 1.1%.

Speaker #2: The year-over-year change primarily reflected foregone earnings from the prior year, strategic reinsurance transactions. And market-related employee costs. These impacts were partly offset by favorable life underwriting margins.

Speaker #1: As a reminder, private equity and real estate and other funds are reported on a one-quarter lag, and accounted for on a mark-to-market basis. Looking ahead, we expect stronger private equity returns in the third quarter.

Speaker #2: And the company's effective tax rate on adjusted earnings in the quarter was 23%, below our 2026 guidance range of 24 to 26 percent. Now moving to page five, pre-tax variable investment income was $231 million, in the second quarter, of 2026.

Speaker #1: Particularly from our venture capital investments. Supported by elevated IPO activity and higher public market valuations. On page six, we show post-tax VAI by segment and corporate and other for the past five quarters.

Speaker #2: Results were below the implied quarterly run rate, primarily reflecting lower private equity returns, with an average return of 0.8%, and real estate and other funds average returns of 1.1%.

Speaker #1: The majority of our VAI assets are concentrated in Asia and RAS and corporate and other. Consistent with the long-duration nature of these obligations. While VAI can vary from quarter to quarter, we manage the business for normalized returns over time, and remain comfortable with our full-year outlook.

Speaker #2: As a reminder, private equity and real estate and other funds are reported on a one-quarter lag, and accounted for on a mark-to-market basis. Looking ahead, we expect stronger private equity returns in the third quarter, particularly from our venture capital investments.

Speaker #1: Now turning to expenses on page seven. Our direct expense ratio is 12.1% in Q2 of '26. This compares with 11.7% for both the full-year 2025 and the second quarter of last year.

Speaker #2: Supported by elevated IPO activity and higher public market valuations. On page six, we show post-tax VAI by segment and corporate and other for the past five quarters.

Speaker #1: Strong PFO growth and continued expense discipline enabled us to absorb the previously disclosed roughly 50 basis point impact from the Pine Bridge acquisition. We manage expenses on a full-year basis and remain confident in our ability to beat our 2026 target of 12.1%.

Speaker #2: The majority of our VAI assets are concentrated in Asia and RAS, and corporate and other. Consistent with the long-duration nature of these obligations. While VAI can vary from quarter to quarter, we manage the business for normalized returns over time, and remain comfortable with our full-year outlook.

Speaker #1: Our consistent expense execution continues to be a MetLife differentiator. Reinforcing the durability of our earnings and our ability to invest in growth while delivering on our financial commitments.

Speaker #2: Now turn into expenses on page seven. Our direct expense ratio is 12.1% in Q2 of '26. This compares with 11.7% for both the full-year 2025 and the second quarter of last year.

Speaker #1: Moving to slide eight, MetLife continues to operate from a position of strong capital and robust liquidity. As of June 30th, cash and liquid assets at the holding companies total $3.4 billion, within our 3 to 4 billion target cash buffer.

Speaker #2: Strong PFO growth and continued expense discipline enabled us to absorb the previously disclosed roughly 50 basis point impact from the Pine Bridge acquisition. We manage expenses on a full-year basis and remain confident in our ability to beat our 2026 target of 12.1%.

Speaker #1: In the second quarter, we returned approximately $1.1 billion to shareholders, including approximately $700 million of share repurchases. We also repurchased approximately $225 million of additional shares in July.

Speaker #2: Our consistent expense execution continues to be a MetLife differentiator. Reinforcing the durability of our earnings and our ability to invest in growth while delivering on our financial commitments.

Speaker #1: These actions underscore the confidence in MetLife's earnings power, the strength of our balance sheet, and our ability to generate durable free cash flow over time.

Speaker #1: For our US companies, we estimate total statutory adjusted capital on an NAIC basis of approximately $16.4 billion, as of June 30th, 2026, up 1% from March 31, 2026.

Speaker #2: Moving to slide eight, MetLife continues to operate from a position of strong capital and robust liquidity. As of June 30th, cash and liquid assets at the holding companies total $3.4 billion, within our 3 to 4 billion target cash buffer.

Speaker #1: Finally, in Japan, we now expect our initial economic solvency ratio, or ESR, to be at the top end of a 170 to 190 percent range for the fiscal year ended March 31st, 2026, up from our prior expectation of middle of the range.

Speaker #2: In the second quarter, we returned approximately $1.1 billion to shareholders, including approximately $700 million of share repurchases. We also repurchased approximately $225 million of additional shares in July.

Speaker #2: These actions underscore the confidence in MetLife's earnings power, the strength of our balance sheet, and our ability to generate durable free cash flow over time.

Speaker #1: While results will vary year to year, we are comfortable managing ESR anywhere within this range. In summary, generated strong and broad-based growth, produced attractive returns, maintained disciplined expense management, and continued to deploy capital from a position of strength.

Speaker #2: For our US companies, we estimate total statutory adjusted capital on an NAIC basis of approximately $16.4 billion, as of June 30th, 2026, up 1% from March 31, 2026.

Speaker #1: Just as importantly, these results were driven by performance across the enterprise, demonstrating the quality resilience and diversification of our earnings. As we move forward, we remain focused on executing our new frontier strategy, delivering on our commitments, and creating long-term value for our shareholders.

Speaker #2: Finally, in Japan, we now expect our initial economic solvency ratio, or ESR, to be at the top end of a 170 to 190 percent range for the fiscal year ended March 31st, 2026, up from our prior expectation of middle of the range.

Speaker #1: And with that, I'll turn the call back to the operator for your questions.

Speaker #2: While results will vary year to year, we are comfortable managing ESR anywhere within this range. In summary, MetLife delivered an excellent second quarter. We generated strong and broad-based growth, produced attractive returns, maintained disciplined expense management, and continued to deploy capital from a position of strength.

Speaker #2: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Speaker #2: And to withdraw your question, press star one again. We ask that you pick up your handset when asking a question for optimum sound quality and if muted locally, remember to unmute your device.

Speaker #2: Just as importantly, these results were driven by performance across the enterprise, demonstrating the quality resilience and diversification of our earnings. As we move forward, we remain focused on executing our new frontier strategy, delivering on our commitments, and creating long-term value for our shareholders.

Speaker #2: Please stand by while we compile the Q&A roster. Your first question comes from the line of Ryan Krueger with KBW. Your line is open.

Speaker #2: Please go ahead.

Speaker #3: Hey, thanks. Good morning. My first question was on inorganic opportunities. You mentioned that in the prepared remarks. If it adds value and strategic fit, I guess maybe just could you could you give an update on what areas of the company at this point in time, based on your business portfolio, would be potential areas you'd be interested in adding to if something comes about?

Speaker #2: And with that, I'll turn the call back to the operator for your questions.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand, and to withdraw your question, press star one again.

Speaker #1: We ask that you pick up your handset when asking a question for optimum sound quality and, if muted locally, remember to unmute your device.

Speaker #4: Sure. Good morning, Ryan. Thanks for the question. It's Michelle. So first, what I will say is that nothing has really changed for us in terms of our M&A philosophy and approach.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of Ryan Kruger with KBW. Your line is open.

Speaker #1: Please go ahead.

Speaker #4: We've always viewed M&A as a strategic capability. And to the your direct question, I've talked in the past about two areas where potentially we would be likely to consider M&A.

Speaker #3: Hey, thanks. Good morning. My first question was on inorganic opportunities. You mentioned that in the prepared remarks. If it adds value and is a strategic fit, I guess maybe just—could you give an update on what areas of the company, at this point in time, based on your business portfolio, would be potential areas you'd be interested in adding to, if something comes about?

Speaker #4: And those are asset management and group. Let me start with group. I would say that whereas we don't see any gaps in terms of our product set, which is the widest in the industry, our capabilities, we've invested heavily, as you know, in technology as well.

Speaker #4: Sure. Good morning, Ryan. Thanks for the question. It's Michelle. So first, what I will say is that nothing has really changed for us in terms of our M&A philosophy and approach.

Speaker #4: And that's really sort of helping us further drive our competitive advantage. So whereas we don't see any gaps there, we're always in conversation with our customers to try to understand if there are things that are of interest to them that we might want to consider you've seen us over the last few years add, but insurance, for example, vision, more recently we've added an identity theft product to our offering.

Speaker #4: We've always viewed M&A as a strategic capability. And to your direct question, I've talked in the past about two areas where, potentially, we would be likely to consider M&A.

Speaker #4: And those are asset management and group. Let me start with group. I would say that whereas we don't see any gaps in terms of our product set, which is the widest in the industry, our capabilities, we've invested heavily, as you know, in technology as well.

Speaker #4: So we're always open to considering new capabilities or solutions if that made sense. Although, as I said, we don't see any gaps in terms of our offering.

Speaker #4: And that's really sort of helping us further drive our competitive advantage. So whereas we don't see any gaps there, we're always in conversation with our customers to try to understand if there are things that are of interest to them that we might want to consider you've seen us over the last few years add pet insurance, for example, vision, more recently, we've added an identity theft product to our offering.

Speaker #4: The more likely area, I would say, is asset management. And you saw us do the Pine Bridge investments deal late last year. And again, here, I would sort of emphasize that we'd be looking at adjacencies or at complementary capabilities as opposed to anything transformational.

Speaker #4: We have a good path to growing organically this business, but we will be open to complementing that with inorganic complementary opportunities. And elsewhere, I would say we're going to remain opportunistic outside of these two areas.

Speaker #4: So we're always open to considering new capabilities or solutions if that made sense. Although, as I said, we don't see any gaps in terms of our offering.

Speaker #4: The more likely area I would say is asset management. And you saw us do the Pine Bridge investments deal late last year. And again, here, I would sort of emphasize that we'd be looking at adjacencies or at complementary capabilities as opposed to anything transformational.

Speaker #4: I would also point out that we have a history of being very disciplined with capital deployment. And M&A, and we have a high bar to clear to ensure that we create long-term value for our shareholders.

Speaker #3: Thank you. Then I had a question on group life. It's been mortality has been favorable for both MetLife and the industry for the last couple of years now.

Speaker #4: We have a good path to growing organically this business, but we will we would be open to complementing that with inorganic complementary opportunities. And elsewhere, I would say we're going to remain opportunistic outside of these two areas.

Speaker #3: Do you think if this continues, there'll be any need to pass through some of these disfavorability to customers through pricing actions? Or do you see it as if the mortality remains favorable, you can continue to maintain price?

Speaker #4: I would also point out that we have a history of being very disciplined with capital deployment. And M&A and we have a high bar to clear to ensure that we create long-term value for our shareholders.

Speaker #4: Good morning, Ryan. It's Rami here. Maybe let me just spend a minute to talk about the quarter, and then I'll get to your question on pricing.

Speaker #4: We've been seeing favorability in mortality for a couple of quarter for a number of quarters right now. Now, this quarter in particular, we saw about 2 points of favorability that came from a combination of prior period development, as well as below expectations in terms of severity of claims.

Speaker #3: Thank you. Then I had a question on group life. It's been mortality has been favorable for both MetLife and the industry for the last couple of years now.

Speaker #3: Do you think if this continues, there'll be any need to pass through some of these disfavorability to customers through pricing actions, or do you see it as if the mortality remains favorable, you can continue to maintain price?

Speaker #4: So think about those two points as being we expect those to normalize as we go forward. And there's early evidence of that if you look at our July numbers.

Speaker #4: Good morning, Ryan. It's Rami here. Maybe let me just spend a minute to talk about the quarter, and then I'll get to your question on pricing.

Speaker #4: So I just want to make sure you look at this quarter in perspective and expect moderation for the rest of the year. Now, to your question, if I think about the overall results, and I think about the go-forward trend here, should we see this favorability continue in mortality?

Speaker #4: We've been seeing favorability in mortality for a couple of quarter for a number of quarters right now. Now, this quarter in particular, we saw about two points of favorability that came from a combination of prior period development, as well as below expectations in terms of severity of claims.

Speaker #4: You would think that our margins here are going to gradually normalize over time? But I would emphasize the gradual nature of this. This is a business that has a renewal cycle between three to five years in our life book.

Speaker #4: So think about those two points as being we expect those to normalize as we go forward. And there's early evidence of that if you look at our July numbers.

Speaker #4: So any normalization would unfold over a number of years here versus a quarter or a 27 type impact.

Speaker #4: So I just want to make sure you look at this quarter in perspective and expect moderation for the rest of the year. Now, to your question, if I think about the overall results, and I think about the go-forward trend here, should we see this favorability continue in mortality?

Speaker #3: Thank you.

Speaker #2: Your next question comes from the line of Pablo Singzon with JP Morgan. Your line is open. Please go ahead. If you are muted locally, please be sure to unmute and proceed with your question.

Speaker #4: You would think that our margins here are going to gradually normalize over time? But I would emphasize the gradual nature of this. This is a business that has a renewal cycle between three to five years in our life book.

Speaker #5: Hi. Good morning. First question I had is, I noted that you mentioned working H mortality as a driver of good group life results. Can you talk about mortality experience for other blocks of this that you have?

Speaker #4: So any normalization would unfold over a number of years here, versus a quarter or a 27-type impact.

Speaker #5: So I'm thinking about individual life and corporate and other and PRT and RIS. I think those are older age customers, but any sort of perspective I would really appreciate it.

Speaker #3: Thank you.

Speaker #1: Your next question comes from the line of Pablo Singhs on with JP Morgan. Your line is open. Please go ahead. If you are muted locally, please be sure to unmute and proceed with your question.

Speaker #5: Thank you.

Speaker #6: Pablo, we're having a lot of interference on your question. Could you try to repeat it or see what's causing the impact?

Speaker #5: Yep. Sorry about that. Is this better?

Speaker #6: Yes.

Speaker #5: I know. All right. And I'll speak a little more slowly. So I noted that you mentioned working H mortality as a driver of good group life results.

Speaker #5: Hi. Good morning. The first question I had is, I noted that you mentioned working age mortality as a driver of good group life results.

Speaker #5: Can you talk about mortality experience for the other blocks of business you have? So I'm thinking about individual life and corporate and then PRT and RIS.

Speaker #5: Can you talk about mortality experience for other blocks of this that you have? So I'm thinking about individual life and corporate and other and PRT and RIS.

Speaker #5: I think those are older age customers, and maybe the experience is different, but any perspective there would be appreciated. Thanks.

Speaker #5: I think those are older age customers, but any sort of perspective I really appreciate it. Thank you.

Speaker #4: Pablo, it's Rami here. We're still hard to hear, but I think you're asking about mortality beyond the group business and in particular how that's playing out in RIS.

Speaker #2: Pablo, we're having a lot of interference on your question. Could you try to repeat it or see what's causing the impact?

Speaker #5: Yep. Sorry about that. Is this better?

Speaker #4: I would say think about the RIS population as being sitting largely older population, retiree population, and the improvements we're seeing in that population are very much in line with what we have baked in into our expectations and reserves.

Speaker #2: Yes.

Speaker #5: I noted yep. All right. And I'll speak a little more slowly. So I noted that you mentioned working age mortality as a driver of good group life results.

Speaker #5: Can you talk about mortality experience for the other blocks of this if you have? So I'm thinking about individual life and corporate, and then PRT and RIS.

Speaker #5: I think those are older age customers, and maybe the experience is different, but any perspective there would be appreciated. Thanks.

Speaker #4: And therefore, I think about the underwriting results in RIS, emerging largely in line with our expectations there. I would note that if you look at the overall population, the improvements in the working age population have been a lot faster than the improvements in the above 65 population.

Speaker #4: Pablo, it's Rami here. We're still hard to hear, but I think you're asking about mortality beyond the group business and in particular how that's playing out in RIS.

Speaker #4: I would say think about the RIS population as being sitting largely older population, retiree population, and the improvements we're seeing in that population are very much in line with what we have baked in into our expectations and reserves.

Speaker #4: So that dynamic is different between those two populations. And also the dynamic for us in terms of our results is how we're pricing and reserving.

Speaker #4: And RIS is very much performing in line with our pricing and reserving expectations.

Speaker #6: I'll just add, I was just going to add something, Pablo. I think overall, just as we see and obviously there's been quite a bit of multiple years of just changing mortality.

Speaker #4: And therefore, I think about the underwriting results in RIS emerging largely in line with our expectations there. I would note that if you look at the overall population data, the improvements in the working age population have been a lot faster than the improvements in the above 65 population.

Speaker #6: We would argue in general that we've moved back to the trend line that we were on pre-COVID. Right? And but as Rami said, we're seeing it drop more materially in the working age less so in the retiree and older populations.

Speaker #4: So, that dynamic is different between those two populations. And also, the dynamic for us, in terms of our results, is how we're pricing and reserving.

Speaker #6: So overall, there's an improvement. I think it varies by different age groups, but overall, we generally see us being back to the trend line of pre-COVID.

Speaker #4: And RIS is very much performing in line with our pricing and reserving expectations.

Speaker #3: I'll just add I was just going to add something, Pablo. I think overall, just as we see and obviously there's been quite a bit of multiple years of just changing mortality.

Speaker #2: Your next question comes from the line of Suneet Kamath with Jefferies. Your line is open. Please go ahead.

Speaker #3: Okay. Hopefully, there's no interference on my end. So I wanted to go to the PRT market. A couple of companies so far this earnings season have been a little cautious about full year 2026 results relative to last year.

Speaker #3: We would argue in general that we've moved back to the trend line that we were on pre-COVID. Right? And but as Rami said, we're seeing it drop more materially in the working age less so in the retiree and older populations.

Speaker #3: So I was just curious if you're seeing the same thing and what do you think is holding back the market and what needs to happen to see better growth ahead?

Speaker #3: So overall, there's an improvement. I think it varies by different age groups, but overall, we generally see us being back to the trend line of pre-COVID.

Speaker #3: Thanks.

Speaker #4: Hey, good morning, Suneet. Look, when you think about this market, and especially the part of the market where we are focused on, which is the jumbo market, it is always going to be lumpy.

Speaker #1: Your next question comes from the line of Suneet Kamath with Jeffries. Your line is open. Please go ahead.

Speaker #4: So I wouldn't try to overread into activity in any one quarter or even over a year, frankly. So think about our performance here we're coming off a record year in '25.

Speaker #3: Okay. Hopefully, there's no interference on my end. So I wanted to go to the PRT market. A couple of companies so far this earnings season have been a little cautious about full year 2026 results relative to last year.

Speaker #4: We sold close to 14 billion dollars of PRTs that year with 12 billion coming in the fourth quarter. So that just to emphasize the lumpiness of the activity here.

Speaker #3: So I was just curious if you're seeing the same thing and what do you think is holding back the market and what needs to happen to see better growth ahead?

Speaker #3: Thanks.

Speaker #4: Hey, good morning, Suneet. Look, when you think about this market, and especially the part of the market where we are focused, which is the jumbo market, it is always going to be lumpy.

Speaker #4: The first half of the year has been lighter, particularly from the jumbo space. But we are seeing a stronger pipeline in the second half of the year and so we see more opportunities emerging for Q3 and Q4.

Speaker #4: So I wouldn't try to in any one quarter, or even over a year, frankly. So think about our performance here. We're coming off a record year in '25.

Speaker #4: And we're going to always be disciplined in terms of how we price this business and focus on generating attractive risk-adjusted returns. But I would say when you look at PRT, you always have to look at the macro picture.

Speaker #4: We sold close to 14 billion dollars of PRTs that year with 12 billion coming in the fourth quarter. So that just to emphasize the lumpiness of the activity here.

Speaker #4: And the macro picture is extremely positive. You've got 3 trillion dollars of defined benefit pension assets with solid funding levels and a very compelling industrial logic for those corporates to offload that risk.

Speaker #4: The first half of the year has been lighter, particularly from the jumbo space. But we are seeing a stronger pipeline in the second half of the year and so we see more opportunities emerging for Q3 and Q4.

Speaker #4: And we are a leading player in that market. And we will be a beneficiary of that. And the other point I would make with respect to PRT is the same trends that are playing out in the US market are also playing out in the UK market.

Speaker #4: And we're going to always be disciplined in terms of how we price this business and focus on generating attractive risk-adjusted returns. But I would say when you look at PRT, you always have to look at the macro picture.

Speaker #4: And to Michelle's point, we are diversified and we're able to find other pockets of growth. And that's exactly what we've done so far this year.

Speaker #4: And the macro picture is extremely positive. You've got 3 trillion dollars of defined benefit pension assets with solid funding levels and a very compelling industrial logic for those corporates to offload that risk.

Speaker #4: We've written more than a billion dollars of UK funded reinsurance. Year to date, think of that as PRT, but in the form of reinsurance.

Speaker #4: And that's been done at attractive returns and that's contributing to our growth here. So if you look at all of RIS, we're pretty confident that we're going to be within our retained balance growth of 3 to 5 percent for the full year reflecting just the power of the franchise and the product portfolio that we have.

Speaker #4: And we are a leading player in that market, and we will be a beneficiary of that. The other point I would make with respect to PRT is that the same trends playing out in the US market are also playing out in the UK market.

Speaker #4: And to Michelle's point, we are diversified and we're able to find other pockets of growth. And that's exactly what we've done so far this year.

Speaker #3: Okay. That's helpful. Thanks. And then I wanted to pivot to Japan. It just seems like there's a lot going on there with the banks, the kandi issue.

Speaker #4: We've written more than a billion dollars of UK funded reinsurance. Year to date, think of that as PRT, but in the form of reinsurance.

Speaker #3: Yen and rate volatility. So there's a lot for the industry to deal with. But your sales seem to be steadily growing. So I was just hoping to better understand what's different about your model and does some of this call it turmoil that's going on in Japan give you the opportunity to lean in a little bit more.

Speaker #4: And that's been done at attractive returns and that's contributing to our growth here. So NetNet, if you look at all of RIS, we're pretty confident that we're going to be within our retained balance growth of 3 to 5 percent for the full year reflecting just the power of the franchise and the product portfolio that we have.

Speaker #3: Thanks.

Speaker #4: Hey, Suneet, it's Lyndon here. So look, we're really pleased with the sales performance that we've seen all across Asia, not just in Japan. And if we look at second quarter sales, we're up 17%.

Speaker #3: Okay. That's helpful. Thanks. And then I wanted to pivot to Japan. It just seems like there's a lot going on there with the banks, the kandi issue.

Speaker #4: And year-to-date sales are up 19% year over year. So strong performance across all our franchises. And really what's driving it is we're seeing really a sustained momentum this year.

Speaker #3: Yen and rate volatility. So there's a lot for the industry to deal with. But your sales seem to be steadily growing. So I was hoping to better understand what's different about your model and does some of this call it turmoil that's going on in Japan give you the opportunity to lean in a little bit more.

Speaker #4: Payoff from a lot of actions we've taken. We have the scale and the diversification that we have in our distribution in pretty much all the markets, but particularly true in markets like Japan and Korea.

Speaker #3: Thanks.

Speaker #4: We've got product innovation. You have strong product development both in US dollar as well as local currency products. And US dollar, we're the first to market in those.

Speaker #4: Hey Suneet, it's Linden here. So look, we're really pleased with the sales performance that we've seen all across Asia, not just in Japan. And if we look at second quarter sales, we're up 17%.

Speaker #4: And we really have strong execution excellence across all the markets. So it's the combination of all these three drivers that are really driving our success in Japan but not just there, across all the markets.

Speaker #4: And year-to-date sales are up 19% year over year. So strong performance across all our franchises. And really what's driving it is we're seeing really a sustained momentum this year.

Speaker #4: And you can see the results all across Asia. There's been some volatility in the market. We've seen some yen volatility of late. But for the most part, we see customers kind of holding off when there's a lot of volatility.

Speaker #4: Payoff from a lot of actions we've taken we have the scale and the diversification that we have in our distribution in pretty much all the markets, but particularly true in markets like Japan and Korea.

Speaker #4: But our sales through June have been strong. And if we go into July, that momentum is continuing. So we're really in a good position because of all these key drivers in the market.

Speaker #4: We've got product innovation. You have strong product development both in US dollar as well as local currency products. And US dollar we're the first to market in those.

Speaker #4: And we really have strong execution excellence across all markets. So it's the combination of all these three drivers that are really driving our success in Japan but not just there, across all the markets.

Speaker #4: And I think that has really been the key to our success in the Asia story.

Speaker #3: Okay. Thank you.

Speaker #2: Your next question comes from the line of Tom Gallagher with Evercore. Your line is open. Please go ahead.

Speaker #4: And you can see the results all across Asia. There's been some volatility in the market. We've seen some yen volatility of late. But for the most part, we see customers kind of holding off when there's a lot of volatility.

Speaker #3: Good morning. Hey, Michelle, just wanted to come back to the M&A question for a minute. Heard your answers. Asset management and group-adjacent businesses and group.

Speaker #4: But our sales through June have been strong. And if we go into July, that momentum is continuing. So we're really in a good position because of all these key drivers in the market.

Speaker #3: On the remain opportunistic comment, though, I think there's some emerging market properties that we heard yesterday are going to become available for sale. With Latin America, I think you've done two very successful deals in Latin America in the past.

Speaker #4: And I think that has really been the key to our success in the Asia story.

Speaker #3: Would that be an interest if those opportunities present themselves?

Speaker #3: Okay. Thank you.

Speaker #1: Your next question comes from the line of Tom Gallagher with Evercore. Your line is open. Please go ahead.

Speaker #4: Yeah. Hey, Tom. Thanks

Speaker #5: for the question. We don't comment on market speculation and we're not going to start now. Look, like I said, nothing has changed in terms of how we think about M&A here.

Speaker #3: Good morning. Hey, Michel, just wanted to come back to the M&A question for a minute. Heard your answers—asset management and group-adjacent businesses and group.

Speaker #3: On the remain opportunistic comment, though, I think there's some emerging market properties that we heard yesterday are going to become available for sale. With Latin America, I think you've done two very successful deals in Latin America in the past.

Speaker #5: We're always in the flow. There's hardly a deal that comes to market that doesn't come across a Dora Whitaker's desk. So we have obviously good visibility in terms of what's happening.

Speaker #5: But I would emphasize that we are very, very disciplined when it comes to M&A. And like I said, there's a high bar to clear.

Speaker #3: Would that be an interest if those opportunities present themselves?

Speaker #4: Yeah. Hey, Tom. Thanks

Speaker #5: And we compare M&A to other potential uses of capital as well. So that's what I would say. With regards to LatAm, I would just add that we're really, really pleased with our business in LatAm.

Speaker #5: For the question, we don't comment on market speculation, and we're not going to start now. Look, like I said, nothing has changed in terms of how we think about M&A here.

Speaker #5: I think Eric and his team have done really an outstanding job and continue to do so. And you can see from our results that LatAm is very much on a path to generate a billion dollars in earnings this year.

Speaker #5: We're always in the flow. There's hardly a deal that comes to market that doesn't come across Dora Whitaker's desk. So we have, obviously, good visibility in terms of what's happening.

Speaker #5: But I would emphasize that we are very, very disciplined when it comes to M&A. And like I said, there's a high bar to clear.

Speaker #5: Which, by the way, is roughly double from pre-pandemic levels. And this is being fueled by sustained growth there. And whereas we're seeing growth across the region, our business in Brazil has been the fastest growing life insurer in that market in that country for several years now and is now contributing about 20% of overall LatAm sales.

Speaker #5: And we compare M&A to other potential uses of capital as well. So that's what I would say. With regards to LatAm, I would just add that we're really, really pleased with our business in LatAm.

Speaker #5: I think Eric and his team have done a really outstanding job and continue to do so. And you can see from our results that LatAm is very much on a path to generate $1 billion in earnings this year.

Speaker #5: So really pleased with the momentum there as well. So that's what I can offer.

Speaker #3: Okay. Thanks for that, Michelle. My follow-up is just kind of an interest rate portfolio repositioning type question. So interest rates are meaningfully higher in both Japan and the US.

Speaker #5: Which, by the way, is roughly double from pre-pandemic levels. And this is being fueled by sustained growth there. And whereas we're seeing growth across the region, our business in Brazil has been the fastest-growing life insurer in that market—in that country—for several years now.

Speaker #3: Have you either begun or considered any portfolio repositioning within either business or even mechanically? Could we see base spreads go higher? Just given where rates are when you think about maturing assets and new money in either of those regions.

Speaker #5: And is now contributing about 20% of overall LatAm sales. So really pleased with the momentum there as well. So that's what I can offer.

Speaker #3: Thanks.

Speaker #5: Yeah. Good morning, Tom. It's John. I'd say broadly speaking, first of all, we think about ALM and risk management and obviously when we have the opportunity to reinvest, we leverage the collective power of all of our differentiated capabilities when it comes to investment capabilities.

Speaker #3: Okay. Thanks for that, Michelle. My follow-up is just kind of an interest rate portfolio repositioning type question. So interest rates are meaningfully higher in both Japan and the US.

Speaker #5: And so I would just say everything's on the margin when it comes to things like that. There's no free lunch with just changing the portfolio.

Speaker #3: Have you either begun or considered any portfolio repositioning within either business or even mechanically? Could we see base spreads go higher just given where rates are when you think about maturing assets and new money in either of those regions?

Speaker #5: If I take RAS, we've talked about spreads being fairly stable. Part of that has to do with the diversification of the product mix that was referenced earlier.

Speaker #3: Thanks.

Speaker #5: In Japan, we have a real balanced portfolio between US and yen now. So I just think those things are there's no quick change that would ever occur.

Speaker #5: Yeah. Good morning, Tom. It's John. I'd say, broadly speaking, first of all, when we think about ALM and risk management—and obviously, when we have the opportunity to reinvest—we leverage the collective power of all of our differentiated capabilities when it comes to investment capabilities.

Speaker #5: But over time, higher rates as we talked about before are do provide kind of positive momentum.

Speaker #5: And so I would just say everything's on the margin when it comes to things like that. There's no free lunch with just changing the portfolio.

Speaker #3: Okay. Thanks for that.

Speaker #2: Your next question comes from the line of Wilma Burdis with Raymond James. Your line is open. Please go ahead.

Speaker #5: If I take RAS, we've talked about spreads being fairly stable. Part of that has to do with the diversification of the product mix that was referenced earlier.

Speaker #6: Hey. Good morning. Could you just give your latest thinking on private equity? We saw that you trimmed the position a little bit in the last quarter.

Speaker #5: In Japan, we have a real balanced portfolio between US and yen now. So I just think those things are—there's no quick change that would ever occur.

Speaker #6: And it seems like it's been you've been trimming it a little bit over the last several quarters. Is that how you see it? And could you talk about the rationale there?

Speaker #6: Thanks.

Speaker #5: Yeah. Good morning. Well, much John. I think we've referenced this before that and this has been kind of a multi-year journey for us. But the fact that we are in a, I guess, a relatively higher rate environment than where we were let's say several, several years ago, we've talked about the fact that over time, we would probably see a slightly lower allocation to PE, albeit we're still investing.

Speaker #5: But over time, higher rates as we talked about before are do provide kind of positive momentum.

Speaker #3: Okay. Thanks for that.

Speaker #1: Your next question comes from the line of Wilma Bertis with Raymond James. Your line is open. Please go ahead.

Speaker #6: Hey, good morning. Could you just give your latest thinking on private equity? We saw that you trimmed the position a little bit in the last quarter.

Speaker #5: But the runoff is probably faster than the contributions. And so and then you referenced in the first quarter, we were opportunistic. We saw an opportunity to do a sale, but also have the opportunity to continue to manage those funds for third parties.

Speaker #6: And it seems like it's been you've been trimming it a little bit over the last several quarters. Is that how you see it? And could you talk about the rationale there?

Speaker #6: Thanks.

Speaker #5: And raise some additional capital around that. So I think all in all, the direction of travel is a modest decline over time on PE.

Speaker #5: Yeah. Good morning. Well, much John. I think we've referenced this before that and this has been kind of a multi-year journey for us. But the fact that we are in a, I guess, a relatively higher rate environment than where we were let's say several, several years ago, we've talked about the fact that over time, we would probably see a slightly lower allocation to PE, albeit we're still investing.

Speaker #5: But that doesn't mean we're going to continue to invest in the space. It's just that the given the seasoned portfolio we have and the diversification we have, we would expect distributions to outpace contributions.

Speaker #5: But the runoff is probably faster than the contributions. And so and then you referenced in the first quarter, we were opportunistic. We saw an opportunity to do a sale, but also have the opportunity to continue to manage those funds for third parties.

Speaker #6: Okay. Thank you. And then is Group PFO growth around 4%? I realize that's better than the industry, but is that where you want to be in the current environment?

Speaker #6: Or do you have plans to accelerate it more towards the 7%? What is the current market look like for that and what are the growth options?

Speaker #5: And raise some additional capital around that. So, I think, all in all, the direction of travel is a modest decline over time on PE.

Speaker #6: Thanks.

Speaker #4: Thank you, Wilma. It's Rami here. I would say just the headline here for Group from a top-line perspective is we're seeing really good momentum.

Speaker #5: But that doesn't mean we're going to continue to invest in the space. It's just that, given the seasoned portfolio we have and the diversification we have, we would expect distributions to outpace contributions.

Speaker #4: And all the underlying indicators are positive. We talked about sales being up year over year. If you look at the below 1,000 segment, they're actually up year over year and well into the double digits.

Speaker #6: Okay, thank you. And then, is Group PFO growth around 4%? I realize that's better than the industry, but is that where you want to be in the current environment?

Speaker #4: Our persistency is higher this year and particular we saw that in our dental block. Our rate actions, which also contribute to that PFO numbers, are running in line with our expectations.

Speaker #6: Or do you have plans to accelerate it more towards the 7%? What does the current market look like for that, and what are the growth options?

Speaker #4: We continue to see rising participation rates within the employee population. And continued double-digit growth in the voluntary suite of products. So all really solid top-line indicators.

Speaker #6: Thanks.

Speaker #4: Thank you, Wilma. I'd say it's Rami here. I would say just the headline here for Group, from a top-line perspective, is we're seeing really good momentum.

Speaker #4: And all the underlying indicators are positive. We talked about sales being up year over year. If you look at the below 1,000 segment, they're actually up year over year.

Speaker #4: When it comes to the kind of four to seven percent range, think of that as a multi-year number. In any given year, we could be at the low end, high end of the range.

Speaker #4: There's timing of sales. There is jumbo sales. The size of the cases we win. And so on and so forth. So we're pleased with the growth.

Speaker #4: And well into the double digits. Our persistency is higher this year and particular we saw that in our dental block. Our rate actions, which also contribute to that PFO numbers, are running in line with our expectations.

Speaker #4: And we're pleased to be in the forward here across all markets in this business.

Speaker #4: We continue to see rising participation rates within the employee population. And continued double-digit growth in the voluntary suite of products. So all really solid top-line indicators.

Speaker #6: Thank you very much.

Speaker #2: Your next question comes from the line of Joel Hurwitz with Dowling. Your line is open. Please go ahead.

Speaker #4: When it comes to the kind of four to seven percent range, think of that as a multi-year number. In any given year, we could be at the.

Speaker #3: Hey. Good morning. Rami, could you just provide some caller on the non-medical health experience in the quarter? How was dental and disability? And I guess PFML has been an area of focus with others.

Speaker #4: And high end of the range. There's timing of sales. There is jumbo sales. The size of the cases we win. And so on and so forth.

Speaker #3: How was that experience for you guys in the quarter?

Speaker #4: Thanks, Joel. So maybe let me start with PFML. The dynamics we've experienced this quarter very much followed what we discussed on our Q1 earnings call.

Speaker #4: So we're pleased with the growth, and we're pleased to be in the range. We see really good momentum going forward here across all markets in this business.

Speaker #4: As you may recall, the PFML products have a claim pattern where you have higher upfront claims that tend to normalize. After a few months of the introduction of that program and this is very much playing out in this quarter.

Speaker #6: Thank you very much.

Speaker #1: Your next question comes from the line of Joel Hurwitz with Dowling. Your line is open. Please go ahead.

Speaker #3: Hey, good morning. Rami, could you just provide some color on the non-medical health experience in the quarter? How was dental and disability? And I guess PFML has been an area of focus with others.

Speaker #4: And we did see lower PFML submissions as that run in effect if you will, is behind us. And at the same time, as part of our BAU, when we need rate actions against this business, we are taking a pre-rate actions.

Speaker #3: How has that experience been for you guys in the quarter?

Speaker #4: Thanks, Joel. So maybe let me start with PFML. The dynamics we've experienced this quarter very much followed what we discussed on our Q1 earnings call.

Speaker #4: And then staying with disability for a minute, if you step back and look at the overall disability results, in the quarter, they've been favorable.

Speaker #4: As you may recall, the PFML products have a claim pattern where you have higher upfront claims that tend to normalize. After a few months of the introduction of that program and this is very much playing out in this quarter.

Speaker #4: We've seen incidents and recoveries to be in line with our expectations. And we've seen improvements from a year over year perspective. And I would say this is not an accident.

Speaker #4: This is very intentional given the investments we're making in the business, the investments we're making from a data analytics AI perspective, that are driving improved recoveries here which is giving us positive results this quarter.

Speaker #4: And we did see lower PFML submissions as that run-off, if you will, is behind us. And at the same time, as part of our BAU, when we need rate actions against this business, we are taking rate actions.

Speaker #4: And then maybe taking one last step back and look at the overall non-medical health ratio, dental is exhibiting the normal seasonality here. And that seasonality would point to a fact that the second half of the year would give us more favorable results.

Speaker #4: And then, staying with disability for a minute, if you step back and look at the overall disability results in the quarter, they've been favorable.

Speaker #4: We've seen incidents and recoveries to be in line with our expectations, and we've seen improvements from a year-over-year perspective. And I would say this is not an accident.

Speaker #4: And therefore, more favorable non-medical health ratio in aggregate compared to the first half of the year. Hope that helps.

Speaker #4: This is very intentional, given the investments we're making in the business and the investments we're making from a data analytics and AI perspective that are driving improved recoveries here, which is giving us positive results this quarter.

Speaker #3: Okay. Thank you. Yeah. That was helpful. And then one on Asia so you've been highlighting AUM growth as a metric to focus on. And that's been strong.

Speaker #4: And then maybe taking one last step back and looking at the overall non-medical health ratio, dental is exhibiting the normal seasonality here. That seasonality would point to the fact that the second half of the year would give us more favorable results.

Speaker #3: But curious on PFO growth because that's been really strong for another quarter here. Any caller on what's driving the re-acceleration of PFO growth in Asia and the sustainability of that?

Speaker #1: Hey, Joel. It's Lyndon here. So look, we are an AUM business. We're primarily focused on the retirement space. So a lot of our business ends up in the AUM components.

Speaker #4: And therefore, a more favorable non-medical health ratio in aggregate compared to the first half of the year. Hope that helps.

Speaker #1: As far as PFOs grow, we sell some of the Fast 60 type business as well. That has been a growing part of our business.

Speaker #3: Okay, thank you. Yeah, that was helpful. And then one on Asia: so you've been highlighting AUM growth as a metric to focus on, and that's been strong.

Speaker #1: We're seeing it some of it come through in the yen space. And especially as the yen product starts to pick up and today represents over 50% of our sales, Shem mentioned that earlier.

Speaker #3: But curious on PFO growth because that's been really strong for another quarter here. Any color on what's driving the re-acceleration of PFO growth in Asia and the sustainability of that?

Speaker #1: So we'll start seeing PFOs sort of continue to grow. But really, the bulk of our business continues to be AUM focused. So that is sort of the key driver behind our growth.

Speaker #2: Hey, Joel. It's Linden here. So look, we are an AUM business. We're primarily focused on the retirement space. So a lot of our business ends up in the AUM components.

Speaker #3: Gotcha. Thank you.

Speaker #2: Your next question comes from the line of Wes Carmichael with Wells Fargo. Your line is open. Please go ahead.

Speaker #2: As far as PFOs grow, we sell some of the FAST 60 type business as well. That has been a growing part of our business.

Speaker #5: Hey. Good morning. Just wanted to follow up on RIS, but base spread expanded five bit better than expected headed into the quarter. So maybe as a follow-up on Tom's question, but with where rates are, fewer Fed cuts, the long in higher, how do you think about base spreads trending in the back half of the year?

Speaker #2: We're seeing some of it come through in the yen space, and especially as the yen product starts to pick up. Today, it represents over 50% of our sales—Shen mentioned that earlier.

Speaker #2: So we'll start seeing PFOs sort of continue to grow. But really, the bulk of our business continues to be AUM focused. So that is sort of the key driver behind our growth.

Speaker #3: Hey. Good morning, Wes. This is John. Yeah. As you recall, I mean, total spreads were 97 basis points. But that was a function of just a lower and weaker private equity returns that we referenced.

Speaker #3: Gotcha. Thank you.

Speaker #3: But core spreads at 100 were at the top end. And we kind of created this new range of 95 to 100 previously. And we talked about asset deployment.

Speaker #1: Your next question comes from the line of Wes Carmichael with Wells Fargo. Your line is open. Please go ahead.

Speaker #5: Hey. Good morning. Just wanted to follow up on RIS, but base spread expanded five basis points sequentially. And I think that's probably a little bit better than expected headed into the quarter.

Speaker #3: We knew that was going to happen. We did see a little bit better improved real estate equity income in the quarter that is likely to probably seasonally reverse in the third quarter.

Speaker #5: So maybe as a follow-up on Tom's question, but with where rates are, fewer Fed cuts, the long end higher, how do you think about base spreads trending in the back half of the year?

Speaker #3: So when we think about looking ahead, we still think the 95 to 100, even with the rate environment and in a way, we're positioned fairly well regardless of what happens with the curve.

Speaker #3: Hey. Good morning, Wes. This is John. Yeah. As you recall, I mean, total spreads were 97 basis points. But that was a function of just a lower and weaker private equity returns that we referenced.

Speaker #3: We've been able to kind of put ourselves in a position where should the curve steepen, or even stay flat, we still think the 95 to 100 is a good baseline.

Speaker #3: But core spreads at 100 were at the top end, and we kind of created this new range of 95 to 100 previously. And we talked about asset deployment.

Speaker #3: So if we had to kind of pick a point for the third quarter, be more like the midpoint of the range at this point just because of the seasonality of some of the real estate returns in 3Q.

Speaker #3: We knew that was going to happen. We did see a little bit better, improved real estate equity income in the quarter that is likely to probably seasonally reverse in the third quarter.

Speaker #5: Thanks, John. And just to follow up on group mortality, so very favorable results here today. I think if I heard your comments and there's maybe a couple of points of normalization, even if I include that in third and fourth quarter and then yet maybe two or three points below end of your range.

Speaker #3: So when we think about looking ahead, we still think the 95 to 100, even with the rate environment and in a way, we're positioned fairly well regardless of what happens with the curve.

Speaker #3: We've been able to kind of put ourselves in a position where should the curve steepen, or even stay flat, we still think the 95 to 100 is a good baseline.

Speaker #5: So any help on where you think that might come in for the back half of the year or the full year?

Speaker #4: Yeah. I mean, look, the ratio is always going to kind of fluctuate here. But I would say the most pronounced seasonality in the group mortality ratio typically occurs in Q1, which is a function of the severity of the flu season.

Speaker #3: So if we had to kind of pick a point for the third quarter, be more like the midpoint of the range at this point, just because of the seasonality of some of the real estate returns in three.

Speaker #4: So if current kind of trends continue think about those normalization items that I've mentioned coming back, and that would be a good best estimate here.

Speaker #5: Thanks, John. And just to follow up on group mortality, so very favorable results here to date. I think if I heard your comments and there's maybe a couple of points of normalization, even if I include that in third and fourth quarter, and then you have maybe two or three points below end of your range, so any help on where you think that might come in for the back half of the year or the full year?

Speaker #4: But I would point you to the two points of normalization here that we've seen this quarter that we don't expect to repeat in the second half of the year.

Speaker #5: Thank you.

Speaker #4: Yeah, I mean, look, the ratio is always going to kind of fluctuate here. But I would say the most pronounced seasonality in the group mortality ratio typically occurs in Q1, which is a function of the severity of the flu season.

Speaker #2: Our last question comes from the line of Tracy Benguigui with Wolf Research. Your line is open. Please go ahead. Please ensure you are unmuted locally and proceed with your question.

Speaker #4: So if current kind of trends continue think about those normalization items that I've mentioned coming back, and that would be a good best estimate here.

Speaker #4: But I would point you to the two points of normalization here that we've seen this quarter that we don't expect to repeat in the second half of the year.

Speaker #5: Thank you.

Speaker #4: All right. Looks like we've reached the end of our call. Thanks for participating, everybody. And have a great day. Thank you.

Speaker #1: Our last question comes from the line of Tracy Banjiji with Wolf Research. Your line is open. Please go ahead. Please ensure you are unmuted locally and proceed with your question.

Speaker #4: All right. Looks like we've reached the end of our call. Thanks for participating, everybody. And have a great day. Thank you.