Good morning, ladies and gentlemen, and welcome to Brighthouse Financial's Third Quarter 2024 Earnings Conference Call. My name is Michelle, and I will be your coordinator today. At this time, all participants are in a listen-only mode. We will facilitate question-and-answer session towards the end of the conference call. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Dana Amante, Head of Investor Relations. Mr. Amante, please proceed.

Thank you, and good morning. Welcome to Brighthouse Financial's Third Quarter 2024 Earnings Call. Materials for today's call were released last night and can be found on the Investor Relations section of our website. We encourage you to review all of these materials. Today, you will hear from Eric Steigerwalt, our President and Chief Executive Officer; and Ed Spehar, our Chief Financial Officer. Following our prepared remarks, we will open the call up for a question-and-answer period. Also here with us today to participate in the discussions are Myles Lambert, our Chief Distribution and Marketing Officer; David Rosenbaum, Head of Product and Underwriting; and John Rosenthal, our Chief Investment Officer. Before we begin, I would like to note that our discussion during this call may include forward-looking statements within the meaning of the federal securities laws. Brighthouse Financial's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties described from time to time in Brighthouse Financial's filings with the SEC. Information discussed on today's call speaks only as of today, November 8, 2024. The company undertakes no obligation to update any information discussed on today's call. During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliation of these non-GAAP measures on a historical basis to the most directly comparable GAAP measures and related definitions may be found in our earnings release, slide presentation and financial supplement. And finally, references to statutory results, including certain statutory-based measures used by management are preliminary due to the timing of the filing of the statutory statement. I'll now turn the call over to our CEO, Eric Steigerwalt.

Thank you, Dana, and good morning, everyone. Today, I will provide an update on the strategic initiatives that we discussed on our second quarter earnings call, followed by some highlights from the third quarter. Following my remarks, Ed will provide more detail on our financial results in the quarter. I am pleased to share that in the third quarter, we continued to make progress on our strategic initiatives designed to improve capital efficiency, unlock capital, and return our combined risk-based capital or RBC ratio to our target range of 400% to 450% in normal market conditions. As I said on our second quarter conference call, we are comfortable operating below our targeted RBC range for temporary periods. The reason for that is twofold: one, we have a number of strategic initiatives underway that we are confident will improve our RBC ratio; and two, we had $1.3 billion of liquid assets at the holding company as of the end of the third quarter. Our strategic initiatives include reinsurance opportunities, along with actions to help simplify our hedging strategy. We are working on multiple reinsurance opportunities, both in-force and flow reinsurance. We have been working on one particular agreement with a third party to reinsure a legacy block of fixed and payout annuities. We are in the final stages and expect to enter into this reinsurance agreement before year-end. Pro forma for this reinsurance agreement, our September 30 estimated combined RBC ratio would be at the lower end of our targeted range in normal markets. In addition, we have made substantial progress on simplifying our hedging strategy. As we have discussed previously, the significant growth we have seen in our Shield annuity block over the past several years has resulted in a balanced risk profile for our annuity business but has also increased the complexity of managing our variable annuity or VA and Shield business on a combined basis. To address this issue, we started to hedge Shield sales on a stand-alone basis with the launch of our new Shield product in July, which we discussed on our second quarter earnings call. We are expanding that approach in the fourth quarter to include our Shield Level Pay+ product that was launched in August of 2022 and any remaining sales associated with our Shield product suite. Additionally, we are formulating a revised hedging strategy for our in-force book, which will now essentially be a closed block of business. Despite the refinements to our hedging program, our overall focus remains the same: which is to protect our statutory balance sheet under adverse market scenarios. At the end of the third quarter, we estimate that our combined RBC ratio was between 365% and 385%, and Ed will discuss that in more detail in a moment. As I mentioned earlier, we expect our combined RBC ratio would be at the low end of our target range in normal markets, assuming the entry into the reinsurance agreement on our fixed and payout annuity in-force business. Also, at the end of the quarter, our holding company liquid assets remained very robust and were approximately $1.3 billion. We have consistently stated that it is appropriate for a life insurer to have a conservative cash and liquidity position at the holding company, and our recent experience illustrates why this is a prudent strategy. Our substantial cash at the holding company also supports our common stock repurchase program. In the third quarter, we repurchased $64 million of our common stock with an additional approximately $25 million repurchased through November 1. From the beginning of our share repurchase program, which started in August of 2018, through November 1 of this year, we have repurchased over $2.4 billion of our common stock, reducing our shares outstanding by over 50% over that time since we became an independent public company in 2017. Along with our commitment to prudent financial management, our overall priorities at Brighthouse Financial have been consistent over the years and are focused on executing our growth strategy, which is centered around our complementary and competitive market offerings as well as our expansive third-party distribution footprint and efficiently managing our expenses as we recognize that being a low-cost producer is very important in our industry. We have continued to execute on this focused strategy which is demonstrated both by our strong sales results through the third quarter of this year and the year-to-date reduction in our corporate expenses. On a year-to-date basis, through September 30, our total annuity sales were $7.8 billion, consistent with the same period in 2023. Sales of our flagship Shield Annuity products have remained very strong at $5.8 billion year-to-date, a 15% increase over 2023 and a record level for Brighthouse. We intend to remain a leader in the registered index-linked annuity or RILA market with continued growth in our Shield sales. Additionally, we remain pleased with our fixed annuity sales as we continue to see year-over-year growth in our fixed indexed annuities driven by our SecureKey product. While sales of fixed deferred annuities were down on a year-to-date basis, they picked back up in the third quarter as expected as we transitioned to a new reinsurer in June. We've continued to grow in the life insurance space with life insurance sales of $87 million year-to-date through September 30, an increase of 19% compared with the same period last year. I'm pleased with the strong sales results that we continue to deliver and expect further growth in both annuities and life insurance sales as we remain focused on providing a comprehensive and complementary suite of products. I would also like to touch on our expansion into the institutional space with the launch of BlackRock's LifePath Paycheck product earlier this year. As we discussed on our second quarter earnings call, when we received our first deposits, we did not expect to see much activity in the third quarter as the inflows associated with LifePath Paycheck will be uneven on a quarter-to-quarter basis as defined contribution plans implement the solution. While we expect limited activity through the end of this year, we do expect to see additional inflows in 2025, and we remain very excited about this product and its success to date. Along with the continued success in our growth strategy, we remain disciplined with our expense management. Corporate expenses were $203 million in the third quarter and $610 million on a year-to-date basis, a 5% decrease year-over-year. As I have said previously, we expect an increase in the fourth quarter expenses as a result of typical seasonality. We still anticipate full year 2024 corporate expenses to come in lower than 2023. In closing, I am pleased with all the progress we have made on our strategic initiatives, which are designed to create more capital efficiency, unlock capital, and return our combined RBC ratio to within target range under normal market conditions. While our work continues, we remain focused on continuing to execute on our strategy and I look forward to keeping you updated on our progress. With that, I will turn the call over to Ed to discuss our financial results in more detail.

Thank you, Eric, and good morning, everyone. As of September 30, our statutory combined total adjusted capital, or TAC, was $5.7 billion, an increase of $300 million from $5.4 billion at the end of the second quarter. The increase in TAC is associated with our efforts to simplify our VA and Shield hedging program. As Eric mentioned, we have expanded our stand-alone hedging strategy for new business, which creates a simplified approach for risk management. We began the process of managing our Shield product sales on a stand-alone basis in July with the launch of our new product suite. We are expanding that approach in the fourth quarter to include our Shield product with lifetime withdrawal benefits known as Shield Level Pay Plus and the residual sales of our old Shield product suite. As part of this process, we have separated the annuity business into two categories. The first is Shield new business, which represents approximately 95% of total VA and Shield sales. And the second is our in-force block of legacy VA and legacy Shield contracts, which, as Eric mentioned, can essentially be thought of as a closed block. By hedging Shield new business on a stand-alone basis, we are increasingly reflecting all future hedges on the balance sheet today. For the legacy block, we are developing a separate hedging strategy and expect this work to continue into 2025. As a result, we can only reflect our current hedges for our legacy block on balance sheet today. It is important to highlight again that, while we are revising the hedging strategy, our focus on protecting the statutory balance sheet under adverse scenarios remains unchanged. For example, we would expect to see substantial gains from our hedging program relative to the VA Shield total asset requirement under an extreme bear market scenario. The changes to our hedging program in the third quarter resulted in a positive impact to reserves benefiting TAC with an offsetting increase in required capital, and therefore, a muted impact to the combined risk-based capital or RBC ratio. This benefit to TAC was partially offset by a normalized statutory loss of approximately $300 million in the quarter. Normalized statutory results reflect the continuation of a negative impact from new business strain, which we anticipate will be less in future quarters as a result of hedging all of our Shield new business on a stand-alone basis. In addition, Flow reinsurance is another initiative that could further reduce new business strain in 2025. We also had a modest loss associated with the significant change in the interest rate environment in the quarter. The normalized statutory loss led to the change in our combined RBC ratio, which we estimate to be between 365% and 385% at the end of the third quarter. As Eric mentioned, pro forma for the pending reinsurance transaction that is expected to close before year-end, our estimated combined RBC ratio would have been at the lower end of our target range of 400% to 450% in normal markets at September 30th. Our cash position remains robust with holding company liquid assets of $1.3 billion at September 30th. We have consistently stated that it is appropriate for a life insurer to have a conservative cash and liquidity position at the holding company, and our recent experience illustrates why this is a prudent strategy. Now turning to adjusted earnings results in the third quarter. Adjusted earnings, excluding the impact from notable items, were $243 million, which compares with adjusted earnings on the same basis of $346 million in the second quarter of 2024 and $275 million in the third quarter of 2023. The notable items in the quarter were related to the annual actuarial assumption review and related model refinements, which had a net favorable impact on adjusted earnings of $524 million after tax. As part of this assumption review, we increased our assumed GAAP long-term mean reversion rate for the 10-year US treasury from 3.75% to 4%. We continue to assume that mean reversion occurs over 10 years. The increase in our long-term interest rate assumption, as well as an actuarial model refinement related to expenses, drove a substantial benefit to adjusted earnings in our runoff segment. The total impact in the runoff segment from the actuarial assumption review and related model refinements was $570 million after tax. Our annual assumption review also included consideration of emerging experience and industry experience studies, which resulted in modest changes to our life and annuity segments. Excluding the impact of notable items, the adjusted earnings results in the third quarter were approximately $30 million below our quarterly average run rate expectation, driven by lower alternative investment returns. The alternative investment yield was 1.6% in the quarter. As a reminder, we expect returns between 9% to 11% annually over the long term for our alternative investment portfolio. The underwriting margin was in line with our quarterly average run rate expectation. However, it was lower sequentially driven by normal fluctuations in the volume and severity of claims, net of reinsurance. In the third quarter, the Runoff segment experienced higher net claims, which was partially offset by favorable net claims experienced within the Life segment. Turning to segment results. In the third quarter, the Annuities segment reported adjusted earnings of $307 million, excluding notable items. On a sequential basis, Annuity results reflect lower fees driven by seasonality. Adjusted earnings, less notable items, were $41 million in the Life segment. Sequentially, lower net investment income driven by lower alternative investment returns was mostly offset by a higher underwriting margin. The Runoff segment reported an adjusted loss of $107 million, excluding notable items. The sequential results reflect lower net investment income and a lower underwriting margin. Corporate and other was flat sequentially with $2 million of adjusted earnings. In conclusion, we are simplifying our hedging strategy while pursuing multiple initiatives to improve capital efficiency and unlock capital. And we anticipate that these actions will have a positive impact on our combined RBC ratio. We are confident in our financial position, which is a combination of our statutory balance sheet and cash at the holding company, and we continue to have substantial protection for adverse market environments.

Thank you. Our first question is from Suneet Kamath with Jefferies. Your line is open, please go ahead.

Thanks. Morning. Just want to start with Eric. Eric, have you and the Board talked about bringing in more risk management experience? And the reason I ask is, this is now I think four quarters in a row where the RBC has been under some pressure. The pure multiples that we've seen in the market are materially higher than yours. It's one of the best environments we've seen for your business model, and we keep getting these RBC surprises. So, I just wanted to get your thoughts on, do you need to bring in some more help just to get this thing back on track?

Yes. Thanks, Suneet. It's a good question. We have brought in more help. We brought in a number of external resources. And frankly, we've hired up in the last 6 months in the hedging area and finance area. So, yes, as we've reached sort of that delta neutral situation between New Shield business and the gross amount of shield business that we put on the books, that we have, generally, from a hedging perspective, hedged against the old VA block, which we've talked about for years now. Now, we're in a situation where we feel it is appropriate to refine that hedging strategy, and we have brought in a number of resources to help us do that. We're making a lot of progress there. We still got progress to make. Ed, do you want to comment at all in addition?

Thank you, Eric. I would like to emphasize what Eric mentioned. Looking ahead, we expect less pressure from new business due to our current initiatives. Historically, managing VA and Shield together has been beneficial for our capital, but with our balanced risk profile, a change is required. The primary financial advantage we foresee is reduced strain, and I should also mention that simplifying our hedging strategy is another important, albeit hard-to-measure, benefit over time. The impact of strain management will be more noticeable in the fourth quarter and beyond for several reasons. Firstly, we've begun hedging our new Shield product suite, launched in July, separately. This new suite accounted for about 30% of our combined Shield and VA sales in the third quarter, which is still relatively small. However, we expect that in the fourth quarter, the separate hedging of new business will represent roughly 95% of our total Shield and VA sales, leading to significant benefits. Additionally, looking to 2025 and beyond, we see a potential opportunity to establish a flow reinsurance deal that would further mitigate strain. To provide some context, strain has been the most critical factor affecting our year-to-date RBC ratio, which has decreased by 45 to 65 points. We estimate that shield strain accounts for approximately 35 points of that decline, which includes not just the impact on normalized statutory earnings but also what directly goes to required capital related to asset charges. It is accurate to say that strain has exceeded our initial assumptions, largely due to the complexities of managing these two businesses together and the establishment of our balanced risk profile. Therefore, we need to transition towards a stand-alone hedging strategy for new business while developing a specific approach for the legacy block.

I understand. Following up on that, without the reinsurance deal, are you confident that your RBC ratio has reached its lowest point, assuming normal market conditions and no further setbacks? If so, have you considered increasing the buyback, given the current valuation? Thank you.

So let me start on that. We don't give projections of what the RBC is going to be. And I know you understand better than most, that it is a complicated and conservative calculation. And there are always elements that are difficult to predict. So I think I would go back to, number one, with this pending reinsurance deal, we would see our pro forma third quarter and RBC ratio at the low end of our 400% to 450% range. Secondly, we would anticipate that our strain from new business will be substantially improved from the experience that we've seen in year-to-date. And you can see in the year-to-date it has been a significant negative for the risk-based capital ratio.

I'll jump in briefly. Let me address your first question and then respond to the second one, Suneet. Ed covered a lot in his response to your initial question, so I’d like to recap a bit. First, we are always willing to help, which shouldn't surprise anyone. If you've been following Ed and my answers over the last few quarters, it's clear that this situation involves the strain and complexity of managing the VA and Shield business hedging together. As you know, in the past, we've taken steps to reduce risk in the company, including equity derisking and adjusting our interest rate hedging strategy. Currently, our focus is on managing the hedging of both Shield and VA together while addressing the strain we’re experiencing from the Shield business. I won’t reiterate that unless someone asks again about our plans for the fourth quarter and into the first quarter. Regarding your second question, Suneet, we've been strategic in the past, and for now, I can say that we have a strong capital position at the holding company, and we are continuing to buy back stock.

Okay. Thank you.

Thank you. One moment for our next question. Our next question is going to come from the line of Ryan Krueger with KBW. Your line is open. Please go ahead.

Thanks. Good morning. Appreciate the commentary on the new business strain. I was hoping to focus more on, I guess, on the Ed, based on the numbers you gave, imports still had a negative impact on RBC this year. I'm trying to, I guess, better understand why that's happening, just given the growth in Shield that you've had over time and the runoff of legacy why the in force would still be producing negative impact of RBC? And I guess to what extent do you think that can change as you simplify the hedging strategy?

Thank you, Ryan. I want to begin by noting that our normalized statutory earnings, when excluding the strain-related factors we've discussed year-to-date, have fallen short of our expectations. Throughout the year, we've identified several contributing factors. For instance, we mentioned basis risk in one quarter, but upon examining the first nine months, it appears to be quite minimal and not a significant factor. Earlier this year, we addressed the actual versus expected in-force impact, which I believe was highlighted in the first quarter. Overall, it hasn't been an ideal year for normalized statutory earnings when excluding strain. However, we tend not to forecast normalized statutory earnings on an annual basis due to its inherent volatility. When we share our expectations about statutory results, we always frame it within a multiyear context, as that's the most sensible approach for how we calculate these figures. It's also worth mentioning that our method for calculating normalized statutory earnings is more conservative compared to how we assess adjusted earnings. That's an additional point I wanted to highlight.

Got it. Thanks. And then on reinsurance, can you give any more color? It sounds like you're still looking at other in-force opportunities beyond the ones that you expect to complete before the year-end. Can you give any more color on what sort of things you're looking at beyond that?

Well, we've got a number of possibilities, Ryan. I don't want to really go too far into this in that we've got a lot of negotiations going on, et cetera, et cetera. But yes, in-force opportunities. And then as Ed has already said, flow reinsurance opportunities as well. So, we're looking at a number of opportunities. And I highlighted in my comments, and Ed probably did as well in his comments with respect to a particular reinsurance agreement that we think will close in the fourth quarter.

Okay. Thank you.

Thank you. One moment for our next question. Our next question is going to come from the line of John Barnidge with Piper Sandler. Your line is open. Please go ahead.

Thank you, and good morning. Appreciate the opportunity. Is there an opportunity to optimize the investment portfolio at all? I know you're looking at the liabilities, but is an IMA possible?

It's certainly possible. And when I think about my comments in the second quarter, John, we're looking at any number of possibilities. So we would never exclude the investment portfolio from that list. So it's a good question.

Okay. Given the framework of not excluding anything, now that you've mentioned the in-force block being considered a closed block, how do you view the opportunity for enhanced annuitizations or buyouts as well?

Sure, John. Generally, we have avoided buyouts for two reasons. First, many distributors are not in favor of them, as these are products they have sold to their clients for financial needs, and we have supported those relationships for decades. Secondly, the take rate doesn’t really impact the overall situation. It's a significant amount of work and can be very disruptive, which is why we haven't pursued them in the past. However, I want to emphasize that we are considering various opportunities, but given the reasons I've mentioned, buyouts are likely not something we would pursue.

Okay. And if I could ask one more question, how do you assess the total addressable market for the liabilities? Is it essentially the entire closed block at this point? Thank you.

I think I understand. What possibilities are you considering for any potential deal? Is that what you mean, John?

Yes, that's correct.

Yes, that’s what I thought. Okay. Again, we're looking at everything. I don't think there's any reason to exclude anything from the 100,000-foot point of view. But then when you get into the details, we've got to figure out the art of the possible. We've got to prioritize because we can't have 30 things going on here. And so I think what I just said probably gives you your answer, right? We're looking at everything. We're seeing the degree of difficulty in certain transactions or potential transactions and then we're prioritizing from there. It's a great question, John. Thanks.

Thank you. And one moment for our next question. Our next question is going to come from the line of Alex Scott with Barclays. Your line is open. Please go ahead.

Hey, good morning. I wanted to see if you could provide some color on just normalized statutory earnings over a longer period of time. I get that you can't estimate it near-term. And I think there is still potentially a hockey stick down the line and it gets better. So I'm just trying to understand like you guys, I think, for years were kind of pointing to a handful of years out in the future that that would happen. I mean, is there still an inflection to consider here? I mean, can you help us think at all around what that could look like and how much it could change from a reinsurance deal?

Good morning, Alex, this is Ed. We plan to provide long-term statutory free cash flow disclosures next year. There is a lot of work involved in this, so I don’t want to say too much. Historically, I expect to see certain patterns continue, but progress has been delayed compared to expectations from five years ago due to cash flows this year. I anticipate a ramp-up because the legacy VA block will eventually run off, leading to capital benefits as we release the CTEs associated with it. I previously discussed the rationale behind our strategy regarding these initiatives. Currently, the actions we are taking to enhance capital may initially result in a decrease in free cash flow in those outer years, which we believe is justifiable since cash flows in those years appear strong. We have adopted a similar approach to cash flow timelines as we did in efforts to narrow the range of outcomes in market scenarios, where we are trying to stabilize the cash flow by sacrificing some capital generation in the longer term to improve capital generation in the near term.

Got it. Okay. That's helpful. The other thing I wanted to check on was just the product structure of Shield and whether it's being changed at all? I mean, I listen to what you're saying and when I hear Shield legacy block, or a Shield closed block, it makes me a little nervous that maybe there wasn't something quite right about that product beyond just combining the hedging program. I mean, can you just help identify like, is it simply like what you're talking about is just around the hedging or are there actually things about the product that needed to change?

Yes, Alex, it's Ed. It's the former. It's around the hedging. It's not around any statement on the profitability or the desirability of the old block of Shield.

I'll just jump in and say that does not mean we won't update the product with new features or new ideas, or new ways the products can be used. But obviously, I agree with everything Ed just said.

Thank you. Our next question is coming from an analyst with Wells Fargo. Your line is open. Please go ahead.

Hey, good morning. Thanks. A lot of my questions have been answered here, but I was just wondering if you could maybe give a little information on like if this reinsurance deal in the fourth quarter is going to be onshore or offshore, just to get an idea from like a timing perspective because I think we've seen a lot of these things kind of get pushed out and not really hit deadlines. So any color there would be helpful.

Nick, it's Eric. Look, I don't want to get into any of that stuff. I'll just tell you that we're confident that it will close in the fourth quarter. I get why you're asking the question. So hopefully, that answer works for you.

Yes. That makes sense. Then I guess going forward, like I appreciate the color on the new hedging program for the stand-alone Shield. But should we expect Shield sales to just continue at this strong pace? Or should we see a step down in the near term at all? Or how are you guys thinking about that?

I want to clarify something regarding the new hedging program for everyone on the call. From the beginning, we have maintained substantial protection on our balance sheet to guard against adverse market conditions. While we are implementing changes and exploring new business opportunities separate from our legacy block, I want to emphasize that we still have significant protection in place. We are continuing to target a statutory MAX first loss framework, which is an important point to avoid any misunderstanding about what the new hedging implies. Now, I'll hand it over to Eric.

Nick, I'll address this in a few ways. First, we want to ensure that we maintain appropriate capital within the operating company. Since the beginning, we have operated with a significant buffer at the holding company and plan to continue this practice. There are two key considerations: ensuring our capital levels are suitable and allowing us to write new business. Implicit in your question seems to be whether we plan to reduce sales. The answer is no, we do not intend to do that. October has been very strong for us. Our initiatives are aimed at achieving both appropriate capital levels and the ability to write new business. I hope this clarifies your overall question, Nick.

Yeah, it did. Thanks.

Thank you. One moment for our next question. Our next question comes from the line of Wes Carmichael with Autonomous Research. Your line is open. Please go ahead.

Hey thanks. Good morning. I just wanted to follow-up around separating the hedging strategy for new business and in-force, and can you maybe just talk about the changes for the legacy block that you're contemplating? It sounded like it still may do somewhat in flux, but I'm just wondering from a big picture conceptual standpoint, what you think makes sense there?

Hey, Wes, it's early for us to provide you any details. As I said in my prepared remarks, we are developing a separate hedging strategy, and we do expect this work to continue into 2025. And I know this came up yesterday on some of the calls. If you look at the footnote on normalized statutory earnings when we show that the TAC was up was up by 600 approximately and CTE98 was up by $1 billion. The related impact from that is just that as we are in this period of time developing this strategy, we can only reflect the hedges on our balance sheet for that block. And that was the reason for the statutory change. Now the net impact to RBC was insignificant. I would anticipate that given that this block is like a closed block and so is running off over time that there will be some stability in the profile of the hedges that you have related to that runoff expected over time. But other than that, I don't know that there is much we could say at this point.

Got it. Thanks. And I guess just since it's still in flux, I know you said 2025 for the free cash flow projections, but do you expect that to push the timing out a little bit?

I would say that we would want to have our strategy buttoned up before we would want to provide the statutory free cash flow projections.

Yeah, makes sense. And then I guess if can ask one more, just on the runoff segment, I think if we look at the core ex-notables number, that was maybe a little bit below year run rate. Is there anything going on in that segment this quarter that we should think about in terms of run rate earnings power?

Yes, I don't think so. I think if you look at our underwriting margin in the quarter, it was consistent with what we would assume to be a normal margin, but we did have worse than our normal assumption for Runoff, and that was offset by better than normal in Life. I think if you look at mortality in the year-to-date, it's generally been good. And this was another quarter that's consistent with what we would expect. It's just by segment, there was some volatility.

Yes, thank you.

Thank you. We have a follow-up question from the line of Alex Scott with Barclays. Your line is open, please go ahead.

Hey, thanks for taking the follow-up. I think it was mentioned during the remarks that there was a June reinsurer switch that occurred, I think it was like fixed annuities that improved sales. I just wanted to see if you could unpack that a bit for us.

Yes, thanks, Alex. This is David. We changed reinsurers earlier this year, and the new reinsurance agreement took effect in June. As a result, we saw a slight rebound in FRA sales in the third quarter, along with strong overall market demand.

Okay. And then final question for me. I just wanted to ask around the hedging program. I think at times, you all have had some tactical posturing like one way or the other on rates or I think more on the rate side than equities with your hedging. Just recognizing that rate has kind of spiked up here, particularly after the election. Could you help us think through like whether you had any kind of tactical posturing on this quarter? And just so that we have a good idea of how to think through marketing for rates and how that could impact you?

Hey, Alex, it's Ed. I wouldn’t say we have any tactical positioning on rates now. We definitely had some tactical positioning on rates before 2022, and since then, we’ve engaged in long-dated hedging to safeguard against low rates when the 10-year yield ranged between 3.5% and 4%. When we discussed rates and their effects in the third quarter, we were actually referring to how long rates dropped, I believe by around 50 to 60 basis points, but I wouldn’t hold me to that. In contrast, short rates decreased by about 100 basis points. This steepening of the yield curve resulted in a modest loss for us in the quarter.

Okay, got it. Thanks.

Thank you. And I would now like to hand the conference back to Dana Amante for closing remarks.

If everyone could hold on for just a moment, I think we're about to conclude. Believe it or not, we have just been informed that all the required approvals for the reinsurance transaction we discussed have been obtained. Therefore, we anticipate executing this as of September 30. Additionally, you have heard all the comments that Ed and I made during this call. With that, I will hand it over to Dana.

All right. Well, thank you. Thank you all for joining today, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.