Hello everyone and welcome to the Corbridge Financial Inc. third quarter 2024 earnings call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on the telephone keypads. If all questioners could please mute locally once they've asked their question to reduce risk of background noise, that would be greatly appreciated. I will now hand over to our host, Ishil Muduasolu, Head of Investor and Rating Agency Relations,

to begin. Yishu, please go ahead. Good morning, everyone, and welcome to Corbridge Financial's earnings update for the third quarter of 2024. Joining me on the call are Kevin Hogan, President and Chief Executive Officer, and Elias Habayab, Chief Financial Officer. We will begin with prepared remarks by Kevin and Elias, and then we will take your questions. Today's comments may contained forward-looking statements which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based upon management's current expectations and assumptions. Corbridge's filings with the SEC provide details on important factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. Except as required by the applicable securities laws, Corbridge is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change, and you are cautioned to not place undue reliance on any forward-looking statements. Additionally, today's remarks may refer to non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release, financial supplement, and earnings presentation, all of which are available on our website at investors.corbridgefinancial.com. With that, I would like to now turn the call over to Kevin and Elias for their prepared remarks. Kevin? Thank you, Isil, and good morning, everyone.

Today, I will review our results for the third quarter and tell how Corbridge Financial once again, delivered on our value proposition. Through our diversified business model, strong balance sheet, and focused execution, we continued to create shareholder value demonstrated by growth in earnings and cash generation and return of significant capital to shareholders. Moving to slide three, Corbridge had a very strong quarter as we grew operating earnings per share to $1.38, cents, a 31% increase year over year. Additionally, our run rate EPS increased 13% over the same period. With solid fundamentals across our diversified businesses, our core sources of income grew 4% year over year and 5% sequentially. Each of our sources of income, fee, spread, and underwriting increased year over year. We achieved these attractive business results while also maintaining a strong balance sheet, one supported by high-quality assets and liabilities, prudent risk management, and diversification. We're heavily focused on asset liability management, which is embedded across all facets of Corbridge. This strategy is driven by our liability profile, and our broad product portfolio reflects a long tradition of thoughtful product design and dynamic product management. Reflecting our risk management focus, Corbridge had no significant reserve adjustments as part of our 2024 annual actuarial assumption update. Given our strong foundation, Corbridge continues to create shareholder value through disciplined execution. Total capital return to shareholders for the third quarter was $848 million, including part of the proceeds from the sale of our UK life insurance business. Moving to start, market-leading businesses continue to serve customers' needs and support our distribution partners' strategies. Our addressable markets are significant, and each benefit from strong tailwinds given a large and growing retirement-aged U.S. population and a life insurance protection gap. The macroeconomic environment also continues to be supportive of our business. Interest rates at mid-durations are expected to remain at attractive levels, and new money rates were in excess of 6%. As Elias will expand upon, there may be some short-term impacts from lower rates at the short end of the yield curve, but these will be more than offset by growth in the overall portfolio over time. A steeper curve is generally better for our business. Now, turning to the businesses. In individual retirement, premiums and deposits increased 40% year-over-year to $5.5 billion. General account net flows, supported by strong sales volume and improving surrenders, were nearly $1.7 billion for the quarter and $5.3 billion for the year-to-date, a level that already exceeds what we reached for full year 2023. These strong flows in the general account continue to serve as a platform to drive current and future earnings. Last month, individual retirement expanded on what is already one of the broadest annuity platforms in the industry with the launch of our first registered index-linked annuity, or RILA. As part of the product development process, we leveraged the longstanding relationships we have with distribution partners and our deep understanding of their strategies. Our RILA brings together the most sought-after features already in the market, together with a lock strategy that is exclusive to CoreBridge. The product is already resonating with our partners, and we are pleased with the reception to date. Financial professionals at nearly 200 of our top distribution partners were positioned to sell our RILA from day one, making it our largest new product launch ever. Corbridge now stands as the only top three annuity provider with offering in every major product category. Group retirement produced another solid quarter. Excluding plan acquisitions, premiums and deposits grew 10% year over year. Advisory and brokerage assets under administration increased 22%, and plan proprietary annuity premiums and deposits increased 17%. The long-term growth opportunity for advisory, brokerage, and out-of-plan annuities is significant, as 1.6 million of our customers are in-plan only. Both in-plan and out-of-plan, our experienced team of financial professionals are an essential part of our success, and we have been investing to further improve their efficiency, resulting in an increase in average productivity per advisor of 15% year-over-year. Life insurance, an important part of our diversified portfolio, had a very strong quarter. Sales growth was 14% year over year, which continues to outpace the industry as it has for eight consecutive quarters. Our modern approach to new business is a key reason for this success. With our data-driven practices, 80% of newly issued policies are auto-discriminate. Building off this capability, we have developed a digital policy application process called Simply Now that provides a contemporary purchasing experience with the underwriting decision typically delivered in a matter of minutes. This feature is attractive to many financial professionals, facilitating further expansion of our life insurance distribution platform. Institutional markets also had a strong quarter. Reserves increased 20% year-over-year, supporting ongoing earnings growth, and we issued $1 billion of DICS this quarter, furthering our strategy to become a more regular issuer. With pension risk transfer, we see a robust pipeline of large potential transactions for the remainder of this year and going into 2025. As a reminder, we specialize in complex transactions that take time to develop and are not consistent quarter-to-quarter. Turning to slide five, we'll see the four strategic levers that CoreBridge is focused on to grow earnings per share and cash flows. The first is organic growth. I just spent a few minutes talking about our strong business fundamentals and the opportunities ahead. We believe CoreBridge will continue to grow our balance sheet organically, which will in turn contribute to increase earnings per share over time. The second strategic lever is balance sheet optimization. We will continue to pursue opportunities to actively manage both our assets and liabilities to drive higher return on capital. To this end, we are expanding our Bermuda strategy and continue to explore additional opportunities to enhance our financial flexibility. The third is expense efficiency. We successfully delivered on Corbridge Forward, the first phase of our modernization and expense efficiency program. As of September 30, approximately $320 million in savings have earned in from this program, and we expect the final $80 million to earn in through 2025. Quarriage is moving to the next phase of modernization. We are further digitizing end-to-end processes that support our insurance operations to improve the customer journey and the distribution partner experience. We are also building on the significant investments we made as part of our separation process to further modernize our finance and actuarial capabilities. We are committed to delivering improved performance and enhanced operational efficiency over time. The fourth lever is capital management. Corbridge remains focused on effectively managing capital to drive increased shareholder returns, executing on opportunities with the goal to provide an attractive and growing cash return to shareholders. Next, I want to spend a moment to update you on the progress we are making against some of our key financial goals. First, adjusted return on average equity. Year-to-date, we have delivered a run rate ROE of 13.3%, a 130 basis points improvement year-over-year, and well within our 12% to 14% target range. Quarter ROE represents a 315 basis point increase since the IPO. Second, operating earnings per share. Year-to-date, we have delivered run rate EPS of $3.70, a 13% improvement year-over-year. Discrete third quarter EPS represents a 36% improvement since the IPO. And third, capital return. Corbridge has returned $1.8 billion to shareholders over the first nine months of the year, and we are on target to achieve a payout ratio of 60% to 65% for the year, excluding proceeds from the sale of our U.K. life insurance business. Since the IPO, Corbridge has returned $4.3 billion of capital to shareholders, including over $1 billion from our international life divestitures. CoreBridge has consistently demonstrated the discipline to allocate capital to growth opportunities where risk-adjusted returns are the most attractive and where customer needs are the greatest while also delivering significant returns to shareholders and maintaining a strong financial position Looking forward, we are focused on growing earnings per share and cash flows and continuing to increase long-term shareholder value I will now turn the call over to Elias.

I will begin my remarks today on slide slick for our key financial results for the quarter. Corbridge reported adjusted pre-tax operating income of $1 billion or operating earnings per share of $1.38, a 31% improvement year-over-year on a per-share basis of $0.11. Alternative investment returns were approximately 7% in the quarter, which were two cents short of our long-term expected returns in traditional private equity benefited from a corporate event and mark-to-market loss from one investment in our hedge fund portfolio. As expected, equity returns improved for notable items and alternative investment for continued organic growth, balance sheet optimization, and income, excluding notable items grew by an increase in each of our sources. Fee income, which compared to 30% of the margin, and income improved 1% over the prior year. Behind the growth in base-spread income, sequential decline was driven by the impact of retirement repayments on higher-yielding assets to provide you with additional management actions, runoff of the portfolio, additional hedging activities sitting rates on assets have been a source of attractive yields complementing other tools we actively maintain alignment of the balance sheet currently floating rate liabilities a significant portion of these assets and their charge period certain macro hedges as part of our balance sheet management strategy same scenario I just mentioned any potential impact could equate to less than one basis point macro hedge, we adjust our positions relative to the prevailing market conditions. While we expect to see base income in individual retirement to continue to grow over time, we could see some pressure in the short term. Furthermore, we know markets spread with the growth in the business. Moving to slide eight, Corbridge has a long track record of delivering attractive financial results under different market conditions. We are not beholden to any one business or a reliable source of income, serves as a natural counterbalance to other sources of income and economic conditions. As we have declined, alternative investments have shown steady resilience over the longer A combination of our diversified, market-leading businesses working together is a shareholder value proposition. Individual business highlights. Individual retirement, adjusted pre-tax operating income grew by five, primarily driven by the growth in both spread. Surrenders continued to improve from their peak. Group retirement delivered another steady quarter through its combination of spread to a more capitalized, fee-based revenue. the changing dynamics in the business as our in-plant customers transition from employment to retain and fee income will take in net flows with raising from required minimum distribution by plan participants. Additionally, we've been informed that they're predominantly invested in our group mutual fund product, thus having a limited impact to operating income increased by expansion with minimal mortality experience. Institutional markets adjusted pre-tax operating income group 50% year-over-year, primarily driven by higher spread income per volume of gigaids. The financial results for the quarter demonstrate the benefits from multiple sources of income as well as the ability for insurance businesses and parent companies for over-year national life business, bringing our cumulative improvement from the end of 2022. It was driven primarily by expense efficiencies from CoreBridge forward. Looking forward to the fourth quarter, we expect now turning to the annual actuarial assumption update. This year with limited impact on operating earnings, continues to maintain a strong balance sheet and our ability to generate consistent cash flows from our insurance subsidies with the flexibility of the company liquidity remains strong at $2 billion and a life leap of $250 million dollars of our debt maturing in 2025. Adjusting for the pre-funded, our financial leverage ratio would have been 29.6%. Distributions from the domestic insurance companies were 550 year-to-date distribution to 1.7 billion dollars. A 10% increase to distribute over 2 billion dollars into, in conclusion, shareholder value as demonstrated by the growth in our And turn the call back to issue.

As a reminder, please limit yourselves to one question and one follow-up. Operator, we are now ready to begin the Q&A portion of the call.

Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. When preparing to ask your question, please withdraw your unmuted locally. We ask that all questioners please mute locally once they have asked their question to reduce the risk of any background noise. And as a reminder, that's our follow-up one. Our first question comes from Alex Scott of Barclays. Alex, your line is open. Please go ahead.

Financial flexibility, I think you're...

I can barely hear you. Can you speak up?

My apologies. Is that better?

Better, thank you.

So I just wanted to ask about the additional opportunities for financial flexibility. I know you all have already done a lot on this front, but was hoping you could add some context on what you're looking at specifically.

So, Alex, it's Elias. So, you know, as you know, we're very proactive with managing our balance sheet, and we look for opportunities to improve our financial flexibility as we did with our Bermuda strategy, as well as look for opportunities creating shareholder value as we did with the International Life Operator. The Bermuda strategy is progressing, as we've talked about before, whereby we're leveraging the support new business generation in individual retirement. that reduces some of the strain we have on new business, and that's part of the strategy to grow earnings and cash flows over time. Bermuda?

Understood. Thanks. One of the things I noticed in the presentation was just reference that you're generating expense efficiencies beyond just Corbridge Ford, and I was interested if you could give us more color on some of the things you're doing there and what you're doing.

to... Yeah, thanks, Alex. Look, Corbridge Forward gave us a great start. And, you know, through it, we updated our operating model. We modernized a lot of our IT infrastructure. We moved a lot of that infrastructure to the cloud. All of our IT is now sitting in one version of the cloud or another. We exited our data centers and we upgraded most of our enterprise platforms, including some of the finance and actuarial platforms, you know, in part in preparation for LDTI, but also in part in preparation for the separation. And so the next phase is actually being able to put a lot of that capability and tools to work, and the areas that our immediate focus are, you know, after transitioning much of our middle and back office insurance operations work, we now have the opportunity to automate and digitize that and eliminate a lot of the work associated with it while improving the underlying customer and distribution partner experience. And then we also have an opportunity to further enhance our finance and actuarial practices. Those are the two, you know, immediate areas of focus because of the tools that we put in place along with the investments that we made preparing for separation. We don't have a particular target or announcement program in place at this time. We're working through the plan, but this modernization journey has just

begun for us. Very well. Thank you. Thank you. Our next question comes from Wes Carmichael of Autonomous Research. The line is open. Please go ahead. Hey, thank you. Good morning. First

question is on Ryla. You talked about being up and running with a number of distribution partners on day one. I guess, how are you thinking about the contribution from Ryla maybe in 2025? How

Yeah, thanks. Look, I mean, RYLA has been one of the fastest growing parts of the market over the last couple of years. And the reality is our largest distribution partners have been asking us to provide a RYLA entry. And, you know, we feel we brought our historical creativity, you know, to our version of the product. And frankly, the initial reception has been very strong in the first couple of weeks. But it is just the, you know, the first couple of weeks. the pipeline is building quickly the number of producers that have been trained on the product is increasing on a daily basis and we're seeing that pipeline continue to build and we're excited about the Ryla product because it has attractive margins it supports our overall diversification and it fits in our overall strategy which is to support our distribution products partners with a range of products that support different customers' needs and risk appetites at different times. And the Ryla product supports a different customer risk appetite than indexed annuities or the variable annuity product. And so we're seeing an expansion of our overall capabilities there. In terms of what it may contribute in 2025, you know, each of our individual retirement products are in a strong position and contribute attractive margins. And so we see it as a strong complement, but aren't prepared to talk about any targets at this point in time.

Okay. Thanks, Kevin. My follow-up was on capital and thinking about Bermuda. And you talked about it a little bit, Elias, but going forward, should we expect cash flows to the parent company from your Bermuda company, or should we really expect you to kind of effectively utilize the excess capital if they're to support new business from individual retirement?

Yeah, thanks, Wes. So, look, I mean, as we've talked about before, we think of Bermuda as the next tool in our capital management toolkit. It provides, you know, a lot of opportunities, you know, for us. Right now, we're focusing on our fixed and indexed annuity new business, but there's other products that may benefit from us, you know, seeding new business into Bermuda. We could potentially engage in portfolio transactions on the in-force business, and then ultimately Bermuda is an environment that has been attractive for attracting third-party capital, which is an option we'll consider at an appropriate point in time. But all of these, we look at as part of our capital management toolkit, which is designed to facilitate our ability to invest in new business at attractive margins and then be able to maintain a strong balance sheet and provide an attractive and growing cash return to shareholders over time.

Our next question comes from Sanit Kemar. Sanit, your line is open. Please go ahead.

Thanks. I wanted to start with annuities. Kevin, the industry sales have been strong. Your sales have been strong. Held up pretty well, even with the pullback in rates in the third quarter. So I guess the question is, how sustainable do you think your level of sales, industry level of sales, is as we kind of move from this year kind of into next year?

Yeah, thanks, Tuneet. What I would say is that the underlying drivers for the annuity industry don't change with the short end of the curve. And really the need for people in this country to plan and prepare for their own retirement is huge and getting larger. And structurally, I think that's one of the things that, you know, has driven the opportunity. Now, certainly the environment the last couple of years has been very favorable, but it's really the five- to ten-year part of the curve that's most relevant in pricing, you know, the annuities products to spread businesses. And that part of the curve, based on the current outlook, is going to continue to allow for these products to be a a very attractive part of a long-term savings plan. The second thing I would say is that the advisor community, you know, there's been a whole new range of advisors in the last couple of years that have learned about the value of annuities as part of that long-term savings program. And so we believe that the conditions for, you know, the annuity business are going to continue to be very supportive. and so whether the volumes will, you know, continue at the pace of the last couple of quarters is really going to depend on what the conditions are each quarter, where interest rates are, and where people believe interest rates are going to go.

Got it. And then I guess, Elias, on the face spread income commentary that you had in your prepared remarks, I guess I was hoping you could unpack that just a little bit because what I wasn't clear on is how much of this impact and pressure that you talked about is actually going to happen and sort of how much of it could happen if the Fed decides to move a certain way. So can you just maybe revisit that with a little bit of granularity?

So, you know, the sensitivity we gave, you know, to the extent there's a 25 basis point rate cut and we've already had 50, is the impact on us from a base net yield perspective is less than two basis points. And to put that in context, you know, we've increased our base yield by over 100 basis points in the beginning of 20. Sometimes income in individual retirement will grow over time and then work the Fed.

Okay, thanks.

Our next question comes from Ryan Kruger of KBW. Ryan, your line is open. Please go ahead.

One more follow-up on the short-term rate. Just wanted to make sure I understood macro hedges reduces that total basis point.

Hey, Ryan, it's Elias. No portfolio, the sensitivity is less than part of our active in managing. I think we've actually reduced these positions over the course of the year. And based on what the outlook is now, there's a chance that I think we'd expect to look at the macro hedge as kind of a little different. The only reason we're giving that look at the investment portfolio, that's where the true sensitivity is. And every 25 basis point, we've increased it by over 100 basis points.

In 2025. There are a number of variables that play in earnings as well as the longer-term trajectories.

We expect to be growing earnings as well.

And, Brian, hey, this is Kevin. I'll just jump in. Each of our businesses is actually in a very strict sense. I think, you know, we've explained the difference between the overall dynamic of new sales being at very attractive margins and expected to continue to be where the middle of the curve, five to ten years, is anticipated, you know, to be. There are some short-term impacts, as Elias just described. but we see an attractive ongoing condition for this business. In group retirement, fee income now exceeds spread income. This is a dynamic we've been talking about in this portfolio some time, and the sources of our spread, our fee income, like the input percent year-over-year, the advisory and brokerage asset base is up 22 percent, out-of-plan assets are up 11 percent. So group retirement, you know, continues to, I think, you know, grow its potential sources of earnings. Our life business is in excellent shape. We've outgrown the market eight quarters in a row after really focusing our portfolio on, you know, less interest-sensitive parts of the business, and then institutional markets is in a strong position. So, you know, this short-term impact on spreads, I wouldn't overstate. Our multiple sources of income, that's a strategy that, you know, we benefit from in different market conditions. and each of the businesses is well-positioned relative to its market.

Thank you.

Thank you. Our next question comes from Tom Gallagher of Evercore. Tom, your line is open. Please proceed.

First question on capital management, second one on asset liability management. But the capital management question is just obviously a very strong level of share repurchase in 3Q. Can you remind us, A, how much you've used up from the U.K. life proceeds and how we should think about a run rate heading into 4Q? If I just look at normalized buybacks from capital generation, it's probably half of that amount you did in Q3. But curious if you still have access that you might lean into if there's opportunities in the fourth quarter.

So, Tom, it's a lot. So our target capital, overall capital return, both share repurchase dividends is 60% organically. The U.K. proceeds were extra meaningful portion.

What you said about the floating rate, 8% of the general account, mainly backing annuities outside of surrender charge. I presume that's an ALM set up to prevent against a rising rate shock type scenario, just thinking about why you would position it that way. So we'll call it more hedge-oriented, defensive-oriented. Given that we're seeing a change in the macro Fed beginning to cut rates, would you consider repositioning that or hedging it in a way where it, you know, we'll call it maybe optimizes the change in macro here? Or are you comfortable just with this big floating rate portfolio backing that block?

Yeah, hey, Tom, it's Kevin. You know, I think I'll jump in here. Let's unpack it a little bit. So, you know, we always manage ALM and our ALM equation carefully as part of our balance sheet management. And as interest rates change, dynamic changes, you know, that will change. You know, either the liabilities will lengthen or shorten. And, you know, as we saw a couple of years ago when interest rates started to rise sharply. And so floating rate assets play an important role for us, you know, in ALM in helping manage duration. And as the overall, you know, shape of the yield curve changes, that will determine the length of the liabilities and will dynamically manage our floating rate portfolio accordingly. But another role that the floating rate assets play is liquidity, you know, relative to particularly annuities that are outside the surrender charge period. And just as a reminder, we never have reinsured our back book, and we've benefited from that. in the environment. We continue to benefit, actually, from that enforced business, but the floating rate portfolio has been a part of that benefit to that enforced business. So, you know, floaters are not purely from a perspective of ALM, but they've been very attractive risk-adjusted returns, and we respond to that. We do have some shorter-dated liabilities that they support, particularly in the annuities business. The last couple of years, some of the three-year, or four-year surrender business has become more popular. And then we also have the annuities outside of surrender. So we'll continue to dynamically manage the floating rate portfolio. It isn't just a defensive hedge the way that you described it.

Thanks for that.

Thank you. Our next question comes from John Barnage of Piper Samba. John, your line is open. Please proceed.

Good morning. Thank you for the opportunity. Your comments about the required minimum distribution being larger than normal, given the percent withholding moves higher, is it with higher markets? That's how we should be thinking, or is it because baby boomers are reaching more peak retirement years and pulling on that as a cohort generally from a participant's perspective? Thank you.

Yeah, John, I think you're talking about the RMDs and group retirement business. It's a seasonal effect in the fourth quarter as people need to meet their minimum distributions. It's something that we see almost every fourth quarter, and it sometimes has the effect of as much as doubling what we would normally see in regular distribution.

Yeah, and, John, if you go a little to Kevin's point, you look back at our trends in the past year, it's the same trend, and we're not expecting anything different this fourth quarter.

Thank you very much.

Our next question comes from Elyse Greenspan of Wells Fargo. Elyse, your line is open. Please go ahead.

Hi, thanks. Good morning. My first question is just on PRT deal flow. I think it's been a little slower since the first quarter. I just was hoping to get an update there just in terms of the environment and the pipeline for transactions you see over the balance of this year into 2025.

Yeah, thanks, Elyse. So, you know, just a reminder, we do focus on full-plan terminations. We've focused on full-plan terms really since 2016. We find the market, you know, we find the economic, you know, more attractive in the full-plan terms because they're a little bit more complex transactions. And, you know, there's fewer companies that have prepared the administration to be able to support them. We continue to see a very strong pipeline of full-plan terminations. Because of the complexity of these, they don't land necessarily every quarter. And I described that, you know, the pipeline for the remainder of this year is attractive. In fact, we've already landed a decent-sized transaction for the fourth quarter that we've been working on for a number of quarters. And we see the pipeline going into next year also very attractive. So, you know, in the medium term, we continue to see very attractive economic opportunities. The pipelines are full. The transactions are moving forward. Plans are largely funded. And activity levels remain high both in the U.S. and in the U.K.

Thanks. And then my second question is on capital as well, right? So $2 billion apparent when we, you know, take into account the pre-funded debt, you know, still, you know, pretty healthy level, right? made it $1.5 billion. So, you know, obviously that's been helped, right, by some of the transactions that you've done. As we just think about, you know, going forward, when do you think you might, you know, bring that down, right, more? I think you've spoken in the past, right, to kind of keeping that in line with, you know, annual needs.

Hey, Lisa, it's Elias. So as we've said in the past, we manage our parents' liquidity to cover the next 12-month needs. And I think you've seen, we've worked through a lot of the one-time expenses we've had. The parent expenses are down from over $200 million run rate down to about a $150 million run rate. So that's all contributing to a lower need of the parent. The $1.5 billion that you're referencing right now at the end of the quarter, which excludes the $500 million we've earmarked for the early 25th maturity, is in excess of that 12-month need, and consistent with what we've said.

Thank you. Our next question comes from Wilma Burdis of Raymond James. Wilma, your line is open.

Please go ahead. Hey, good morning. You touched on this a bit earlier, but could you talk more specifically about the proportion of fixed annuities that have been written over the last couple of years in terms of three-year duration, four years, five years, seven years? Maybe just talk a little bit about that. Distributors have mentioned to me that three-year fixed annuities have been most popular during the recent period of higher rates, so I just wanted to see if

that's what you're also seeing. Thanks. Yeah. So, Wilma, in terms of the dynamics, generally, depending upon an investor's position, clearly the short duration products would be attractive for customers that see less certainty in the longer-term rate environment than the longer-term. There were definitely periods when the rate curve started to change There was a lot of uncertainty around there, so quite a bit of the shorter duration product was attractive to customers at that time. But more recently, with some broader perspective on where medium-term rates may be, in particular the 5- to 10-year part of the curve, we've seen a return to the more traditional 5- and 7-year surrendered products. and it really is something that depends on the strategy of each of our distribution partners and the position of a given customer and what fits with their long-term portfolio expectations over time. So we don't necessarily have a strategy of directing towards one duration or another. Our strategy, as with all of our products, is to have multiple solutions available. Those include both products with income benefits or products that are accumulation-focused or products that are short or medium or long duration. And, of course, we've just rounded out our portfolio with our new RILA product, which we're looking forward to further developing.

I think you touched on this a little bit earlier as well, but the environment actually looks somewhat favorable for me to need to continue to sell annuities, especially fixed. And as you mentioned, it sounds like you're seeing longer dated products as well.

So is that what you're seeing? Thanks. I think the environment continues to be excellent for annuities among our other products. And, you know, as I mentioned earlier, the demand is definitely there. The advisor community understands the value of these products, especially at the kind of rate environment that we anticipate being able to continue to see. And so, yes, I mean, we're seeing a lot of demand for fixed annuity. The demand for fixed annuity is a little bit more reflective of the immediacy of where rate changes are. But the demand for index annuity has been consistently growing over time. There's a particular part of the investor appetite that still very much appeals to a traditional variable annuity, and then the RILA, you know, speaks to, you know, a risk appetite that's a little bit more aggressive than would be interested in an indexed annuity, but maybe not all the way to the appetite of a traditional variable annuity. So, you know, across the board, the environment for the annuity industry remains very attractive.

Thank you.

Thank you.

Our next question comes from Josh Danker of Bank of America. Josh, your line is open. Please go ahead.

Thank you very much. I just want to talk about given the strong respectivity in the quarter, how much excess capital do you have, not just the buffer you have, but the amount that you would want to be returning to shareholders, remaining from the M&A transactions and just your capital optimization overall? And are there any thoughts at all about long-term cash flow conversion on your earnings, whether it can be pushed higher than you have said in recent conference calls and whatnot?

You know, what I would say is this. Our balance sheet is a very strong position. We've been proactive in managing it to make sure that we're above our targets. Parent liquidity is above kind of what our parent needs are. we've you know we've been pursuing opportunities to improve our financial flexibility and there are other and when it comes from a good job there and I think if you look at that balance sheet and

so everything about modeling out do you intend to operate above your long-term capital ratios for the long term or do you expect to get those down to in line or in target with range with your

The way we look at the balance sheet is not just looking at one metric. The way we look at the balance sheet is, you know, we look at our capital ratios, our leverage profile, our liquidity profile, as well as the risk profile of the balance sheet. And that kind of, what are we comfortable with, has to be at $400 or $410. We look at it collectively.

Thank you for the description of the language.

Thank you. Our final question of today comes from Dan Bergman of TD Cowan. Dan, your line is open. Please go ahead.

Good morning. Maybe just on alternative investment returns, they were still a little bit below long-term expectations in the quarter, but continues to show nice sequential improvement. Based on the prepared remarks, it sounded like there were some noise and one-off items in the quarter. But first, I just wanted to see if you had any initial view into what you'd expect for alternatives in the fourth quarter. And then maybe just more broadly heading into 2025, Would you expect alternative returns to be back at long-term levels, or could the higher interest rate environment cause some ongoing pressure?

So, listen, we had a really good quarter in the third quarter. If you look at what's the trend been, to your point, the returns have been improving. We expect the fourth quarter to be another good quarter. I don't think it's going to be as good as the third quarter, given we had a corporate event and some FX benefits on the foreign funds that we had invested in. So our best insight based on what we know today, it will be between where the second quarter is and where the third quarter was. Looking into 25, listen, we continue to believe our long-term expectation of returns being in the 8% to 9% range. And obviously, as you know, there's macro fact now beyond what's our long-term expectation around variables.

That's really helpful. Thanks. And then maybe just a quick one on life insurance. It sounded like the strong earnings there were driven by favorable mortality. So I just wanted to see if you could give a little bit more color on the experience in the quarter and kind of trends you're seeing in that business. And should we expect any go-forward impact to run rate earnings or change in volatility levels from the recaptured business?

So let me start with the recaptured business. So that was a decision on our part to take a lot of economic sense to recapture it. And as we look forward, we don't think that adds any meaningful incremental potential volatility. In fact, on run rate, the earnings is limited on an annual basis on recapturing that treaty. Mortality, listen, mortality can be volatile from quarter to quarter, and their seasonality around it when, you know, second and third quarter tend to be lower first and fourth quarter. Back the last couple years, you know, we've been experiencing mortality experience in line with our pricing expectations or that there could be volatility more to mortality.

Yeah, what I would say, I would just add, look, we've worked hard in the life business. We're very comfortable with the product range that we're focusing on right now, which is less interest sensitive. We've made investments in our digital and automated underwriting capability that are really paying off. We've been focused on mortality not just recently, but for a very long time. You know, we've had a long-term suite for many, many years. And, you know, the third quarter mortality was not just within pricing expectations, but, you know, well within pricing expectations. You know, we feel really good about the position to serve the need for the protection gap in the U.S. Our consistent growth has shown that. In terms of what the mortality will be, even in a large portfolio, mortality can be volatile from time to time. So we're very comfortable with our position in the life business.

Yeah, that's very helpful.

So thank you. Thank you very much. So thanks, everybody. As I conclude today, I want to share a few words of gratitude with my colleagues at Corbridge. This has been a remarkable two years since our initial public offering. And thanks to all of you, we're living our purpose every day, where we help people to take action to plan, save for, and achieve secure financial futures. I'm grateful for all of your outstanding work and your ability to do work. Thanks, everybody, for joining the call, and have a good day.

Ladies and gentlemen, this concludes today's call. Thank you for joining our Disconnect Your Lines.