Welcome to the Reinsurance Group of America Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. After today’s prepared remarks, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Todd Larson, Senior Executive Vice President and Chief Financial Officer.

Thank you. Welcome to RGA's fourth quarter 2023 conference call. I'm joined on the call this morning with Tony Cheng, RGA's President and Chief Executive Officer; Leslie Barbi, Chief Investment Officer; and Jonathan Porter, Chief Risk Officer. A quick reminder before we get started regarding forward-looking information and non-GAAP financial measures. Some of our comments or answers to your questions may contain forward-looking statements. Actual results could differ materially from expected results. Please refer to the earnings release we issued yesterday for a list of important factors that could cause actual results to differ materially from expected results. Additionally, during the course of this call, the information we provide may include non-GAAP financial measures. Please see our earnings release, earnings presentation, and quarterly financial supplement all of which are posted on our website for a discussion of these terms and reconciliations to GAAP measures. Throughout the call, we will be referencing slides from the earnings presentation, which again is posted on our website. And now I'll turn the call over to Tony for his comments.

Good morning, everyone, and thank you for joining our call. Last night, we reported adjusted operating earnings for the fourth quarter of $4.73 per share, and for the full-year of $19.88 per share. Our adjusted operating ROE, excluding notable items, was 14.4% for the year. The quarter included favorable investment and very strong GFS results along with strong organic new business and in-force transaction volume. Our underwriting experience was in line with expectations across the enterprise. This capped off a very strong year. We are excited with the great momentum in our business with our global platform, positioning us for continued growth and success. We entered 2023 with the priorities of delivering on earnings and ROE targets, as well as accelerating our new business growth all while taking an active and balanced approach to capital management. We have delivered on all these three priorities: Firstly, we produced record EPS and strong ROE results. Second, as measured by our internal metrics, we produced a record level of new business value, which was up significantly from 2022. You will also see on slide 17 in the earnings presentation that the value of business subject to LDTI increased by more than $3 billion in 2023, primarily attributable to new business won during the year. In addition to the volume, I am also very pleased with the breadth and quality of the new business we delivered. We had strong results across many of our businesses and geographies with a significant percentage of our new business under exclusive arrangements. These types of arrangements create greater strategic value, which gets shared between our clients and RGA. And the third priority we delivered on was our active and balanced capital management. During the quarter, we deployed $346 million of capital into in-force transactions, bringing the year-to-date total to a record $933 million. We were active across the globe with the U.S., Asia and EMEA, all contributing to our in-force transaction success. In addition to supporting our clients through deploying capital into our business, we also returned $419 million to shareholders via dividends and buybacks during the year. Finally, we launched Ruby Re, further diversifying our sources of capital to fund our exciting future growth. Our optimism for the future is fueled by our continued success in our four areas of notable growth that we have previously communicated. Starting with our longevity and PRT business. In the U.S. PRT market, we closed our third transaction. In a very short period of time, we have established ourselves as an active and key player in this market, and we are optimistic about our prospects going forward. In the U.K. longevity space, where RGA is a clear market leader, the team has had an outstanding year, innovating in various segments of the longevity market. Based upon the current environment for global longevity business, we expect 2024 to be another very active and productive year. In our Asia Traditional segment, we continue to see positive results, bringing product development and underwriting solutions to our clients to help fuel their growth and share in their success. In China, in the fourth quarter, we launched a simplified issue medical product with a major insurer to complement the successful critical illness product we spoke about during Investor Day. In Hong Kong, we launched a product with a market leader to provide a more inclusive form of critical illness to individuals that could not previously gain coverage. This supports our purpose of making financial protection accessible to all whilst furthering our business strategy. In our third area of notable growth, the asset-intensive business in Asia we executed transactions that combined our strength of product development with coinsurance and continued to innovate across the region to support a very active transaction pipeline. And finally, in U.S. Traditional, we closed some nice in-force blocks in Q4 and also partnered with our clients and distribution entities to drive profitable new business growth. As announced, we also made an investment to further our capabilities to support clients in digital underwriting and fulfill their purpose of closing the protection gap in the middle market. I would be remiss not to also mention the collective group of all our other businesses where we have incredibly talented teams and market-leading positions. For example, we were able to finalize an attractive asset-intensive transaction in the U.S., due to our long-term client relationship and reputation for execution certainty. In addition, we announced yesterday an asset transaction in Belgium, and we are hopeful of seeing other transactions across Europe, similar to what we have seen in Asia and North America. As proud as I am about all these accomplishments, I am even more excited about the future, building on our strong foundation created by the talent, expertise and integrity of all our people around the world. Reflecting this positive outlook, we have updated our financial targets, as shown on slide 18. We have provided new earnings run rates and reiterated our intermediate EPS growth targets on this higher base. In addition, we increased our expected ROE range to 12% to 14%. I am clearly confident in our ability to continue to deliver growth at attractive returns to our shareholders for many years to come. Our growth prospects are built on our core principles of strong risk management combined with our entrepreneurial spirit to create new innovative solutions and share with our partners in their success. Thank you for your interest in RGA, I will now turn it over to Todd to discuss the financial results.

Thanks, Tony. Moving to the quarterly results, RGA reported pretax adjusted operating income of $386 million for the quarter and adjusted operating earnings per share of $4.73. For the full-year, we reported record adjusted operating earnings per share of $19.88. For the year, adjusted operating return on equity, excluding notable items, was 14.4%. We are very pleased with the strong results, as well as very strong new business volumes and capital deployment. Investment results for the quarter remained favorable. Reported premiums were up 19.2% for the quarter. For the year, premiums totaled $15.1 billion, representing an increase of 16.3% on a constant currency basis. The increase includes $500 million in premium from a U.S. PRT transaction in the fourth quarter, PRT premiums for the full-year totaled $1.5 billion. As Tony mentioned, we have strong momentum in new business activity and expect to continue to see attractive premium growth over time. The effective tax rate for the quarter was 18.2% on pretax adjusted operating income, below the expected range primarily due to the distribution of earnings across the globe and generation of certain tax credits. The effective tax rate for the full-year was 21.5% on pretax adjusted operating income. Turning to the quarterly segment results, starting on slide seven in our earnings presentation. The U.S. and Latin America Traditional segment results reflected favorable group and individual health experience and slightly unfavorable claims experience and client reporting adjustments in individual life, which had a larger financial impact due to the mix of experience between capped and uncapped cohorts. As we've previously discussed, under LDTI, experience on capped cohorts is reported in the current period. For uncapped cohorts, a portion of the underlying mortality experience is reported in the current period earnings and the remaining experience is spread into future periods. On a year-to-date basis, the underlying experience in the Individual Life business was favorable. The U.S. asset-intensive business results were strong reflecting higher investment spreads, including those on floating rate securities. And our Capital Solutions business continues to perform in line with our expectations. The Canada traditional results reflected unfavorable group claims experience and impact from a one-time item of approximately $8 million. The Financial Solutions business reflected favorable longevity experience. In the Europe, Middle East and Africa segment, the traditional business results reflected unfavorable mortality experience, most of which was recognized in the current quarter. This was partially offset by a positive impact on new business in Continental Europe. EMEA's Financial Solutions business reflected favorable longevity and other experience, including improvements in reporting. Turning to our Asia Pacific traditional business. Results reflected favorable underlying claims experience, a small portion of which was recognized in the current period. Asia Pacific Financial Solutions business reflected favorable investment spreads and strong new business. The Corporate and Other segment reported a pretax adjusted operating loss of $23 million, less than the expected quarterly range, primarily due to higher investment income. Moving on to investments on slides 10 through 13. The non-spread portfolio yield for the quarter was 4.86%, reflecting higher yields. For the non-spread business, our new money rate rose to 6.65%, reflecting a higher allocation to private assets in the quarter. Credit impairments were minimal and we believe the portfolio is well positioned as we move through ongoing economic uncertainties. Related to capital management, as shown on slides 14 and 15, our capital and liquidity positions remain strong. We ended the quarter with excess capital of approximately $1 billion. In the quarter, we deployed $346 million of capital into in-force transactions, bringing the year-to-date total to a record $933 million. In the quarter, we also returned a total of $106 million of capital to shareholders through $50 million of share repurchases and $56 million in dividends. We expect to remain active in deploying capital into attractive growth opportunities in our organic flow and in-force block transactions and returning excess capital to shareholders through dividends and share repurchases. As Tony previously mentioned, during the quarter, we successfully launched Ruby Re, a Missouri domiciled third-party reinsurance company. Alternative capital has been part of RGA's capital management strategy for a long time, and Ruby Re is another source of capital to support our growth. As part of the launch, RGA executed an initial retrocession of $2.5 billion of existing liabilities. During the year, we continued our long track record of increasing book value per share. As shown on slide 16, our book value per share, excluding AOCI, increased to $144, which represents a compounded annual growth rate of 10.4% since the beginning of 2021. A metric I want to highlight is the value of business subject to LDTI as presented on slide 17. This represents expected unrealized underwriting margins, which demonstrates the long-term value of this business. We introduced this metric back in June at our Investor Day. The unrealized underwriting margin is calculated as the expected present value of our future premiums, less present value of claim benefits and treaty allowances for the part of our business with reserves subject to LDTI financial reporting. These values are derived from the cash flows used to determine reserves, which are based on current expectations and are reviewed as part of the annual audit. During 2023, this value increased to approximately $27 billion, up $3 billion or 15% from the end of 2022. The primary driver was the strong new business written during the year. To summarize, based on our current expectations, over $27 billion of pretax unrealized underwriting margin exists for the business that is already on our books. While these margins don't consider investment income or general expenses, they are expected to significantly contribute to future earnings. I want to emphasize again the current measure only contains business subject to LDTI and excludes certain asset-intensive and short-duration business. As we've discussed, 2023 was very strong for RGA and results were ahead of the intermediate term financial targets and run rates provided at our Investor Day. The primary drivers of the outperformance were favorable impacts of higher interest rates, strong new business, and favorable experience. Considering these dynamics and the continued strength of our underlying business, we have updated our current run rates and reiterated our intermediate growth targets, as shown on slide 18. We have also increased our intermediate return on equity target range to 12% to 14%. These updated run rates now represent the base from which we expect to achieve our intermediate growth targets. We believe these updates appropriately reflect our strong momentum and earnings power as we look to the future. We continue to see good opportunities across our geographies and business lines, and we are well positioned to execute on these opportunities and our strategic plan. We are very excited about the future and expect to deliver attractive returns to our shareholders. This concludes our prepared remarks, and we would now like to open it up for questions.

The first question comes from Jimmy Bhullar with JPMorgan. Please go ahead.

Good morning. I had a couple of questions first on just the difference between net and operating income. I think you had a decent amount of derivative losses and losses on sales of investments. So if you could just give us some color on what really drove each of those items?

One, Jimmy, it's Todd. One item is, I think what we refer to as B36 of the embedded derivatives. That's on the funds withheld type reinsurance treaties that we've had over the years. So that had part of the impact. And then some of the derivatives that we use in some of our currency investment strategies had a negative impact. And then we had some capital losses as well.

Okay. And the losses on sales, are those related to repositioning of the portfolio on deals and stuff? Or is it just normal sales because of credit deterioration?

Hi, it’s Leslie. Yes, on the unrealized losses, it was things like extension trade, normal trading cash management and relative value. There were a few specific credit exposures you managed, but it's predominantly just normal course decisions and portfolio repositioning. And as you know, the portfolio market values are still somewhat below book value for people generally just because interest rates had risen so much in 2022 and into 2023.

And then just on the portfolio as well. If I look at your new money yield, it was already pretty good. It went up even more in 3Q. And I think you're almost 300 basis points above their 10-year treasury yield is. So you mentioned private that you're doing a lot more privates, but the yield seems very high. So just talk about what it is that you're investing in and your comfort with the credit quality? And what's really driving the increase in human yields?

So there, we, in this quarter, not every quarter is exactly our target asset allocations over time, but there were some great opportunities in private. So disproportionately, we had more of this quarter that explained really the full change quarter-over-quarter. But if you look at underlying still investment grade corporates were the largest allocation. And we had covered a bit in Investor Day. I know we normally don't spend a lot of time talking about investments, but we have a very broad platform. So we do have an excellent mix of opportunities across both public and private. And so there's a lot of premium we can add over just straight publics when we're investing. And on top of that, so there are some areas like TMLs where there's still very good opportunities because there's probably more interested borrowers than lenders given banks backing out of there, and we had really good opportunities there in rate-locks. So that's some of it.

Thank you.

The next question comes from John Barnidge with Piper Sandler. Please go ahead.

Good morning. Thank you for the opportunity. As we think about new business generation, and I'm just trying to think about how much of that is now coming from boutique one-to-one solutions than just winning on price? Maybe leveraging the data and solutions you have to really grow that volume in the flywheel. Thank you.

Let me take that, John. Really, I just want to firstly just reiterate our strategy, which hasn't changed, which is, we, as I mentioned in my comments, we've got this incredible risk management and pricing capability. And when you combine it with the entrepreneurial spirit, the collaboration between our great people, this leads to innovation leading to growing market share. And as I said during Investor Day, it's very important for our growth to continue to grow reinsurance markets and grow underlying insurance markets. So to answer your question, I'm really delighted with the proportion of our new business that came from what we call Creation Re. Broadly, it's really pursuing exclusive transactions where we're able to provide the idea, provide the innovative solution, hopefully give the partner that we partner with an edge to create greater value for that company and we share in that value. So what I'd say, I'm not going to give you a specific number. We set a target; we well exceeded that target during the year. We'll obviously up our targets internally for 2024. But really, delighted with how that's going. And it really shows the strength of our strategy, the strength of our people and really the excitement within the organization.

That’s very helpful. Thank you. My follow-up question is, Variable investment income has been rather relatively strong. Can you maybe talk about your near-term outlook for transaction volume within that? Thank you.

Hi, this is Leslie. Yes, so we had a very good solid quarter there on variable investment income. It was modestly above what we expected. I think if you think about the composition of our portfolio that drives that, which we have been strategically building over the last 10 years, we get sort of balanced sourcing from private equity and real estate. I would say that generally in the market, obviously, with 2023 not an amazing year for M&A and things that tends to drive less activity of realizations in the private equity portfolio. And on the real estate front, we have an in-house team and we're the ones picking those investments; we're the ones that are thinking about when is the best time to sell them. So I'd say part of 2023, certainly, there was probably in the marketplace in general, still a separation between buyers and sellers. I think there's some more activity picking up there. But for us, it's really about the specific holdings that we have and what makes the best sense about when to sell those. So I think we'll continue to have a probably similar year in 2024 in terms of total VII possibly a touch lighter, but we had a couple of years of really, really robust. This environment is a little less robust, but we're still moving around that long-term average return that we communicated in Investor Day of 10% to 12%.

Thank you. Appreciate it.

The next question comes from Joel Hurwitz with Dowling Partners. Please go ahead.

Hey, good morning. So I appreciate the updated disclosure on the unrealized under margins. Can you just take me through the moving pieces of the $3 billion growth? I think you mentioned $2 billion is new business. I guess what is the other $1 billion? Is there net favorable experience that flows through that?

This is Todd. I'll start, and others can chime in. A significant part of the $3 billion you mentioned, around $2 billion, comes from the strong growth in new business throughout 2023. The remaining $1 billion is a combination of adjustments to experience assumptions and their impact on future margins, slightly offset by the natural runoff of the in-force business.

Okay helpful. And then just in terms of the current quarter experience in U.S. individual mortality, can you just give a breakout of what you saw in the impact between capped and uncapped cohorts?

Yes. I will begin. This is Todd again. In the U.S. individual life segment, we experienced adverse claims of approximately $20 million, primarily due to increased large claims. As previously mentioned, much of the unfavorable experience was in the capped cohorts, although we saw some positive claims experience in the uncapped cohorts. Overall, the financial impact on the income statement for individual life this quarter was about a $40 million negative.

Okay, thank you.

Sorry, this is Jonathan, too. Just to add in, if you take a step back and look at the year-to-date results for U.S. Individual Life, our overall underlying claims experience was favorable for the year, as we mentioned in the prepared remarks, about $40 million favorable for individual life on its own. And again, we had some cohort distribution impacts, which resulted in that being a headwind over the course of the year, but our underlying experience was favorable.

And sorry, gentleman, let me just add a few more comments on your first question. Thank you for asking the question around long-term value from LDTI. I'll state the obvious that is only the business that's under LDTI. There is a significant proportion of our business that is not covered under LDTI at the moment.

Got it. Thanks.

The next question comes from Tom Gallagher with Evercore ISI. Please go ahead.

Good morning. Just a first question on the updated run rate earnings guidance. Should we view that as normalized '23 run rates or exit rate? And so when we think about '24, should we be growing that by your high-single-digit rate? Or should we think about that more as a run rate for '24?

Yes. So it is. We did look at 2023 on a sort of on a more normalized basis as we built up our projections going forward and developing our financial plan, that type of thing for 2024. So you could look at the updated run rates, more of our expectation of the run rates for 2024.

So there's some embedded growth expectation in those ranges. Is that fair, Todd?

Yes, fair.

My follow-up, Tony, I was interested in your comment about a greater percentage of your business coming from exclusive arrangements. Can you not that I'm looking for a history lesson, but just can you provide some perspective on how that's trended over time? Like historically, has most of your reinsurance you've written been done with pools of other reinsurers? What does that look like now? Is it different between U.S. and Asia?

Yes, we haven't specifically tracked those numbers, but it's always been part of our culture since the beginning. Overall, it has generally increased over time. As you mentioned, it may vary across different regions and business units. What really pleased me is that as the messaging within the organization under Anna and now myself became stronger, the belief in the teams that might not have been pursuing this as actively began to grow. We encouraged them to embrace this direction and give it a try. There’s nothing more rewarding for any leader than to witness teams succeed in this area and build their own confidence that they can achieve it. That’s why we are so excited about our prospects and the positive momentum we are starting to see.

Tony, just one follow-up. Is the main point that the margins significantly improve when you pursue exclusive deals rather than the pool deals? Do you think that's a fair assessment?

Yes. No. I mean definitely, the margins are better, but obviously, it's a win-win with us and our clients, right? I mean we're truly able to give them something that they're willing to commit an exclusive to. So it must be of great value. It's usually first to market or innovative. And then it's a greater value creator for us and our partner. And obviously, we're able to share some of that value.

The next question comes from Suneet Kamath with Jefferies. Please go ahead.

Thanks. Just wanted to follow-up on Tom's question, just so I understand the run rate guidance and all that stuff. So if I look at Slide 8, I think it shows that on a normalized basis, you did call it, $1.7 billion of pretax earnings in 2023. And if I take the midpoint of the range in terms of the run rate, that's also around $1.7 billion. And I think what you said, Todd, is that's probably a good indication of 2024. So is that right? I mean, basically, what you're saying is 2024 pretax earnings should be in line with 2023 normalized?

Yes, normalized. And we've, in 2023, we would, as we've talked about, a very strong year, very solid underlying earnings. But when we came up with the 2024 run rate, we did look at what we would view as some sort of not unusual items, but some one-off type items that we don't expect to repeat and add to the ongoing run rate. That could be some of the impact of the in-force actions adjustments, some related to experience that kind of thing.

Okay, I understand. Regarding capital, I would like to break it down into two parts. The $933 million invested in 2023, how quickly should that start generating returns? Will it begin earning throughout 2024? It seems that a significant portion was concentrated in the third and fourth quarters, so I'm curious about that. Additionally, concerning your excess capital, if I consider what you're earning from it, I would estimate that the impact on return on equity is probably around 100 to 150 basis points. When you mention excess capital of over $1 billion, do you believe that this amount can be fully deployed and reduced over time, or is part of it set aside for risk management purposes?

I'll start with the second part of your question. Yes, we are comfortable reducing our excess capital to the range of $600 million to $700 million, while still maintaining some cushion. We have also developed alternative sources of capital that we can access quickly, like the Ruby Re transaction that Tony and I mentioned. For the right transaction with a suitable return and strategic profile, we would consider using some of that excess capital when we are confident we can replenish it quickly. Regarding the $933 million of capital we deployed throughout the year, the profits and returns from that generally increase over time based on the underlying business type, so we expect some contribution in 2024, with growth continuing thereafter.

Okay, thanks.

The next question comes from Ryan Krueger with KBW. Please go ahead.

Hey, good morning. My first question was on individual life mortality in the U.S. I heard your comments that 2023 in total was a bit favorable. I guess in the overall population, it seems like it's been consistently running unfavorable still to pre-pandemic level. So I was interested in your thoughts on why you think you're seeing that type of divergence between insured experience versus population experience at this point? Thanks.

Yes. Ryan, it's Jonathan. I mean as you mentioned, there is a difference in the populations that we're talking about. So that could be some of why we're seeing different experiences. It is also relative to the expectations that you said as well. So if you recall, over the last couple of years, we have been including excess mortality expectations in our reserving assumptions, in particular, under LDTI, when we move to best estimate. So our expectations include our best estimate of what we think that excess mortality will be. And as you said, the results are coming in a little bit favorable relative to those expectations.

Okay, thanks. Makes sense. And then can you give any rough sensitivity on your exposure to floating rate assets? Either just the amount of floating rate assets that you have or the potential impact on earnings from let's say, a 25 basis point change in short-term rates?

This is Leslie. So floating rate overall, I will first say that obviously, some decline in rates has been expected for quite a while, and so we already have assumptions in the run rate guidance that are similar to where the market is currently. So you're starting from a fine point there. And then we have taken actions over 2023 as we thought we were near those take short-term rates to do some floating to fixed swaps on some of the floaters, and net in the portfolio, it's less than 4% of the total exposure. So you're talking about a quarter of under $10 million over the course of the year for a 50 basis point move. But again, the forwards that already predict moves down in interest rates this year are already in our guidance.

Great, thanks a lot.

Our next question comes from Wilma Burdis with Raymond James. Please go ahead.

Hey, good morning. I guess, could you talk a little bit about the unfavorable experience in the capped cohort, specifically, if there were any trends you noticed there? And somewhat related to that, could you talk about any mortality trends you're seeing in this kind of winter flu and COVID season? Thank you.

Yes, thanks, Wilma. This is Jonathan. For the quarter, we noticed some negative experience with older age groups and larger policy sizes, as Todd mentioned. The performance of these large policies can fluctuate from period to period due to the nature of the business. Overall, our experience was favorable or consistent with other age groups and policy sizes. Regarding the flu, the data we've observed this year suggests that it might be occurring earlier than usual, but it does not appear to be as severe as last year's season. Current trends indicate that this year's flu season will likely be average, possibly slightly below or above what we typically expect based on the mortality and hospitalization rates we've seen so far. This observation aligns with global trends as well.

And anything I note on COVID?

Yes. COVID is challenging to quantify accurately on its own, which is why we analyze it from a total excess mortality perspective. However, based on the data we can see, we expect there are no indications of a significant fall or winter surge. That said, it's hard to distinguish COVID trends due to the current quality of reporting.

And then just one more. If you guys could talk a little bit about how you're thinking about longevity exposure going forward? I know that's something that you used to kind of give some targets around increasing longevity exposure. Just maybe you can give us an update there.

Yes, this is Jonathan. I'll start, and others can chime in. Our expectation aligns with what we previously shared at Investor Day. We anticipate that the portion of longevity risk within our overall biometric risk will rise in the coming years. We expect growth in our mortality and morbidity business, but we see significant opportunity in longevity. Specifically, we predict that longevity risk will increase from about 10% to 15% of our total biometric risk to around 20% to 25%. While we will still have a heavier focus on mortality, the shift will create a more balanced profile, which is positive for diversification.

Yes. Perhaps let me just add, and I'll just kind of queue off what Jonathan said on diversification. So obviously, we will be mortality long for quite a period of time. but the longevity adds some diversification. But just to get a bit more finer, yes, our mortality block tends to be higher socioeconomics in younger age. Our longevity block obviously tends to be blue collar and retirees. So with medical advances that we would expect to continue to see, as we've always seen, in a way, it favors the mortality block more so than the negative on the longevity block.

Thank you.

The next question comes from Alex Scott with Goldman Sachs. Please go ahead.

Hi, good morning. First one I had for you is on the regulatory front. I know in Bermuda, I think you guys don't use a scenario-based approach and your U.S. taxpayer, so a little less applicable to you. But I guess, you're just interested in a broad update. Are you seeing it affect to the competitive environment at all? For some of the relationships and transactions you have? I mean any kind of price sensitivity change related to it?

Thanks, Alex. Thanks for the question. I think we've previously shared, we have anecdotally seen some impact on the competition. There was a previous quotation where due to an announcement in Bermuda overnight, the number of competitors on a certain individual quotation dropped dramatically. We obviously are very mindful of regulations around the world, Bermuda, the U.S., even Europe and U.K., we're seeing obviously some discussions. We're not overly concerned by that, we always continue to focus on what we're doing. And in some sense, that's why we're very delighted with the Belgium transaction that we did. There is a lot of discussion on regulatory issues in the continent but we were very delighted with that transaction. We believe it can open up further opportunities in Belgium and broader throughout the continent.

And I guess for a second question, could you just kind of give us a feel for how fashion rates are trending in the U.S. market, something I don't track quite as closely. So I'd just be interested if you have an update on sort of where things are moving there.

Yes, maybe I'll take that one. I mean I think directionally, it's in a positive direction. Our job is always, as I mentioned earlier, continue to innovate, find new ways to have a win-win with our partners, so they have a strong compelling reason to reinsure. I would say session rates as they usually track is on new business. What we have seen increasing interesting as some of the clients move towards a more capital-light derisking their in-force blocks of business. That creates greater opportunities for us on an in-force perspective, reinsuring mortality on back books and so on.

The next question comes from Mike Ward with Citi. Please go ahead.

Thank you, everyone, good morning. We have updated our run rate guidance and are projecting 8% to 10% earnings growth, which applies to both earnings dollars and EPS. I'm curious if there is any contribution to this 8% to 10% from improved new money yields or overall growth in net interest income.

Mike, it's Todd. I just start out by saying the increase in the overall run rate that we provided last night compared to the Investor Day back in June, there's really three components, I would say. There's the higher investment yields. And then there's the good experience on the in-force book overall across the diversified platform. And then there's the added margin for the strong new business volumes that we've been able to achieve during the year.

And Todd, the only thing I'll add, I know the print for new money grade is particularly high this quarter. That isn't what is assumed for the full year, the assumptions about how much money will have put to work and where it will go is more consistent with current market conditions than that particular print in the fourth quarter.

And then maybe on just on capital return. Does the 8% to 10% kind of assume an ongoing, call it, $200 million of annual buybacks going forward?

Yes. I would say it really considers our continued sort of active and balanced capital management between as we've been very consistent over the years, we really like deploying the capital into the transactions that make good returns for the risk return profile, keeping healthy dividend and then balancing out with the share repurchases. So it's really the continued assumption of that active and balanced approach to the capital management.

The next question comes from Jimmy Bhullar with JPMorgan. Please go ahead.

Hey, I just wanted to follow-up to see if you could give us some color on what's going on in the Australia business. And just how the block performed this quarter? And how much of the problematic vintages are already on your books and just your overall comfort level with the reserves for that book?

Yes. So for the quarter, we had a modest loss in Australia, continuing to monitor the business. And overall, market conditions seem to be okay, but continue to keep a close eye on the overall block. But overall, our reserves for most of that business are under LDTI, so we're required to be holding best estimate reserves on the balance sheet.

Yes, Jimmy, as we've probably shared previously, Australia is somewhere we pay very close attention to. I guess it was my first time. Really, as you would expect, the regulatory environment and the market has improved over time. We, as you'd expect from RGA, retain our incredibly strong discipline. Like I mentioned, it's really that combination of the risk management along with the entrepreneurial spirit that's absolutely the discipline in Australia is part of our Asian business, and a relatively minor part of the Asian business.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Tony Cheng for any closing remarks.

Thank you, everyone, for your questions and sincere thanks for your continued interest in RGA. This was a very strong quarter, but really completing a very, very strong year. Further demonstrates our substantial earning powers in our business. I think you've seen all the time the incredibly diverse platform we have, whether it's experience, whether it's geography, whether it's our business strategy, and that's really fueling, we feel, a very strong pipeline that we obviously have visibility on. So we really remain very well positioned to capitalize on the many growth opportunities ahead. We're absolutely confident in our ability to continue to deliver attractive returns to our shareholders and benefit all our stakeholders. So thank you once again.

Thanks. The conference has now concluded. Thank you for attending today's call. You may now disconnect.