Good morning. Welcome to Voya Financial's Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the call over to Mike Katz, Executive Vice President of Finance. Please go ahead, sir.

Thank you and good morning. Welcome to Voya Financial's third quarter 2023 earnings conference call. We appreciate all of you for joining us this morning. As a reminder, materials for today's call are available on our website at investors.voya.com. Some of the comments made during this call may contain forward-looking statements or refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our website. Now, joining me on the call are Heather Lavallee, our Chief Executive Officer, and Don Templin, our Chief Financial Officer. After their prepared remarks, we will take your questions. For the Q&A session, we have also invited the heads of our businesses, specifically Christine Hurtsellers from Investment Management and Rob Grubka from Workplace Solutions. With that, let's turn to slide 3, as I would like to turn the call over to Heather.

Thanks, Mike. Let's begin on slide 4 with some key themes. Our results reflect the underlying strengths of our businesses, the benefits of our diversified revenues, and our strong track record of executing on our targets while continuing to invest for future growth. In the third quarter, we generated $1.74 per share of adjusted operating earnings, including notable items. We remain on track to achieve our EPS target of 12% to 17% for the three-year period ending in 2024. We've taken the necessary steps to protect margins, and we will continue to be disciplined on spending as a key lever to manage our businesses. Looking ahead, robust pipelines across all three businesses will power our growth into 2024 and beyond. Our commercial momentum continued to build in the third quarter; in Wealth Solutions, full-service recurring deposits were up 10% with positive net flows in both full service and recordkeeping. In Health Solutions, annualized in-force premiums and fees were up 21% with growth across all product lines. While investment management flows continue to reflect a difficult market for asset management, the underlying business is strong. Importantly, we head into the fourth quarter with most transition-related outflows now behind us and the expectation of even greater benefits from our new international distribution relationship with AllianzGI. The benefits of that relationship continue to emerge with international retail contributing more than $1 billion of positive net flows in the quarter. As we look ahead to 2024, we're seeing a strong growth pipeline across all of our businesses. In Wealth, we already have $12 billion of plans for implementation in 2024. In Health, our outlook includes premium growth at the high end of our 7% to 10% target range with a strong sales pipeline for 2024, which includes known sales in life and disability, up more than 40%, and voluntary sales up almost 50% year-over-year. In Investment Management, we are confident that our strong pipeline will support our return to at least 2% organic growth. This pipeline includes unfunded private credit commitments in the institutional channel, robust projected flows in secondary private equity, and continued growth opportunities in international markets. With its prominence in fixed income and strong investment performance, Voya Investment Management is well positioned to benefit as cash currently on the sideline moves back into longer duration assets. The combination of our strong pipelines and robust expense discipline will allow us to protect margins and deliver on our financial goals. Turning to capital management, we maintained a strong exit capital position at the quarter end of approximately $400 million. We deployed nearly $300 million of capital in the third quarter across debt extinguishment, share buybacks, dividends, and the completion of the transaction to take full ownership of Voya India. We generated an additional $200 million of excess capital this quarter, contributing to over $800 million over the past 12 months, exceeding our 90% free cash flow conversion targets. Don will share more on our results in performance shortly. Turning to slide 5, after the strategic acquisitions we've made over the past year, we continue to focus on successful business integration. These acquisitions have diversified our revenues, helped us establish a strategic foothold in new markets, and positioned us to capitalize on strong growth opportunities. Our acquisition of the U.S. business of AllianzGI has reshaped Voya Investment Management, providing access to high-growth international markets and revitalizing our retail capabilities. Benefitfocus provides Voya with new capabilities in benefits administration, access to new employer markets, and a platform to advance our strategic vision for workplace benefits and savings. With open enrollment season currently underway, we're focused on delivering outstanding service to our customers, which is a key driver of growth that will help us both retain and expand our customer base. The acquisition is bringing Voya's workplace benefits and savings strategy into sharper focus for customers, supporting our strong sales pipeline. In the third quarter, we took full ownership of our global technology and operations subsidiary, which we have rebranded as Voya India. This strategic flexibility maximizes the value of the Voya India organization, built from scratch in only four years and now encompasses almost 2,000 Voya employees. We are further building our capabilities in technology and customer experience, enhancing the value of our workplace and investment management businesses. Innovative solutions are being brought to our customers, driving technology that leads to greater automation, faster speed to market, improved performance, and a more efficient cost structure. As we continue, Voya's purpose and vision drive positive outcomes for our clients, colleagues, and the communities in which we live and work. To support employer and employee needs, we recently introduced new mental health offerings through our critical illness and accident insurance products. To support our communities, we again held our annual employee giving campaign in September with approximately 75% of Voya colleagues participating in programs that supported more than 1,900 charitable causes. With that, Don will now provide more details on our performance and results.

Thank you, Heather. Now, let's turn to our results on slide 8. We delivered $1.74 of adjusted operating EPS in the third quarter, which includes $0.21 of alternative and prepayment income below our long-term expectations and $0.12 of other unfavorable impacts within Health Solutions. Beginning next quarter, we expect to pre-release our alternative and prepayment income experience to better inform consensus estimates. Excluding notable impacts, third quarter 2023 adjusted operating EPS was $2.07, compared to $2.24 in the prior-year quarter. Favorable loss ratios in Health Solutions moderated somewhat from exceptional levels in the prior year. Current year results reflect growth in fee-based revenues in wealth and investment management, supported by disciplined spending and prudent capital management. Third quarter GAAP net income was $248 million, reflecting the favorable impact of certain non-cash items. Free cash flow generation was over $200 million in the quarter, demonstrating another quarter above our 90% target. Turning to Wealth Solutions, we continue to make progress on our workplace benefits and savings strategy, which differentiates us in the marketplace and builds on our leading retirement franchise. We ended the quarter with $174 billion of full-service AUM and $510 billion of total client assets. Our total client assets have meaningfully increased over the last 12 months, including a combined $3 billion in recordkeeping and full-service net flows in the third quarter and $7.5 billion over the last 12 months. Our relentless focus on maximizing customer outcomes in the workplace has helped us win new business and retain key clients in both the corporate and tax-exempt markets. This focus on our customers has supported growth in full-service recurring deposits, which exceeded $14 billion over the last 12 months. Turning to slide 10, we continue to drive profitable growth and maintain healthy operating margins. Wealth Solutions generated $179 million of adjusted operating earnings in the quarter and $630 million over the last 12 months. Net revenues were higher year-over-year, reflecting the benefit of our diverse revenue streams. In the quarter, we continue to see elevated fixed surrenders and lower transfers from variable investments to fixed accounts from our participants. While we expect fourth quarter spread income to be consistent with the third quarter, participant behavior is uncertain due to the macro environment, which will drive trends heading into 2024. We continue to maintain margins within our target range of 36% to 40%. Administrative expenses were $12 million lower than the second quarter, but we expect fourth quarter expenses to increase back to second quarter levels due to the impact of seasonal spending. Heading into 2024, we have taken additional actions to ensure expenses support our target operating margins. While we expect full-service net outflows of $2 billion to $3 billion next quarter, this is mostly driven by one large case departure. We have a robust pipeline, which includes $12 billion of plans in implementation for 2024, nearly 15% higher compared to the same time last year. Turning to Health Solutions, our excellent year-to-date results reflect significant growth and favorable underwriting experience this year. Annualized in-force premium and fee growth was approximately 15%, excluding Benefitfocus. This was substantially better than our 7% to 10% growth target and was driven by strong sales and favorable retention across all product lines. Our total aggregate loss ratio was 66% on a trailing 12-month basis. While some of the second quarter favorability in stop loss reversed this quarter, results remain favorable. We expect stop loss ratios will trend towards our long-term target range of 77% to 80% in 2024. We are lowering our long-term total aggregate loss ratio target to 69% to 72%, down from 70% to 73%, driven by strong underwriting and substantial growth in our voluntary block. Turning to slide 12, our significant growth and favorable underwriting experience over the last year resulted in approximately $350 million of adjusted operating earnings over the trailing 12-month period, with adjusted operating earnings in the quarter at $53 million. Results in the quarter included one-time unfavorable impacts from our annual assumption review and a non-recurring legal reserve. Excluding these impacts, adjusted operating earnings were $71 million. Third quarter revenues grew 36% year-over-year, reflecting strong in-force premium growth and the addition of Benefitfocus revenues. Adjusted operating margins were 32.2%, illustrating prudent expense management while investing for growth. Looking ahead, we expect administrative expenses to increase by $10 million to $15 million in the fourth quarter, reflecting seasonality and our first open enrollment season with Benefitfocus. We have had a strong start to the 2024 renewal sales season and remain confident in growing our book and bringing solutions to our customers that improve financial outcomes in the workplace. Turning to slide 13, Investment Management has a multi-decade track record of generating significant value for our clients across different market cycles. As Heather mentioned earlier, our flows this year have been affected by challenging market dynamics and strategic decisions made to modernize and streamline our platform. The transition away from our former international distribution partnership to AllianzGI contributed $3.3 billion of the overall $4.3 billion of net outflows in the third quarter. With this transition now largely behind us, we can build on the momentum with our AllianzGI partnership, which has added $3 billion of net flows since inception. A majority of the general account assets have now transitioned back to Venerable, with the remaining general account and variable portfolio assets transferring over time, included in our margin and revenue guidance. Looking forward, we have a strong unfunded pipeline of over $10 billion from diverse strategies and expect to return to our organic growth target of over 2% next year. Turning to slide 14, Investment Management delivered adjusted operating earnings of $49 million in the third quarter, net of AllianzGI's non-controlling interest, and $174 million on a trailing 12-month basis. Net revenues grew 21.8% excluding notables on a trailing 12-month basis as we added AUM and revenues from AllianzGI. Third quarter adjusted operating margin excluding notables was 25.5% on a trailing 12-month basis. We continue to manage spending to position us for further margin expansion heading into 2024. We are well positioned to benefit from a rotation back into higher yielding fixed income strategies. Further, our diversified and differentiated product pipeline, along with our international distribution, positions us well for future growth. Turning to slide 15, we ended the quarter with excess capital of approximately $400 million. We generated $200 million of capital in the third quarter and $800 million over the last 12 months, consistent with our 90% free cash flow conversion target. In the third quarter, we deployed approximately $300 million of capital, which included nearly $100 million in share repurchases and dividends. With the recent debt maturity behind us, our leverage ratio is now in the middle of our long-term range. Near-term capital deployment will focus on share repurchases and dividends. Our baseline expectations are to return approximately $200 million in the fourth quarter. Looking ahead, we will continue to prudently manage our balance sheet and deploy capital as we generate it. Turning to slide 16, we remain on track to achieve our targeted EPS CAGR of 12% to 17% for the three-year period ending in 2024. We have taken additional expense actions to ensure we protect margins and achieve our financial targets. We continue to generate commercial momentum. Our strong pipelines across all three segments support our growth outlook and we will remain prudent with our capital.

Our first question goes to Elyse Greenspan with Wells Fargo. Please proceed with your question. Elyse, are you there?

Sorry, I was on mute. My first question is on investment management. I was just hoping to get some additional color. I know you guys spoke about the pipeline that you have in that business around $10 billion. If you can compare that to historical levels, and then second of all, how much more outflows are you expecting from the NNIP relationship and should that all come through your results in the fourth quarter mostly?

Thanks, Elyse. Christine will jump in and talk about our optimism on the pipeline.

Yes, absolutely. Thank you, Elyse. Let me actually start with the second question and then I'll pivot to the pipeline itself. So NNIP, yes, we are expecting outflows in the fourth quarter of $0.5 billion to $1 billion, and that will largely put NNIP behind us. So, think of that as a 2023 event for VIM. Now, moving then to the pipeline, as we shared, it is over $10 billion. Let me contextualize that for you as far as history. Compared to a year ago, we're over 3x the size of the pipeline entering 2024 versus 2023. We're seeing a real pickup in momentum here, and one of the things we've done for consistency is we're keeping that discussion more on what the traditional pipeline view of VIM is, which includes U.S. distribution, and does not include Allianz. The opportunity when you think about their distribution reach and the global demand for fixed income, we see a lot of opportunities there. The $10 billion includes unfunded wins and very high-probability institutional wins where we are a finalist. So again, the opportunity pipeline is growing every day, and we're excited and confident moving into '24.

Thanks. And then my second question, you guys gave a target for capital return, the $200 million for the fourth quarter. And you also mentioned, right, you're within your target debt leverage. So, should we expect capital return to improve from that $200 million level in '24, as we think about your earnings growing from here?

Yes, Elyse. This is Don. 2023 was an interesting year because we had a debt retirement that came up in the third quarter. We had to deal with that. We've historically been a little bit more balanced around share repurchase in debt retirement quarter-to-quarter. This year was a little bit different; we had $162 million in share repurchase in the first quarter, we had some debt retirement in the second quarter that limited the amount of share repurchase. Now, we're guiding around the $200 million of share repurchase and dividends in the fourth quarter. We are comfortably within our leverage metric range right now. You should expect obviously fourth quarter what we've guided to, but you should expect that in 2024, our bias—given where we are in our leverage metric right now—will be to share repurchases and return capital to shareholders.

And simply put, Elyse, as we go into '24, our focus is on integrations of the strategic acquisitions, driving organic growth, and, as Don mentioned, focusing on returning capital to shareholders in the form of share buybacks and dividends.

Thank you. Our next question comes from Ryan Krueger with KBW. Please proceed with your question.

Hey. Good morning. My first question was just on the 12% to 17% EPS CAGR through 2024. I think in the last call, you had talked about expecting to be at the higher end of that range, and I'm curious if that's still your expectation at this point?

Yes. Thanks, Ryan. We are confident in being in that 12% to 17% three-year EPS growth guidance. The incremental macro headwind since the second quarter and the moderating of the stop loss favorability that occurred makes it a bit more difficult to get to the top end of that range. To get us to the top end of that range, we'd likely need some combination of a reversal of the recent equity market declines, a more normal yield curve that's not inverted, and loss ratios at the bottom end of our revised targets. But having said that, our confidence around being in that 12% to 17% range is driven by a couple of things: One, the commercial momentum we're experiencing in all three business segments, as Heather alluded to; the disciplined underwriting in health; and the really strong year-to-date results that we've had there, along with our continued focus on expense management.

Got it. Thank you. And my second question was on investment management, just on the fee rate. It went up a fair amount this quarter. I think there might be some impacts from NNIP and revenue guarantees and whatnot. So, can you give any more color on just how to think about the fee rate as we move into 2024?

Sure, Ryan. When you think about the basis points or the fees, you're absolutely right, it has been going up. It’s important to think of it in terms of outflows consisting of lower basis point, lower margin business. Behind the scenes, some of the things we're winning in—like international retail, as well as private debt—tend to have higher basis points under management. We would expect to continue to see progress over time as we grow and leverage international retail, private and alternative growth. However, we don't manage the business solely to that metric. We think about operating margin and growth. We may see some pressure on that number next year for positive reasons, as we are seeing real interest, particularly in Asia for fixed income. Demand for high-quality fixed income, notably from sovereign wealth funds, is something we're monitoring. Overall, we're excited and see great opportunities in 2024.

Great. Thank you.

Thank you. Our next question comes from Alex Scott with Goldman Sachs. Please proceed with your question.

Hi. Good morning. My first question is just on the Benefitfocus business and the comments sounded optimistic around the year end. It was just interesting if you could elaborate more on how the cross-selling is going. Are you expecting that this could potentially bring a bigger bump in growth this year due to some of the cross-selling efforts across your different clients? And is that something we should be considering at the end of the next quarter?

Hey, Alex. This is Rob. I’ll start, and Heather may want to chime in on the back end. We're really excited about the conversations that are going on. I want to be clear that this is a business with a longer sales cycle; technology-driven sales tend to be more of a 12-month to 15-month cycle. So, I wouldn't expect major changes just from new enrollments now. It's really about building momentum into 2025. Those conversations are different now than they were 12 months ago, and they give us confidence in the cross-selling opportunities. We have a strong position strategically for Benefits and Savings and are excited about what Benefitfocus will bring. As Rob mentioned, we’re thinking about this in terms of 2025 and beyond, but we are super excited about this strategic acquisition.

Yes. Thanks, Rob. To emphasize a few key points: It has been a year since we announced the acquisition. This has been a highly strategic acquisition for us to bring on top benefits administration platforms. Voya has been able to accelerate bringing new capabilities to market for Benefitfocus. We stabilized service heading into open enrollment. We’ve got a strong pipeline with intermediaries, which is where we see the biggest growth. We couldn’t be more excited about Benefitfocus moving forward.

Got it. Second question I had is on the Department of Labor fiduciary rule. I know it's early, but just any thoughts on how it could impact your business? I guess I'm particularly interested in whether it would impact proprietary funds and the wealth solutions business, or if it would impact IRA rollovers.

Yes, yes, Alex, I’ll take it. It’s early with it just coming out, but our teams are paying attention to it. We continue to focus on delivering for our participants and doing what's in their best interest. Early days for the fiduciary rule; stay tuned for more updates as we understand it better.

Thank you. Our next question comes from Suneet Kamath with Jefferies. Please proceed with your question.

Thanks. Good morning. A couple of questions on wealth solutions: You talked about a $12 billion pipeline. Should we think about that as essentially in flight in terms of onboarding, or is there still a risk that you don't get that, as you're in final negotiations with other players? I want to understand how we're defining this pipeline and how confident we can be in closing on it.

Sure, Suneet. This is Rob. We feel very confident; we have people actively implementing these plans. The way to think about them is clients in implementation. There’s very little uncertainty with these plans. We're confident in what we're doing; this includes tax codes and sizes. This represents a 15% jump over the prior year, and we really like the pipeline's mix and strength.

Got it. Okay. And then for Don, regarding capital deployment, should we think about capital deployment being a function of the free cash flow you generate? Would you also contemplate drawing down some of the $400 million of excess capital you have at the end of the quarter?

Yes, Suneet, great question. We've been particularly thoughtful and prudent this year, given some uncertainty around the macro environment. We've intentionally deployed in the current quarter the capital generated in the prior quarter. I would expect this to continue until we have clearer visibility on the macro environment. We define excess capital as excess for a reason, and our long-term goal will be to return that excess to shareholders.

Building on Don's point, we have a long track record of returning capital to shareholders. Over the last year, we've resumed share repurchases, increased the dividend, and decreased our leverage ratio. You can expect us to focus on this continuing return of capital into '24 alongside our confidence in generating over 90% free cash flow.

Thank you. Our next question comes from John Barnidge with Piper Sandler. Please proceed with your question.

Good morning. Thanks for the opportunity. You've talked about Voya India and mentioned disciplined administrative expenses. Can you talk about leveraging Voya India within investment management and wealth solutions? Is there some dynamic you can discuss about hiring a percentage for new positions in that business or any framing would be helpful?

Yes, John. As we think about expense discipline, this is not a new muscle; we have practiced this for a decade. We're proud of our teams for reducing expenses, particularly in asset management and wealth businesses. Moving forward, our focus is on maintaining operating margins within our wealth and health sectors and improving investment management margins. We see opportunities within Voya India for investment management and Benefitfocus, along with optimizing our organization to best serve our clients, leveraging around discretionary spend and advancing in automation, AI, and simplifying our IT footprint.

That is very helpful. Thank you. And then the follow-up on the disclosure around alternative investment income performance. Can you provide a look forward given its one-quarter lag, and how performance in the third quarter specifically played out?

I'm sorry, John, can you repeat that question? This is about alternatives?

Yes, on alternatives. It sounds like you're planning to share performance metrics going forward. Can you discuss how third quarter performance specifically played out and what to expect for the fourth quarter?

What we're planning to do is publish information on alternative performances below our long-term expectations. We'd like to provide that information shortly after the end of the quarter, as part of our 8-K process. This will allow you to incorporate it into your consensus numbers or expectations as it relates to our performance. Currently, there’s a 30-day period where we may misalign with prepayment options or alternative below or above expectations. The goal is to provide this information early so you can adjust as needed.

Thank you very much. Our next question comes from Wilma Burdis with Raymond James. Please proceed with your question.

Hey, good morning. Could you guys provide a few additional details on the legal reserve recorders?

Yes, this is Rob. It sits within the health business. We won't go into details yet as it’s not at that stage, but we don't have enough to size it and adjust in our results this quarter.

The only thing I'd add, Wilma, is that we consider it a non-repeatable item.

Okay, thank you. And could you give a little more color on the improved outlook for the health benefit ratio and what’s driving that?

As you look at our business mix, the primary driver reducing it from 70% to 72% is really the mix of our business. As we've grown in our voluntary business, it shifts our outlook. This is a range we'll continue to look at over time as the mix shifts. Our goal is to grow responsibly and this shows up in our results.

We’re proud of the results delivered by Rob and his team. Annualized in-force premium growth is 15%, well above our 7% to 10% target; revenue growth at 36%; maintaining a loss ratio below our target. We're excited about the pipeline that the team has in front of us.

Thank you. Our next question comes from Tom Gallagher with Evercore ISI. Please proceed.

Good morning. A follow-up for Christine on the $10 billion pipeline related to the U.S. Can you talk about how Europe is performing, excluding NNIP? Based on what you're seeing there, would you expect it to contribute to inflows for 2024?

Thanks, Tom. As far as what we're seeing in international flows from Allianz since closing the deal, they have delivered $6.5 billion, primarily into our income and growth franchise, as well as thematic equity. The income and growth platform has brand recognition and credibility in Asia, where many of the flows are coming from. Looking forward, we've launched some funds specifically to counter the largest outflows from NNIP, particularly in investment grade credit. We will keep an eye on developments there, and I'm excited about opportunities in credit, securitized assets, and institutional mandates through Allianz.

I appreciate that color on that. Just shifting to medical stop loss volatility. Can you provide insight into what’s occurring? Was it due to large claims, or more concentrated issues, or claims causes? Any sign of continued trends?

Yes, look, it’s a volatile business. It’s a tail-risk business. Our results have been exceptionally strong in recent years. The trailing 12-month view for the stop-loss business has us at a 72% loss ratio. This shows that we focus on the trailing 12 months for robust data. Claims experience and historical perspectives matter. That said, we’re confident in our long-term outlook and maintain our pricing with respect to those dynamics.

I’d just add that the team has run this business successfully for years, and there's a track record we’re confident will continue moving forward.

Is there more of a recency bias when thinking about pricing and renewals heading into year-end for the stop-loss business?

As we assess what our underwriters need to do, we evaluate risk every year for both new and existing clients. Our historical performance helps us develop a long-term view while being responsive to recent events. In terms of pricing, we apply our assessments based on past performance and emerging risks. It's important to maintain that balance for manageable growth moving forward.

Thanks. And just one more, if I could sneak it in.

Hi. Good morning. Thanks for taking my question. Just one follow-up on the $10 billion investment management pipeline. What’s been the historical experience regarding timeframes for funding those mandates? Would you expect a similar timeframe for the near-term funding?

Yes, sure, Ken. This is Christine. As for the pipeline, we have great confidence that we'll fund those mandates in the calendar year. While there are some slower capital deployments from insurance clients this year, the pipeline reflects what we expect to see this year. We're seeing positive trends, including positive U.S. retail flows and declining redemption rates, indicating a healthier interest moving into our fixed income strategies.

Got it. Very helpful there. Just one quick follow-up to your earlier comments. Would it be fair to say that the retail net inflows you saw in the quarter were largely driven by fixed income? Can you provide a better sense of the metrics around those net flows?

Yes. The flows in retail have been driven predominantly from offshore money into income and growth. Our global technology has been performing well, alongside positive trends from Asia. It’s exciting to see not only the positive inflows but also the broader stabilization within our traditional U.S. market.

Thank you. Our next question comes from Josh Shanker with Bank of America. Please proceed with your question.

Yes. I don't mean to belabor the point, but a little more on medical stop loss. A lot of healthcare providers are seeing medical cost inflation. I realize we should look at a trailing 12-month basis, and it's very good, but can you give us any confidence that what we're seeing in the third quarter isn't a result of the medical cost inflation? If it is, how long do we need to wait for a repricing?

Yes, Josh, there are dynamic factors, so we'll acknowledge that upfront. We've seen strong claims performance traditionally and will always monitor for new dynamics due to inflation. Core inflation usually ranges around 6% to 7%, which is factored into our future risk assessments. While claims costs can fluctuate, we believe our historical data supports the outlook.

Additionally, higher medical costs for consumers bolster demand for our supplemental health products and HSAs, which is essential given market conditions. Demand for these products is a clear reflection of such needs entering 2024.

Given that GLP-1 drugs are a hot topic, what should we consider regarding their impact on the medical stop-loss industry? Will they reduce extreme healthcare intervention costs?

This is a technical issue. We've tracked the potential cost implications over the years and updated expectations accordingly. As we grow in this area, we remain focused on underwriting strategies related to medical stop-loss; we’re closely monitoring developments.

Thank you.

Our next question comes from Joel Hurwitz with Dowling & Partners. Please proceed with your question.

Good morning. Just following up on the $12 billion wealth pipeline, can you break down how much is full-service versus recordkeeping and how both compare year-over-year?

Yes, I would consider it consistent with our book. This data point is powerful; we’re continuously generating new business. We continue ongoing implementation discussions now. While we’re not discussing projections for '25 and '26, we have great optimism about current activity and pipeline performance, which is up 15% versus the prior year. It’s a strong indicator regarding our success across different segments.

Our value proposition resonates across tax codes, and we are a leader in this space. We’re excited about what we see moving forward.

As we look at expenses for the full year, expect mid-to-high single-digit increases. Can you discuss actions you are taking for 2024 expenses and how we should consider overall growth and expenses in wealth? As Rob mentioned, we’re focused on several big drivers on a corporate level, looking at reducing technology complexities. This effort to simplify will persist into next year, prioritizing operating margins while balancing growth.

This point isn't just for wealth but applies organization-wide. We’ve maintained a disciplined approach to expenses and will reinforce that focus moving forward.

We have reached the end of our question-and-answer session, and I would now like to turn the conference call back over to Heather Lavallee for any closing comments.

To summarize a few key messages, our results reflect the underlying strength of our businesses, the benefits of our diversified revenues, and our strong track record of executing on our targets while continuing to invest for future growth. We remain on track to achieve our EPS CAGR target of 12% to 17% for the three-year period ending in 2024. As we look ahead, robust pipelines across all three businesses will power our growth into 2024 and beyond. We look forward to updating you on our progress. Thank you for joining us today.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.