Lincoln National (LNC) 1 Aug 242024 Q2 Earnings call transcript

Good morning, and thank you for joining Lincoln Financial Group's Second Quarter 2024 Earnings Conference Call.

[Operator Instructions] Now I would like to turn the conference over to Senior Vice President and Head of Investor Relations, Tina Madon. Please go ahead. .

Thank you. include press found supplement page measures. their call, on website, operations these common earnings can statistical of to including quarterly non-GAAP available and www.lincolnfinancial.com, be the comparable adjusted operations most all the documents operating adjusted Our income release, on to or and earnings GAAP supplement our measures from [indiscernible] used of adjusted today's income reconciliations stockholders Investor from Relations income

remind prospective you related call or of Private the to are any products, we statements actions, operations, today's Reform want Before Litigation including to Securities begin, performance during that regarding from resources, income forward-looking trends share made I statements those future expenses, results, XXXX. Act financial in services repurchases, under future deposits, capital expectations, liquidity our businesses or and

other issued well from that involve disclosures report quarterly uncertainties our from with current expectations. as uncertainties These These annual in XXXX most differ our in forward-looking cautionary results and XX-K in Form described materially SEC. on and could release statements to our those on as earnings this time our the our to cause risks Form risks the actual in XX-Q reports morning include time those and detailed earlier filings recent statement

address after Chief update we'll prepared occur statements and Chris forward-looking that CEO; any revise or After of Cooper, Financial your to Presenting we are questions. or Chairman, Officer. their them are obligation circumstances Ellen These made reflect and no only and as this today, Neczypor, remarks, undertake President to events morning of today.

Ellen? the call Let me turn to over Ellen. now

call Thank good our joining you, everyone. morning, today. and you Thank for Tina,

a X we market capital steady growth to During strong cycles across year. continued objectives future foundation upon the Built to maximize the investment and flow resources improve operating profitable make the grow growth. outlined ensure model to free framework to stability franchise. earlier second optimize our enterprise this advance we and towards a progress support scalable deliver cash our for and to quarter,

touch briefly starting these objectives, foundational me Let of Capital. on each with

capital ended we our target to We RBC as maintain investor buffer the you are quarter sale combination successfully This XXX% level actions ratio free position to to capital that taking this necessary greater with management to build its estimated goal XXX% our for the XX ], take closed as over of our is next the we more provide outlook important and RBC chapter. of the of volatility. business. In an RBC than few build year, as years. of pleased our the above and steps target should flow generation The communicated milestone an business to continue earlier our next over wealth from the cash we we XXX% increase minimize an capital flexibility of [ our our are we points update we

started benefits further made see expense reductions year. made earlier of quarter operating also we the our to and this progress We optimizing the this model in

Bermuda and affiliated flow. help competitive business our financial new subsidiary, in support for us license the segments cash which as received such we Additionally, free our objectives will enhancing our stay

cash organization objective into against businesses, we flows Lincoln of stable with profitable characterized growth products transform delivering more higher our and and Lastly, advanced as an segments returns. we by risk-adjusted

products spread to future like business and retirement reposition business and business across diversify our annuity continue our and and expansion expect grow spread of that to product well-balanced position we segments with market group ahead, look evolve products, mix sharing to includes growth. for products life risk we business emphasize our As our and more a accumulation

lay distribution leadership the in our groundwork advantages, franchise, portfolio to competitive leverage at-scale including expansion. trusted will broad leader our market powerful future our a for and brand, are product We businesses and

While businesses, X and is a at different journey realignment this stages. our the strategic of each is in multiyear

our and quarter well executing this sales overall are levels demonstrated most importantly, sales as We in mix. in our

Turning to quarter performance. our second

results strategic highlights. we to as priorities our execute continue few Our on key our a solid expectations with exceeded were and

delivering line business in earnings grew by X across growth annuities quarter products strongest second Protection strong and achieving sales quarter Group record momentum years segments. years. Our earnings its prior delivering its and XX% X sales its earnings year-over-year highest its quarter and year in over all continued in with

investment the expectations a earnings delivered excluding line alternative business, of Our sequential in and with life in income our impact increase below-target sales.

of growth range the And earnings and last sales plan finally, within sequential quarters. services few the retirement produced

to Retail and includes Annuities our Now Solutions, turning which Life businesses.

growth book focuses balanced were addressable of achieve shifting optimization a competitiveness our reflected solid and our broadest our capabilities. strong this on The market this returns enhancing business progression Annuities and by business. on We Our annuity diversified to expanding delivered quarter the to earnings mix. and more strategy in through while aim a our continued of

from more the were of prior sales of light spread products. and the XX% levels were spread Total quarter and XX% XX% all across in than sales the Sequentially, categories $X.X up product quarter. overall annuity with sales higher up billion sales and year were in

categories to larger We utilizing distribution in to training partners framework marketing, are support provide relationships building data footprint. partners our with and and on select long-standing further our expand our space product to shelf and in distribution leading

in proposition. value market. were our We product and integral strategies course and up early, fixed be strategic increasing more crediting still living the year-over-year it last by strong refreshed year a while launched and our features sales momentum fixed doubled XX% sustain the continue have sales be benefits delivering year-over-year guaranteed marketplace. and consistent XX% unique quarter. overall is second-generation the the demonstrated product and RILA sequentially. to a growing sales XX% resonating over the to with And we are in than to successfully we more solutions in although increased VA customer continued capabilities solid than sequentially as of presence more the also than the built with a competitive focus applied Our to

However, these strength the a range broad summary, business balanced results remains representing total of to contributor our continue to product the annuities smaller a while category this to In XX% product mix our for sales sales, customers fulfill with evolving as achieve solutions of providing objectives quarter. reflect than annuity a our less we in of needs. their

We Now growth turning XX% as sequential to strategic ongoing result sales our life. achieved realignment. of a

cash more we life We optimize products to supporting distribution and are stable on returns, our adapting to our risk-adjusted and higher focus by footprint. business are repositioning this team with wholesalers our flows

our enable reach And coverage. This shift. our and doing aim and so, product will accelerate our by we elevate to improve better

our competitive While distribution will strengths service time, business growth. and and take higher earnings are we strengthening that increase our leveraging realignment life while of our will drive differentiation customer-centric the underwriting our confident in product,

quarter, an an results Group target Workplace line in grow another will this to were delivered strategy for which sustainable and discuss, small our our achieve health. an our Adjusted Chris our excellent is products very on group, supplemental margin. by market strategic impact the turning are Next, in with business Group timing includes we Protection and emphasis the Solutions, Within segments in across and business. to pleased presence Retirement diversifying businesses. X.X% further Earnings record year refund resulting and of that experienced Services margins and expanding quarter, Plan market with its prior of momentum and with

to for growth. line typically top accounted value achieve our margin X%, driven business and XX% ability of continue deliver of have our combined business supplemental existing execution in and primarily annual to growth by new the with and Sales for to This expansion from These highlight second to We growth. profitable customers, disciplined over XX% year. renewal quarter including would of business segments, prioritize sales volume growth compared lower-than-usual increased our to expectations, new last products diversify to help. results levels market line relationships a our our the reinforcing Premium our quarter all spanned continued pricing, reflected persistency with strength and XX% customers. by

each segment key strategies, segment. of we targeted pillars expansion offer gaining are within further are traction our which tailored as margin Our solutions efforts

position our meeting the are grow capabilities where which market we are our customers capabilities self-service reengineering and technology with they digital group pace growth. the also our expansion along accelerate expanding strategic business and offerings our investments, our our evolves, technology. the upgrading and continue talent, regional model. in and national we investments As expanded we the met, These building want at in small driving our to to product accelerate To segment service to underwriting be of client with in leadership presence necessary capabilities are markets, our

confident that become a our overall sustainable are business our will to group mix. results deliver strategy of significant part more help business our We executing

in our through service recordkeeping quarterly in Plan Retirement RPS, RPS. results our is institutional strategy to growing RPS' to market turning our In Services, Now with continue line and or differentiated our expectations. model. were segments core

to income, spread due they year-over-year due XX% improvement. declined lower earnings grew and higher balances to account expense Although sequentially

While And year-over-year, XX%. the the of wins beginning this remainder known materialize we year, continue anticipate increased strong ahead sales we pipeline first by year. have were across quarter third total to of as flat our of will of in deposits year to we the look all segments, a which

flexible continue services and benefiting invest enhance offer to We model our from to our customers. in RPS, products we the

overall objective increasing to with efficiency model. the operational our of this which are also business We is our consistent optimize operating

substantial see conviction to to reiterate opportunity transforming want Lincoln. I repositioning. We continue strategic in closing, In our our

Our and at-scale balance and retail foundation built workplace businesses a leading distribution strengthened sheet. is on with

increasing advantages flexibility. on create capital leveraging sustainable growth a to and evolve differentiation profitability, platform focus enhance businesses, competitive operational efficiency for is and greater our Our our

sets further forward we I stage the quarters. that to with you will long-term our coming Our value results to the strong look performance confident for for momentum shareholders. ability our creation in second deliver in quarter sharing drive updates further are

With now over turn to me call that, Chris. the let

and morning, Ellen, you, Thank good everyone.

areas our strategic I'm underlying quarter our demonstrated our focus to X high priorities end execution came against Our and second the of results at this expectations. going morning. on in further results

I'll including results, level First, review second recap segment our a financials. of our quarter

and review capital; portfolio. on our I'll investment third, touch I'll Second,

of items. quarter. income available or reported in X significant $XXX to adjusted with items of million quarter, So normalizing but common recap let's start quarter were a per morning, no we the share. $X.XX This operating stockholders there There second were the

our our $XX target share. in $X.XX delivered return quarter X% below annualized return after-tax amount or alternative an per this basis, On was million $XX investments a million. portfolio the First, or

there Protection refund. a Second, benefit an of $XX due was Group timing to in the experience million

discussing further I'll touch our on segment when results. this

difference impacted net factors Now net of driven net for income. income X by reported The income We available to the stockholders common net or share. $X.XX to predominantly and between was that turning million quarter. diluted per income operating adjusted $XXX

the The to business. the of $XXX related first of sale closing was million impact Management a Wealth of our favorable

was driven program from movement This was a rates second was inclusive impact benefits risk income. net quarter market $XXX of and that by the positive second performance. higher million in hedge markets of resulted The a favorable interest nonoperating within and in equity

funds through GAAP withheld million offset by the Fortitude was impact higher a of accumulated transaction. our of with in driven offsetting available-for-sale income other were embedded comprehensive to expected assets the in impacts third the derivative positive these rates change reinsured driven flowing corresponding by This of back primarily in block. change turnover by portfolio Re $XXX the Partially in the agreement the our was a accounting losses fair AOCI. positive GAAP or The Fortitude reinsurance on securities Re related of interest value

the to turning segment Now results.

of $XX family $XXX which quarter's in paid One a prior quarter in our results to group, was margin timing benefit $XXX X.X%. years, with from included reported the of million and with the start related income this results leave was million annual of margin record and compared million within an recognized a refund program. in third prior note, quarter. Of In the state's Let's experience quarter operating disability a year benefit of XX% a this to

Excluding income group's and a margin was $XXX operating this benefit, of X.X%. million

the pricing maintain this Group's our actions. a reflection are our book discipline and continued results business of our diversify of execution quarter in of strategy to

environment backdrop, persisted and from Additionally, rate the benefits supportive quarter. unemployment the favorable in low a macro the including interest

results XX% typically quarter, percentage severity towards this higher for quarter. year loss The The line mortality higher we driven was our loss amounts. points by benefit product life prior as increased age ratio volatility group populations, trended the ratio to younger have Turning group quarter. versus X was the

work recoveries, percentage outcomes X expectations loss approximately the XX% The for refund quarter, this record to percentage of return improvement. ratio experience was disability, relative X longer-term from For ratio low loss year-over-year. timing annual LTD for positive favorable by points and was our incidents the strong decreasing benefited enabling of this claim to accounted and points our The claimants.

of a look keep to mind. of the in year, to are items we the second As half there couple

margin the the in expected will expansion of to points high results commitment to expect of second, year group have XXX consistent the seasonally from results results are our to quarter our year trends. the the and the strategy. confident and with I the and results record We First, historically experience mentioned included moderation as third in annual the XX disability execution And third against of our moderate to historical first half. reflect the end remain our get results will earlier, second of our in half the strong benefit margin quarters, the continue we in experienced of in first results favorable fourth half And Overall, we while expansion results refund. relative the that basis XXXX.

compared reported unfavorable quarter. items sequential that and prior quarter broad-based, year-over-year $X million, $XXX a balances, basis, by higher improved turning to Annuities income results annuities. $XXX reduced income expense. in million the account results. excluding of increased and On sequential impacted driven the Now spread The million to were operating improvements year first significant

the Ending year quarter account the increase offset a higher as equity billion, impact account balances balances. more to $XXX X% totaled markets outflows. prior of Turning versus than

outflow Overall and rate strong interest elevated which the was higher expected in performance. given were market environment equity quarter, the levels

represented in to end improved than annuities. to account focus spread points flows net variable total first However, the fixed strong relative of the and XX% represents quarter. the our RILA on now of versus quarter and up like balances, to quarter, the general as due account expanding year spread products total we lines. sales of At continue balances both product X account XX% percentage more prior

results mix also reflect product annuities but our quarter's our This of continued the only in-force execution not of business, strength shift. our

of second Our deliver half the positioned strong remains annuities year. the to well business earnings in

prior Plan decline months, $XX reduced by value by stable to The interest million Now reported rates, in higher net driven turning to year Retirement XX the Services, operating last income driven was offset over G&A primarily million partially from participant the which compared of $XX quarter. outflows expenses. elevated resulting

increased balances to and XX% expenses. sequentially account results net million or $X due higher lower by However, G&A

spreads for second stabilize spread rate XXX compared quarter basis compressing basis points year the base the current the around basis points environment, Our of at to In we XX was points prior roughly expect the quarter. the half to XXX year. in

persisted stable the we continues outflows our While the quarter, trend in stable be quarters. to X outflows value value the quarterly encouraging, experienced and lowest of last level in

turning positioned expense Overall, our account Average continued $XXX balances on balances disciplined we coming the account were nearly revenue reflects the Now versus up XX% for on sequential the account in year earnings increased the and deliver XX% quarter over solid quarters. focus remain improvement end-of-period and prior quarter. growth efficiencies, billion, and to well focus balances. year-over-year to

income impacts compared below-target were prior with the this term Universal as Re expenses. Lastly, Fortitude was lower quarter run face the business Mortality slightly the $XX of retail by turning our business was line in in mortality driven Life by favorability rate small as an million of of loss and life our expectations offset claims, reported transactions business. a in the operating quarter income year to number to elevated Life by alternative Life investment operating offset amount high of in $XX Insurance. partially in million

pressured Overall, for prior the G&A earnings actions of taking alternative reflecting while reductions profile reflecting this to targeted our strategic the of the this in million result Life we've made expenses versus first with in Net the earnings reported half $XX we underlying the was the improve the lower expense business. income down quarter, the expectation, year been quarter investment were year. quarter, line

in We the in from we year. of expect on the Life favorability actions half expenses taken mortality improvement seasonality have and support business the to second the

to first of on head Let In resulting focus. expenses. organizational Managing in focused focused me a strategic reducing the spending. the area complexity, quarter, count discretionary reduction ongoing expenses the across briefly touch on in announced in organization unnecessary now on actions efforts removing we that key addition the remains a were company-wide

items of this of excluding year-over-year. a both significant these sequentially declined and first expenses As the have from result actions, G&A quarter year,

As X think highlight we expenses to I want items. broadly, more about

volumes year. sequential We particularly the items, second year. the continue seasonal of growth course half First, to impact saw the higher impacts drive expense this sales experience the in the and of we'll second over in those quarter,

and efficiency to the in we process from to to our And third, to our invest continue the to efficiencies our strengthen to improve we overall base earlier year alongside Second, further see growing opportunity operations, the talent, outcomes expense of while objectives. evaluate strategic profitability opportunities franchise our this financial continue actions while the rationalize of technology our businesses.

quarter ratio to as we estimated capital. our a RBC view the ratio above with buffer is during an level our We and RBC target reminder, a a environment. Shifting XXX%, to maintain allowing RBC RBC as ended target recessionary a XXX% XXX%,

discussed improvement the to last Wealth completion roughly quarter, sale business million of delivering Management we the Osaic, driven $XXX of statutory our sequential capital As by was of the benefit.

reflecting Osaic Ellen ratio leverage years. flexibility an to capital XX.X%, basis outstanding down significantly XXX actions above as the mentioned, taken the and ratio few million. targeted to achieving protect XXX% of capital driven Overall, rebuild the the gain debt greater RBC provide a should points to $XX of Our of by and after-tax milestone, improved over over we've is key next related transaction pay and close the sequentially

a Alpine, drive annuities covering in-force scale entity. wholly initial of licensed an to certain Aditionally, group Monetary want into I license Class an fixed Bermuda-based of on executed the reinsurance indexed and to business our In reinsurance disability blocks line. June, owned issued Bermuda we Authority the subsidiary, for LNC. update transaction newly provide E Lastly, a subsidiary

Alpine affiliated operate ahead, as reinsurance Looking life will and annuity an company.

the are flow and capacity around affiliate support flow to our the reinsurance marketplace. competitive Bermuda presence that pleased a our ensuring the reinsurance in very markets for and The centered strategy of line Alpine improving long-term products in cash increased strategic We free objectives. business and will of join creation are new with

phase support achieve XXXX business early this later new to in expect XXXX. flow the We initial or of

deliver migrations. reflect investments. provide grade moving portfolio. of solid positive portfolio. continues Now the quarter, high The I net to to XX% was ratings X on updates continued nature our want performance investment remains portfolio last to quality to and Overall the Similar to and

to First, on third, the continue general on increased loan optimization platform mortgage with on our Starting the with in our second alternative account on our in efforts, money efforts; progress performance. We portfolio; new a where drive new second, we and investment X.X% at commercial portfolio to to general optimization account yield. the organization. money our multi-manager invested sequential yield value improvement leverage experienced our quarter, our

increase driven in rates, this shift assets of higher by and to primary a structured our asset While high-quality driver products. portion was was targeted mix a liquid the less

ahead we earnings spread will to strategy, execute year, half further the continued second product support as the which As and expect of progress we we optimization our look competitiveness.

office Next, we quality environment. navigate longer-term sector, a The assets well but of on are positioned represents with the to representing loan invested mortgage The invested are transition, high there in remains we total believe XX% brief of and update office only headwinds and a commercial through X.X% going portfolio. our the assets. is total portfolio

positioned and on near-term conservatively our are a service coverage office discussed remain from debt perspective. maturities manageable prior As portfolio and loan-to-value calls, within

be CML our details supplement. can earnings in Additional on quarterly portfolio our found

below quarterly X% generated return a alternative X.X%. our our Lastly, of of expectation investments quarter, this quarterly

and allocations strategies. portfolio reminder, estate-related with equity and strategies of our is to real hedge comprised relatively diverse alternatives a fund small private of real a asset As mix

due the lower slightly However, primarily activity, merger reduced have quarters, certain to private over equity returns of several below our been and realizations acquisition pace in which strategies. has last expectations, the

rates, estate. sub interest which And valuations such real as on higher certain strategies, negatively impacted

the to quarter, quarters, the we similar third points. I to expect alternative As In X X.X% recent want we to to below closing, be moderately ahead investment look reiterate expectation. returns

been has primary First, strong capital foundation building focus. a a

growth. year, the quarter, execution of across wealth sale strategic initiatives progress enterprise of business our that have of support building closing will last ensure including key significant foundation capital the over market investment made With the cycles this the for and profitable stability we management the towards

optimization Second, this cash with our our operating effort pleased and flow franchise. from while ongoing the focus And strategic third, momentum strong unchanged free our we we we've in discipline. improve maintain are progress sheet, being objectives balance grow reflects made, the expense earnings quarter against as to progress the and remains a made our model longer-term execute overall

me Tina. to let that, call turn back the With over

Thank question requeue you, of portion We'll yourself Chris. and then now limit additional Please the one follow-up and to call. you begin questions. question-and-answer have one the if

begin operator Q&A. turn over me let Now the the to call to the Operator?

today Instructions] from line [Operator from Ryan Your of question KBW. Krueger first comes the

can My was a the first free of you -- your -- I just was? on us what Can can first, question first you half just year, flow. rough free cash flow of sense cash guess, you give

Ryan.

you think that that can of capital and and say would is in relative this common So paying longer-term put the see year. look, what a outlook to continued I the track earlier sense dividend the out from we're we growth get on the I

XX% in in reminder, XXXX, we growing XXXX. was the to a X-year conversion had free a that talked about flow as to cash XX% So outlook XX%

we get I there's to to we reminder, think make that be number time, takes sure going investments a that said what the as we're each make the to a we targeting. and quarter was at that X-year X-year puts as longer-term

the would, step actions if quarter, took. think you we given about that first used thought had expense then it we I the we some right, some think capital we generated for of of you we and that So severance back, if

proceeds flow we think able for an up to This get we're Alpine, in entity mentioned, an thinking And we on Osaic example the ready as executing of some the used deleveraging. I the deal. position we whereas quarter, set for overcapitalized for started we as about then

that if step the day, and the end of think communicated about thought as progress you part the back, of had we outlook. we're about So and making at it the

that free We some ] XXX% are by line. to big bringing on still, step RPC, [ to both flow track this down ratio XXXX. a chop conversion quarter on but leverage forward getting get to to and to the XX% cash wood XX% from got executing was the We've

be quarter. going takes puts to and each there's So

think of at get we're to the making look you if making end the to relative that to confident numbers, as day, we feel the make. the I you progress we the that at need had to XXXX can described what we're path the progress that

And the any was then And much are contribute what sense on -- Bermuda, did reinsurance can of you thinking more how initially the capital then you impact you to internal forward? going originally of give about us it magnitude how lost of the seeded?

Sure.

So our be one is to couple step next strategic to of think and establishment about that going important end that It's of executing products we the of forward. achieving talked key the about an markets critical the as competing Bermuda you years. objectives strategic the are in objectives entity the over on

So about products. like really and spread thinking growth in spread

I in think that. annuities $X X billion with bit ceded fixed was entity. feel the We little or than really minus past establish Bermuda a less got licensed year. worked the quarter. We good for plus reserves. and that about for then to disability us step about this We in We

again, the Alpine, next the the capital the flow L&L long-term can end be able a we're that all on the relative flow into for forward. create the the flow to of down will At its the day, the reinsurance move to also for new going the and step free we But inception I takes puts execute there And overcapitalized couple get reserves in still that business sense target that in off to really, capital to with say the scale and relative of agreement execute is the that a at entity now. the through get We're deal will will internal to next -- working versus different an quarters. going cash not is goal there. scale we system. goal being of to block throw

over think be products a Bermuda. in of that number attractive will different look I time, there

with in fixed annuities. external As flow substantial an also retain a partner deal the we a there. sales of example, place an generate have but amount We we that do

I think framework work fixed So economic one example, annuities is that well the very Bermuda. in

a the more good it's So to pleased progress. come, step, we're really and but with

comes from Evercore. line the from Lu question next of Nick Your

the group protection was very strong sales, So it for year-over-year.

line the Just peer -- elevated in to with commentary wanted recent on pricing competition.

to you how feel here? adequacy wanted the Just see pricing guys about are sales comfortable from going new and

Sure.

So I'm that. to happy take

So as we sales group in it as any said that, always have environment that, We market all, seen of what the first been are is not view to we -- change the and relates rational. seeing competitive remains been, has and we and landscape. competitive. Having it noticeable has but largely

in on service and protection margin predicated been infrastructure needs. And grow have proper the the being capabilities balance as critical is how business. carriers this to service, in ultimately the serve small are group terms point mention in tend that importantly, business operational And the messaging this that group Most growth very the market. in over having then the market on to at date. much want business had a uptick time, just between also prioritizing new market successful those into about to required entrants, some have to in not the just start an entrants have and seen success and of of we in impact the those material think We are to new they segment. really I really and

as the we're as refreshing So the mentioned, pricing. We much disciplined very in are market, we And of all much very also remain process we reflected of across relates and to our in targeting differentiated in growth strategies fact that's comfortable product. that also renewal business and how, got And of a feel we combination new margin are that's and that again, growth. of X% prioritizing we've pricing. terms very we are -- overall over where we it premium

will follow-up point annuities, very sequentially, both strong, there Sales was is any key year-over-year to behind was especially on to that what the and that? annuities. on particular you And is fixed also driver as

Sure.

very increase in are our with we So sales. overall annuity year-over-year XX% pleased

fixed remarks, mentioned annuity annuity in operational in Building a required came consistent our a upfront the capabilities were be presence of fixed to As in sales billion. part saw And We quarter number increase we for last very in we significant a $X.X sales. our to the at that the have year. able a better of spent market.

examples external an attractive was flow mentioned that. with to of provider so them Chris put in one that, of And and agreement of an place

leveraging with our on of our focused space some also key We shelf strategic relationships, distribution established consistent partners. and we

And that are in strategic reinsurer the asset forward, and utilizing market. growth drive we going that fixed our sales to also have we have refined Chris allocation. to affiliated leverage our the to also Bermuda mentioned, we and now opportunity setup continue And as

although saw one of an X been about RILA RILA also into increase important flat, the sales We years there XX%. -- than RILA ago. has down We of year-over-year, product saw relatively a were segment X%. us. entrants more market for sequential we We over And the earlier

in an is there very all be price, us our we compete competitive think a annuity product our of overall refreshed product to that offer been unique to RILA annuity some have features RILA enable continue know, strategy. which as we you and And then to over presence part there. valuable. continues maintain the on we quarter, variable significant in And has We features product. we that And important our

are. sales. comfortable target returns, We're We're XX% of with annuities about at very good guarantees that again, feel, overall we and VA our we where good level. with achieving represented annuity about

next line from comes from Kamath Suneet Your question Jefferies. of the

expense important to start story. improvement expenses. improvement about wanted the of cash on flow pretty you've part a free Obviously, I talked is

sense of maybe best because to get to what's target what measure then it investing Obviously, just in efficiency you're sort is but and So want a really way of the you're I the making also business. moves,

And externally, progress. sometimes so I hard to that think actually it's see

that of some So performing you're against would point us are how there that metrics track that? you to kind

Thanks for the question.

as expenses certainly And the the one company, point, think if framing optimization. of that for a aggregate couple back starting we're years, is $XXX there big room in G&A just the right? I in, a So go made seems the million past for given points of you in are up so picture, that environment we've

first So that's the big picture.

about room specific your to need be that's way and business great there's for example different Because margins unit for a through where the each better come probably metrics look lot to the be investment, a higher expenses, and if with Group is you will a -- think going for go offset of but investment versus at I best different question, optimization. to it. business, will overall. it in level,

to That's We were think life from go. down $XXX need. million, day, we unit to expense just think business different quarter, ultimately, we out significant and where quarter continue $XXX look on it's We at each make this level, metrics the of think next and year that see And that the highlight we slightly the look of see us if room in the we But come expenses And the On over a the are -- continue there investment more a incumbent I $XXX that at. at last businesses. you million, right? that's in aggregate, a of G&A a second to net year. to different think, side, million to we at quarter something started the opportunity critical I so couple years. ago, be we end should

expenses should unit you ways coming expenses come but in see look certain other at a investment in when and normalize operating the speaking, in margin. I the help? it, terms the to obviously, of you the pockets, for G&A expense has denominator that down generally at the business look say, Does can that. through that company. degree ratio in for level, in reflecting we try volatility some then But would You to aggregate

And any can as well. Yes. That's more would guys detail helpful. you provide obviously, be helpful

In that? to second terms was of the you are just And your sustainable seeing my on behind industry. I what's to terms going here record follow-up, to is looks like any be competitors. a your behavior annuities. Ellen, for follow And of wanted wanted that? it I irrational get on in thoughts How quarter up

industry and if then you the would perspective a a on maybe be So perspective could? on helpful Lincoln,

Sure.

demographic one year years a So a for we point, a of that this we Number we demand. customer and that first Americans of the history. is things. that couple know turning to have next of ever it's combination than is more where see, significant there's XX continue think just we trend all, there X we And exactly to here, your have in

need savings been relatively rates decade. at are the previous than really you interest deferred certainly one thing. a And they planning for so higher for had And have is and for retirement we still that secondly, know

talked the of that be is some that So year a last And also of also enable capabilities driving have capabilities them the annuity in the space well value another that that as customer built that number know of of then similar well. as just we types thing about that built is to we that operational we proposition. competitors some

So competitive. factoring annuity we that Similar in. that is said group previously and I had the think annuity of what is is landscape all definitely about to

important is efficiency got we our each in importantly that fact us. returns annuity all of the we've talked are largely target returns. aggregate capital all that being our best to about that We the can see in the And and products. segments ensuring ensuring products are we across from achieving we've rational. our and risk-adjusted -- appropriate are that of And in we And

that So Suneet. I hope helps,

Your Carmichael next the Autonomous from Research. question Wes of comes from line

And under And My prefunded above of come next XX%. a buffer, of leverage. did year. bit the for down first debt RBC that was on deleveraging is but a $XXX mentioned your think million as question now roughly priority, March there's you I ratio

other maturity? given that, do after So more do to Or mean, I'm missing? you pieces that there's are there I work think

you're came right, the leverage down. ratio So Wes,

to peaked it XX.X% down think now XX.X%. last around around year there. I somewhere at XX.X%, We're

goal said a what ]. is the to XX% As reminder, [ is closer we've long-term

work think So to room we certainly go. to There's still there's be done.

I think you different a accomplish couple can that of in ways.

equity from on You obviously quarter, from to partly from natural but can this elephant. earnings company, we just of did the gain sale which the also continue the build

in combination And which proactively table. the at loan. of of We the term repaid some million to continue management looking longer can then debt. well. look attractive buying of term on We did of are tools, all there's -- $XX at You that liability our as this quarter

the a at will opportunity So couple of come also of the the to years. preferred we that have do or buy day, in have the will in, end

about as length. That's we've talked at priorities the

So where balancing for I you say the think than all into that the that would you our invested together, is that end put And goal time it moment, that return is get we're if the and at today. leverage best not think for goals done. at the We we're bring dollar areas deploying same to capital the looking down. achieve we're leverage lower

group in results we're think, Got on above little the it. disability again maybe and -- margin your And do I the have across strong, know half a very we're expect in, been top business end I X% X% be and the moderation guess my you the of second But probably the would the industry on year. in of you given environment target. to follow-up

near above I targeting in the think there's that little you X%. of you're kind bit do run term? think But a to room of

improvement range this the think in we So that year that terms I holds. provided still of

ended reminder, X.X%. to XXX So a year we at for improvement basis we point communicated XXXX. a And last XX as

the a But at at the XXXX, So the at right? half number to half, our second margin, tracking right? remarks, first you're X.X%, So of So noise, year's if X% group around the in said X.X%, somewhere in there's XXXX somewhere broad we're to would then And versus last X.X%, around be look strokes, in the still I the within the look X.X% So high you I look there's relative basically the think a there half. Gets end. reminder, the right? half results first range, earnings down and of but our if continue year-over-year, group at to if end first will of our to high that relative you -- understand you'll range. is business, you of the important as quarter, second just quarter but bring you -- improvement. it the that see right? the to the at seasonality seasonality prepared as and first that we're

experience we thing last to in just this quarter the the benefit I reiterate, refund, remarks, from normally quarter in third year. this of mean, got like the it prepared the in you get second The we -- said quarter, just the that we received but

holds, that about range, to we when it's the you're your probably the of at the to and in. just the think the -- first estimates, that at half So guidance see you what still make day, we factoring At the relative higher that point. moment, end of sure your we think and end prior

next Brian Your UBS. from comes the line Meredith question from of

first My on Brian. group. for on is [indiscernible] question

Could amongst groups how that kind driving mortality additionally, you higher age group. higher you're other you mentioned And are trend little it that what's unpack a You of younger going seeing of mortality and see the And kind there age that forward? in? more? any

get in our would any I that Look, in question. group the for life Thanks it's volatility -- say quarter. business. you given

into I wouldn't read much too it. So

cohorts end business. read folks too year-over-year because But it higher the to wouldn't at in the younger those the When increase in business you expected the or helps the higher are in that through just it loss attached Life all the I that the group I ratio. a point handful And a in earnings this of trend the volatility the of explaining I was else mortality day, age being into in what think from have come claims explain from -- it can the just quarter. there's life much equal. to but happened severity have

any forward? second are Got that kind -- XXX% you you now how do you it. on? that Bermuda focused -- more you about there that focused you're growth? opportunities And organic is gives M&A question of then And return think flexibility at and so on [ of that RBC mark ] capital kind my have Are for going ratio on the

the outlook thinking would I investor what we capital Thanks changed. I we as return on the Look, reiterate are think question. so of for Yes. part discussed hasn't

rate that next are are there this number to year, the of years flow to we to I to get are right? XX%, a talked that earlier to over we what uses in capital of about steps couple the XX% go take from been cash So free think in of to 'XX to you back get that there. moving order describing, we've free required conversion run the there need cash if XX% flow that

of thinking using of deal associated optimizing with infrastructure. Alpine capital using an being capital expense about part fund our establishment the example So it, is as to to the with

the a coupon a you relative So a deleveraging perspective. which payback, of you preferred from from if to about about severance good example, there use is think the is and think expensive capital the if perspective

a longer lot to the the that we run in thinking hasn't for rate had the that at to on what operating a for opportunity efficiency We over cash of very think term. free the improve higher changed. and needed day, of probably get of fact, there's focused capital the So end using we're and, term. generating use to than are our to the to the company XXXX we long us But in investments that's make the

remarks. more call no are over There I now turn at closing the Tina questions this time. Madon for will to

any Please at address joining us follow-up you Thank have. happy this morning. for us investorrelations@lfg.com. you e-mail We're to questions

today's concludes That participation. you conference Thank for call. your

now disconnect. may You