Jack Matten

Max explained JPY 90B annual sales needed for flat earned premium. Currently at negative 1-2% underlying and expects that for the full year, with a path to growth over time.

Virgil confirmed no material macro impact on persistency or recruiting, expecting 10,000-11,000 recruits again this year consistent with recent trend.

Max confirmed 6% ceded to date with 10% midterm target, but signaled willingness to raise the cap over time. Sees significant capacity for continued ceding between Japan and Bermuda.

Max clarified 130bp net premium ratio reduction is GAAP-only (1/3 of benefit ratio decline). The remaining 2/3 (lapse/reissue reserves release and WAYS block runoff) benefit both GAAP and FSA statutory margins.

Max confirmed assumptions include a very small forward improvement in cancer and hospitalization trends based on long-term favorable experience, but characterized it as fairly limited.

Max emphasized strong credit management and bottoms-up underwriting. No exposure to recently troubled names. Structured private credit performing in line. Confident portfolio will perform well if credit cycle turns.

Max emphasized organic growth as primary capital deployment priority, with M&A evaluated but buybacks having delivered very good IRRs recently.

Max explained current assumptions include small forward-looking hospitalization improvement. Assumptions will be updated in Q3 as part of annual unlock process.

Yoshizumi acknowledged medical is far more competitive than cancer but emphasized Aflac's #1 share of new policies and plans for optimized channel activities.

Yoshizumi confirmed Miraito launched at associates and Daido/Daiichi in March, banks and Japan Post in April, with positive results across all channels.

Yoshizumi detailed medical insurance improvements, strengthened promotions via end-to-end structure, and 600+ new agent hires in 2024 expected to contribute in 2025.

Brad said CRE may have bottomed but recovery will be slow. 2025 expected to play out like 2024 with continued watch list management and REO portfolio optimization.

Lapse rates expected to remain elevated vs pre-pandemic, consistent with last year given economic stress. AIL Q1 first-year lapses higher than recent but viewed as fluctuation. Mix effects also at play: Liberty worksite and DTC internet channels have inherently higher early lapses. Overall resilient within historical norms for economic cycles.

Admin expense target: 7.3% → 7% of premium over next few years. Sales side: faster agent onboarding/training via AI improves both productivity and retention. Multiple pilots in progress beyond deployed tools. Benefits embedded in 2026 projections with continued tailwind into 2027.

FCF increase to $625-675M reflects solid statutory earnings growth. 2025 included extraordinary dividends that inflate comparison. No Bermuda benefit in 2026 guidance. Statutory earnings at a new sustainable level providing confidence in cash generation.

Q4 agent count decline is a recurring pattern (3 of 4 years). Struggling agents tend to fall off at year-end. Retention initiatives adjusting middle management incentive compensation to balance sales vs recruiting/retention. Still projecting agent count growth for 2026.

No Bermuda benefit in 2026 FCF guidance. Reciprocal jurisdiction requires 2 accounting periods, earliest benefit 2027. Timing ultimately up to regulators.

Confirmed demand is fine, premium per sale improving. Issue is agent onboarding cycle. AIL hires up 17%, leading indicator for future production. Agent count growth plus incentive programs support 2026 guide.

Favorable mortality flows directly to stat income. GAAP assumption changes are GAAP-only, no stat impact. Some health improvement also benefits stat earnings.

Deferred timing details until business plan is finalized with regulators and rating agencies in Q3. Will update on next 1-2 calls.

Explained LDTI creates cohort-level volatility where aggregate rate increases are sufficient for some cohorts but not others.

CFO confirmed rate increases effective Q2 start, expects UAGA margins in 5-7% range for full year.

Management attributed improvement to strong Q4 mortality experience and favorable development on prior-quarter claims.

CFO broke down: $100M from reinsurance transactions, ~$150M from valuation manual changes (half sustainable long-term), with investment income flat as partial offset.

Joel noted $80M adjusted earnings for Q1 was outsized due to $7M China Construction Bank performance fee. Sustainable run rate more in mid-70s. FX tailwinds finally emerging and allowing underlying results to show through in US dollars.

Joel confirmed no real estate transaction activity in Q1 driving lower VII. Expects pickup in Q2-Q4. Full year 2026 still expected to improve versus 2025. Underlying alternatives portfolio performing well. Performance fees expected similar to 2025 levels but lumpy by quarter.

Kamal highlighted three growth avenues: European real estate pipeline with Asia-based family offices, newly launched private wealth product in France exceeding expectations, and exclusive partnership with leading Islamic bank in Saudi Arabia. Private market AUM outside real estate now exceeds $16 billion.

Kamal explained fee rate noise from $13B of divestitures and mix shift toward development-oriented private strategies anchored on committed capital rather than AUM. These strategies generate more transaction and performance fees over time. Private market revenue grew 9% in 2025. Focus on revenue growth delivery over reported fee rate.

Joel cited $1.6 billion excess capital, $150M higher than entering Q3 despite $400M returned. Q4 buybacks expected even further elevated. Deanna added growing fee-based businesses will provide tailwinds to free capital percentage.

Joel confirmed continued margin expansion with expenses growing slower than revenues. Chris cited RIS investments in modernizing recordkeeping and individual customer capabilities. Amy highlighted multiyear front-end acquisition and data exchange investments. Kamal noted IM building new private and public market capabilities.

Amy explained SMB focus means different plan designs without extended rate guarantees or high maximums. LTD incidents benefiting from hybrid work enabling faster return to work. Life and disability competition relatively stable with dental being the standout competitive pressure.

Chris confirmed RIS margin will be comfortably at upper end of targeted range but not above it. Continuing to invest for future capabilities while maintaining expense discipline with growth below revenue growth.

Chris confirmed 2-3bp normal compression guidance intact. Market outperformance and VA lapses the additional pressures. Spread-based shifts affect total revenue rate not fee rate.

Chris noted DB funding levels still over 100% despite market decline. PRT pipeline remains good. Full year 2025 expected similar to 2024 volumes.

Joel confirmed underlying growth similar to 2024. FX is the main drag. Continued margin expansion expected in 2025 and beyond.

Kamal highlighted $500M positive nonaffiliated NCF in Q4, $2.7B positive from local clients for full year. International institutional and credit wins driving momentum.

Sullivan noted reduced PRT activity from economic uncertainty but expects 2025-like pattern with stronger second half. Highlighted growing middle-market deal pipeline alongside jumbo capability.

Sullivan detailed $1 trillion credit AUM split between public and private, plus $150 billion real estate. Emphasized non-sponsored deal sourcing and institutional demand for highest quality managers.

Andy declined to speculate on potential FSA actions. Reiterated weekly collaborative work with regulators. Focus is on executing the four remediation actions to come out of the situation expeditiously and stronger.

Yanela confirmed 65% free cash flow target correlates to ~$3B distributions. Cash flows not linear across the year. Strong holding company cash balances and operating entity financial ratios. Capital deployment decisions managed dynamically throughout the year.

Yanela framed expense discipline as continuous improvement culture rather than specific initiatives. Intermediate target of 10.5-8.5% operating expense ratio. Already at top end of range at year-end 2024. Expected continued progress.

Yanela cited higher spread income from strong sales with reinvestment yields above portfolio yields, plus market appreciation offsetting VA fee runoff. 50bp long-term rate decline sensitivity: ~$0.20/share annual AOI impact. No material short-term rate impact.

Andy noted 60% VA exposure reduction achieved. Large transaction market available with plenty of capital and counterparties. Continuous balance sheet optimization discipline. Nothing specific to share currently.

Andy confirmed continued stabilization unless large yen change. Still expect $100M 2025 impact consistent with prior quarter. Counteracting with additional distribution/service resources, doubled yen offerings, retirement/savings product expansion.

Yanela cited strong performance in both group life and disability, improved customer experience and claims management, under-5000-lives market segment with 50%+ sales growth, and 81.3% benefits ratio well within target.

Andy declined quarterly specifics but expressed confidence in long-term tailwind trends for annuity business.

Yanela clarified the runoff and new business strain comments were about GAAP/AOI earnings, not the cash flow conversion ratio.

Andy cited higher yields, stronger underwriting, sales momentum, and expense discipline outweighing U.S. dollar product surrender pressure.

Over 5% of customers have multiple policies, accounting for almost 20% of IFP. Three key investment areas: cross-sell platform, pricing/underwriting capability, and growth spend optimization. Overhead growing low single digits.

Too early to quantify Tesla FSD contribution to financials. Positioned as laying groundwork for broader autonomous vehicle insurance market. Management declined to comment on Tesla's competitive insurance offering.

One-time ERC (Employee Retention Credit) program tax refund, not expected to recur in future quarters.

Management confirmed subrogation rights sold for the Eaton fire at a healthy ratio, roughly $8M impact. Some additional recovery opportunity from Palisades fire but substantial amount already reflected.

Management proceeding to recover up to the 50% limit allowed. Some in year one with full resolution over a two-year period.

Wilson explained pricing is just one lever in a broad competitive toolkit, then had Merten walk through the Rubik's Cube analogy of operational levers, analytics, and organizational accountability.

Wilson gave a brief, cautious answer indicating California still needs significant reforms before homeowners pricing is adequate, did not commit to growth plans.