MetLife Stock

All right. Good morning, everyone. We're going to get started with our next session. I'm Ryan Krueger from KBW. And it's great to have MetLife back with us today. Up on stage with me is Michel Khalaf, President and CEO; John McCallion, CFO and Head of MetLife Investment Management. I also want to recognize John Hall and the IR team from Met.

So to kick it off with Michel, you launched a new 5-year strategy called New Frontier in December of 2024. Can you review the key components of that strategy and just how things are tracking so far relative to your targets?

Sure. And first of all, it's great to be back with you, Ryan, this year. So when we launched New Frontier, our goal was to deliver -- to accelerate growth, deliver strong returns and do so across cycles, positioning MetLife as a quality compounder over time. I think 2 years into the strategy or nearly 2 years into the strategy, really pleased with the progress that we're making. Our approach is simple. We want to deploy capital and resources through market-leading businesses where we have structural advantages. Think about size, scale, distribution and product and origination capabilities.

The 4 priorities that we set at Investor Day, I believe we're making good progress across the board. The first one was accelerating or expanding and accelerating growth in our Group Benefits business, where we are the largest player, 3x the size of our nearest competitor, capitalizing on our unique origination, retirement and liability origination capabilities in the U.S. and Japan and in the U.K., accelerating growth in our asset management business. We want them to become a greater contributor to our overall earnings over time. And then last but not least, accelerating growth in international markets. And we feel that we're really well positioned. We are in markets that have strong tailwinds when it comes to trends that we're seeing in those markets, and we feel good about our opportunity to capitalize on those. So those are the -- our main strategic priorities.

And we set, I think, an ambitious set of commitments and goals to support those. I would say we're tracking ahead of schedule in terms of delivering on those. We delivered a 10% EPS growth in 2025. We are exceeding that this year, a 16% adjusted ROE in '25. We're at 17% this year, which is at the top of our 15% to 17% range. Our direct expense ratio came in below target in '25. We're absorbing PineBridge this year, and we're still committed to achieving our 5-year target when it comes to the direct expense ratio. And then where the rubber meets the road on free cash flow, we delivered nearly $5 billion in '25, and the pace is continuing strong this year. So all in all, I think we feel good about the momentum we're seeing across our businesses.

And one point I would make here is that our model is repeatable. It's based on recurring revenues and the flexibility to invest where we see the most compelling risk-adjusted opportunities. And if you consider that technology and AI are force multipliers, that further supports our ability not only to deliver on our 5-year commitments, but hopefully to exceed those.

Great. Maybe delving in a bit more. I mean one aspect of the New Frontier strategy you've been discussing is a balanced mix of earnings from capital-light and capital-driven businesses. Can you expand a little bit more on what you mean by that and how you see that evolving over time from here?

Sure. And I've described diversification as MetLife's superpower. We really believe that, and it extends to every facet of our business, be it the geographies and markets that we operate in, our products and distribution channels, our -- the various risks that we take, our investment portfolio. And it also extends to this balance between capital-light and capital-driven businesses. That balance is roughly 50-50 today. We think of them as 2 engines that power the company.

And one point I'd make is that those 2 engines have been constructed deliberately over time. We've made significant progress in achieving this balance, this 50-50 balance. On the capital-light front, you have Group Benefits, asset management, LatAm, EMEA, businesses that are not very capital intensive that deliver high ROEs. And then from a capital-driven perspective, you have our retirement and spread businesses. And again, here, we deploy our balance sheet to generate attractive risk-adjusted returns. And one point I would make here also is that one engine feeds the other because we -- our capital-driven businesses originate assets for MetLife Investment Management to manage, which fuels our fee-based capital-light engine. So those businesses are highly complementary.

On expenses, you had mentioned being ahead of target so far. One of the targets was 100 basis point improvement in the expense ratio over 5 years. Can you talk a little bit more about what types of things you're doing to drive down the expense ratio? And to what extent things like AI and technology are playing a role in that?

Yes, sure. And let me just echo Michel's comments. Great to be here. So thanks for having us back. So maybe just 2 things. I might just tie in ROE to that as well because they're connected and also kind of just coming off of Michel's comments on the mix of business.

I think a couple of things I would point out. The unit cost initiative is really like a cultural thing for us, and it's really not about cost reduction. We're really trying to drive a sustainable operating leverage within the firm where revenues outpaced expenses. We want to be able to invest in the business for growth. We've been doing that. And at the same time, we are seeing a reduction in our unit cost occur. We had that occur under Next Horizon. We're already off to a great start under New Frontier. And I think as Michel pointed out, I would highlight, again, just a point, we acquired PineBridge, which is an asset management business, which is a high expense ratio business, right? That probably put about 50 basis point headwind on our expense ratio, yet it has not taken us off track. So we've absorbed all 50 basis points this year.

If we hadn't had PineBridge, we would probably have a target of like 11.6% instead of the 12.1% we have for this year.

So I think all in all, there's a real cultural inertia that's going on around our focus on driving operating leverage across the firm. And I wanted to bring ROE into that. And that's also helping with ROE. If you tie together the points Michel made around our mix of business, so we are -- we have been -- our pace of capital-light businesses is outpacing capital driven, and it will likely continue. So that in and of itself will drive up ROEs. Unit costs will drive up ROEs. We've been delivering high unlevered IRRs on new business, kind of the high teens, call it, right? So if you take all of those things, couple that with the fact that we have a runoff block that's more capital intensive, that's also one reason why you're starting to see the ROEs push up to the upper end of the range. We've been at 17% for the first half of this year relative to our 15% to 17%, and we see good momentum going forward.

I would say the other thing just point -- I think you referenced a little bit around just what's driving these things. We've been on a journey around delivering a foundational tech stack, a journey around a data strategy. And now you embed AI and going back to how are you absorbing the 50. I mean these things are real. We're really seeing kind of the productivity gains come through the firm, and we see that continuing throughout. Workflows are changing, how we process claims are changing, how we underwrite is changing. And then there's opportunities for AI to drive growth. So that really continues to drive down that unit cost over time.

Great. Shifting into the businesses. Within the Group Benefits business, your premium and fee growth has been trending towards the lower end of your 4% to 7% target over the last couple of years. Certainly want to acknowledge it's a great business, and there's nothing wrong with growing 4%. But do you still see an opportunity to accelerate revenues within that target?

Yes, we do. To your point, PFO growth was -- the underlying growth was about 4% in the first half of the year. We're pleased with that. That's higher than market growth in the first half. We believe it will pick up somewhat in the second half of the year, and we certainly see a path to it migrating towards the midpoint of the range, if not higher over time.

I think a few things that give us confidence in our ability to do that. If you think about our strategy, it's based on accelerating growth in regional market, which is a segment of the market that's more fragmented. We're seeing good momentum there. We're also -- given our relationships, especially at the high end of the market, we have the opportunity with more employers looking to do more with fewer providers to add more products to existing customers. And then increasing the take-up rates on our voluntary products. So we've seen also good traction there, and we've made investments that have been helpful to us in terms of driving up take-up rates there. So for -- I think all those strategies support our view that we'll be able to -- that the 4% is certainly not the ceiling. We think that we will be able to deliver certainly growth towards the midpoint of the 4% to 7% range that we declared.

The other thing that I would point to is, again, it's not about growing for the sake of growing. It's about disciplined profitable growth. If you look at our earnings so far this year, up 22% versus last year. And we're certainly trending ahead of the 7% to 9% that we sort of discussed at the outlook from an earnings perspective. So we're growing, but we're growing in a way that also helps us protect margins.

Can you talk more about the underwriting trends you're seeing in the Group Benefits business across Group Life and nonmedical health? And just any key things we should be thinking about there for the second half of this year?

Yes. Let me start with the fact that they certainly have been favorable to start this year-to-date, as Michel said, has had a strong growth in margins year-over-year. As you break it down, obviously, we've seen strong mortality trends when it comes to Group Life. Second quarter, we had a benefit ratio of 79%, well below our range that we gave for the -- our annual range for the year.

And while we did have, call it, 2 points of favorability from prior year development and some claim severity. Nonetheless, it was a very strong mortality trends. And I think what's important in this business, particularly in the Group Life business is these tend to have 3- to 5-year guarantees. So we do expect some moderation to happen in the second half and as we move forward, but it will be slow moving. We don't expect everything to happen at once. But certainly, a Group Life mortality ratio has been a nice tailwind, and we expect it to continue in the near future.

On the nonmedical health side, we did a lot to come into this year, much better positioned. We got our dental repricing done. Disability has continued to maintain in line with expectations. So we've seen the seasonal improvement occur. We did have some headwinds, and I think the industry did around PFML in the early part of the year. We've seen that moderate in line with expectations now. So we expect the rest of the year to start to continue to see that seasonal improvement occur. So I think broadly speaking, Group Benefits underwriting margins will remain intact for the near term, and we see good momentum going forward.

I guess when it comes to competition in the Group Benefits market, how would you characterize how things stand today? And are there any particular areas, whether it be product or market, where you're seeing more price firming or softening at this point?

I would say that overall, the market is competitive but rational. I think the fact that this business is short term in nature, so claims do show up fairly quickly. I think that acts as a sort of incentive for folks not to get overly aggressive. We've certainly seen that in recent years.

And look, price matters and will always matter in this business, but it's not just about price. And I think increasingly so, we are seeing service delivery and how you experience -- the experience that you deliver to employers and employees play a very important role in decisions that are made when it comes to this business. We've always talked about the importance of scale here because that's what allows you to make important investments to keep up with customer expectations, customer needs, something that we've done consistently over many years.

A good example I would give you there is our investment in My Leave Navigator, which is our leave and absence platform. That was a multiyear project. We deployed significant dollars into that. And that's paying off big time for us because it's been very well received by the market. It takes away from employers a burden when it comes to administering complex plans, especially as more and more state enact paid family leave regulation. And it's helping us grow, but not only grow that business, typically, we sell that product with 4 additional coverages, again, ensuring that we're achieving returns and margins that we feel comfortable with and to support what we're seeing in terms of how we're protecting margins in that business. So yes, it's a competitive market, but I think it's not just price anymore.

In your U.S. retirement business, one component of it is pension risk transfer. The market as a whole has been pretty quiet so far this year. What do you think is driving that? And then how do you feel about the pipeline as we move forward?

Yes. I think it has been a slow, I would say, first half of the year. I would say that this business tends to be lumpy anyway, especially at the jumbo end where we tend to focus. Obviously, last year was a record year for us, $14 billion in sales, in PRT sales. I think what we're seeing is more of a timing thing as opposed to sort of a structural shift in this market or in the attractiveness of this market. Because if you think about the $1.5 trillion sitting in plans that are well funded, if you think about the incentive for plan sponsors to transact, reduce balance sheet volatility, remove admin burden and make sure that benefits payments are delivered by strong quality insurers. I think those fundamentals are still there and support a market that I believe will continue to be robust for years to come.

We already see a healthier pipeline in the second half of the year compared to the first. We're obviously a market leader here. We bring a lot of capabilities to the table. And again, I think we feel good about the mid- to long-term prospects of this market and our ability to continue to win, but continue to be very disciplined in our approach as well.

The market probably focuses a lot on PRT, but you do have a lot of other products in the Retirement Income Solutions business. Can you talk more about the growth opportunities you're seeing outside of PRT and how you're feeling about the 3% to 5% target you have for growing retained liabilities there?

Yes. We feel good about the 3% to 5%, and we're confident in achieving that. To your point, I think PRT gets the headlines, but it's not just about PRT, and we're very well diversified in -- when it comes to our RIS business. We're market leaders in structural settlements and stable value, for example. And we've been able to tap into some, I would say, important growth areas as well. U.K. longevity reinsurance has been a business that we stood up in 2020, and that's contributed significantly over the years. We continue to see a healthy pipeline there.

And U.K. Funded Re, which is a business that we entered last year, we've already written $1 billion there this year. And then we talked about entering the retail annuity market here in the U.S. on reinsurance basis. And since we did that last year, we've already written $2.5 billion there. So we're continuing to tap into areas well beyond PRT when it comes to growth. What's important for us is this flexibility of -- we want to be able to pivot to where we see the most compelling risk-adjusted opportunities. And again, I think that diversification that we have allows us to do that.

Spreads in the retirement business, excluding variable investment income, have been pretty stable lately in the 95 to 100 basis point range. Would you expect that to continue going forward? And then how would you anticipate changes in the yield curve potentially affecting that outlook?

Yes. We -- it's been pretty stable now for some -- few quarters. And obviously, a few years ago, we came off some highs just because we had some protection from the way to protect against a sharp rise in the short end of the curve. But since then, those have rolled off. We have a very diversified portfolio, as Michel said, both not just from an origination perspective, but also across the curve, short and longer duration. So that has -- obviously, the higher yielding longer rates have been a positive tailwind for us, and that's continuing. At the same time, a flatter curve on the shorter duration is not as ideal.

So -- but they're balancing each other out. And what I'd say is we're well positioned to maintain the current spreads regardless of where -- I'm assuming there's no steepening of the front end of the curve from here, let's say. But whether it stays here or steepens, we would probably be able to sit within that range that we've talked about, which is like 95 to 100 basis points.

Got it. Then on variable investment income, I mean, it's volatile by definition. But for the overall first half of the year, it was pretty in line with your expectation. Can you talk more about, I guess, the underlying pieces between venture capital, private equity, real estate and how you're feeling about the back half of this year?

Yes. It's -- the first half, if we take the first 2 quarters, we came in roughly $750 million of pretax. Our annual guidance range is $1.6 billion. We said in the second quarter earnings call that we still expect to hit our outlook of $1.6 billion. So that implies obviously a slightly higher second half than what we saw in the first half. And we saw -- and I think everyone has recognized the second quarter has produced some constructive backdrop for this portfolio, particularly VC. Venture capital is about 25% of our private equity portfolio. And certainly, the IPO market, the AI-related investment activity in the second quarter, all those things are strong tailwinds for the VC portfolio. Even the broader PE portfolio is going to benefit from just the broader public equity market marks that are occurring.

So there's some good momentum going into the third quarter. Our sense is we'll be at the $1.6 billion, if not upward bias at this point to the $1.6 billion for the year. And certainly, I would say, for the third quarter, we have an upward bias relative to our quarterly annualized number just given that backdrop.

Got it. To move to Asia, it's the highest rate environment there that we've had in quite a long time now in Japan and Korea. How are you seeing that affect consumer behavior? I guess, both in terms of demand for new products, but also surrender activity on existing business?

Yes. I mean, I think we've seen very strong sales in Asia overall in the first half of the year. The second quarter was a record quarter for us when it comes to sales in Asia, 17% growth.

The second half, I should point out, is a much tougher comparison because we had a very strong second half last year as well. But overall, for the full year, we've come in above the mid- to high single range that we gave that outlook for sales in Asia. In Japan, the higher rates are increasing demand for yen product. This is a trend that we had sort of anticipated, I would say, hence, several new yen product introductions over the last couple of years. And to give you a sense of the progress we've made there, last year, 30% of our sales came from yen-denominated products. This year, it's 50%. So we're seeing really good traction on that front and good momentum.

From a surrender activity perspective, the weaker yen is increasing policy value, so hence, leading to higher surrenders compared to what we would normally see. I think a good measure that we use, certainly, we think is important for Asia is AUM growth. And because that accounts for inflows and outflows. That's 6% year-on-year. So very healthy and gives you a sense of how the region is performing and the momentum that we're seeing there. And outside of Japan, I would say, again, we're continuing to see really good momentum. Korea has performed very strongly. Strong equity markets there are supporting some of our variable products. And we've also been able to leverage a lot of our expertise from Japan on the FX front, brought that know-how to Korea, and that's also resonating in the market. And our other markets are doing fairly well as well. So all in all, really pleased with Asia's overall performance.

So have you been able to do any asset repositioning to take advantage of higher yields in Asia? And to what extent could that be an ongoing opportunity?

Yes. We -- I think it's important to kind of understand the construct that we operate in. And for us, certainly, when it comes to interest rates and FX, we tend to try to really focus on our disciplined asset-liability management approach, right? That also ensures that -- and we've talked about our sensitivities under ESR, for example, in Japan, they're very limited relative to large movements, right? And that's a function of ALM, right? So we tend to not take large directional market positions in the portfolio.

Having said that, in general, there is a higher rate environment, and yen is a positive aspect to that business over time. We will also look for opportunities to reposition where we see like there's a strong payback period to something like that. And so we've had -- over the course of the year, we've done a few hundred million of repositioning in the portfolio. But we're also mindful that we're relatively speaking, matched or as much as you can be in some of the real long-duration liabilities. So over time, you would see that higher rate environment come in to a roll-off, reinvest. And then we would also be opportunistic, but it wouldn't be very large amounts of trading that you'd see.

Got it. Asia earnings have also just come in above expectations that you had set coming into the year. Are there any particular drivers that you'd call out that has led to that? And any reason to think it's not sustainable?

Yes. I mean I think Michel touched on a lot of them. You're seeing broad-based growth across that region. Japan, mentioned Korea, all of those things, the 17% growth in sales in the second quarter, the record sales. We see that strong sales momentum continuing. Obviously, the compares might be a little different relative to last year. So year-over-year may feel different.

But certainly, the level of sales is on track, and we'll continue to drive that AUM growth that Michel referenced of the, call it, mid-single digits, 5% to 6% or so. Equity markets have also been positive in addition to interest rates, let's put those, those are kind of known. Equity markets, as Michel mentioned Korea, also China. We actually have some equities in the China portfolio. So in the -- that comes through NII because it's a joint venture. And so we've seen strong NII in the Asia segment, some of that coming through China, and they've had some strong equity market performance in the country.

Got it. And in Latin America, as we emerged from the pandemic, you've had a really strong run of results and growth there. What would you attribute that to? And what would, in your view, be the biggest risk of that not continuing from here?

Yes. I think LatAm has been a powerful growth engine, I would say, for us. We've seen really strong momentum, top line sales growth, PFO growth translating into earnings growth as well. I think we're -- we continue to do very well in our core markets of Mexico and Chile. I put that down to diversification when it comes to distribution capabilities and products as well. And we've seen -- I did mention that in the past, we've seen coming out of COVID a flight to quality, if you like, that we benefited from to some extent, but very strong execution on the ground.

And then Brazil has been one of our fastest-growing markets anywhere, certainly, fastest growing in LatAm. We grew sales 70%, 30% PFO growth. And Brazil is now contributing 20% of LatAm sales overall. A major driver of the growth that we're seeing has been our Xcelerator platform, which is our embedded insurance digital platform. We've been able to acquire a number of digital banks, e-commerce companies, retailers on that platform. That platform now accounts for 20% of overall LatAm sales. So that's been a major driver. But again, we've seen really good execution when it comes to the expense discipline in the region as well.

And to the point you made, Ryan, that's translating into basically earnings having -- doubling from pre-pandemic levels, and we're on track to deliver $1 billion this year. The risks, I would say, are macro in nature. I would say currency has been favorable, but that's always something that we look at. And the overall sort of economic conditions, I would say, are things that we would watch for. In terms of our business, we don't see anything from a regulatory perspective, for example, that is -- that creates risks or concerns for us at this point.

EMEA has been pretty consistently outperforming expectations in the last year or 2. What do you -- what's been going better than you expected in that region? And do you think the outlook has permanently moved higher at this point?

Yes, I'm so glad we get to talk about EMEA because I mean, I think EMEA has been a really great story for us in terms of -- it's a high-quality business, capital-light, protection-oriented. It's an important contributor to our free cash flow. Basically, we've averaged 100% of earnings in free cash flow for a number of years now. And I think it's a good example of a region where we've done a lot of simplification, and we've really done a good job managing expenses, unit costs.

We're in 23 markets, but we operate out of 5 legal entities. So it's a very efficient structure when it comes to expenses and capital. And we focus on segments of the market where we -- I say we have a right to play in terms of the value that we bring and the value that we can extract as well. And the team there has done a really good job of that. So we've seen top line growth translate into earnings growth as well. We've been running at the high end of the 90% to 100% range that we -- quarterly range that we gave at the outlook. And I think I would expect us to continue to be at the high end of that range for the second half of the year.

And in MetLife Investment Management or MIM, you touched on the PineBridge acquisition earlier, but can you give an update on how that's been going so far in the integration?

Yes. We're a little over half of a year into the integration. And I say this internally to the team. I mean, you go through some -- obviously, some challenges here and there. But overall, it's been a very, very strong integration. Culturally, there's a great fit. We got the leadership team in place 1/1, and we're off and running. Clients have been extremely receptive to the combination. It just made sense, right? Where they've come from, their history and their heritage coming into us, coming into our global brand. And I'd say the power of the 2 have 1 plus 1 is more than 2, right?

And look, this was -- as we have said before, the strategic aspects of this is how do we continue to grow our global asset management footprint. That includes capabilities, distribution and also institutional client reach, right? We have significant opportunities for us to cross-sell across just our existing clients. And that's been a big aspect to us. In the first half of the year, we saw some natural revenue dis-synergies with any integration. Actually, a lot of that was covered as part of structure that we built into the deal and the performance-based structure aspects of that. So -- and we feel like that's mostly moderated as of now. In addition, I think we're able to accelerate some expense synergies. So we've been able to capture about $50 million of annualized run rate saves so far. And we see now the path for us to continue to drive growth.

The reality is I think if we look at the range for this year, we're probably heading towards the lower end of that range for this year, but we actually feel like we're still on target to hit our '27 and '28 implied numbers that we gave in the outlook. So -- and that would also imply getting to that operating margin that we referenced. So all in all, we're very pleased with the integration, what the combined platform now brings to our clients and look forward to continuing to drive growth.

What are the big moving parts to get to the 32% margin target for 2028?

Yes. I think it's a little bit of those things that I referenced before. We need to now drive revenue growth through that cross-sell opportunity. We have a lot of dry powder in our private area today, probably close to $4 billion of dry powder that will be deployed over the next, I'd say, year to 18 months, right? So there's a natural revenue opportunity ahead of us there with the commitments that we have. And then ultimately, continuing to drive our expense synergies and the operating leverage.

One of the things that we focused on for a number of years is maintaining a One MIM platform. That's been very important for us to drive that sustainable operating leverage. So now we need to continue to do that. There's a lot of technology implementation and conversions that we have to do over the next few months and into next year, and that will be important to maintain and to accelerate that.

My last question was on capital management. How are you prioritizing M&A, share repurchase, buybacks and as well as any further opportunities for divestitures?

I think this is an area where we've been very consistent. And I would say no change whatsoever in terms of our philosophy or approach here. Our first-order priority is to support organic growth, and we're doing so at attractive returns and paybacks. So we'll continue to focus there.

On the M&A front, we're very disciplined. I would say any deal would have a high bar to clear. And we think about strategic fit, cultural fit, but we also think about value creation over time and how any deal would compare to other potential uses of capital as well. And then excess capital, we will continue to return to shareholders. Recently, we announced a new $3 billion buyback authorization from our Board. I think that's another indication of the confidence that we have in our financial standing and again, ability to continue to return capital to shareholders over time. And we want to continue to have an attractive dividend yield. That's an important, I think, part of our story. So an increasing dividend is something that's important to us.

From a divestiture perspective, we're always going to look at our lens using the same lens, I would say, that would apply to acquisitions in terms of strategic fit, in terms of value creation and the like. But there are no burning platforms, and we really like the mix of business that we have currently.

Excellent. Well, we're going to wrap it up here, but thanks a lot to Michel, John and the MetLife team.

Thank you. Thank you, Ryan.

Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Second Quarter 2026 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to risk factors discussed in MetLife's SEC filings.

With that, I will now turn the call over to John Hall, Treasurer and Head of Investor Relations.

Thank you, operator, and good morning, everyone. We appreciate you joining MetLife's Second Quarter 2026 Call.

Before we begin, I direct your attention to the information on non-GAAP measures on the Investor Relations section of metlife.com in our earnings release, in our quarterly financial supplement and in our earnings call and investor presentations, which you should review.

On the call today are Michel Khalaf, President and Chief Executive Officer; and John McCallion, Chief Financial Officer and Head of MetLife Investment Management. Also available to participate in the discussion are other members of senior management.

This morning, John McCallion will speak to the earnings call presentation we released last night. The deck is available on our website. An appendix to the deck features disclosures, GAAP reconciliations and other information, which you should also review. After prepared remarks, we will have a Q&A session, which will end promptly at the top of the hour. As a reminder, please limit yourself to 1 question and 1 follow-up.

Now to Michel.

Thank you, John, and good morning, everyone. This was an outstanding quarter and another clear demonstration of how our New Frontier strategy is working as intended and how repeatable our model is built on a powerful recurring revenue base and the flexibility to invest where we see the most compelling global risk-adjusted opportunities.

At the heart of our New Frontier strategy are 2 complementary earnings engines that contribute roughly equally One is capital light, where businesses like Group Benefits, Latin America, EMEA and Asset Management generate attractive fee and underwriting income with strong cash generation. The other is capital driven, where our retirement and spread-based businesses leverage our origination, investment and risk management capabilities to put our balance sheet to work at attractive risk-adjusted returns.

Importantly, the 2 engines reinforce one another. Our capital-driven businesses originate assets that are managed by MetLife Investment Management, supporting the growth of our asset management platform and expanding our capital-light earnings over time. Together, they create a company that's more balanced, more resilient and better positioned to perform through different market environments. And that's exactly what we saw this quarter.

Adjusted earnings increased in every business segment compared with a year ago. Underwriting performance was strong. Volume growth was broad-based, and we continue to fund promising growth opportunities while returning excess capital to shareholders. This is New Frontier in action, leveraging our scale, market-leading businesses and strategic diversification to generate durable growth and attractive returns across a range of economic conditions.

Turning to second quarter results. We reported adjusted earnings of approximately $1.6 billion or $2.43 per share. Adjusted earnings increased 15% from the prior year period. Adjusted earnings per share increased 20%, faster than earnings growth, reflecting our measured and consistent approach to capital management.

Adjusted premiums, fees and other revenues, excluding pension risk transfers, increased 5% year-over-year. Sales rose 7%, led by strong growth across our international businesses. Variable investment income totaled $231 million pretax and was higher than the prior year period. Adjusted return on equity was 17% at the top end of our 15% to 17% annual target range for the second quarter in a row and well above our cost of capital.

Our direct expense ratio, which is a product of both revenues and expenses, was 12.1%, in line with our full year target. We achieved this despite approximately 50 basis points of impact from the addition of PineBridge Investments, a fee-based business with a structurally higher expense profile. Even as we integrate that business, we remain on target through rigorous expense management and productivity gains from AI and other technologies.

To that point, AI is becoming a structural advantage for MetLife and our scale sets us apart. The sheer volume of new policies, service interactions and claims we handle every day gives us more places to apply AI and more data to make it smarter. Over time, we expect that to be a meaningful and durable tailwind to both growth and productivity while creating an even more seamless experience for our customers.

Critically, we carefully monitor our AI-related investments and expenses, including model usage and token costs. They're held to the same return standards we have for any other investments we make or expenses we have. And the gains we're achieving in growth, productivity and customer service, which is evident in our direct expense ratio, far exceed the costs. And above all, governance and risk oversight remains central to how we deploy AI, consistent with the trust our customers place in MetLife.

Turning to the performance of our business segments, starting with Group, starting with Group Benefits. The segment generated adjusted earnings of $503 million, up 25% year-over-year. Life underwriting was particularly favorable. The Group Life mortality ratio was 79%, reflecting continued improvement in mortality among the working age population. Adjusted PFOs increased 1%. Excluding participating contracts, adjusted PFOs rose 4%. Year-to-date sales are up 9% with regional business advancing 11% led by the under-1,000 employee market. We saw double-digit sales gains year-to-date in disability and voluntary products with particular strength in A&H.

These results demonstrate the quality of this flagship franchise. Our scale, broad product set and long-standing customer relationships set us apart and position us well to meet the evolving needs of employers and employees, while delivering responsible growth over time.

Moving to Retirement and Income Solutions, or RIS, we reported adjusted earnings of $377 million, up 2% from a year ago. Adjusted PFOs, excluding pension risk transfers, increased 19%, driven primarily by U.K. longevity reinsurance and structured settlement sales. The long-term retirement opportunity remains compelling. Aging populations are increasing demand for retirement income and risk transfer solutions. And MetLife has the origination capabilities, investment expertise and product breadth to serve that demand across key global markets.

Our portfolio spans risk transfer, pensions, annuities, stable value and other global risk solutions. This breadth affords Metlife the capacity to be selective in deploying capital, choosing to pursue only the highest returning risk-adjusted opportunities.

Turning now to Asia. Adjusted earnings of $420 million increased 21% on a reported basis and 25% on a constant currency basis. Sales advanced 17% on a constant currency basis, reflecting strong performance across markets, particularly in Korea, where we continue to see momentum. And Japan countered a solid year ago sales quarter for life and annuities with almost 90% A&H growth on a constant currency basis following a newly launched medical product.

And the roughly even mix of U.S. dollars and yen product sales points to the balanced growth we're delivering, not reliant on any single product or currency. And with favorable demographics, deep distribution and continued product innovation, we see meaningful opportunities ahead.

In Latin America, adjusted earnings of $268 million represented a quarterly record and an increase of 15% and 4% on a constant currency basis. Adjusted PFOs increased 6% on a constant currency basis, reflecting robust growth and solid persistency across the region. Sales rose 9% on the same basis. Latin America continues to demonstrate the value of our leading market positions, multipronged distribution and ability to serve a growing need for protection, health and retirement solutions.

Turning to EMEA. Adjusted earnings of $108 million increased 8% or 11% on a constant currency basis. Adjusted PFOs grew 12% on a constant currency basis, supported by sales and renewal activity across the region. Sales increased 15%, reflecting sustained and broad-based growth.

Now shifting to MetLife Investment Management, or MIM. The segment generated adjusted earnings of $57 million, up 6%. Growth reflected the contribution from integrating PineBridge Investments and expense management. Other revenues increased 34% and total assets under management reached approximately $748 billion. Our second quarter performance illustrates the advantage of diversification. Different businesses contribute in different ways, but together, they each benefit from the scale and capabilities of the broader MetLife enterprise.

Shifting to cash and capital, MetLife continues to operate from a position of financial strength. During the quarter, we repurchased approximately $700 million of common shares. Year-to-date through July, we have returned over $2.4 billion to MetLife shareholders through a combination of stock buybacks and common dividends. Last night, we announced a new $3 billion share repurchase authorization, reflecting our confidence in MetLife's capital generation and long-term outlook. And we ended the quarter with $3.4 billion of cash and liquid assets at our holding companies, firmly within our $3 billion to $4 billion target buffer.

Our approach to capital deployment and allocation remains consistent. Our first priority is to fund responsible organic growth where MetLife has structural advantages and opportunities to earn attractive risk-adjusted returns. We will pursue inorganic investments when they add strategic capabilities, meet our financial criteria and create value. Beyond those opportunities, we return excess capital to shareholders over time.

We are also using reinsurance and third-party capital to support additional retirement origination while creating assets for MIM to manage. This enables us to pursue customer demand in a more capital-efficient manner and extend the value of our platform across the enterprise. Most importantly, growth is translating into tangible shareholder value. Disciplined strategic capital deployment fuels future earnings and strong recurring free cash flow enables us to invest in our businesses and also return capital consistently.

In closing, this was an excellent quarter that once again demonstrated the investment case for MetLife under New Frontier. Our complementary earnings engines, capital-light and capital-driven are working together as intended. They create a more balanced and durable earnings profile, along with a stronger foundation for long-term value creation.

We are pleased with our progress. We have confidence in the strengths we have built over time, the momentum across our businesses and our ability to execute through a range of environments. New Frontier is the right strategy for MetLife, and we are moving forward with speed and purpose.

With that, I'll turn it over to John to walk through the results in more detail.

Thank you, Michel, and good morning, everyone. This quarter is another strong demonstration of MetLife's earnings power and the strength of our business model. We generated broad-based growth across the enterprise, delivered excellent underwriting results, maintained disciplined expense management and continue to deploy capital prudently.

So I'll start on Page 3 of the earnings call presentation and walk through the key drivers of the second quarter performance. It was an excellent quarter, and the combination of growth, returns and execution enabled us to meet or exceed our key financial commitments once again. Adjusted EPS grew 20%, while adjusted ROE reached 17% at the top end of our 15% to 17% target range.

Our direct expense ratio was 12.1% and keeping us on track to beat our 12.1% 2026 annual target. Net income totaled $705 million or $1.09 per share, while adjusted earnings were $1.6 billion or $2.43 per share. The difference between net income and adjusted earnings was primarily driven by mark-to-market accounting on our derivatives and net investment losses. Overall, our outlook on credit remains stable, and our hedging program continues to perform as expected.

Moving to Page 4. Adjusted earnings increased 15% year-over-year or 14% on a constant currency basis. Growth was balanced across the enterprise, driven by favorable underwriting margins, strong volume growth across all segments and higher investment margins, partially offset by less favorable expense margins. Adjusted earnings per share were up 20% and 19% on a constant currency basis, with strong earnings growth supported by disciplined capital management.

Now moving to the businesses. Group Benefits had an outstanding quarter, generating adjusted earnings of $503 million, up 25% year-over-year, driven by favorable underwriting margins and volume growth. The Group Life mortality ratio was 79% for the quarter, better than our 2026 target range of 83% to 88%, reflecting continued favorable mortality trends among the working age population.

The non-medical health interest-adjusted benefit ratio was 73.9% within our annual target range of 70% to 75% and a 190 basis point improvement sequentially, consistent with our seasonal utilization patterns. Growth remains healthy across the franchise. Sales were up 9% year-to-date and adjusted PFOs increased 1% and up 4%, excluding participating contracts, reflecting growth in both national accounts and regional business.

Turning to RIS. Adjusted earnings were $377 million, up 2% year-over-year, driven by favorable recurring interest margins and volume growth, partially offset by lower variable investment income. Total investment spread was 97 basis points in the second quarter, below our guidance range of 100 to 120 basis points, driven by weaker private equity returns within VII. While core spread, excluding VII, was 100 basis points, up 5 basis points sequentially, reflecting the benefit of asset deployment along with improved real estate equity income.

RIS continues to benefit from the strength of its origination platform. RIS adjusted PFOs, excluding pension risk transfers, were up 19%, driven by strong growth in U.K. longevity reinsurance and structured settlements. Retained liability exposures grew 3% year-over-year at the low end of our 2026 outlook range, consistent with our expectation that growth would build over the year.

Importantly, even with a lighter PRT market in the first half of 2026, the team has continued to advance other sources of growth across the platform. U.K. FundedRe is a strong example. It underscores our ability to leverage existing capabilities, develop new solutions and create attractive growth opportunities even when certain markets become more limited.

Asia adjusted earnings were $420 million, up 21% and 25% on a constant currency basis. Results reflect strength across the business, supported by favorable equity markets, higher variable investment income and continued volume growth. Asia's key top line growth metrics continued their strong momentum in Q2. General account assets under management at amortized costs were up 6% on a constant currency basis.

Sales rose 17% on a constant currency basis, fueled by equity market tailwinds in Korea plus traction from recent product launches. In Japan, sales increased 2% year-over-year against a strong prior year comparison and 13% sequentially. Taken together, these results reinforce our confidence in Asia's long-term growth trajectory and the strength of our franchise across the region.

Latin America delivered adjusted earnings of $268 million, up 15% year-over-year or 4% on a constant currency basis. Results were driven by strong volume growth as well as favorable market factors, including an elevated encaje return of 5.6% in the second quarter and lower taxes. This was partially offset by the impact of the Mexico VAT change. Top line momentum remained strong with sales up 9% on a constant currency basis and adjusted PFOs up 16% or 6% on a constant currency basis.

Growth was broad-based across the region, led by Brazil, Mexico and Chile. And we continue to see attractive growth opportunities across the region, supported by strong distribution capabilities, favorable product demand and the increasing reach of our MetLife Accelerator platform.

EMEA delivered adjusted earnings of $108 million, up 8% year-over-year or 11% on a constant currency basis. Results were driven by strong volume growth, partially offset by higher expenses in the quarter. EMEA's top line remained strong with adjusted PFOs up 12%, supported by ongoing sales momentum and solid renewal activity across the region. Sales increased 15% on a constant currency basis, reflecting broad gains across markets and geographies. Importantly, as the business has continued to scale, we are seeing that growth translate into increasingly consistent and durable earnings power.

Turning to MetLife Investment Management, or MIM. Adjusted earnings were $57 million, up 6%, driven by solid business growth and expense management. Momentum is building across the platform. And as integration benefits continue to emerge, we expect adjusted earnings to maintain their upward trajectory through the second half of the year.

Total AUM increased $12 billion sequentially to $748 billion at June 30, including a notable $7 billion increase in institutional client AUM. This growth, combined with a 410 basis point improvement in operating margin during the quarter, positions MIM to deliver full year adjusted earnings within its guidance range of $240 million to $280 million, though likely toward the low end. We remain confident in the sustained success of this business and our 2027 guidance remains intact.

Corporate & Other reported an adjusted loss of $160 million in the second quarter compared with a loss of $142 million a year ago. The year-over-year change primarily reflected foregone earnings from the prior year strategic reinsurance transactions and market-related employee costs. These impacts were partly offset by favorable life underwriting margins. And the company's effective tax rate on adjusted earnings in the quarter was 23%, below our 2026 guidance range of 24% to 26%.

Now moving to Page 5. Pretax variable investment income was $231 million in the second quarter of 2026. Results were below the implied quarterly run rate, primarily reflecting lower private equity returns with an average return of 0.8% and real estate and other funds average returns of 1.1%. As a reminder, private equity and real estate and other funds are reported on a 1-quarter lag and accounted for on a mark-to-market basis.

Looking ahead, we expect stronger private equity returns in the third quarter, particularly from our venture capital investments, supported by elevated IPO activity and higher public market valuations. On Page 6, we show post-tax VII by segment and Corporate & Other for the past 5 quarters. The majority of our VII assets are concentrated in Asia and RIS and Corporate & Other, consistent with the long duration nature of these obligations. While VII can vary from quarter-to-quarter, we manage the business for normalized returns over time and remain comfortable with our full year outlook.

Now turning to expenses on Page 7. Our direct expense ratio was 12.1% in Q2 of '26. This compares with 11.7% for both the full year 2025 and the second quarter of last year. Strong PFO growth and continued expense discipline enabled us to absorb the previously disclosed roughly 50 basis point impact from the PineBridge acquisition. We manage expenses on a full year basis and we remain confident in our ability to beat our 2026 target of 12.1%. Our consistent execution continues to be a MetLife differentiator, reinforcing the durability of our earnings and our ability to invest in growth, while delivering on our financial commitments.

Moving to Slide 8. MetLife continues to operate from a position of strong capital and robust liquidity. As of June 30, cash and liquid assets at the holding companies totaled $3.4 billion within our $3 billion to $4 billion target cash buffer. In the second quarter, we returned approximately $1.1 billion to shareholders, including approximately $700 million of share repurchases. We also repurchased approximately $225 million of additional shares in July.

These actions underscore the confidence in MetLife's earnings power, the strength of our balance sheet and our ability to generate durable free cash flow over time. For our U.S. companies, we estimate total statutory adjusted capital on an NAIC basis of approximately $16.4 billion as of June 30, 2026, up 1% from March 31, 2026.

Finally, in Japan, we now expect our initial economic solvency ratio or ESR to be at the top end of a 170% to 190% range for the fiscal year ended March 31, 2026, up from our prior expectation of middle of the range. While results will vary year-to-year, we are comfortable managing ESR anywhere within this range.

In summary, MetLife delivered an excellent second quarter. We generated strong and broad-based growth, produced attractive returns, maintained disciplined expense management and continued to deploy capital from a position of strength. Just as importantly, these results were driven by performance across the enterprise, demonstrating the quality, resilience and diversification of our earnings. As we move forward, we remain focused on executing our New Frontier strategy, delivering on our commitments and creating long-term value for our shareholders.

And with that, I'll turn the call back to the operator for your questions.

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Ryan Krueger with KBW.

My first question was on inorganic opportunities. You mentioned that in the prepared remarks if it adds value and strategic fit. I guess maybe just could you give an update on what areas of the company at this point in time based on your business portfolio would be potential areas you'd be interested in adding to if something comes about?

Sure. Ryan, thanks for the question. It's Michel. So first, what I will say is that nothing has really changed for us in terms of our M&A philosophy and approach. We've always viewed M&A as a strategic capability. And to your direct question, I've talked in the past about 2 areas where potentially, we would be likely to consider M&A. And those are asset management and group.

Let me start with group. I would say that whereas we don't see any gaps in terms of our product set, which is the widest in the industry, our capabilities. We've invested heavily, as you know, in technology as well, and that's really sort of helping us further drive our competitive advantage. So whereas, we don't see any gaps there, we're always in conversation with our customers, try to understand if there are things that are of interest to them that we might want to consider.

You've seen us over the last few years add pet insurance, for example, vision. More recently, we've added an identity theft product to our offering. So we're always open to considering new capabilities or solutions if that makes sense. Although, as I said, we don't see any gaps in terms of our offering. The more likely area I would say is asset management, and you saw us do the PineBridge Investments deal late last year.

And again, here, I would sort of emphasize that we'd be looking at adjacencies or a complementary capabilities as opposed to anything transformational. We have a good path to growing organically this business, but we would be open to complementing that with inorganic complementary opportunities. And elsewhere, I would say, we're going to remain opportunistic outside of these 2 areas.

I would also point out that we have a history of being very disciplined with capital deployment and M&A. And we have a high bar to clear to ensure that we create long-term value for our shareholders.

And then I had a question on Group Life. It's been -- mortality has been favorable for both MetLife and the industry for the last couple of years now. Do you think if this continues, there'll be any need to pass through some of these -- this favorability to customers through pricing actions? Or do you see it as -- if the mortality remains favorable, you can continue to maintain price?

Ryan, it's Ramy here. Maybe let me just spend a minute to talk about the quarter, and then I'll get to your question on pricing. We've been seeing favorability in mortality for a couple of quarters -- or a number of quarters right now. Now this quarter, in particular, we saw about 2 points of favorability that came from a combination of prior period development as well as below expectations in terms of severity of claims. So think about those 2 points as being -- we expect those to normalize as we go forward. And there's early evidence of that, if you look at our July numbers. So I just want to make sure you look at this quarter in perspective and expect moderation for the rest of the year.

Now to your question, if I think about the overall results, and I think about the go-forward trend here, should we see this favorability continue in mortality? You would think that our margins here are going to gradually normalize over time. But I would emphasize the gradual nature of this. This is a business that has a renewal cycle between 3 to 5 years in our life book. So any normalization would unfold over a number of years here versus a quarter or a '27 type impact.

Your next question comes from the line of Pablo Singzon with JPMorgan.

First question I had is, I noted that you mentioned working age mortality is a driver of good Group Life results. Can you talk about mortality experience for other blocks of business you have? So I'm thinking about individual life and Corporate & Other and PRT and RIS. I think those are older age customers, but any sort of perspective there would be appreciated.

Pablo, we're having a lot of interference on your question. Could you try to repeat it or see what's causing the impact?

Yes. Sorry about that. Is it better?

Yes.

I noted -- Yes. All right. I now speak a little more slowly. So I noted that you mentioned working age mortality is a driver of good Group Life results. Can you talk about the mortality experience for the other blocks of business you have. So I'm thinking about individual life and Corporate and then PRT and RIS. I think those are older age customers and maybe the experience is different, but any perspective there would be appreciated.

Pablo, it's Ramy here. We're still hard to hear, but I think you're asking about mortality beyond the group business and in particular, how that's playing out in RIS. I would say, think about the RIS population as being sitting largely older population, retiree population and the improvements we're seeing in that population are very much in line with what we have baked into our expectations and reserves. And therefore, I think about the underwriting results in RIS emerging largely in line with our expectations there.

I would note that if you look at the overall population data, the improvements in the working age populations have been a lot faster than the improvements in the above 65 population. So that dynamic is different between those 2 populations. And also the dynamic for us in terms of our results is how we're pricing and reserving. And RIS is very much performing in line with our pricing and reserving expectations.

I'll just -- I was just going to add something, Pablo. I think overall, just as we see, and obviously, there's been quite a bit of multiple years of just change in mortality, we would argue, in general, that we've moved back to the trend line that we were on pre-COVID, right? But as Ramy said, we're seeing that drop more materially in the working age, less so in the retiree and older population. So overall, there's an improvement. I think it varies by different age groups. But overall, we generally see us being back to the trend line of pre-COVID.

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

Okay. Hopefully, there's no interference on my end. So I wanted to go to the PRT market. A couple of companies so far this earnings season have been a little cautious about full year 2026 results relative to last year. So I was just curious if you're seeing the same thing. And what do you think is holding back the market and what needs to happen to see better growth ahead?

Look, we're -- when you think about this market, and especially the part of the market where we are focused on, which is the jumbo market, it's always going to be lumpy. So I wouldn't try to overread into activity in any 1 quarter or even over a year, frankly. So think about our performance here. We're coming off a record year in '25. We sold close to $14 billion of PRTs that year with $12 billion coming in the fourth quarter. So that just to emphasize the lumpiness of the activity here.

The first half of the year has been lighter, particularly from the jumbo space. But we are seeing a stronger pipeline in the second half of the year. And so we see more opportunities emerging for Q3 and Q4. And we're going to always be disciplined in terms of how we price this business and focus on generating attractive risk-adjusted returns. But I would say, when you look at PRT, you always have to look at the macro picture and the macro picture is extremely positive. You've got $3 trillion of defined benefit pension assets with solid funding levels and a very compelling industrial logic for those corporates to offload that risk. And we are a leading player in that market, and we will be a beneficiary of that.

And the other point I would make with respect to PRT is the same trends that are playing out in the U.S. markets are also playing out in the U.K. market. And to Michel's point, we are diversified, and we're able to find other pockets of growth, and that's exactly what we've done so far this year. We've written more than $1 billion of U.K. funded reinsurance year-to-date. Think of that as PRT, but in the form of reinsurance, and that's been done at attractive returns. And that's contributing to our growth here.

So net-net, if you look at all of RIS, we're pretty confident that we're going to be within our retained balance growth of 3% to 5% for the full year, reflecting just the power of the franchise and the product portfolio that we have.

Okay. That's helpful. And then I wanted to pivot to Japan. It just seems like there's a lot going on there with the bank's [indiscernible] issue, yen and rate volatility. So there's a lot for the industry to deal with. But your sales seem to be steadily growing. So I was just hoping to better understand what's different about your model. And does some of this, call it, turmoil that's going on in Japan give you the opportunity to lean in a little bit more?

Suneet, it's Lyndon here. So look, we're really pleased with the sales performance that we've seen all across Asia, not just in Japan. And if we look at second quarter, sales were up 17%. And year-to-date, sales are up 19% year-over-year. So strong performance across all our franchises. And really, what's driving it is we've seen really a sustained momentum this year, a payoff from a lot of actions we've taken.

We have the scale and the diversification that we have in our distribution in pretty much all the markets, but particularly true in markets like Japan and Korea. We've got product innovation. You have strong product development, both in U.S. dollar as well as local currency products. In U.S. dollar, we're the first to market in those. And we really have strong execution excellence across all the markets. So it's the combination of all these 3 drivers that are really driving our success in Japan. But not just there, across all the markets, and you can see the results all across Asia.

There's been some volatility in the market. We've seen some yen volatility of late. But for the most part, we see customers kind of holding off when there's a lot of volatility. But our sales through June have been strong. And if we go into July, that momentum is continuing. So we're really in a good position because of all these key drivers in the market. And I think that has really been the key to our success in the Asia story.

Your next question comes from the line of Tom Gallagher with Evercore.

Michel, just wanted to come back to the M&A question for a minute. I heard your answer is asset management and group -- adjacent businesses in group. On the remain opportunistic comment, though, I think there's some emerging market properties that we heard yesterday are going to become available for sale. With Latin America, I think you've done 2 very successful deals in Latin America in the past. Would that be an interest if those opportunities present themselves?

Yes. Tom, thanks for the question. We don't comment on market speculation, and we're not going to start now. Look, like I said, nothing has changed in terms of how we think about M&A here. We're always in the flow. There's hardly a deal that comes to market that doesn't come across Adora Whitaker's desk. So we have obviously good visibility in terms of what's happening. But I would emphasize that we are very, very disciplined when it comes to M&A. And like I said, there's a high bar to clear here, and we compare M&A to other potential uses of capital as well. So that's what I would say.

With regards to LatAm, I would just add that we're really, really pleased with our business in LatAm. I think Eric and his team have done really an outstanding job and continue to do so. And you can see from our results that LatAm is very much on a path to generate $1 billion in earnings this year, which, by the way, is roughly double from pre-pandemic levels, and this is being fueled by sustained growth there. And whereas we're seeing growth across the region, our business in Brazil has been the fastest-growing life insurer in that market in that country for several years now and is now contributing about 20% of overall LatAm sales. So really pleased with the momentum there as well. So that's what I can offer.

Okay. My follow-up is just kind of an interest rate portfolio repositioning type question. So interest rates are meaningfully higher in both Japan and the U.S. Have you either begun or considered any portfolio repositioning within either business? Or even mechanically, could we see base spreads go higher just given where rates are when you think about maturing assets and new money in either of those regions?

Tom, it's John. I'd say, broadly speaking, first of all, we think about ALM and risk management. And obviously, when we have the opportunity to reinvest, we leverage the collective power of all of our differentiated capabilities when it comes to investment capabilities. And so I would just say like everything is on the margin, when it comes to things like that. There's no free lunch with just changing the portfolio.

If I take RIS, we've talked about spreads being fairly stable. Part of that has to do with the diversification of the product mix that was referenced earlier. In Japan, we have a real balanced portfolio between U.S. and yen now. So I just think those things are -- there's no quick change that would ever occur. But over time, higher rates, as we talked about before, are -- do provide kind of positive momentum.

Your next question comes from the line of Wilma Burdis with Raymond James.

Could you just give your latest thinking on private equity? We saw that you trimmed the position a little bit in the last quarter. And it seems like it's been -- you've been trimming a little bit over the last several quarters. Is that how you see it? And could you talk about the rationale there?

Wilma, it's John. I think we've referenced this before that -- and this has been kind of a multiyear journey for us, but the fact that we are in a, I guess, relatively higher rate environment than where we were, let's say, several, several years ago, we've talked about the fact that over time, we would probably see a slightly lower allocation to PE, albeit we're still investing, but the runoff is probably faster than the contributions.

And so -- and then you referenced in the first quarter, we did -- we were opportunistic. We saw an opportunity to do a sale, but also have the opportunity to continue to manage those funds for third parties and raise some additional capital around that. So I think all in all, the direction of travel is a modest decline over time on PE, but that doesn't mean we're going to continue to invest in the space. It's just that the -- given the seasoned portfolio we have and the diversification we have, we would expect distributions to outpace contributions.

Okay. And then as group PFO growth around 4%, I realize that's better than the industry, but is that where you want to be in the current environment? Or do you have plans to accelerate it more towards the 7%? What does the current market look like for that? And what are the growth options?

Thank you, Wilma. It's Ramy here. I would say just the headline here for group from a top line perspective is we're seeing really good momentum. And all the underlying indicators are positive. We talked about sales being up year-over-year. If you look at the below 1,000 segment, they're actually up year-over-year and well into the double digits. Our persistency is higher this year. In particular, we saw that in our dental block. Our rate actions, which also contributed to that PFO numbers are running in line with our expectations. We continue to see rising participation rates within the employee population and continued double-digit growth in the voluntary suite of products. So all really solid top line indicators.

When it comes to the kind of 4% to 7% range, think of that as a multiyear number. In any given year, we could be at the low end, high end of the range. There's timing of sales. There is jumbo sales, the size of the cases we win and so on and so forth. So we're pleased with the growth, and we're pleased to be in the range. And we see really good momentum going forward here across all markets in this business.

Your next question comes from the line of Joel Hurwitz with Dowling.

Ramy, could you just provide some color on the nonmedical health experience in the quarter? How was dental and disability? And I guess, PFML has been an area of focus with others. How was that experience for you guys in the quarter?

Thanks, Joel. So maybe let me start with PFML. The dynamics we've experienced this quarter very much followed what we discussed on our Q1 earnings call. As you may recall, the PFML products have a claim pattern where you have higher upfront claims that tend to normalize after a few months of the introduction of that program. And this is very much playing out in this quarter, and we did see lower PFML submissions as that run-in effect, if you will, is behind us.

And at the same time, as part of our BAU, when we need rate actions against this business, we are taking appropriate rate actions. And then staying with disability for a minute, if you step back and look at the overall disability results in the quarter, they have been favorable. We've seen incidents and recoveries to be in line with our expectations, and we've seen improvements from a year-over-year perspective.

And I would say this is not an accident. This is very intentional given the investments we're making in the business, the investments we're making from a data analytics, AI perspective that are driving improved recoveries here, which is giving us positive results this quarter.

And then maybe taking one last step back and look at the overall nonmedical health ratio. Dental is exhibiting the normal seasonality here, and that seasonality would point to a fact that the second half of the year would give us more favorable results and, therefore, more favorable nonmedical health ratio in aggregate compared to the first half of the year. I hope that helps.

Okay. That was helpful. And then one on Asia. So you've been highlighting AUM growth as a metric to focus on, and that's been strong. But curious on PFO growth because that's been really strong for another quarter here. Any color on what's driving the reacceleration of PFO growth in Asia and the sustainability of that?

Joel, it's Lyndon here. So look, we are an AUM business. We're primarily focused on the retirement space. So a lot of our business ends up in the AUM components. As far as PFOs grow, we sell some of the FAS 60 type business as well. That has been a growing part of our business. We're seeing it -- some of it come through in the yen space, and especially as the yen product starts to pick up and today, it represents over 50% of our sales. Michel mentioned that earlier. So we'll start seeing PFOs sort of continue to grow. But really, the bulk of our business continues to be AUM focused. So that is sort of the key driver behind our growth.

Your next question comes from the line of Wes Carmichael with Wells Fargo.

Just wanted to follow up on RIS, but base spread expanded 5 basis points sequentially, and I think that's probably a little bit better than expected headed into the quarter. So maybe as a follow-up on Tom's question, but with where rates are, fewer Fed cuts, the long-end higher, how are you thinking about base spreads trending in the back half of the year?

Wes, this is John. Yes. As you call out, I mean, total spreads were 97 basis points, but that was a function of just a lower and weaker private equity returns that we referenced, but core spreads at 100 were at the top end, and we kind of created this new range of 95 to 100 previously. And we talked about asset deployment. We knew that was going to happen. We did see a little bit better improved real estate equity income in the quarter that is likely to probably seasonally reverse in the third quarter.

So when we think about looking ahead, we still think the 95 to 100 even with the rate environment. And in a way, we're positioned fairly well regardless of what happens with the curve. We've been able to kind of put ourselves in a position where should the curve steepen or even stay flat, we still think that 95 to 100 is a good baseline. So if we had to kind of pick a point for the third quarter, it'd be more like the midpoint of the range at this point, just because of the seasonality of some of the real estate returns in 3Q.

And just a follow-up on group mortality. So very favorable results year-to-date. I think if I heard your comments, and there's maybe a couple of points of normalization. Even if I include that in the third and fourth quarter and then you have maybe 2 or 3 points below the low end of your range. So any help on where you think that might come in for the back half of the year or the full year?

Yes. I mean, look, the ratio is always going to kind of fluctuate here. But I would say, the most pronounced seasonality in the group mortality ratio typically occurs in Q1, which is a function of the severity of the flu season. So if current kind of trends continue, think about those normalization items that I've mentioned coming back, and that would be a good best estimate here. But I would point you to the 2 points of normalization here that we've seen this quarter that we don't expect to repeat in the second half of the year.

Our last question comes from the line of Tracy Benguigui with Wolfe Research.

All right. It looks like we've reached the end of our call. Thanks for participating, everybody, and have a great day. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

All right. Good afternoon, everybody. We're here with John McCallion, the CFO of MetLife. John, really appreciate your time. It's always great to chat about MetLife.

Yes. Great. Great to be here. Thanks.

So maybe let's start with just the overall broader environment kind of just the level set, right? So today, obviously, data points have been uncertain and it varies depending on jurisdiction. And you're in various parts of the world.

So what do you think would be MetLife's key advantage or competitive advantage here? And where are you most constructive versus where are you most mindful of risk, so to speak?

Yes, sure. And like I said, thanks for having us. It's good to see you again.

Let me start with maybe the macro backdrop. I think a few things are important as you think about the environment. One is unemployment remains low, right? Two, inflation seems -- I know we had some new data out today, but generally speaking, manageable and then wage growth seems to be keeping up.

I think the third thing that we would highlight that's maybe a little more specific is real estate cycle is coming through. Maybe it's on the back end and on the uptick. So you see that kind of improving, although it seems to be more of a U-shaped recovery than a V-shape.

And then maybe the fourth thing in terms of backdrop I'd highlight is credit remains stable, broadly speaking. And I know private credit versus public credit. But in general, I would say credit still remains strong. So overall, we think that really kind of gives a constructive backdrop to our situation.

Now for us, as we think about how we built our business and how we think about competitive advantage, it's been important for us to continue to build a market-leading level set of franchises across the globe that's diversified by not just geography, but product, risk capability. And we think that's really a competitive advantage for us as we work through and because different environments change and you want to have the option to do well in a variety of different economic environments. And we believe that gives us that sustainable growth component to our story.

I think the other thing it does is it also -- while it drives -- in our view, it drives growth, it also provides us the opportunity to lower our cost of equity. So all in all, we think it's a strong value proposition.

I would probably point to -- broadly speaking, from a mix perspective, we think about that competitive advantage, about 50% of our business is in what we consider to be more capital-light businesses. And we have another 50% in what we consider to be more capital-driven or balance sheet businesses, right? So in that first category, think of higher ROE, lower capital-intensive businesses. You can think of our market-leading business in Group Benefits. You can think about us being the #1 life insurer in Latin America, and we've seen some outstanding growth in that region of late.

EMEA has kind of emerged with a really strong growth story, another protection-oriented business. And then we have our asset management business, which, while small now, is probably our highest growth segment.

And then on the other side of the business mix, you have the retirement businesses, which really is our global retirement platform. And that's covering the U.S., U.K. and Japan, where the first 2 are more institutional and then Japan is more of a retail.

So all in all, we think that gives us a really unique value proposition and mix of business that allows us to perform well in good environments and to perform well in a variety of economic environments. So we think that's a real structural advantage for us.

Got it. And I think that kind of segues nicely into the New Frontier strategy that you guys laid out previously, right, now that is in its second year. So far, you're clearly doing well against the targets you laid out at the time. I would just love to hear, as you think about executing your strategy going forward, any new updates or anything that you think would be interesting going forward?

Yes. Thanks. So first, I think we're very pleased with we're off to a great start under that new strategy under New Frontier. And let's just start with, it's highlighted under 4 strategic pillars, if you will. So one is how do we extend our lead in Group Benefits. How do we leverage the global retirement platform we have and capitalize on that unique platform that we have. Third is how do we accelerate growth in asset management. And then fourth, is expanding the growth in some of our higher returning, higher-yielding growth markets in international markets, particularly in LatAm and Asia.

And across the board, I'd say all are off to a great start, right? Group Benefits, at $27 billion of annual premium. In 2025, under the retirement platform, we had record sales in pension risk transfer. We closed the PineBridge acquisition, which is a great step forward in how we look to kind of grow and accelerate growth there.

And then thirdly, like I said, we've seen outstanding results in both Asia and LatAm from a growth perspective. I think both segments have shown some very strong top line metrics. So all in all, we think from an execution perspective, we're off to a great start.

And then when you look at the numbers in 2025, so we had some key commitments that we expect to hit over the 5-year period. And the first one is double-digit EPS growth. So we hit that in 2025. The second one, we talked about an ROE range of 15% to 17%. We're at 16% for '25. Third was a free cash flow range of $65 million to $75 million on an annual basis, $25 billion of distributable cash over 5 years. We're off to a great start. We had 80% free cash flow in 2025 on a 2-year average.

And then thirdly, we expect unit cost to continue to get better. We use a direct expense ratio as a measure of that, which is -- it's our fixed cost divided by our revenue. So it's a growth metric, too. And that came in at 11.7%, and we had a target of 12.1%. So I would say 2025, we hit on all marks.

And then when we looked into 2026, we saw that momentum continue even -- maybe even stronger. We had 23% growth in EPS in the first quarter. We had an ROE of 17%. And while our direct expense ratio went up a tick to 11.9% from 11.7%, that is a function of actually absorbing an asset management business that has a higher expense ratio. So one thing we didn't do is we didn't come off our target of 100 basis point reduction in our unit cost over the 5-year period. And we think we'll continue to accelerate that improvement over the 5 years.

So overall, we think we've really hit on all segments. And quite honestly, if you look across the businesses, each one of them has shown strong growth. And so that was another central theme of New Frontier is the growth aspect of our strategy. So all in all, we're very pleased with the results.

And I think part of that exciting part, especially on the expense side, right, when you laid out the targets that technology aspect probably isn't as capable as it is today. And this wouldn't be a financial conference if we don't talk about AI. So how is MetLife utilizing the technology side to really perhaps even accentuate the strategy that we just talked about there?

Yes, it's a great point. Like you said, several years ago when we were starting the strategy, that was probably not the central theme. It certainly is a central theme today for us. And the good news is, I'll say, technology modernization was an integral part of what we've been doing over the last 5 or so years.

We probably spent between $3 billion and $3.5 billion just on technology modernization. And what that's really doing for us now and including kind of data quality and things like that, is by us having focused on reengineering our processes, we are setting ourselves up to implement and augment that modernization with -- by embedding AI.

And this AI trend, which is remarkable, and we certainly see the power of that coming to fruition, we think it's going to be very beneficial. We think that the investments we made, coupled with what we've seen on AI has given us the confidence to maintain, I'd say, a conviction around that 100 basis point decline on the expense ratio.

I think at the same time, what we found is that while unit costs will be important. This is really a growth opportunity for us. This is about productivity gains. This is about how we can enhance growth. So while we're doing things like in some businesses, we're able to auto adjudicate claims 9x what we used to because of some of this recent technology.

We're able -- we're also able to get 4x the amount of RFPs out in the same amount of time. So again, that's a growth function there.

And then I think lastly, where we really see the power of this is where you have an employee experience that's so important for take-up rates. Think about our group benefits business, employee paid type products, there's going to be a real important aspect to that. And I think when you have the scale and the breadth that we have, we have that much more opportunity to be able to leverage some of these new technologies going forward. So we're really excited about it.

It sounds like there's a lot to do from area.

Yes.

So if we look at it from a segment perspective, right? So for example, Group Benefit. Group Benefit has seen favorable mortality trends, especially for the working age population. Just how sustainable do you think this trend is the favorable overall trend in Group Benefit?

And then is there a fear that maybe the industry might try to compete this away at some point in time? Curious your thought on just Group Benefits in general.

Yes, it's a good question. We haven't certainly seen any of the latter part of your point yet, but we certainly have seen some favorability in mortality Q1, quite honestly, came in well below in terms of a benefit ratio, our expectations and certainly below a seasonal expectation for Q1. We saw much, much lower. And quite honestly, we probably think that's going to continue throughout the year.

To your point about the sustainability of those margins, I think for us, the way we built our business and our portfolio, having the widest breadth of product, so being diversified across that product breadth. By the way, there are some other products that need to do better. So when we think about margins, we don't think about any one product, right? And sometimes, we actually think about customer profitability, right, because these things are bundled as well.

So we think that there's actually -- for our business and for the way we operate, we think there's a sustainability and profit margin. That would probably the way that we think of it. And so you might have some margins in certain products doing better, but others having some more pressure. We saw that with dental. We've repriced that's coming back. And so I think our view is that it will balance out. But we do think profit margin will be sustainable. I'm not so sure life by itself would be.

Got it. No, that's very helpful. So on to that, right, so nonmedical health benefit ratio, 4Q '25, you're setting that benefit ratio to somewhere between 70% to 75%. And then can you maybe talk about that piece of the business, especially performance in 1Q as well as if we think about the outlook for the balance of the year as well?

Sure. Yes. It came in towards the top end of that range that you referenced. In Q1, that's not necessarily outside of the normal variance that we would expect to see, right? There's -- it tends to be higher utilization when it comes to some of the products there. And we certainly saw that with dental, although we're very pleased with the progress we made around dental in general.

We saw a little bit of higher severity on disability in the quarter. That's actually one -- that's probably a couple of quarters now where we've seen higher severity, not frequency as much as severity.

And then the third one is we had some new states come in on paid family leave. It is a product that can have in the first year, a little bit of higher strain. So we're seeing that. And we expect that to improve. I'm not so sure it's a Q1 and everything else improves after it or it's a first half, second half. I think we still need to see how things emerge here.

But all in all, there's a wide variety of diversification in that benefit ratio as well. And we feel comfortable with the range that we're at, at least over kind of a near-term basis.

So it feels like it's trending positively.

I think so. But I'm not so sure you're going to -- as we've seen in the last few years, actually, it's been first -- it's moved to almost a first half seasonality versus the second half. So we have to monitor that. And there's nothing jumping out us right now, but we're obviously paying very close attention to it.

Retirement and Income Solutions business, right? So one thing the entire industry talks about is spread. The spreads here, 95 basis points in first quarter, and that was 4 points of sequential decline, but that was also within our expectation. So -- if we think about maybe just MetLife and maybe the industry, so where do you see the trend is going in the current broader environment, understanding that we're constantly getting economic data so...

Yes. I think one of the benefits of that business for us is we have products that cut across the yield curve. So we have some shorter-term products. We have some longer-term products.

In general, our view is that we came in at 95 basis points in Q1. By the way, if you include VII, we're at the top end of our range, about 120. So I know we look at it ex-VI, but VII is important to our spread. But the reality on the ex-VII, as we said in Q1, we kind of expect to hover around this point until the yield curve steepens more. I think that's the one thing that came in so far this year, a little different and probably one of the things as a result of some of the positive macro factors that I referenced earlier, the odds of a Fed rate cut may be declining this year.

So if that's the case, we think hovering around where we are, the 95%, give or take, 1 or 2 basis points in any one quarter is probably the sustainable spread for us.

Got it. Okay. So if we move outside of the U.S., so let's start with Asia, right? Sales have been very strong over the last few years, both in Japan and Asia ex Japan. If we think about what you've discussed earlier about the strategy, the macro and everything, can you maybe talk about the opportunity here, especially given geopolitical and economic environment feels somewhat volatile there.

Yes. Yes, it's a good question. I think there's a lot of positive trends behind Japan, right, and as well as our Asia business overall, demographics being one of them. So we deliver products that are very supportive of the needs of that emerging and aging population.

As you said, we've had some very strong results over the last year or so. In Q1, I think Asia sales were just above 20%. Obviously, Japan was -- is a big component of that given its size. And again, Japan fits into just the broader model I referenced earlier around what we try to do. So we have a diversified set of products. We have -- we actually had some yen variable life product. We had a U.S. dollar product that we initiated in the quarter.

Our A&H product performed very well. So again, just diversified by type of product, and we're diversified by channel, right? And that allows us to leverage and allocate capital to its highest and best use depending on what the competitive environment is like. So again, another very strong quarter for Japan.

In addition to that, Korea, which is leveraging a lot of the learnings from Japan, particularly in the foreign currency products that we've seen. I think Korea was above 40% in terms of sales growth. So we're seeing some real good momentum there as well. And so we're very pleased with what's ahead. There is some volatility. I actually think for our products and for the environment, given the, I'd say, the higher rate -- marginally higher rate environment, it's all relative, right, higher rate that has emerged, coupled with that supportive demographic trend that I referenced, the setup is pretty constructive for Japan.

Rates being better than what it was before.

It's relative, yes.

Yes. Maybe looking at Latin America, right, you set a path to $1 billion of annual earnings, and then you are making progress towards that. So can you also maybe just help us think about the opportunities in that market, obviously, very different, but to a lesser extent, actually somewhat similar as well.

Yes. Yes. So again, I put that in that category of capital-light, right, lower capital needs in terms of the products that they deliver. And just a high ROE, high-growth market. That's what we have, right? And it's very important. We're #1 life insurer in Latin America, supported by some very strong structural trends, right? You have a rising wealth population still with low insurance penetration.

I think the other thing which has been very fortunate for us, and again, a function of the scale that we have, we've been making investments in technology. It's the region that we're seeing the fastest uptick on embedding technology into the ecosystem and the process through -- from end-to-end with the customer. And we've seen some tremendous results, and we have a product called Accelerator, which we leverage. It gives us the ability to enhance our agents, right, this technology that we're leveraging.

Accelerate is embedded with some of our partners, which embeds insurance and accelerates growth. And we've seen -- in just the last year, I think we had $200 million of sales a year ago. We're already up to $700 million through that platform. So we see a real big opportunity ahead of us in Latin America a place where growth has been accelerating, and we see that continuing, and that path to $1 billion is real. I'd say real for '26.

That should be pretty impressive. The -- earlier, you mentioned that EMEA has been a big grower for you, right? And then the growth there. Curious to your thoughts on earnings sustainability, also similar to Asia, right, if we think about the geopolitical risk there, just curious to your view on that.

Yes. EMEA is really remarkable, actually, just thinking about it. If you think about that segment, we actually have reduced our footprint over the last several years.

So despite that, it's shown like a structural growth trend and real durable growth trend that has emerged really over the last several years. If you take 2023 to 2025, sales have been growing in the 20% range, top line, low double digits and earnings close to 20% and so it's really set itself up as a strong durable growth engine with products that are protection-oriented, high free cash flow. It's actually a segment that generally gives us a dividend that's about equal to earnings every year. So 100% dividend ratio, right?

So again, a growing and emerging part of our story. And I think also, it's another region that's starting to leverage some of the learnings from Latin America in how insurance is starting to be embedded in the digital journey. So we're seeing a lot of cross learnings from those teams as well. So overall, we're very pleased with the progress, and we think this is really, like I said, a durable growth story now.

That's a pretty impressive return profile there. So MetLife Investment Management, your newest broken out segment on the financials, right? Just curious as how you think about the performance thus far. Obviously, there's still a lot more to go from there. And then curious to your view on the long-term growth for this segment and your vision for the segment in general.

Yes. I think it's important, like I said, it's one of the 3 -- or 3 of the -- 1 of the 4 priorities, right, #3 in the priorities, but 1 of the 4 priorities that we have under New Frontier. And I'd say it's off to a great start.

Our goal here is to scale our asset management business above and beyond where we are. We're already a scale player, but we want this to be a more material piece of our earnings mix as we go forward, right? And probably, like I said, probably our highest growth segment that we should see over time.

The PineBridge acquisition that we just did was a kind of a check towards accelerating growth, added about $100 billion of AUM to our business. And I'd say we're off to a great start. The quarter, high growth relative to the last year, but obviously, we brought in PineBridge. And I think the team has done a really nice job integrating, building a combined leadership team from both firms and looking for ways to leverage some of the new capabilities we have, like so we built a leveraged finance platform through PineBridge. We have a new multi-asset solution. Our alternatives brand has basically tripled or quadrupled in size. So we're very excited about what's ahead.

So maybe on the point on PineBridge, right? You had very strong ROE during the integration in the first quarter. As we think about that integration, which you kind of alluded to and as we think about just the broader outlook for net flows for the investment management piece and for PineBridge, how should we think about the flow picture, but also how should we think about just that integrated firm, so to speak, and capabilities.

It's a great question. One thing that we've been fortunate to maintain is one platform, one MIM platform. So bringing PineBridge in -- and bringing -- and integrating that into become one MIM was very important to us. We've maintained that philosophy. So we're not trying -- we're not -- we haven't gone out and done a boutique platform. We've built one platform that we believe we can scale either through organic or complemented through inorganic acquisitions.

So from that perspective, we have a good backdrop for integrating. It's never easy, and it takes longer than you think. But we got the teams already off and running.

Net flows, like with any acquisition, you're always going to have in the near term, some normal variability in net flows. We also saw some market depression in the first quarter that has come back. But the pipeline looks very constructive, right? And so as we think about this business, I think what's important to us is that 3-year outlook and guide, and that's what we're really aiming for. You might see some just some ebbs and flows in the first year. But integration, I would say, is off to a better start than we anticipated.

Got it. So yes, even though first half of the year, market feels a little weird, things will be fine. That's right. So maybe on that, is a nice kind of segue into the investment income piece, right? You had very strong variable investment income. We kind of -- you alluded to that a little bit earlier. And then that was that during -- heading into second quarter and then also the rest of the year, we -- looking -- just looking back 2026 thus far has been sort of a V-shaped market. How are you thinking about the broader impact to your variable investment income in 2026? And then are there things around the edges that you might want to change here and there?

Okay. Yes. So first, I think we entered the year, and we've talked about the benefit of having a well-diversified, well-seasoned portfolio. And we saw that come through in Q1, over $500 million of pretax VII relative to, call it, the $400 million or so kind of quarterly run rate that we guided to. So we think that kind of -- that was a good reflection of what we've been talking about, having that diversified seasoned portfolio and a very strong return in Q1.

We mentioned in the earnings call that given the way Q1 closed, we could see a little more pressure going into Q2. We'll deliver our 8-K disclosure in a couple of weeks, maybe 2 or 3 weeks that shares because they're all starting to come in now.

But with that, we actually think Q2 backdrop is setting up very well for Q3, right? If you think about what's happening with the broader market in general and technology in general, and then you throw in there the IPO market, and we have a nice allocation to VC portfolio. We actually think we're pretty well positioned going into Q3. So while we might see a little pressure coming into Q2, we think we're pretty optimistic about what we might see in Q3.

Right, for sure. It's just -- it's been a sort of reshape going forward. Now part of the overall portfolio, private credit, right? So you provided some helpful disclosures on the first quarter, but I think it's fair to say that a lot of investors can be influenced by fear from that perspective. Can you maybe help us think about the private credit portfolio for you, but also maybe just some commentary about the broader industry, if that's possible in terms of private credit, yes.

Yes, sure. I think for us, first, and we used the term as part of our disclosure, private fixed income to make sure it's all inclusive, right? I think the terms get used very liberally out there these days.

So let's use that as kind of the broad-based term that covers all private fixed income assets to start. And from there, we've been doing this for decades, right? So it's a core competency of us. We do it for our own balance sheet. We also do it for third parties. It's, we believe, a key competitive advantage for us. And the fact that we do that and we apply that in a way that allocates the right assets to the right liabilities, right? That's very important when we think about our own balance sheet is that ALM, asset liability management.

Broadly speaking, the other thing that's very important from that disclosure, 95% of our fixed -- private fixed income assets is investment grade. So again, we're generally on our balance sheet an investment-grade shop with some smaller allocation to higher-yielding assets and investments. And then if you move down from there, where people start to reference private credit, maybe with middle market direct lending, it's a pretty small allocation in our balance sheet, less than 1%. And we never had any exposure to some of the BDCs.

I think our collective view right now is that credit remains pretty stable in general. Remember, we're coming from a set of environments and years where there was no credit losses. So there might be some credit losses coming back in, but I don't think that means credit is a challenge, right? I think it's just going to be more idiosyncratic versus a systemic issue.

I think the other thing that came out with private credit of late is just the funding needs to be right for the asset, right? If you have liquid funding or funding that could move away from you and you put it into an illiquid asset or a less liquid asset, as we've seen with some of the BDCs and retail flows, that can be a challenge.

Got it. So sometimes it feels like you're always fighting against a narrative, maybe commercial real estate or credit side of things.

Yes. I think what's really important to your point is we're a high-grade balance sheet. And you've seen that, like you said, with real estate and everything else that have come through. While we're going to all face some challenges, it hasn't had any impact on our capital management activity.

Yes, exactly. The risk management is tightened.

Yes.

So maybe if we shift a little bit to the free cash flow narrative. Based on everything you have said so far, it should be a very free cash flow generative environment that you're in. And it does feel like you should be on the higher end of that 65% to 75% return rate profile, right? So if that is the case, given the solid business momentum going forward, curious to your thoughts on free cash flow going forward.

Yes. And I think, obviously, that's very tied into capital management and things like that, right? And 65% to 75% on average feels like a good target. It's going to vary in any 1 year. By the way, last year, we were 80%.

Exactly, right?

So I get it. There may be some views that, well, why aren't you increasing it? When we think of our business and we think of the opportunities for supporting organic growth and thinking about other things, maybe other uses of that, we think this is a good target for us. Could it vary from that target? Sure, but I don't think we're going to move off the 65% to 75% at this point. And remember, that's with -- that's continuing with growth, right.

Right. So essentially -- but at the same time, you have very strong earnings that you have.

That's right.

Then in that case, right, so the capital that you are generating in that case, if we think about just the current broader market valuation, if we think about just the amount of cash that you're getting, can you maybe discuss the capital deployment opportunities, your thoughts about buybacks, potential other activities with the cash, things of that nature?

Yes. First, if you start with our philosophy, right, our first goal is how do we support organic growth with high returns, high IRRs, good payback, and you've seen that come through in our VNB disclosure.

Then we would evaluate whether there's any complementary inorganic growth. And then the excess would be returned in share repurchases and dividends. If you take 2025, we have about $4 billion supporting organic growth, another $1 billion or so from inorganic with PineBridge acquisition and a few other things.

And then that's, call it, $5 billion of support of growth. You had another $3 billion for share repurchases or so and then another $1.5 billion of shareholder dividends, so call that $4.5 billion. So $9.5 billion, going back to the point around the resiliency of our balance sheet that we deployed in 2025 to drive shareholder return.

I think that philosophy is really what should be focused on for us, right? That's the consistent philosophy for us. When it comes to 2026, from our perspective, we would say that the guide that we provided early last year of share repurchases generally in line with 2025. It's probably the best information we have at this point.

But overall, we feel very comfortable around our capital position. All the operating entities and the projections we have around their solvency remain robust. We have a significant amount of liquidity at the holding company. So we feel very well positioned regardless of the environment.

Got it. We have a couple more minutes if anybody have any questions you want to ask. Please use the microphone.

Can you talk about the trends you're seeing in the long-term care risk transfer market and if that would have any appetite?

Yes. I think it's a market that, as we've said in other forums that continues to get more attention. Over the years, I think other blocks and other products have taken a lot of the attention. I think now that a lot of transactions have occurred, you see more people reviewing LTC and being a bit more innovative around solutioning.

I think for us, our viewpoint has been the same. We're constantly engaged with third parties, thinking about being solution-oriented. This tends to be a relationship because it's a reinsurance arrangement, so it needs to be a win-win. And it makes us better, by the way, having those conversations, doing that analysis.

So from our standpoint, if it's value accretive, yes, we would be open to that. And there's a lot of factors on determining the definition of that. But in general, we see the conversations continuing, yes.

Okay. I think we're out of time. John, I really appreciate your time. Thank you or being here.

Thanks. Thanks, Bob.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife First Quarter 2026 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to risk factors discussed in MetLife's SEC filings.

With that, I will turn the call over to John Hall, Global Head of Investor Relations.

Thank you, operator, and good morning, everyone. We appreciate you joining us for MetLife's First Quarter 2026 Earnings Call. Before we begin, I'd point you to the information on non-GAAP measures on the Investor Relations portion of metlife.com in our earnings release and in our quarterly financial supplements, which you should review.

On the call this morning are Michel Khalaf, President and Chief Executive Officer; and John McCallion, Chief Financial Officer and Head of MetLife Investment Management. Also available to participate in the discussion are other members of senior management.

Last night, we released an earnings call presentation, which addresses the quarter. It is available on our website. John McCallion will speak to this presentation in his prepared remarks. An appendix to the deck features disclosures, GAAP reconciliations and other information, which you should also review.

After prepared remarks, we will have a Q&A session, which will end promptly at the top of the hour. As a reminder, please limit yourself to 1 question and 1 follow-up.

Now, over to Michel.

Thank you, John, and good morning, everyone. This was an excellent quarter and a strong start to the year as we demonstrated the full earnings power of MetLife guided by our New Frontier strategy. Adjusted earnings were ahead of last year for all operating business segments with across-the-board top line growth. Margins were resilient, and we deployed capital with discipline, investing responsibly in growth and returning excess capital to shareholders. Importantly, this quarter's performance was balanced and repeatable.

Each of the key elements that drive our strategy, diversified businesses, disciplined capital allocation and investment portfolio and balance sheet strength all came together to demonstrate the promise and resilience of MetLife's superior value proposition. Year 1 of New Frontier was about building the right engine to drive growth and establish MetLife as a high-quality compounder over time. Year 2 is about acceleration and driving execution across our portfolio of market-leading businesses, where we serve more than 100 million customers. The first quarter provides early evidence that we're moving forward with urgency and discipline and are well positioned to deliver against the ambitious financial commitments we've established.

Turning to first quarter results. We reported adjusted earnings of $1.6 billion or $2.42 per share. Adjusted earnings increased 18% from the prior year period. Adjusted earnings per share increased 23% year-over-year, faster than earnings growth, reflecting our steady capital management. Adjusted premiums, fees and other revenues, excluding pension risk transfers, increased 10% year-over-year. Growth was broad-based, spanning nearly all businesses and regions. Variable investment income totaled $518 million pretax, marking the third consecutive quarter of above-expectation VII.

The first quarter result was near the top of the range we announced last month and driven by higher private equity returns, roughly 2.9%, aided by strong venture capital performance. Adjusted return on equity was 17%, at the top end of our 15% to 17% target range and far above our cost of capital. Our direct expense ratio was 11.9%, an improvement from last year and favorable relative to our full year target. This result is even more impressive when you consider the integration of PineBridge, a business with a structurally higher expense profile typical of asset managers.

Turning to the performance of our business segments. Starting with Group Benefits, the segment generated adjusted earnings of $439 million, up 19% year-over-year. Life mortality in the quarter was exceptional, as working population mortality continues to trend favorably and was further helped by a light flu season this year. Total sales were up 15% in the quarter and adjusted PFOs, excluding participating contracts rose 4%. Within national accounts, our persistency is in the high 90s, and our average customer tenure is more than 20 years, illustrating the strength of Group Benefits contribution to our recurring revenue model and its consistent compounding of value over time.

Looking ahead, our market leadership, scale and enduring customer relationships position us well to drive growth in the most attractive segment of the U.S. life insurance market. Employers continue to see the value of benefits beyond medical coverage as a cost-effective way to support their employees' health and financial security journeys in a tight economy.

Moving to Retirement & Income Solutions, or RIS. We reported adjusted earnings of $451 million, up 11% from a year ago, lifted by strong variable investment income. After a record-setting fourth quarter for pension risk transfers and longevity reinsurance, newer additions to the lineup, U.K.-funded reinsurance and retail annuity reinsurance contributed $1.5 billion of new sales, further reinforcing the diversity of our product offerings. The breadth of our global retirement opportunity set is substantial and extends around the world to include top markets such as the United States, the United Kingdom and Japan. These are markets where demographics are driving the demand for income, which our product suite is well suited to provide.

Turning now to Asia. The region delivered an outstanding quarter. Adjusted earnings of $487 million increased 31%. Sales performance in the quarter was very strong as the region advanced 22% on a constant currency basis. In Japan, our largest market in Asia, we saw continued strength in both FX and yen-denominated products. We also benefited from a new corporate accident and health product introduced in the quarter. Altogether, Japan sales rose 26% on a constant currency basis. For Korea, our second largest market in Asia, the combination of a solid economy and our product innovation has been a driver of growth with constant currency sales increasing 44%.

In Latin America, adjusted earnings totaled $229 million, an increase of 5% despite the impact of last year's tax change in Mexico. Performance was supported by robust sales growth and persistency in the quarter with sales increasing 20% and adjusted PFOs up 11%, both on a constant currency basis. The region demonstrated strong underlying momentum in the quarter, led by employee benefits growth in Mexico, retirement annuity demand in Chile and the ongoing expansion of Accelerator in Brazil.

Turning to EMEA. Adjusted earnings of $110 million rose 33% with adjusted PFOs up 15% on a constant currency basis. Our strategic focus on capital-light, accident and health and life products is delivering results. The cumulative impact of strong sales across multiple markets for the past several years is clearly showing up in adjusted PFO and adjusted earnings growth.

Before I move on, we made the difficult decision to divest our business in Ukraine, a phenomenal example of resilience in the face of the most challenging circumstances. Going forward, this market-leading franchise will be even better positioned to continue its growth trajectory with its new regional parent.

Now shifting to MetLife Investment Management, or MIM. The new segment delivered adjusted earnings of $47 million, an increase of 68% following the first fully integrated quarter post the PineBridge acquisition. Institutional client assets under management decreased 1.9% sequentially during the quarter, mostly due to market depreciation in equity and public fixed income as well as modest net third-party outflows. MIM's pipeline and forward commitments look strong, particularly within private assets.

Let me briefly touch on artificial intelligence, which continues to play an important role in advancing our new frontier strategy strengthening how we run the company and driving growth and efficiency. Over the past 5 years, we've invested more than $3.2 billion to simplify and modernize our technology ecosystem. That investment is delivering tangible at scale benefits for our customers, associates and operations. As we continue to adopt AI responsibly, we're improving how we make decisions, enhancing how we serve customers and reducing friction across the enterprise.

Our work to embed AI across core operations, combined with consistent execution is reducing complexity and costs while driving productivity and supporting growth and can be seen in the steady improvement in our direct expense ratio. For our customers, AI helps us respond faster, provide more relevant guidance and make our products easier to understand, leading to increased uptake. Above all, governance and risk oversight are built into how we deploy AI, which is paramount given the trust placed in us by our customers.

Shifting to cash and capital, we've been active on a number of capital management fronts. First, we repurchased roughly $750 million of MetLife common shares and paid common dividends of around $370 million for a total of roughly $1.1 billion returned to shareholders in the quarter. We repurchased nearly another $200 million of net common shares in April, and we have $1.1 billion remaining on our existing authorization.

Second, signaling our financial strength and flexibility, our Board of Directors announced a 4.4% increase in MetLife's common dividend per share. And finally, during the quarter, we opportunistically issued $1 billion of subordinated debt to support our balance sheet and provide growth capital. At its height, the offering was oversubscribed more than 5 times and was issued at tight relative spreads, indicating the value and confidence that the fixed income market attributes to MetLife's balance sheet. It's important to note, we executed these capital actions while also funding the quarter's substantial organic business growth, and we closed the quarter with $3.9 billion of cash at our holding companies, which is at the top end of our $3 billion to $4 billion liquidity target buffer.

Before I close, I would like to take a moment to welcome Dan Glaser and Michelle Seitz who joined MetLife's Board of Directors in February. I am confident that Dan's deep experience in the insurance industry and Michelle's track record across investment management will serve MetLife's shareholders well.

In closing, this was an excellent quarter that illustrates the investment case for MetLife. Under New Frontier, the decisions we are making and the actions we are taking continue to translate into durable earnings power, capital flexibility and attractive risk-adjusted returns across cycles.

Our New Frontier strategy is deeply informed by the environment around us. From demographic shifts and higher interest rates, the convergence of insurance and asset management to the rapid proliferation of AI, we are positioning MetLife to benefit from these forces in a measured commercially disciplined way. We are pleased with the fast start to the year. This quarter's performance strengthens our confidence in the outlook we have shared and reinforces our belief that New Frontier is the right strategy at the right time.

With that, I'll turn it over to John to walk through the results in more detail.

Thank you, Michel, and good morning, everyone. As Michel mentioned, this quarter reflects not just strong headline results, but the continued strength of our earnings quality, through strong growth, disciplined underwriting, expense control and prudent capital management. So I'll walk through the first quarter results, including updates on our investment portfolio and will do so using the Q1 earnings call presentation.

We'll start on Page 3. MetLife is off to a very strong start to the year, benefiting from the strength of our diversified, market-leading businesses, disciplined capital management and an ongoing efficiency mindset. In the first quarter, adjusted EPS grew 23%, while adjusted ROE reached 17% at the top end of our 15% to 17% target range. And our direct expense ratio was 11.9%, beating our 12.1% 2026 annual target. Net income totaled $1.1 billion, or $1.74 per share, while adjusted earnings for the quarter were $1.6 billion, or $2.42 per share.

The primary difference between net income and adjusted earnings was net investment losses, primarily stemming from normal trading activity within the fixed maturity portfolio. This quarter, we experienced a higher amount of trading losses because of a more substantial amount of portfolio rotations. In addition, this line included a modest loss as a result of a sale of a portion of our private equity limited partnership interest.

As we've seen signs of improvement in the private equity secondary markets, we opportunistically divested roughly $750 million of private equity assets at the end of Q1 at a modest discount. The transaction structure, like previous secondary sales we've completed, will allow MetLife Investment Management to continue managing the assets from the sale. While this is a prudent approach to managing our investment allocation, it also supports growth in our third-party asset management business.

Moving to Page 4. We present adjusted earnings for each segment and Corporate and Other, showing a total year-over-year increase of 18% and 15% in constant currency to $1.6 billion, driven by higher variable investment income, strong volume growth and favorable underwriting margins, partially offset by lower recurring interest margins. Adjusted earnings per share were $2.42, up 23% and 20% on a constant currency basis with strong earnings growth supported by disciplined capital management.

Now moving to the businesses. Group Benefits adjusted earnings were $439 million, up 19% year-over-year, largely driven by favorable life underwriting and volume growth. The Group Life mortality ratio was 80.1% for the quarter, better than our 2026 target range of 83% to 88%, reflecting continued favorable mortality trends among the working age population. Our nonmedical health interest adjusted benefit ratio was 75.8%, which was above our annual target range of 70% to 75%, in line with seasonally higher expectations for Dental. Within disability, higher average severity also impacted the quarter, along with higher incidence from paid family leave. Group Benefits had strong sales in the quarter, up 15%, primarily driven by growth across both core and voluntary products.

Adjusted PFOs increased 2%, reflecting underlying growth of approximately 4%, partially offset by a 2-point headwind from participating contracts, which have limited impact on earnings. RIS adjusted earnings were $451 million, up 11% year-over-year, primarily driven by higher variable investment income and favorable underwriting margins. Mortality in our annuity business was lower compared to Q1 of '25; however, underwriting margins remained elevated due to a large structured settlement contract reserve release in the quarter. Despite RIS' strong results in Q1, we still expect full year adjusted earnings to be between $1.6 billion to $1.8 billion that we provided on our outlook call.

Total investment spread was 119 basis points at the top end of our 100 to 120 basis points guidance range. Core spread ex VII was in line with expectations at 95 basis points and down 4 basis points sequentially, as we continued rotating the large Q4 inflows, primarily from PRT mandates.

RIS continues to benefit from the strength of its origination platform. While top line metrics were masked by a tough compare versus the prior year quarter, which had PRT inflows of $1.8 billion, RIS adjusted PFOs, excluding PRTs, were up 58%, driven by strong growth in U.K. longevity reinsurance, post-retirement benefits and structured settlements.

Asia adjusted earnings were $487 million, up 31%. The primary drivers were higher variable investment income and strong volume growth. Asia's key top line growth metrics continued their strong momentum in Q1. General account assets under management at amortized costs were up 7% on a constant currency basis. A key driver were Asia sales, which were up 22% on a constant currency basis, primarily driven by Japan and Korea, reflecting the traction that we are seeing from new product launches in both markets all while maintaining pricing and underwriting discipline throughout.

Latin America adjusted earnings were $229 million, up 5% year-over-year. On a constant currency basis, adjusted earnings were down 9%, reflecting the Mexico VAT change and less favorable taxes versus the prior year quarter, which more than offset strong volume growth across the region and favorable underwriting. Latin America delivered strong top line growth, with adjusted PFOs up 25% or 11% on a constant currency basis. And sales were up 20% on a constant currency basis, driven by strong growth in Brazil, Mexico and Chile, a clear indicator of sustained demand and continued execution across this franchise.

EMEA adjusted earnings were $110 million, up 33% and 28% on a constant currency basis, primarily driven by robust volume growth. Adjusted PFOs increased 19%, or 15% on a constant currency basis, and sales rose by 17% on a constant currency basis, with broad-based growth across the region. The strong top line growth over the last several years is translating into a stronger, more consistent earnings power.

Turning to MetLife Investment Management, or MIM. Adjusted earnings were $47 million in the first quarter, up from $28 million a year ago and in line with the outlook we provided in February. The primary drivers were business growth, including the acquisition of PineBridge and favorable expense margins. With the first quarter reflecting seasonally higher expenses, we expect adjusted earnings to improve as the year progresses, aided by the continued progress integrating the PineBridge business. Institutional client outflows were approximately $2 billion during the quarter, reflecting elevated market volatility and the impact of bringing the 2 platforms together. However, outflows have stabilized the latter part of Q1 and so far in April, and we're seeing a solid pipeline ahead.

Corporate and Other reported an adjusted loss of $177 million in the first quarter compared to a loss of $129 million a year ago. The year-over-year change was driven by foregone earnings from the prior year strategic reinsurance transactions, lower recurring interest margins and less favorable expense margins. This was partially offset by higher variable investment income. And the company's effective tax rate on adjusted earnings in the quarter was 24% at the bottom end of our 2026 guidance range of 24% to 26%.

Now we'll move to Page 5. This chart reflects our pretax variable investment income for the 4 quarters of 2025 and the first quarter of 2026, which was $518 million. The higher than implied quarterly run rate in Q1 was driven by private equities, which had an average return of 2.9%, while real estate and other funds had an average return of 0.8%. As a reminder, PE and real estate and other funds are reported on a one quarter lag and accounted for on a mark-to-market basis.

On Page 6, we provide VII post-tax by segment and Corporate and Other for the 4 quarters of 2025 and Q1 of '26. Most of the VII assets are concentrated in Asia, RIS and Corporate and Other, consistent with the long-term nature of these obligations. As of March 31, 2026, total VII assets stood at $18.2 billion. Asia represented nearly half of these assets, while RIS and Corporate and Other accounted for about 30% and 20%, respectively. As always, we manage the business assuming a normalized level of VII over time and remain comfortable with our full year outlook.

Now let's discuss our private fixed income portfolio on Page 7. We've been investing in private assets, including private fixed income for decades with a proven track record of disciplined underwriting, strong governance and alignment with our liability profile. This chart shows our private fixed income portfolio, valued at approximately $85 billion as of March 31. The majority of these investments are in traditional private placement and infrastructure. Like our general account, this portfolio is high quality, around 95% is investment grade. It's well diversified and built to perform across market cycles.

We also have limited exposure to segments generating the greatest attention in today's market. We have no exposure to business development companies, or BDCs, and our middle market loan exposure is under 1% of our general account. Lastly, private assets offer a strong relative value, especially when matched with our long-term illiquid liabilities. With prudent management, these assets deliver extra returns through direct origination, stronger covenants and collateral protections.

Now let me turn to Page 8. Here we provide a summary of our software and software-related investments. We've cast a wide net here to comprehensively address this area of focus. We have a deliberately minor allocation in a highly diversified portfolio, across both direct and indirect investment. The portfolio is predominantly investment grade, diversified by issuer, structure and strategy and positioned high in the capital structure.

Our $2.5 billion direct exposure, or 0.6% of our general account, is largely concentrated in market-leading, well-capitalized technology companies with robust liquidity profiles. The $6.3 billion of indirect exposure representing 1.4% of our general account is diversified across funds and structures with credit protections and conservative positioning that limit downside risk.

Within private equity, software exposure totals $1.3 billion, spread across a highly diversified set of investments, where returns and cash flows will naturally vary across the investments. And most of our venture capital exposure of $3.5 billion is skewed towards AI firms, which are benefiting from higher valuations and contributed positively to returns this quarter. For example, our venture capital portfolio generated a 6.8% return this quarter. In short, our software exposure is intentional, well controlled and not an area of concern from a risk or capital perspective.

Now turning to expenses on Page 9. Our direct expense ratio was 11.9% in the Q1 of '26, ahead of our full year target of 12.1%. This compares with 11.7% for the full year 2025 and 12% in the first quarter of last year. This quarter's performance was driven by strong PFO growth and continued expense discipline, which allowed us to successfully absorb the roughly 50 basis point impact from the PineBridge acquisition that we previously disclosed, while still coming in ahead of target. We continue to manage expenses on a full year basis, and this quarter reinforces confidence in our ability to deliver against our 2026 target.

Moving to Slide 10. MetLife continues to operate from a position of strong capital and robust liquidity. As of March 31, cash and liquid assets at the holding companies totaled $3.9 billion toward the high end of our target cash buffer range of $3 billion to $4 billion. During the first quarter, we returned approximately $1.1 billion to shareholders, including approximately $750 million of share repurchases. And we repurchased approximately $200 million of additional shares in April. Our capital actions reflect confidence in both the near-term earnings and long-term free cash flow durability.

For our U.S. companies, our 2025 combined NAIC RBC ratio was 379%, well above our target ratio of 360%. Preliminary first quarter 2026 statutory operating earnings were approximately $610 million with net income of approximately $170 million. And our estimated U.S. statutory adjusted capital, on an NAIC basis, was approximately $16.2 billion as of March 31, down 5% from year-end '25, primarily due to seasonally higher U.S. entity dividends paid in Q1, partially offset by operating earnings.

And finally, in Japan, we expect our initial economic solvency ratio, or ESR, to be in the middle of our 170% to 190% target range for fiscal year ending March 2026, following completion of regulatory filings in June.

In summary, MetLife delivered an excellent first quarter, reflecting disciplined execution across the enterprise, as we enter year 2 of our New Frontier strategy. Broad-based top line growth, strong returns and expense discipline underscores the quality and the durability of earnings, while strong capital, liquidity and free cash flow support disciplined and consistent capital management. Our high-quality, well-diversified investment portfolio, built on decades of private asset experience and risk management, positions us well through market cycles, with limited exposure to areas under the greatest scrutiny. Taken together, these results reinforce our confidence in MetLife's ability to compound value over time and deliver attractive, dependable returns for shareholders.

And with that, I will turn the call back to the operator for your questions.

[Operator Instructions] Your first question comes from the line of Suneet Kamath with Jefferies.

I wanted to start on Group Life, I guess, for Ramy. We've seen working age mortality trend has been improving, I guess, for a couple of years now. And I'm just wondering if you've done some more work in terms of what's driving that and if you think this trend that we've seen is sustainable.

I don't think we can hear the answer, at least I can't.

Yes, sorry. Let me -- hold on a second. Suneet, can you hear me now?

I can.

Okay. Sorry, we had a problem with the mic here. So thank you for the question. And let me just give you maybe a bit of color on the quarter and then give you a sense of how we think about the sustainability of the results. We're very pleased with the results in the quarter. We've got about 2 points of favorable prior quarter development coming through. We did see about another 0.5 point of favorable severity, which can kind of fluctuate quarter-to-quarter.

And as you noted, we are also seeing overall favorable working age mortality when you look at the CDC data. Look, there's a lot of different potential drivers for that favorability. Some include a pull-forward effect from a COVID perspective, some include the impact of GLP-1 drugs, and there are a lot of other pieces that we're researching and looking into, which I'm not going to go through all the details right now.

But when you step back and think about what this means for our results, keep a couple of points in mind. One is while we operate in a competitive environment, this is also a market where we particularly can differentiate on factors beyond price. So we talked about the strategy in terms of how we bring our value proposition to our clients, especially those who are looking to do more with fewer. So life insurance is often bundled with other coverages such as disability and dental and voluntary, and this allows us, from a bundling perspective, to look at overall customer profitability and protect overall margins.

And from a specific life perspective, if the favorability that we see does persist and does become credible on these RIS, we would expect some portion of it to flow back into pricing, but that would happen gradually over time. So think of that happening in years, not quarters, if you think about our underwriting ratio. I hope that helps.

Yes, that's helpful. And I guess maybe shifting gears to Japan, it seems like we're seeing a lot more actions by regulators in that country. And I think the secondy issue that you are part of. I think, it's an industry-wide issue. But I'm just curious if you can give us an update on what's going on there and if you're aware of any other reviews by the regulators that could impact Met's franchise there.

Suneet, it's Lyndon here. So look, this issue, as you described, has impacted several companies across the industry. And we obviously take this matter very seriously. We've conducted a very comprehensive review all across the company. All the seconded employees have returned to their positions, and we've discontinued the practice. And we take lots of steps to kind of work with our customers, our partners and regulators to resolve the issue.

And all the details of the review we've undertaken, all the corrective actions that we put in place can be found on our website. We're in conversations with the FSA about lots of different things. The press release noted we had a reporting order, but all our discussions with the regulators continue to be confidential right now.

Yes. And I think just to add to that, Suneet, I mean, just to reemphasize, it's an industry issue, we're not seeing any impact on our business and results and sales, as you saw in the quarter. So I think, as Lyndon said, which kind of -- we're working through it, where all of us, like the whole industry, are working through addressing this with the regulator. And I think we don't see this as anything with any specific company. It's more just a change in industry practice.

Our next question comes from Ryan Krueger with KBW.

Maybe I'll start with an opposite side of a Japan question. You had quite strong sales there. Can you talk a little bit more about the positive dynamics you're seeing that drove this? And how you're thinking about the rest of the year?

Yes. It's Lyndon. Let me take that. So look, we did have a very strong quarter. We're very pleased with the performance we've seen in the quarter. Sales are up 22% year-over-year. So let me give you some color about Japan and the rest of Asia. So let's start with Japan. Sales in Japan were up 26% year-over-year, and that's really driven by distribution strength across all of our channels. We've also benefited from very successful product launches in the quarter. We saw life sales grow. That was driven by the yen variable product as well as a U.S. dollar single premium product.

In the A&H products, we launched a new product in the quarter, and A&H sales were actually up 77% year-over-year. So strong performance in the yen A&H portfolio. When we look at annuity sales, they remained steady against what was a very strong comparative in the prior year, but we continue to see some momentum in U.S. dollar single premium products. An important dynamic for the quarter was our mix of business, between yen and dollar products, was close to 50-50, reflecting a very diversified product portfolio.

Now going to the rest of Asia, sales there were up 18% year-over-year. And here, Korea was a key driver. Sales growth was up 44%. And here, too, we saw momentum in our U.S. dollar sales, where we've been able to leverage what we've done in Japan with U.S. dollar product as well as our investment expertise and take it to Korea. And then, we also saw strength in our Korean won product there, and that was driven primarily by the strong macroeconomic environment, particularly the rising equity markets. So we're off to a strong start for the quarter.

Now looking ahead, we can expect a little bit of moderation in year-over-year growth rates just given the strong prior year comparatives, but we really expect the momentum we have to continue going into the second quarter.

And on non-medical health, could you give us a little more color on the key drivers that impacted this quarter? And also just how you're thinking about the rest of the year?

Sure, Ryan. It's Ramy here. So if you think about the quarter, 3 kind of drivers I would point to. First is dental, very much performing in line with our expectations. We did observe the seasonally higher dental utilization coming through in the quarter, which does impact the ratio, and we would expect utilization to moderate in the second half of the year, and that's kind of consistent with historical trends.

For disability, we did experience higher disability claims. Those were coming from the impact of new state-mandated paid family leave programs. These new programs have a claim pattern with higher upfront claims that tend to normalize. So here again, we would expect that impact to also moderate in the second half of the year.

And then the third factor, which John referenced in his prepared remarks, we did see slightly elevated severity in LTD. And it's important to note that while this was elevated on a year-to-year basis, when we look at it sequentially, it was actually flat over the last 3 quarters. So we don't really see any evidence of a trend here in terms of severity and very much in line with kind of quarterly fluctuations that we would see.

So if you put all of these pieces together, from an aggregate perspective, back to your question, we would expect this ratio to moderate, but look for that moderation in the second half of the year, if you think that coming through our numbers.

Our next question comes from Wes Carmichael with Wells Fargo.

First question was on RIS spread. I think the core spread declined a little bit sequentially. But you've also brought on a lot of new business from PRT and other products over the past couple of quarters. So any help on how you're thinking about core yield or spread? And how that should trend if there's any uplift from deploying some of that cash or reallocating some assets going forward?

Yes. Thanks for the question. Wes, it's John. So as you mentioned, RIS spreads for the quarter were 119 basis points and down about 5 basis points in total sequentially, but honestly, at the top end of our 100 to 120 basis point guidance range, VII contributed about 24 basis points. So that was essentially flat, which reflected, obviously, our strong private equity performance. And so if you exclude VII, core spreads were 95 basis points. And that 4 basis points of sequential decline was largely in line with expectations we discussed in February.

As we had guided, there was -- obviously, we had a large volume of new flows in 4Q, primarily from the PRT mandates. That created a bit of a headwind in Q1, as we continue to rotate that portion of the -- or a portion of the portfolio. And so as we look ahead into 2Q, we do expect some improvement from lower asset rotations, but we're also operating in an environment where the yield curve remains persistently flat with the short end higher than maybe relative to our outlook expectation of the curve steepening. So that actually puts a bit of a headwind on us. I think taken all together, our expectation for Q2 is that core spreads will remain close to where we are in Q1, maybe slightly above, modest improvement in Q2. And total spreads will continue to track to our full year range.

Got it. And second, I guess, Sun Life issued a press release last week that they're settling a class action lawsuit with policyholders. In their release, I guess, they noted that they can seek recourse from MetLife for, I guess, around CAD 200 million on a gross basis. So -- I realize that's small, but just wanted to see if that's something that we should be thinking about as a near-term impact on MetLife.

Wes, it's Michel. Thanks for the question. So I think I believe you're referring to the April 30 press release by Sun Life. The claims made by Sun Life can best be characterized as baseless and misleading. MetLife was not named a defendant in the reference class action suit. And Sun Life has taken no legal action to enforce the alleged indemnity claim against MetLife. As a matter of fact, there are currently no legal proceedings between the parties. We vigorously dispute that we owe Sun Life any indemnity whatsoever for the claims made in the underlying settlement. And the last thing I would say is that Sun Life and only Sun Life is responsible for its own decisions and actions in this matter.

Our next question comes from Tom Gallagher with Evercore.

First one, John, the -- did you say $170 million of stat net income in 1Q? And if so, anything in particular that was weighing on that result? And how -- maybe more broadly, how are you feeling about capital generation to start the year overall?

Yes. Tom, yes, on stat capital, I mentioned in the opening remarks, we had about a 4% decline in the quarter. And the largest reason for that is, as I mentioned, dividend seasonality for our U.S. entities. We typically take a larger dividend in the first quarter. And then while dividends from our non-U.S. entities have weighted more heavily towards the remaining quarter. So that's typically been a historical practice for us around capital management throughout the year. I think importantly, nothing has really changed in terms of our capital trajectory or capital generation. I mean, we continue to demonstrate a free cash flow ratio of 65% to 75% and remain confident to do that throughout New Frontier.

Finally, in 2025, we saw an RBC ratio of 379%, well above our 360%. So very much in line with where we've operated over the last several years. And overall, we believe this continues to reflect our strong capital resilience and discipline, and there's nothing really to call out. I mean, you saw some normal, I'd say, level of credit losses in the quarter, a little higher trading losses and just -- kind of just general seasonality of Q1. And you can go back and see that it's pretty consistent with prior quarters.

Got you. My follow-up is I just want to ask a higher-level strategy question on the investment side. How are you -- what are you thinking about things? And I know you had some reallocations going on with PRT and the like. But if -- I guess starting on your commercial mortgage loan portfolio, I noticed you've been shrinking that a lot. So it looks like you're not originating as much on that side or at least retaining as much on that side. So I take that to mean you're a little more cautious going forward on the CML side. Where are you reallocating? And where are you more bullish? Is it private credit? Or just a little bit of color on what are you thinking more broadly about where you're looking to allocate new dollars?

Yes. Tom, it's a good point. And I think like with any environment and in the way we approach it is, obviously, we think about relative value, right? And we -- this is why it's so important to have a diversified platform where you have strength and capabilities across a number of asset classes because quite honestly, some asset classes can look more challenging at different times. I'd say just on your point of real estate, we are continuing to see an environment there, where we have seen liquidity and price discovery pick up, and we expect this trend to continue through the year. And it's helped kind of normalize pricing and things like that. And so there are, I'd say, improving opportunities, but surprisingly, new issuance and new origination spreads are still relatively tight. So we're being selective when it comes to that, and we think that's the best approach in this asset class.

To your question about what else are we looking at, I think we have a variety of different capabilities within the private assets. Asset-backed financing probably is one of the places where we're seeing opportunities for risk-adjusted returns that are very strong. But I think within each asset class, we can find it, but maybe at broad themes around sectors, that's probably on a relative scale place that is showing better value.

Your next question comes from Joel Hurwitz with Dowling.

First one on MIM with PineBridge now on board. Can you maybe talk about the outlook for flows or provide some more color on the strong pipeline that you mentioned in your prepared remarks? And then, can you also talk about the ability to leverage some of the international distribution that comes with that acquisition?

Joel, it's John. Look, I'd just start out by saying we're very excited about what's ahead for MetLife Investment Management. This is the first quarter post acquisition. And while it's still early, we're really encouraged by the progress that we've seen across integration, client engagement, pipeline development. From an integration perspective, we really were focused on being quick and deliberate out of the gate. We announced a new MIM leadership team, which took a combination of both firms.

We're in process of consolidating key investment platforms to drive operating synergies. And then, we've started out of the gate being focused on being a 1 MIM platform. And -- that was really -- holistically, that was a strategic rationale for bringing these 2 firms together. And we've been proactive with clients and consultants in terms of our outreach and our vision, talking about these investment capabilities, and the feedback has been consistently positive. We're seeing really some great opportunities for early signs of cross-selling to begin to emerge. And so I think -- I'd just say, overall, the early days have just continued to reinforce the strategic fit of PineBridge.

In terms of new pipeline, I'd say it's well diversified. We see some being committed, new commitments. We have opportunities for deploying capital under our existing mandates. We have some late-stage client activity. So I think, all in all, as you know, with the institutional asset management, it can be inherently lumpy and episodic at times. But I think what we're really excited about the engagement and the momentum that we're seeing is very positive and highly constructive, and we're just seeing those -- these opportunities develop across asset classes and geographies.

As you point out, one of the attractive things about PineBridge coming together is they really brought an international non-U.S. footprint to us. About 50% of their AUM is outside the U.S. So we spend a lot of time with the teams kind of thinking about how we can, as I said earlier, think about those cross-sell opportunities, and we're finding a lot of opportunities out of the gate. So just as we step back, despite this being early integration, and there's some natural, I'd say -- I'll say, early day consolidating situations that occur in terms of flows, we feel very good about the demand that's there for our products, the depth of the pipeline that we're seeing and our ability to continue to generate new net flows.

Got it. That was very helpful. And maybe, Ramy, can you just talk about what you're seeing from a competitive landscape across the various markets you play in, in the group space? And just any color on sort of the drivers of the top line and group ex participating policies being towards the lower end of your target range?

Thanks, Joel. Maybe let me just hit about -- hit the top line question first. So as we described before, participating policies do impact PFOs, but don't really impact our earnings. So we always like to think about the true measure of top line growth is one that does exclude participating policies. And in this quarter, we saw slightly over 4% growth using that metric. And as the industry leader, continuing to grow at these levels, and if you look at it in absolute terms, we're certainly very pleased with our growth rate here.

And look, while we compete in a competitive environment, we have a value proposition that's resonating in the marketplace and continuing to deliver for our customers, and therefore, deliver for our shareholders. So from a driver's perspective, it's really been hitting on all cylinders this quarter. We have improved persistency. That was broad-based, particularly evident in our dental book. We've also achieved all of that persistency while meeting our expectations in terms of rate actions across the business.

Very strong momentum in terms of sales, broad-based across core and voluntary. And we continue to drive our strategy that we talked about at Investor Day from a re-enrollment perspective. We talked about those twin gaps of a confusion gap and a protection gap and how our ability to bridge them is going to drive better enrollment results, and we're seeing that with double-digit voluntary product growth in our portfolio. So all over, I would say, as the industry leader with clear competitive differentiators, we're very pleased with the top line momentum here.

Your next question comes from Tracy Benguigui with Wolfe Research.

I just want to go back to MIM. You mentioned some third-party outflows. Did that come from PineBridge deflections or somewhere else?

Yes. No, I think it's a mix, right? So there were -- we did have some expected post-close activity, I'll call it, early in the quarter. And then also, we had, just as you would typically have, client allocation shifts that are unusual to start the year. So it's a mix of both.

Got it. And just appreciate an update on your annuity reinsurance flow. How many cedents are you part of that right now?

Tracy, we have, as of this point, 2 partners that we're working closely with on the reinsurance side. And just -- I would just give you a bit more color on that is we're working with partners who appreciate what we can bring to the table in terms of our financial strength, investment capabilities, liquidity and capital flexibility. But I would also say, we are also very selective in terms of who we partner with because we look at the quality of the liabilities being originated, and in particular, we look at the cost of funding for those liabilities. And so we think these are win-win partnerships and really speaks to the strategy of looking to go after adjacencies, which play to our strength. And -- Michel mentioned that in his opening remarks in terms of retail reinsurance. The other adjacency that we're seeing a lot of tailwinds in is the U.K. funded reinsurance. And on a year-to-date between those 2 pieces, we have $2 billion of inflows here, and these are businesses that were basically started from scratch from Investor Day to sitting here today 18 months later.

Our next question comes from Pablo Singzon with JPMorgan.

First, could you comment about your outlook for EMEA? Earnings were above the quarterly run rate you had provided before. And operations that don't seem to be affected by what's going on in the Middle East. So I'm just curious how you're seeing the rest of the year unfold there.

Just to make sure, Pablo, you said EMEA. Is that what you said?

Yes, that's correct, John. Just earnings being stronger and operations not being affected by the conflict in the Middle East?

Pablo, it's Michel again. So yes, we're really, really pleased with EMEA's performance. And I would say that's been building over a couple of years now, where strong sales growth is translating into PFO growth and earnings growth as well. I think that's also reflective of the highly efficient structure that we have in EMEA, especially in Europe.

With regard to the situation in the Middle East, just to give you a sense of EMEA's earnings, about 2/3 come from Europe, 1/3 from the rest of the region. And about 50% of that 1/3 comes from Turkey and Egypt. So clearly, we've been keeping a close eye on what's happening in the region. Our first order priority is the safety and well-being of our associates there. So far, we have not seen any impact. And I think EMEA's performance in the quarter is -- provides evidence of that. And we think that, provided the situation stabilizes from here, we're not going to see any impact. And if we do, they're not going to be material to EMEA overall and certainly not to MetLife's overall results as well.

And I would just add, Pablo, just in terms of outlook, we probably -- obviously, this is a very strong quarter. I wouldn't consider this to be a run rate where we had a $90 million to $100 million quarterly run rate as part of the outlook. And we're probably trending towards the middle to upper end of that range is where we -- going forward.

That's clear. And then my second question, disability, maybe for Ramy again. Do you think the trends you've seen so far, right? You called out severity, paid families, would those require repricing beyond normal course? And I guess, how do you frame how you might be positioning the book today versus the past several years when results for the industry were just very strong?

Yes. Well, just in terms of our overall approach for pricing here, we have the ability to reprice about 50% of the book every year in terms of our disability book. And that's driven by a combination of would be client-specific experience as well as our outlook. I would say from an LTD perspective, what we've seen from a 1 quarter of severity this quarter, and I talked about this being flattish over the last 3 quarters, we're not seeing any evidence that would say -- would merit an overall repricing of the book.

Outside of the severity that we talked about, the performance is very much in line with our expectations, be it in terms of incidence or closure or recovery rates. So we feel pretty good about where the book sits today, but we'll continue to monitor this and clearly reflect an individual customer by customer experience.

And then for the paid family medical leave, I talked about the nature of the product. I think of it as an expanded STD product, and I talked about the front-end nature of those claims. Clearly, as we get a more credible experience as we get into the outer quarters, we will look at repricing actions as needed. But the front-end nature of this isn't a surprise to us. It's -- this is how these plans effectively work.

And again, I'll come back to the fact that we can reprice about 50% of this business every year. So think of this as a BAU in terms of hitting our target margins and our pricing actions.

That is all the time we have for questions today. I will now turn the call back to John Hall for closing remarks.

Thank you, everybody, for joining us this morning, and have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, everyone. We're here with Ramy Tadros, President of U.S. Business. And Ramy, if you could discuss the businesses that you run, they generate 60% of MetLife's adjusted earnings. Could you start by giving us a brief overview?

Sure. Sure. Thank you, Wilma, and great to be here today. So at the highest level, you've got the Group Benefits business and the Retirement and Income Solutions business, which make up the bulk of that 60%. Think of those as businesses where we see secular tailwinds that are going to drive growth for years to come and businesses where we have distinct competitive advantages that would allow us to kind of achieve that growth at good margins.

So I'll give you just a more flavor on that. So Group Benefits, arguably the most attractive segment of the life insurance market today, it's a business that's characterized by high ROE, rational competitive environment. And within that segment, we are the largest player in the market. We generated about $25 billion worth of premium last year, which makes us 3x the size of our next competitor. We have the broadest product portfolio in that business, and we are a market leader in every single product that we operate in, either #1 or #2.

And Group Benefits generated about 25% of MetLife's earnings. Retirement and Income Solution, this is an institutional retirement platform spanning the U.S. and the U.K. And think of it as a business that's also benefiting from the demographic trends in terms of retirees and retirement needs. Here again, we're also a leading player in every single category that we operate in, #1, #2 or #3.

And we have a range of solutions spanning pension risk transfer, which has been a particular strong area of growth for us here, where we serve the derisking needs of DB corporate plan sponsors who want to derisk and exit the pension business, all the way to being one of the leading providers of stable value solutions for this DC plan participants. And in a week like this with very high market volatility, by the way, those stable value funds tend to be very countercyclical. We see a lot of folks going and seeking safety in some of our stable value solutions in environments like this. But those -- think of those as group benefits and the retirement business making up the bulk of that 60%.

Great. And Met is #1 -- is the #1 group benefits provider in the U.S., 16% market share and 25% with national accounts. Even with the level of scale, the group business is guided to grow 4% to 7% versus 3% for the market. What are some of the ways that you can extend that leadership in group benefits?

Yes. Well, we get this question often, which is you're the market leader, you have been outpacing market growth, and is that sustainable? And look, the answer to that is, in a nutshell, is pretty simple. This is an industry where scale begets scale. And I'll explain 2 kind of main reasons.

One is it's an industry where capabilities really matter. So we compete on digital experiences, underwriting accuracy, channel relationships and a lot of different capabilities that sit inside of each of our product portfolio. And over the last 5 years, we invested $2 billion in building and adding more capabilities in this business. And if you have that scale, you continue to invest in this business, you create more space between you and the market. So there's that dynamic going on. And then when you look at group benefits, in particular, there are, I would say, 3 factors in that market that has allowed us to continue to outgrow the industry that are particular to that industry.

So one is when you look at employers, when employers look to choose their benefit providers, invariably, they want to do more with fewer. So that reduces complexity on their end and makes it easier from an HR perspective and an employee and an employee experience perspective. And because of that consolidation happening in terms of doing more with fewer, we have invariably been at the winning end of that because we have the broadest product portfolio, and we can meet the needs of different segments in the market.

Just to give you kind of maybe some numbers on that one. You talked about a 25% market share in national accounts, which we define as employers with 5,000 or more employees. Those customers of ours on average offer 12 products. We typically have 3 of the 12. So while we have a 25% market share, we still see a long runway for growth there. And in fact, 80% of our sales are coming from existing customers. And the average customer has been with us more than 20 years.

So there's that dynamic of the employer are doing more with fewer. The other dynamic in this industry that's also giving us tailwinds that are accelerating the growth is the channel is consolidating. So if you look at be it privately owned consultants and brokers or the publicly owned brokers, they are going through a series of roll-ups and M&As. And that's continuing to happen and it's still a trend that's going to play out in the future.

And what happens when that consolidation occurs, is these brokers tend to also consolidate the set of employers they do business with. So if broker A and broker B, each had 5 different insurers, they come together, out of the 10, only 5 or 6 will make it on that short list. And that consolidation helps us because we invariably end up on that short list. So the consolidation of the channel is also helping us as the #1 carrier in the industry.

And then the last piece, which has contributed to about 1/3 of our growth over time, is all about driving up participation rates of our products in the workplace. So the way you should think about this business, there is the employer making a choice. They may give you life insurance, disability, dental, employer paid. And then they offer you a set of additional products that give you -- that are paid by the employee that give you additional coverage, like a cancer insurance product or a health indemnity product -- a hospital indemnity products rather. And when we look at that runway, we see participation rates here that are low double digits.

So a lot of white space for us to capture within the employers that we serve today. And people ask me, so why is it low double digits? And you look at it and you're like, there are 2 specific, we call, gaps that we are unlocking. One is a confusion gap which is survey after survey, you talk to people who've gone through an open enrollment experience, irrespective of their financial acumen, by the way, half of them tell you we are confused. They don't know why they're making these choices and what just happened in those 20 minutes.

And then the other piece is you look at it, and it's not surprising, you've got a massive protection gap in this country. People are underinsured by every single measure you look at. And what we're building, deploying technology, data analytics, AI is to get to people at that time of open enrollment and give them guided advice as to what protection they need based on their particular circumstances. And then over time, nudge them to use these products and become more aware of the coverage they bought and that's continuing to drive double-digit growth for us in that segment and what is otherwise a very mature market.

So those 3 factors, doing more with fewers, consolidation of the channel and the growth in the participation rate in the work site continue to help us kind of drive above industry growth rates.

Makes sense. And great color there. You have a high single-digit market share with the regional accounts, so less than at the national level. And of course, that's more fragmented as well. What is your strategy to grow there in the regional market? Do you approach that differently?

Sure. Look, it's not 25%, it's close to 8.5%, 9% in regional markets, which we define as employers with 5,000 or less in terms of their employee population. The #1 player in that market is not a single company. It's Delta Dental, which is an amalgamation of different state-based dental insurance companies. So if you think about as a commercial competitor, we're actually the leading player even in regional markets.

But as you said, it's more fragmented. And so when you think about the runway there, we look at that market that is more fragmented than we see avenue for faster growth. Some of it is happening from the broker consolidation that I talked about. The other dynamic in this market is there's more white space. So midsized employers, when we look at it, 3 out of 4 of them don't offer the full suite that some of their larger employers offer. So we often find ourselves going to employers who are looking to introduce new benefits unlike the national account space that's more saturated.

The other dynamic in regional markets is -- which favors for us size is the connectivity into the broader ecosystem of benefits is very important. So let me just spend 30 seconds on that. If you're an employer, you're invariably using benefit administrator or human capital firm to help you administer your benefits. So you think of the Workday or the ADPs of the world, et cetera. As an insurer, if you are tightly connected with those firms, deep API integrations, you're much, much more easier to do business with and that gets you the front of the line in terms of being more competitive and offering a more compelling value proposition to that employer.

Those integrations take kind of 2 to happen, right? And so we look at these firms, they look at us and they're like, who are we going to prioritize in terms of who we integrate with and they do the same. And so over time, that's another factor that's giving us more tailwinds in this business because we have deeper integrations in a consolidating market space that, again, gives us kind of other avenues for growth and differentiation.

Very interesting. Can you provide more color on Met's leave management program, how that's evolved in recent years? And if there's any additional capabilities you're interested in adding to the platform? .

Sure. So leave management was a space that kind of we've identified more than 5 years ago that's going to provide different and evolving needs in the marketplace. And in a nutshell, a lot of what's driving that is regulatory complexity and state-based leave plans. So if you're an employer, whether you're a single state employer or a multistate employer, these state-based leave plans require you to essentially offer the leave and administer it in a way that is compliant. They are different state by state.

And if you're an HR manager, they're highly complex to administer. And when we looked at the space 5 years ago, 2019, there were 37 million Americans who lived in a state that required those plans. By 2027, that number will triple. We'll go from 37 million to about 100 million. So when we looked at that space, we said this is going to be a service and a product that employers are going to care deeply about. They will not want to manage it themselves. They want to outsource it, and we're going to go after it.

And at the core of it is investments in technology, digital journeys for employees who want to go out on leave, integrations with employers in terms of their payroll systems and human capital systems, giving them the right data and analytics around the leave program and then as well as claims adjudication capabilities. So out of the $2 billion that I've mentioned in technology spend, this was the probably a single largest line item in that space.

And look, we're in a situation. We saw that this year, we've got a couple of more states come online, 1/1 of '26. And we're seeing very nice tailwinds for growth there in absence in particular. And this is a product that we bundle with the rest of our portfolio because it's -- we've made huge investments in it, and we typically sell it alongside life, [ broadened stability ], dental business, our voluntary portfolio. And a good data point here for you is, on average, customers who bought our absence products bought 4 or 5 other products from us, 1/1 this year. So an area where we saw the trend, we made intentional investments and we're seeing good results there in terms of growth and profitability.

That's definitely a good stat on the sales there with the leave management. How has Met integrating AI into group benefits? And I think you started to kind of go there at the end of your last answer, how do you see automation impacting the revenue and expenses as well?

Sure. Look, as a firm, we've made -- we've been very clear that we think AI is a transformational technology. And this is -- at the executive level, at the CEO level, we fundamentally think it's going to change the nature of work. And we want to get ahead of it. and use it to our advantage in terms of how we serve our customers and how we develop our own talent and be competitive in the market. And we're really looking at this through the lens of kind of competitive advantage because some of these things are going to become table stakes. But what we're really looking at is finding ways in which they can become -- provide us with an edge.

And at the highest level, when you have very high volume of transactions, very large premium to invest data -- invest technology over and then a lot of data underlying all of those, we see that as a real source of competitive advantage in the business that we're in. So in terms of making it more real in terms of how we're deploying it, we have an AI-infused reengineering effort that's looking at all of our core processes and reimagining them. And that cuts across things like claims, things like call centers, things like customer service functions. And we're seeing benefits in terms of speed, efficiency and quality accuracy, right?

We are deploying AI in places around underwriting and there is pricing accuracy is an important driver for us where we can get a lift from a predictive modeling perspective. And both of those, I would say, are well underway, right? The place we're turning our attention to right now is top line. So I mentioned that confusion gap, deploying data and analytics to figure out what's the right advice to give to someone, when to ping them with respect to their specific needs and make them more aware is something we're really, really focused on.

So we think there's a lot more potential from a business that's B2B or B2B2C to deploy AI from a lift perspective, from a top line point of view. And look, the technology is changing at such an exponential rate that part of what we're also doing across the firm is making sure that our talent is staying up to date. And if someone used AI 3 months ago, it's kind of almost irrelevant at this point. You really want your talent from a tech perspective, from a business perspective to stay at the cutting edge of this because it is changing very quickly, and therefore, the art of what's possible is also changing very quickly.

Great. And we're going to turn to Retirement and Income Solutions business. What are the largest growth you see in the -- growth opportunities you see in the Core Retirement business?

P Look, I think it comes back to the demographic trends and then an aging population. People look for retirement solutions, and we just published a thought piece on this, which is they're looking for a paycheck, not a pot of gold. Pot of gold is good, but cause anxiety. A paycheck is what people actually need in retirement. So from that perspective, that's where we're kind of positioned.

And from an opportunity perspective, we see a number of different places, which are driving nice tailwinds for us from a growth side. One is pension risk transfers. You've got $3 trillion of DB assets sitting on corporate balance sheets. Half of those are sitting in plans, which are frozen or closed. And as people age, those plans go from kind of deferred liabilities into folks who are in pay. So these are people who have retired from a corporate receiving a monthly paycheck and where the pension obligations still reside on the corporate balance sheet.

Survey after survey, tell you that Corporate America wants to get out of the pension business. You want to focus on your widget business, not the pension business. And so as that wave continues to go through and as the population ages, we're continuing to see a lot of demand and growth coming in the pension risk transfer part of the market. And we're kind of a leader in that space. We wrote over $14 billion of PRTs last year.

The other place, which we just entered is on retail side. Although we're not a retail player in the U.S., we've entered the retail market on an institutional basis. That's a market that's about $160 billion a year in retail annuities. And we have a couple, we're very selective about these partnerships, where primary retail insurers are coming to us seeking additional capital capacity, seeking the liquidity that we could provide and are looking -- and we've entered into reinsurance agreements where we're starting to see flow come from those retail insurers in the form of us being a reinsurer. So that's another oar in the boat, if you will, in terms of getting access to another growth market here, again, done only on an institutional basis and that in a way that is in line with our enterprise ROE numbers and margins.

Great. And could you talk a little bit -- you touched on it, but maybe the demographic outlook, that retirement gap and how that's building over the next several years?

Yes. I mean you just look at -- every statistic you look at here, you look at the number of people turning 65 every year. I talked about the defined benefit plans and those as people reach the retirement age, the logic about -- on risk transfer becomes even more compelling. So all of these things are going to play out. They're going to continue to accelerate. That's one trend we know it's definitely going to happen. We all get older.

And so as an insurer, what we have is the ability to provide income and provide guarantees in a way that a pure asset manager cannot. So that's if you think is the underlying trend that's going on and that's what's driving the growth for us here. The same thing is happening in other developed economies. So we are active in the U.K. market, U.K. pension risk transfer market, in particular, similar trends to what's happening in the U.S. We participate in that market as a reinsurer as well. And again, very similar dynamics, large DB plans looking to exit. In that case, insurance companies looking for a partner that can help them with investment capabilities as well as capital.

And I think you touched on it a little bit, but if you could dig a little bit deeper into the institutional retail side that you were talking about, how you use Chariot Re for that and the strategy and outlook there?

Sure. So think of Chariot Re. Chariot Re is a sponsored entity. It's -- we have a minority stake in that we launched last year with a seed transaction. We did 2 transactions last year totaling about $11 billion. The core of the strategy maybe is encapsulated with a simple triangle, right? You got retirement businesses like our U.S. business, like our Japan business that's seeing a lot of demand for retirement products, and we are well positioned to capture that and gather those assets.

We are getting to a point where some of that demand exceeds our own organic capital deployment capabilities, right? So we're looking for capital flexibility. And that's what Chariot Re comes, and that's the second part of that triangle, which is Chariot Re is providing us access to third-party capital that can be deployed against those liabilities. And then the third piece of the triangle is with Chariot Re, MetLife Investment Management, which is now a segment in our financials, is managing on a fee basis, the majority of the assets that are sitting on Chariot Re's balance sheet.

So really, it's a way for us to enhance our capital flexibility, continue to gather assets and retirement markets where we've got leading distribution positions, but turn what is otherwise a spread business that would have normally been on our balance sheet with our capital into a fee business, where we earn a return on, and we also participate in the economics of it through our minority stake in Chariot Re. So that's the Chariot Re concept.

It's supportive of our growth, be it in retail flow reinsurance or PRT insurance. As I said, it's not also unique to the U.S., it's also supportive of what we're trying to do outside of the U.S. in places like Japan where we've got a leading retirement franchise.

Great. And are there any updates regarding further derisking solutions for MetLife Holdings? What can we see -- expect to see that may help build capital or reduce risk?

I mean with Holdings, our approach is to be proactive, but also be disciplined. So you've seen us over the last few years, do one large transaction that was about $19 billion focused on more Life UL business. In the fourth quarter, we closed another transaction, that's about $10 billion that was focused on our variable annuity business. And we continue to be in active dialogue with respect to other parts of what's now legacy. It's sitting in corporate and other as the size of MetLife Holdings has shrunk over the years.

But these are always complex transactions. They take long time, years to execute. They need to work for both parties. And we're going to be very disciplined and make sure we're shareholder-friendly in terms of looking at transactions that make sense to shareholders and makes sense for us to allow us to kind of extract and redeploy capital. So we continue to be engaged, and this is a market that has more activity in it, which is always encouraging.

Within the businesses you oversee, are there M&A opportunities you would find interesting? And how do you evaluate buying versus building out capabilities? .

Sure. And if you think about in the U.S. outside of our MIM acquisition with PineBridge, we've done a few acquisitions in group benefits that I would call them more tuck-ins in terms of very focused on specific capabilities. But more broadly, when we think about the group business, we have a strategy and a clear line of sight towards very profitable, solid organic growth. We have the scale in that business, which I talked about. We've got the broadest product portfolio that I've also talked about. So we don't see the need strategically to go and acquire.

And having said that, M&A is always part of the toolkit. We always look at it. We see the deals that come to market, and we're actively looking at it. But it's not something where I would say is a prerequisite for us to achieve our financial targets, be it in terms of our top line growth or bottom line growth.

I think you highlighted so many great trends. What do you think is most underappreciated about your business? Or I guess, the biggest opportunity. I was just -- what would you want to communicate about the positive outlook?

Yes. I mean I would say with respect to our retirement business, what's underappreciated is the discipline that we have in pricing and our investment philosophy. In weeks like this where there's concerns around things like private credit and risk on the investment side, we have had a philosophy for many, many years to be right down the middle from an investment perspective and a risk appetite perspective, and we feel really good about our general account portfolio.

And what's also underappreciated in that business is our liabilities are not callable, right? So a lot of the -- what you're hearing about in the market really doesn't apply to us, neither from the asset perspective or the liability perspective.

I think on the group benefit side, look, this is a business when you're 3x the size of your next competitor, when you still have fragmented markets, beyond looking at next quarter or the third quarter or the fourth quarter, we just see a tremendous runway here for us. We see trends that are going to continue to drive growth in that market. And we feel we've got a great strategic positioning that's going to allow us to be a clear winner in that market going forward.

Great. Thank you very much, Ramy. We appreciate it. This was great color. And hopefully, you'll join us for the breakout.

Great. Thank you.

Welcome to the Bank of America U.S. Financial Services Conference, Generally, what I would call the insurance sleeve. And this is the MetLife presentation. I'm really pleased to have Michel Khalaf, President and CEO; John McCallion, Executive Vice President and CFO. And I guess, a new title, Head of Investment Management, this is a new title or title that's been more...

Head for a while.

It's obviously a bigger topic now because it's a reporting segment now, which had not been the case.

Every day feels new.

Every day feels. That's good. And so we're going to get to investment management as it's a bigger part of the story. But we just want to thank you for being here. And for the audience, if you want to ask a question any time, there's no order to my questions that can't be interrupted. So please just raise your hand, and we'll make that happen.

So let's start with the 3-year strategies and whatnot. We are now in year 1 through, I guess, the New Frontier, which is the, I guess, -- Next Horizons was the old one. The very hard. It sounds like Star Trek episodes a little bit. Can you talk about sort of the learnings through year 1 of New Frontier and where we're at right now?

Sure, sure. And thanks for having us, Josh. It's given us a good excuse to escape New York weather. So thank you for that. Yes. So it's a 5-year strategy, New Frontier. We launched it just over a year ago. And at the time, we talked about MetLife's superior value proposition of strong growth, attractive returns and lower risk. And we established an ambitious set of 5-year commitments to back this superior value proposition with 2025 was our first installment on this -- 1-year installment on this 5-year strategy. And in 2025, we delivered 10% adjusted EPS growth, 16% adjusted ROE and $4.9 billion in free cash flow.

In addition, we shaved 40 basis points off of our direct expense ratio target of 12.1%. I think this speaks to the efficiency mindset that we've built in the company, but also to the fact that investments in technology, AI, in particular, are starting to have a real impact as well. As part of -- I'm pleased with the results that we produced in 2025, but I'm also pleased with the progress we've made on the 4 strategic priorities we established back in December '24. And those were: one, extending our lead in group benefits; two, capitalizing on our unique retirement platforms; three, accelerating growth in asset management; and four, further scaling and expanding in highly attractive international growth markets. And I'm very pleased that we've made significant progress on all 4 priorities.

In Group, where we got bigger in 2025 and strategic investments we made, especially on the leave and absence front are starting to really resonate with customers, which is giving us really good growth in that segment of the market. In retirement, we had record PRT and U.K. longevity reinsurance origination in 2025 in RIS. And we had 17% sales growth in Japan. Again, I think this speaks to our sort of multipronged unique retirement origination platforms. We closed on the -- and one thing that I will sort of mention here is that we've talked about reinsurance as a strategic capability for MetLife. We further reinforced that with the launch of Chariot Re in 2025. And we completed 2 reinsurance transactions with Chariot Re.

What this does, it gives us another tool in the toolbox that can help us help support our growth on the retirement front as well as generate assets for MetLife Investment Management to manage. And speaking of MIM, we closed on the PineBridge acquisition at the end of '25. And we originated $22 billion in net flows. So what this does, it's a step change in terms of -- we were at roughly $600 billion in AUMs. We're now at $740-plus billion in AUM. And we've -- as you mentioned, MIM is now a segment, which hopefully will allow investors to, I think, better recognize the value of this business to the overall franchise. And then outside the U.S., very strong growth, I would say, across the board. I would just point to Mexico and Brazil as really good examples of that, where we're continuing to see very strong momentum consistent with what we talked about at Investor Day. And this is putting LatAm on a sort of a good path towards achieving $1 billion in earnings in the near term.

I think we achieved this in the face of continued uncertainty when it comes to the overall environment. And this brings me just to sort of emphasize again the importance of one having all-weather businesses, but also of diversification, which I've called it a really super power for MetLife. Just the importance of diversification, it's foundational to how we manage risk at the company. And it extends to everything from our investment portfolio to geography to our lines of business, products, channels, you name it. And I think a good sort of measure of the effectiveness of this diversification is exhibited in our steady and consistent free cash flow.

Well, I have no more questions. So let's go basically. I want to go through actually each one of the things you mentioned one by one. I guess, John, when we think about the comments that Michel made about double-digit EPS growth. So can we break that down into revenue, share reduction and expenses? And what are the tensions and opportunities to exceed that basic formula that delivers on that?

Yes, sure. And I just want to echo thanks for having us here. And it's great to be in Florida right now, I'd say. One thing to kind of be mindful of, if you think about Next Horizon to New Frontier, we really haven't had an EPS target. And one of the reasons is I think we're -- we've been going over through quite a long journey of transforming our firm, right? And I think as Michel referenced, we've really gotten to the, I'd say, the business mix that is really set for us to establish New Frontier. That also gave us the confidence to establish an EPS target of double-digit EPS growth.

And rough justice, what we referenced is that we believe that there's about a 60-40 split between earnings growth and capital management that would support that. I think the other thing to be mindful of is we did have a the legacy runoff business of MetLife Holdings is a legacy retail business of ours. That is shrinking. So it's less of a headwind on growth as well. So again, I think just from a timing perspective, it just felt right as part of New Frontier to establish this as part of our ongoing commitments.

In sort of thinking about how it all comes together with the 15% to 17% ROE goal, is there something about the nature of MetLife's capital-intensive business that puts a ceiling on the type of ROEs the business can achieve. So we're thinking about long term, is this a 15% to 17% in perpetuity? Or will liberty at the end of 5 years saying, hey, look, we've gotten to a level of efficiency, we're actually higher than that going forward?

Yes. I mean, obviously, right now, we're comfortable with the 15% to 17% as part of New Frontier. But there are 3 -- maybe, I guess, 3 dynamics going on right now in our business. One is if you look at the mix of business, we probably -- we probably have growth rates in the higher ROE businesses, greater than the balance sheet businesses that we have. And like Michel said, we're well diversified across both. Second, you have the runoff of MetLife Holdings. And then third, which has been a theme for us, and it does take time in an insurance company for these things to ultimately translate. But if you look at the value of our new business returns, which are unlevered IRRs, we've been in the high teens for quite some time.

This is a long-tail business. It takes some time for that to kind of find its way into the overall ROE of the firm, but that is part of what's allowed us to go from 12% to 14% up to now 15% to 17% over the last 7 years or so. And that -- I think those broad themes are still continuing. We're very comfortable with 15% to 17%, but there certainly is kind of an upward opportunity at some point in the future.

And one more part of that, of course, is keeping your expenses down. You guys did the New Frontier presentation and had your expense ratio goals. You integrated the PineBridge acquisition. Expense ratio went up, although I think that we knew that PineBridge was part of the plan at that time. So it was already built into the guidance about how you thought about things? Or how do we make those numbers?

Yes, PineBridge was not part of the plan at the time. Obviously, that came shortly thereafter, but what we provided at the Investor Day was pre- PineBridge. So that had -- at Investor Day, we said over a 5-year period, we would reduce our expense ratio by 100 basis points, and it will be pretty ratable across that 5-year period. Obviously, with an acquisition of an asset manager, which has a naturally higher expense ratio, it's a pretty simple business. profit margin is 30%, your expense ratio is 70%, right?

So that by nature, is just going to put pressure on the expense ratio. What we said on our earnings call, though, is because of the progress that we've been making across the firm. And as Michel said, we came in at 11.7% this year relative to a 12.1% target for the firm. While this will push us back up to 12.1% for 2026, we are still going to make the 11.3%. And it just goes to show, I think, the -- what we've been seeing in our firm across process reengineering, Michel likes to refer to when we kind of leverage AI that injecting that into those process reengineering is like a force multiplier. And we're seeing the effects of that. And it's been a great journey. It's been -- it's embedded in our DNA, and I think the team has done an excellent job to allow us to stay committed to 11.3%.

In terms of part of the goal, you want to grow fee revenues at Group Benefits in the 4% to 7% range over the 5-year period. We're at the low end of that range in '25. Should that accelerate? And what happened in '25, you're in the range still, but you're at the lower end of the range. Can you diagnose that a little bit?

Sure, sure. Yes, we feel confident in the 4% to 7% range for 2026. And 2 sort of main reasons for that, I would say. If you think about 2025, we were early movers in taking repricing action on our dental block. That impacted our persistency, put pressure on our persistency for 2025. That was the right thing to do, and we've seen dental margins revert to expectation with the sort of a normal seasonality that you expect to see in that business. And with most of the rate action behind us, we're seeing persistency, just early look at 1/1 renewals, very strong. So it's reverting back to where we would expect it to be. So that's one area.

The second one is, again, we have a good sort of view of 1/1 sales, and those are looking really strong. I think what we're seeing there is we talked about this at Investor Day as we launched a New Frontier is that we had identified the stability in particular, as a growth opportunity for us. And for the industry, I would say, that as an industry leader, we thought it was an area where we could we could accelerate our growth. We made important investments in this area, especially in things that sort of make life easier for employers and employees. We talked at Investor Day about My Leave Navigator on the leave and absence front as an important capability in that regard. And we're seeing these investments really resonate with customers. So that's driving significant growth for us.

And the thing I would also mention, which, again, we talked about at Investor Day, is this trend of employers wanting to do more with fewer providers. And one of the ways that we are capitalizing on this trend through our leave and absence offering is by bundling other products and services with that offering. So just to give you a sense of that, for our new sales, 1/1 sales, on average, we're bundling 4 to 5 products with leave an absence. So if you sort of take -- you look at these 2 sort of areas I mentioned combined, those give us confidence in our ability to grow well within the 4% to 7% range. And another thing I would mention about our Group business, and I have to go back to this team is diversification because, again, we are extremely well diversified in that business from a product, from an industry, even from a geography here in the U.S. perspective. And that diversification also allows us to sort of adjust and perform even in a varying economic situations and conditions.

You made the comments about taking rates in dental to restore and the profitability is good in dental. Can you talk about trend a little bit in the various group lines in terms of loss trend and what you're trying to compete with right now? I guess, particularly dental, we sort of speaks for itself, but we can talk about disability in life a little bit.

Yes, sure. So on the life front, we had -- our ratio was 81.1% in the fourth quarter, 83.1% for the full year, so below our 84% to 89% range, and we did bring down that range to 83%, 88% for the near term. What we're seeing there is consistent with CDC data for working age population where you see favorability. So we've seen that. I think the industry as a whole has seen that, and we certainly benefited from it across our book. We think that -- we believe that some of this favorability will persist going forward. And then on the disability front, we -- I think sort of disability sort of drove about a percentage point up in terms of our nonmedical health ratio for the fourth quarter. A few things that we saw there.

One is a slight increase in average severity on the block. Two, we saw social security decisions come down in the quarter. And then I would say slightly, it's not -- it wasn't sort of pronounced, but we saw some of that. And then we saw higher incidence rates. Again, if you look at the full year, we're still in line with expectations, but that was sort of what we saw in the quarter. And last was lower recoveries, although if you think about recoveries for the full year, they were ahead of expectations. So we don't believe that this is sort of the signals a trend necessarily. It's something that we're obviously going to keep a close eye on, but that's really what sort of impacted our nonmedical health ratio in the fourth quarter.

One or 2 of other companies that I look at who are in the medical stop-loss category report the rise in cancer incidents among young working age individuals. Is that -- could that be affecting disability at all in terms of like trying to diagnose whether it's happening and two, if there's any impact on trend from that?

We're not seeing that in our book. So it's something that obviously we keep a close eye on. But so far, we haven't seen that in our book.

Do you have thoughts on employment, especially with AI yesterday, I saw the insurance stocks were all down a lot because software is going to eat everything. But I think we'll attack sell-side research analysts first. That being said, I believe I'm a MetLife customers, that might be a problem. Can we talk a little bit about what the future of employment is and what it means for the company?

Sure, sure. So first, maybe let me start by saying, I think there was an element of employment hoarding, I would say, post pandemic. And the expectation has always been that this would correct over time. I think we've seen some of that. And it's something that we also sort of factor in when we project our growth rates in any given year. In terms of the headlines, I meet with other CEOs, our customers all the time. And I'm not hearing CEOs say, well, we're going to -- because of AI, we're going to shed 30%, 40% of our workforce in the next few years. What I'm not hearing also is that we want to do the same level of business with 50% less people.

I think what I'm hearing is we think with AI, we can do 50% more business, but we won't need 50% more people to do it. And I think this speaks to sort of AI being augmenting what humans do rather than replacing them. I think it speaks to the fact that the real prize with AI is on the productivity front. That's why also we like direct expense ratio as a good measure of progress we're making because it has revenues and expenses, not only expenses. So my sense is that productivity gains are going to drive new opportunities, including for the Group business. And I go back to diversification being our friend here because, again, when you're diversified by size of employer, by industry, by geography, even within industries, I think that also offers you some built-in protection.

Let's switch to retirement a bit. Given the economic outlook, and it's a very spread-sensitive business. Obviously, it's very programmatic. How do you look at the rate environment and the ability to deliver on your objectives given some people say interest rates are coming down. Any thoughts there?

Yes. And I think one of the comments we mentioned last year is we felt 2025, you'd see a stabilization of core spreads, which we did. I think we're just close to 100 basis points, maybe 1 basis point less or so and plus or minus maybe in the 2 basis point range throughout the 4 quarters. So that's kind of where we thought. We also referenced the fact that we have a variety of products that do well at the long end of the curve and the short end of the curve. That diversification allows for some stability. We see the stability continuing. There will be pockets of headwinds here or there for just different reasons. For example, we had a very large level of new flows in the fourth quarter on PRT.

Oftentimes, subsequent to that, the quarter later, you have some portfolio changes that have to occur. That has -- that tends to just slow down a little bit and have a little bit of a headwind in terms of spreads. So we might see a couple of basis point headwind in the first quarter. But one of the things we gave as part of the outlook was a little more clarity around RIS earnings, which we said would be relatively flat year-over-year, primarily due to our balances. And we referenced the fact that now in light of -- and Michel referenced strategic reinsurance earlier, leveraging reinsurance in a more strategic way, including with Chariot Re and other external parties, we've now been a little more clear on the growth metric for RIS being retained balances, that is net of reinsurance. And because of the large transaction with Chariot last year, you'll see a little bit of timing in our growth to be more back-ended in the second half of 2026. But spreads overall should remain relatively stable, I think going forward.

I might be using the wrong word here, but 10 years ago, I'd call PRT maybe a greenfield business. And obviously, it's a very much mature business right now. How much opportunity is there in PRT and in 10 years from now, is there anything left?

Yes. I mean I think there would be -- I really do. And I'll tell you why. I mean, I think just if you look at the sheer volume that's out there, it's well over $1 trillion. I mean it's $1.5 trillion by some estimates. You have very healthy funding levels that are supportive, again, of employers, plan sponsors wanting to transact. I think probably the main constraint will be capacity just in terms of capital going forward. There's been some noise lately with some of the sort of lawsuits, et cetera, but this hasn't really dampened the market much. I mean we had a record year last year, $14 billion in PRT. And those are -- this is business that we put on the books with returns that are consistent with our enterprise returns.

So we're really pleased with that. It's a lumpy business. We're extremely disciplined when it comes to the business that we put on the books. And we operate in the jumbo end of the market where we think that our brand, our balance sheet, size, our underwriting investment and admin capabilities provide us with a competitive advantage and where you find also fewer competitors. So yes, I mean, I think you're going to continue to see lumpiness in terms of the business and how much comes to market in any given year, but I think this is going to be a growing market for the foreseeable future.

And where does Cherot Re come in? What's the capability that you've gained by adding it to your arsenal?

Yes. I think to Michel's point around the growth metrics and just the trends we're seeing in terms of the need for retirement solutions broadly, whether it's PRT, we have -- we mentioned the growth we're seeing in Japan and the U.K. One of the things we set out as part of the strategy is we wanted to make sure we augment our own existing capital generation with that of third party. That's what Cherot Re does. It's a sponsored entity. It allows us to supplement and provide capital to meet the growing demands in these retirement markets. And it's off to a great start. I think we had -- in the first 6 months, we've closed 2 transactions. We stood up the team. We're off and running. And so it's a unique opportunity for us to leverage this capability across our platform. And I think there's a lot of opportunities ahead.

Again, I want to just bring out if anyone has a question, don't be shy, you can raise your hand and you can ask. So let's pivot now to the latest segment, the Investment Management. And can we talk about some goals? There's always had goals, but we don't see it as a reported segment, they get buried. So now that we see the numbers and we understand what they are, how should we be judging performance in MetLife Investment Management?

Yes. And one of the things we said with making it a reportable segment is we would coincide that with the closing and with the data spare, we closed PineBridge on December 30. So we're off and running now with a reportable segment. And yes, we're really excited. I mean, first, I mean, just the PineBridge acquisition, the team has come in 1/1 and it's just -- it's been really a one-MIM mentality right away. Obviously, we have a lot of work to do to integrate and drive revenue and expense synergies across the platform, but we're off to a great start. In terms of our objectives, and one of the things we referenced at Investor Day is kind of on this path to $1 trillion AUM. I mean that's more of a headline. But at the end of the day, our main objective is to accelerate growth in EBITDA. And with the PineBridge acquisition, we'll have about a 30% growth in revenue next year in '26, I should say, relative to '25 as well as earnings. We gave a range of $240 million to $280 million.

And then from there forward, we expect 15% to 20% growth in earnings. And a lot of that will be the revenue synergies we see across the platform as well as through leveraging our scale and operating leverage that we're building as part of the combined group. So we're super excited about what's ahead. And even Chariot Re, I referenced before, that -- if you think back to Chariot Re, that's another way of also growing in this retirement space, but moving from maybe spread-oriented business into -- and moving that to be fee-oriented because we obviously have an investment mandate along with General Atlantic across that entity.

You're calling $1 trillion a headline number, but like there's not necessarily immediate math behind it. But will the main path to be getting there be organic growth? Or will it be through continued acquisition?

Yes. I mean, look, we have a big acquisition to absorb right now. We need to get that right. That's probably the most important thing for us. And I think, like I said, I'm very, very pleased with what I'm seeing out of the gate in the first month as one team. And I think the groups did an excellent job between sign and close, maintaining their momentum, which is not always easy when you have kind of this -- you can put on hold and things like that. But basically, PineBridge came in with the AUM that we expected. So we're off to a great start.

The feedback we're getting is that this really makes a lot of sense. So there's a natural fit to the 2 firms together. And then if we get this right, it will give us the opportunity to think about getting this platform in a position that can easily tuck in other things over time. But right now, we're focused on integration.

So what capabilities did MetLife get with PineBridge and what enhanced abilities for fundraising does PineBridge now have with those strategies because it's part of the MetLife family?

Yes. I think they bring to us a bit of a higher-yielding tilt to their strategies, whether it's in the high-yield leveraged loan market, CLO platform. They bring a multi-asset platform. They help us grow our alternatives. And then on -- to your point, the geographic complementary nature, they're a bit more non-U.S., which is very complementary to our current platform. I think over 50% of their assets are outside the U.S. So that obviously gives you that distribution reach. And there's an opportunity looking at the client set to find ways to cross-sell. We actually had some early wins already. So very excited about what we have ahead.

I want to talk about international a little bit. Certainly, I mean, I think that Japan has been a huge part of that story for a while now. I think in terms of both Japan and Korea are advanced markets and mature, but you've had a great deal of success in what some would call mature markets. What have been the secret skills that have allowed you to grow in a place where growth is not as strong as it is in other markets you're in?

Sure. Yes. I mean, really pleased with the growth we're seeing in both Japan and Korea. Japan sales grew 17% in 2025. I think to a large extent, this is down to our diversified distribution and product capabilities in the market and the fact that we've been in Japan for over 50 years. So we know this market really well. I think there's a few things that are sort of from a macro perspective that are happening in Japan that are creating tailwinds as well for the industry for MetLife, I would say. The one, I mean, there's renewed energy and dynamism in Japan. And I think if anything, the recent elections probably reinforce that.

With an aging population, with people living longer. I think people are having to start to save earlier. That's creating a new sort of generation of customers for the industry, for MetLife as well. So that's certainly a tailwind. And then with people living longer, there also their needs when it comes to health and to retirement and savings are evolving. I think the other macro sort of trend that we're seeing is around with inflation now part of the system, people are having to move away from cash to other market-linked instruments and cash still represents close to 50% of savings in Japan. And we have seen over the last couple of years, 2, 3 years, a move out of cash things don't happen very quickly in Japan, but they are certainly happening. And the government is encouraging also the people there to sort of consider market-linked instruments. The stock market has been doing well in Japan.

So I think those are important sort of trends that create some tailwinds for the industry. For us, some product introductions in 2025 were very helpful. The thing I would mention as well is that 2/3 of our sales in '25 came from U.S. dollar products, but 1/3 came from yen products. And that's important in the context of rising yen interest rates. This gives us the ability to proactively sort of go after that opportunity if and when it manifests itself. And then Korea, I think, is a great example of us taking the know-how, the expertise that we built in Japan and transferring it over to Korea. U.S. dollar sales have been very strong there. And the equity market has done remarkably well as well, which is, again, another tailwind, if you think about sort of our sales momentum. So we feel good.

Obviously, we had guided to high single-digit sales -- mid- to high single-digit sales for Asia in '25, we achieved 18%. This -- so off of a strong base, I would say, we still feel confident about delivering mid- to high single-digit sales growth in 2026.

Does the self-imposed 90-day moratorium on sales at Prudential mean that for a short period of time, MetLife is going to be the beneficiary of a competitor not selling your products in the market?

No. I mean, obviously, I don't want to comment on other companies' issues. But I don't see it as such. It's a competitive market. You have many competitors in Japan, including some local companies. We feel really good about our ability to compete in that market. And I think we've been demonstrating that. So that's why that's really sort of how we think about our growth trajectory there.

Can you talk a little bit about the changes in solvency ratios in Japan and what it means for your dividend capacity in the country?

Yes. I mean there's been kind of a broad trend moving to a more economic framework in different jurisdictions. Japan is no different and one of which we are very supportive of, which is why we really don't see a big impact at all from the change. If anything, it's preferred to us where these economic frameworks, they take into account -- they're a lot more focused on ALM and various risks that are being taken. And that's really how we look at managing and our businesses across the globe. So from a product perspective, we don't see any changes. We talked about being within a 170 to 190 ESR ratio come the end of March. I still believe we're on track.

And then when we look at the sensitivities, one of the things we gave out at the earnings call and our outlook was whether the U.S. Treasury or the 30-year JGB moves 100 basis points, either of them or both of them at the same time, we're still within the range. So again, it just goes back to ALM is a very important concept under these new ESR frameworks, and we're very, very supportive of it.

If we pivot to Latin America, Mexico is probably the most important country in that cohort. I think we're starting out at a goal for this year 2026 at 6% to 8% growth and then accelerating in the out years of the new horizons. Can -- why are you so confident in that market and your opportunity to not only do well but do better?

Yes. I mean we -- excluding notables, we had the VAT issue in Mexico, which is an industry thing, not a MetLife issue. Excluding notables, we had a record year in '25, both on -- from a top line and a bottom line perspective. And that's not a one-off. I think that's sort of building on the momentum that we have seen in the region for a number of years now. So we feel confident in our ability to continue to grow both the top and the bottom line in the region, including Mexico, where we have diversified channels and products that are continue to resonate in the market and continue to fuel our growth there. And then Brazil has been a growth market for us. We've been growing faster than the market for, again, a number of years now.

There, besides the traditional channels, we've seen a lot of momentum in third-party and embedded insurance. And again, based on our New Frontier strategy, we had invested in digital capabilities, we call it accelerator to enable these channels and this growth, and that's really resonated in that market and across the region, I would say. So all in all, we feel really good about LATAM's continued momentum and trajectory. And as I said, we see a clear and I'd like to say imminent, but near term, let's put it -- let's say, near-term path to $1 billion in earnings there.

Very good. And finally, let's close on variable investment income. I think that for a number of years, it was incredibly outsized and pleasurable and wonderful and it's not been so great lately. Have we learned anything from the last decade that informs MetLife's future allocations or -- and just what can we say here?

Yes. I mean I think we should start with it's been a very valuable asset class for us over time. And certainly, it can bring some volatility. But if you look at the overall returns that we've generated there, it's been excellent. So -- but with a higher yielding environment, we have been migrating down our allocations to move into higher-yielding fixed income-oriented assets. And we'll probably continue in that direction. But we've seen -- we did see some stabilization here in 2025, the back end of the year, the back half of the year was very strong. I think we came in just under 9% for full year return. So look, we're cautiously optimistic that there's kind of a continued upward trend here, but we stayed with the 9% annualized return for 2026.

Great. Well, with that, I'm going to call an audible here and say it's time. I really appreciate John and Michel and John for being here.

Thank you.

Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Fourth Quarter and Full Year 2025 Earnings and Outlook Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to risk factors discussed in MetLife's SEC filings.

With that, I will turn the call over to John Hall, Global Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for MetLife fourth quarter 2025 earnings and near-term outlook call. Before we begin, I'd point you to the information on non-GAAP measures on the Investor Relations portion of metlife.com, in our earnings release and in our quarterly financial supplements, which you should review.

On the call this morning are Michel Khalaf, President and Chief Executive Officer; and John McCallion, Chief Financial Officer and Head of MetLife Investment Management. Also available to participate in the discussion are other members of senior management. Last night, we released an earnings call presentation, which addresses the quarter as well as our near-term outlook. It is available on our website. John McCallion will speak to this presentation in his prepared remarks.

An appendix to the deck features outlook sensitivities, disclosures GAAP reconciliations and other information which you should also review. After prepared remarks, we will have a Q&A session, which will end promptly at the top of the hour. As a reminder, please limit yourself to 1 question and 1 follow-up. With that, over to Michel.

Thank you, John, and good morning, everyone. When we launched New Frontier a year ago, we introduced 4 strategic priorities with a greater emphasis on growth. Over the past 12 months, we have advanced these strategic priorities, growing our business responsibly, deploying capital soundly and operating with speed and discipline, all while navigating a dynamic market and economic environment. Reinforcing our market leadership our best-in-class Group Benefits business added approximately $600 million of new adjusted premiums, fees and other revenues in 2025, with higher-margin voluntary PFOs rising 10% year-over-year.

Scale, technology and discipline continue to drive this attractive business forward. We capitalized on our unique retirement platform by seeding a sidecar, Chariot Re, tapping the U.S. retail retirement space via flow reinsurance and originating more than $14 billion of pension risk transfer sales, MetLife highest-ever annual PRT total. To accelerate growth in Asset Management, we closed on the acquisition of PineBridge Investments, and established a new business segment, MetLife Investment Management. At year-end, MIM had $742 billion of assets under management, up from roughly $600 a year ago and our high-growth international markets demonstrated their strategic importance with impressive growth rates.

In 2025, Asia saw constant currency sales jumped 18%, aided by a strong contribution from Japan, while Latin America saw constant currency sales rise by 12% with Mexico leading the charge. Our business growth has been fueled by sound capital deployment and capital management and 2025 was a seminal year for MetLife on this front. We expect to have deployed close to $4 billion to support organic new business in 2025, driven in part by the PRT origination and the Asia and LatAm sales production that I just mentioned.

We returned roughly $2.9 billion to shareholders via common stock repurchase and another $1.5 billion through common stock dividends, bringing the total to approximately $4.4 billion. We did this while funding about $1.2 billion of acquisitions and business investments, including PineBridge and Mesirow, making 2 investments in Chariot Re as well as boosting our investment in PNB MetLife, our India joint venture.

And we executed several strategic reinsurance transactions. Among these were 2 separate deals with Chariot Re totaling about $11 billion of liabilities and a risk transfer agreement with Talcott totaling $10 billion of liabilities. When we introduced our New Frontier strategic priorities last year, we also established a fresh set of 5-year financial commitments that underscore MetLife's superior value proposition. These commitments not only serve to challenge us, but more importantly, to hold us accountable. We committed to achieving double-digit adjusted EPS growth over the time frame recognizing this will not always be a linear path.

And in 2025, we delivered roughly 10% adjusted EPS growth, excluding notable items. We committed to achieving a 15% to 17% adjusted return on equity. For the full year, ex notable items, we delivered 16%. We committed to [ shaving ] 100 basis points over 5 years to achieve a direct expense ratio of 11.3%. In 2025 alone, aided by AI and other emerging technologies, we lowered our direct expense ratio to 11.7%, putting us well ahead of schedule. And where it all comes together, free cash flow, we committed to generate $25 billion over the course of 5 years.

In 2025, we made a $4.9 billion down payment toward that cumulative target. Throughout Next Horizon and now through New Frontier, the prevailing constant has been change. The all-weather nature of our market-leading businesses position MetLife to adapt and succeed in a variety of economic environments. One year into New Frontier, it is clear we have the right strategy at the right time, focused on the right growth opportunities and measuring ourselves against the right metrics. Turning to fourth quarter results. We reported strong quarterly adjusted earnings of $1.6 billion or $2.49 per share. Excluding notable items, we reported $2.58 per share, up 24% compared to $2.08 per share a year ago. On an ex notable basis, this represents MetLife's highest single EPS quarter.

Contributing to the outperformance in the quarter was robust underlying business momentum across most segments, aided by another consecutive quarter of improved variable investment income, which totaled $497 million. Our private equity portfolio returned 2.8% in the quarter, and we also saw a modest rebound in returns on our real estate and other funds as well. Adjusted premiums, fees and other revenues, or PFOs, rose 8% to $12.8 billion and rose 29% to $18.6 billion when retained pension risk transfer deals are included.

For the full year 2025, we reported adjusted earnings, excluding notable items of $6 billion or $8.89 per share, up roughly 10%. Higher variable investment income, volume growth and capital management drove the growth in earnings per share. As we do each fourth quarter, we included our outlook for certain near-term targets and other elements of guidance in our earnings call presentation. This year, in view of our resegmentation, we have taken a more prescriptive approach. In a moment, John will delve into our near-term outlook in greater detail. But on a high level, it should be evident we are on track to achieve our 5-year commitments for adjusted EPS, adjusted ROE, direct expense ratio and free cash flow, among others established under New Frontier.

Turning to MetLife's businesses. Group Benefits adjusted earnings, excluding notable items, totaled $465 million in the fourth quarter, contributing to full year adjusted earnings ex notables of $1.7 billion. Life mortality continues to trend favorably, which we expect to persist in 2026. Repricing has returned dental to target profitability, while disability experience trailed our expectations in the quarter. This year anticipates 7% to 9% growth in adjusted earnings year-over-year, driven by PFO growth and supported by underwriting.

In Retirement and Income Solutions, adjusted earnings, excluding notable items, were $454 million for the quarter, up 18%, bringing full year adjusted earnings ex notables to $1.7 billion. For the year, RIS benefited from record origination in both PRT and U.K. longevity reinsurance. For Asia, adjusted earnings ex notables totaled $444 million for the quarter and $1.6 billion for the year. Strong annual sales growth from new products, in particular, foreign currency-denominated products in Japan and Korea pushed general account assets under management to advance 7% on a constant currency basis in 2025.

Looking to Latin America, adjusted earnings, excluding notable items, came to $227 million, up 13% in the quarter. Business momentum in the region has been outstanding over the past several years, supplemented by the expansion of digital platforms such as Xcelerator and growing strategic partnerships. Given the segment's strength in the quarter, it is not hard to see a pathway to $1 billion in annual adjusted earnings over the near term. With EMEA, the segment continues to punch above its weight class relative to last year's outlook. The segment reported adjusted earnings ex notables of $97 million in the quarter, which is close to the run rate implied by our 2026 outlook. And to close out business highlights, in the fourth quarter, we transitioned to new segmentation with the introduction of MetLife Investment Management as a business segment. This aligns with our New Frontier strategic priorities, reflects the critical mass we've gained with the acquisition of PineBridge and underscores our intent to grow and further capitalize on the increasing conversions of life insurance and asset management.

Moving to cash and capital. The fourth quarter serves as an excellent reminder of MetLife's capital strength and flexibility. After retiring $0.5 billion of debt, buying back around $430 million of common stock, paying roughly $370 million of common stock dividends and funding close to $1 billion of acquisitions and other investments. We ended the year with $3.6 billion of cash and cash equivalents. This falls firmly within our target liquidity buffer of $3 billion to $4 billion. A final note on capital. In the month of January, we repurchased another $200 million of our common stock. We expect 2026 repurchases to be in line with 2025.

To wrap up, the strategic actions we took in 2025 set the table for the coming years of New Frontier and position MetLife to deliver on our financial commitments and our superior value proposition of responsible growth and attractive returns with less risk. We are entering 2026 as a stronger company with sustained business momentum and expanding market leadership. While the macro and market environments continue to evolve, we remain laser-focused on the levers we control and on relentless execution to generate responsible growth, deploy capital with rigor and further drive operating efficiency.

MetLife's financial strength feeds our ability to deliver for our shareholders as well as other stakeholders, including our customers, employees and communities. In 2025, MetLife paid roughly $50 billion in policyholder benefits and claims and invested more than $90 billion to support our liabilities. The sheer scale of these numbers highlights the dedication of our people to MetLife's purpose, always with you building a more confident future. I am energized by our team's commitment and look forward to the future as there is still much for us to achieve.

Now I'll turn it over to John to cover our performance and outlook in greater detail.

Thank you, Michel, and good morning, everyone. I'll review our fourth quarter results and refer to the fourth quarter earnings call presentation for financial highlights, including our near-term outlook.

Starting on Page 3, we made significant progress in 2025 toward our 5-year financial goals. We achieved 10% adjusted EPS growth and adjusted ROE of 16% within our target range, a 2-year average free cash flow ratio of 81%, surpassing our target and a full year direct expense ratio of 11.7%, also beating our target.

Overall, an excellent first year, which establishes a strong foundation for our New Frontier strategy. Net income was approximately $800 million and $3.2 billion for the fourth quarter and full year of 2025, respectively. The difference between net income and adjusted earnings was mostly attributable to net derivative losses, primarily due to rising long-term interest rates, favorable equity markets and stronger U.S. dollar. We use derivatives to hedge economic exposures where these offsets are either reported elsewhere in the financial statements or where the offsetting economics emerge over time.

In addition, net investment losses were largely the result of normal trading activity on the portfolio and credit remained stable. We had 2 notable items in the fourth quarter that reduced adjusted earnings by $61 million in the aggregate or $0.09 per share. The notable items were the Mexico VAT impact we discussed in the third quarter and higher asbestos litigation reserves recorded in Corporate & Other. Moving to Page 4. This slide compares fourth quarter year-over-year adjusted earnings, excluding notable items by segment and Corporate & Other. All my comments refer to figures excluding notable items.

Adjusted earnings rose 18%, 17% in constant currency to $1.7 billion, driven by higher variable investment income, strong volume growth and favorable expense margins, partially offset by lower recurring interest margins. Also, we have revised our definition of adjusted earnings to exclude the noncash accounting of real estate depreciation to align the impact of real estate asset value changes and better reflect the recurring cash flow and returns of the investment in adjusted earnings. This change increased fourth quarter adjusted earnings by $57 million and is expected to add about $200 million annually, mostly benefiting Corporate & Other.

Adjusted earnings per share were $2.58, up 24% and 23% on a constant currency basis. Growth was supported by disciplined capital management. Moving to the businesses. Group Benefits adjusted earnings were $465 million, up 12% year-over-year, largely driven by favorable underwriting, primarily in Life and Dental, partially offset by weaker disability. The Group Life mortality ratio was 81.1% for the quarter and 83.1% for the full year, below our 2025 target range of 84% to 89%, reflecting continued improvement in working age mortality trends. The fourth quarter nonmedical health interest adjusted benefit ratio of 72.2% was within our annual target range. Seasonally low Dental utilization was in line with expectations. However, disability results came in below expectations due to higher average severity and higher incidents in the quarter, albeit within pricing expectations.

Group Benefits adjusted PFOs for the fourth quarter and full year 2025 was up 2% year-over-year. Excluding the impact of roughly 2 percentage points from participating life contracts, the growth would be 4%. RIS adjusted earnings were $454 million, up 18% year-over-year, primarily driven by higher variable investment income. Investment spreads, excluding VII, remained relatively stable at 99 basis points, up 1 basis point sequentially. RIS delivered substantial inflows in 2025, driven by record sales of $42 billion in the year. Pension risk transfers were more than $14 billion and U.K. longevity transactions were $11 billion, including $7 billion in the fourth quarter.

The strength of this origination platform and growth throughout 2025 underscores the global demand for Life and Retirement Solutions as well as our focus in leveraging strategic reinsurance to enhance our capital flexibility to support this trend. Asia adjusted earnings were $444 million, essentially flat year-over-year, up 1% on a constant currency basis. The primary drivers were volume growth and favorable expense margins. These were partially offset by less favorable underwriting margins versus the prior year quarter, which had positive reserve refinements that benefited adjusted earnings by roughly $30 million. Asia's key top line growth metrics were robust in the fourth quarter and full year of 2025.

The general account assets under management at amortized costs were up 7% on a constant currency basis. Sales were up 18% on a constant currency basis on both a quarterly and a full year basis, primarily driven by Japan and Korea, our 2 largest markets in the region. Latin America adjusted earnings were $227 million, up 13% and up 4% on a constant currency basis, driven by volume growth across the region. Latin America's adjusted PFOs were up 25% and 16% on a constant currency basis, while sales were up 26% on a constant currency basis due to strong growth across the region, most notably in Mexico and Brazil. EMEA adjusted earnings were $97 million, up 64% on both a reported and constant currency basis. The primary drivers were robust volume growth as well as favorable underwriting margins.

EMEA adjusted PFOs were up 21% and up 17% on a constant currency basis. Sales were up 24% on a constant currency basis, reflecting strength across most markets, led by Turkey and the U.K. Turning to MetLife Investment Management or MIM, which we are reporting as a stand-alone business segment for the first time. MIM delivered adjusted earnings of $60 million in Q4 of '25 versus $16 million in Q4 of '24. The primary driver year-over-year was the transition to general account market fees as part of becoming a business segment. Looking ahead, we would point you toward MIM's key financial metrics as shown in our quarterly financial supplement.

In addition to the statement of adjusted earnings, we provided AUM and revenue information for both institutional clients and the general account. Corporate & Other, which now includes MetLife Holdings, our legacy runoff business, reported an adjusted loss of $38 million for Q4 of '25 compared to an adjusted loss of $72 million in the same period last year. The primary drivers were favorable investment margins and expense margins. These were partially offset by less favorable life underwriting margins. Page 5 shows our pretax variable investment income, or VII, for the 4 quarters and full year 2025 as well as full year 2024.

Variable investment income was $497 million in Q4, driven by private equities, which had an average return of 2.8%, while real estate and other funds had an average return of 1.1%. As a reminder, PE and real estate and other funds are reported on a 1-quarter lag and accounted for on a mark-to-market basis. For the full year, VII was $1.5 billion, below our 2025 target of $1.7 billion, but well ahead of the prior year. Real estate and other funds accounted for much of the shortfall, while PE returns, which generated a full year 2025 return of 8.2% were modestly below our annual expected return of 9%.

On Page 6, we provide VII post-tax by segment and Corporate & Other for the 4 quarters and full year of 2025. Most of the VI assets are concentrated in Asia, RIS and our legacy runoff business now in Corporate & Other, consistent with the long-term nature of these obligations. As of December 31, 2025, total VII assets stood at approximately $19 billion. Asia represented nearly 45% of the assets, while RIS and Corporate & Other accounted for about 30% and 25%, respectively. Turning to Page 7. This chart shows a comparison of our direct expense ratio for the fourth quarter and full year 2024 and 2025.

As you can see, we continue to benefit from our efficiency mindset in driving down our cost curve with our direct expense ratio falling to 11.7% for the year, which is well ahead of target. This includes seeing the benefits from the adoption of AI tools and other emerging technology broadly across our company as we've seen the opportunities to reengineer processes while also injecting AI tools to enhance the speed and accuracy of our delivery, all of which improves the lives of our customers and our employees. Let me now review our cash and capital position as detailed on Page 8. MetLife remains strongly capitalized with robust liquidity. As of December 31, cash and liquid assets at the holding companies totaled $3.6 billion, in line with our target cash buffer of $3 billion to $4 billion.

The acquisition of PineBridge, which closed in the quarter, was the main driver of the reduction in HoldCo cash sequentially. In addition, total cash returned to shareholders in the fourth quarter was about $800 million, including approximately $430 million of share repurchases. An additional roughly $200 million of shares were repurchased in January. For the 2-year period 2024 and 2025, our average free cash flow ratio, excluding total notable items, was 81%, exceeding our 65% to 75% target range. In terms of statutory capital for our U.S. companies, our combined 2025 NAIC RBC ratio is expected to be above our 360% target.

Our estimated U.S. statutory adjusted capital on an NAIC basis stood at approximately $17.2 billion as of December 31, up 1% from the third quarter. We anticipate the Japan solvency margin ratio to be around 770% as of December 31, pending the final statutory filings in the coming weeks. As a reminder, this will be the last stat filing in Japan based on the SMR, which will be transitioning to an economic solvency ratio or ESR. As we have previously disclosed, we expect to report an initial ESR within a range of 170% to 190% for March 2026. Now let's discuss our outlook starting with the overview on Page 10.

Based on the forward currency curve, we expect the U.S. dollar to be stable in 2026 relative to 2025. The forward interest rate curve projects long-term interest rates to be modestly higher and the yield curve expected to steepen, a positive development. And we use an assumption of 5% annual return for the S&P 500. For our near-term targets, we expect to achieve double-digit adjusted EPS growth. We expect adjusted ROE to be in the range of 15% to 17%. We expect to maintain our 2-year average free cash flow ratio of 65% to 75% of adjusted earnings, which supports our 5-year commitment to generate $25 billion plus of free cash flow.

Specifically for 2026, given asset management businesses tend to have higher expense ratios, the acquisition of PineBridge will add 50 basis points to our direct expense ratio in 2026, with our 2026 target being 12.1%. However, with the considerable progress we've made in the first year under New Frontier towards achieving 100 basis point improvement over the 5 years, we intend to maintain our 2029 target of 11.3% despite the higher expense ratios associated with accelerating growth in our asset management business. Variable investment income is expected to be approximately $1.6 billion pretax. Our Corporate & Other adjusted loss is expected to be between $500 million and $700 million after tax. We are maintaining our expected effective tax rate range of 24% to 26%, and we expect our 2026 share repurchases to be in line with 2025.

At the bottom of the page, you will see certain interest rate sensitivities relative to our base case, reflecting a relatively modest impact on adjusted earnings over the near term. Page 11 provides our outlook for VII. We expect the average asset balances for private equities to decline in 2026 and over the near term as we continue to strategically reposition the portfolio to higher-yielding fixed income securities, consistent with the higher interest rate environment. We are assuming annual returns for private equity to be 9% and real estate and other funds to be 7% over the near term.

Finally, as a reminder, we include prepayment fees on fixed maturities and mortgage loans in VII. Moving to our business segments on Page 12, starting with Group Benefits. We are maintaining our adjusted PFO growth target of 4% to 7% over the near term as we continue to strengthen our market leadership. We are reducing our group life mortality ratio target range by 1 point to 83% to 88% as we expect favorable mortality trends will continue in 2026. For Group Non-Medical Health, we are increasing our interest adjusted benefit ratio target range by 1 point to 70% to 75%. We are seeing the benefits of our leave and absence capability and technology investments take hold in the market. And therefore, this range is reflective of our updated view of product mix over the near term.

Taking all these factors into account, we expect Group Benefits adjusted earnings ex notables to grow 7% to 9% in 2026. Please keep in mind, Q1 tends to be a seasonally low quarter with both life and Non-Medical Health results skewing to the higher end of the target ratio ranges. RIS near-term outlook is on Page 13. As part of New Frontier, we are strategically leveraging reinsurance to augment our organic capital with third-party capital to support the building demand for retirement solutions. This further supplements our liability growth while allowing us to maintain capital discipline. The common theme is capital flexibility. With our expanded toolkit, we're able to support liability growth and at the same time, generate additional investable assets to be managed by MetLife Investment Management.

As a result, we've enhanced the statistical pages in the QFS to more clearly reflect the impact of our growing use of reinsurance. As such, RIS segment earnings will be driven by retained liability exposures net of reinsurance, more specifically, the average retained liability exposures, which we expect to grow 3% to 5% in 2026 with growth weighted toward the second half of the year. We expect RIS adjusted earnings in 2026 to be between $1.6 billion and $1.8 billion. Given growth is weighted to the second half of 2026, Q1 adjusted earnings is expected to be relatively flat year-over-year. Finally, we expect total general account investment spread to range from 100 to 120 basis points in 2026. For Asia, on Page 14, we expect annual sales growth to be mid- to high single digits on a constant currency basis over the near term and general account AUM growth in the mid-single digits. Asia adjusted earnings, excluding notable items, are expected to grow mid-single digits over the near term.

Regarding the Japan ESR, assuming 100 basis point change up or down in either or both the 10-year U.S. treasury and/or the 30-year JGB rates, we expect to remain within 170% to 190% target range. On Page 15, for Latin America, we expect adjusted PFOs to grow high single digits over the near term. We expect Latin America adjusted earnings, excluding notable items, to increase 6% to 8% in 2026, including a roughly $50 million impact from the Mexico VAT change, which we expect to be mostly in the first half of the year. We expect adjusted earnings to return to high single-digit growth in 2027 and '28.

Moving to EMEA. We expect adjusted PFOs to continue to grow high single digits given the strong momentum in the business. For adjusted earnings, we expect EMEA's new quarterly run rate to increase to $90 million to $100 million in 2026 and then grow mid- to high single digits in 2027 and 2028. Finally, for MIM, we expect revenues to grow roughly 30% in 2026, largely driven by the combination of PineBridge and then increase by mid-single digits thereafter. For MIM adjusted earnings, we expect to be between $240 million and $280 million in 2026, then grow 15% to 20% per year in 2027 and 2028 from a combination of revenue and expense synergies as well as greater operating leverage.

By 2028, we are targeting an operating margin of approximately 32%. In addition, we expect MIM's Q1 adjusted earnings to be approximately $50 million, lower than the implied quarterly run rate due to higher seasonal expenses in the first quarter. In total, MetLife delivered a strong quarter to close out another strong year. We successfully executed key strategic initiatives to support New Frontier while achieving our financial commitments. Building on our clear momentum and solid fundamentals across our diverse set of market-leading businesses, we achieved robust top line growth, maintained disciplined underwriting and exercised prudent expense management. With a strong balance sheet and reliable free cash flow generation, we are well positioned to achieve responsible growth and deliver attractive returns with lower risk, creating sustainable value for both our customers and our shareholders.

And with that, I'll turn the call back to the operator for your questions.

[Operator Instructions] We'll take our first question from Jimmy Mueller at JPMorgan.

So first, I just had a question on Group Benefits for Ramy. Just comment on what you've seen through renewal season in various product lines. I know you've been pricing up dental over the past year. How you're seeing your -- like what you've done in terms of pricing in various product lines and whether you're seeing competition pick up or ease in any of the products in Group Benefits?

Thanks for the question, Jimmy. I would say if we look at our 1/1 results, in particular, with respect to persistency and renewals, we're seeing pretty robust results. I would say, increase in persistency, in particular, in dental. As we've talked about, we did take actions in 1/1 of '25 with respect to the dental business and responded quickly to kind of get back to our target margins. And I would say at this point, persistency is improving and is pretty robust. And although we'll come back and talk to you about our full Q1 results, at this point, we also have good sales growth across our book of business. And in particular, I would highlight disability here as an area of strength that we're starting to see based on our 1/1 results.

And then just another topic for Lyndon or maybe Michel. In Japan, you've seen pretty dramatic moves in some of the macro variables, whether it's currency or interest rates. How is that affecting your business in terms of persistency, maybe the sales mix? And any comments on the competitive environment in that market as well?

Jimmy, it's Lyndon here. So yes, we have seen some macroeconomic volatility recently, both in the FX as well as the rates. But just if you think about it, the short-term impact on sales could be due to rates. We see a short-term impact during periods when we see significant macroeconomic fluctuations. And what happens here, our customers tend to wait for the markets to stabilize before going out and buying foreign currency products. So we see these temporary fluctuations. But for the most part, our value proposition continues to remain solid with the customers. And given the breadth of our product portfolio and our distribution strength here, it really gives us -- puts us in a good position to meet the demand through these periods, whether it's yen or dollar products.

And just with the issues at Prudential, obviously, they're more company-specific and don't have anything to do with you guys. But do you see any impact on your business just because of Pru and you both being American company in terms of sales persistency and recruiting?

Yes. Look, thanks for the question. We really don't have much to say about it. I mean we're aware of the situation. We're very optimistic about our position in Japan. As you heard during Investor Day, we think it's a very attractive market given the higher rate environment as well as all these positive macroeconomic trends. There's a lot of capital coming into the market, and it continues to be a competitive market. But as I said, we've got a really good platform, strong multichannel distribution, a very diversified product portfolio. You can see our sales results have been very strong this year. They've been up 17%. So we're very optimistic about our position in Japan and optimistic about our potential going into '26.

We'll move next to Tom Gallagher at Evercore ISI.

First question, John, just a question on this change in GAAP earnings for real estate accounting. I think the $200 million benefit that you flagged. Is this a GAAP-only impact? Any expected change in statutory? Or did statutory already have that adjustment? And why change this? Is this -- were you more conservative than peers? Or is that more reflective of what you think the economics are?

Yes. Yes, it's something we've thought about for some time. And I think just the resegmentation and change kind of gave us an opportunity to rethink just the reporting in adjusted earnings. And I think relative to peers, we probably had a higher allocation to real estate because of our expertise in the area. And so we tend to lean into this asset class. So we did a review as we thought about it, quite honestly, the noncash cost accounting construct really is not ideal for representing kind of the annual cash flows and annual returns of this product. It also doesn't really align with the changes the book value and then you have a sale that goes below. So we tried to make this change create a little more alignment in kind of the overall economics of the asset class and just more reflective of our operating cash flow.

That makes sense. I thought I'd throw out a MIM question since it's the new bright shiny object this quarter. And it's a question that we've been getting recently. So I'm curious to what extent you can comment on Brighthouse, obviously going to be acquired by Aquarian. I know that they're a partner of yours, that's -- you have an investment management agreement with them. Any way you can sort of frame how meaningful that could be if that contract changes with the acquisition? And is that -- is anything for that baked into your '26 guide? Or would that more likely be a '27 issue?

Yes. Let me start with -- first, we're very excited about just closing PineBridge at the end of the year. I think there's just been an excellent momentum hitting the ground 1/1 as one team. And just to kind of highlight we have historically in MIM been kind of a one MIM platform. We really haven't built this boutique style. So there's a natural process for how these complementary businesses can come together and integrate. And we're really excited about what's ahead.

Even looking at things from between sign and close, you saw kind of our flows in MIM were very strong and PineBridge did great. And that's just a testament to why this makes sense and how it's resonated in the market. And so we're really excited about what's ahead. And it just gives us a bigger -- even further expansion of our solutions that we can provide to clients and particularly insurance clients. We can be a full-service provider to insurance clients, not a product pusher, but just really kind of focusing on what's best for them. We serve their needs. And as you mentioned, Brighthouse, Brighthouse is a great relationship for us. We have a long history. We take pride in that. We're excited to have the opportunity to work with the new combined firm that they have, and I know they're going through a process right now. So we're here to help them.

Look, at the end of the day, we have a diversified set of clients across our MIM platform. We have close to $150 billion of AUM in insurance. And it's -- we have a diversified set. And to the -- I think when it comes to exposure, while we are excited about keeping and growing our relationship with Brighthouse, that's kind of our expectations. At the end of the day, to the overall firm, this would be a worst-case scenario would -- at the end of the day, would be a very modest impact to EPS.

We'll move next to Joel Hurwitz at Dowling.

Michel, in your prepared remarks, you mentioned that you guys have tapped the U.S. retail retirement space with flow reinsurance. Can you just provide an update on what you've done to date and your outlook for that opportunity at this point?

Joel, it's Ramy here. I'll take this one. I would say, first, you just need to put this in the broader context of our retirement strategy in the U.S. that we talked about as part of our New Frontier strategy. And at the highest level, look, our approach here is to compete in the retirement space in areas which play to our strength and leverage our competitive advantage. And we looked at that and as part of that, looked at a fast-growing U.S. retail annuity market and identified an opportunity to participate in that market in a way that does leverage our competitive advantages. And in this case, the path that we have chosen is to participate in that market on an institutional basis as a reinsurer.

And look, testament to the discipline of execution here in under a year, we executed against that strategy. We now have 2 partners with flow reinsurance deals in place that have kicked off over the past couple of months. We value these partnerships and our partners value what we bring to the table, in particular, in terms of financial strength, investment capability, capital flexibility. So this is exactly what we mean when we say we're looking for opportunities that play to our strength. And at the end of the day, this is going to add to our ability to grow liability origination and capture the momentum that we're seeing in the retirement market in a way that works well for our economics and plays to what we can bring to the table here.

And then just wanted to follow up on Jimmy's question on Japan and the macro and on persistency. Did you guys see any increased surrender activity in Q4 thus far in Q1? And I guess, is there anything baked into your outlook for potentially higher surrenders just given the FX and rates?

Yes. Joel, it's Lyndon here. So yes, we did see the surrender trend in the fourth quarter was a little bit higher than it had been sequentially in the third quarter, and that was primarily because we saw the yen has depreciated relative to U.S. dollar. For the full year, in '25, our surrenders have come down relative to where they were in '24. And for '26, we're assuming that surrenders come back to our long-term assumption over there, and that is baked into our 2026 guidance.

We'll go next to Suneet Kamath at Jefferies.

I wanted to start with group. One of the questions we always get is AI is coming in, it's going to take out x percent of the workforce. That's going to negatively impact group benefits companies. And if I look at your guidance, it looks like growth on top of pretty good growth this year. So it doesn't feel like you're building anything in related to that. So can you just talk about what you're seeing maybe at the customer level in terms of either hiring or layoffs, just so we can kind of see what the scope is in terms of where we are?

Thank you, Suneet. It's Ramy here. So look, when we construct our PFO outlook, we look at a number of factors. We have certainly incorporated what we have been seeing in our book with respect to employment actions that some of our clients have taken, be they AI-driven or otherwise. And the outlook assumes that this trend would continue in 2026. So we are taking a very grounded view of where that picture is heading. But look, at the same time, in our outlook, we also incorporate what we're seeing in terms of growth, be it in terms of adding coverages to existing employers and new sales, increase in participation rates via our enrollment effort.

And a piece of that is the very strong start to 1/1, which I've talked about earlier, and that's been a strong start, both in terms of persistency in sales and really sales across the entire book, inclusive of disability. So when you put all of this thing together, we feel comfortable with the outlook range. The diversified nature of our book across industry, size of employers and geography are all helpful factors for us here if we were to see more ebbs and flows in terms of the employment levels across economies as well as across sectors. So net-net, we feel comfortable with the outlook, and we are incorporating what we're actually seeing by way of employment actions in our book as well.

And then, I guess, for John, on capital, I wanted to ask about Japan because 1 of the things that we're hearing is that unrealized losses in Japan can influence the sort of dividend formulas in terms of getting capital out. So I just wanted to maybe address that and kind of how you think that could play out in 2026.

Yes. Suneet. Yes. Yes, like you said there, in Japan and elsewhere, quite honestly, there's multiple factors when you think about dividend capacity, right? You have your solvency ratios. You also need to look at kind of the retained earnings, and that is true. But there's other factors that go into that from the balance sheet as well. So there's multiple things that get in there. I think at the end of the day, for us, we're not seeing any constraints on our dividend capacity in Japan. So there's really no change. And that includes as it relates to transition to the ESR, and we feel like we're in a healthy position when it comes to retained earnings as well.

Can you just size what percentage of the Japan book has been reinsured out of Japan?

I don't have that off the top of my head. We've done -- but we've done reinsurance for quite some time over the course of the last probably decade, and we've utilized mostly our Bermuda entity when it comes to that. But it's a portion, but it's certainly not a majority.

We'll go next Wes Carmichael, at Wells Fargo.

First question on group disability. I think you had a little bit less favorable experience in the quarter. I think the nonmedical health loss ratio was kind of flattish sequentially. We've heard similar comments I think, from peers. Just wondering if you could unpack a little bit what you saw in disability and if you expect that to kind of continue into 2026.

Yes, it's Ramy here. So we did have some pressure in the quarter with respect to disability. Think about it as just slightly over 1 point in our nonmedical health ratio. There are a few moving parts here. So one, we did see a slightly higher average severity across our long-term disability book. We did see social security decisions come a bit down this quarter. Those tend to kind of fluctuate quarter-to-quarter. Recoveries and incidents, I would say recoveries were slightly down in the quarter. But for the full year, they were strong and above expectations.

Incidents slightly ticked up in the quarter. But again, for the full year, they were also largely in line with expectations. So if you think about how we were to trend this, while this has been an unfavorable quarter, it certainly does not make a trend, and I wouldn't extrapolate from the outcomes in this quarter into 2026.

And maybe, Ramy, just sticking with you. But in terms of mandatory paid family leave and related products, I think a few states are rolling out new mandatory programs. But as I kind of look across the map of the U.S. with mandatory leave, it looks like there's a lot of white space. There's no Texas, no Florida, a lot of central U.S. states don't have the programs yet. So I know the offerings maybe aren't as profitable as some of the other products in group, but do you see that as a big opportunity to take more market share from MetLife as more states come online?

Yes. Thank you for the question. So maybe I'll just step back and talk about disability in general and then come back to paid family leave and really also bring you back to the context that we talked about at our Investor Day. We identified the disability space in general as an attractive growth opportunity. A lot of secular trends are driving that growth, inclusive of the state-based regulations that are coming through. We made investments in this space, both to provide best-in-class capabilities to employers and employees.

We talked about some of our digital capabilities as well. And that value proposition is resonating well in market. And look, as part of that strategy, we also talked about employers wanting to do more with fewer and talked about absence and disability as an anchor product for us. And the proof point in here is that the vast majority of our absence and disability sales are actually bundled with our overall suite of products. So that's kind of the broader context around disability and absence in general. When you think about paid family medical leave, this has been a piece of that puzzle and one that has given us some nice tailwinds as more states have rolled out programs, including Minnesota and others. And we talked about the picture of that continuing because of the white space you've just mentioned. And our approach in this space leverages all the capabilities that I've talked about, but it also leverages the breadth of our product portfolio.

And just to give you another data point here, when I look at our 101 sales for PFML, on average, they came with 4 or 5 additional coverages that were bundled with those sales. So this is a really classic example of us identifying an opportunity, formulating a strategy and just executing really well against it, and we're very pleased with the outcome.

We'll go next to Alex Scott at Barclays.

First one is on corporate. I just wanted to understand the $500 million and $700 million. I mean, there's some different moving pieces there with the resegmentation. So is there any -- I guess, in particular, is there anything that's more specific to '26 in that number? It just felt a little higher than I was expecting when I was sort of going back and understanding holdings and corporate and what the combination and MIM would mean.

Alex, you're saying you were assuming a higher...

No, I was thinking it wouldn't be quite that high -- or I wouldn't expect it as big a loss, I guess. So I just wanted to understand if there was something more onetime in nature for '26 in the numbers, sorry.

Yes. I mean maybe I'll use Q4 to maybe try to get you there, right? So on an ex notable basis, our loss was $38 million. And you have to take into account there was some, I'd say, nonrecurring items in taxes, expenses. We had some reserve releases, and we had some excess quarterly NII in C&O. That probably gets you up to a run rate of around $100 million. And then when you translate that into the next year, you have to take into account, and I think this is important, so I appreciate the question. The -- we did some reinsurance transactions in the fourth quarter.

So the Talcott transaction we announced, that's about $100 million of lost earnings, we did the Chariot one. So I think close to $30 million of additional lower earnings from MLH, which is now in Corporate & Other. And then the other thing you have to take into account just for seasonality is remember, every first and third quarter, we have about $15 million more of cost for preferred dividends. So that should help you with your quarterly modeling, but that's a little bit of what you're missing.

Got it. Very helpful. Next one for you is just on the artificial intelligence topic. And I think you touched some on just employment sensitivity in group. But is there any other opportunities or risks that you point out? And can you talk about even in just your investment portfolio, exposure to software, et cetera, is just a topic that we're beginning to get a lot more questions on, and it's very theoretical, hard to answer, but would be interested in your take.

Maybe I'll just start. I mean, look, I think 1 of the things that we pride ourselves in and not just in the investment portfolio, but across our firm is -- and we referenced this quite a bit at Investor Day is diversification. And whether that's diversification geographically. We have diversification and types of businesses. So we have healthy balance sheet businesses, and then we have very healthy capital-light businesses across the globe. On top of that, we have different risk profiles.

And then if you go to the investment portfolio, I think it's fair to say, and we've seen other numbers of internal analysis that kind of prove -- we're probably the most diversified across the industry in terms of our approach. We're able to do that because we have a fully scaled global asset manager. Where we are -- because some people, if you say diversified, you'd say, well, how do you stay close. We're able to stay close to every credit that we underwrite and monitor because we have scale.

So we're able to do this because of our scale and our competitive advantages and when it comes to the software point that you referenced, at the end of the day, there are a variety of different cycles out there. This is probably in places where I think in the industry, we're probably not that exposed just given our approach to kind of investment-grade oriented investing. So I -- we've seen it. I'm not so sure it. We really weigh in too much here because we don't think it's that much of an exposure to the industry or us.

And that is all the time we have for questions today. I will now turn the conference back over to John Hall for closing remarks.

Thanks, everybody, for joining us today, and have a good day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Hello, and thank you for joining, as I discuss MetLife's results for the fourth quarter and the full year of 2025. The fourth quarter provided a strong close to the year, reflecting the earnings power of the firm through our diversified set of market-leading businesses. We executed on key priorities under the New Frontier strategy, further positioning MetLife to generate responsible growth and attractive returns with lower risk.

Also, you'll notice that MetLife Investment Management is now a stand-alone business segment, reflecting the strategic importance of our asset management business, and we have combined the former MetLife Holdings segment largely into Corporate & Other.

Now let me start with the full year 2025. Net income was $3.2 billion. Our full year adjusted earnings were $5.9 billion. The primary difference between net income and adjusted earnings relates to net losses on derivatives, which are used to hedge certain economic exposures and generally have an economic offset elsewhere in the financial statements. On a per share basis, adjusted earnings excluding notable items, rose 10% to $8.89.

A few additional highlights for the full year. We saw strong volume growth across our businesses. This included recording $14.2 billion in pension risk transfer or PRT transactions in 2025. Expense discipline remained a key focus with the full year direct expense ratio of 11.7% beating our 2025 target of 12.1%, which excludes notable items and PRT transactions. Our free cash flow exceeded our 2-year average target ratio of 65% to 75% of adjusted earnings. And our full year adjusted return on equity was 15.9% within our target range of 15% to 17%.

Now let's turn to our fourth quarter results. Fourth quarter net income was $778 million compared to $1.2 billion in the fourth quarter of 2024. Net derivative losses were the primary driver, partially offset by higher adjusted earnings. Adjusted earnings were $1.6 billion, up 13% from the prior year period, driven by higher variable investment income, strong volume growth and improved expense margins. On a per share basis, adjusted earnings were $2.49. Excluding notable items, earnings per share were $2.58, up 24% from the prior year period.

Now let's turn to our business segments, and I'll focus on quarterly results unless otherwise stated. Group Benefits adjusted earnings were $465 million, up 12%, largely due to favorable life underwriting. Adjusted premiums, fees and other revenues, or PFOs, were $6.3 billion, up 2% with overall growth partially offset by the impact of favorable mortality on participating life contracts. PFOs from participating life contracts can fluctuate with claims experience.

Retirement and Income Solutions adjusted earnings were $454 million, an 18% increase, largely driven by favorable variable investment income. Record PRT sales were achieved in both the fourth quarter and the full year with annual sales up 56%. Asia adjusted earnings were $444 million, essentially flat on a reported basis and up 1% on a constant currency basis. Volume growth and favorable expenses were offset by less favorable underwriting.

Regional sales reached $598 million, an 18% constant currency increase driven mainly by Japan and Korea. Moving to Latin America. Adjusted earnings, excluding notable items, were $227 million, up 13% on a reported basis and 4% on a constant currency basis, reflecting strong volume growth across the region, and favorable Chilean encaje returns. Adjusted PFOs were $1.8 billion, up 25% on a reported basis and 16% on a constant currency basis due to strong growth across the region, sales increased 26%, driven by growth across the region.

In EMEA, adjusted earnings were $97 million, up 64% on a reported and constant currency basis, primarily driven by strong volume growth across the region and favorable underwriting. Adjusted PFOs were up 21% on a reported basis and 17% on a constant currency basis due to strong sales across the region. And finally, in MetLife Investment Management, adjusted earnings were $60 million.

We're excited to begin sharing the results of MetLife Investment Management, a top 25 global asset manager based on assets under management. Total assets under management stand at $742 billion as of year-end, a 27% increase over the prior year, primarily reflecting the recent closing of the acquisition of PineBridge Investments. Further details regarding the performance of our business segments can be found in our earnings release dated February 4.

Here are some key enterprise metrics. MetLife's adjusted return on equity was 17.6% for the fourth quarter. Adjusted book value per common share was $57.07. Turning to cash and capital management. Cash and liquid assets at the holding companies amounted to $3.6 billion at the end of 2025, which is within our target cash buffer of $3 billion to $4 billion. In the fourth quarter, we bought back approximately $430 million of our common shares and paid approximately $370 million in common stock dividends. And for the full year, we returned approximately $4.4 billion to shareholders through common stock dividends and share repurchases.

In summary, MetLife's strong fourth quarter and full year results demonstrate our ability to execute our all-weather New Frontier strategy and drive performance, all while maintaining a robust capital position and returning cash to shareholders. We are confident that the foundation we've built in 2025 will help us achieve our financial commitments and deliver on our unique value proposition of responsible growth and attractive returns with lower risk.

Thank you for watching.

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife Third Quarter 202 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we get started, I refer you to the cautionary note about forward-looking statements in yesterday's earnings release and to risk factors discussed in MetLife's SEC filings. With that, I will turn the call over to John Hall, Global Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you being with us today for MetLife's Third Quarter 2025 Earnings Call. Before we begin, I direct you to the information on non-GAAP measures on the Investor Relations portion of metlife.com in our earnings release and in our quarterly financial supplements, which you should review.

On the call this morning are Michel Khalaf, President and Chief Executive Officer; and John McCallion, Chief Financial Officer and Head of MetLife Investment Management. Other members of senior management are also available to participate in today's discussion.

Last night, we released a set of quarterly supplemental slides, and they're available on our website. John McCallion will speak to these slides in his prepared remarks. An appendix to the slides features additional disclosures, GAAP reconciliations and other information, which you should also review. After the prepared remarks, we will have a Q&A session, which will close at the top of the hour. As a reminder, please limit yourself to one question and one follow-up. With that, over to Michel.

Thank you, John, and welcome, everyone, to this morning's call. Last night, MetLife reported strong third quarter results, showcasing the earnings power of our diversified set of market-leading businesses and shining a spotlight on the positive impact of our New Frontier strategy. The expectations we outlined in the second quarter emerged in the third quarter as anticipated.

Most notably, underwriting results bounced back in our flagship Group Benefits business on normal disability experience and seasonally better dental profitability. Variable investment income posted its highest recent contribution to adjusted earnings as capital markets activity accelerated, unlocking value in private equity. Our global retirement liability origination platform is in high gear with growth in the U.S. and the U.K. as well as in Japan, where our efficient capital structure is supporting stellar sales growth. And in Latin America, our innovative digital platform for embedded insurance, Accelerator continues to attract and win over new strategic partners.

Turning to our quarterly results. We reported adjusted earnings of $1.6 billion or $2.37 per share, up 22% per share from the prior year period. Notable items totaled $18 million or $0.03 per share and included our annual actuarial assumption review and a tax adjustment in Mexico. Excluding notable items, adjusted earnings totaled $1.6 billion or $2.34 per share, a 21% increase from a year ago. The greatest driver of our outperformance in the quarter was strong investment margins led by variable investment income as well as volume growth across several business segments. We reported variable investment income of $483 million, above our implied quarterly outlook of $425 million on higher private equity returns, which reached 3% for the quarter.

With the rebound in variable investment income, MetLife generated an adjusted return on equity, excluding notables, of 16.7%, a level more on par with the company's earnings power and near the top of our target of 15% to 17%. And we delivered a direct expense ratio of 11.6% in the third quarter. We are well ahead of schedule with this ratio relative to our New Frontier commitment with the force multiplier effect of AI and other emerging technologies accelerating our productivity and efficiency gains.

Moving to MetLife's businesses. Group Benefits adjusted earnings, excluding notable items, totaled $457 million, up 6% from a year ago, reflecting solid underwriting results. Disability results returned to normal and dental profitability ramped up in the quarter, consistent with its seasonal profit pattern. As a result, we saw a 230 basis point sequential improvement in our nonmedical health loss ratio, providing further confidence in achieving a combined 400 basis points of improvement across the third and fourth quarters.

In Retirement and Income Solutions, adjusted earnings, excluding notable items, totaled $423 million, up 15% from the prior year quarter, reflecting higher variable investment income. Chariot Re officially launched in the third quarter with an initial reinsurance transaction of roughly $10 billion. This strategic partnership helps expand MetLife's retirement liability origination capacity in a capital-efficient manner while also generating institutional assets for MetLife Investment Management.

Total liability balances in RIS were up 3%. The solid result was driven by strong general account balance growth, including structured settlement production, a record quarter for us, in fact, and volume growth in U.K. longevity reinsurance. We did not report any new pension risk transfer deals in the third quarter. However, the fourth quarter is shaping up to be a record quarter as we've already written $12 billion of PRT transactions, demonstrating the trust the marketplaces in MetLife.

Our long-term outlook for the PRT business is positive. A few weeks ago, we released the results of our annual poll of pension plan sponsors. The survey found that 94% of those sponsors planning to derisk their portfolios expect to fully divest in the next 5 years. This is the highest percentage we've recorded since we initiated the survey 10 years ago.

Shifting to Asia. Adjusted earnings, excluding notable items, were $473 million, a 36% increase on a reported basis from the prior year quarter. Sales surged 34% on a constant currency basis, driven by an outstanding 31% increase in Japan. Our competitive Japanese product portfolio, which includes both foreign currency and yen-denominated retirement products has gained excellent traction across our multipronged distribution in the country.

More than keeping pace, constant currency sales in other Asia markets jumped 39%, led by Korea, China and India. In Latin America, adjusted earnings, excluding notable items, were $222 million, up 2%. Adjusted PFOs for the region totaled $1.7 billion, up 11% on both a reported and constant currency basis, indicative of continued business momentum across the region, most notably in Mexico, Chile and Brazil. We recently added e-commerce leader, MercadoLibre as a partner on our Accelerator digital platform in Mexico and Brazil. We now have more than 20 partners across Latin America, and the Accelerator platform has generated more than $340 million of annualized premiums since its launch, another powerful example of New Frontier in action.

Finally, EMEA posted another strong quarter with adjusted earnings, excluding notable items of $89 million, up 19% on a reported basis, primarily due to volume growth. As we do each third quarter, we published our 2024 value of new business or VNB results. It is hard to overstate VNB's importance as a tool for MetLife in maintaining capital and pricing discipline around the globe.

Over time, the principal use of VNB has powered our transformation into a more capital-light business with consistent improvement demonstrated year after year. Again, the results for the past year are impressive. In 2024, we deployed $3.4 billion of capital to support new business origination. This is the highest order use of our precious capital. The capital deployed in 2024 was put to use at an average internal rate of return of 19% and a payback period of 5 years. Our success with VNB does not occur in isolation.

Achieving high internal rates of return on new business with short payback periods feeds directly into our ability to produce a high return on equity and generate strong free cash flow. To that end, we continue to manage capital with discipline, protecting liquidity and balance sheet strength while returning excess capital to shareholders.

Our track record is well established. We have returned almost $24 billion to shareholders through buybacks and common dividends in the past 5 years. And the third quarter was no exception. We returned about $875 million to shareholders through common stock dividends and share repurchases. We paid roughly $375 million of common stock dividends and repurchased around $500 million of our common stock.

With approximately $150 million of repurchases in October, our total year-to-date share buyback is now roughly $2.6 billion. We ended the quarter with cash and liquid assets at our holding companies of roughly $4.9 billion, which includes about $700 million earmarked for near-term debt maturities and is above our target cash buffer of $3 billion to $4 billion. There is no doubt capital deployment and capital management have been integral to our past success and will continue to be as we push forward with the execution of our New Frontier strategy.

We are working hard towards the successful closing of 2 strategic transactions: the acquisition of PineBridge and the sale of a legacy block of variable annuities to Talcott Resolution Life. In both cases, we are fully engaged and on track to close in the fourth quarter. As we execute across our New Frontier strategic priorities, we are extending our leadership in the places we have the right to win. Underpinning our strategic priorities is our investment portfolio and our time-tested approach to credit and our unwavering commitment to risk management.

For 157 years, MetLife has navigated complex and evolving credit markets, delivering consistent investment results even through periods of significant volatility. Today, while the credit environment is reasonably stable and credit fundamentals resilient, we recognize spreads are historically tight and in some ways, priced for perfection. We maintain an up and quality bias across our portfolio, supported by active surveillance and disciplined underwriting.

Our diversified high-quality portfolio and active risk management position us well to navigate a wide range of economic outcomes, ensuring we deliver regardless of the market environment. In closing, our third quarter results illustrate MetLife's ability to create exceptional value for shareholders and stakeholders alike and the power of the New Frontier as a growth engine.

As we do each year, we just completed the annual pressure testing of our strategy with our Board of Directors and came away confident we have the right strategy for the right time. Our focus on consistent execution, steady capital management and expense discipline will continue to strengthen and differentiate our market leadership while fueling our superior value proposition comprised of strong growth and attractive returns with lower risk. Now I'll turn it over to John to cover the quarter in more detail.

Thank you, Michel, and good morning, everyone. I'll walk through our third quarter results and refer to the 3Q '25 supplemental slides, which covers highlights of our financial performance, including details of our annual global actuarial assumption review. In addition, I'll provide updates on our value of new business metrics and our liquidity and capital position.

Beginning on Page 3, we provide a comparison of net income and adjusted earnings for the third quarter. We have introduced a new line item, net activity attributable to ceded reinsurance arrangements, which captures the net income impact from the growing use of ceded reinsurance following the launch of Chariot Re in Q3 of '25.

Much of the offsetting amounts are captured in accumulated other comprehensive income, or AOCI, and primarily represents the change in unrealized gains or losses on the reinsured portfolio ceded to the reinsurer. Therefore, we believe most of the accounting for this item to be asymmetric or noneconomic in nature. Additionally, the main factors contributing to the difference between net income and adjusted earnings this quarter were net derivative losses resulting from stronger equity markets, rising long-term interest rates and strengthening of the U.S. dollar.

The net investment losses were generally in line with recent quarters. Overall, we continue to believe we are operating in a relatively stable credit environment. Moving to the bottom of the table, we recorded 2 notable items that mostly offset each other, resulting in a net increase to adjusted earnings of $18 million or $0.03 per share. The first item relates to the resolution of an industry-wide tax matter in Mexico regarding the value-added tax deduction of certain health insurance claims expenses.

This resolution and related change in tax law resulted in an after-tax charge of $71 million in 3Q of '25 in Latin America. We anticipate an additional after-tax charge of $20 million to $25 million in 4Q. And for 2026, we estimate a reduction in Latin America adjusted earnings of roughly $50 million to $60 million as we recalibrate our underlying rate assumptions in Mexico with little to no impact in 2027 and beyond. The second item relates to our annual actuarial assumption review, which increased adjusted earnings by $89 million.

Turning to Page 4. We provide additional details of these effects on adjusted earnings and net income by segment. The overall impact from the annual review was modest. In Retirement Income Solutions, or RIS, our payout annuity business benefited from higher mortality. Within Asia, we recognized more favorable experience in Japan due to lower morbidity in accident and health products and favorable lapse experience in life insurance. And in MetLife Holdings, we had favorable mortality in life insurance and favorable lapse rates in variable annuities.

Next, let's look at adjusted earnings by segment on Page 5. This shows third quarter year-over-year comparison of adjusted earnings, excluding notable items by segment and Corporate and Other. All my comments related to this slide will be made on an ex notables basis. Adjusted earnings were $1.6 billion, representing a 15% increase year-over-year. This was primarily driven by higher variable investment income and strong volume growth. These were partially offset by less favorable underwriting and lower recurring interest margins when compared to the prior year. Adjusted earnings per share were $2.34, up 21%. Growth was supported by disciplined capital management.

Moving to the businesses. Group Benefits results showed steady growth and improved margins. Adjusted earnings were $457 million, up 6%. The key drivers were favorable expense margins and volume growth. This was partially offset by less favorable life underwriting. The group life mortality ratio, excluding the assumption review, was 83.3% for the quarter, which is below the bottom end of our 2025 target range of 84% to 89%, but less favorable than the 82.4% on the same basis in the prior year.

The nonmedical health interest adjusted benefit ratio was 72.5%, modestly above the midpoint of our annual target range of 69% to 74% and essentially flat to Q3 of '24 of 72.4%. This result represented an improvement of 230 basis points sequentially from the second quarter, primarily due to the anticipated dental seasonality and an expected recovery in disability. We continue to expect our nonmedical health ratio to improve further in 4Q due to typical lower seasonal utilization in dental.

Turning to the top line, Group Benefits adjusted PFOs were up 3%, which was dampened by approximately 1 percentage point due to the impact on premiums from participating life contracts. In addition, sales were up 5% year-to-date due to growth across most products. RIS maintained its strong momentum, coupled with higher investment income.

Adjusted earnings were $423 million, up 15% year-over-year. The primary driver was higher Variable Investment Income or VII. RIS investment spreads were 131 basis points, up 29 basis points sequentially due to higher variable investment income. RIS spreads, excluding VII, were up 1 basis point sequentially at 102 basis points. In addition, the transfer of approximately $10 billion of RIS liabilities to Chariot Re in 3Q of '25 resulted in a reduction in adjusted earnings, which was in line with our prior guidance of $15 million to $20 million per quarter.

RIS continues to achieve strong business momentum. Adjusted PFOs, excluding PRTs were up 14%, primarily driven by higher structured settlements and U.K. longevity reinsurance sales. In addition, our spread earning general account liabilities grew 4% year-over-year, while total liability exposures grew 3%. And as Michel mentioned, we've already secured a record level of new PRT mandates so far in Q4.

Turning to Asia. The segment displayed strong performance across all key metrics. Adjusted earnings were $473 million, up 36% and up 37% on a constant currency basis. The primary drivers were higher variable investment income and volume growth. Additionally, results were positively impacted by a $30 million after-tax benefit from a model refinement applied to accident and health products in Japan. General account assets under management at amortized costs were up 6% year-over-year on a constant currency basis, and sales were up 34% on a constant currency basis.

Sales in Japan, our largest market in the region, were up 31% on a constant currency basis, driven by product launches and enhancements earlier in the year. And other Asia markets also contributed meaningfully with sales up 39% year-over-year on a constant currency basis, led by Korea and China. Latin America had solid top line growth and resilient earnings. Adjusted earnings were $222 million, up 2% on both a reported and constant currency basis, primarily due to volume growth across the region.

In addition, a favorable Chilean encaje return of 6% contributed to LatAm's solid performance, although it was below the 8% earned in 3Q of '24. Latin America's top line continues to perform well. Adjusted PFOs are up 11% on both a reported and constant currency basis, and sales were up 15% on a constant currency basis, with strong growth across the region, most notably in Mexico, Chile and Brazil. EMEA had broad-based volume growth, driving a double-digit adjusted earnings increase.

Adjusted earnings were $89 million, up 19% and 17% on a constant currency basis. EMEA adjusted PFOs were up 11% and up 9% on a constant currency basis, and sales were up 24% on a constant currency basis, reflecting strength across most markets led by Turkey, Gulf and the U.K. MetLife Holdings delivered adjusted earnings of $190 million, up 12%, primarily reflecting higher variable investment income.

Corporate and Other reported an adjusted loss of $288 million for 3Q of '25 compared to a loss of $249 million in the same period last year. This increase was primarily driven by market-related employee costs as well as higher interest payments on outstanding debt. The company's effective tax rate on adjusted earnings in the quarter was approximately 24%, which is at the bottom end of our 2025 guidance range of 24% to 26%.

On Page 6, this chart reflects our pretax variable investment income for the past 5 quarters, including the third quarter of 2025, which was $483 million, above our implied quarterly guidance of $425 million. Private equity returns of 3% in the quarter drove the outperformance, while our real estate and other funds yielded an average return of approximately 50 basis points.

As a reminder, PE and real estate and other funds are reported on a 1-quarter lag and accounted for on a mark-to-market basis. Page 7 presents post-tax variable investment income by segment and Corporate and Other covering the last 5 quarters.

Each business segment maintains a distinct investment portfolio, carefully matching its liability profile. The majority of VII assets are concentrated in Asia, RIS and MetLife Holdings, reflecting the long-term nature of these obligations. As of September 30, 2025, total VII assets stood at approximately $19 billion. Asia represented over 40% of these assets, while RIS and MetLife Holdings accounted for about 30% and 20%, respectively. This distribution underscores our strategic approach to asset allocation, ensuring that the investment portfolios are aligned with the duration and risk characteristics of each segment's liabilities.

Turning to expenses. Page 8 illustrates our direct expense ratio trends over time. For the third quarter of 2025, our direct expense ratio was 11.6%, an improvement from 11.7% in Q3 of '24 and notably below our full year target of 12.1%. We continue to emphasize that the full year direct expense ratio offers the most meaningful measure of our expense management given the inherent variability in quarterly results. However, this quarter's outcome further demonstrates our continued commitment to disciplined expense control and operational efficiency while maintaining responsible growth across our businesses.

Turning to Page 9. The chart highlights MetLife's value of new business, or VNB, metrics across our major segments, which we report annually and highlight the past 5 years. During 2024, we allocated $3.4 billion in capital to support new business initiatives, achieving an average unlevered internal rate of return of approximately 19% and a payback period of 5 years. This disciplined capital deployment generated about $2.6 billion in new business value.

The 2024 VNB results underscore our ongoing commitment to investing in opportunities that deliver responsible growth and attractive returns. We view annual VNB as a key indicator of our ability to expand our ROE and accelerate free cash flow generation over time.

Let me now review our cash and capital position as detailed on Page 10. MetLife remains strongly capitalized, maintaining robust liquidity well above our internal targets. As of September 30, cash and liquid assets at the holding companies totaled $4.9 billion, exceeding our target cash buffer of $3 billion to $4 billion. We continue to prioritize returning excess capital to our shareholders with total cash returns in the third quarter reaching approximately $875 million, comprised of roughly $500 million in share repurchases and approximately $375 million in common stock dividends.

In addition to these returns, holding company cash reflects the net impact of subsidiary dividends, debt issuances, operating expenses and other cash flows. For our U.S. entities, preliminary statutory operating earnings for the first 9 months of 2025 were approximately $2.1 billion, with net income of $1.3 billion. Our estimated U.S. statutory adjusted capital on an NAIC basis stood at approximately $17.1 billion as of September 30, essentially unchanged from the prior quarter.

We anticipate the Japan solvency margin ratio to be around 740% as of September 30, pending the final statutory filings in the coming weeks. Looking ahead, we are pleased with our progress toward the transition in Japan to ESR, a capital framework that closely aligns to the economic capital model we use to manage our business.

Based on our initial work, we expect to report an economic solvency ratio within a range of 170% to 190% from March 2026. This ratio reflects the strong capitalization of MetLife Japan as evidenced by its stand-alone AA- rating from S&P as well as our capital management efficiency. We have yielded cash dividends from Japan totaling more than $4 billion over the past 5 years.

Before I wrap up, I'd like to note that starting in the fourth quarter, we plan to report MetLife Investment Management or MIM, as its own business segment. In addition, we plan to eliminate MetLife Holdings as a stand-alone segment by consolidating it into Corporate and Other. This new reporting structure aligns with our New Frontier strategy.

As part of this resegmentation, we will disclose recasted historical financial results in early January, which should allow enough time to update your models prior to our fourth quarter earnings call. In summary, MetLife delivered a strong quarter, underpinned by sustained momentum and solid fundamentals across our diverse set of market-leading businesses.

We achieved robust top line growth, maintained disciplined underwriting and exercised prudent expense management, all while benefiting from higher private equity returns. And our value of new business metrics highlight our strategic and disciplined approach to allocating capital.

Backed by a strong balance sheet and reliable free cash flow generation, we are well positioned to achieve responsible growth and deliver attractive returns with lower risk, creating sustainable value for both our customers and shareholders. And with that, I will turn the call back to the operator for your questions.

[Operator Instructions] We'll take our first question from Ryan Krueger at KBW.

My first question was on Asia sales. Can you provide some additional color on the strength that you saw? What were the key drivers? And what do you think will -- to what extent can this momentum continue going forward?

Ryan, it's Lyndon here. Look, we're really pleased with the strong quarter we've had in Asia. We've seen a 34% increase in the overall Asia market. So let me give you some more color here.

Let's start with Japan. Sales were up 31% year-over-year. We've launched a couple of new products. We've got a new single premium FX Life product that we launched in April. And this product continues to do very well. In addition, we launched a new yen variable life product in August, and this too has been received very well by the market. We've also made some product enhancements. We've enhanced our single premium FX Annuity product earlier this year, and this continues to do well when we compare to the prior year.

So if you take all the product launches we put in place as well as the product enhancements, combine it with our distribution strength, that's really what's driving the strong growth that we see in both our channels, bancassurance as well as the face-to-face channel in Japan.

Now when we look to the rest of Asia, sales there were up 39% year-over-year. And we're really seeing strong performance in Korea and China here. China sales were higher in the bancassurance channel, and that's really been driven by the fact that we've launched some new key bank partners as well as been able to penetrate existing bank partners.

In Korea, we continue to deliver consistently strong performance. And here, we are showing strength in our U.S. dollar product sales as well as our one variable life product and in the face-to-face channels. So good results overall. Now looking ahead, we expect this momentum to continue going into the fourth quarter, and we expect to exceed full year sales guidance for '25. I hope that helps.

Great. And then just a quick one on expense seasonality. Can you -- I think you typically do have some expense seasonality in the fourth quarter. Can you give us any rough magnitude of what to expect there?

Yes. Ryan, it's Michel. Yes. Look, we are really pleased with the -- our direct expense ratio coming in well below the 12.1% that the target that we had set during the outlook. There is some seasonality, fourth quarter being somewhat higher than the first 3 quarters. But I would say that our expectation is that we will come in below the 12.1%, I would say, even well below the 1.1 at year-end.

And 2 factors contributing to this, I will say. One is early this year, we had asked our teams, given the uncertain environment to tighten our belts and to see how we can manage expenses to a greater extent without sacrificing any of the investments we're making in growth and strategic initiatives. And the reaction has been really great, really pleased with it. And we've also asked the team to make sure that we carry some of those savings into next year and beyond.

And the other factor here is technology related. Over the last 5 years, we've invested over $3 billion to simplify and modernize our technology ecosystem. This really has laid the foundation for us to integrate emerging technologies, including AI into our core processes, products and services.

We've also developed a proprietary AI platform, which we call MetIQ. This platform blends generative agentic and classical AI capabilities that support responsible solutioning across business domains. So think about app development and customer service, for example. We've also provided tools for our employees, our associates as well as increased training. So this is all leading to both productivity gains as well as driving further efficiencies. And this is also contributing to the lower direct expense ratio that you're seeing here.

We'll move next to Tom Gallagher at Evercore.

First question, just on the $12 billion of PRTs that you've won so far in Q4. Is that a few large deals, several smaller ones? And can you just comment on what's happening competitively in that market to allow you to have so many wins?

Thank you, Tom. It's Ramy here. We're really pleased with our 2025 performance in PRT. To date, we have written more than $14 billion. And as Michel mentioned, there's $12 billion of that coming in the fourth quarter, which is making it a record for us. It's a few large deals. So as you know, we focus on the jumbo end of the market versus the small end of the market.

So think of those as jumbos, not small deals. And the other -- maybe 3 other points just to think about and put this kind of record quarter in context for us. One is that we have distinct competitive advantages in that jumbo end of the market. It's our balance sheet size, our investment capabilities. And look, Tom, at the jumbo end of the market, financial strength, disciplined risk management and established track record are all very important factors for plan sponsors and their advisers, and we're extremely pleased that we're winning the trust of the marketplace here and having a record quarter.

The 2 other points I'd make here as well is to also reiterate our disciplined approach to these deals. We do take an M&A lens to our capital deployment here and evaluate the risk and return of each deal. So the focus on value is very much there, and you see us also disclosing our VNB metrics, which really also encapsulates that. And for PRT, we continue to achieve ROEs in this business, which are supportive of our enterprise ROE targets.

And then maybe the last point also though, just to put this in context, this is also a quarter where this win is a great illustration of us deploying our retirement platform and our capital strategies that we talked about at our Investor Day. So we're bringing the strength of our liability origination, our RIS platform.

We're using our own balance sheet, but we're also using third-party capital here to enhance financial flexibility. So think about those deals driving spread earnings for RIS as well as additional growth and fee revenue for MetLife Investment Management. So it really ticks a lot of the boxes that we talked about back in Investor Day with respect to our strategy here.

That's good color. I appreciate it, Ramy. I guess my follow-up would be for you as well. Can you just comment on what's happening underneath nonmedical health on your improvement? I guess several peers have seen some volatility in group disability this quarter. Can you comment on the split between dental and disability, what you saw in Q3 and then why you're still confident that you can continue to improve into Q4?

Thanks, Tom. We're also very pleased with our underwriting results here in group. And you saw us print a nonmedical health ratio that's 230 basis points down sequentially, which is slightly above where we indicated last quarter. So just to split that up for you in terms of disability, in particular, and then Dental. I would say the 2 drivers behind the sequential improvement. One is the favorable seasonal utilization pattern in dental. We did talk about that in the last quarter, and that's materialized here in the third quarter. We also have the benefits of our pricing actions continuing to flow through our bottom line.

And I would remind you that this seasonality also exists in the fourth quarter, which is why we expect to see a further improvement in this ratio come Q4. Disability is performing well for us. It's very much in line with our expectations. Incidents and claim severity are in line. We are seeing very strong recoveries. And I would say that's an outcome of investments we've made in various capabilities in disability over a number of years.

So this is coming through as well in very strong recoveries. So all in all, consistent with what we talked about in the last quarter. And so think about that 400 basis points improvement that we talked about, this 230 gets us more than halfway through in that direction of the overall 400. I hope that helps.

I'll go next to Suneet Kamath at Jefferies.

Just on PRT, is any of the $14 billion that you are planning to write this year going into Chariot Re? And how do we think about the difference in earnings impact if it goes in Chariot Re or if it stays on your balance sheet?

Suneet, it's John. Let's just start with -- we launched Chariot Re on 7/1. We transferred just under $10 billion of liabilities to Chariot Re and did all that launching in less than -- a little less than or just over a year. So -- we're very pleased with the progress we've made. Look, I think this comes back to our strategic approach and something we laid out in Investor Day and that Michel kind of articulated around just how we think about complementing our own capital with third-party capital.

We see more growth in the retirement business. So it's hard to kind of pinpoint is this Chariot or is -- Chariot is kind of ongoing. We're always working with them. That's kind of the process. And that will be part of the -- how we accelerate growth on our retirement platforms. It's -- but it's not necessarily always so perfectly aligned and things don't always line up. So I'd say yes, but to your answer, I think you could argue that we'll look more holistically at just our total asset growth and then use third-party capital to augment that.

And then I think the comments we gave back a quarter ago in terms of like the impact, the temporary impact on earnings is somewhere between $15 billion to $20 billion on the $10 billion deal. That's kind of a rough justice of an earnings impact in any one quarter. So just so you have like a sensitivity, but we would expect that to be temporary in nature while we then refund that with other growth.

Okay. That's helpful. And then I guess, Michel, in your prepared remarks, you referenced this efficient capital structure in Japan. I was hoping you could unpack that a little bit. Is that unique to Met? And then relatedly, on the ESR, the $170 million to $190 million, are there any adjustments that you're making to, I guess, the rules that come from the FSA?

Yes. It's John again. Maybe I'll just touch on that given your -- the collective components of that question. So when we talk about the efficient structure, obviously, we're referencing we have a pretty big presence in Bermuda. So we've leveraged Bermuda for certain products. And that has helped us get to a more economic regime. We've continued to build our presence in size in Bermuda, both our affiliate and as well as obviously the launch of Chariot Re. So we've leveraging that framework. And then your question was on ESR. Was it just how that relates to ESR, that was your question? I just want to make sure I got it correct.

Yes. No, it's the 170 to 190. Some companies have talked about company-specific adjustments that are made when they report those ratios. That's what I was looking.

Okay. Yes, this has no adjustments. This is just prescribed. We're following the prescribed rules here. So that's the $170 million to $190 million. And look, as we've been -- we have operated under an economic framework. We've always used both to kind of think about our products and how we run that business.

I referenced in my remarks about we've been consistently dividending, including this year out of Japan. We've had $4 billion of distributions up to the holdco over the last 5 years. So this is just the general range that we would expect to run this company.

We'll move next to Alex Scott at Barclays.

First one on -- going back to Group Benefits. Can you talk a bit about just what you're seeing in the competitive environment, pricing environment and what you think that could lead to in terms of growth? Do you feel like at this point, you can get back to a more long-term growth outlook for 2026?

Thanks, Alex. I would say we continue to see a market that's competitive, but a market that's rationally priced, which means we kind of always find opportunities to grow and we grow that business while maintaining discipline in terms of underwriting and achieving our target returns.

And you hear us talk about that, but I think just keep in mind, 2 specific attributes here that have sustained this competitive yet rational environment. The first is the fact that these are short-term products. So underwriting results emerge fairly quickly. And this acts as a natural check, if you will, on the competitive dynamics. The other is, look, customers here are looking for real solutions to help them deliver their overall talent strategies and drive business outcomes.

So yes, price matters, but they're also looking for solutions that give their employees good experiences, enhances their productivity. In many instances, they're looking to transfer administrative burden in terms of leave and absence. They want to do that with a carrier that's tightly integrated with them and is easy to do business with. They want to do more with fewer. So they're looking for bundled solutions across the entire range of products.

And look, we are a leader in this industry. And so we bring all of the above and more to the table. which allows us to drive good growth, and that comes through good retention, good renewal pricing and also we can do that while maintaining discipline. So I would say all of these things are really good attributes that we -- that the market has.

And we have a 4% growth rate in this quarter once you kind of net out the impact of the [indiscernible] contracts, 4% on top of $25 billion in absolute terms is a pretty significant number, and we're really pleased with the momentum that we have in this business.

Second one I have for you is just if you could give us your views on some of the comments that have been made around private credit investing in insurance recently. And I think some of the comments were focusing on private letter ratings and this idea that maybe there's ratings inflation out there. So if there's any kind of stats you can give us about your private credit book and the way that you go about applying ratings and so forth, that would be helpful too.

Alex, it's John. I'll start here and maybe I'll ask my partner here to even add some color. So let me just give you some broad themes. So -- and Michel referenced before, first, let's just -- we are constructive on the credit environment right now. There's strong fundamentals, corporate profits are strong. But as you heard from Michel, spreads are tight. So you need to be very mindful and disciplined around value and risk right now. And for us, that generally means up in quality. Even in higher-yielding strategies, we're up in quality. I did see the same referenced article that you had.

And look, they were pretty generic comments. So hard to kind of unpack that and wouldn't try to even do that here. But I think for us, if I look at just us, we're a top-tier private asset, private credit manager. We've been doing this for decades. Importantly, having done this through credit cycles, right? Not everyone has done that. And these assets give us many, many benefits. And I'll ask Chuck. Chuck is our Chief Investment Officer, and he can give a little color on some of the specifics and how we think about underwriting.

I mean I think John's first point is spot on in that we've been a major investor in this sector for a long period of time. And I think it's important when you -- when we hear all the comments out there to understand that MIM does our own underwriting. Our primary source of credit underwriting is the own work we do. It's not rating agencies. It's not a rating letter. It's our specific underwriting.

And the vast majority of our corporate bonds are investment grade, 95%. And the exposure that we have to below investment grade is mostly up in quality. So I think all those factors, good underwriting, good experience, focus up in quality puts the portfolio in pretty good position.

We will move next to Wes Carmichael at Autonomous Research.

First question I had for you was on RIS and just kind of your outlook for the base spread from here. I think, John, you mentioned it improved a basis point. But as we look forward, how are you thinking about the base spread?

As you said, we had 131 basis points in spreads, about 29 basis points of that was VII. And so we came in at 102%, and that was actually up 1 basis point from Q2 and better than our guidance we had given. And we had expected some seasonality in some real estate that wasn't as severe as we thought, and there was also a few other smaller favorable items that helped us maintain consistency.

As we think about Q4, all else equal, we'd expect kind of a steady spread level from Q3. The one headwind we'll have to be just think about or be mindful of is with the large amount of PRT mandates that we've won during this quarter, that can cause a quarter -- temporary quarter headwind as you reposition assets, and that could be a couple of basis points, if any. But I think putting it all together, we see relatively flat, I think, would be kind of our viewpoint at this point.

That's helpful. And second, I guess there's a press release out this morning from Brighthouse, the company is expected to be acquired by Aquarian. And I believe MIM manages a portion of assets for Brighthouse. But I just wanted to see if there's any other potential impacts to MetLife. I don't think it should be AUM you managed, but are there any other impacts that we should be thinking about from here?

Yes. No, we saw the report as well, and I think congratulations to the team. And obviously, all this was rumors until it's not. And -- but to the extent that it's not a rumor, you know then that there was a lot of hard work that went into something like this. So we're certainly happy and congratulate the team for all the hard work they went through. Look, for us, it's been a -- we have a great relationship with Brighthouse.

We obviously have a long history with them. And so we have kind of a fun place in our heart for that relationship. At the same time, we have some very unique asset management capabilities that we think help them achieve their strategic objectives. So the key relationship right now, to your question, is our asset management relationship, and we look forward to leveraging the partnership and working with them to help them with their strategic outcomes.

Next, we'll go to Joel Hurwitz at Dowling.

On MIM, any color on the performance of the business this year and how third-party flows have been?

Joel, it's been a good year. To be honest, if we had to kind of unpack the first and second half of the year, the first half, just given the market volatility was a little muted. Also, the announcement of PineBridge probably put a little bit of a slowness on things in the beginning of the year, but the team has worked tremendously hard to kind of educate the external environment.

And we saw -- we had a strong second half. I think we're just above on total assets under management of just over $630 billion of AUM, above $200 billion on third-party assets. So -- and the flows in the second half of the year have been very strong. So we're very excited about what's ahead for MIM. And obviously, kind of it's one of our strategic initiatives to accelerate the growth of -- and the team has been working very hard and excited to become our own segment come next year.

Got it. And then a couple on LTC. First, any material changes to the assumption set there? We've seen a couple of players have some adverse incidence trends. Not sure how that's trending for you guys. And then just any update on what you're seeing in the risk transfer market for that business?

Yes, sure. I'll start, and then I'll hand it over to Ramy to give some thoughts on the market. So broadly, you saw our actuarial assumption review pretty modest, slight positive overall, some slight positive in RIS with some higher mortality benefiting there and -- then in Asia, some favorable experience on morbidity and lapse rates.

And then in Holdings, we actually had some favorable life experience as well as some favorable lapse experience on VA, a very, very modest LTC number of 2 million post-tax change. And so I think the block continues to perform well. The ADE is in line with what we would typically expect. And I'll turn it over to Ramy to give some color on just what he's seeing in the market.

Thanks, John. As we've said before, we have and continue to look at risk transfer opportunities here. And clearly, very much seeing the recent risk transfer activity that's taken place -- so we're engaged and continue to look at that. And having said that, though, we will be very disciplined here as we explore these opportunities. We have a very well-managed book of business. It's well capitalized and well reserved. We continue to have a successful rate action program that's allowing us to obtain the necessary premium increases that the book needs. So as we look at any potential transaction, price is going to really matter here. And ultimately, any transaction needs to be accretive from us -- for us from a shareholder value perspective.

We'll take our next question from Wilma Burdis at Raymond James.

Could you just discuss the forward timing of the impact of the Mexico tax law change?

Yes, this is Eric. So as John mentioned, this quarter, we took a notable charge related to the change law in the tax law in Mexico. So first, let me start by giving you a little bit background on this item. So in the past few years, the Mexican tax authorities have been challenging the VAT deduction of certain insurance claims-related expenses.

And although the discussions were ongoing for several years, there was really no -- little to no progress until the past few weeks when the government and the industry reached an agreement, making the change effective for 2025 and beyond. And this revision to the tax law just passed the legislator last week. So for MetLife, this industry-wide insurance change only affects our health product offering. The change to the VAT deductions results in notable impacts in 2025 with lesser impact in 2026. And as we transition to the new rule, and then there will be little to no impact in earnings by 2027.

So we are already working to adjust our underlying rate assumptions for this annually renewable product, along with other management actions which will help mitigate the impact of this transition. So from our experience also, this market has been very resilient and rational, which gives us confidence that we will work through this quickly.

Our business in Mexico is strong. We have a large and very well-diversified franchise, and we're confident in our ability to continue to deliver on that strong performance. So in summary, this impact to the VAT change is isolated in nature, and it's temporary. And we expect we'll be back to our run rate and growth trajectory for the region by 2027. I hope this helps.

Okay. And then you had some positive assumption updates in Asia. Is any of that potentially ongoing?

Wilma, it's John. No, that's -- those are all generally onetime in nature.

And that concludes our Q&A session. I will now turn the conference back over to John Hall for closing remarks.

Great. Thank you, everybody, for joining us this morning, and we look forward to engaging as the quarter goes on.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.

I'm Ryan Krueger, Life Insurance Analyst at KBW. It's great to have MetLife back with us again this year. Up on stage with me to my immediate right is Michel Khalaf, President and CEO, to the far right is John McCallion, CFO and Head of MetLife Investment Management. Also want to acknowledge John Hall, Treasurer and Head of Investor Relations; and other members of the IR team in the front row.

So with that, Michel you launched a new 5-year strategy called New Frontier, last December at an Investor Day. Can you review the key components of New Frontier, how they differ and have evolved from the next -- the prior -- next Horizon strategy and then just how things are going so far, even though it's only a couple of quarters in.

Sure. Thank you, Ryan. It's great to be with you today. I think to put the new strategy in context, it might be useful just to take a step back and reflect on the journey that we've been on for the last 5, 6 years. We've undergone an important transformation moving away from capital-intensive businesses, improving the return profile of the company as well as reducing risk.

And this was sort of all through intentional actions that we've taken, starting with continuing to grow our most attractive businesses such as group LatAm and MetLife Investment Management. It was also helped by divestitures that we made especially in relation to sort of a more volatile business, for example, such as our former Auto & Home business as well as other businesses that were not meeting our return thresholds.

And I think the also transformation from capital heavy to capital light was turbocharged by strategic reinsurance transactions that we made to accelerate the runoff of our legacy business. All that while continuing to drive efficiency in the company and reducing our direct expense ratio as well. I think an important proof point of this transformation is reflected in our return on equity.

And back when we launched -- Next Horizon we set a target of 12% to 14%, and we were running actually at the low end of that. Last year, we posted a 15.2% ROE, and I would argue without necessarily hitting on all cylinders. And we have the confidence now to -- as part of New Frontier to commit 15% to 17% ROE, which is not very common in our space, I would say. So I think that's important, because New Frontier really builds on Next Horizon, it's not a departure from it. We've set more ambitious targets that reflect some of the opportunities that we see in terms of important trends and how we're positioned to be able to capture those trends.

We've set for major strategic priorities, I would say, that will drive our sort of higher aspirations as part of New Frontier. The first is extending our leadership in group benefits, where we're the leader by some margin.

The second is further leveraging our global retirement platforms from an origination perspective and some of the most attractive retirement markets, the U.S., Japan and the U.K. The third is to accelerate the growth of our -- of MetLife Investment Management with an aspiration to reach $1 trillion in AUM, and lastly, in terms of international markets, it's really expanding our presence in some of those key markets, such as China, India, Brazil and Mexico.

So those are sort of some of the priorities related to the strategy. And I would say that its launch has been extremely well received. I've been able to tour many of our offices since we launched that, and there's a lot of excitement. But I would also emphasize that whereas it's important to have the right strategy, I would say, equally important is to have strong execution because that's ultimately what determines success. And I think we understand that really well at MetLife.

I'm pleased with the sort of -- with how we've sort of started on our New Frontier journey in the first half of this year. Aside from alternative investment income, which has been challenged in the first half of the year, I would say, very strong execution. We announced 3 important strategic initiatives this year, the PineBridge Investments acquisition, the -- Talcott reinsurance transaction both of which we are working very hard to close in the second half of the year and on track to do so. And then -- and then we launched Chariot Re with the reinsurance transaction that we announced also in July there.

Coupled with that, growth is a central theme for our new Frontier strategy. And when we look at the topline and the momentum that we're seeing there, very encouraged by it, 9% growth in group sales in the first half, RIS liability balances are -- have grown -- total balances have grown 6%. So above the 3% to 5% range that we had committed to in our outlook, really good growth in Asia, also Japan posting a 29% growth in sales in the second quarter. And then EMEA and LatAm also very strong top line growth. So all in all, pleased with the underlying momentum when it comes to sort of the early days of the strategy and with the execution levels as well. And I think this bodes well for the future.

Great. I think that's good overview to start and then dig into a lot of those topics. One was on the expense ratio. You have a target of improving the direct expense ratio 100 basis points over the next 5 years. Can you talk a little bit about what you're doing to achieve that? And also, should we expect the improvement to be fairly gradual throughout the 5 years? Or is there any aspect of it that's more back-end loaded?

Yes. First, I just want to say thanks for having us again, and thank you for these nice loungers. They're very comfortable. Just heading -- using the ROE concept that Michel talked about, maybe there's really 3 legs to that stool. One was kind of the returns we're seeing on new business. The second is looking at our portfolio mix. And then the third expenses, right?

And going back to next year, we dropped the expense ratio, I think, a little over 200 basis points over that period. Our plan is to continue to reduce the expense ratio over the New Frontier strategy, another 100 basis points. And we really think of this as like a growth lever for us actually. -- right? We believe that we have operating leverage that we can build upon.

Some of that can be moved to the bottom line, but we also want to just increase the capacity of discretionary spend to fund growth. And that goes back to really the New Frontier strategy, putting our thumb on the scale when it comes to growth and responsible growth. And so that discipline and that cultural piece to kind of who we are right now, we think it's very important. And I think the team has done a tremendous job. It's become part of our DNA. We've really tried to embrace the concept of moving away from these big bang expense initiatives where we're going to spend a lot of money to save a lot of money.

It's all built into our expense ratio. And we see a lot of momentum and certainly with the advent of some of these new technologies that are coming in front of us. We certainly see a nice path to the 100 basis points. And -- right now, we -- at least in the outlook call, we assume kind of an evenly distributed reduction over the 5-year period. But in the first half, we're at 11.8%. The second half tends to be seasonally higher, but we are off to a really good start.

Great. In the Group Benefits business, you raised the premium and fee growth target to 4% to 7% from 4% to 6% previously. You're already the market leader -- so what are you doing to drive top line growth at or above the industry at this point?

Sure. Yes. And as we said, Ryan, we're the market leader by some margin, I would say, we're 3x the size of our nearest competitor in that space. And I've described group benefits as the most attractive segment of the U.S. life insurance industry, I believe that. It's a business that benefits from economic growth. So typically, GDP growth translates into growth in the profit pool for that business. It's a business where scale really matters and scale drives further scale and there are important barriers to scale in that business.

And what we've seen over the last few years is that investing in capabilities that customers tell us they need to meet their expectations is absolutely critical and continuing to grow this business, something that we've been doing for a number of years now. Beyond just sort of the growth that comes from economic growth, we -- the way that we extend our leadership in group is through adding more employers, adding more products to existing employers and increasing employee participation and employee-paid products.

And national accounts where we have a leading position there. It's -- and we have a very large customer base there. It's about really focusing on increasing the number of products that we have with our customers. And with the trend that we see in terms of customers wanting to do more with fewer providers, this is something that plays to our strength, just having just the widest and most comprehensive product portfolio in the industry. And just to give you a sense of the opportunity there.

On average, we have just over 3 products with our -- on average with our customers. The longer a customer with us, the more products we have with them, and on average, customers tend to have more than 10 products on offer. So still a lot of opportunity to grow there. In regional market, which is much more fragmented, there, it's about adding more employers and we benefit there from channel consolidation that again plays to our strength given our broad relationships with the broker community.

And there also, it's about bringing our full product suite to that market. So transferring the sort of the product set that we have in national to regional as well. And then across the board, it's about increasing take-up rates or employee participation. And here, investments that we made in a benefits experienced digital platform called Upwise, which actually we showcased at Investor Day -- is very important in closing the sort of confusion gap that exists when it comes to employees choosing their benefits and making their benefit selections.

We're continuing to deploy this capability, extending its access to more employers. Our recently announced partnership with Workday is another step in that direction. And for those that have used this platform what we've seen is, one, they're telling us that it's made their selection experience much easier. And two, seen a significant uptick in take up rates for our voluntary products in particular. So all of these sort of factors combined give us confidence in terms of our ability to continue -- to extend our leadership in this space.

In the first half of this year, it seems like you're trending towards the lower end of that 4% to 7% premium growth target. Are there any unique factors that are causing some headwinds in 2025 that you would expect to abate going forward? .

Yes. That's partially due to the rate action that we took in 1/1 on our dental block. So that had an impact on persistency for dental and for some of the products that we tend to bundle with dental as well, just to be clear, we are perfectly willing to let business move away if we can get -- if we can clear our return hurdles for that business.

And although this is sort of somewhat dampened our growth in the first half of the year. I would argue it's value-enhancing, because it improves margins and in dental as well as earnings as well. And we've seen our experience in dental back to very much in line with expectations. Most of these rate -- most of the rate action is behind us now. We have good line of sight as far as the second half of the year as a concern. And we think persistency is going to be strong going forward here.

From a margin perspective in Group Benefits, you saw some elevated nonmedical health claims in the second quarter. You also continue to see favorable group life mortality -- can you review a little bit again what you saw in the second quarter and then what your outlook is going forward for the rest of this year?

Yes. So we did see the nonmedical health ratio above our outlook range for the year, so that's in the second quarter. And our expectation is that we're going to see improvement mainly due to seasonality, both in the third and fourth quarter, so in the second half of the year. And to sort of frame that for you we're expecting a 2-point improvement sequentially in the nonmedical health ratio in the third quarter and a further 2-point improvement in the fourth quarter.

What we saw in the quarter is from a dental perspective, experience in line with expectations, this is a seasonal business. So second half tends to be more favorable than the first half, especially the fourth quarter. So we're expecting that trend to play out in the second half of the year. For long-term disability, again, I would say, very consistent with expectations, both from an incidence and recoveries perspective. And again, we keep a close eye, obviously, on this business, and we're not seeing any signs of deviation from that.

What we saw in disability is in the second quarter, our elevated claims with 2 specialty customers. Those are accident related, so nothing that would suggest a trend or something that would persist going forward. The disability and dental from a PFO perspective constitute about 2/3 of the nonmedical health ratio -- the remaining 1/3 are other products. Think about A&H and hospital indemnity, critical illness and other products.

And those products tend to fluctuate within a certain band in any given quarter. What was unusual in the second quarter is that we had elevated loss ratios. And so everything went in one direction. Typically, they tend to offset. Again, we -- there's no connection between these sort of the experience. When it comes to these products, there's nothing macro that would suggest that this is a trend that should persist. So our expectation here is that this will moderate in the coming quarters.

And that's why as I said earlier, our expectation is that we're going to see a 200 basis point improvement in the ratio in the third and a further 200 basis point improvement in the fourth.

Moving to the Retirement Income Solutions business, there's a few different products that are within that business. Can you talk about where you're seeing the best growth opportunities right now?

Yes. I mean really pleased with the growth that we're seeing in RIS. And I think we're benefiting from the diversification that we have within RIS in terms of our product set there. That's leading to strong, but also very balanced growth, I would say. We expect to be within the 3% to 5% liability balances, growth range for the year, even after seeding the $10 billion of -- to charity of liabilities charity.

In the second quarter, we were at 6% in terms of total liability balance growth. And that's -- I think the nice thing that we see is that we see strength in our spread earning-generating businesses such as PRT and structured settlements as well as our fee earning businesses such as U.K. Longevity Re and stable value. And we continue to see a healthy pipeline going into the second half of the year as well. And if you consider some of the demographic and retirement trends as well. I think the outlook for this business in terms of ongoing growth is quite positive.

Can you discuss the -- in that business, the outlook for spreads, excluding variable investment income? And then just how to think about the potential impact of more Fed interest rate cuts or the shape of the yield curve and how that could influence where spreads end up coming out.

Yes, sure. So in the second quarter, spreads were around 100 basis points roughly. And that's pretty much on target with what we projected in the first quarter earnings call. And we talked about there being a stabilization of spreads. We had a number of [ caps ] roll off last year. We thought this was probably a good landing area. We did say that in the third quarter, there tends to be a few basis points of seasonality for some real estate investments that we have.

They tend to be hotels and corporate events tend to lessen during that period, the third quarter period of time. So all else equal, we would expect that to revert back to the roughly 100 basis points. Now that's with the current forward curve. That's also with an inverted or flat curve depending on how you look at it. The reality is for our collective business, which going back to Michel's point, has a diversification of product, both in terms of duration and the short end of those products, the shorter products, I should say, tend to do better when there's a steepening of the curve, right?

And so lower short end of the rates, longer, higher longer end of the rates. That tends to be kind of the sweet spot for RIS generally, sometimes there's some transitional pieces to that. I wouldn't consider them to be material. But overall, a Fed cut and the steepening of the curve is beneficial for that business.

You talked a little bit about Chariot Re, which is your new Bermuda-based reinsurer. Can you talk a little bit about the motivations you had to launch Chariot Re and -- and also just how do you anticipate utilizing it going forward?

Yes. And I'll go back to Michel's opening remarks on the strategy. And if you think through the 4 strategic initiatives there, one of which is retirement. And that's a function of trends. And given the higher interest rates, given the demographic shifts that are occurring globally, certainly for us, that's RIS and in Japan as well as using our capabilities in the U.K.

Those trends are what caused us to think through the formation of Chariot Re. We're doing that with our partner, General Atlantic, we launched at July 1. Super excited about the launch, $10 billion out of the gate. The other thing you kind of -- to remember, that's scale, right? I mean, it's $10 billion.

And people would, I think, be pretty happy to get to $10 billion sometimes when they start these sidecars. So already a sizable entity -- and this allows us to augment our existing capital generation. Up until now, our annual capital generation was sufficient to fund our growth. Based on the trends, we believe there is more growth opportunity out there and supplementing our own capital generation with third-party capital, helps us take advantage of that trend.

And then at the same time, we get to leverage the collective best-in-class asset management capabilities between us and General Atlantic to produce a unique value problem. And that ultimately helps us also fund the growth of another strategic initiative of growing our asset management business. So again, it just fits nicely into that new frontier strategy and set of initiatives and off to a great start and looking forward to continuing to grow that.

Let's shift to the international businesses, starting with Asia. You've seen a pickup in growth this year, really, especially in Japan and Korea. Can you talk about what's driving that? And just how are these markets evolving and reacting to higher interest rates and a continued aging of the population.

Yes, I'm really pleased with the growth that we're seeing so far in 2025 in Asia overall, and I would say, in particular, in Japan and Korea. To the point that you made, I think the -- what we're seeing in terms of demographic and economic shifts provide a good sort of tailwind, if you like, that for growth in those markets going forward. We posted a 10% increase in sales in the first half of the year in Japan and over 40% in Korea.

And for Asia overall for the full year, we think we'll be at the top end of our sort of outlook of mid- to-high single digits there. what sort of drove the momentum in the second quarter in Japan, in particular, is the stabilization in the yen exchange rates. So that benefited our foreign exchange denominated products in Japan. We saw very strong demand and provided the yen continues to be stable. We think that demand should continue.

Korea is a really good example of us taking the know-how expertise and that we've built in Japan or in any given market and transferring it over, because, again, there, the growth has been fueled by foreign exchange products. Sort of we hone this expertise in Japan, and now we're able to leverage it in Korea, which again goes to showcase, I think the importance of what we call One MetLife and this ability to transfer capabilities from one market to the other.

I think what we're likely to continue to see in Japan, in particular, with inflation coming back into the picture, potentially higher rates as the shift away from cash and bank deposits into market-linked instruments.

This will play out over time. But I think this will be beneficial to the industry as a whole. And I think to MetLife, in particular, given the strength that we have as a leading player in that market with a strong brand as well as our strong distribution and product capabilities as well.

I guess, other side of the sales equation is you've seen some volatility in policyholder surrenders in Japan. Can you talk about what you've seen? And just how does it come through your and impacted your financial results?

Yes. With the more stable yen, we've seen a drop in surrender activity in the first half of 2025. And we think that's likely to persist for the remainder of the year. Whereas this sort of -- has a somewhat of a near-term impact in terms of lower earnings from surrenders, if we compare it to higher levels last year, -- this is -- I would argue this is a good thing in the medium to long run. Because better persistency translates into sort of margin improvement over time and more earnings over time as well.

So all in all, I think this is really what's caused the sort of somewhat of an impact to earnings, I would say. However, we see it as a positive, and we expect it will continue for the balance of the year.

Then Japan is finally implementing the economic solvency ratio or ESR next year. Can you talk a little bit about how that may impact MetLife or if at all?

Yes. I think for us, as we've talked about, we were very supportive of moving to an economic framework. We felt quite honestly, SMR created some volatility that wasn't really reflective of economic value at times. And so we were a proponent of the move. Look, I think there are a few things here or there that I know the industry is still talking about and maybe won't get implemented right away, but maybe there's some time. But ultimately, we think that all in all, we're fairly pleased with where it landed. We've always kind of operated under an economic framework when think about pricing product and things like that. So it's -- I'd say the transition has been fairly seamless.

I put this in almost like a BAU category for us. Quite honestly, if we thought that there were some challenges, we probably would have held back on some things this year, but it really has had no impact on dividend capacity, dividend remittances. We've continued to remit dividends this year. We will continue to do so based on what we see going forward. And all in all, and based on that prescribed the -- prescribed regulatory framework, we think this will just kind of be a BAU matter for us.

Got it. In Latin America, I guess really ever since we've emerged from the pandemic, you've had very strong growth momentum. Can you talk a little bit more about what's driving that? And do you see any risk to that slowing down? Or do you think it can continue at this type of level?

Thank you for mentioning that. Again I think I think LatAm is sort of an underappreciated business for MetLife. As you referenced, it's a business that's performed phenomenally, I would say. In the last several years from a top line perspective as well as from an earnings perspective and our earnings have more than doubled since the pandemic and we have line of sight to $1 billion in earnings as we look ahead here.

And so I think it's going to be hard to ignore that TAM going forward. It's a -- we have a very strong presence in the region, a strong footprint when it comes to the markets that we're in. We're leaders in Mexico and Chile, with an also strong presence and growing fast in Brazil as well, 30 million customers in the region and very well diversified from a distribution and product perspective as well. To give you a sense of that, we're leaders in employee benefits in both Mexico and Chile.

We have 10,000 agents supporting our face-to-face distribution in the region. And third-party distribution where we distribute through banks, utility companies, retailers and the like has been our fastest-growing channel. We have about 100 partners in the region. And like I said, this is growing fast for us. It's also complemented by the emergence of digital natives, especially digital banks, digital e-commerce providers. And we saw that phenomenon sort of the first in Brazil a few years ago. And now it's paying across the region as a matter of fact, even to other parts of the world. And we had invested early on in a capability, which we call Accelerator.

We also gave everyone the chance to test drive Accelerator at Investor Day, but it's an embedded digital embedded insurance platform that integrates seamlessly with these native digital banks and financial services companies. And here, we're seeing, again, tremendous traction. We already have 21 partners on the platform, 5 million customers already on it in a couple of years' time.

And the expectation is that these numbers are going to grow significantly going forward here. So we feel really good about our footprint, how we're positioned in that time. I think we stand to benefit also from market dynamics there, economic, demographic and the like, still relatively low levels of insurance penetration, I would add -- so feel good about the sustainability of our growth trajectory there.

In EMEA, it's your smallest region, but the earnings have been coming in quite a bit better than you expected, at least coming into this year. What's been causing that? And -- have you changed your outlook at all going forward now?

We keep hitting our regional President for EMEA. That's one of these days, you will get a question on an earnings call, hasn't happened yet. But very pleased with EMEA's performance so far this year, very strong volume growth, PFO growth. And we've seen good momentum from PFO perspective for, I would say, several quarters now.

This is starting to find its way into earnings more rapidly, which is a positive. And this is really across the region. So it's not one country or one product that are responsible for this. It's broad-based, which is also, I think, helpful. And we -- our expectation is that EMEA will come in above the 70% to 75% quarterly outlook that we had shared in February. Not sort of at the Q2 level, but certainly above the 70% to 75% level that we had shared.

MetLife Investment Management or MIM was highlighted as a key area of potential growth, hitting -- reaching an inflection point at your Investor Day? And then afterwards, you announced the acquisition of PineBridge, can you give us an update on how MIM is performing and also how the PineBridge deal will fit in?

Yes. And as we mentioned earlier, this is one of the strategic initiatives New Frontier. And look, it's an already scaled top 25 asset manager with unique capabilities in public fixed income, private credit and real estate. That's kind of our broad platform. And as you mentioned, we announced the acquisition of PineBridge, which is a really exciting thing for us. We're hoping for that to close in early fourth quarter. We're already kind of gearing up to welcome the team and I've already met a number of folks and just what a great cultural fit. Also brings complementary investment capabilities in the private credit side and public fixed income.

And then geographically, they have a great presence outside the U.S. in addition to some great products here in the U.S. And that -- again, that helps us scale our global platform, distribution capabilities as well. So -- we're super excited about the growth aspects of that acquisition, and we're looking forward to bringing them into the MetLife family.

And just last question on capital management. How are you prioritizing M&A, buybacks, dividends at this point? And then also, should we think about any potential further divestiture activity?

Sure. I think we have a well-established framework when it comes to M&A, in particular, that we've sort of applied consistently over a long period of time. And so there will be no change when it comes to that. First, I would say we want to continue to support organic growth, especially that we see good opportunities to do so. When it comes to M&A, we look at strategic fit as a key criteria. Cultural fit is very important as well.

And then the type of opportunities that meet a number of financial criteria that we've set, mainly being accretive when it comes to EPS to free cash flow to ROE and obviously, any transaction would have to clear a minimum adjusted risk hurdle rate that we set as well. And we typically look for complementary capabilities, whether it's product, whether it's sort of an investment from an investment perspective, something that would help accelerate revenue growth and again, fit in nicely with our core business, what we consider as core.

From a divestiture perspective, I would say -- and again, we've built a track record here. We're going to continue to sort of look at our portfolio through the lens of strategic fit and whether a market or a business continues to meet our expected return hurdles. And -- if that's not the case, then we would take appropriate action. And as far as dividend and buybacks, I would say, for dividends, we want to continue to have an attractive dividend yield that is sort of continues to grow, call it, in line with earnings growth.

And then on buybacks, again, I think we've built a track record here. I think for the last few years, we've averaged $3 billion to $3.3 billion in buybacks annually. This year, we had our foot on the gas pedal in the first quarter with $1.4 billion. We're at $2.1 billion through July. And we had pointed to a more measured pace for the balance of the year, which is still sort of our view here. So that's a little bit on sort of capital management.

Great. We're going to wrap it up there. Thank you very much to Michel and John and the MetLife team.

Thank you.

Thank you.