Financial Data and Key Metrics Changes - First quarter reported adjusted net earnings were $91 million or $0.72 per share, compared to $108 million or $0.86 per share in the first quarter of 2024, reflecting a decrease of $17 million primarily driven by margin compression and higher interest expense [24][26] - First quarter adjusted return on assets (ROA) was 68 basis points, pressured from near-term headwinds, while adjusted ROA on a last twelve-month basis decreased to 100 basis points from 106 basis points in the fourth quarter of 2024 [27] - Reported adjusted return on equity (ROE), excluding AOCI, was 9.7%, up 2.3% over the first quarter of 2024 [27] Business Line Data and Key Metrics Changes - F and G reported record assets under management (AUM) before flow reinsurance of $67.4 billion as of March 31, reflecting a 169% increase compared to the first quarter of 2024 [19] - Gross sales were $2.9 billion, a 17% decrease from the first quarter of 2024, primarily due to lower MYGA sales, while indexed annuity sales remained strong at $1.5 billion [19][20] - Pension risk transfer (PRT) sales were $311 million in the first quarter, down from $584 million in the first quarter of 2024, with funding agreements at $525 million compared to $105 million in the prior year [21] Market Data and Key Metrics Changes - The investment portfolio is well matched to the liability profile, with 96% of fixed maturities being investment grade, and credit-related impairments averaging six basis points over the last five years [10][11] - The portfolio's fixed income yield was 4.53% in the first quarter, a decrease of three basis points from the first quarter of 2024, reflecting the runoff of higher yielding in-force assets [12] Company Strategy and Development Direction - The company continues to diversify earnings between spread-based and fee-based sources, with a focus on optimizing return on capital and maintaining pricing discipline [17][29] - The owned distribution portfolio is expected to create value with double-digit annual growth of EBITDA over the medium term [17] - The company remains committed to achieving targets set during the 2023 Investor Day, focusing on managing sales and in-force profitability [29] Management's Comments on Operating Environment and Future Outlook - Management noted that near-term headwinds are believed to be temporary, with expectations for improvement throughout 2025 [6][7] - The company is focused on managing sales and in-force profitability to optimize return on capital, while navigating macroeconomic uncertainties [29] - Management expressed confidence in the resilience of the business model despite current market volatility [60] Other Important Information - The company has successfully completed capital markets activities, including issuing $375 million of junior subordinated notes and redeeming $300 million of senior notes [28][29] - The company ended the quarter with a GAAP book value attributable to common shareholders of $5.8 billion or $43.31 per share [29] Q&A Session Summary Question: Growth opportunity for the Ryla product - Management indicated that while MIGA sales declined due to market volatility, there has been a rebound in April, and they remain optimistic about the Ryla product's growth potential [32][34] Question: Impact of lower industry volume on own distribution - Management noted a rebound in own distribution in April and suggested that the slowdown was balanced between industry volume and investments in the platform [36][37] Question: Decision to raise common equity - Management clarified that the capital raised will be deployed thoughtfully into new business opportunities, maintaining a disciplined approach to pricing [40][41] Question: Cost of funds increase - Management acknowledged the sequential increase in the cost of funds and attributed it to lower surrender income and cash yield impacts, while maintaining pricing discipline [45][46] Question: MIGA sales rebound in April - Management confirmed that the rebound was largely due to internal factors and improved market conditions, emphasizing the profitability of the MIGA business [53][54] Question: RBC sensitivity to equity market volatility - Management reassured that there are no changes to RBC expectations and targets, maintaining a focus on being above 400% [69] Question: Performance of alternative investments - Management indicated that the direct lending portfolio performed well, while the LP portfolio came in lower than expectations, impacting overall yield [72][74]