Financial Data and Key Metrics Changes - The company reported Q4 operating EPS of $7.75 per share, marking the second consecutive record quarter in earnings [6] - Adjusted operating return on equity (ROE) for the trailing 12 months was 15.7%, exceeding the intermediate-term target range of 13%-15% [6][17] - For the full year 2025, the company achieved record operating EPS and increased the value of Inforce business margins by 18% [6][10] Business Line Data and Key Metrics Changes - The U.S. market showed favorable results driven by management actions and variable investment income, with individual life mortality in line with expectations [8] - EMEA results reflected strong volume growth and favorable experience, with full-year pre-tax earnings up 35% [11] - APAC continued to see growth momentum, with pre-tax operating income up 18% for the year [10][11] Market Data and Key Metrics Changes - Premium growth was 7.4% year-to-date on a constant currency basis, benefiting from strong growth across North America, EMEA, and APAC [18] - The U.S. healthcare business has approximately $400 million of annual premium, generating about $25 million of pre-tax run rate earnings [39] Company Strategy and Development Direction - The company is focused on a proactive business approach, optimizing its balance sheet, operational scaling, and capital stewardship to generate long-term shareholder value [14][15] - A strategic review led to the decision to exit the group healthcare lines of business, with a focus on deploying capital in strategically aligned businesses [12][39] - The company aims to maintain a balanced approach to capital deployment, targeting a total payout ratio of 20%-30% for buybacks and dividends [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate attractive shareholder value going forward, supported by a strong pipeline of opportunities across various regions [16][77] - The company anticipates a more limited financial impact from Inforce management actions in 2026 compared to recent years [22][83] - Higher interest rates are viewed positively for overall earnings, with modest exposure to disintermediation risk from higher rates [89] Other Important Information - The company successfully repurchased $50 million of shares in Q4, totaling $125 million since reinstating buybacks [10][18] - The effective tax rate for Q4 was 23.8%, with expectations for 2026 in the range of 22%-23% [18] Q&A Session Summary Question: Capital allocation and payout ratio - Management confirmed the target of a 20%-30% total payout ratio while maintaining flexibility for capital deployment [32] Question: Group health rate actions and exit strategy - Significant rate actions were taken, including a 40% average increase, and the decision to exit the group healthcare business was driven by strategic alignment [38][39] Question: Performance of the Equitable block - The Equitable transaction is expected to generate earnings of $160-$170 million in 2026, with various drivers of economic upside identified [45][46] Question: Long-term care risk transfer deal performance - Management expressed satisfaction with the long-term care business performance, aligning with risk appetite and return expectations [57] Question: Exposure to software-related companies and AI disruption - The company has modest exposure to software lending and actively assesses the impact of AI on the investment portfolio [62] Question: Regulatory changes in Europe and competition - Management noted no significant competitive threats arising from regulatory changes in Europe, focusing on opportunities with both asset and biometric risks [72][73]

Financial Data and Key Metrics Changes - The company reported Q4 operating EPS of $7.75 per share, marking the second consecutive record quarter in earnings [4] - Adjusted operating return on equity (ROE) for the trailing 12 months was 15.7%, exceeding the intermediate-term target range of 13%-15% [4][14] - Full year 2025 results included record operating EPS and a 15.7% ROE, with Inforce business margins increasing by 18% [4][5] Business Line Data and Key Metrics Changes - The U.S. region showed favorable results driven by management actions and variable investment income, with individual life mortality in line with expectations [5] - EMEA results reflected strong volume growth and favorable experience, while APAC continued to see growth momentum [5][9] - The Equitable block contributed positively, with earnings consistent with guidance for the second half of 2025 and expected earnings of $160-$170 million in 2026 [21][34] Market Data and Key Metrics Changes - Premium growth was 7.4% year-to-date on a constant currency basis, benefiting from strong growth across North America, EMEA, and APAC [16] - The APAC region produced excellent bottom-line results for the year, with pre-tax operating income up 18% [8][9] - EMEA's full year pre-tax earnings were up 35%, reflecting strong new business growth [9] Company Strategy and Development Direction - The company is focused on four key areas: proactive business approach, balance sheet optimization, operational scaling, and capital stewardship [12] - A strategic review led to the decision to exit the group healthcare lines of business, with significant rate increases implemented [10][31] - The company aims to maintain a balanced approach to capital deployment while returning capital to shareholders [28][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate attractive shareholder value going forward, supported by a strong pipeline of opportunities [13][48] - The company anticipates a more limited financial impact from Inforce management actions in 2026 compared to recent years [20][52] - The expected tax rate for 2026 is projected to be in the range of 22%-23% [16] Other Important Information - The company ended the quarter with estimated excess capital of $2.7 billion and deployable capital of $3.4 billion for the next 12 months [16][24] - The non-spread book yield was slightly higher than Q3, driven by new money rates exceeding portfolio yields [24] Q&A Session Summary Question: Capital allocation and payout ratio - Management confirmed the target of a 20%-30% payout ratio remains appropriate, balancing capital deployment with shareholder returns [27][28] Question: Group health rate actions and business exit - Significant rate increases of 40% were implemented, and the decision to exit the group healthcare business was driven by strategic alignment [30][31] Question: Long-term care risk transfer deal performance - Management expressed satisfaction with the long-term care business performance, aligning with risk appetite and return expectations [39] Question: Exposure to software-related companies and AI disruption - The company has minimal exposure to software lending and is actively managing the portfolio in light of AI trends [41] Question: Regulatory changes in Europe and competition - Management noted no significant competitive threats arising from regulatory changes, focusing on opportunities with both asset and biometric risks [44][46] Question: Opportunities in specific regions or product lines - The company highlighted strong pipelines in Asia and the UK longevity market, with optimism about future returns [47][48]