Equitable Holdings, Inc. (EQH) Earnings Call Transcript & Summary

Good morning, everyone. I'm Ryan Krueger from KBW, and pleased to be joined by Robin Raju, who is the CFO of Equitable. Thanks for joining me, Robin.

Thank you, Ryan. Thanks for having me.

I wanted to kick it off with discussing New York's Reg 213 since that's been such a hot topic lately for you. As a starting point, can you just discuss how Reg 213 differs from the NAIC variable annuity rules? And give some perspective on why it's causing noneconomic reserves for Equitable?

Sure. Thanks. First, I'd say as a reminder, Equitable manages its business on an economic basis, which really just means we manage on fair value. What it could trade for in the market, that's what we hold liabilities for, and that's what we hedge. And we think that's an appropriate way to manage an insurance company. I think it was back in 2015, the NAIC started work on a new variable annuity reform to bring more transparency to investors on what the appropriate reserving framework should be in [ different ] variable annuities. They hired Oliver Wyman as a consultant, ran many studies for many years, and we supported it. We're early adopters because it brought a level of transparency and reserving as much as it could. It wasn't perfect. They have this arbitrary 3.5% reversion to EMEA interest rates, but they at least charged companies who took outsized risk on a statutory basis. New York, when they saw VM-21 are going to be adopted, they wanted to take their own approach. They didn't like some of the items in VM-21. Again, as I said, it's not perfect. We just think it's better than what was there before. And in a rush to create a framework that would apply to New York companies, there were some unintended consequences. For us, specifically, and everybody's book is different. But for our business, we have a fixed rate GMxB business. That's business sold before 2007, higher guarantees related to it. And then we have a post-financial crisis business, which has more appropriately price guarantees, I would say at that time. The way the regulation works, it's actually less punitive on reserves for pre-2007 fixed rate GMxB business and more punitive on post-crisis business or even regular premium business that doesn't have guarantees associated with it. So for us, when we put it together, it has an unintended consequence, which [Audio Gap] over redundant reserves over time that we wouldn't be required to hold in or any other country for that matter because it's uneconomic and the way it's designed. So we're fortunate, though, where we are. We have a strong position -- cash position at the holding company with $2.5 billion and a strong RBC ratio, and the measures and the actions that we highlighted give us confidence that we can still manage the business on an economic framework. And we'll take actions necessary to address the redundant reserves.

I have a couple more on this. So last month, on your earnings call, you announced that you have a 5-year phase-in agreement with New York on this issue. I guess, first, just if nothing else happened, would you expect the $2 billion of redundant reserves to be incurred relatively evenly over that 5-year period? Or is there anything nuanced about the timing of it?

Yes. No, I would say I expect it to come through pretty evenly over the 5-year period. There is some market impacts related to it. So I guess as the market moves dramatically one way or another, that could impact the timing of it across the board. So I'd expect it to come through pretty evenly over time. We worked with the department, and we're fortunate on 2 aspects. One, they approved our landmark variable annuity deal, which derisked the company earlier this year. And in almost like less than 20 days, they gave us this permitted practice, which enables us to address the redundant reserves over this 5-year period of time and gives us confidence in our ability to continue to return capital to shareholders.

In terms of -- so they gave you the permitted practice that phases it in, but do you still have optimism that the New York DFS would actually consider revising this regulation in the future?

Yes. Our preference is always to find a good economic solution. So we'll continue to advocate for economic reserving and requirements. But an amendment to the regulation is not needed given we have the permitted practice and we have actions that we can take to address it across the board. So New York's indicated their preference was to give us the permit to practice, and that's what they did. And given that we have an avenue to take actions to address their unintended consequences of Reg 213.

Got it. Can you discuss a little bit more on the -- about the initial actions that you've taken to mitigate the impacts? Let's start there first, and then I have a follow-up.

Sure. I think before on actions, what gives us comfort, I mentioned early, is the $2.5 billion of cash at the holdco and then the 450% RBC ratio. So that gives us capital in order to continue to pay out to shareholders year over -- over the short term. So we're very fortunate to have that capital buffer and the strength of our balance sheet overall. From an action standpoint, there're a few things we want to do. One, we want to increase the unregulated cash flows that we have coming up to the holding company. So currently, it's about 35% of the $1.5 billion that comes up every year, that is unregulated. The actions that we're taking are going to increase that 5to 0%. We started doing some of those actions or about halfway there. By year-end, we expect to be at 50%. The second thing that we're going to evaluate is reinsurance transactions. So that's internal and external reinsurance transactions. We have a menu of options that we can select, but we're in no rush to do anything, and anything we're going to do has to result in good economic value for our shareholders as we're not going to destroy economic value to solve an accounting issue overall. And third, additionally, going forward, we're going to sell most of our new business outside of New York. So by the end of 2022, about 90% of our new business will be sold outside of New York. So those combined actions give us comfort to continue to return capital to shareholders and continue to grow our business as we see good value coming through across all of our business lines.

I know you have the cushion at the holding company and the cushion at -- the RBC cushion. But beyond -- I guess beyond that, do you feel like you can take actions to fully offset the $2 billion redundant reserves over the 5-year period?

Absolutely. I think the actions that we -- the menu we have, as I mentioned, we have a wide menu of actions we could take. So it's about what -- which choice we want to select that drives the most economic value and how it enables us to offset the redundant reserves.

One last one on this from the audience is just, on potential reinsurance transactions, is there any -- is that mostly focused on -- are there any specific business lines that, that would be focused on?

Now we look at it across all of our business lines to see where we can drive the most economic value for shareholders. At the end of the day, it would -- if it's not particularly focused on one or the others, where can we drive the most value for shareholders?

Got it. Okay. I think that's -- I've exhausted my questions on Reg 213, so I'll move on. In terms of capital returns, you have the 50% to 60% capital return target. But on -- but you also have the $2 billion of excess holding company cash. Can you help us think about what are potential uses of the current excess capital that's above and beyond your normal free cash flow generation?

Sure. So number one, the current excess capital is there to support our long-term payout ratio. So we always -- the way we have dividends come out, sometimes we're able to take 2 dividends in any given year because of the formula, like in 2020. In 2021, we didn't take out dividend because of the formula. So we always operate with a capital buffer at the holdco and by design, we want all capital to be at the holdco in order to provide us buffer as it relates to the dividend formulas and underlying insurance company. Now [ fortunately ], we have done regulated cash flows for AB. So that provides us ongoing confidence. But having a buffer enables us to maintain the payout ratio without it [ even having to dip ] down to our minimum $500 million. Outside of capital returning to 50% to 60%, we look at M&A as a lever to return capital to shareholders, but it has to make sense. We have good -- some good small businesses that we see opportunities in to get to scale. But the price is expensive right now in the market, and it would have to be measured against additional share buybacks for shareholders. But right now, we're looking at the market from an M&A standpoint. And if we see something that makes sense for shareholders, we'll do that as a way to return capital as well.

Can you expand on that a little? I think, at least in the past, when you've talked about potential M&A, wealth management and employee benefits have been the main things that you've cited is, can you, I guess, maybe give us a little bit of perspective on how those businesses are performing organically at this point? And then why you're interested in M&A there specifically?

Yes. I would say there are 3 areas that we think of M&A. One is alternatives. Again, we look at AllianceBernstein and we look at their portfolio, and we think alternatives is a way that we can current -- we can expand the portfolio. The alternative business at AB have done very well. We originally seeded it with about $4 billion of seed capital a few years ago, and they've [ won ] that with third-party money to be over $20 billion of AUM right now in alternatives. So us working together with AB has created a higher multiple business, and that goes along with the additional $10 billion of committed capital that we have as [indiscernible] to AllianceBernstein. The second area is wealth management. It's a smaller business compared to our other segments. It's in corporate and other today, but there's a $75 billion of AUA. AUA is up 41% year-over-year, obviously driven by equity markets, but also positive net flows. If we can get that business to $100 billion or $150 billion of AUA, we probably break that out to the market. So it would be another source of value for investors. So if we can bolt something on to that to make it bigger and increase the capitalized cash flows for investors, we would certainly do so. The third area is employee benefits. You've heard us speak about it a lot. We always -- we continue to see record strong growth from that business. Our enrollees for that are about 500,000. Now you want to be close to 900,000 to 1 million enrollees to be at scale. So we've grown that well, but it takes a long time to get to scale in that business. So again, a bolt-on to that would accelerate our growth trajectory in that line as well. So I look at all 3 of those, and those are 3 areas that we want to look at from an M&A standpoint to supplement the good organic growth that we're getting.

There have been -- I mean there's always tends to be a fair amount of small wealth management deals in the market. And there have been a few smaller employee benefits deals, too. Has the main impediment so far just been then price? Or were you not as -- or as you were working through like venerable transaction, were you not as focused on it before?

Again, we look at everything in the market. So there's no deal that gets announced that we haven't looked at in these areas. I think the main impediment [ is price ]. Everything we see is going 20 to 30x, and it really doesn't make sense for our shareholders when you look at that versus share buybacks to pay 20 to 30x for something. So we're going to continue to focus on it, but it has to make sense for our shareholders for us to do something.

Got it. And then there's a couple of audience-related follow-ups here. One was just in on how you think about your wealth management business and AllianceBernstein's private client business? And if it could ever make sense to combine them into a single business?

Sure. I think the 2 businesses serve different clients. And I think that's the main thing to recognize. So AllianceBernstein is on the high net worth end, where our wealth management business is focused on the mass affluent side. So the needs, the technology would be somewhat different across the board. We like both businesses. They both provide good value for their firm. But just like anything with asset management and wealth management or insurance, putting it together would have to make -- we have to be commenced that drives better value for shareholders at the end. We just don't want to put it together to put it together unless there is synergies. And right now, given the 2 different client needs that they address, we don't necessarily see the synergies enough to put the 2 together.

Got it. On the -- so the recent decision to [ ALEC ] their commit [ $10 billion ] of general account assets to the illiquid platform at AB. So you -- this is -- can you talk a little bit about what led to that decision? And you've also talked about investment income uplift from doing this as well. So how are you -- I guess what led to the decision? And also, how you're thinking about the potential trade-off of more investment income but potentially higher credit risk?

Sure. Our first leg of and when we came out an IPO, we announced we're going to rebalance our general account, and that was moving from treasuries to public corporates, and the program was to design to deliver $160 million of earnings. We ended up delivering $240 million in annual lift. But that was just the first leg of the program. It was really just to better align with U.S. peers coming out of Solvency II. We've now entered the second phase, and we're really looking to capture the illiquidity premium that alternative private credit capabilities give us. As I mentioned earlier, we seeded AllianceBernstein's alternative business few years back, and they've successfully grown that. They've been able to recruit teams with the seed capital that we provide. It is a synergy between the 2. And with this additional $10 billion that we see in the next phase of our general accounting, illiquidity premium, if AllianceBernstein can raise 4 to 5x at -- of third-party money on that, that's significant value that we can deliver to our shareholders. So it's one of the best synergies that we have between the firms is us seeding AllianceBernstein money, then recruiting teams and expertise and raising third-party money. It's good value for our shareholders over the long term. We're really focused though on higher asset quality when we think about structured and private credit. So expect about half of that to be done on the private credit side, have to do structural alternatives, but mostly on the higher asset quality side where we like to risk reward.

Got it. You had mentioned -- I think you had mentioned this area also as an area of bolt-on M&A potential. Did I -- I guess did I interpret that correctly? And is that separate from the initiative to just allocate more money to the platform?

Well, it's separate but it goes together. We can -- if we can find a platform that provides other alternative capabilities that AllianceBernstein doesn't have, we can allocate a more [ general ] account assets to it to help them as well. So when we think about alternatives, again, we're trying to build a higher multiple business [ via ] AllianceBernstein. And if we can do that and support it with our general account, it's a great synergy for shareholders.

Got it. And then just I guess a related question on AllianceBernstein that you get a lot, but you own about 65% of it, but that was also just kind of a legacy ownership structure that you inherited from your predecessor company. Do you -- are you pretty content with that level of ownership at this point in time? Or would you still -- would you consider changes in the future?

Sure. As you said, the 65% is a function of history. No one mathematically designed that to be like the best ownership that we have. But we're really happy with the state that we have in AllianceBernstein as it is a significant investment, but they're also a great partner together with the insurance company. So from a holding company perspective to have an insurance company and an asset manager, we can really optimize the value end-to-end of the services we provide overall. So we've historically always looked at [ to ] hold 51%, 100%. I'd say now we're more focused on how do we drive synergies? How do we increase the value and take the best of both of these operating companies and deliver value for shareholders? So that's our focus now is how do we continue to drive long-term value for -- between the insurance company and AllianceBernstein so that the sum of the parts is greater for shareholders.

Got it. You had announced a new expense initiative on the last quarter's call. Can you walk through a little bit in terms of the magnitude? And also, what type of actions you're planning to take to achieve it?

Sure. So it's similar to our general account. At IPO when we announced the $80 million of fixed expenses, we were really focused on head count efficiencies, optimization. This next $80 million builds on the COVID pandemic, on the learnings that we had. The first leg of it is optimizing some of the travel saves, some of the work from home saves that we've received from the pandemic. So making some of that permanent. The second leg of it is benefiting from the technology that we built as part of the separation from AXA. So we've put all our information in the cloud. We've digitalized a lot of the operations. So the second [ point ] of that is benefiting from the technology investments that we've made over the past. And the third leg, which will come out in the later part is our leases. So we're going to significantly reduce some of our leases, especially in the New York area, and that will provide a better footprint and a better optimization of expenses by paying less to landlords and allowing people to have more flexible working arrangements. So [indiscernible] give us confidence in our ability to continue to add incremental value for shareholders.

Got it. And shifting a little bit to new business. So we've continued to just see more and more companies enter the RILA or the buffer annuity space. Can you talk about how do you differentiate yourself from competitors at this point in that market? And also -- or have you seen any pressure on new business returns from all these new competitors? Or have you been able to maintain pretty similar returns?

Sure. First, we're proud to have innovated that market. We were the first to come to market with a buffered annuity, and that gives us a history in how they distribute that across different distribution areas. So us being able to market protected equity strategies for clients really resonates today in a world where people perhaps seen equity markets continue to rise. They seem like they're always going up. But if there someone that's close to retirement, you may want the protection while keeping equity exposure, and that's really the need for consumers. So that's number one, and that's most important. Everybody is in this space now across the board, and it certainly increased competition, but it increased the size of the pie in many ways. And as we [indiscernible] grow sales, we've hit another record quarter in the second quarter with $1.9 billion in [ our ] capital strategy sale, our flagship product in the RILA space. We continue to innovate with features on their, so giving different payoffs for advisers and clients in order to stay ahead of the market. But in reality, Ryan, our differentiator is our distribution. It's where we play, and that's always been a differentiator for Equitable. It really enables us to enhance value for shareholders. So it comes in several [ areas ]. One is our affiliated distribution with Equitable advisers. We have 4,300 affiliated advisers who only sell structured capital strategies. That's an advantage for us that enables us to control margin and value. No one else is in that space. Second is other insurance carriers. There are other insurance carriers P&C firms that we distribute in and with a small set of competitors. Again, we're able to take the learnings we have from our Equitable advisers, going and train their investment professionals on how they sell buffered annuities. And it really helps us gain market share, and that's what being a big piece of our growth. And where we don't play. We don't play into wirehouses. We're #12 in the wirehouses, but we're #2 in overall variable and Moody sales led by our buffered annuity products. So it [ differentiates ] us and why we've been able to stay ahead is solely due to our distribution.

There was a follow-up on the audience, which was that kind of what can you do to -- or can you talk a little bit about just how much less risky the SCS product is than a traditional variable annuity product with income guarantees?

Sure. Very different. We always -- it's always tough to get across that all BAs are not the same. We've said that for a long time. So SCS leverages our structured capital strategy product, leverages the variable unit chassis, which enables you to have the tax advantage that a variable annuity provides. But it doesn't have any riders associated with it. So no living benefit providers that traditional GMxB or an [indiscernible] annuities ask. So there's no complexity about riders. The product is perfectly matched and priced in the market, and we get to reset pricing every 2 weeks based on current market rates. So it's perfectly matched to use an options at point of sale. And the only risk in the product is traditional credit risk because it ends up actually looking like a spread product that's perfectly AOM-matched at the end of the day. And it doesn't happen, as I mentioned, any of the complex [indiscernible] options that are traditional variable annuity has. So it's simple from a balance sheet perspective, but more importantly, it's simple for clients and it resonates well with them.

You recently have become more active in funding agreements. Can you give any sense of how meaningful that business could be for the company over time?

Sure. It spreads where they are for us and as [indiscernible] [ appears in it is true ]. Funding agreements are probably the cheapest line, so we're really attracted by the FABN market. We've launched it, and we're now up to over $5 billion in the program. We have approval to go up to $10 billion. And it's really just ends up being a spread or in a dig where we can borrow at a lower rate and invest at a higher rate to generate a spread for shareholders. So it's a good market right now. It's a cheap liability, and it's going to enable us to enhance returns for shareholders. And that's part of what drives a additional $180 million of incremental income that we've done. Further to that, we just did our first ESG-related FABN note with a $500 million sustainable finance issuance. So it helps support our ESG efforts as well. So it's a core element of our business going forward and expect us to be active in the market.

In your Group Retirement business, I guess, nuances when people think about retirement businesses, there's always been lots of 401 K-C pressure. You're primarily in the 403(b) business, which seems like it's just had a lot less fee pressure. Can you, I guess, talk a little bit about that dynamic? And why you think that is?

Sure. I think the -- it's easy to think that the 2 markets are the same, but they're very different. I think it better be -- is probably familiar with 401(k) market, institutional sale, you deal with a plan [indiscernible]. Obviously, they're bidding you out against 3 other [ advisories basically ], and you have to prove your value to win in that market. 403(b) is more of an individual sales. So we have 8,700 slots with school districts, but that doesn't give us the business. We have 1,000 dedicated advisers that go into those slots. And they have to sit down, work with teachers, explain to them their current pension plans and the benefits that they have in their local municipality and why supplemental retirement income is important. So the value added there is really on advice, and that's the core differentiation between 401(b) and 401(k), where we play in the K-12 market. And we're proud to be in that space, servicing and helping teachers. I know I have young kids, and what teachers had to deal with over the last year, I'm really proud that we're a leader in that market and helping teachers help them save for retirement.

In terms of GAAP LDTI, the changes that are coming in 2023, can you talk a little bit about how you view that? And when you might be in position to disclose the impacts to the market?

Yes. Ryan, I'm very excited. I mean you won't hear too much exciting from people when talking about [indiscernible]. But I'm really excited about LDTI and what it's going to do because it's going to address uneconomic accounting mismatch of assets and liabilities and help that be more transparent for the investors. GAAP is not fair value based. And as a result, it's difficult for investors to compare companies on their liabilities as they're not mark-to-market. Are they hedging it appropriately? It's difficult for investors. With our economic hedging, fair value accounting and GAAP is going to work very well. It's going to reduce volatility between our operating earnings and net income. As our hedges, you'll see our hedges matches [indiscernible] because they're fair value. We're excited about it. Our teams are currently going to work to accept this impacts, and we plan to disclose everything at our Investor Day next [ part ]. But I think this is going to be a game changer for the industry, and it's really going to help investors understand the different risks that companies are taking on a GAAP standpoint going forward.

I think the one, I guess, maybe perceived negative that it could have on you would just be that your likely pro forma leverage ratio will go up on a GAAP basis. I guess where are you -- like you had discussions with rating agencies about this, and how are you thinking about how that could impact you?

Sure. I'm not too concerned on the leverage ratio, to be honest. The reasons why is, one, discussions in the past on leverage ratio, rating agencies have always suggested that an increase of a fair value liability wouldn't drive their change in assessment in terms of leverage ratio and that impact on your rating. Second, historically, accounting changes haven't driven rating agencies to change assessments on leverage ratios overall. But it's a little bit early in terms of -- I guess we'd have to see where the industry lands out and what happens to everybody across the industry, and if they decide there are changes that need to be made. But it's not really a concern of mine today.

Got it. I wanted to dig in a little bit more in variable annuity hedging because you've -- Equitable has been strongly emphasizing your fair value risk-neutral approach for hedging. That's definitely not the approach every company in the variable annuity space is taking. So maybe you could elaborate on why you believe that's the best way to manage the liabilities?

Sure. As a reminder for everyone, we hedge fully the economic liabilities of the guarantees that we provide, which means we immunize our balance sheet to changes in interest rates or equities. And I think that's a key distinction of us compared to the industry, and it's been proven to be effective. And honestly, that with us with our landmark VA transaction with Venerable. What does that mean more specifically as we manage to the forward curve? So even if the NAIC allows people to assume some arbitrary 3.5% interest rate, we look at where rates are today, and we hedge to where they are today. We don't believe that an investor -- well, what I'd say is we believe if an investor wants to take a bet on interest risk, we think there are better places to do it than an insurance company. And so our perspective is investors want us to protect against movements in interest rates or equities which have balance sheet risk associated with them. So that's why we hedge fully to rates where we assume is -- and we test rates going negative, rates going -- staying low for long. And that means that we're managing economically because what we assume in the liabilities is what we can hedge. So it's fully market consistent across the board. And we think that's the appropriate way to manage complex liabilities to ensure that you can deliver sustainable returns for investors.

I think the other side of that argument I've heard from some is that equity markets typically perform above risk-free rates over time. And so should that really be hedged based on risk-free rates? What would be your perspective on that?

My perspective would be if equity markets go down and you need a capital call, that's not good risk management at the end of the day. And so our view is where we offer guarantees which have equity exposures, we have to hedge those guarantees. Where we have equity exposure where there no guarantees associated with them, we won't hedge those. But where are the guarantees that we put the balance sheet at risk, we believe appropriate to hedge those as I don't think investors would be happy with [indiscernible] if equities weren't hedged appropriately. Again, [indiscernible] rate. I think taking equity risk at an insurance company is a terrible bet. It's probably one of the worst places you can take an equity bet. You're better off buying call options on the street around the change. It's just where the -- take an insurance company is not equities or interest rate, it's credit. The insurance companies can hold it at book value, and that's good value to hold it at book value. You can't do that anywhere else. So that's where -- and that's where we strongly believe that's the risk that investors would like to be in insurance companies, not equity and interest rates.

Got it. This is, I guess, somewhere related, but the NAIC -- you've mentioned the interest rate assumptions in statutory accounting and this economic scenario generator is being reviewed by the NAIC to be revised. It seems like it will likely incorporate lower interest rates. I guess what are your thoughts on that process? And then how could that make that effect Equitable once it's done?

Yes. Look, we're a lead advocator of that. We've actively engaged the NAIC in accounting because we believe a more realistic distribution of interest rates is appropriate on the statutory lens. And what they're assuming now and what they're working towards is lower rates for longer different scenarios, which test the balance sheet. I think it's more appropriate. I mean just set an arbitrary number to assume that the 10-year is always at 3.5%. This doesn't make sense at the end of the day when we know where interest rates are now. That's a huge risk in terms of balance sheet exposure that someone is taking. The current framework allows people or entices people not to hedge when rates are below 3.5%. So there's a huge risk laying on insurance company balance sheets right now if they're not hedging interest rates. So we think that this is a more sustainable framework with the new scenario generator coming out. And again, it will provide transparency to investors and rating agencies on what are your appropriate risk and potential capital implications on different balance sheets across the industry.

In terms of Equitable, so I think one question [ I've gotten ] from people is if the current economic scenario generator is effectively mandated by the NAIC and it assumes mean reversion and then the mean reversion rate is lowered, why wouldn't that impact Equitable as well?

Yes. It's because in our hedging liability, we assume the forward curve. So essentially, when we model out the liability, we assume the forward curve and don't put in the NAIC assumption in our hedging formula, the way we model it and what we hedge. So as a result today, our reserves are held appropriately for interest rates at today's environment. So [indiscernible] based it from 3.5% to 1.30%, 1.3%, but would have no impact because that's what Equitable assumes already, and we hedge it. So if it goes down from here or up from there, we have essentially no impact or very limited with any change that NAIC is contemplating.

And just 1 follow-up on that. I think if it's -- correct me if I'm wrong, but I believe there's a voluntary option from companies in the variable annuity space to do what you're doing and use a fair value approach in statutory reserves? Or you can not do that and assume the mean reversion, is that correct?

That's right. So what we do is we take that voluntary approach and we assume the forward curve for interest rates because we believe it's more economic. And that's how we think an insurance company should be managed. And that's how we think investors would like them to be managed. So I agree, that's why there's limited impact for Equitable.

There was a question in the audience on funding agreements. And given the competitive nature of that business, there's been a lot of issuance, are you -- what type of return target do you have there? And are you able to achieve it at this point?

Yes. Like compared to new business, essentially, we try to -- we're getting a double-digit IRR on [ lending ] agreements. It's not -- there's really good demand amongst investors for funding agreements. So we haven't even seen any slow up in demand despite a lot of activity out there and the returns are comparable to new business with double-digit IRRs.

And just 1 -- probably by this time maybe for this 1 last question from the audience, which is on your life insurance business, probably hasn't been talked about as much. How do you view that business at this point in time?

Sure. So it's our small segment of Protection Solutions, but we see value in the products that we offer. We're #4 in the VUL market. It really aligns with savings for consumers as they look to have tax advantage savings products and view of -- does that plus the protection of that benefit. So we like where we play in the market. We're [ set ] on where we play because we play where we see value for us and the consumer. And so we still like the market. We've grown, and you've seen that shift in our business. Our volume has grown pretty well year-over-year in the VUL space as a result of that chip. So we like where we play. But we're focused on really growing the employee benefits business, which I mentioned earlier. We have 500,000 enrollees now. That's really exciting to have a greenfield that's producing good returns and growing rapidly for investors.

Excellent. Well, we're pretty much out of time. So I think we're going to end it there. Thanks a lot, Robin, for participating, and much appreciate it.

Thank you, Ryan.