Great-West Lifeco Inc. (GWO) Earnings Call Transcript & Summary

Thank you for standing by. Welcome to the Great-West's Second Quarter 2026 Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Shubha Khan, Senior Vice President and Head of Investor Relations at Great-West. Please go ahead. .

Thank you, Morgan. Hello, everyone, and thank you for joining the call to discuss our second quarter financial results. Before we start, -- please note that link to our live webcast and materials for this call have been posted on our website at greatwesttlico.com under the Investor Relations tab. Turning to Slide 2. I'd like to draw your attention to the cautionary language regarding the use of forward-looking statements, which form part of today's remarks. And please refer to the appendix for a note on the use of non-IFRS financial measures and important notes on adjustments, terms and definitions used in this presentation. And turning to Slide 3, I'd like to introduce today's call participants. Joining us today are David Harney, our President and CEO Jon Nielsen, our Group CFO; Ed Murphy, President and CEO, Empower; Davis Mohan, President and CEO, Canada; Lindsey Wixom, CEO of Europe; Jeff Pune, CEO of Capital and Risk Solutions; Linda Carrigan, our appointed Actuary; and John Melbourn, our Chief Investment Officer. We will begin with prepared remarks followed by Q&A. With that, I'll turn the call over to David.

Thanks, Shubha, and good morning, everyone. Please turn to Slide 5. This quarter, we built on our strong start to 2026, delivering 15% base EPS growth, driven by double-digit growth at both Empower and CRS. We continue to demonstrate strong execution across all of our growth platforms. Empower across the northern milestone, surpassing USD 2 trillion in client assets on its workplace platform. This business will be further strengthened by the acquisition of Milliman's Retirement and Benefits Administration business, which is expected to close later this year. Great-West continues to generate strong risk-adjusted returns with a base ROE of 19.3% this quarter, supported by our ongoing shift to a more capital-efficient business mix as well as balance sheet optimization initiatives. Lindsey will discuss some of these initiatives in more detail shortly as part of an update on our European operations in this quarterly call. Our strong cash generation and balance sheet continue to provide significant financial flexibility, and we expect total capital deployment through buybacks and M&A in 2026 to be at least as much as was deployed in 2025. Please turn to Slide 6. I -- as I mentioned, we delivered base EPS growth of 15% year-on-year, primarily driven by strong growth in our retirement wealth and reinsurance businesses across markets. Total retirement and wealth client assets grew 22% year-over-year to more than $3.37 trillion, of which $1.3 trillion represents higher-margin assets under management or advisement. Robust capital generation continues to reinforce our financial position. We continued our share buybacks during the quarter and still ended with a solid capital base, including a LICAT ratio of 128%, Holdco cash of $2.5 billion and a leverage ratio of 27%, down 1 percentage point from Q1. Please turn to Slide 7. Our results this quarter highlight the benefit of diversification in our portfolio. Our segments are largely delivering on their growth ambitions through the first half of the year despite the impact of more volatile earning drivers. Empower grew base earnings at a double-digit pace year-over-year with strong operating margins and retirement plan wins while delivering impressive growth of 66% in its wealth business through the first half of 2026. Canada saw a double-digit growth in both Retirement and Wealth earnings on particularly strong margins, though this was offset by moderated insurance experience in the second quarter. In Europe, business performance has been strong across markets year-to-date with robust sales, including $1.2 billion of bulk annuities in the second quarter, continuing to support the outlook. And finally, Capital and Risk Solutions continues to see strong demand for capital solutions across geographies and product lines, driving 38% year-over-year base earnings growth for the first half of the year. Overall, I am very pleased with our performance at the midpoint of the year. Please turn to Slide 8. We I want to take the opportunity to highlight Empower's recently announced acquisition of Milliman's Retirement and Benefits Administration business. The acquisition further scales our defined contribution platform and more importantly, as a leading defined benefit capability that strengthens our go-to-market offering by adding 1.5 million participants and USD 130 billion in client assets upon closing. Empower's workplace platform will be better positioned to compete for bundled opportunities. This transaction is expected to be financially attractive and accretive to base earnings in the first year and is available today to address any additional questions on the transaction and the strong outlook for Empower's business overall. . With that, I will pass over to Lindsey to discuss our European operations, where we have significantly enhanced the risk return profile through sustained new business momentum and balance sheet optimization.

Thank you, David, and good morning. Please turn to Slide 10. In Europe, our base earnings increased 2% year-over-year in the second quarter, primarily driven by higher global equity markets, favorable insurance experience gains and supportive currency movements. These were partially offset by a moderation in trading gains from the exceptionally strong levels recorded in the prior year. For the first half of 2026, base earnings grew 8% year-over-year, better reflecting the solid underlying business performance and successful execution of our strategic priorities. These results reinforce our confidence in the long-term earnings trajectory of the European business. We continue to benefit from a diversified earnings mix, recurring fee-based revenue streams and strong growth across our lines of business. Turning to Slide 11. Looking more closely at business activity, Europe continues to see robust demand across product lines, providing attractive opportunities for organic investment and a strong foundation for sustained earnings growth at a mid-single-digit pace or higher. In insurance and annuities, U.K. bulk annuity sales were $1.2 billion this quarter, with year-to-date sales amounting to a fivefold increase from 2025, reflecting robust demand for bulk annuities across the industry and healthy margins, particularly in the SME segment of the market. We continue to deploy capital in a disciplined manner, targeting returns in the mid-teens or higher. Retail annuity sales also remained strong, increasing 54% year-to-date reflecting on consumer demand for guaranteed retirement income solutions amid ongoing retirement planning needs. Within Group Benefits, in-force premiums increased 9% year-over-year reflecting solid retention, pricing discipline and ongoing growth, particularly encouraging with the performance in wealth as net flows improved significantly from the prior year period to $7.1 billion of net inflows in the first half of 2026. This improvement was driven by continued momentum in retail sales and a rebound in institutional flows. It also underscores the attractiveness of our value proposition as clients continue to seek trusted advice and comprehensive wealth solutions across our European markets. . Finally, retirement net flows remained positive at approximately $600 million, consistent with the prior year, demonstrating the resilience and stability of our retirement franchise. Taken together, the U.K., Ireland and Germany have a breadth of avenue to drive sustained growth. These drivers are supporting stronger earnings, higher ROE and increased capital generation. while reducing dependence on any single market or product line. Please turn to Slide 12. Beyond top line growth, we continue to make significant progress in optimizing our balance sheet. At the Investor Day last year, we outlined a series of initiatives designed to improve capital efficiency, enhanced returns and increase financial flexibility. We are pleased to report that we are on track to deliver over $3 billion in capital benefits, exceeding our expectations from a year ago. These benefits were generated through enhanced asset liability management practices, strategic use of reinsurance and modernization of our ALM tools and risk modeling capabilities, improved capital efficiency has translated to more than $2 billion in additional cash remittances and has reduced capital strain on new business by approximately 30%, enhancing capital deployment flexibility across the boarder organization. The impact of these initiatives is most clearly reflected in our return metrics. Europe's base ROE this quarter reflects a 350 basis point improvement from 2024, demonstrating our ability to translate business growth and capital optimization into greater value creation. Importantly, this improvement has not come from taking additional risk. Rather, it reflects deliberate actions to optimize capital utilization, improve our business mix and increase operating efficiency. Overall, Europe has delivered a good first half of 2026, marked by strong top line growth and enhanced capital efficiency, enabling the business to drive strong risk-adjusted returns. As we look ahead, -- our focus remains on executing against attractive growth opportunities, maintaining disciplined capital deployment and continuing to enhance returns while preserving the strength and resilience of our balance sheet. I'll now pass it over to Jon to talk through the broader financial results for the quarter. .

Thank you, Lindsey, and good morning. Please turn to Slide 14. Great-West, again, delivered a strong quarter with double-digit earnings growth driven by sustained momentum across our retirement and wealth businesses and strong new business volume in our CRS business. Base earnings per share growth of 15% year-over-year was also supported by $925 million of share buybacks since the start of the year. These results drove base ROE of 19.3%, in line with our medium-term objective of 19.5% for a second straight quarter, while net earnings in the second quarter were impacted by unfavorable market experience, primarily from interest rate movements, the year-to-date impact of interest rates was largely neutral. Turning to Slide 15. We are pleased that credit experience for the second quarter was down year-over-year and within our expected range of 4 to 6 basis points on an annualized basis. As a reminder, total credit experience is the aggregate of credit experience shown in our drivers of earnings disclosure as well as our retirement and wealth P&L statements, all of which are included in the supplemental information package. We continue to expect that under normal conditions, credit experience would be at the lower end of the $80 million to $120 million pretax range that we indicated at the beginning of the year. Turning to our results by segment, starting with Slide 16. Empower delivered an excellent quarter with double-digit growth in base earnings, up 34% in constant currency, reflecting continued organic growth momentum across both the retirement and wealth businesses. In Retirement, strong equity markets drove double-digit growth in average client assets which now exceeds USD 2 trillion for the first time. Net plan inflows remained strong, and we continue to expect positive net plan flows for the full year 2026. Operating margins also improved by over 600 basis points from a year ago, helped by improved credit experience and underscoring the significant operating leverage in the business. Empower Wealth performed exceptionally well with base earnings up 67% year-over-year in constant currency. Operating margins were a record 40% this quarter up 10 percentage points year-over-year, demonstrating the scalability of the wealth platform. We intend to further invest in the business in the second half of the year and beyond and as a result, expect the full year operating margin to be in the mid to high 30s. Overall, the significant momentum in our businesses drove empowers base ROE to a record 22.2% and reinforces the double-digit growth outlook for 2026. Turning to Slide 17. Base earnings in our Canadian operations decreased 9% year-over-year as continued momentum in retirement and wealth was offset by moderated long-term disability experience gains, which can fluctuate from quarter to quarter. Underlying business growth was solid with group benefit sales up 20% from a year ago. Insurance and Annuity sales up 15% year-over-year and rising equity markets and operating leverage supporting base earnings growth of 26% in the retirement business and 38% in wealth. Turning to Slide 18. Capital and Risk Solutions continued the strong start to the year with base earnings up 35% on a constant currency basis in the second quarter. This was driven by continued demand for our capital solutions globally, which drove a 54% year-over-year increase in the run rate insurance result in the second quarter. The pipeline in that business remains strong, and we continue to expect new deals through the remainder of 2026. Turning to Slide 19. As we've highlighted in the past, our organic capital generation is significant and is a key strength of our businesses. In the second quarter, base capital generation exceeded 80% of base earnings, while free cash flow was 86% of base earnings. As we've said before, Great-West Capital is highly fungible, providing significant support for continued capital deployment, while attractive organic growth opportunities and our more capital supported businesses, may impact base capital generation in any given quarter, we expect Great-West to remain highly cash generative. Turning to Slide 20. Great-West exceptional free cash flow generation has supported significant capital deployment. So far this year, we've repurchased $925 million of common shares and announced the acquisition of Milliman's Retirement and Benefits Administration business in the United States for a total consideration of USD 340 million. Similar to last year, we've amended our existing NCIB, allowing us to repurchase up to 40 million shares in 2026. We continue to expect that total capital deployed either through share repurchases or M&A will at least be as much as the $1.6 billion deployed in 2025. Our LICAT ratio stood at 128%, down from 129% at the end of the first quarter, driven by a number of individual insignificant items. For the remainder of the year, we expect to maintain a LICAT ratio at or above 125% even if new business volume in our reinsurance business remains elevated. Our leverage ratio of 27% and Holdco cash balance of $2.5 billion positions us for continued financial flexibility and to pursue strategic capital deployment opportunities. Overall, we've had a great first half in 2026 and are excited about the continued momentum across all our business segments. With that, I'll turn it back over to David for concluding remarks.

Thank you, Jon. Please turn to Slide 22. I'm really pleased with how well we have continued to execute on our strategy since I took over as CEO a little over a year ago. With double-digit earnings growth through the first half of the year and a base ROE in excess of 19%, the results speak for themselves. This is a testament to the focus and efforts of our people across the organization. I'd also like to note that we are presenting our results for quarter 2 a week earlier than we did last year. And I'd like to thank the finance and related teams for the amazing work to date and accelerating their time lines to facilitate the earlier reporting of these results. I am confident in the outlook for our business. We remain well positioned to deliver on all our medium-term objectives. And Power is on track once again to generate double-digit organic base earnings growth this year. CRS continues to outperform its growth ambitions with strong demand for its capital solutions expected to persist through 2026. We also demonstrated the strong and improving return profile of the business, supported by our balance sheet optimization efforts, especially in Europe. I am confident that we will continue to deliver on our strategy and create long-term value for our shareholders in the years ahead. Thank you. And with that, I'll turn it over to Shubha to start the question-and-answer portion of the call.

Thank you, David. In order to give everyone a chance to participate in the Q&A, we ask that you limit yourselves to 2 questions per person. You can certainly requeue for follow-ups, and we will do our best to accommodate if there's time at the end. Morgan, we are ready to take questions now. .

[Operator Instructions] Your first question comes from John Aiken with Jefferies.

With the Capital Risk Solutions that you mentioned the strong pipeline. As you're seeing demand increase in the segment, -- is this actually having any impact on margins? Are they actually widening out?

That's a good question, John. Thanks for that. We're -- I mean there's always eroding margins on business that's been in the books for a long time. So you can think of capital solutions as innovative and in the early years, you tend to get really good margins. And as others other insurers enter the market then that the margin erodes over time. So we always have a little bit of erosion on our margins on existing transactions over time. And that's the way it works. However, I think what we are seeing right now and what we've seen in the last 18 months or so and continuing to see a lot of demand for some of the solutions that are working. And it's actually a very diversified portfolio. We've got behavior risk in Europe and in North America, policy behavior risk that people are reinsuring out. And then we're seeing some helped reinsurance demand in the United States, the mass lapse transactions in Europe on savings products. And then some -- a lot of demand on our essentially our capital solutions for non-life products. So it's coming in a very diversified manner. We're very happy with it. However, our business is lumpy and it comes in waves. I think I highlighted that at the Investor Day last year. So it is a very lumpy business. Right now, we're riding the wave, we're very opportunistic that way. But we remain disciplined. If the margins are no longer there, and we're not getting our returns we're going to move on to other types of products. So it's important for us to continue to get new ideas and new products, and we're working on those, and we've got some pretty good ideas right now. So whether the demand will be there or not for these products is hard to tell. But it's been a good run.

I think it's fair to say, Jeff, that margins on the new business have been good and in line with very very good -- what's driving the growth here is increased demand from the market rather than any change in our competitive posture.

Understood. Understood. And Jeff, just as a follow-on, given your success, how is competition shaping up in your markets?

It's been -- I mean, it's the same usual suspects, right? Like there's the same -- we're the same player. I think that what we've seen, Jon, over the years, I think that reinsurers have shift -- there's been a shift from just a risk partner to capital and planning partner. We've been at the forefront of that, and we're constantly coming up with ideas. So -- we've got extremely good relationships with large insurers in all the markets we're in. And I think we benefit from the trust that they have in us. There's always some copycats in the market and people that are coming in and trying to get in the market. That will continue to happen. But we have been 1 of the leaders in the capital solutions and intend to continue to be that way. It's a hard market to get in. You need to have experience and the right mindset, and the right balance sheet and backing of a strong company really helps as well. So I think we've got all the right tools in our toolbox to get there.

Your next question comes from Mike Ward with UBS. .

I was just wondering if we could dig into the Milliman deal a little bit. And 1 of the things I was curious specifically about is some of the opportunities beyond sort of the cost synergies, but like, I guess, revenue opportunities, right? The health and welfare benefits kind of administration just because I don't think I don't think that you guys kind of quantified that potential opportunity, but it's an exciting part of that deal, I think.

Ed, do you want to take this?

Sure. Thanks for the question, Mike. Absolutely. I would say unlike some of the other major transactions that we did in Mass Mutual and Peru, in particular, those were really driven in large part by cost synergies. This was very much about a strategic growth opportunity for us. This is a core capability that we were lacking to some degree because we are working through a third party. We're working through a partner. And we really felt like we needed to own the capability similar to what we did with the acquisition of Option Trax, where we have now an owned and proprietary capability in the equity plan administration category and space. And so we think there's tremendous opportunity, obviously, to cross-sell our DB admin capabilities with our existing customer base, tens of thousands of corporate clients. But also, it puts us in a position to be far more effective in new pursuits when clients and sponsors are typically looking for a multi-product type solution, defined contribution, defined benefit administration and health and welfare administration. And so we're better positioned -- we will be better positioned once that's successfully integrated to compete for those opportunities. I would say the market has moved to valuing the bundle and that's very much core to our strategy is to build out these capabilities that allow us to establish deeper relationships with existing clients and with prospective clients. And what I would say is in our workplace business, we continue to grow as measured by net new participants -- at 1.5 to 2x the rate of the market. In fact, this year, without an owned DP admin capability will add close to 1 million participants net to the platform on a base of $20 million. So 5% growth in a market that's growing at 2%, 2.5%. So I think this is a tremendous growth opportunity, obviously, coming out of the transaction. Once it closes, we are establishing a partnership with Milliman. We think there's tremendous consulting opportunities that we can work on with Milliman. So I would just summarize by saying -- this was all about addressing a product gap that we felt like we had, but also very revenue synergistic from the standpoint of being able to have a much more appealing offering across things like DC DB and health and welfare. .

That makes a lot of sense. And then shifting away from the U.S. So the -- you guys spent a good amount of time talking sort of about the capital efficiency and business mix optimization efforts in Europe I'm just kind of wondering like how much more runway you see to further execute on that in Europe and what that could look like? And do you see similar opportunities in other regions?

Yes. Thanks, Mike. We're really happy with the success that we've had in Europe. That's a multiyear project and happy to report back on being ahead of where we expected to be at the Investor Day. And that's really driven the ROE up significantly as we've done that and generated capital for us. I would say we're kind of 2/3 through that work. It does cover all the countries in Europe, although the most significant impact were in the higher capital-intensive business, which is more a part of the U.K. business. And when I say 2/3 of the way through, we are reflecting what we expect to be the outcome of that work when we've reported back to you and when we set out our initial expectations. So as we continue to deliver that, it will be against those expectations that we've laid out. That's not just a focus in Europe, albeit that was the biggest opportunity for us. 2 years ago, but we're looking across the business and continue to optimize the business mix, the capital intensity and the return and look for opportunities to continue to drive better capital deployment and better IRRs out of our business.

Your next question comes from Tom MacKinnon with BMO.

Two questions. First on the Capital and Risk Solutions. If you mentioned the business comes in waves. It looks like the capital solutions business is largely in terms of short-term business and not really the -- not CSM related. So if demand did fall 10% would we expect those short-term expected earnings to decline 10%. And what is the outlook really for that those short-term expected earnings in CRS going forward through 2026, given the strong demand?

Thanks, Tom. I appreciate the question. I think you could look at some of the capital solution earnings as being a bit stickier than you've said there. It does erode over time either through competition or people don't renew some of their covers. But we tend to replace and expect to replace those earnings with more capital solutions. So the demand is still fairly strong although I think it's tapered off a little bit from the levels we've seen in the first -- the last 18 months, but there's still plenty of demand. So I would say that the current level of run rate that we have now is very sustainable. And we're probably going to continue to see mid-single-digit plus growth from this standpoint. So that's how I would qualify it. That makes sense.

Great. The second question is with respect to Empower. Ed, we had $14 billion in participant net outflows understand higher markets can sometimes lead to higher net outflows, but that to me would suggest a lot of rollover possibilities yet. I look into U.S. wealth, there was $1.8 billion in net inflows. That's kind of the lowest we've seen in the last 7 quarters, understanding you're doing some transformation initiatives there kind of trying to upgrade your capabilities with respect to rollover capture. But any color you can add on that on the commentary I just made there.

Yes, sure. Tom, I think the 1 thing to take note of is the seasonality of the contributions on the workplace side. So we had roughly $45 billion in contributions in Q1, and that was to be expected because that's when a lot of the company matches and profit-sharing hits. And then that dropped to $32 billion in Q2, and we would see that being relatively constant through the balance of the year from a contribution standpoint. So the disbursement piece of it or the distribution piece of it on the workplace side, was largely just driven by account balance as it wasn't volume per se. Now to answer the second part of your question, what I would say is, as we shared with you last quarter, we've instituted some changes. We've implemented several changes across the organization made some structural changes, made some personnel changes. And I will say that I have seen improvements starting to take hold. And as I look at Q3 and beyond, we fully expect to see improvement above what we experienced in Q1 and Q2, so a lot of the indicators, I think, are very, very strong. The flow opportunity for us has been fairly constant from quarter-to-quarter in terms of the opportunity set. But as we look forward, we see greater success and higher net new assets in Q3 and Q4. So more to come there, but I feel good about the path that we're on.

Your next question comes from Alex Scott with Barclays.

First one I had is on excess capital. I was wondering if you could talk about capacity you have. I know you've got the Milliman going on. So just maybe talk about your appetite for further M&A and how you're measuring that against buybacks, especially considering your stock price has gotten to a pretty attractive valuation at this point.

Yes. Thanks, Alex. As you know, we're generating significant capital in excess of our target of 80% plus and that's really translated into really strong free cash flow. If you look at this quarter above 85%. And that trend, if you look backwards, was fairly consistent. 2/3 of our business and the growth parts -- the parts of our business that are growing the fastest, do come from capital-light businesses, and we expect that those businesses to continue to outpace the growth of the overall company. So we're in a good position to see that free cash flow continue at high levels. We did -- as we reported back on, we are in the process of capital optimization on some of those more capital supported businesses and happy with the progress there that's also driving that capital generation. We did end the quarter at around $2.5 billion of cash, and we haven't changed our capital allocation priorities continue to be what's in the best interest of the long-term return of our shareholders and deploying that. We have the tools available, both through our NCIB program and through an active watch on the M&A market, which we took advantage of this quarter, as you said, with Milliman to deploy that capital, we would expect over time that we wouldn't sit on excess capital in perpetuity, but there may be timing as to when opportunities present themselves in the M&A market. We want to be prepared for those and balance that with our ongoing buyback program. So what we said consistently in this third quarter of the third call of the year is that we will do at least as much capital deployment as last year. That was $1.6 billion. We deployed $925 million in buybacks and then obviously the $350 million or so into the Milliman acquisition. So we'll continue to evaluate as we head into the second half, we have the tools in place and thankful that Power Corporation has continued to support extending the NCIB program to the same level of shares as last year. Obviously, we probably wouldn't get to the full usage of that NCIB program, but I guess our thought is stay -- have some flexibility. We still think there's intrinsic value in buybacks and strong earnings growth and cash generation in our stock and we'll balance that against opportunities. As I said, with the thought that we'll deploy that capital, but there may be timing in which we in which we do it and obviously, a balance between the opportunities in the M&A market and buybacks.

Got it. Really helpful. Next one I had is on Empower Retirement. Wanted to see if you could talk a bit more about the margin there. I know I heard you upon on the margin for wealth, I think, in your comments, but could you talk about retirement that the margin has gotten a lot better there. How are you viewing the trade-off further margin improvement or investment in the business in that segment?

Yes. So I think a couple of factors there. Obviously, the market tailwind has been a contributing factor, and that's been positive for sure. But as we've shared with you in the past, we've been on a multiyear journey in terms of transforming the operating environment and driving our unit costs lower and we have a multiyear plan to do that. Obviously, AI is playing a prominent role there, but also just the work that we're doing around straight through processing and automation. So as we look further out, the scale that we have gives us tremendous operating leverage and I'm confident that we can continue to drive unit cost lower. We can't always rely on the markets but we focus on the things that we can control, which is delivering value for our customers and doing it in a way that's efficient. So I think our guidance in terms of margins in the workplace business is really sort of in the low to -- as you acknowledge, we've seen really strong improvement in the margins over the last couple of years and in particular, a nice move just over the last couple of quarters. but it's also a business that we are going to continue to invest in as we build out more capabilities. If you think about the acquisition we did with Milliman that's largely a workplace type transaction. So we're making investments there. But our -- we've got a really strong expense discipline that I think is also a big contributing factor.

Your next question comes from Paul Holden with CIBC World Markets.

First question I want to ask you about is on asset allocation. And in consideration, particularly of corporate spreads were about as tight as we ever have. And the reason I'm asking the question always thought GWO and asset allocation always took advantage of spreads, not just in terms of trading income opportunities, but also just in terms of yield enhancement, right, being an important part of the story over time. So just recent thoughts on asset allocation, how you're dealing with or trying to generate yield enhancement opportunities in a very challenging credit spread environment.

Jon, do you want to comment?

Yes. Thank you. So what I'd say is with respect to where we are in the current credit spread environment, -- we have a conservative, well-diversified portfolio. We are not aggressively chasing or pressing on that given that we are near historical tight spread levels across the board. And I think the strategy remains consistent. We will certainly look for ways to be more capital efficient and have a better balance in all of our businesses with ALM, but we also need to make sure we're market competitive in our product areas. And so far, we're able to do that. But as you've seen with some of the changes that we've deployed, in some of our segments in terms of becoming more capital efficient and optimizing more effectively. That's likely to continue throughout the portfolio across our various segments. So again, I would say our strategy is to continue to hold the course on our desired risk taking in the portfolio and continue to try and build the portfolio yields through the types of strategies we have been deploying and more efficiency of capital. I'll turn it over to David, if you have any comments?

Yes. I'd just add overall, like our earnings are becoming less dependent on trading gains or a smaller portion. I think even in the current environment, there will continue to be trading gain opportunities. So -- but it's not a line we expect to grow -- we'll have less reliance on this going forward. But even in the current environment, we will continue to be trading gain opportunities.