Principal Financial Group, Inc. (PFG) Earnings Call Transcript & Summary

Welcome to Day 2 of the Bank of America Financial Services Conference. And this session is with Principal Financial Group. So if you're looking for that, you are in the right room. I'm really pleased, we have Chairman, CEO and President of Principal Financial, Dan Houston here. I think, Dan, I did a math, it is your 40th year in the company?

Yes, 40th year. May 28.

40th year. Dan has had many management roles through the business and became CEO 9 years ago.

Yes.

And we're just really pleased to have him. So I have many prepared questions, but don't be shy. If I see a hand in the audience, I'm happy to break out of what I'm asking and go any direction you want. And let's get started.

Absolutely. Let's do it.

So can we talk a little bit about the 2024 outlook?

Absolutely.

And I guess, set the base with 2023 and then how investors should be thinking about the year to come.

When we think about 2023, it was a really solid year for Principal Financial Group coupled across a number of different metrics, including just growth, right? Non-GAAP operating earnings growth of over 6%. We had a very strong capital return to investors. You may have seen that we had $1.7 billion through stock repurchase as well as through our common stock dividend. So again, I think for growth investors that are also wanting to get compensated with a strong dividend, it certainly held up. The business has performed well. International probably is -- doesn't get the positive attention that it should, but Latin America performed exceedingly well. But overall, International performed strong for the organization. And then when -- to answer your question around the outlook, again, we believe strongly 9% to 12% operating earnings growth for next year to 75% to 85% free cash flow, very strong, and again, maintaining our 40% dividend. So we feel good about not only what we're able to produce in 2023, but equally as important what we can do in 2024.

So the dividend of about 40%, we've had in, I think, the last 4 quarters, 3 dividend raises.

That's correct.

And obviously, as they're not special dividends, they are regular dividends and they're ratcheting up. Talk about like how the confidence for cash flow gets put together. Just once you raise the dividend, that's hopefully forever.

Yes, that's right.

And so what -- after an extended period of time for Principal that is without a dividend raise, like what has made you so confident with the dividend increase?

So as you know, we've been a public company since 2001. And over that period of time, we've always gone up into the right as it relates to the dividend. When the economy lost cabin pressure back in '08 and '09, we reduced our dividend, but since then have increased it consistently. And when we did an investor profile and we're out talking to people like yourselves on what was important to you, a common stock dividend is important, and it is peg at 40% of our net income. It's something pretty catastrophic would have to happen. And what makes me more confident today than even going back, say, 10 or 15 years ago is we are more of a fee income-oriented organization. We are less balance sheet oriented. It isn't that we don't have balance sheet exposure. But we do have, we feel incredibly confident about its earnings profile and its ability to continue to generate strong earnings for the organization. So my confidence level on the common stock dividend is very high. Likewise, Josh, to that point, I feel really good about our return of capital in the form of share buyback, which is something that has been modified within the last, say, 5 years. Again, if we have more free cash flow, given the composition of the businesses, which puts us in a position to do that quite nicely.

And where does M&A fit into the capital deployment model?

When I think about M&A, we've got really strong scale and capabilities across our businesses. And again, just for those of you less familiar with the story, it's around benefits and protection for small- to medium-sized businesses. It's around retirement of all size with emphasis on small to medium and it's global asset management. And again, we can talk more about that as we get going on how we've aligned our international global -- international asset management franchise with our domestic franchise. But again, all of those come together quite nicely as it relates to our ability to generate strong earnings. And so as it relates to M&A, I think of it as more something that would be a modest bolt-on that would give us additional scale or capabilities. But again, a lot of these businesses that we have are, frankly, at scale.

Shifting gears to the Retirement business, which you ran for a long time.

Right.

The -- we're at full employment in this economy. Some businesses are having -- growing rapidly, others are pulling away, you do a lot of large-scale business, it's a big mix of things. What's sort of the employment outlook? How does it impact revenues? How does that -- the Retirement Solutions business sort of look 3 years out from a peak employment position where we're going to be into a more normalized economy -- or more normalized cycle, I suppose?

Yes. And for those of you who maybe had just joined Brian Moynihan's comments, his outlook is very similar to Principal's. As a matter of fact, as I sat here, I was thinking that it was like listening to our own economist talk about this. But I want to take just a small -- just a few minutes and talk about this SMB market. I think it's largely misunderstood. It's where the vast majority of employment growth occurs here in the U.S. He talked about the context of their drawing down on their credit lines. The reality is they use a lot of their own cash to run their own businesses. They're quite conservative about how they do that. There is more outsourcing. They're less capital intensive. So the SMB segment of the market is very strong. We did a well-being index back in November of this past year of small- to medium-sized employers. They actually are very bullish about their businesses collectively. They do use benefits as a way to differentiate themselves. They have to compete with large employers. So we view the SMB market as an incredibly strong growth engine for the organization both in our Benefits and Protection business as well as in our Retirement business. The health of those companies is quite good. I'll be out in California here in a couple of weeks, talking to our largest institutional-sized clients. We have a client council, and I've had a chance to look at in advance of sort of their feedback. And even the large clients, 20,000, 30,000, 40,000 employees, their outlook is actually quite strong going into this and going into 2024.

Just to be clear, small and midsized businesses can have healthy employment at the same time as there's a winner take all thing, all size employee groups are gaining a healthy...

Well, you think about -- I think about general full employment in this country at 5%. We're somewhere around 4%. There's always been about 5% that for whatever reason, transitioning through various phases of their life. So yes, I think that the SMB segment is strong. Large employers, you see the headlines around some of the tech companies laying off. You see some of -- we talked about BofA had some reductions over the course of the last decade. But the reality is this is an incredibly resilient economy in the U.S., and those employees are getting picked up. There is still a huge fight for talent, the ability to attract and retain talent, benefits and compensation have proven to be a very strong way to retain talent.

And how does that turn into better growth for the Retirement business and I guess, the stability of cash flows in that business?

So it shows up in a number of different areas for us. In other words, transfer assets for Principal this past year are up double digit. The inside deposits, reoccurring deposits coming -- you get a raise of 4%, that just gets compounded in there because most employees use sort of set it and forget it. So you increase your paycheck 4% or 5% or up 9%, 10%, you're going to see a proportional increase in the salary deferral occurring at that same time. And then you've just got overall growth in these plans. We track very closely the in-plan growth of the number of new employees in our small- to medium-sized Benefits and Protection business. It goes around 2%, 2.5%. So there's a lot of levers that contribute to growth both in our Benefits and Protection business as well as in our Retirement business. As employment stabilizes or grows, we get the full benefit of that, including inflation.

And of those monies, what extent are deployed and how much is being, I guess, saved by cash accounts and whatnot right now?

So of course, that's 2 sides of this business. As it relates to full service retirement plan customers, most often, they're invested in some sort of target date fund where they're making choices. Very seldom do you see those account values go to some sort of money market. They're generally fully invested all of the time. Where we've seen the movement towards money market is in our institutional global asset management business, money sliding off to the sidelines. It's been a volatile interest rate market here in the last 2 years with the 10-year treasuries we heard this morning going up over 500 basis points. In spite of that, we still think that there's a lot of good opportunities in a lot of our asset classes, and we still have confidence about our flows. This industry has been in outflows, a large degree for 2 reasons: money going to the sideline in some form of money market and/or individuals pursuing some sort of passive. We're not a passive player. We believe strongly in an active strategy. The other component that contributes to some challenges to principal in net cash flows around our commercial real estate exposure. We have a lot of confidence in that. We've been in that over 80 years. And again, that tends to be a very, very cyclical business, and we're in one of those periods of time where it's a bit of a trough, but the pipeline for that business is actually quite good.

Before we get into asset management, let's stay with employment a little longer on Specialty Benefits business and talk about strategy in terms of dental in terms of what other benefits are being popularly purchased and expanding within the arsenal of what employers want to give to their employees.

Yes. So those 115,000, 120,000 small- to medium-sized Benefits and Protection customers of ours, the average size is anywhere from 40 to 50 employees. That's a pretty common place for Principal. Dental is a lot of the premium. However, there's also a generous portion of cross-selling that's taking place over the years for long-term disability, short-term disability, group life, voluntary benefits and supplemental health insurance benefits. And so that head continues to be a catalyst of growth because of that installed base, you start with a relationship with dental and then it evolves into adding disability or life or one of these other voluntary benefits. Oftentimes, it's also a catalyst for driving individual disability income. You're in there talking to a small, medium-sized employer. They have key individuals they want to cover with a DI policy or deferred compensation or business owner executive solutions. Those businesses have -- we've been quite intentional about expanding the relationships once we've had that beachhead with a small- to medium-sized employer. Also, remember that they don't have an HR department. They don't have a head of human resources. They're very appreciative of the support that Principal can provide small- to medium-sized businesses with all those wraparound services, whether it's the ongoing administration, whether it's the ability to enroll them properly and to have those interactions with those employees, taking those questions, answering questions and providing with additional choices and options through our call centers.

And how does the experience of a small employer do with some -- at Bank of America, I have my renewals in September or October, and I go to a website and I have lots of choices, lots of opportunities. What's the experience of engagement between Principal and the customer, not the employer, but the employee and how they access Principal and the product?

It's actually probably more direct with the name Principal than it would with BofA. We know that there's a lot of very large employers, and you have the ability to customize those materials, you have 400, 500, 600 people that probably work in your benefits department that help sort this out. We take on that responsibility. And because of that, we have more of a direct relationship. Talking to that individual and extending additional options that might be available to them, that had already been available, but they were unaware of it. So rather than have a BofA representative or a large employers benefits department talking about those, Principal would be in a position to do that either digitally. And again, Amy Friedrich and her team have just done a masterful job embracing technology to run BMP that allows employees to self-serve as well as into the call center and make those choices.

And can you give us some ranges of what percentage of employees have multiple products with the cross-sell successes overall and the trend? And how does that feed back into the growth?

Yes. So a couple of different things to sort out. It all depends on how many coverages were purchased in the beginning. On average, it's 1.5 to 2x coverages are chosen in the very beginning. It's either dental, combination of life or disability or voluntary. We certainly see that more than double over the course of the next 2 to 3 years because of the opportunity to be back in front of those clients presenting that. The other thing I would tell you has been a major focus for the last few years is to have introductions made between our retirement plan customers and our group benefits customers. And where that has been a stumbling block for a very long time. It's not for the reason you might not -- might think. It's not because you have a difference of opinion between not wanting all those with one provider. The challenge is through distribution. You may not have a properly licensed insurance agent or financial advisor working with that person having a group one license to sell a group disability versus a securities license to sell retirement. But what's changed is a lot of these large distributors, BofA falls into this category within Merrill Lynch, it has changed dramatically because now because of more team selling they're bringing in their colleagues to go out and make a joint call on that employer, one's representing retirement, one's representing group benefits, and they're collecting that relationship for the firm, the distributor. Increasingly, that is probably one of our largest growth areas for the organization. And again, we welcome that. We're a bit unique at the Principal Financial Group to have both of those capabilities. And for us to bring the power of that comprehensive solution, it really holds up well. We launched a product by the name of Elevate within the last 2 years. We are gaining traction. But this -- think about this as a concierge service to small- to medium-sized businesses. Again, they don't have those resources. They're able to work with us either digitally or work with us over the phones. Through that concierge what we help them is through purchasing. We leverage Principal Financial Group's purchasing power. We extend that to them as we create savings through purchasing whether it's through FedEx or UPS or whatever range of services they might need, Office Depot, et cetera. We leverage those relationships, create more dollars available to go back into benefits to support their benefits program. So we see that as a really strong growth catalyst for Principal going forward.

I'm just looking out for any questions, feel free to ask them. But I'll look out and any time you can ask one. Let's move over to Principal Asset Management. Talking about the combination of Principal Global Investors versus Principal International. What benefits were unlocked by pushing the 2 businesses together and how has that worked out overall?

So it's probably worth going back 30 years. And I won't go back to every nitty-gritty detail, but I think context is going to matter. When we dropped the flag 30 years ago, back in 1989 to stand up our stand-alone global asset management capability, at the very same time, we stood up Principal International. And they were really going after 2 different things. If you think about 30 years ago, you would have had decisions in Chile or Mexico or China or Thailand or Malaysia, most of that investment was local. And a lot of it actually was focused on sovereign debt. So if you were down in Brazil, you really weren't interested 30 years ago in a global equity fund or it's something that was not related to Brazil. And in some of those cases, it was regulatory impossible to invest outside the country for certain types of money, including retirement. So that's why we built Principal International separate from Principal Global Asset Management. Well, bringing these things together in the last 30 years, what's happened? The borders have dropped. You can now have frictionless sales of financial services products across the globe. And so where before the demand was for local managed assets, their appetite for global investments has grown substantially. Because of that macro event, we made a decision within the last 2 years to combine Principal International and Principal Asset Management along with Principal International and align those resources so that we can use every one of those global locations as asset gathering machines for Principal Asset Management and it's worked nicely. I think about we had a Mexican equity capability that was -- certainly had demand well outside the borders of Mexico. So that has been one of the catalysts of growth. One of our other catalysts of growth has been around our joint venture partners. When I think about Brazil, it's Banco do Brasil, formidable large banks, strong organization, strong distribution. We're the largest provider of retirement plan services in Brazil. We have about 1/3 market share, 1/3 of all new deposits. We go to CIMB Group in Malaysia, again, a formidable competitor, and been able to attract assets. And so we're leveraging not only Principal International, but now we're leveraging those relationships with Principal Asset Management. So I'm very enthusiastic about the ability to drive assets to the platform by leveraging Principal International and combining the 2 organizations.

So if we go back a year ago, interest rates were moving in one direction. And now surprisingly, that was up. And now we are -- 1 year later, we're actually lower than they were a year ago. And a lot of people think there's rate cuts coming and things are going down. What does that mean for the various strategies that Principal has, and where are fund flows moving compared to where they were a year ago?

Yes, who would have thought, right, I mean, that we'd see a 500-basis-point increase and not have had a more significant drag on the economy than it has. It just goes to speak. And again, we're talking about the domestic business and the fortitude and the resiliency of the U.S. economy with a significant increase in interest rates. I don't think anybody would have predicted that. It's for that reason why I don't think they're going to just drop immediately here. I do think this is going to be a second half of '24, first part of '25, where we would see any sort of significant rate cuts in the 10-year treasury. Having said that, from an opportunity perspective, the first place I'd start is on commercial real estate. I think it's been a little bit exaggerated as do most of these inflection points, where there is a macro impact, it impacts an asset class like commercial real estate. Our exposure to office is manageable. But we are seeing people returning back to the office. We think there will be some absorption of that repositioning of some of those. Our portfolio has generally higher quality. We're sitting on a $6 billion inbound queue to real estate. Again, as a fiduciary, we have responsibility to work with those sovereign wealth funds, those large institutional investors to find that right inflection point when we want to put that money to work. But I feel very good about the asset class long term. And again, real estate has never been immune from market cycles. The other option is around equities, I think, again, good opportunities. We have a very strong mid-cap, small cap and international platforms, both international, domestic, international fixed income and equity opportunities with strong track records. So again, look forward to seeing those flows. And then, as you know, when the retirement plan business, target date, managed accounts are very much in demand. It is in vogue and our performance recently has been quite strong, should allow us to attract assets into those target date funds.

Putting office aside for a second.

Yes.

When we think about flows for commercial real estate investment. And there's a lot of strategies that are not office-centric, of course.

That's correct.

And so maybe you want to say a few things about things that are going on in the commercial real estate sector that you're making -- and I assume we're seeing some positive fund flows for you as well. There are -- there's hunger for those strategies, and it's positive right now.

There really are, as you say, office is one part of it, but life sciences has had a significant growth. Warehousing, it's not a sexy asset class. But as you think about the repositioning of not only the U.S. economy, as it relates to commerce, but global economies, I mean, you travel around the world, you see Amazon facilities. It has changed things dramatically when I think about data centers. We're a large developer of data centers and again enjoy very strong partnerships with large pools of money again, whether it's large endowments, whether it's sovereign wealth funds, large defined benefit plans, they're looking for alternative asset classes. They're looking for select opportunities like cold storage, like data centers. These are all subcategories of commercial real estate. What makes Principal a little bit unique. As I said earlier, we've been in that business for over 80 years. We have our people on the ground in those markets globally, identifying the right opportunities. Every Friday, I convene our investment committee as the Chair. We have in-depth conversation. And when you hear these market professionals talk about whether it's Denver or L.A. or international locations, it reminds you of just the science that goes into the asset selection process of commercial real estate broadly defined.

And I think back to office, this question when we know the answers. There's a lot of nervousness around it. But in my mind, maybe you agree, maybe you don't that we'll know the answers when we start seeing demand for money coming back into the sector that people want to invest in the office class of properties again. What do you think the time line is for seeing new money we put in the work in that sector?

Million-dollar question, right, or maybe it's a billion-dollar question because we've gone through peaks and troughs of real estate every 8 to 10 years. It's just part of it. This one brought on by the pandemic changed perhaps forever the actual dynamics of what it means to work from the office. So if you have anybody in the office, you still need office space, whether it's 3 days a week, 2 days a week or 5 days a week. So I think there will actually be more renewals, maybe a smaller footprint, maybe more shared workstations. But you've already started seeing some very large corporations start demanding that it's back to a 5-day work week. So I don't think by any stretch of the imagination, this has been settled yet in terms of what is the office consumption rate, absorption rate really going to be. So I think location is going to matter. I think property type is going to matter. But if you've got high-quality, well-situated commercial real estate assets in the right markets, I think it's going to be likely a better outcome than what you might think.

And in terms of -- I'm thinking of market for investment property, how much money is there on the sidelines that's underdeployed right now?

I think it's -- I couldn't put an exact figure on it. but it's hundreds of billions, trillions of dollars. I mean there is a lot of money sitting in money market. Balance sheets are very strong for corporations. I mean, look at the cash that sits in some of these large tech companies. I mean, there's an enormous amount of capital. I think that the threshold for organizations has been moved up. I think as part of capitalism being a publicly traded company, companies are being held to a higher standard about how you deploy that capital and what the return profile needs to be. But if you think about the sheer demand there will be to digitize the global economy, it's going to be enormous. It is going to improve things from an efficiency perspective. It's going to improve the customer experience. It's going to allow us to deal with this massive shortfall of labor that we're going to have, not only here in the U.S., but around the world. But to get ourselves positioned, the amount of investment we'll have to make in infrastructure and data centers and programming and really getting our arms around generative AI and adopting these natural language systems to each of our respective organizations, the regulatory oversight that's going to occur. There's going to be a demand for people and deployment of a lot of money into the economy to drive this next generation. My internal comments on this, if we thought the industrial revolution was a big deal, I think the digital revolution will make it look actually quite insignificant and small.

You said around the world, Principal does have some very significant non-U.S. assets. Can you talk about the positioning and growth opportunity for Principal in those geographies where you have boots on the ground?

Yes. So -- and that's another sort of benefit from our combining of Principal International with Principal Asset Management. Because we're in 80 different locations and the boots on the ground are about a dozen different locations, and it's where we've identified emerging markets typically where there's going to be a strong middle class, where the products and services that Principal has been successful and in the U.S. will likely take place. So you look at big economies like Brazil, like Mexico, certainly China and Malaysia fall into that category of where they do have a rising middle class. Now the ride to get there, it can be a little bit bumpy. But over a long period of time, we know that the demographics favor those companies doing business in those countries that can appeal to the middle class small- to medium-sized businesses that they are going to find a larger percentage of the population with discretionary income to set money aside for long-term retirement savings. All of that thesis still holds up together quite nicely. To the extent we can leverage technology from the U.S. into those markets, to the extent we can leverage our joint venture partnerships around the world and to the extent we can take the global products that are being managed within Principal Asset Management to every one of those locations is all efficient and effective and in demand for those markets. So I think the big growth opportunities will be around Brazil. I think we'll see a lot of growth in China. I do not count China out. China is still a formidable global player, a very large economy. And they've got to go through their groin pains, but I suspect long term, they'll continue to do quite well as they continue to emerge as a more mature economy as opposed to an emerging economy.

Pivoting a little bit to Central America and South America. We talked a little bit about political situation in various countries. There's elections that are going to happen in Mexico this year. Obviously, in -- Chile is always very political in terms of viewing of pensions and whatnot. And what are the risks, what are the opportunities, I guess, down there?

Yes, that's where this pendulum continues to go back and forth. And if I think about what Pinochet had put in place back in the '70s for Chile, he got away from a PAYGO system. And if you look at the AFP model in Chile, it's probably one of the most successful systems around the world of compulsory plans of money having been set aside. It actually proved to be one of the most stabilizing factors during the pandemic. As you know, they were able to take out 10% 4 different times, so reduce those account balances. So when you step back and look objectively like Chile very specifically, the system worked. And you had a change in government. And as a result of that sort of liberal bias, there were 2 things that they were trying to accomplish. The first one, of course, as you know, was to rewrite the constitution for the entire country and it failed miserably. People just weren't checking off on that. That wasn't something people were willing to sign up for, and it was rejected out of hand by voters. The second bite of the apple has been focused around the retirement. The retirement AFP model. And again, when you do the surveys and you listen to the people of Chile, they tell you a couple of things. One is they want their choice in who their provider is. Number two, they want choice in who the investment manager is. The third leg of that stool, which is under pressure, which was to take new contributions and allocate a portion of them to a PAYGO system. And again, voters have said that does not appeal to us. So the final chapter for AFPs in Chile has not been written yet. And it's still under debate, but Principal and the other AFP providers do communicate regularly to regulators, to elected officials to continue to make the case that this system does require some adjustments, but an expression one of our senior executives used to use years and years ago was, don't throw the baby out with the bathwater. This is still a very viable system. You mentioned Mexico. Mexico is a little bit different in that those decisions had already been completed. And that didn't have as much to do with the structure as it did some maximums on what you could charge. And as a result of that Principal needed to, and we did make adjustments in our cost structure to reflect that we would have less revenue coming in on those Afore accounts. And so again, building up scale, leveraging technology, being more efficient, adjusting compensation to distribution it takes a couple of years to get it right, but we'll continue to work our way through the impact it had on having reduced it. At the same time, that compulsory model increased deferrals between now and the year 2015. Those deferrals will more than double over that period of time. So on one hand, we have less revenue coming in. But on the other hand, we have more dollars coming into the system. And because it's compulsory those dollars will be there.

And there's low political risk in Mexico even if there is a change in the ruling party?

I think no different than the U.S. I think everywhere around the world, these are the kinds of things that are constantly reviewed. But you have to ground yourself in this and that is around the globe, people want to make choices around their investments. They like the idea of having a personalized account, and they generally don't think government is in the best position to manage the assets or to administer it. So to the extent that, that continues to be the case, we still think there's a big role for the private sector to play in supporting these countries and their citizens to achieving financial well-being and retirement. And that's what this is all about. I mean there's a massive demographic. You see it right here in the U.S., it's baby boomers, this year 2024, is the peak year. Because the peak birth rate in the U.S. was 1959. And when you bring the math forward, we'll have 12,000 baby boomers at every single day today, retiring. And that will happen for the foreseeable future until this sort of wanes down back to our referral service retirement plan business and some of the pressure on cash flows. People do -- I mean they did save these last 30 years so that they could draw down these dollar amounts in retirement. And the good news is because of it was a tax deferred status because they had the power of compounding growth individual account balances have just -- have performed quite well for, in particular, the American savers.

And then I don't know if there's any questions in the audience, but just one last one if there's no questions, and there doesn't seem to be. In that outlook, can there be de novo winners -- or at this point in time, are the businesses that are set up for the opportunity for growth the ones that we'll see emerge as the winners in the next 10 years or so?

You're talking about the providers like Principal?

Like Principal. You already have to be there to win or will there be new comers who can come into the system in a lot of these emerging opportunities?

There's nothing like starting a baseball game, if you're already standing on second base. I wouldn't want to be sitting in the dugout. So I do think having scale and capabilities and understanding. Again, we do enjoy scale in the markets in which we compete. We believe that the markets that we're competing in are the right markets. We have strong capabilities today. And I think about our retirement plan business, deferred compensation, non -- employee stock ownership programs. There's a huge -- and I've been saying this for decades as long as we've been a public company, defined benefit plans are going to be around for the next 40 years, right? There may not be a lot of new plans, but you have to manage those assets. If you're going to manage those assets, you need the capabilities and services to provide recordkeeping, actuarial services. There's a lot that goes into that. So you don't just acquire that overnight, and Principal has a lot of proprietary capabilities around the recordkeeping consulting, distribution, significant distribution relationships with great organizations like Bank of America and many other third-party distributors. We work with literally hundreds of thousands of advisers in the U.S. We have three of the largest banks as joint venture partners outside the U.S. between China Construction Bank, CIMB Group and Banco do Brasil. Don't underestimate the power of those distribution capabilities. So yes, we have a very strong foundational competitive advantage and having reshaped our portfolio of business in the last 4 years, we're more fee-based than we are balance sheet-based. Having said that, there are balance sheet businesses like our pension risk transfer business that fit hand in glove with the rest of our retirement business. And again, it's great for asset management. It's great for our spread business and it provides us a great ballast inside our general account, which is kind of a $75 billion general account.

Great. Well, thank you for being here, Dan. Hopefully, everyone here will get a chance to talk to Dan individually. And please give me a hand.

Thank you. Appreciate it. Thank you.