2023 KBW Insurance Conference

Sep 6, 2023

All right. Good morning, everyone. We are going to get started with the next session. I am Ryan Krueger, and I cover life insurers for KBW, and it is great to have Unum with us. Sitting next to me is Rick McKenney, President and CEO, and to the far right is Steve Zabel, CFO. We also have Matt Royal and Nate Burns from Investor Relations in the front row. I will kick it off. Unum had very good first half results. You raised your guidance for 2023 after the first quarter, and then after the second quarter, you raised the guidance to the higher end of the new range. I was hoping to just start by providing some opening remarks around the company's performance so far this year. Great. Thank you, Ryan. It is good to have all of you here with us today. Steve and I are glad to take you through Unum's results, and it is good to be here at the KBW Insurance Conference. It is always good to be here coming out of Labor Day and looking towards the last half of the year, or last quarter and a bit. I think if you look at what we talked about at our second quarter earnings call, which is representative of the full first half of the year, we have seen some very good results in the company. I would start with the top line. If we get into a world in 2023, post-pandemic, we saw some really good growth rates. Our expectations of 3%-5% growth coming into the year, we were right around 4% for the first half, so that looks good from the overall top-line perspective and that is good broad-based growth across the company. Our margins have looked exceptionally good. As you mentioned, we came into the year expecting relatively flattish earnings growth first quarter based on what we saw. We increased that to 10%-15%. Coming out of the second quarter, we actually took expectations, just saying we expect to be at the top of that range given some of the outperformance that we saw in some of our lines coming through the year. The overall earnings picture, the growth trajectory looks very good in the company today. I would also say that is backed up with a very strong capital position that we saw. With the movements that we have seen in interest rates as well as just this good performance we saw through the first half of the year, capital levels of an RBC of 450%, which is the highest we have seen, and then cash over $1 billion. Really good overall baseline as we look to the second half of the year and executing, continuing that growth trajectory, continuing to deliver good margins and as we wrap up this year, even looking out to 2024. I appreciate that intro. I think it is a good time relative to the expectations, but certainly a lot of execution here to happen in the second half of the year. Great, thanks. Well, disability has definitely been one area that has been particularly favorable. I was hoping you could talk a little bit more about what are the key drivers that have been leading to that, and also just how sustainable you think they are. Yeah, I can take that, and thanks for having us here today. It's great always to be here with you, Ryan. I take you back even before the pandemic and some of the trends that we saw in our long-term disability, our group disability line, and it was really one of gradual improvement in recovery rates within that block. We think we have best-in-class teams back at the home office, best-in-class technology to really manage that book. What you would've seen is continued improvement there. When we got into the pandemic, we had some acute things that impacted the results. The most specific was just around incidents that we saw in our group disability line, and a lot of that was directly related to COVID, but then also things around behavioral health and other items that really elevated our loss ratio for a period of time in maybe 2 to 3 quarters. What we've seen on the kind of back part of the pandemic and coming off of the pandemic is recovery rates have continued to increase, and we're very happy with where those are. They've stabilized here, I would say, the last couple of quarters, but incidence rates have come down quite a bit since that period of time. We're really seeing the combination of favorability across both of those dimensions. As Ryan said, we've had loss ratios on our group disability line that's right around 60%, and those are the lowest I think we've ever seen in that block. The question becomes sustainability and how we're looking forward to the back half of the year. We feel good about the sustainability, because we understand how we've worked the block to get recovery rates to where they are today. We're back more in line with our expectations for incidents, and we've seen that now for a quarter or so. Feel good about the sustainability. If we look to the back half of the year, we've talked about the fact we think those loss ratios will stay in the low 60s for the remainder of the year. The big question that is still out there is around pricing and what that might look like, and I think that might be a follow-up question that we can address. But that is the question we get asked a lot about investors is, given those margins, what do we want to do from kind of a commercial strategy perspective? I guess, yeah, let's go to that. That is the follow-up now. So how are you approaching renewal pricing on disability at this point, just given how favorable these results are? Is there much pressure competitively to pass through some of this outperformance to customers, or do you look at things more holistically? Yeah, maybe I could talk a little bit about what we see. You first have to set the context of the market that we are in today. So when you look at the outperformance that we have seen through the first half of the year, I would say relative to the competitive base, you did not see as much of that in the first quarter, but you clearly did in the second quarter. I think a lot of our competitors had some good results. So when you think about that overall, it is important as we look forward, the couple of factors. One is the competitive dynamic. So we will be competitive in the marketplace today. Our disability business has one subset. It is really about the broader portfolio, but as a subset, we have been a market leader. We know what we are doing. As Steve said, in that business, we have done really well. But we also have to look at the competitors that are out there today. I think it is a fairly rational bunch of competitors that we deal with today, and so we all compete very hard against each other, but at the same time, it is not an outlier in that space which does that. So over time, when we think about pricing and how we bring that back, we think about a couple of factors as we price. One is we take experience into account as we bring that pricing out. So these are good results, although they have seen that in the first half of the year. It is a little bit slower process to bring that into our overall pricing dynamic. Then you think about how these blocks renew. It takes time. Certainly, in the smaller size, renews more slowly. Some of the larger cases may renew more quickly, but I think that this is something that will have to play out over time. I take you back to the point that we're going to be competitive in the markets today, and we'll have to see how that plays out. But we're very happy about the returns that we're seeing in our disability line. Not to focus too much on that, when we go to an employer, we're thinking about the whole basket of things that we bring to them, the disability, life insurance, the leave management, which is increasingly more important for that employer, as well as our voluntary benefits. It is a broader package, but very happy about what we've seen in disability. In group life, can you talk a little bit about how that line is performing at this point as we've moved into an endemic phase? Are you raising prices on that business? I guess getting back to Rick's comment, do you put all these different lines together and come up with one overall price when you're going to customers? Yeah. I'll just start with the experience that we've seen more recently in our group life block. If you go back to the first quarter of the year, we did continue to see some experience of COVID-related deaths in that first quarter. It was pretty minimal, and really when we projected out, we did project out that there'd almost be an endemic impact from COVID on the group life block. If you roll that into the second quarter, then we saw a very insignificant impact with that block. Our insureds are mostly in the kind of working age population, which I'd say hasn't been hit as much more recently, specifically around deaths related to COVID. We feel really good about it. Now, with that said, we do look at pricing. I'd say it's a little bit different depending on what part of the market it is. At the upper end of the market with our larger cases, we always look at experience. We look at multiple years of experience when we come through our renewal process, and then we also do take an aggregate view of pricing. I'd say on the margins, we've made some moves on that. Nothing that would be real significant, but it's very case-related. Then it does play into the other products that we may have with that client and what the experience has been on that. It's a more holistic formula, and I'd say it's also been a pretty modest impact on our pricing, generally speaking. Thanks. I guess shifting more to the top line now, your ongoing operations premium growth has recovered to the 4%-6% longer-term range that you typically talk about. Can you talk a little bit more about the underlying dynamics that you're seeing right now and what the growth environment looks like? Yeah. The growth environment has been good for us, and I think that's the underlying capabilities that we're delivering. Back to the overall expectations, this year, we came into the year expecting 3%-5% premium growth. Part of that's still some of our lines coming out of the pandemic take a little bit longer to heal, namely the voluntary benefit lines. But longer term, we've actually put out there 4%-7%. Right now we're just over 4% for premium growth. We want to see that continuing. I think when we see a premium growth rate in the 4%-7% range at the margins that we're looking at, it's a very compelling business that we're part of today. If you go across the board, I think our growth feels good, both from a new sales that we're bringing on the books, but also our persistency levels remain very high. People are staying with us, and some of the stickiness that we've created through some of the offerings that we bring to them are really important. When you go by both our group lines as well as our voluntary lines and look internationally as well, we've seen some very good top-line results, and it's up to us throughout the course of the year as we get to 1-1 renewals next year, making sure we keep on that really strong growth trajectory. Doing so in a disciplined way, making sure that the margins follow that strong growth rate is how we look at the franchise in 2024 and beyond. Can you talk about how much of a contribution you're seeing from natural growth in the traditional group lines? By that I mean wage and employment growth. How has that trended in recent years, and how does it compare to what you'd expect longer term? Yeah, I just go back to historical levels. When we talk about natural growth, we really have relationships with clients where as they bring on new employees as well as when they increase wages, that really flows into our premiums where we have kind of wage-linked and just employment-linked types of products that are employer paid. I'd say historically, that probably was in the 2% range annually, 2% to 2.5% range. During COVID, we did see that soften quite a bit where that growth was pretty minimal for a period of time. What we've, though, seen probably over the last year is that's been up in more of the 5% range, and so probably more than double what maybe historically we've seen. That over time will come back down probably to the historical means. But right now the labor market is still really good. There still is some compensation inflation in the market, so that may continue for a period of time. We don't really plan on that longer term as we think about pricing and just profitability of the block. Then in the voluntary lines, I know, Rick, you mentioned that it has been slower to rebound, both in Colonial Life and the Unum US voluntary lines. Can you talk about why that is and what the trajectory might look like from here? Sure. There's a couple things that happen in the voluntary space different than in the group lines. So when you think about the group lines going back to the pandemic, as things came down, as employment came back, those group lines recover very quickly because it is a population type return. In the voluntary markets, there's really two steps to the process. One is engaging with the employer and making sure that they want to provide voluntary benefits to their employees. But then there's that second step of actually employee uptake. They've got to select those benefits to be part of that. So most of that business is actually selected as opposed to just provided. The access is provided by the employer, but it's up to the employee. Actually, our group lines or those that are associated with our Unum brand have actually recovered pretty well in the latest markets. They've gotten to those customers more quickly, the uptake has been faster, and the tools that they're bringing out there have actually recovered. Our results have been pretty good in our Unum-branded voluntary benefit side. The Colonial Life side takes a little bit more time because these are much smaller cases. You've got to get out there in front of customers on a more one-by-one basis. It's taken some time to recover, both with our sales force. We have 14,000 agents that are out there today integrating with the fabric of America, and so getting them out there, talking to them, talking to how they can provide benefits to their employees. Ultimately, the next step is getting employees to sign up for those benefits. It just takes a little bit longer. The franchise is in a good spot. In fact, better than it was going into the pandemic. There's a lot more electronic tools that the teams are using out there, but it's taking a little bit longer. The growth rates we expect over the course of this year is kind of a 1%-3% premium growth, which is good, but this is a line of business we had experienced pre-pandemic, which would've been high single digits. The goal is how do we get back to that level? It takes a little bit of time. We're putting the right pieces in place, but I think that's one that we'll look forward to because it's a fantastic franchise. The margins have continued to be very good. This is about how do we get back to growing the top line in an area that we have come to expect prior to the pandemic. Voluntary benefits are still a very big part of the franchise overall, and we're excited about the prospects. I guess when you think about the 4%-7% growth target, it sounds like right now you're probably getting a bigger contribution from natural growth than you would normally expect, but the voluntary lines also haven't fully rebounded. Would you expect those to roughly kind of offset each other maybe as we move forward over the next couple of years? Yeah, I think generally speaking, our longer-term target is still 4%-7% premium growth or somewhere in that range. I think you're right. The impact from natural growth will come down a bit, but we think we're on a good trajectory for the other lines to be able to grow at a faster pace. As Rick said, Colonial used to grow in the high single digits, and that would be our aspiration to get them back in that range. Yeah. Now, moving to the U.K., you've seen pretty strong growth there, and also an improvement in underwriting results at the same time. Can you just give us an update in general on what you're seeing in the U.K. at this point? Yeah. We're very excited about our U.K. team and the corner that they've turned. If I give you a longer-term perspective of what they've faced into starting with Brexit, then moving into the pandemic and how they've come out of that, I think they've done a good job of providing new solutions as part of their product set that they are delivering to customers. Those are things around healthcare management and some of the things that we don't have as much in the U.K., given the national health service that they have there. But they've done a very good job of growing premium growth. We saw sales growth of 50%-plus. We're seeing premium growth in those lines of 10% that we see in the U.K. We see it as we've always seen as a good growth opportunity. They just have dealt with a lot of headwinds over the last several years, including interest rates have turned around and all those dynamics that we've talked about. So the team's doing a very good job bringing good services along with the core products that we offer over there to employers, and we see good growth potential that we have in the U.K. and very good returns as we would've been accustomed to going back five-plus years ago. Yeah, Ryan, I might just add on talking about the underwriting results a little bit. As we came through the pandemic, that business was a little challenged. The dynamic over there as a national health service was very important to us being able to work with customers to get them back to work. That whole system kind of locked up during COVID. So you'd have seen our loss ratios a little bit higher than we would've expected. Obviously, COVID mortality played its way through that block as well. Now that we've come out of the backside of that machinery is working pretty well again, and we've also really benefited from the tailwinds of higher interest rates. We've mentioned this multiple times on various calls that a lot of those products work over there is the benefits are indexed to certain interest rate indexes, and we back those by floating rate gilts in our investment portfolio. Many of those benefits are capped, and they cap at 5%. So with the level of inflation that we've seen over there, that's actually net net been really a tailwind to earnings over there, and you'd have seen in the last couple of quarters some pretty high earnings levels that are probably not sustainable as their interest rates and their inflation kind of work their way back down. But we disclosed in the second quarter, we thought their core earnings were probably in kind of the mid-20s million GBP, and that's really good for that business. Pre-COVID, probably about a £20 million business on a quarterly basis. We just think the core franchise and underwriting results are at or above what they were going into the pandemic. I guess, shifting to long-term care a little bit, the benefit ratio was above the 85%-90% target for the first time in quite a while. I guess can you, one, provide a little bit more color on what you saw causing that, and then if you've seen some normalization as we've gotten past the second quarter into the third quarter? Yeah. I will go back to the first quarter of the year. What we saw in the first quarter was some elevation with our incidents, claims incidents within the block. We also, though, saw higher than what we would expect for mortality, claimant mortality. So they offset a little bit. You ended up with a loss ratio that was more in the range. We did see the claims incidents elevation continue into the second quarter. As the quarter proceeded through, though, we saw that trend come down a little bit as we got to the end of the quarter. And then even into July, we saw the trend come down a little bit more. It is still a little elevated from what we would expect longer term. But what we did not see repeat in the second quarter was the higher claimant mortality. We did get a higher-than-expected loss ratio. We will continue to monitor that as we get through the third quarter. We are in the process of closing the books for August, and then we will be back after we close the third quarter to really talk about how that played out. But I will say we were happy with the trend that we saw, which did also continue into the third quarter. Do you have any sense of what caused it? It seems actually consistent across many of your peers, said a very similar thing. Yeah. I do not know if it was perhaps pent-up demand from seniors that had not entered facilities. But was there any consistency in what occurred? Yeah. We looked at a lot of different ways. I'll say the incidence was pretty consistent across any segment that we would have, whether it's geographic or whether it's situs. We didn't see anything acute there. We did have lower than normal trends during COVID of our claims incidents. It's hard to tie that back and say there's a direct correlation. With this block, it doesn't take much related to how many more claims you might get above your expectation to drive a higher than normal loss ratio. So we're monitoring it. I would say statistically, we haven't drawn a ton of linkages that there was somehow backed up inventory, but it's something that we'll look at as we close out the third quarter. Separately, in long-term care, could you give an update on your progress with LTC rate actions? How far along are you relative to the current plan or what was assumed in your reserves? Yeah, and that's probably the best way to think about it right now, is we have a set of best estimate assumptions right now that back our long-term care GAAP reserve block. Going back to last time we reset that, there was about $800 million of present value that was anticipated in that reserve. We've had a really good year. We announced earlier in the year we got a large approval from California, and that took us to probably about three-fourths of the way through, and we've continued to build off of that as the year has progressed. So we're getting in that kind of 80% range. The one thing that I would say about these rate increases, it's not really a program that starts and stops. You continually assess the blocks. You continually assess how different segments of the block's performing, and we'll continue to go back to regulators when we think it's actuarially justified to get rate increases. The $800 million could change over time, but we feel really good about what's in the reserve right now and the progress we've made. Just generally speaking, the environment is really good with regulators. It's continued to improve. We haven't really seen a slowdown philosophically during COVID of them understanding the need to approve these rate increases. Just one follow-up on that. Do you see more opportunity based on the current block's performance to ask for more after this, or would you need to see something change in the block? Yeah. You need something to change and sustain over a longer term period of time. Okay. We really look at our assumption set from a best estimate, the same way the assumption set that we file these rate increases, what they're based on. So, we keep consistency there. If we find a need to change it over time, we'll change it. But that period of time experiences isn't something that we make major changes. Then on LTC interest rate hedging, we have rates much higher, much better spot now. Can you go through your interest rate hedging strategy and how much protection it's providing at this point? Also, is there more that you can do to lock in this favorable rate environment? I know, I think I already asked you this on the call last quarter. Yeah but I might ask again, just with this negative IMR proposal with the NAIC, could that actually allow you to do more hedging because it would give some sort of a little bit of a cushion against Right the risk of rising rates? Yeah. I'd just start off by saying we are thrilled with where we've moved the hedging program over the last year. We're up to about just short of $2 billion notional that we've put on this block. The construct, we use treasury locks to do that, which in essence locks in the treasury rate. We look out for a new money horizon of 5 years. We really don't go any further right now with our program and just look at the new money that will be available for us to invest during that period of time and put these hedges on. We've already started to kind of roll through some of these that have matured, and we've been able to invest at the locked-in rates. So we're really happy with how that's progressing. The other thing that we have begun, though, related to interest rate management is we're starting to do a little repositioning of our long-term care portfolio. What we're looking at are those investments, fixed maturity investments that we have in the portfolio that may have shorter maturities. Just think anywhere from 2 to 7 years out that those will start to mature. A way to lock in those rates, frankly, is just to take advantage of current interest rates and reposition part of the portfolio into longer-term fixed maturity portfolios. So in essence, extending the duration of the portfolio, being able to take advantage of current interest rates. So we've begun that process. We're going to update a little bit more when we get into the third quarter earnings calls, but we're pretty happy about doing that. All that said, the new proposal that was approved at the NAIC on the margins is helpful because, for those of you that aren't as familiar, it allows you to admit negative IMR that's generated from taking losses and selling out of your investment portfolio up to a limit based on the amount of surplus that the legal entity has. That does allow you, given where interest rates are today, to sell out of positions that maybe are shorter duration at a loss and not have to take the upfront capital impact of that. That is in our thinking, but right now we're in a position where negative IMR isn't an issue for us. We haven't had to sell out of portfolios due to liquidity issues over the last year. We feel very comfortable where we are. But yeah, I'd say on the margins, that will be helpful and also help us think about maybe extending the hedging program as well. I think it does provide more tools, right? There are different types of hedging instruments you might be able to do, which we're more constrained in that environment. But I think as Steve said, right now we're focused on a little bit of the repositioning. We'll talk more about that. Yeah. Great. Then you get asked this all the time, but just what do you feel like the impediments are to an LTC risk transfer deal at this point in time? Also how much of a priority is it for the company? Yeah, I just start with the second piece of that question. It is a priority for the company. I think that our long-term care block is very different than everything else we do across the company. We are in the group space, so we're an ongoing business. This is a closed block because it is a reason. We shut it down, actually closed the block to new contracts back in the early part of the 2010s. I think that having this risk transfer is important. That's kind of the goal longer term. The impediments to that is finding the right counterparty. What counterparties are looking at. It certainly helps over time as more data comes into not just our block of business, but the industry as a whole, and their capacity and their knowledge around understanding more about this business. Similar to what we did with our individual disability closed block back in 2020, you have to have counterparties that are educated around the risk, that understand the dynamics, that can look into the depths of ours, and understand what the bid-ask spread could look like. That's a process that we go through. I think importantly for our internal teams, we are ready. We've done the dissection of our blocks of business different than we would've said maybe 5 years ago. We have the ability to parse those different blocks of business for different risks that may be afforded to a different counterparty. Those are all the things that we can do. A deal, a transaction will take time on this space. It is a more complex liability than some of the other liability transactions you've seen out there. But what we were able to do on our individual disability block in 2020 at a really good transaction is something we look to say, "Its time will come." We're working on it then. We don't see any particular impediments. It's just going to be time of that bid-ask spread getting in a reasonable range, and that bid-ask spread narrowing really comes down to counterparties that are looking into the details of our blocks of business and understanding what that looks like. As you said, we have been asked many times, and I think we'll be in the same spot that say, we're going to keep working on it and there's nothing imminent, but certainly, we'll be prepared when that time comes. Just one more question on that. There's different ways you could go about it. You could try to do a slice of your whole block that would be somewhat representative of the overall block, or you could carve out specific pieces that the counterparty might want more. Do you have a view on which one of those strategies would make more sense for you? Well, I think the realistic part is we've got to look to the counterparty and what they're going to want. As much as we would want to do different pieces, it really is going to be how we work with a counterparty. Different counterparties want different things. Some will be in purely the liability reinsurance side, some will be more on the asset side. We need to be, I think, responsive to what the counterparty might want in that. Shifting a little away from long-term care again. You've talked about $1 billion of annual free cash flow generation from your core business. I think that guidance was given at the beginning of the year, and since then you've had a much stronger disability result. Is that $1 billion still roughly the right number, or is there upside to it because of the favorable performance? Yeah, I would say you can just look at our results so far this year. We're just south of $600 million of statutory after-tax earnings within our traditional life insurance companies. So I would say we're on pace to exceed that. We'll have to see how the back half of the year plays out. The one thing that I would note that's important is statutory income doesn't translate immediately to dividend capacity and cash available to holdco. You go through your annual process, and so that would be something that we would look to take out of the operating companies next year. Pretty much we know what our capacity is this year for dividends. But yeah, all things being equal, that should give us a little upside. Once you finish funding the LTC premium deficiency reserve this year, the combination of the ongoing business cash flow and your current balance sheet should give you quite a lot of capital flexibility. How are you thinking about the priorities for using that capital as we get beyond this year? Yeah, no, our capital flexibility today is quite solid. Coming out of the pandemic and the capital that we built up at the end of the quarter, 450% RBC, highest levels we've seen. Over $1 billion of cash we've got available to us. As you say rightly, right now we're focused, 2023 is the year we're going to fund the PDR to a level where we won't have to readdress that in the next several years. That's priority one. But past that process, and as Steve said, the generation is really strong. We're going to need to put that money to work. We think about it very consistently with it's about growing that top line, those premium level growth, and making sure we're investing in the right things are important. That's both from an organic perspective, and we would even think about inorganic or M&A means to actually speed and enhance the levels of our premium growth across the company. That will be really important. When we think about past that, certainly raising our dividends. This will be the first quarter where we paid out a dividend at a higher level of dividends, and the company continued to be growing at a very steady pace. We'll look to that. Share repurchase is something that we increased by about 50% starting in this quarter from an annual level of $200 million to $300 million. Those are all things that we'll have to readdress as we get into 2024 because the capital generation is quite good. We'll be beyond the PDR funding levels that we've seen, and we'll have decisions to make given the capital levels that we've seen. But growth will be first and foremost, but certainly, we will address what we see from a capital deployment perspective as well. In terms of M&A, can you give any more color on what types of things might be a good fit for you at this point? Yeah. We've been actually pretty consistent in terms of things. It gets back to what I said, it's going to be things internal to the company. When you look at the breadth of our portfolio and the areas we're participating in today, we're pretty happy with that. We don't see gaps in the portfolio of areas we need to get into. Unlike if you go back seven years ago, when we bought a company in the dental space, that was a gap in the portfolio that we filled in. It's going to be things that make us connect closer with customers. That can be a technological capability, it can be a distribution-type capability. All those things that surround what we do today will make us faster, and things that we could do organically, but we'll see those benefits a little more quickly with M&A. That's both here domestically, as well as in our international operations. It's about how can we get a little bit bigger, a little bit faster, by using M&A to do so. I'm going to pause here and see if there's any questions in the audience. If not, I will continue. One question that comes up at times is just how to think about the economic sensitivity of your core business, I guess particularly disability underwriting. Can you provide some thoughts on that? Yep, I can take that. We probably think about it in three buckets, just how the economy impacts our business. We start with our credit portfolio and looking at our investment portfolio, what credits we're exposed to. We're a credit shop. We believe we create value with our credit research and improving that really over multiple cycles. That's one place that we look at that. The second place would be just the pace of growth, and we've talked about natural growth. That can slow down a little bit, and we did see that slow down during COVID, and have seen that in the past slow down a little bit. We still grow, though, as a company. It just might not be at the same pace. Then the third would be around disability. We have seen some impacts there, mostly around submissions through other economic cycles, where those might increase for a period of time. At the end of the day, we underwrite for eligibility and for fit for purpose. Those claims that come through our door are only going to approve those claims where the person truly is disabled and truly should be receiving benefits on our policies. I would say that has been a lesser impact as we have seen other cycles. It is something we think about. As we came into this year, we did all of our planning based upon a slower, almost a mild recessionary environment, which we have not really seen. That is something that we factor into our growth trajectory and just how we think about our business plans. One other one is, it seems like you have invested quite a lot in the business internally to help growth and differentiate yourself from peers. Could you maybe give a few examples of things you have done that you think has separated you from peers in terms of these investments? Yeah, I think in our markets, I would highlight a couple that we have talked about. One is in our business today, leave management is a very important capability. Employers are out there, certainly they want to have the benefits package we have, but leave management and the proliferation of leave types is really important. We have actually for the last several years, been investing in technological platforms and how we bring that to the market to help employers. That is something that is still coming online as we speak. I think just even the discussion around that is an important capability. The second piece I would mention is the connections that we drive. We talk about it as HR Connect, and that is how we actually streamline the communications between ourselves, the HRIS platforms, and the end customer, and making that a lot faster. Those are areas we have invested in over several years that are coming online more and more, and those are differentiations, I think, in the market today that are important. Just the sheer strong capabilities, as Steve mentioned, around managing our disability claim book really well, taking good care of our customers, and helping people get back to work. Those are capabilities which I think have differentiated us in the past and will continue to differentiate us. Yeah, the only thing I'd add is it's a differentiation on the front end when we're selling new cases into a client, but also to renew a client, because the best new business is an existing customer to be able to renew them. We're really seeing the client become much stickier when they really see the benefits of some of these technologies that we've been able to put into our combined ecosystem. That's really the way we're thinking about it, is not us communicating to them, it's us having one ecosystem that it's really part of just one system of how the workflow works. I think these investments combined with increased staffing caused some pressure on your expense ratio in the last few quarters. But would you say we've kind of hit the peak there and- Yeah you expect some improvement in the future? Yeah, we mentioned back at Investor Day that we were going to peak sometime during the year. That would still be the plan. Then we've proven over time we can bring down expense ratios just by working smarter, incorporating productivity. A lot of the things that we talked about of winning in the market, those do also have productivity impacts, that we're able to be more efficient with how we just administer business. All right. Great. Well, we will wrap it up there. Thank you very much to Rick, Steve. Thank you. and Unum.