Good morning. Welcome to Voya Financial's Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mei Ni Chu, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us this morning for Voya Financial's Fourth Quarter 2024 Earnings Conference Call. As a reminder, materials for today's call are available on our website at investors.voya.com. We will begin with prepared remarks by Heather Lavallee, our Chief Executive Officer; and Mike Katz, our Chief Financial Officer. Following their remarks, we will take your questions. I'm also joined on this call by Don Templin, former Chief Financial Officer and Strategic Adviser to Voya; and the heads of our businesses, specifically Jay Kaduson, CEO of Workplace Solutions; and Matt Toms, CEO of Investment Management. Turning to our earnings presentation materials that are available on our website. On Slide 2, some of the comments during today's discussion may contain forward-looking statements and refer to certain non-GAAP financial measures within the meaning of federal securities law. GAAP reconciliations are available in our press release and financial supplement found on our Investor Relations website. And now I will turn the call over to Heather.

Thank you, Mei Ni. Good morning, and thank you for joining us today. Before we turn to our key themes, I'm happy to welcome Jay Kaduson as our new CEO of Workplace Solutions. Jay brings deep industry experience and a track record of driving growth and innovation. He's been a valued partner to Voya for many years, and will be a tremendous asset in helping us grow our health and wealth businesses from our already strong foundation, while advancing our Workplace strategy. I also want to take a moment to welcome Mike Katz in his new role as Chief Financial Officer, and recognize Don Templin's significant contributions over the past 2 years. We are thankful for Don's guidance and insight. Now let's turn to our key themes on Slide 4. In 2024, we delivered strong earnings and growth in Wealth Solutions and Investment Management and an outcome in Health Solutions consistent with the update we provided in December. We maintained our focus on careful stewardship of capital, remain disciplined on expenses and continue to execute on our strategy, including through accretive investments in our future growth. In Health Solutions, our Stop Loss results for the fourth quarter is in line with the expectations we shared in our December announcement. We have taken corrective actions within our Stop Loss business, including meaningful rate increases and strengthened underwriting risk selection, and we expect a material improved net underwriting result in 2025. We're confident that our reserves will adequately cover future claims based on our January experience. In Wealth Solutions and Investment Management, we delivered strong revenue growth, margin expansion and commercial momentum in the fourth quarter and full year 2024. Earnings for Wealth Solutions were up 30% year-over-year, with revenue growth and adjusted operating margin exceeding our 2024 full year targets. Wealth…

Thank you, Heather. Before turning to our results, I would also like to thank Don Templin for his strong leadership and the impact he has made at Voya. As our next CFO, I look forward to building upon his success. Now let's turn to our financial results on Slide 9. We reported $1.40 of adjusted operating earnings per share in the fourth quarter. This contributed to the $7.25 delivered for the full year. Our full year results include alternative and prepayment income that were $0.53 below our long-term expectations. Alternative income returns were approximately 7%, improving both sequentially and year-over-year. Prepayment income remains below long-term expectations due to the higher interest rate environment. We expect lower prepayment income to persist in 2025, and have updated our guidance accordingly. Our results were impacted by higher loss ratios in Health Solutions, which offset the strong results in Wealth Solutions and Investment Management throughout 2024. Both these segments exceeded net revenue and margin targets, driven by higher fee-based revenues and cost discipline. Free cash flow conversion was approximately 90% in 2024. We expect this to continue, and for capital generation to increase in both 2025 and 2026. I will cover this in more detail shortly. With that, let me turn to our segment results. Turning to Health Solutions on Slide 10. In December, we shared unfavorable experience for the January 2024 Stop Loss business. Since then, claims have stabilized. We have set the loss ratio for the January 2024 cohort at 95%, and estimate that this cohort is approximately 70% complete as of December 31. Note that the reported fourth quarter loss ratio is above 95% due to the year-to-date true-up. We have included details on our loss ratios by cohort in our investor supplement to make this more clear. Experience in January…

[Operator Instructions] Our first question is from Elyse Greenspan with Wells Fargo.

I wanted to start with the ROE guide, right? You guys said that at 12% to 13% for this year. It had been 14% to 16%, right, with the outlook presentation last year? So I guess, the moving pieces to me, right, seem like the weaker Stop Loss result, the investment in leave management. You also are bringing on OneAmerica. And then you -- Mike, you did say, within your prepared remarks, that you expect lower prepayment income in '25. I'm not sure if I'm missing anything else there that brings the ROE down. And then would the expectation be that you would get back to that target range of 14% to 16% in '26 when Stop Loss gets back to target results?

Elyse, it's Mike. Thanks for the question. And maybe I'll step back a bit, but I think you've got the majority of the pieces here. We did not give a specific EPS guide, but we did give a sense through the free cash flow generation to really think about where EPS might land in 2025. I would think about our 90% free cash flow generation is closing up that $7.50 to get at a EPS of approximately in the mid-8s, mid-$8. If you do that net of growth investments, that $50 million we talked about, that's primarily on leave. You're going to get slightly less than $8. As it relates to the ROE piece, I know we have a guide of 12% to 13%. I would think about 2025 as on the high end of that range. And if we adjust it for the growth investments, we'd be above that 13%. Now, Elyse, maybe to your variances, I think you named them, but let me just hit all of them to make sure we're complete with the answer. So first, you mentioned the leave investments I just did as well. I would also note, in Health Solutions, we are on a journey on enhancing value to our customers around voluntary products, that does affect the loss ratios in 2025. Second, within Wealth, we are -- we do have additional spend that's aimed at implementing over 20 billion of new plans. Outside of OneAmerica, we're also expecting fee income to increase, and that to be offset by lower spread income. The third piece is share repurchases. We do give a sense of that. So I think you have that piece, Elyse. And then finally, as you mentioned, on prepayments, we're guiding to that being down year-over-year, approximately $25 million. I would highlight this is really not economic. It's just the timing of investment income where prepayments accelerate that versus over time.

Okay. And then on buyback, given that it's more second half weighted, is the expectation that you just are going to buy back a very minimal amount of your shares in the first half of the year? And then, Mike, just on that second piece of my last question, would you expect the, I guess, I know you're not laying out '26 ROE right now, but would you expect kind of to go back to that 14% to 16% next year?

Yes. Elyse, thanks for coming back to the ROE piece. So as I mentioned earlier, if you adjust for the leave investment, you'd be north of 13%. The other piece is we're trying to anchor to this free cash flow generation as we shared in the material. We're not only expecting a meaningful increase in free cash flow generation in '25, but also 2026. So absolutely, the journey is to get back to that long-term 14% to 16%. As it relates to just share repurchases, I would think of them primarily focused in the second half. It was for the reasons Heather mentioned on some really important key growth investments, the OneAmerica piece, the Sconset piece and the leave management piece I just mentioned. I would though point your attention to how we thought about capital. You look at 2024, we returned over 100% of free cash flow through share repurchases and dividends. We mentioned approximately 50% this year. But over that 2-year period of time, we're talking about approximately $1.2 billion of return of capital. Growth investments, they come when they come. We're going to be opportunistic on them, but I think our commitment to our shareholders is that we're going to do that when we see long-term shareholder value, and we see it with all 3 of those pieces.

And Elyse, I'll just reiterate Mike's final point is that we're committed to returning capital to shareholders. And as we've been talking about for a couple of years, we want to continue to be balanced in driving value in the business through the commercial momentum and being opportunistic with investments, whether they be organically or being opportunistic around inorganic.

Our next question is from Tom Gallagher with Evercore ISI.

First question is the $50 million strategic spend on leave management and disability admin. Will any of that recur into '26? Or can we zero that out?

Tom, it's Mike. I would think of it primarily impacting 2025, and part of that is that we're expecting not only revenue from the leave administration, but also from short-term disability that we'll be assuming in 2026. So we see this as kind of more of a breakeven in 2026 and then generating positive earnings in 2027 and beyond. So I think you're thinking about it right, Tom. But obviously, as we get deeper in the year, we'll talk more and more about 2026.

That's helpful. And then I just want to ask about the Stop Loss expectation. Obviously, a very wide range of 80 to 90. And it looks like the majority of the improvement from the 95 level is risk selection, not on actually rate versus trend. Just considering, it looks like you had an unforced error on risk selection that led you into this situation. What gives you confidence that you figured out the underwriting side in a better way? Or what are the lessons learned?

Sure, Tom, it's Mike. I'm going to hit the rate increase just briefly before I get to your question on risk selection, which is important. And I think you properly gleaned that we view that as the bigger piece of the improvement in 2025. So first, on the rate increase, we did achieve a 21% average net effective increase for the January 2025 business. I would view that as an average. So when we look at some of the underperforming blocks, the increase was much higher than 21%, and we've addressed kind of that higher frequency of claims that we talked about in our pricing. On the risk selection, it really is a key focus on known claims. So think about when we see claims in the prior calendar year and making a prediction on how we think that's going to emerge in the following calendar year. And as we looked at known claims in 2023, that was a key driver of the higher loss ratio within January '24 in that book of business. To your question on addressing this, first, I just mentioned about the fact that we feel the 9% first dollar trend that's much, much higher for Stop Loss when it's leverage, that, that was adequately priced for. Second, we were holding firm on request for data. So we wanted to see the most recent data before finalizing quotes. And third, as we talked about last year, there's a strategy element of this as well and ensuring that the full team understood that the strategy was margin over premium growth, and you saw that in the results. Finally, I've worked very closely with this pricing and underwriting team at the end of the year to make sure that we're very comfortable with what we're communicating as far as the outcomes of this 5% to 15%. I might just make one other comment, Tom, just because I know there's probably a question on the 95%. We are very confident that the reserves that we established in the fourth quarter will be sufficient to cover future claims. As you can imagine, we've not only been looking at this internally, but we've had external eyes on this as well. And importantly, we're now in February. So we've had a chance to see how the January data has emerged, and that's just strengthened our confidence that what we put up in the fourth quarter is going to be sufficient to cover future claims.

And Tom, the only build I would have to Mike's very detailed response is that you can imagine, we are also looking very closely at the completion of the non-January '24 book of business with the same sense of scrutiny. And what we're seeing right now is it's following very similar trends in the prior years. And so the actions we took last year to increase pricing, we think, has held as well, but we're going to continue to stay very close to it.

Our next question is from Ryan Krueger with KBW.

My first question was on the wealth flows. I guess, can you give any more perspective on how to think about this in 2025? I think, I guess, in particular, I would assume there might be more than normal volatility from shock lapses related to OneAmerica. So just any way to frame that?

Ryan, it's Heather. Thanks. I'll take your question. So as you think about -- I'll do the quick look back on '24 before getting to look on '25. So you think about what we delivered in '24 and really, the main theme is that the fundamentals of our wealth business are strong. The 2 billion in the full year DC flows, the 98.5% planned retention that Mike mentioned. A little bit more specificity as in 2024. Our full service sales were up 17% year-over-year for '23. So just thinking about that momentum. As we take a look into '25, what we see right now is if we do that same comparison of full service known sales for '25 versus at the same time for '24, they're up 30%. So an important metric. Mike referenced the 20 billion of plans and implementation. And just for clarity, those are plans that are one, that we -- that will be funded within '25, some of which have already funded. To your point on OneAmerica, just as a reminder, the assumption on retention was 90%, so you compare that to the 98.5% of our book of business. So that will create a little bit of noise as we go throughout the year in terms of flows, but it's very much embedded into our guidance and our financials. And so at the end of the day, we do feel strong in terms of the fundamentals that we see heading into '25 across well.

Great. And then just a quick one on Stop Loss. When you include January, what percentage of claims would that typically get you to for the full year cohort?

Ryan, maybe not tracking with your question. Can you ask it differently?

You said you were through 70% of the claims at the end of December, and I was wondering what you had in January, how much does that increase that too?

Yes. No, Q4 and Q1 is really important, Ryan, with respect to just completion. I would think of us approximately another 5% to 10% complete after January. That's the way I would think about it.

Our next question is from Alex Scott with Barclays.

I wanted to sort of probe a little bit more on some of the things that are onetime in nature in '25, and I guess, in particular, Health Solutions and just the need to invest in the business. Is there some level of ongoing investment, whether it's leave or just other capabilities that you'll continue to build out? Do we need to just think about a higher run rate of expenses? And I'm just asking because my concern is there's a lot of things that seem like they went back in '26 and could make people pretty optimistic on the growth you get going from '25 to '26. But I just want to make sure I'm not missing things about ongoing investment in Health. And then maybe if you could also comment on Wealth Solutions on just the investment to be able to bring on assets and so forth?

Alex, maybe I'll start from a strategic standpoint, and then I'll pass it to Mike on the financials. So one of the reasons we wanted to specifically call out the investment in leave management is we think it's important from a transparency perspective to give investors a view of where we're investing. But I'll hit on the strategic importance of this capability. And we have seen a significant trend in group insurance where customer experience really matters. It's no longer just about having the right price or provisions within your insurance products. And so investing in leave and the fact that employers -- this is really one of the primary decisions they're making around group insurance and very often, the bundle is going with who wins on leave. And that's really evidenced by some of the stats we shared in the presentation that today, we think about it 100% of our leave cases actually have life and disability and 72% of our lease cases have supplemental. And we see a significant opportunity. We've been a fast grower in supplemental, and that's one where we see an opportunity to continue to grow there. And that's a key component of our workplace. And maybe very briefly on Wealth, and Jay will provide more in the coming years just as we think about our strategy. But in Wealth, we've talked a lot about taking -- making investments in retail Wealth Management and that our clients, at the end of the day, very often don't have access to a financial adviser. And so they look to what's offered through the workplace and also needing broader advisory capabilities and really out of plan capabilities. So there, we're investing in the number of advisers. We're also investing in technology capabilities to make our advisers more productive and the onboarding experience more seamless for clients that ultimately we think is going to drive growth. But Mike?

Yes. No, look, the only build I have with Heather on Health is just kind of reiterate what I shared with Tom just a moment ago, in that the question around how do we think about leave next year. Yes, a portion of those expenses will exist next year, but the offset on the revenue side as we get paid for the leave administration as well as onboard short-term disability. And so that's a key piece to think about. But on the Wealth side, I think just everything Heather said, the only thing I would say on a kind of more of a technical note is that as we give the modeling considerations for Wealth. We did include commissions and the intangible effect in the guide that -- we haven't done that before. And the reason was the OneAmerica piece. OneAmerica's obviously having an effect on expenses in 2025 and you have your normal seasonal effect across all the segments.

Got it. And maybe a follow-up actually related to the last piece there. In Wealth, I mean, if I look at the 1Q guide that you guys are pointing to, it looks a little over $200 million of pretax earnings. I think about a year ago, I think the normalized number, after all, it was around $200 million. So seemingly not a whole lot of growth there. And I get there's some weight that's maybe a little unique to '25. But when I think about OneAmerica and the contribution, is it that it's not really contributing anything yet in 1Q to bottom line and it grades in throughout the year? Or is it in there? I'm just trying to understand the $75 million from OneAmerica and whether that begins showing up more when we think about 2Q, 3Q?

Yes, Alex, I think just that first quarter, as Heather was talking about, I mean, there is a large investment in Wealth around that $20 billion plus of lands and implementation. So that's having an effect at the beginning of the year. Obviously, there'll be revenue to follow. To your big picture question, continue to be fully on plan for that $75 million of earnings we're expecting to add within Wealth, and one of the offsets is those expenses I just mentioned. And you also see a bit of an offset with respect to spread income where spread balances were down year-over-year.

Our next question is from Joel Hurwitz with Dowling & Partners.

Can you just provide some more color on what you're doing in the voluntary business that's driving the loss experience higher? And is this in response to competition? Or do you think this is needed to improve persistency of the business or drive higher growth?

Yes. Thanks for the question, Joel. I'd say a couple of things, right? You think about voluntary. So it's unique in the group insurance space where typically you're going to have participation rates that are in the high teens, low 20s. So I think somewhere 18% to 20%. So when we talk about wanting to drive increased client value, frankly, we want our customers to utilize these very important products. And so the couple of trends that I would think about is, number one, when we see higher utilization, which means we see the claims experience ticking up. We know that our customers are then utilizing these products. So what I would watch for and what we're focusing in on is how do we increase the utilization of these products today. We've got about high persistency in our voluntary business in the high-90s. But one stat I'd share with you is when we look at our open enrollment through Benefitfocus, where we're able to leverage guidance and the right education, we see supplemental participation rates that moved from a traditional 20%, up into the low 60s. So that's the real key component is that these administrative capabilities, whether it be leave or whether it be ben admin, they drive higher participation rates. And as you see higher participation rates, that's really because clients are seeing the value of the products. So that's really the way I would think about them versus necessarily competitive pressure on pricing and the loss ratio. It's really -- this has been very thoughtful around making sure that clients are getting the utilization.

Okay. That makes sense. And then just on leave and disability. Historically, you've reinsured the disability business that you wrote, but do you plan to start retaining all of that moving forward? Or is it just a portion of the short-term disability that you'll retain?

I'd say we've had a long-standing relationship with a disability reinsurer that has frankly given us capital release, and we don't have the tail liabilities of the long-term disability. The strategic rationale for us to in-source leave and, frankly, the disability administration, was to influence the customer experience is that leave and absence is increasingly complicated for employers as well as for employees. You think about somebody going out on maternity leave and they have to file 3 or 4 leaves. So our ability to influence the client experience we thought was most important. So this is one of the things that we will be taking in some of the short-term disability over time. But I would say, for us, we like the arrangement we have with the partnership that it allows us to grow in the space without necessarily taking on the tail risk, and that's where we're going to be focusing on in the near term.

Our next question is from Wes Carmichael with Autonomous Research.

A follow-up on OneAmerica. You provided some color there. But now that the acquisition is closed, I know you reiterated the financial impacts and perhaps net flows will be a little bit more volatile. But anything that you saw that was surprising as you integrated that? And maybe can you just talk about retention experience through renewals?

Yes. I mean a couple of things. And I've certainly stayed close to this and spending time with some of the OneAmerican clients. But I think maybe a couple of things I would refer to as pleasant surprises is the market, and particularly the OneAmerica clients and the advisers have been very, very favorable in the announcement. They're excited to be part of Voya and to be able to take advantage of some of the new digital experiences that we can bring to them that we had already invested in. We are thrilled to welcome the OneAmerican employees, very, very talented team. And I would say on the retention, at this point, nothing surprising. It's very much in line with the guide that we see. And so for us, this is just tracking very much as expected. And I think the other piece I would reiterate is because they're on the same recordkeeping platform, our technology teams are very much ready to be able to do a smooth implementation over the time period that we've outlined. So nothing surprising, and we just continue to reiterate the $75 million of earnings accretion expected.

Got it. And then my follow-up on capital deployment. Seems like there needs to be maybe a little bit of a recovery through 2026. But if I think back over the last couple of years, I think you've been pretty active in M&A and maybe more than some would have expected. So just wondering if you're still expected to be -- expecting to be active on the M&A front going forward and where you might be interested?

Yes. I mean I think this is something that we've tried to talk about being both very disciplined with capital management as well as expenses and opportunistic. We're very, very pleased with OneAmerica. We think it was not only highly strategic to allow us to scale in the full-service business at spread-based assets but also highly accretive. We think Sconset Re, and I'm sure Matt will have a couple of points to add on that, is both strategic and opportunistic. So I would say it's something that we're going to pay attention to and we're going to look for opportunities that we can both scale our businesses that we can potentially add new capabilities. And I think the final comment is we focus a lot on inorganic and builds. But with Jay coming on board, I think you're going to expect us to focus a bit more on partnerships. Think of it like what we've done with AGI, which we think are a great use of being capital efficient as well as opportunities to accelerate the growth, more than can be done in a necessarily an organic build.

Yes. Wes, this is Matt. Just maybe quickly on Sconset. A great example of using capital wisely to further build upon the insurance acumen we have and build further in the sidecar market, which is attractive, fast-growing, where our leading insurance asset management capabilities play quite well, namely, private assets, commercial mortgage loans, core fixed income and infrastructure, call a few out. So a targeted investment built upon that strategic relationship with Allianz, a capital return story that you'll see in our investment line item that's attractive as well as AUM that will build over the next few years to $1 billion to $2 billion range targeted strategic and a nice return profile.

Our next question is from Jimmy Bhullar with JPMorgan.

I just had a question on your asset management business. You noted positive flows in the last couple of quarters. But the asset growth hasn't been commensurate with the flows, what the flows would suggest in market performance partly because you've had fairly high amount of outflows from divested businesses, like I think it was around $2 billion, $2.5 billion, $2.7 billion this quarter, $7.9 billion the quarter before. Can you talk about how much -- and then that's obviously not in your flow numbers the way you present, but how much more -- what does that relate to? How much more of that do you have that is potentially at risk? And just the economics of those assets, are those similar to the ongoing assets, are they lower fee, higher fee?

Yes. Thanks, Jimmy. This is Matt. Thanks for the question. Yes. So it is an important transition, right? So we talked about the growth of the business, extremely happy with the $12.5 billion flow you referenced in '24, that organic growth rate of 4.4%, well above our 2-plus percent long-term average cutting against that, and we've been really upfront about this is divested businesses, some which go back now 7 years. That is a known flow, very visible, enable for us to manage in our platform costs around it. So we've seen a flow in 2024. We have one more component of the Venerable flow that we signaled in 2025. We see that coming in the second half. And those are, as you referenced, lower fee assets that we can also take costs around as we optimize the growth going forward. So it's a part of the investment strategy of broader Voya. These are great transactions for broader Voya to divest. The key message there though is the growth is outpacing that at a higher revenue level, that higher revenue and higher fee rate is what's growing the revenue line item and the operating profit, and that is outpacing the outflows.

And I would just emphasize, Jimmy, I think that 4 consecutive quarters of really, really strong flows, record flows in the year and great momentum set up for '25. We feel very good about our asset management business.

And what's the amount of the Venerable assets that you think will leave in '25?

That number is -- $6.8 billion is the current estimate in the second half of 2025.

And beyond that, the NNN and Venerable will be mostly gone?

That's correct.

Our next question is from Wilma Burdis with Raymond James.

Could you just go into a little bit more detail of what types of actions went into improving the risk selection on the Stop Loss block?

Wilma, I'd probably just reiterate kind of what I was sharing earlier around making sure that we feel very good about the pricing for every case that we're underwriting. Second, really making sure we have the most current data before finalizing quotes. And then just strategically and mindset-wise, ensuring that our underwriters and the entire team understood the strategy of focusing on margin versus premium growth, and premium was down 16%. That's a big number when you think about that relative to medical trend. The other thing I'd say just to maybe -- on the question around how we think about Stop Loss just really more broadly. We're disappointed, obviously, in what happened in 2024. But I would just point to the annual renewable nature of Stop Loss that's allowed us to get after the profitability quite quickly. Think about 5% to 15% low end of the range being close to that 77% to 80%. We're still guiding to a 2-step process here to get back to our target range. But that's a key reason why we like the product is our ability to get after margins quite quickly.

Makes sense. So you were able to just, I guess, get rid of a lot of the poorly performing accounts. Is that how that works?

Yes. Well, I think that's the right way to think about it. You've heard us talk about really the importance of renewing a healthy book of business. And so really, what I would think about is we wanted to make sure we were renewing the strong performing cases. We renewed over 75% of those. When Mike talked about the underwriting discipline, it was really very much holding firm on underperformers and making sure we got the data, we got the rate increase we needed and we didn't. We didn't necessarily renew that mix that book of business, and that's reflected in the block retention that we've talked about and the decline in the book of business. So that's absolutely right. I think the final piece I would mention too, Wilma, is the importance of factoring in the higher frequency of claims that we saw in '24 into the '25 pricing. So we have assumed that the higher frequency of claims that we saw in '24 will continue throughout, and that's also factored into the pricing adjustments we made for the '25 book.

Our next question is from Suneet Kamath with Jefferies.

I wanted to hit on the Wealth Solutions flows. I get the dynamic of markets higher and more money comes out. But have you seen any big changes in the participant withdrawal rate if we look at what that was in, say, 2024 and compare that to historical? Any changes there?

Yes, I'll answer that. We did start to see some improvement in the Q4 in participants surrenders. We've still taken perhaps a cautious you heading into '25, the participant surrenders would continue to be elevated just given a little bit of the uncertainty of the markets. But yes, we did see an improvement when we started to see interest rates come down.

Got it. Okay. And then, I guess, sort of relatedly on Wealth, one of the things that we're hearing from some other companies in the wealth space is, this whole concept of in-plan annuities within target date funds. And I was just curious, what is your strategy there? Do you think that's an opportunity? And sort of what needs to happen for you to get that product on your platform?

Yes. Thanks for the question. So there are a couple of things that we do today is we do actually have annuity provisions inside of our products. We also partner with different annuity providers through our broker-dealer. But -- and we have certain products within our own partnership within Matt's team as well as other asset managers that have different income solutions. But this is one of the things I think you're certainly going to hear more from Jay in the coming quarters. Certainly, our investment in retail wealth management is going to be an important component of that. And realizing what are some of the product enhancements or different partnership options we consider that allow us to address both implant and out-of-plan solutions as well as annuity. So I'd say this is a bit of a stay tuned. We see some opportunity here.

Our final question is from John Barnidge with Piper Sandler.

My question is on Voya Investment Management and Sconset Re. Voya Investment Management previously has had a lot of success with insurance clients. Of the existing insurance clients, how many of them already don't have existing sidecars?

John, this is Matt. I don't know the exact number of that, but our insurance business, over 70 clients currently. We do work with a good number offshore as well as onshore and globally. I'd say the majority don't. We tend to be extremely competitive in the mid- to smaller-sized insurance company market. We have some larger clients as well. Sidecars are part of the industry at this point. We think they'll continue to be a growing part of the industry, and that could broaden. So as we look across our client base, some of whom have their own exposure, some of them don't. We can also look to leverage our own capability and like to guide them down their own path and provide investment solutions alongside of that. So really a leading position in the insurance industry market. It gives us both the right to win on an AUM basis, but also on an advising our client basis.

And my follow-up question. No some variable investment income 1 quarter lag generally, and no annual marks can sometimes come in the first quarter a year ago, some companies had larger marks. Do you have any visibility near term into annual marks on funds as it relates for the first quarter?

Yes. Thanks, John. This is Matt again. Always, as you referenced, difficult to predict financial markets, let alone private asset markets. The last year -- and if you saw in 2024, and I think Mike laid this out well, a bit of a lag versus our 9% assumption. As we think about where interest rates are today, a little bit lower. We think about equity markets broadening as opposed to being so narrow. That tends to take your return expectation higher towards that long-term average. So we think about where we're starting to feel like we're in that possible range or -- now longer term, we will outkicked that 9%. But we think it's a fair assumption as we start the year, interest rates where they are that we can be back on that long-term contract.

This will conclude our question-and-answer session. I would now like to turn the conference call back over to Heather Lavallee for any closing remarks.

To summarize a few key messages, in 2025, we remain focused on improving our Stop Loss margins, ensuring a smooth OneAmerica integration and driving continued commercial momentum. By maintaining the strategic focus, we will continue to grow excess capital and enhance shareholder value. Our customers remain at the center of all we do, and we are dedicated to continually enhancing their experience and outcomes. Thank you for joining us today, and we look forward to updating you on our progress throughout the year. Have a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.