Reinsurance Group of America, Incorporated

Welcome to the RGA's second quarter 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more detail on the risks and uncertainties, please refer to the risk factors discussed in RGA's periodic reports to the SEC for reconciliation of the non-GAAP measures discussed on this call Good morning, everyone, and thank you for joining today's call. We appreciate your continued interest in RJA.

I am delighted to share that we have delivered a record result, building on the strong momentum established at the start of the year. Results were excellent across all regions and business lines, driven by the recent new business placed over the past few years. This quarter benefited from strong investment returns and modestly favorable claims, extending a trend of steady results that demonstrate success on both sides of the balance sheet. Consistent with the past number of quarters, the results showed our strengths at work, which include deep biometric expertise, strong asset management capabilities, a global platform of local offices, market-leading brand, and flexibility to partner across the industry. Our focus is clear. We aim for balanced earnings growth, The smart use of capital and attractive returns over the long term. Let me walk through the highlights from the quarter. Asia Pacific produced another excellent quarter, driven by continued earnings contribution from new business and additional investment income. Leading with biometric expertise, local experience, and long-standing client relationships, we closed several notable deals in the region led by Hong Kong and Japan. These deals were in our sweet spot as they covered both in-force and flow business, leveraged both sides of the balance sheet and showcased the expertise of our exceptional local teams. EMEA earnings outperformed our expectations. Higher investment income contributed to results and overall claims trends were in line. We also continued to build momentum with new business, completing several transactions across the region and expanded in our existing markets. In the US, results continued to be impressive, with meaningful contributions from new business and investment income. New business activity in individual life remained steady, driven in part by the breadth of our underwriting services that make risk selection faster and Smarter for Clients. U.S. Group results also met expectations and continued to benefit from pricing actions taken earlier this year. This quarter demonstrates the advantages of our global reach and flexibility. We deployed capital into in-force transactions and organic flow business across all three of our regions and across a range of products. Just as important, we were selective. Declining opportunities that did not fit our risk return profile. This discipline is central to how we operate. For the new business closed both year to date and for the quarter, the expected returns met or exceeded our targets. Now let me take a step back and remind you of the strategy driving RGA forward. Once again, RGA's distinctive strengths include Deep expertise in biometric risk, proven asset management capabilities, global reach, the leading life and health brand, and the flexibility to work with partners across the industry. We apply these strengths in combination across key areas of focus. First, creating win-win transactions that generate higher returns for RJ and greater value for clients. Our five decades of experience, global footprint, and local market insight enable us to serve clients in our sweet spot, combining best-in-class biometric expertise with diversified investment capabilities. Next, scouring our global platform to meet the rising demand for risk and capital solutions. Our strong balance sheet and global brand sets us apart as a trusted counterparty. And then third, We are also optimizing our balance sheet through enforced liability management, better risk-adjusted investment returns, and both internal and third-party capital sources. And finally, we focus on capital stewardship, striking the right balance between investing in attractive opportunities and returning capital to shareholders. Here are three examples of win-win solutions from around the world In the U.S., growth is in part driven by our strategic underwriting programs, where volumes are on track to double from last year. This matters because these opportunities are, by nature, reinsurance exclusives. RGA's underwriting capabilities are expanding from a value-added service into a primary driver of reinsurance value. For example, one client started by asking for underwriting support, which grew into a broader, long-term, in-force transaction. This shows how our top-tier underwriting capabilities can be the reason a carrier chooses RGA. In Asia, we closed a Hong Kong flow coinsurance treaty that helped a key client launch a new product addressing growing longevity needs. leveraging both RJ's differentiated biometric and investment capabilities. The transaction showcases our ability to combine product development leadership, biometric expertise, risk sharing design, and local execution to deliver innovative client solutions. In EMEA, we added to our asset intensive markets in continental Europe with a new transaction this quarter. Another important step in growing our regional presence. This showcases our differentiated asset capabilities and the strength of our brand and teams in the region. Turning to capital allocation, we have deployed nearly $500 million year-to-date into in-force transactions, and this quarter we returned $111 million to shareholders, including $50 million in share repurchases and $61 million of dividends. We also announced a 5.4% increase in our dividend to be paid in the third quarter. We maintained a strong balance sheet, ending the quarter with $2.2 billion of excess capital. Balanced use of excess capital is a key part of how we build long-term shareholder value. Looking ahead, Our confidence in 2026 and beyond remains high. Our fundamentals remain strong and our pipeline remains healthy. Our advantages are durable and our strategy is consistent with what has created value at RJ for over five decades. We are confident we will meet or exceed our intermediate term financial targets and deliver long-term value for shareholders. Before I turn the call over to Laura, I want to take a moment to congratulate her on her new role. Laura is a remarkable RJA success story and an outstanding leader. In her 26 years with the company, she has advanced through multiple levels within the finance organization, including leading finance for the largest business unit and serving as deputy CFO. In her latest position as Chief Strategy Officer, she played a central role in sharpening the enterprise strategy and reinforcing our strong focus on disciplined execution. Having worked closely with Laura for now over two decades, I have every confidence that she will excel as our new CFO. With that, I'll turn the call over to Laura to share her comments on the quarter.

Thank you for the introduction, Tony, and good morning everyone. Before I start with the results, I want to say how honored I am to take on the CFO role. I am very excited to continue working alongside Tony and our leadership team, and I look forward to developing relationships with our external stakeholders and continuing to deliver on our strategy. As for the results, RGA earned pre-tax adjusted operating income of $761 million for the quarter or $8.89 per share after tax. Over the trailing 12 months, our adjusted operating return on equity was 18.4% excluding AOCI and notable items. This was a record operating quarter built on discipline execution across our businesses. Two drivers stood out. First, investment results were excellent due to higher new money yields and strong variable investment income. And second, earnings continued to benefit from new business we wrote in recent years consistent with our expectations. As Tony said, we are successfully leveraging our strategic advantages to deliver strong results and we are confident in our targets for 2026 and beyond. Now to the segment results. In the U.S. and Latin America, traditional results reflected favorable individual life claims experience and strong variable investment income. Claims in U.S. Group were in line with our updated view, and our repricing work is on track to deliver solid results through 2026. In financial solutions, results were favorable primarily due to VII, in-force actions, and longevity experience. In Canada, traditional earnings were in line with expectations, and financial solutions were favorable due to strong VII. In Europe, the Middle East, and Africa, traditional results were favorable, driven by one-time items, and financial solutions results were favorable, driven by higher investment income. In Asia Pacific, traditional had another healthy quarter, driven by new business, and financial solutions reflected favorable VII and the strong contribution of new business. Finally, our corporate and other segment reported adjusted operating loss before tax of $35 million. This was better than our expectations due to, again, strong VII and lower financing costs. Now turning to premium growth. Our traditional premiums grew 2.2% or 0.9% constant currency, which were impacted in part by previously noted in-force management actions. For total premiums excluding PRT, year-to-date premiums grew 10.5% or 9.3% constant currency. A growing number of deals within financial solutions are tied to biometric underwriting, so focusing on traditional premium growth has become a less informative indicator of biometric underwriting growth at the company. This quarter we executed additional in-force actions, and while they did not have a notable overall impact to consolidated earnings, they did cut our exposure to capped blocks. In the U.S., that exposure is down by 25% since we adopted LDTI three and a half years ago. Reducing our exposure to capped cohorts is a priority as it reduces earnings volatility and improves the overall profile and returns of our business. Our approach here is simple. We partner with clients to build value. That work can take many forms. It can mean new transactions, premium rate changes, or recaptures. The expectation is always to improve the long-term value of our business. Transitioning to claims. On an economic basis, claims came in $31 million better than expectations. The benefit to current period earnings was $14 million. Since 2023, economic claims for the company have run favorable by $375 million, primarily driven by U.S. individual life and Asia traditional, as well as contributions from financial solutions. As a reminder, the portion not yet in our reported results will flow into earnings over the life of the business. In our earnings presentation on slide seven, we highlight key items for the quarter, including claims experience, VII, in-force management actions, and other items. The other bucket represents a mix of small adjustments across the portfolio that occur every quarter. Sometimes these items help earnings and sometimes they hurt. This quarter, almost all of them benefited RGA. Over time, we expect these items to net closer to zero. The effective tax rate for the quarter was 23.1% on adjusted operating income before taxes, generally in line with our expected range of 22 to 23%. I'll now turn to investments. The yield on our core portfolio, excluding VII, was 4.96% in the quarter. Our new money rate was 6.02%, An increase due to higher market yields and higher allocation to investment-grade private assets compared to last quarter. Our strategic asset allocation is designed to take advantage of the higher reinvestment environment in a capital-efficient manner. The new money rate remains above our portfolio yield, supporting steady growth in investment income. Annualized returns for BII were strong at 15% for the quarter and 11% year-to-date. Well above our 7% planned return for 2026. The outperformance was driven by a combination of realized gains and broad-based alternative equity outperformance. The results reflect sustainable value creation from our diversified alternative equity portfolio. For full year 2026, our strong year-to-date results raise our confidence that we can meet and potentially exceed our 7% target. Overall, portfolio fundamentals are healthy and credit performance is in line with expectations. Our globally integrated investment platform continues to leverage proprietary expertise and strategic asset manager partners to deliver superior liability-driven returns. Now to capital. We put $158 million to work this quarter into in-force transactions. We are especially pleased with the quality of these deals as we expect returns from this new business to meet or exceed our targets. We returned $111 million to shareholders this quarter, including $50 million in share repurchases. That brings total buybacks to $225 million since restarting our repurchase program in the third quarter of last year. We closed the quarter with about $2.2 billion of excess capital broadly in line versus last quarter. Our excess capital is calculated annually and adjusted periodically to reflect quarterly activity and update to assumptions. We manage capital through several lenses. These include our internal economic capital, regulatory, and rating agency frameworks. We remain well capitalized across all our frameworks, supporting our counterparty strength and providing financial flexibility. We will continue balancing capital invested in the business with capital we return to shareholders through dividends and buybacks. Over the intermediate term, we continue to target a 20% to 30% payout ratio, but will remain opportunistic. As previously noted, we expect to use $400 million of excess capital to pay down debt this September. Turning to book value, we extended our long record of growing book value per share. In the quarter, excluding AOCI and B36 effects, our book value per share rose to $174.11. This reflects a compound growth rate of 10.1% since the start of 2021. To sum up, this was a record operating quarter, supported by continuous execution of our strategy. The fundamentals continue to be solid. New business momentum is healthy. Investment results continue to contribute steadily to earnings growth. Capital deployment remains disciplined, and we are focusing on deals that meet or exceed our return standards and fit our risk limits while also returning capital to shareholders. Our priorities are unchanged. Deliver attractive, sustainable returns, manage risk well, and deploy capital where we see the best long-term value. Thank you for your continued interest in RGA. This concludes our prepared remarks. We would now like to open it up for questions.

Thank you. We will now begin the question and answer session. Please limit yourself to one question and a single follow-up. If you have additional questions, you can rejoin the queue. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble the roster. The first question will come from Wes Carmichael with Wells Fargo. Please go ahead.

Hey, good morning. Thank you. Just had a question on traditional premium growth in the U.S. I think there was maybe a modest decline from the actions you've taken, but I think, Tony, in your prepared remarks, you mentioned that volumes are on track to double. So just any color on how you're thinking about traditional premium growth in the U.S. from here?

Yeah, thanks, Wes. Let me kick it up a notch, and I'll hand it over to Laura to talk more specifically about the premium growth. So look, we've had a strong first half of the year, and I'm particularly pleased with the quality, as seen by my earlier comments, of the business that we've ridden in all three of our regions. And that's represented by the fact of my earlier comments that we have met or exceeded on our pricing targets. Our pipeline remains strong, high quality, and diversified in all three regions. Now, just some commentary on the U.S. As you mentioned, we have a very important underwriting program we call the SUP Underwriting Program, and it has doubled in volumes over the past year. And really, the key point here is twofold. One is these strategic underwriting programs lead to business directly and getting more and more meaningfully. but also lead to indirect business because, as I mentioned earlier, that one transaction started off purely as an underwriting program and ended up into a much more material in-force transaction. But allow Laura to comment more on the premium.

Sure. Thanks, Tony. So for the U.S. traditional business, underlying growth has remained solid as we grow share in a stable market driven in part by the momentum of our underwriting initiatives that Tony just mentioned. For this quarter and the last few quarters, as we have noted, in-force management actions have impacted U.S. traditional premium growth while at the same time improving the earnings profile of the business. As a reminder, these actions have cut our exposure to U.S. capped cohorts by 25% since we adopted LDTI three and a half years ago. Excluding these non-recurring items, both U.S. traditional and total traditional premiums year-to-date grew 3%. But most importantly, I want to note that total U.S. premium excluding the PRT growth was approximately 8% for both this quarter and year to date, which is both the traditional and the financial solutions business a more indicative indicator of the underlying growth of the U.S. Got it.

Thank you. And maybe switching gears, but just an update on the equitable transaction maybe. and U.S. Financial Solutions were really strong, but I think benefited probably from some BII. So just wanted to see how the equitable business is tracking relative to your prior earnings expectations.

Sure, Wes. Happy to address that. So overall, we remain on track with the financial results expected from the transaction. Claims experience on the block was in line with expectations for the quarter as it has been since the deal closed. So still in line.

The next question will come from Alex Scott with Barclays. Please go ahead.

Hey, thanks for taking the question. I wanted to get your take on mortality. We've seen a lot of favorable mortality across group life, I think now individual life more so, and I think there's even a company or two out there that have sort of guided to it continuing. How are you viewing that dynamic? What are you expecting in terms of You know, sort of a benefit on the other side of the pandemic.

Yeah, thanks, Alex. This is Jonathan. I can take that question. I mean, certainly we're pleased with our overall experience this quarter, and more importantly, the continuation of our good year to date and longer term results. And we believe that this reflects our biometric and risk selection expertise and is consistent with favorable population trends that you mentioned. Specific to U.S. individual mortality, our claims experience was in line with expectations in total and for large claims this quarter. Our capped cohorts were modestly favorable and uncapped cohorts were in line, and there were really no other notable trends to call out when we slice our data by attained age or issue year. On a year-to-date basis, U.S. individual claims experience has been favorable by approximately $70 million, and these results are, again, directionally consistent with what we're seeing in the population and across the industry.

Okay, that's helpful. Second question I had was on the reduction in the capped cohort blocks. I hadn't appreciated the decline 25%. Can you talk about further decline you expect there and some of the actions you're taking?

Sure, Alex. Excuse me, I'll start with that. So first, we're pleased that our in-force management efforts have led to a 25% decline in the U.S. exposure to the capped cohorts. Reducing our exposure to capped cohorts is a priority for us since it reduces the earnings volatility and does improve the overall profile and returns of the business. I'll also note that the exposure does naturally decline as well as we add profitable new business and older business runs off. But overall, the goal is to continue to reduce our exposure there over time.

The next question will come from Sunit Kamath with Jefferies. Please go ahead.

Great, thanks. I wanted to start with capital deployment. I guess year-to-date, Tony, as you mentioned, it's about $500 million. I just wanted to sort of frame that relative to, I think, what you've said in the past of deploying about $1.5 billion a year. Is that still a number that we should be thinking about? And you'd mentioned your pipeline, so maybe a little bit of color in terms of what that looks like. Thanks.

Sure. Let me kick that off, and I'll hand it over to Laura. Bottom line, we've had a very strong first half of the year. Our pipeline remains healthy. While transaction timing can vary quarter to quarter, our return expectations remain unchanged. Both quarterly and year-to-date returns have met or exceeded our targets. I'd like to just highlight a meaningful portion of our business. As you know, of our new business growth over the past three years has been sourced through Exclusive opportunities, which is a key reason behind these higher returns and the strong results that you're now starting to see over the past few quarters. But hand it over to you, Laura.

Tony, a few other things that I'll add to that. First, I remain confident in achieving our intermediate term targets of 8% to 10% EPS growth, 13% to 15% ROE, and a 20% to 30% payout ratio. Second, and as we have highlighted in the past, we do have several levers to achieve the 8% to 10% EPS growth target, which does provide flexibility. Those include things like the capital deployment into the enforced transactions and organic flow business, positive contributions from our investment portfolio, effective enforced management, and shareholder returns. And I do agree with Tony. We have a healthy pipeline, and capital stewardship is a priority for us. Our strategy does allow us to be flexible if we don't like the market opportunities and to the extent we don't see the opportunities in the market to deploy capital, we will look at options to return capital to shareholders.

Okay, thanks. And then I guess a higher level question maybe for Laura. I think one of the issues that investors struggle with is RGA's earnings mix and just how much of the earnings comes from sort of spread-based business versus your more traditional underwriting. So I was wondering if you could give us a little bit of color in terms of what that mix looks like, both for the overall company and, if possible, the global financial solutions businesses together. Thanks.

Sure. Tony, thanks for the question. So we don't provide the source of earnings view, as you know, but we do continue to really focus on the biometric risk. One of our key competitive advantages is reinsuring both sides of the balance sheet. And we see that a lot now as we're doing more biometric risk across our financial solutions business. You know, we really believe that clients place a higher value on the reinsurance, on reinsurance partners and solutions that can address both risks on both sides of the balance sheet and that is a focus for us.

The next question will come from Tom Gallagher with Evercore. Please go ahead.

Good morning. First question is, what percent of your APAC business is Hong Kong? And within Hong Kong, how much is MCV? And obviously, just asking this because of what's come up lately with change in tax law and the potential that the MCV business could slow. But if you could provide some perspective on that, thanks.

Thanks for the question, Tom. Look, you know, I'd say a couple of things. We don't Give the country breakdown within Asia. But obviously, Asia is a very important area, region for the company, and Hong Kong is an important part of that region. And really, it's too early to comment on the impact of some of the news coming out from the Chinese government. That said, as I mentioned, Hong Kong is an important region for us. I really want to highlight that our business in Hong Kong is very much more protection orientated. With less investment income. But we will continue to observe how this evolves over time.

Okay, thanks for that, Tony. And then just a broader question about, you know, when I look at what's happened over the last few years, the asset intensive business has grown. And it looks like you've done some pretty good deals as well. But it's had the effect of increasing your asset leverage. And I know part of that is because you've gotten credit for the value of Inforce from the rating agencies. But I guess my broader question is, would you expect that trend to continue, meaning your investment portfolio may grow faster than your shareholders' equity, or do you think it's going to become more balanced over time? Do you see that trend continuing, I guess, is my question. Thanks.

Sure. Thanks, Tom. So for RGA, asset leverage is really an output, not an input into our business. We manage the business for the best risk-adjusted returns over time. We have done more transactions in recent years due to the opportunities that have presented themselves, which have added to our asset leverage. However, a key to our competitive advantage, like I just mentioned, is the ability to reinsure both sides of the balance sheet. And it's important to note that a high percentage of our enforced transactions have biometric liabilities attached. and a very low percentage are pure asset intensive or have spread-based earnings only. I'll note our asset intensive business is different and tends to be longer duration with a biometric risk element where we have re-underwritten the key assumptions before taking them onto our balance sheet and we expect those blocks then to deliver higher risk adjusted returns over a longer period of time.

The next question will come from Joel Hurwitz with Dowling and Partners. Please go ahead.

Hey, good morning. Just first on excess capital, Laura, can you just take us through the drivers of the reduction quarter over quarter in the excess number?

Sure, Joel. So first, excess capital level this quarter is really fairly consistent with last quarter, especially in the context of the large size of our capital base, and we're pleased with our strong excess capital position. Second, and just as a reminder, our excess capital is calculated annually and adjusted periodically to reflect quarterly activity and updates to the assumptions. We do remain well capitalized across all our capital frameworks and entities, which gives us significant financial flexibility, and we continue to generate strong organic capital that we're deploying in ways to support our targets and the 8% to 10% EPS growth and 13% to 15% ROEs.

Got it. And then just a quick one on the capped cohort reduction. How much of that 25% reduction is due to management actions versus what's due to runoff and the new business growth you've put on?

Yeah, sure. Thanks. I'll address that too. So we've had a pretty significant focus on our in-force management actions over the last few years that certainly have contributed, I would say, significantly Maybe not the majority of that, but a good part. But additionally, it will run off naturally over time, just as we add business and the older business runs off.

The next question will come from Pablo with JP Morgan. Please go ahead.

Hi, good morning. My first question is just Ruby. I'd be interested in just getting an update there. You know, are you fully deployed against the capital that sits there? Would you need to reload? And I guess more broadly, if you could speak about the business of GCC. Thanks.

Sure, thanks for the question. So, you know, just as a reminder, third-party capital remains a core element of our capital management strategy. It does enhance our flexibility to fund growth and return capital to shareholders, while also generating incremental fee income over time. Specific to Ruby Re, we expect to be fully deployed this year, and we are evaluating options and structures for our next sidecar vehicle, which we'll provide more updates on when appropriate.

Thank you. And then my second question is basically just around, it's about reinsurance activity on legacy liabilities, right? So that's picked up, I think, more broadly and, you know, reinsurance has sort of warmed up the blocks like GUL and LTC that traditionally have been shunned. So I guess the question is, you know, has the activity from your peers changed how you look at these liabilities? You know, are they seasoned enough or have structures involved enough to make you more comfortable with them? Thank you.

Yeah, Pablo, let me take that. And thank you very much for the question. Look, we remain very selective and disciplined on ULSG and LTC risks. So our appetite for these risks sits in a very well-defined, narrow window. Our biometric risk capabilities are second to none and gives us specialized underwriting expertise on these risks. However, we are keenly aware of the need for higher hurdle returns on these lines, especially on a public company balance sheet. Now, ULSG and LTC liabilities are less than 10% of our balance sheet today, and we very much expect it to remain this way going forward. Finally, I'd like to say, look, given our discipline and expertise and our narrow selection criteria, these blocks have performed well and are in line with our expectations over a long period of time.

The next question will come from Wilma Burdis with Raymond James. Please go ahead.

Hey, good morning. Given this is a relatively normal quarter for mortality, is this a good run rate in terms of VPS?

Yeah, hi, this is Jonathan. Yeah, I think you're right, Wilma, in pointing out that it was a fairly benign quarter for claims experience. As Laura mentioned, about $31 million of economic favorability across the whole portfolio and about $14 million impact on the bottom line. So, like you said, it was pretty normal.

Yeah, thanks, Lamont. I'll just jump in. As you know, we don't give annual EPS guidance. We feel good about the results so far this year and believe they are the results of our disciplined growth strategy and our competitive advantages. Overall, we continue to feel confident in our 8% to 10% intermediate term EPS growth target.

Thank you. And then what is the appetite for another large block deal given Equitables has been integrated for about a year and what are you seeing in the market? Thanks.

Yeah, look, you know, thank you for the question. Look, we continue to, you know, we really don't want to speculate or discuss transactions that, further transactions down the road that could be out there. We continue to stay focused on our execution of our strategy, which is absolutely combining our unique strengths to win exclusive transactions and replicate those transactions around the globe. And we've been delighted with sticking to that very well-defined strategy and very happy that the results start to show over the past recent quarters.

Our last question of the day is a follow-up from Wes Carmichael of Wells Fargo. Please go ahead.

Hey, thanks for taking my follow-up. I just wanted to dig in for a second on the earnings power, but just on the one-time items in the quarter, it was pretty material at 83 cents. Can you give us just any color on what segments benefited most from that in the period and how much maybe?

Sure, Wes. Happy to address that. So as I mentioned in my script, every quarter there are small adjustments across the portfolio that may impact earnings. These adjustments can help or hurt us in any given quarter, but over time we do expect them to net closer to zero. This quarter, almost all the items benefited our earnings, and it really was across all the segments. I won't quantify each item, but there were a number of smaller items that added up to that $71 million. They consisted of things such as Catch-ups on our contract experience, client adjustments, and modeling and data updates, all of which did add to the earnings, like I said. I will note, though, that none were indicative of a trend and are all truly one-time items.

Okay, fair enough. And maybe this last one, but on Alton VII, very favorable in the second quarter with a 15% return. You mentioned that you're on track to meet or exceed, but any color on how you're thinking about the third quarter, the balance of the year, just given what you know now?

Yeah, thanks, Wes. This is Jason. I'm happy to take that. And as you noted, the second quarter returns of approximately 15% on an annualized basis were strong. Year-to-date, that's around 11% on an annualized basis, and that's clearly above our 2026 expectations of 7%. We're seeing nice broad-based returns, and we feel good about the ALTS performance. So while we aren't increasing or changing our target for the remainder of this year at 7%, The strong performance to date definitely gives us increased confidence in meeting and potentially exceeding that expectation for the year. It's really too early, though, for 2027 to have a prediction on that performance, but we'll certainly update you with our expectations if and when they change.

Thanks, Jason.

Thanks. This concludes our question and answer session. I would like to turn the conference back over to Tony Cheng for closing remarks.

Look, thank you once again for your attention and participation in our call. I'd like to welcome Laura again as our new CFO. RJ is positioned well across the globe, given the strength of our global platform and the tailwinds in these markets. We look forward to meeting or exceeding intermediate targets going forward and look forward to your continued partnership. This ends today's Q2 call.

The conference has now concluded. Thank you for attending today's call. You may now disconnect