“Our expectation going forward remains for modest credit losses on the portfolio.”

In context

“de a few updates on our commercial mortgage loans. Overall, the CML portfolio continues to perform consistent with expectations, where we expect higher quality assets to outperform the asset sector broadly. The average LTV on our CML portfolio now stands at 64% as of December 31, up slightly from 63% in the third quarter of 2023, and the average debt service coverage ratio remains steady at 2.3 times. The modest increase in LTVs and stable debt service coverage ratio are further indicators of the disciplined approach we take to investing in this asset class. The quality of our CML portfolio remains strong with only 2.6% of loans having LTVs more than 80% and DSCRs less than one times. With regards to CML loan maturities, we resolved 100% of the loans that were scheduled to mature in 2023. Our expectation going forward remains for modest credit losses on the portfolio. Turning to Page 9. This chart shows a comparison of our direct expense ratio over the prior eight quarters and full year 2022 and 2023. Our direct expense ratio in 4Q of 2023 was up modestly at 12.4%, reflecting the impact from seasonal enrollment costs in group benefits as well as higher employee related costs. That said, as we have highlighted previously, we believe our full year direct expense ratio is the best way to measure performance due to fluctuations in quarterly results. For the full year of 2023, our direct expense ratio was 12.2% below our 2023 target of 12.6%. We believe this result once again demonstrates our consistent execution and focus on an efficiency mindset in a challenging inflationary environment, while continuing to make investments in our businesses. I will now d”