“We expect to maintain our two-year average free cash flow ratio of 65% to 75% of adjusted earnings.”

In context

“3 supplemental slides, but we feel it's worth including again for the sake of completeness. Also, pages 18 through 21 provide interest rate assumptions and key outlook sensitivities by line of business. Now let's turn to Page 12 for further details on our near-term outlook. Starting with the overview. We expect continued uncertainty to persist around inflation and unemployment in 2024. We expect the U.S. dollar to stabilize around current levels. Based on the 12/31/2023 forward curve, we assume long-term interest rates to be largely unchanged in 2024, and the yield curve will move from inverted to modestly upward sloping as short-term interest rates decline and we assume a 5% annual return for the S&P 500. For our near-term targets, we are maintaining our adjusted ROE range of 13% to 15%. We expect to maintain our two-year average free cash flow ratio of 65% to 75% of adjusted earnings. Also, given continued focus on expense discipline, building capacity to reinvest in growth initiatives, and our overall efficiency mindset, we are lowering our direct expense ratio guidance for 2024 from 12.6% to 12.3%. Specifically, for 2024, VII expected to be approximately $1.5 billion. Our corporate and other adjusted loss target is expected to be $750 million to $850 million after tax in 2024. This represents an approximately $100 million increase from our prior adjusted loss guidance of $650 million to $750 million in 2023. The higher range reflects C&O's current run rate given the impact of a higher rate environment on interest expense and pension costs, as well as the impact of lower expected benefits from VII. We are increasing our expected effective tax rate range by two points”