“We anticipate that the new money yields will remain above roll-off yields given the prevailing interest rate environment.”

In context

“for the last three years, including second quarters of 2023 and 2024. Adjusted net investment income in Q2 of 2024 was up $120 million year-over-year. Recurring investment income has benefited from higher interest rates, partially offset by the roll-off from higher interest rates caps. In addition, we have seen VII improvement driven by higher private equity returns. Turning your attention to the right side of the page. This shows our new money yield versus roll-off shows our new money yield versus roll-off yields since second quarter of 2021. Over the last nine quarters, new money yields have outpaced roll-off yields, consistent with higher interest rates. In the second quarter of 2024, our global new money rate achieved the yield of 6.27%, 63 basis points higher than the roll-off rate. We anticipate that the new money yields will remain above roll-off yields given the prevailing interest rate environment. However, the spread can fluctuate depending on the mix of sales across our businesses. Now moving to expenses discussed on Page 8, this chart shows a comparison of our direct expense ratio for full year 2023 of 12.2% and the first two quarters of 2024, both at 11.9%. 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. Our Q2 direct expense ratio benefited from solid top line growth and ongoing expense discipline. Looking ahead, we would expect our direct expense ratio to be higher in the second half of the year, consistent with the seasonal nature of our business. That said, our performance year-to-date positions us well to achieve a full year 2024 direct expense ratio of 12.3% or”