“We expect to maintain our two-year average free cash flow ratio of 65% to 75% of adjusted earnings, which supports our five-year commitment to generate $25 billion plus of free cash flow.”

In context

“t. Now let's turn to page eleven for further details on our near-term outlook starting with the overview. Based on the forward currency curve, the US dollar is expected to further strengthen, which creates a headwind to adjusted earnings growth of approximately $150 to $175 million in 2025. This impact is embedded in the non-US segment outlooks I will discuss in a moment. The forward interest rate curve projects long-term interest rates to be stable, and the yield curve to steepen, a positive development. We use an assumption of a 5% annual return for the S&P 500. For our near-term targets, these are consistent with our New Frontier commitments that we announced at investor day. We expect to achieve double-digit adjusted EPS growth. We expect adjusted ROE to be in the range of 15% to 17%. We expect to maintain our two-year average free cash flow ratio of 65% to 75% of adjusted earnings, which supports our five-year commitment to generate $25 billion plus of free cash flow. Also, given our continued focus on expense discipline, we target reducing our expense ratio down 100 basis points to 11.3% by 2029. Therefore, for 2025, we are lowering our direct expense ratio guidance to 12.1%, down from 12.3% in 2024. Specifically, for 2025, variable investment income is expected to be approximately $1.7 billion pretax. Our corporate and other adjusted loss is expected to be between $850 to $950 million after tax. We are maintaining our expected effective tax rate range of 24% to 26%. At the bottom of the page, you'll see certain interest rate sensitivities relative to our base case, reflecting a relatively modest impact on adjusted earnings over the near term. Further sensitivities are in the appendix to these slides. On page twelve, the chart reflects our expectation”