“We are increasing our near-term expected annual returns for private equity to be 9% to 11%, and we are also increasing our expected returns for real estate and other funds to be in a range of 7% to 9% over the near term.”

In context

“e, 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 of VII average asset balances to be stable in 2025. We are increasing our near-term expected annual returns for private equity to be 9% to 11%, and we are also increasing our expected returns for real estate and other funds to be in a range of 7% to 9% over the near term. In 2025, we expect both PE and real estate and other funds to be toward the lower end of their respective ranges before trending higher in 2026 and 2027. Finally, as a reminder, we include prepayment fees on fixed maturities and mortgage loans in VII. Now I will discuss our near-term outlook for our business segments. Let's start with the US on page thirteen. For group benefits, we are increasing our adjusted PFO growth target to 4% to 7% annually over the near term. We are maintaining our near-term underwriting guidance ranges: group life mortality ratio of 84% to 89%, and group nonmedical health interest adjusted benefit ratio of 69% to 74%. Please keep in mind, these are annual ratios and both typically skew to the higher end of the ranges in the first quarter given the seasonality of”