“The change to the VAT deductions results in notable impacts in 2025 with lesser impact in 2026.”

In context

“the Mexico tax law change? Eric Sacha Clurfain: Yes, this is Eric. So as John mentioned, this quarter, we took a notable charge related to the change law in the tax law in Mexico. So first, let me start by giving you a little bit background on this item. So in the past few years, the Mexican tax authorities have been challenging the VAT deduction of certain insurance claims-related expenses. And although the discussions were ongoing for several years, there was really no -- little to no progress until the past few weeks when the government and the industry reached an agreement, making the change effective for 2025 and beyond. And this revision to the tax law just passed the legislator last week. So for MetLife, this industry-wide insurance change only affects our health product offering. The change to the VAT deductions results in notable impacts in 2025 with lesser impact in 2026. And as we transition to the new rule, and then there will be little to no impact in earnings by 2027. So we are already working to adjust our underlying rate assumptions for this annually renewable product, along with other management actions which will help mitigate the impact of this transition. So from our experience also, this market has been very resilient and rational, which gives us confidence that we will work through this quickly. Our business in Mexico is strong. We have a large and very well-diversified franchise, and we're confident in our ability to continue to deliver on that strong performance. So in summary, this impact to the VAT change is isolated in nature, and it's temporary. And we expect we'll be back to our run rate and growth trajectory for the region by 2027. I ho”