Strategy targets top quartile earnings growth excluding legacy VA
The call was primarily a major strategy refresh, centered on narrowing the geographic footprint by exiting emerging markets, scaling core businesses (US retirement, PGM, group insurance), and executing a $750M efficiency program. Q2 results exceeded expectations, driven by strong core results despite the POJ sales suspension. Announced exit from 6-7 emerging markets to free up 'well north of $3 billion' for reinvestment in US, Japan, and Europe.
Buzzberg readStrategy targets top quartile earnings growth excluding legacy VAThe call was primarily a major strategy refresh, centered on narrowing the geographic footprint by exiting emerging markets, scaling core businesses (US retirement, PGM, group insurance), and executing a $750M efficiency program. Q2 results exceeded expectations, driven by strong core results despite the POJ sales suspension. Announced exit from 6-7 emerging markets to free up 'well north of $3 billion' for reinvestment in US, Japan, and Europe.Read full analysisCollapse analysis
The call was primarily a major strategy refresh, centered on narrowing the geographic footprint by exiting emerging markets, scaling core businesses (US retirement, PGM, group insurance), and executing a $750M efficiency program. Q2 results exceeded expectations, driven by strong core results despite the POJ sales suspension. Announced exit from 6-7 emerging markets to free up 'well north of $3 billion' for reinvestment in US, Japan, and Europe.
Raised multi-year pre-tax efficiency target to $750M by 2028, up from $150M in 2027, driven by offshoring and tech use.
Established new long-term goal for PGM to account for 25% of adjusted operating income, up from ~12% today.
Q2 EPS of $4.08 beat on strong spreads, fees, and better-than-expected POJ suspension costs ($105M vs. expectations).
Revenue$15.661B
+1% QoQ
EPS$4.08
+13% QoQ
Gross margin32.04%
reported
Op margin7.99%
reported
What changed this quarter
01
Guidance
Strategy targets top quartile earnings growth excluding legacy VA
Guidance tone
02
Capital Allocation
Capital rotation from emerging markets expected well north of $3B
Announced exit from 6-7 emerging markets to free up 'well north of $3 billion' for reinvestment in US, Japan, and Europe.
03
Asset Management
PGM targeted to double to 25% of AOI
Raised multi-year pre-tax efficiency target to $750M by 2028, up from $150M in 2027, driven by offshoring and tech use.
04
Margins
Efficiency program raised to $750 million run-rate by 2028
Reported gross margin was 32.04%, reinforcing the quarter's better-than-guided profitability.
Demand & capex
Demand
Bookings & conversion
Management noted strong retail annuity sales, record group insurance earnings, and record individual life sales, driven by demand for retirement income and accumulation products. Pension risk transfer volumes were muted in the first half but expected to accelerate in the second half, though below record levels. Japan sales remain impacted by the POJ suspension, with recovery expected over time.
Capex
Investment and capacity
Management described a $750 million pre-tax run rate cost efficiency program by year-end 2028, up from a $150 million target for 2027, focused on organizational simplification, technology, and workforce optimization. No explicit capital expenditure numbers were provided.
Tone · Confident
Management expressed strong conviction in the refreshed strategy and forward outlook, citing improved execution and momentum, while acknowledging multi-year execution and headwinds such as the Japan sales suspension.
Supply-chain alpha
A1
The company is reducing its operating footprint from more than a dozen countries to roughly half, rotating over $3 billion in capital to focus on US, Japan, and select Europe, and explicitly aims to scale in asset classes like infrastructure equity and primary private equity.
“We will also look to enter adjacent areas increasingly important to our third-party clients, including infrastructure equity and primary private equity, building on our deep client relationships.”
Management noted an expectation of a second-half surge in US pension risk transfer (PRT) activity after a quiet first half, but also stated volumes will remain below the record levels of recent years.
“While we expect industry activity to accelerate in the second half, as is typical, We anticipate that transaction volumes this year will remain below the record levels seen in recent years.”
The company is reducing its operating footprint from more than a dozen countries to roughly half, rotating over $3 billion in capital to focus on US, Japan, and select Europe, and explicitly aims to scale in asset classes like infrastructure equity and primary private equity. — Indicates intensifying competition from a major insurance-linked asset manager in private markets, putting pressure on existing alternative asset managers to differentiate.
… Our objective is to further advance our market leading franchise by leveraging strength in areas where we have led for decades, including credit, infrastructure debt, and real assets. At the same time, we will expand in priority areas, including asset backed finance and direct lending. These asset classes support stronger returns, competitive pricing in our retirement businesses, and improved enterprise performance. We will also look to enter adjacent areas increasingly important to our third-party clients, including infrastructure equity and primary private equity, building on our deep client relationships. Growth in higher fee asset classes, combined with expansion into new geographies and client segments, will further improve asset management performance. We see significant opportunity outside North America, which makes up roughly half of the $147 trillion global asset pool. Only about a quarter of our third-party assets under management are sourced internationally today. We also have substantial runway to diversify our client base by expanding in retail and institutional segments where demand for private market solutions is accelerating. including insurance, sovereign …
Management noted an expectation of a second-half surge in US pension risk transfer (PRT) activity after a quiet first half, but also stated volumes will remain below the record levels of recent years. — Suggests a competitive US PRT market in 2026 with fewer jumbo deals, which could compress premiums or delay revenue recognition for all participants.
… with income. Our distribution reach in innovative product design are differentiated competitive advantages, enabling us to target areas of the market that prioritize customer solutions over price. On the institutional side, we completed $1 billion of longevity reinsurance sales, but PRT sales remained muted in the quarter with a notable absence of jumbo transactions in the U.S. market in the first half of this year. While we expect industry activity to accelerate in the second half, as is typical, We anticipate that transaction volumes this year will remain below the record levels seen in recent years. Although activity remains episodic, this market represents a significant forward opportunity, both here in the U.S. and in Europe, as I noted in my strategy remarks. And these transactions should drive strong earnings growth over time. Our brand, underwriting expertise, and execution capabilities will enable us to maintain our leadership position as these markets continue to transact. Our group insurance business delivered record quarterly earnings as initiatives to strengthen the business and diversify its growth profile translated into results. Performance was led by our …
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