Policyowners' Examining Committee

Advances in technology and innovation are fundamentally changing how we live and, increasingly, how we work. Although not a new phenomenon, the pace of technological disruption is accelerating exponentially. The Committee believes industry winners and losers will be disproportionately determined by whether and how technological innovations are leveraged in total service to business strategies through business-driven, technology-enabled solutions. The most prominent current example is the advancement and application of artificial intelligence ("AI"), which is delivering business capabilities at unprecedented rates. The AI use cases in the insurance and financial services industries are vast: optimizing operational efficiencies in claims, service, and back-office workflows; automating underwriting; deepening client engagement through data-driven, tailored planning and next-best action alternatives; enhancing advisor productivity through targeted prospecting tools and training modules; developing innovative products through data-driven enhancements; optimizing investment management; improving employee productivity through commercially available efficiency tools; and many others. The Committee believes the companies that master and apply these types of technologies first will capture disproportionate advantages.

The Committee believes the Company is on the right path toward optimizing a business-driven, technology-enabled operating model. It recently reorganized its technology, information, and portfolio management operations under a single business architect to better orchestrate business, technology, data, and operations as one integrated unit. It has begun applying this integrated system to cross-functional, lighthouse-style business domains, and it will gradually use this model to change the way the entire business operates, leveraging learnings along the way. The Committee believes that a process of making small changes, iterating and course correcting along the way, and progressing toward a business-driven, technology-enabled end state is the right approach. The Company is also leaning into the business-relevant use cases of AI, such as its 2025 deployment of its active listening AI (ALAI) tool. ALAI supports advisors and clients by documenting and summarizing meeting content, populating factfinder questionnaires, and producing draft documents that advisors can quickly review, modify, and use with prospects and clients. The advisors with whom the Committee spoke raved about how ALAI makes their day-to-day tasks easier so that they can spend more time with clients. The tool is an excellent example of leveraging technology to increase advisor efficiency and streamline business processes, and the Company should ensure it maintains a dedicated AI road map and corresponding data strategy to continue to leverage advances in AI for both the Home Office and its advisors.

But there is more to be done, and as referenced above, the cost of not accelerating these efforts is too high to ignore. Like many decades-old insurance (and other) companies, the Company has legacy systems and cost centers that could benefit from innovation initiatives, and those things should be prioritized in a technology modernization road map. More importantly, the concept of "innovation" needs to expand from a business objective to an institutional mindset. Employees should be encouraged to innovate in their spaces and should be recognized both for their successes and for their learnings derived from good-faith failures. Evolving technologies are coming, and the Company should continue to take action to ensure it is enhanced by them, not disrupted by them. The Committee encourages the Company to continue to embrace technology and innovation through an optimized, business-driven, technology-enabled operating model.

As the Committee learned about the Company's exclusive advisor force (the "Field"), two realizations became clear. The first is that the Field is instrumental to both the Company's client experience (including achieving exceptional client outcomes) and the Company's overall success. The second is that, while the Field and Home Office are absolutely aligned on pursuing those two ends, they are not always aligned on the manner in which to pursue them. The Committee would encourage both the Home Office and the Field to prioritize alignment in their joint pursuit of providing financial security to more and more policyowners and clients.

The Committee identified several key areas for focus. As a first example, advisor succession events can be extremely disruptive to policyowners and clients, and planning for these events should be a critical joint effort between the Home Office and the Field. The Field craves collaboration, both in its pursuit of finding and training suitable succession candidates and in accessing market-rate capital to facilitate the transfer of these businesses. Advisor time spent navigating these transactional challenges is time spent away from attracting new clients and pursuing excellent client outcomes. The Committee was pleased to learn about the advisor succession programs currently under development and deployment by the Home Office, and the Committee recommends special focus and collaboration among the Home Office, retiring advisors, and succeeding advisors in minimizing transactional friction for the benefit of policyowners and clients. As a second example, the Company should ensure that Home Office-produced marketing materials are relevant for the critical Getting Established, Mass Affluent target audience. The Committee heard from a young, female advisor—who, herself, qualifies as Getting Established and Mass Affluent—that much of the Company's content needs to be more tailored to her younger generation client base. To be sure, that's only one anecdote, but it's an anecdote that resonated with the Committee and suggests that some among the Company's most critical target segments aren't being reached. Additional examples where enhanced collaboration would benefit policyowners and ensure Company (including Field) success include work toward additional product innovation, provision of associated client services, and stronger alignment between national Company and local advisor branding. The Home Office and the Field also need to ensure that sufficient "connective tissue" exists between the two so that guidance and feedback flow in a continuous loop.

The Committee acknowledges that achieving total alignment with more than 8,000 independent advisors, each with unique styles, preferences, and priorities, is an impossible task. The Committee further notes that much regular collaborative work does take place between the Home Office and Field. For example, the Committee was impressed by recent "Clear the Path" work intended to solve minor structural pain points and provide a better client and advisor experience.

There is also significant, regular collaboration between the Home Office and the four standing Field Associations. Processes are in place to solve common challenges, and the Committee encourages the Home Office and the Field to lean into this work and prioritize increased alignment for the benefit of new and existing policyowners and clients.