Prompt:
Human: I'm pleased that you are able to join us today.
The slides are available on our website at investors.
Referring to Slide 2.
Leading our discussion are Maria Pope, president and CEO; and Jim Ajello, senior vice president of finance, CFO and Treasurer.
2021 was a year of strong growth and execution.
Against the backdrop of the ongoing pandemic, the historic ice storm and record heat.
We focused on grid hardening and new technologies to improve reliability and resiliency.
Turning to Slide 4.
For the full year 2021, we reported net income of $244 million, or $2.72 per share.
This compares with $155 million, or $1.72 per share for the full year 2020.
For the fourth quarter, net income was $66 million, or $0.73 per share.
This compares with $52 million or $0.57 per share for the fourth quarter of 2020.
Our region is growing, particularly the tech and digital sectors driving overall revenue growth.
Net variable power costs were also higher, reflecting regional power market volatility, particularly in the third quarter.
Operating administrative expenses increased due to higher wildfire and vegetation management expenses, and the cost of several storms outside of the large major storm deferral.
Finally, employee wages and benefit expenses were higher, reflecting inflation pressures, and improved performance over 2020.
Given our region's attractive environment for high tech and digital companies, and ongoing in migration, we expect growth to remain very strong.
Power market challenges will also likely continue.
We've taken several steps to reduce our exposure.
Through first, forward pricing updates to the annual update tariff mechanism.
Second, new forecasting methodologies that better reflect wind and other volatility reflected through our rate case.
And third, plant operating improvements.
And finally, fourth, procurement of additional forward capacity.
Operating efficiency is the focus.
And as we address rising customer expectations as well as inflationary pressures will be increasingly important.
All of this combines to inform our 2022 earnings guidance of $2.75 to $2.90 per share.
Later in the call, Jim will go into much more detail on both 2021 results, and our 2022 outlook.
I would like to now talk to a couple of highlights that were significant from an operational, legislative and regulatory standpoint.
First, opening the new Integrated Operations Center, and launching the advanced distribution management system were key milestones.
These investments establish the foundation for Intelligent Energy Network that enables the integration of greater amounts of renewable energy, distributed energy resources, and increases system flexibility, and resiliency.
Second, we advanced our digital capabilities across the enterprise to improve performance and deliver exceptional customer experiences.
We simplified our work and reduce costs by equipping field crews with new digital tools, upgrading supply chain systems, and increasing call center performance.
Together, these advances allow us to get more work done and drive operational efficiency.
Through advanced data analytics and smart grid technologies, we're increasing the reliability of our system, even under uncertain, and extreme weather conditions.
First, a path to decarbonization was further catalyzed by the passage of Oregon's clean energy legislation, working with a broad coalition of stakeholders.
Aggressive carbon reduction goal targets were established that are consistent with our goals and aligned to the International Panel on Climate Change or IPCC's sixth report.
PGE was also the first utility in the country to sign the climate pledge, committing to achieving net zero emissions across our company operations by 2040.
And for the 13th consecutive year, our Voluntary Renewable Energy Program was ranked number one in the U.S by the National Renewable Energy Laboratory.
Forth, we initiated an RFP in April for up to 500 megawatts of renewable energy and 375 megawatts of non-emitting capacity.
Initial bids were submitted in January, with a short list expected to be issued in the second quarter and a final decision by the end of the year.
While many of you have lots of questions on the bids, we are in the very early stages of evaluation, and all this are subject to NDAs.
Also, in collaboration with customers and stakeholders, we issued our inaugural Distributed System Plan focused on modernizing our grid to accelerate distributed energy resources, and maximize grid benefits for all customers and community members.
Fifth, as part of our 2022 general rate case, we recently reached an agreement that subject to OPC final approval will resolve the annual revenue requirement, average rate based, capital ratios, and a corresponding increase in customer prices.
And finally, this year we relaunched our guiding behaviors.
First established more than 25 years ago, and our ongoing and long standing commitment to diversity, equity inclusion.
We're also continuing our long-standing focus on environmental stewardship, and during the past year, PG employees completed over 15,000 hours of community service, and employees retirees, the PG Foundation, and our company donated $4.8 million to support our communities.
As we look to the future, we anticipate continued economic growth and load increasing 2% to 2.5% in 2022.
With longer term growth of approximately 1.5%.
Ongoing focus on digital and other technologies, operational improvements, and efficiencies which could help mitigate inflationary cost pressures.
Overall, we're well prepared with improved reliability, resiliency, and operating performance as we rapidly transform to address urgent climate change challenges and lead a clean energy future across our region.
Our 2021 results reflect the continued economic growth in our service territories and the opportunities, and challenges of our path to decarbonization.
We experienced strong load growth from higher residential and industrial demand, while also navigating challenging power markets, and inflationary cost pressures.
Turning to Slide 5.
The continued recovery from the initial economic downturn due to COVID-19 is reflected in our strong year-over-year load growth of 4% weather adjusted.
In 2021, we experienced growth across all customer classes, with residential demand increasing 1% weather adjusted, which reflects ongoing economic growth.
Commercial load increased 4.2% weather adjusted as the sector rebounds from the decreased activity in 2020.
Industrial deliveries increased 8.5% weather adjusted as our service territory continues to attract growth from high tech and digital customers, including data centers, customer expansion, and new site development activity, all point to strong growth in the sector.
The favorable weather we experienced contributed an additional 1.1% to the overall growth rate of 5.1% in 2021.
Based on recent trends in our service territory, primarily driven by industrial growth, and anticipated distributed energy resources growth, including transportation, electrification adoption, we are raising our long-term growth guidance from 1% to 1.5%.
Our quarterly earnings per share increased from $0.57 per share in 2020 to $0.73 per share in the fourth quarter of 2021.
The increase was primarily due to a $0.17 adjustment to a non-utility asset retirement obligation liability in the fourth quarter of 2020, including fourth quarter results full year GAAP earnings per share was $2.72 for 2021, compared to GAAP EPS of $1.72 for 2020.
Non-GAAP earnings per share for 2020 was $2.75 after removing the negative impact of the energy trading losses.
I'll cover our financial performance year-over-year on Slide 6.
Beginning with a GAAP net income of $1.72 per share in 2020, which we add back the $1.03 per share impact of the energy trading losses.
We experienced a $0.78 increase in total revenues, primarily due to the strong economy driving growth in our service territory, with the balance due to more favorable weather.
Offsetting this was $0.58 of unfavorable power cost.
2021 saw a significantly higher power prices, particularly in the summer, due to warmer weather and increased regional demand for capacity.
We have deferred $29 million of incremental power cost under our [Inaudible] mechanism, which represents 90% of the variance above the threshold.
We anticipate the regulatory process related to this deferral will begin late in the Quarter 2 of 2022, and continue through the year.
There was an $0.18 decrease to earnings per share from cost associated with our transmission and distribution expenses, including $0.05 for enhanced wildfire mitigation, $0.05 of additional vegetation management, and $0.08 of service restoration costs related to storms in 2021.
There was a $0.41 decrease to earnings per share from administrative expense, including $0.12 in adjustments to incentive programs, including $0.06 for 2020 decreases and incentives following the trading losses.
$0.07 from increases in wage and salary expenses and $0.16 for outside services to strengthen risk management, improved customer facing technology, and improve our supply chain management systems.
$0.03 from higher insurance expenses, partially due to higher wildfire insurance premiums and then, $0.03 from miscellaneous other expenses.
Going to DNA, a $0.32 increase due to lower DNA expenses in 2021, including $0.22 increase due to the impact of a non-utility asset, our retirement obligation revision to 2020, an $0.18 increase due to the impact of plant retirements in 2020.
And these increases were partially offset by an $0.08 decrease due to higher plant balances in 2021.
A $0.05 decrease from the impact of higher property taxes.
And then finally, there was a $0.09 increase primarily driven by the recognition of a benefit from a local flow through tax adjustment in Q1 of 2021.
Turning to Slide 7.
Last month, we reached an agreement with stakeholders that resolved several significant aspects of our 2022 general rate case.
In addition to the previously agreed upon 50:50 capital structure and 9.5% allowed ROE, we agreed to a final annual revenue requirement, average rate base, and a corresponding increase in customer prices.
A final rate base of $5.6 billion, an increase of $814 million, or 17%, which represents a constructive outcome for investments made on behalf of customers.
While the $10 million increase in the annual revenue requirement net of power cost represents a modest 0.5% increase in customer prices.
We also agreed to end our decoupling mechanism.
The operation of the existing decoupling mechanism is misaligned to the current policy framework in Oregon, especially as it relates to supporting decarbonization.
So the parties agreed to eliminate it.
Parties agreed to accelerate colstrip depreciation to fully depreciate our interest in that plant by 2025.
While certain policy elements remain outstanding in all settlements remain subject to final PUC approval, we are pleased with the potential outcome for our customers and stakeholders.
A final order is expected by the end of April.
On the resource plans, we made several regulatory filings in which we shared our plans to advance the strategy to meet our targets, reducing greenhouse gas emissions in the power we served customers.
Maria discussed our resource plans earlier in the call and we look forward to working through the RFP process, and expect to share an update in Quarter 2 .
Turning to Slide 8, which shows our updated capital forecast through 2026.
We increased our capital expenditure forecast for 2023 to 2026 from $550 million to $650 million per year to more clearly reflect our fundamental plans to invest in the system.
For reference, in 2021, we exceeded our target guidance of $655 million with the total capital expenditures of $680 million.
Over the next five years, we expect to invest roughly $3 billion on top of the recently settled $5.6 billion in the incident rate case.
To be clear about this increase, I want to point you to the distribution service plan that Maria referred to.
This plan anticipates significant growth in load, new connects, new projects for customers, system expansion, substations, and grid modernization, which primarily explain the increase in the capex.
The increases primarily represent group grid resiliency and transportation and electrification investments plan for future years, but do not include expenditures related to the possible RFP ownership options.
With the recent settlement in the GRC, subject to approval by the OPUC, this affirms that we will not need to issue equity to meet our capital requirements in 2022, unless there is a significant renewable addition stemming from the RFP.
The RFP process for energy and capacity resources, with bids submitted in January and a shortlist targeted in Quarter 2 final selection of winning bids is expected by the end of 2022.
The RFP will be a competitive process, and we'll share more details as we move through the procedural calendar.
We continue to maintain a solid balance sheet, as you can see on Slide 10, including strong liquidity investment grade credit ratings accompanied by a stable credit outlook.
Total available liquidity at December 31, 2021, $843 million and we remain one of the least levered [Audio gap] sector.
Plan to fund investments with cash from operations, and issuance of up to $250 million of debt in the second half of 2022.
As we did in 2021, we will apply our green financing framework, continue to seek out opportunities to take our long-term debt to our sustainability strategy through capital investments.
Turning to Slide 11.
We are initiating full year 2022 earnings guidance of $2.72 to $2.90 per diluted share.
As a reminder, we established our base year and growth rate in 2019 with earnings per share of $2.39 per diluted share.
The midpoint of this guidance range represents a 5.8% compounded annual growth rate from the $2.39 base.
I'd like to walk through a few key drivers that will prove that we're confident we'll grow to this 46% range in 2022.
The drivers of our long-term guidance remain strong load growth from in-migration and industrial expansion, operational efficiencies, and potential investment opportunities in our system with renewable resources.
We expect continued strength and energy deliveries with 2% to 2.5% weather adjusted retail load growth.
I would like to address our 2022 O&M guidance midpoint of $600 million, which represents a 7% decrease from 2021 levels.
2021 O&M included significant work to accelerate our digital and customer strategies, we expect these efforts to create sustainable efficiencies in our operations in 2022 and beyond.
In 2021, we also accelerated our vegetation management efforts, implemented new customer interface system, automate many aspects of customer service.
We continue to deployment of distribution, automation technology, and we made significant investments to build risk awareness, and mitigation into our operations.
Looking forward to 2022, we will increase efficiencies by accelerating adoption of digital technologies, and investments made in 2021.
[Inaudible] leverage increased recent grid investments to strengthen our operations.
I am confident as we continue to identify and implement efficiencies in 2022, we can't continue to grow.
We are reaffirming our long-term earnings growth guidance of 46% of 2019 this year.
With respect to dividends, our board recently declared a dividend of $0.43 per share.
Our 2021 full year dividend was $1.68 per share, this dividend, we completed our 15th consecutive year of dividend growth in the last five years, growing at 6.1% compounded annual growth rate.
We also plan to continue our limited share buyback program to offset any dilutive effects of shares issued under our compensation programs.
The combination of strong growth trends, clear decarbonization targets, and significant opportunities to invest in our customers electrification needs create a compelling case for delivering value by serving clean, affordable, safe, reliable, and equitable energy.
To execute our long term financial targets for customers and investors alike.
I'd like to note that today we announced that Lisa Kaner, our VP general counsel chief compliance officer, plans to retire in early July, and we'll transition to the role of chief compliance officer effective mid-March.
We're grateful for Lisa's insights, expertise wise counsel, as we navigated the challenges of the last five years.
Recently, Lisa was instrumental in resolving all of the litigation associated with the 2020 energy trading matter.
Lisa sets high standards for leadership and integrity, and we wish her well in retirement.
At the same time, I'm pleased to announce that Angelica Espinosa, who has served as deputy general counsel and corporate secretary, has been appointed as VP general counsel effective mid-March.
Prior to joining PGE, Angelica held multiple roles at Sempra Energy, including vice president of gas acquisition, vice president and chief risk officer of SoCal gas, chief counsel for the Sempra International businesses, she joined Sempra in 2014 from GE, where she had multiple legal leadership positions in their oil and gas division.
Congratulations, Lisa and Angelica.
Lisa, we wish you well, and are grateful for all you've done for PGE, and Angelica, we're excited about the broad expertise and experience that you bring to our executive team and the company.
 Assistant:

Chosen response:
compname reports q4 gaap earnings per share of $0.73.
sees fy earnings per share $2.75 to $2.90.
q4 gaap earnings per share $0.73.
initiating 2022 earnings guidance of $2.75 to $2.90 per diluted share.
sees capital expenditures of $660 million in 2022 and $650 million in 2023 through 2026.


Prompt:
Human: Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement.
We appreciate you joining us for our third quarter investor update.
Moving to Slide 3 and the agenda for today's call.
I'll also share some current initiatives underway to advance PPL's clean energy strategy and provide a brief operational and regulatory update.
Joe will then provide a financial update, including a detailed review of third quarter financial results.
Turning to Slide 4.
We continue to make excellent progress on our key initiatives to strategically reposition PPL for long-term growth and success.
In September, we received FERC approval for our planned acquisition of Narragansett Electric.
With FERC's approval, we now have four of the five approvals necessary to close on the transaction.
We continue to make progress on securing the final approval from the Rhode Island Division of Public Utilities and Carriers.
In its procedural schedule, the division has established February 25 as the target date for a decision.
This would put PPL and National Grid on a path to close on the transaction by March of next year as originally expected.
As we pursue the final regulatory approval, we continue working closely with National Grid on planning to ensure a smooth transition for Rhode Island customers and Narragansett employees upon closing.
Together, we've collaborated through 30 functional integration teams to plan and execute a safe, effective and minimally disruptive transition of the Rhode Island operations.
These teams have built robust Day 1 integration plans to execute on identified business requirements; extracted transition service agreements that will be key to providing a stable, seamless transition for customers; redesigned critical business processes to enable the TSAs to effectively operate; designed a new Rhode Island operating model and organization from the ground up, with over 1,100 National Grid employees accepting employment offers pending the close of the transaction.
We've initiated an integrated change management and communication strategy to engage our future employees, customers and Rhode Island stakeholders to begin to build relationships for the long term.
And all three labor unions have ratified their new contracts that will be effective under PPL's ownership.
As we work to secure final approval, we look forward to partnering with the talented team in Rhode Island to deliver safe, reliable, affordable and sustainable energy.
And we are very excited about the opportunity the acquisition presents to build one of the nation's most advanced clean energy-enabling grids in support of Rhode Island's ambitious decarbonization goals.
Finally, on this slide, I'm excited to highlight a new valuable addition to PPL's Board of Directors, Heather Redman.
Heather is the co-founder and managing partner of Flying Fish Partners, a venture capital firm that invests in early stage artificial intelligence and machine learning start-ups, including energy-related applications.
She brings expertise in disruptive technology, industry transformation, energy development and energy technology at a time when PPL is squarely focused on driving innovation and positioning our company for growth in the clean energy transition.
I am confident that Heather will be a fantastic addition to our diverse and experienced board.
With Heather's addition, our board now has 10 directors, 60% of whom are diverse, and 30% of whom are women.
Turning to Slide 5.
In advancing our strategic repositioning, we also continue to make progress in deploying proceeds from the sale of our U.K. assets to maximize shareowner value.
And while we recognize cash is fungible, we are showing the major buckets for the use of proceeds on this slide.
And today, we've announced two updates.
First, as we continue to develop our business plan, we've identified at least $1 billion in incremental capital investments in Pennsylvania and Kentucky through 2025 to support grid resilience and modernization in advance of sustainable energy future for our customers.
We identified capex opportunities, predominantly in the T&D areas, include continued application of smart grid technologies, which improve overall system reliability and reduce O&M costs at the same time.
It also includes further hardening of the system to support reliability and resilience in the face of more frequent and stronger storms.
We'll look to make these same types of investments in Rhode Island once we close the transaction and work with Rhode Island stakeholders on the pace of change to the clean energy economy in the state, keeping in mind the cost impacts for customers.
In addition to our updates on capex opportunities, we've also revised our expectations for share repurchases and have allocated an additional $500 million to buybacks.
We now expect to repurchase a total of approximately $1 billion of PPL common stock by year-end, effectively doubling the amount previously announced on our Q2 call.
We've already completed $550 million in share repurchases through October 31.
We're pleased about the progress we've made in evaluating our capital plans and look forward to sharing additional details at an analyst day following the closing of the Narragansett acquisition.
In the meantime, we'll continue to review our business plans for additional opportunities that will drive value for both customers and shareowners.
We are also providing an update on the timing of an expected change to PPL's dividend and reiterate the planned dividend policy following the closing of the Narragansett acquisition.
The dividend has and will remain an important part of PPL's total shareowner return proposition.
Given the procedural schedule in place for the required regulatory approval in Rhode Island, we expect to maintain the current quarterly dividend rate through the January 3, 2022, payment.
After that date, we plan to realign the dividend, targeting a payout ratio of 60% to 65% of the repositioned PPL earnings as previously communicated.
The final decision regarding the dividend will be made by the board of directors after the Narragansett closing.
Moving to Slide 6.
We continue to advance our clean energy strategy as we pursue our goal of net zero carbon emissions by 2050.
In October, our Kentucky Utilities filed renewable power purchase agreements with the Kentucky Public Service Commission to provide a combined 125 megawatts of solar power to five major customers.
Under the 20-year agreements, which will support customer participation in LG&E and KU's green tariff, LG&E and KU will procure 100% of the power from a new solar facility that will be built in Western Kentucky.
The agreements reflect our continued efforts to support the growth of renewable energy and economic development in the state.
utilities committed to supporting the growth of electric vehicles as we seek additional opportunities to enable third-party decarbonization.
The Electric Highway Coalition will focus on development of a seamless network of rapid electric vehicle charging stations, connecting major highway systems from the Northeast to the Midwest down to Texas.
The goal is to create convenient options for long-distance EV travel to reduce range anxiety for consumers.
We also continue to expand investments in R&D needed to achieve net zero.
Our Kentucky Utilities recently announced a partnership to study the capture of carbon dioxide emissions.
The partnership with the University of Kentucky Center for Applied Energy Research, or CAER, will seek to develop cost-effective, scalable technology to capture carbon dioxide from a natural gas combined cycle plant.
We'll be working with CAER and using the carbon capture infrastructure we've already built at our Brown coal facility in 2014 to simulate emissions from a natural gas plant.
The project will also support a study aimed at direct air capture of CO2, potentially creating a negative emissions power plant.
In addition to capturing CO2, the system aims to produce two value-added streams, hydrogen and oxygen, that can be sold to offset the cost of capturing and storing the CO2.
Additional partners in this R&D initiative include Vanderbilt University and EPRI and GTI through their low carbon resources initiative.
The carbon capture unit we've built at the Brown plant is one of only a few carbon capture systems in operation today at power plants in the United States.
Furthering our R&D-related efforts, PPL recently acquired an ownership interest in the SOO Green project, a 350-mile underground transmission project that seeks to connect the MISO and PJM power markets and support growing demand for clean energy.
We recognize that expanding the nation's transmission grid will be critical to connecting more wind and solar power and reducing greenhouse gas emissions.
Breaking through siting, permitting and other barriers to build this transmission quickly and cost effectively will be key.
SOO Green seeks to tackle these challenges by developing high-voltage transmission lines underground along major rail corridors.
PPL's investment in the SOO Green project will enable us to gain valuable insight into this innovative approach.
We look forward to lending our capabilities and transmission expertise to support this project's success.
Turning to Slide 7.
On October 19, LG&E and KU submitted their triennial joint Integrated Resource Plan to the Kentucky Public Service Commission.
The IRP provides the commission with information regarding our potential generation sources over the next 15 years to meet forecasted energy demand in a least cost manner.
The IRP is submitted for informational purposes and represents a moment-in-time look at ongoing resource planning, using current business assumptions and long-term forecasts.
LG&E and KU's 2021 IRP projects a significant reduction in coal's contribution to our generation mix, declining from over 80% of the expected electricity produced in 2021 to about half of the total power produced in 2036.
In our base case scenario for load and fuel prices, we show the retirement of nearly 2,000 megawatts of coal capacity as we economically advance a clean energy transition.
These projected retirements are consistent with the depreciation study filed in our last rate case, as well as the estimates used in developing our net zero goal announced last quarter.
The IRP base demand and base fuel price scenario envision solar power playing a growing role in meeting our customers' demand for energy over the next 15 years, accounting for nearly 20% of all the power we supply to our Kentucky customers by 2036.
This scenario shows an additional 2,100 megawatts of solar combined with 200 megawatts of battery storage, along with simple cycle gas units needed for reliability purposes by the end of the planning period to replace that 2,000 megawatts of expected coal plant retirements.
We've also added a high-case scenario to this slide, which reflects the implications of higher demand and higher fuel prices due to several factors.
Under the high-case scenario, we would expect there to be significantly more energy needed by 2036, requiring additional capacity.
Based on our assumptions, that would primarily be met with an additional 5,500 megawatts of incremental renewable and storage resources above the base case scenario through that time period.
Further, that would result in more than twice as much output from renewable resources by 2036, reflecting approximately 40% of generation output primarily replacing natural gas from the base case scenario.
We expect the next IRP, which will be filed in 2024, to be an extremely important plan based on the current timing of our next coal plant retirements, which are expected to begin again in 2024.
Moving to Slide 8.
On August 20, PPL Electric Utilities announced a constructive settlement with an alliance of industrial and municipal customers that had challenged the company's FERC-approved base transmission return on equity.
The settlement, which must be approved by FERC, would change PPL Electric's base ROE from 11.18% to 9.9% from May 2020 to May 2022 with the rate stepping up to 10% by June 2023.
The settlement also updates the equity component of PPL Electric's capital structure to be the lower of its actual equity component calculated in accordance with the formula rate template or 56%.
The settlement also allows PPL Electric to modify the current formula rate, which is based on a historic test year and move the company to a projected rate year.
Further, PPL's formula rate could also be modified to be based on the calendar year moving forward rather than the current rate year that begins June 1.
We expect these changes to help reduce regulatory lag as we continue to make additional investments in transmission infrastructure.
Overall, the settlement is expected to reduce net income by approximately $25 million to $30 million per year.
In other operational developments, our utilities continue to be recognized for our award-winning customer service and innovation.
PPL Electric Utilities and Kentucky Utilities were once again listed as two of the most trusted utility brands in the United States based on a recent study performed by human behavior firm Escalent.
The results of the study show that communications played a vital role in building brand trust between utilities and our customers in 2020 during the pandemic.
It was the third consecutive year PPL Electric received this recognition and the second consecutive year for Kentucky Utilities.
Also, the Association of Edison Illuminating Companies selected PPL Electric Utilities as a winner of one of their 2021 achievement awards for revolutionary work in vegetation management.
Trees are a common cause of outages.
Within PPL Electric Utility service territory, it's estimated that about a third of distribution outages over the past five years were caused by trees contacting overhead wires.
By using a new approach that leverages data analytics and other new technologies, PPL Electric Utilities found ways to trim and remove the right trees at the right times across 28,000 miles of overhead lines to help prevent outages.
This has led to improved reliability despite an increase in more severe weather without increasing overall vegetation management costs.
By using smart sensors that collect real-time information like wind speed and line temperature, operators can relieve transmission congestion and increase the electricity sent over those lines.
PPL Electric Utilities has been recognized for its leading-edge approach to integrating DLR into core operations and using data from the sensors to make prudent investment decisions.
And finally, we continue our efforts to support economic development in the regions we serve.
One recent major development in this area is Ford's announcement of plans to construct a $6 billion electric battery complex within our LG&E and KU service territory.
It is one of, if not the largest economic development announcement in Kentucky's history and will have far-reaching positive impacts on communities around the commonwealth.
In fact, 2021 has been a record year for Kentucky in terms of economic development growth with over $10 billion in new investments being announced within the state.
Other recent developments in addition to Ford's announcement include a $460 million investment by Toyota and a $450 million investment by GE at its Appliance Park in Louisville.
These decisions exemplify the strengths that Kentucky has to offer large industrial customers.
Specifically, we are known for exceptional reliability to deliver energy 24 hours a day, 365 days a year.
Further, we have some of the lowest retail rates in the country, an important characteristic for large industrial customers and something we remain keenly focused on maintaining.
Kentucky also has the third lowest business cost in the country and is home to three global shipping hubs.
And our Kentucky service territories are located in a centralized region that is well protected from intensifying coastal storms and other natural disasters.
We are excited to support the energy needs of these developments and their prospective impact on our surrounding communities.
Before we move to the next slide, in the broader context, I would also note that Kentucky Governor Andy Beshear in the state's Office of Energy Policy unveiled a new energy strategy on October 20 called E3.
The strategy considers three Es as key pillars to the strategic vision of a resilient economy in the state: energy, the environment and economic development.
And this strategy aligns very well with PPL's clean energy transition strategy.
We're encouraged by several areas included in the strategy where our utilities will play a vital role and we expect will provide future opportunities, including ensuring a transmission grid that supports growing renewable resources; ensuring an electric distribution grid that is self-healing, self-sufficient and auto-sensing; supporting a diversified energy supply that is fuel secure, sustainable and resilient; incentivizing sustainable business investments, including hydrogen and other renewable fuels; supporting the development of carbon capture utilization and sequestration industries; and supporting alternative fuel transportation infrastructure.
LG&E and KU participated in working groups associated with affordability and economic development in the lead up to the state announcing its strategy.
We believe the strategic framework represents a comprehensive approach to positioning Kentucky for success in a changing energy landscape.
We look forward to engaging with the Kentucky administration and other stakeholders as the state further develops its strategy to support sustainability, boost competitiveness and spur job growth and innovation in local and regional economies.
Today, we announced third quarter reported earnings of $0.27 per share.
This reflects special items of $0.09 per share primarily related to losses on the early extinguishment of debt associated with the recapitalization of the balance sheet post the sale of WPD.
Adjusting for special items, third quarter earnings from ongoing operations were $0.36 per share compared with $0.30 per share a year ago.
Our third quarter results bring our year-to-date earnings from ongoing operations to $0.83 per share.
Now let's move to Slide 10 for a more detailed look at our third quarter segment results.
Our Pennsylvania regulated segment recorded $0.16 per share for the third quarter, which was $0.01 per share lower compared to a year ago.
The decrease was primarily due to higher operation and maintenance expense, primarily related to higher storm and support costs and reserve recorded for a reduction to the return on equity in the transmission formula rate.
Partially offsetting these items were returns on additional capital investments in transmission.
Turning to our Kentucky regulated segment.
Third quarter results were $0.21 per share, a $0.04 per share increase compared to Q3 2020 results.
The increase was primarily driven by higher base retail rates effective July 1 and lower interest expense, primarily due to interest costs that were previously allocated to the Kentucky regulated segment.
Partially offsetting this increase was higher operation and maintenance expense related to support and generation-related cost factors that were not individually significant.
Results at corporate and other were a loss of $0.01 per share, which was $0.03 higher compared to a year ago.
In summary, as we work to complete our strategic repositioning, I remain incredibly excited about our future.
We continue to build momentum throughout 2021 and executing our strategic objectives.
energy company stronger, more agile and better positioned to advance the clean energy transition, to deliver utilities of the future and to drive long-term value for all of our stakeholders.
 Assistant:

Chosen response:
qtrly earnings per share $0.27.
qtrly earnings from ongoing operations (non-gaap) $0.36 per share.
announced update to its planned share repurchase program, increasing targeted repurchases to approximately $1 billion by year-end.


Prompt:
Human: We appreciate you joining us for our 2020 year-end earnings call today.
With me as usual are Joe Bergstein, our chief financial officer; Greg Dudkin, the head of our Pennsylvania utility business; Paul Thompson, the head of our Kentucky utility business; and Phil Swift, who heads up our U.K. utility business.
Moving to Slide 3.
I'll also share a few updates on regulatory and ESG matters.
Later, Joe will provide a more detailed overview of year-end and fourth-quarter financial results.
I'll then share some closing thoughts on our key focus areas for 2021.
Turning to Slide 4.
I'm incredibly proud of how PPL performed in 2020, a year unlike any we've seen in our lifetimes.
It was a year that tested our resolve, our resilience and our ability to adapt very quickly to dynamic conditions.
Importantly, we provided electricity and natural gas safely and reliably to more than 10.5 million customers when it mattered the most.
This included the hospital workers and the first responders who were on the front lines.
And it included customers whose homes became offices, whose kitchens and bedrooms became classrooms and who were counting on us to deliver without fail.
We're extremely honored that our continued operational excellence resulted in further recognition from these very same customers in 2020.
This included topping all large utilities in the east for the ninth straight year for residential customer satisfaction and all mid-sized utilities in the Midwest for both residential and business customer satisfaction.
In the U.K., at the end of 2020, we again finished with scores of over nine out of ten in all four of our DNOs and are on track to receive the maximum incentive reward under Ofgem's broad measure of customer satisfaction.
We also received the U.K.'s customer service excellence award for the 28th time since 1992.
As we focused on our commitment to provide a superior customer experience, we also recognized the need to support our local communities and assist customers struggling with COVID-19.
With that in mind, we continued to offer payment assistance programs, flexible payment options and referral services to help customers manage their energy bills.
Shifting to our financial performance.
We achieved financial results that are within our original earnings guidance range, despite the challenges of COVID-19.
This achievement included overcoming a $0.12 per share unfavorable impact from COVID, due primarily to low sales volumes in the U.K. and lower commercial and industrial demand in Kentucky, as well as a $0.05 per share unfavorable impact due to mild weather compared to normal conditions.
We were able to offset some of the impact through effective cost management and several other factors without negatively impacting the long-term strength of the business.
regulatory construct provides recovery for any under-collected revenues from lower sales volumes, which was a significant portion of the 2020 impact.
We also maintained a strong financial position and delivered on our commitment to return capital to share owners, something PPL has done each quarter for 75 consecutive years.
Turning to Slide 5.
As we dealt with the challenges of COVID-19 during the year, we also remained very focused on the future.
Building on the $27 billion we had invested over the prior decade to improve service to our customers, during 2020, we completed more than $3 billion in infrastructure improvement, in line with the original expectations we outlined for you at the beginning of the year.
The vast majority of this investment, nearly 90%, was focused on transmission and distribution infrastructure to strengthen grid resilience, incorporate new technology and advance our clean energy strategy.
Shifting to a few sustainability highlights.
We continued to advance our clean energy strategy in 2020.
At the outset of the year, we set a more aggressive carbon reduction goal.
And throughout the remainder of the year, we invested in our networks to enable increased electrification and large-scale additions of distributed energy resources in the future.
In Kentucky, we secured regulatory approval for a 100-megawatt solar power purchase agreement to meet increasing customer demand for clean energy solutions.
We also continued to expand customer participation in our Solar Share Program, securing full subscription for two additional phases of Solar Share construction that will begin this spring.
In addition, our Safari Energy business also added more than 90 megawatts of solar capacity to its portfolio, increasing its own capacity to 110 megawatts.
This new capacity is all contracted via long-term power purchase agreements.
And in August, we joined a five-year industry initiative to accelerate the development of low-carbon energy technology and advance affordable pathways to economywide decarbonization.
We recognize that going even further, faster than the goals that we've set to address climate change requires new ideas, technology and systems that can be delivered safely, reliably and affordably.
That's why we're partnering with EPRI and GTI on their new Low-Carbon Resources Initiative.
As part of our sustainability efforts, we also remained focused on advancing a culture of diversity, equity and inclusion across PPL and supporting meaningful change in progress in the communities we serve.
To build on PPL's prior momentum in this area, the company adopted a new enterprisewide DEI strategy with five supporting DEI commitments.
In the wake of the killings of George Floyd, Breonna Taylor and others in 2020, PPL led focused discussions with our employees and in our communities on race and social justice that will continue to guide our efforts moving forward.
In addition, we provided initial contributions to support local organizations focused on DEI initiatives and launched a new scholarship program that aims to award $1 million over the next decade to support minorities and females pursuing careers in engineering, IT, technical and trade roles.
As a reflection of PPL's continuous focus on embracing diversity, inclusion and advancing equity for all, we were named a Best Place to Work for LGBTQ equality by the Human Rights Campaign Foundation, once again earning a perfect score.
Lastly, on this slide, I would note that we continued to enhance our ESG disclosures in 2020, demonstrating our ongoing commitment to transparency, and to keeping stakeholders informed.
This included our disclosures around political spending, an area in which the Center for Political Accountability and the Zicklin Center for Business Ethics Research gave PPL their Trendsetter ranking on the CPA-Zicklin Index.
Turning to Slide 6 for some regulatory updates.
In November, we took steps at our Louisville Gas and Electric and Kentucky Utilities businesses to support continued infrastructure investments that benefit our customers.
LG&E and KU filed rate requests with the Kentucky Public Service Commission on November 25, seeking approval for a combined revenue increase of about $331 million in electricity and gas base rates.
The requested increases will support continued modernization of the grid to strengthen grid resilience, as well as upgrades to LG&E's natural gas system to enhance safety and reliability.
In addition, we are seeking approval for full deployment of advanced metering infrastructure, faster electric vehicle charging stations and an updated net metering tariff.
If approved by the Commission, LG&E and KU's requested revenue increases would take effect July 1, 2021.
Given the COVID pandemic and in an effort to reduce the near-term impact of the rate adjustment for our customers, we sought to minimize the size of the requested increase and have included in our request for approval a $53 million economic relief surcredit to help mitigate the impact of the rate adjustment until mid-2022.
In addition, we have proposed to implement AMI in a manner, which based on current projections will not require an increase in the combined revenue of LG&E and KU in this rate case or in the future as operating cost savings are projected to more than offset the incremental capital cost of the project.
Additionally, pending the outcome of the proceeding, it's our goal not to request another base rate adjustment for several years.
In other notable Kentucky updates, LG&E and KU on January 7 issued a request for proposal for generation capacity to meet a potential energy shortfall that may be created by the anticipated retirements of 1,000 megawatts of coal-fired generation during this decade.
Brown Unit 3 are expected to be retired by 2028 as they reach the end of their economic useful lives.
We've also included in the appendix a slide that details the projected economic lives with our baseload generation plan.
The utilities are seeking 300 to 900 megawatts of capacity beginning in 2025 to 2028.
Additionally, we're asking for proposals for at least 100 megawatts of battery storage.
Proposals are due March 31, and we anticipate making a decision by mid-2021 and potentially filing for regulatory approvals in early 2022.
Lastly, in the U.K., Ofgem issued its RIIO-ED2 sector-specific methodology decision in mid-December.
The decision was largely in line with our expectations and underscores the vital role DNOs will play in supporting decarbonization in the U.K. to achieve a net zero economy.
In January, WPD became the first DNO to issue a draft business plan for RIIO-ED2.
That draft plan proposes GBP 6 billion in new investments to support decarbonization, digitalization and enhanced network utilization.
Turning to Slide 7 and the 2021 to 2025 capital plan.
We've outlined more than $14 billion from 2021 to 2025 to support continued modernization of our transmission and distribution networks and to advance a cleaner energy future.
This forecast spending represents $1 billion of incremental capex from 2021 to 2024 compared to our prior plan.
Those increases include $400 million in Kentucky to support full deployment of advanced metering infrastructure, $300 million in Pennsylvania for additional transmission investments, as well as incremental funding for IT initiatives focused on digital transformation investments in work optimization, smart grid technology and the customer experience and $200 million in the U.K. due to a shift of certain investments from 2020 to 2021 as a result of COVID-19, additional funding for telecommunications projects and updates to our RIIO-ED2 capital plan.
I'll begin with a brief overview of our fourth-quarter results on Slide 9.
PPL delivered fourth-quarter 2020 earnings from ongoing operations of $0.59 per share compared to $0.57 per share in the fourth quarter of 2019.
Weather in the quarter was about $0.01 unfavorable compared to 2019, as our Kentucky segment experienced slightly milder temperatures.
The estimated impact of COVID on our fourth-quarter results was about $0.02 per share, $0.01 due to lower U.K. sales volumes and $0.01 driven by lower demand in Kentucky.
We continue to experience improvement in this area as C&I demand steadily improves across our service territories.
Overall, these results were in line with our expectations.
Moving to our full-year 2020 earnings results on Slide 10.
We achieved 2020 earnings from ongoing operations of $2.40 per share compared to $2.45 per share a year ago.
As Vince mentioned earlier, our 2020 financial results reflect an estimated $0.12 unfavorable variance due to COVID-19.
During 2020, we also experienced a $0.06 unfavorable variance due to weather compared to 2019, primarily in Kentucky.
In terms of dilution for the year, we experienced $0.11 per share of dilution year over year, primarily reflecting the impact of the equity forward settlement in late 2019.
Moving to the segment drivers, excluding impacts from weather and dilution.
regulated segment earned $1.33 per share, a $0.01 year-over-year decrease.
The decrease in U.K. earnings was primarily due to lower adjusted gross margins, driven by lower sales volumes primarily due to the impacts of COVID-19, lower other income due to lower pension income, higher operation and maintenance expense and higher depreciation expense.
These decreases were partially offset by higher foreign currency exchange rates compared to the prior period with 2020 average rates of $1.47 per pound compared to $1.32 per pound in 2019.
In Pennsylvania, we earned $0.65 per share, which was $0.07 higher than our results in 2019.
Our Pennsylvania results were primarily driven by higher adjusted gross margins, primarily resulting from returns on additional capital investments in transmission and lower operation and maintenance expense.
These increases were partially offset by higher depreciation expense and other factors that were not individually significant.
Turning to our Kentucky segment.
We earned $0.55 per share in 2020, a $0.03 increase over comparable results one year ago.
The increase was primarily due to higher adjusted gross margins, primarily resulting from higher retail rates effective May 1, 2019, and lower operation and maintenance expense.
Partially offsetting these items were lower commercial and industrial demand revenue, primarily due to the impact of COVID-19 and higher depreciation expense.
Results at corporate and other were $0.03 higher compared to the prior year.
Factors driving earnings results at corporate and other primarily included lower overall corporate expenses and other factors not individually significant.
Turning to Slide 11.
We outlined the trends we observed in weather-normalized sales for each segment by customer class since the beginning of the pandemic.
Overall, lower demand in the C&I sectors continued to be partially offset by higher residential load in each of our service territories.
We also experienced a steady recovery in the C&I space as certain restrictions were eased during the year.
In Pennsylvania, residential usage steadily declined following the sharp spike we experienced at the onset of COVID, yet remains up about 3.5% compared to last year, signaling strong demand from customers still working from home.
As for the C&I sector, we saw incremental recovery from the lows experienced in the second quarter.
And by year-end, we're tracking less than 3% behind prior year levels.
The largest declines remain primarily in the retail trade and services industry, which we expect will remain depressed until restrictions are lifted.
In Kentucky, residential usage was up about 7% in Q4 compared to the last year, consistent with what we experienced in Q3.
We continue to experience a moderate recovery in the C&I sectors in Kentucky, up substantially from the second quarter.
C&I volumes were down 3.5% from last year's usage in Q4, which was an improvement from the 7% decline observed during Q3.
Similar to Pennsylvania, the largest declines in the C&I sector continue to be seen in the services industry.
However, sales to the manufacturing sector returned closer to the 2019 levels in Q4.
And finally, in the U.K., residential usage also remained higher, with volumes being up about 6% compared to last year.
C&I sectors has lagged our domestic jurisdictions overall, but has continued to make a strong comeback, down about 9% versus the prior year, a substantial improvement from the second-quarter lows of over 20%.
While additional incremental lockdowns were put in place during the fourth quarter, these impacts did not restrict the construction and housing industries, and we have not seen a slowdown in operational activity in these sectors.
And as a reminder, any revenue shortfall in the 2020-2021 regulatory year will be recovered by WPD in the 2022-2023 regulatory year adjusted for inflation.
Before I briefly highlight our 2021 strategic priorities, I just want to reiterate how proud I am of what we were able to achieve in 2020 under truly remarkable circumstances.
Operationally, we didn't miss a beat, delivering very strong results.
Financially, we overcame stiff headwinds to achieve our earnings guidance and returned capital to share owners.
Internally, I saw our businesses collaborate like never before, as we worked to keep each other safe and tackle COVID-19.
And at the end of the day, I truly believe we made a positive impact on society, and that's the common purpose that really unites employees at all levels across PPL.
In 2020, we demonstrated PPL's tremendous resilience and agility.
And as I've shared with our employees, I truly believe we will emerge from this pandemic stronger and more united than ever before.
With that in mind, our clear focus moving forward is on delivering long-term value for our customers and our share owners.
In 2021, that includes completing the process to sell our U.K. utility business and repositioning PPL as a purely U.S.-focused utility company.
I'm pleased to report that the process to sell WPD remains on track, and we continue to expect to announce a transaction in the first half of this year.
As we shared previously, we believe the sale of the U.K. business will simplify our business mix, strengthen our balance sheet and enhance the company's long-term earnings growth rate.
In addition, we believe it will give the company greater financial flexibility to invest in sustainable energy solutions.
Another top priority of ours this year is, as always, delivering electricity and natural gas safely, reliably and affordably.
No job we do is more important than that.
And this year, we will remain focused on continuous improvement, innovation, benchmarking and best practice sharing as we seek to once again deliver industry-leading operational performance and provide a superior customer experience.
Other notable priorities for 2021 include advancing our clean energy strategy and reducing PPL's carbon footprint, further enhancing the DEI culture I spoke about earlier and building strong communities through philanthropy, volunteerism and customer assistance.
In conclusion, as we look to 2021 and beyond, I'm excited about the opportunity we have to reposition PPL for future success.
And I'm confident we will continue to deliver long-term value for our customers, our share owners and the communities we serve.
 Assistant:

Chosen response:
sees fy 2020 earnings per share $2.40 to $2.60.
qtrly earnings from ongoing operations per share $0.59.
not providing future earnings guidance at this time as a result of formal process to sell its u.k. utility business.
expects to announce a transaction regarding u.k. utility business in the first half of 2021.


Prompt:
Human: Joining our call today are Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Alison Rad.
We also reference certain non-GAAP measures, which we believe will provide insight into the company's operations.
Second quarter results were very strong, reflecting continued progress in both our term life and our Investment and Savings segments.
Leveraging the fundamental strengths of our business model, we are positioned to meet the middle market's increased demand for financial security, which has been revealed by the COVID pandemic.
Starting on slide three.
Adjusted operating revenues of $654 million increased 25% compared to the second quarter of 2020, while diluted adjusted operating income per share of $3.25 rose 33%.
ROAE also increased to 27.8% compared to 25.6% during the same quarter last year.
Turning to slide Four.
We attracted nearly 90,000 new recruits during the quarter.
Year-over-year comparisons are difficult to evaluate because of the varying impact of the pandemic in each period and the tailored recruiting incentives we deployed each quarter.
Looking beyond this noise, we believe that we are using the right mix of messaging and incentives to continue to drive recruiting and to increase the appeal of our business proposition.
More than 10,000 individuals obtained a new life insurance license during the quarter, and we are encouraged by those results.
We have seen some improvement in the licensing process over the last few months.
Testing windows are now generally available and many states have called up on processing backlogs, although there remain some pockets where processing is still taking longer than usual.
Licensing candidates today also have more flexibility to access pre-licensing classes in both in-person and remote options widely available.
We continue to see a higher success rate for candidates choosing to attend in-person classes, but there is some hesitancy about assembling in classrooms.
As COVID social distancing measures eased, we noted a greater degree of distraction among our licensing candidates.
After a prolonged period of lockdown, some people are prioritizing social activities and travel over the pursuit of their life license.
Since the beginning of the year, our message to the field has been focused on getting new recruits engaged and licensed.
We provide resources and coaching to assist new recruits on the most effective path to licensing.
We also offer incentive credits and consistent messaging on the importance of new licenses and growth of the sales force.
We believe our prioritization and support will help overcome the recent obstacles to the licensing process over the next few months.
We ended the quarter with about 132,000 life license representatives, including a total of 2,400 individuals with either COVID temporary licenses or a license with an extended renewal date.
As time wears on, we believe the majority of these licenses will largely age out.
Excluding all 2,400 of these licenses from our total sales force provides a more appropriate and conservative understanding of the underlying size of our sales force and the foundation for future growth.
The pandemic presented us with numerous unique challenges over the last year, yet we were able to navigate these obstacles by adapting quickly to a remote framework -- remote work environment and by embracing web conferencing tools that will have a lasting benefit to our sales force.
We remain committed to growing our sales force and expect to end the year at around 131,000 life licensed representatives after all the COVID-temp licenses and extended renewals have expired compared to a normalized count of 130,700 at the end of 2020.
Turning to slide five.
Consumer sentiment for the value of life insurance remains strong, which is most evident in our persistency levels.
Sales are also robust.
However, we are finding that some individuals, both clients and reps, are also focused on resuming normal everyday activities, which competes with their urgency to obtain insurance coverage.
Nonetheless, we issued nearly 90,000 new life insurance policies during the quarter, a figure that is slightly below last year's second quarter record levels yet outstanding by historical standards.
Productivity remains above our historical range at 0.23 policies per life license representative per month and total face amount grew to $887 billion in force at quarter end.
Looking ahead, as we see trends normalizing, we project full year-over-year life sales to decline approximately 5% versus last year's elevated levels.
Turning to slide six for a review of our Investment and Savings Products segment results.
Sales exceeded $3 billion for the first time in history with solid demand from both the U.S. and Canada clients and across all product lines, including mutual funds, annuities and managed accounts.
Strong equity markets continue to contribute to investors' confidence and help drive sales.
Net inflows at $1.2 billion during the quarter were twice the level in the prior year period and slightly above the $1.1 billion in the first quarter of 2021.
This level of sustained net inflows is a function of strong sales and investors' decisions to stay invested.
We believe our redemption levels remain well below the industry rates.
We ended the quarter with client asset values of $92 billion, a 34% increase year-over-year, combining strong equity markets and nearly $3.5 billion of net new inflows over the last 12 months.
Barring an unforeseen period of market uncertainty, which would have a negative impact on investor sentiment, we expect third quarter investment sales to grow in the 30% to 40% range versus last year's third quarter.
We're making steady progress in our U.S. mortgage distribution business and continue with our deliberate efforts to expand distribution.
We are now actively engaged to do business in fiftheen states with about 1,000 license representatives.
We estimate the mortgage business will earn around $4 million in pre-tax earnings during the second half of 2021 for a full year total of $7 million.
Because of the positive impact, we believe the mortgage business brings to recruiting, life and ISP sales and client satisfaction.
We've begun a mortgage referral program in Canada.
While providing similar positive overall business dynamics, this referral program does not require licensing of our representatives in Canada and provides much smaller economics for the company.
We're seeing good response from our reps and clients to this offering, which rounds out the full-service client experience.
Our acquisition of e-TeleQuote closed on July one and we're excited about adding senior health offerings to Primerica's financial solutions for middle-income families.
In addition to e-TeleQuote's existing distribution model, we're in the process of rolling out a pilot referral program, leveraging Primerica's strong relationships between our sales force and our clients.
I look forward to updating you on our progress in the coming quarters.
Starting with our Term Life segment on slide seven.
This quarter marks the first period where COVID impacted both the current and prior year periods.
Segment results were very strong and operating revenues of $384 million increased 17% and pre-tax operating income of $117 million rose 23% year-over-year.
As Glenn discussed, term life sales were down slightly from last year's highly elevated levels.
Consumer sentiment for protection products continues to be favorable as reflected in record levels of policy retention.
Persistency improved across all durations over the prior year period, which was already at historically elevated levels.
Given more context, lapse rate in last year's second quarter was 50% lower than 2019 levels, while the current quarter lapses were an estimated 25% lower than 2019.
The compounding impact of sustained higher sales and policy retention over the last five quarters drove 16% growth in adjusted direct premiums year-over-year.
adding $11 million to pre-tax income over baseline 2019 levels.
The similar contribution in 2020 was $3 million.
The higher persistency lowered DAC amortization by $14 million, which was partly offset by $6 million in higher benefit reserves for a net contribution of $8 million to pre-tax income for the quarter.
The net contribution in the prior year period was $4 million.
Current period claims remained elevated in comparison to our historical experience.
We incurred about $6 million in COVID claims and an additional $3 million of claims that were not identified as COVID for a total of nine million excess claims for the quarter.
This compares to $10 million of excess claims in the prior year quarter, which were fully attributable to COVID debt.
The $6 million of COVID claims was in line with our expectations but increased our experience from $10 million per 100,000 population deaths to $13 million per 100,000 population deaths.
The increase was caused by higher COVID-related deaths in Canada, which has historically had lower reinsurance coverage and therefore, a higher average retained face now.
It's not unusual for us to experience normal claims volatility in the $3 million range in the quarter.
And at this point, we believe this to be the case.
That being said, there was a lot of discussion in the news about the impact of delayed medical care and the behavioral health crisis, which could have impacted recent claims activity.
We continue to monitor our experience for any emerging trends.
The level of vaccinations and their efficacy against strains of the virus are key to determining the ongoing level of COVID-related deaths.
Looking at the third quarter, we estimate $6 million in COVID claims for the quarter based on an estimated 57,000 population deaths, including 500 deaths in Canada.
We expect lapses to begin normalizing later in 2020 -- excuse me, 2021.
However, we have yet to see movement in that direction, and it remains difficult to predict the extent to which we will see a permanent improvement in persistency from pre-COVID levels.
Any such improvement in persistency would be favorable to margin, resulting in a benefit ratio being higher and the DAC ratio being lower than pre-COVID levels.
If the improvement is in the 10% range, margins would likely increase 80 to 100 basis points from where they were prior to the pandemic.
Insurance expense ratio remained below its pre-COVID historical average during the quarter at 6.6% compared to 6.8% in the prior year period as higher adjusted direct premiums led to greater fixed cost absorption.
Turning to the ISP segment on slide eight.
Operating revenues of $238 million increased 45% and pre-tax income of $71 million was 52%.
These year-over-year comparisons reflect continued strong sales, which Glenn discussed earlier and significant asset appreciation over the last year.
The 67% increase in sales base revenues was somewhat lower than the growth in revenue generating sales due to an increase in large dollar trades, which have a lower commission rate.
Many of the large dollar trades are coming from retirement plan rollovers with job turnover on the line and a greater number of baby boomers deciding to retire.
Asset-based revenues increased 39%, largely in line with the higher average client asset value.
Our sales and asset-based commission expenses increased in line with the associated revenue.
Other operating expenses grew by 11%, largely driven by fees based on client asset value.
Canadian segregated fund DAC amortization for the quarter was at a normal run rate, but was $1.7 million higher than the prior year due to a significant market correction that occurred during the second quarter of 2020.
Moving next to our Corporate and Other Distributed Products segment on slide nine.
The adjusted operating loss increased by $5.2 million compared to the prior year excluding $2.1 million in transaction-related expenses incurred during the quarter as a result of the acquisition of e-TeleQuote.
The year-over-year change results reflects around $3 million higher employee and technology-related costs as well as $1.6 million of higher reserves on a block of discontinued business due to the low interest rate environment and improved persistency.
Allocated net investment income in the segment declined by $2 million largely driven by a higher allocation to the Term Life segment to support growth in that business, along with lower overall yield on the invested asset portfolio.
Our growing mortgage business added a net $1.6 million to pre-tax income during the quarter year-over-year.
Consolidated insurance and other operating expenses on slide 10 were in line with expectations that are $113 million during the second quarter, rising 13% or $13 million over the prior year.
The increase was largely driven by growth in our businesses.
We anticipate third quarter insurance and other operating expenses in our three existing segments to be approximately $119 million or 12% higher than the prior year period.
Beginning next quarter, our disclosures will be expanded to including four segments: senior health, which will capture revenues and expenses associated with the distribution of Medicare-related insurance policies by e-TeleQuote, including earnings generated from sales force by Primerica labs.
Our intent is to continue to remove transaction-related costs, which are specific to the purchase of e-TeleQuote and that we view as onetime in nature from our operating results.
These costs include fees necessary to close the transaction.
Other onetime costs that assist us in integrating e-TeleQuote into our organization and the adjustments to certain items recognized for purchase accounting.
Other integration-related costs that are ongoing in nature will be shown as operating expenses in the Senior Health segment.
Turning to slide 11.
The unrealized gain on our invested asset portfolio at the end of June was $123 million, up from $98 million at the end of March as rates declined and credit spreads tightened.
The portfolio remains of high quality and well diversified across sectors and issuers.
The NAIC recently adopted new bond factor to be used in the calculation of RBC that go into effect for 2021 year-end reporting.
Modeling our June 30 RBC ratio using these factors, we estimate our ratio will be reduced by approximately ten to fifteen basis points.
We believe this change is small enough to not require significant changes to our invested asset portfolio.
With the new bond factors, Primerica Life estimated risk-based capital ratio is about 410% at the end of the second quarter, and we plan to remain above 400% for the rest of the year as we continue to fund business growth and take ordinary dividends to the holding company.
On slide 12, holding company liquidity at June 30 was $656 million reflecting the buildup in anticipation of the e-TeleQuote acquisition and includes the $125 million draw against our revolving credit facility.
Immediately following the closing on July 1, holding company liquidity was approximately $169 million.
 Assistant:

Chosen response:
primerica q2 adjusted operating earnings per share $3.25.
q2 adjusted operating earnings per share $3.25.
q2 revenue rose 25 percent to $654.7 million.


Prompt:
Human: Joining our call today are our Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Alison Rand.
We will also reference certain non-GAAP measures, which we believe will provide additional insight in the company's operations.
Our strong results continue to reflect our ability to adapt to the changing business environment.
Since the emergence of COVID-19, Primerica has been educating and assisting clients in choosing the right protection products to meet their family's insurance needs.
As a reaction to the pandemic phase, we are helping guide clients' investment decisions and assisting families as they prepare for a more financially secure future.
These last 18 months are a perfect example of the balance and resilience of our business model.
I'm proud how quickly our sales force is adapted to a combination of virtual and in-person client interactions to continue serving middle-income families when they need us most.
Over the same 18 months, we've delivered on our strategic goal of expanding our product offerings.
We moved from pilot to full rollout of the new mortgage business, which continues to grow as we gain experience.
We also launched our senior health referral program during the third quarter, further rounding out a balanced product platform to help clients through every financial step of their life journey.
Looking at the third quarter, we continue to set new records with Investment and Savings sales up more than 50% year-over-year.
At $8.7 billion, total sales during the first 9 months of 2021 have already eclipsed full year 2020 levels, and we're on pace to break $10 billion in annual sales for the first time in our history.
As anticipated, sales in our Term Life segment have started to normalize versus their COVID peak.
And while sales are down versus the record levels, we forecast full year sales to be about 10% above pre-pandemic levels.
We also expect to surpass $900 billion of face amount in force by the end of the year, another milestone in our corporate history.
Starting on Slide 3, adjusted operating revenues of $692 million increased 22% compared to the third quarter of 2020 and diluted adjusted operating income per share of $2.98 increased 7%.
These results include an adjusted net operating loss of $4.6 million or $0.12 per diluted adjusted operating earnings per share for our newly acquired interest in e-TeleQuote.
ROAE at 24.1% during the quarter remained strong.
Turning to Slide 4.
We added nearly 92,000 new recruits during the quarter, down from the third quarter of last year when focus and urgency driven by the pandemic created tailwind.
It's worth noting that recruiting remains strong compared to pre-pandemic levels.
We believe our success and proven track record continue to make our business opportunity attractive to aspiring entrepreneurs.
Disruption and discontent in the job market create more people looking for alternatives to their current career paths, and these individuals may be interested in joining our business.
Throughout the COVID-19 pandemic, the process for licensing new recruits has been impaired.
Early on, the impact was overshadowed by states implementing short-term accommodations.
Now that these programs have ended, current licensing numbers reflect the difficulties.
Key among the issues is the difficulty in getting new recruits to complete training class.
In-person classroom training provides the greatest completion rates.
However, distractions associated with the reopening of the economy and a degree of hesitancy by some to congregating classrooms is impeding progress.
Online training alternatives offer ease of access, but often do not have high completion rates due to their lack of disciplined and accountability.
We continue to adapt in order to overcome this dilemma by offering more classroom options that appeal to a variety of schedules, increasing our messaging and incentives and better equipping our field leaders to overcome resistance.
A total of 9,381 individuals obtained a new life license during the quarter, which is below our historical pull-through rate.
We believe this is a reflection of the current COVID environment rather than an underlying challenge in our ability to get new recruits licensed.
A key part of our messaging to the field leadership includes the importance of keeping new recruits engaged and moving toward a permanent license.
We ended September with approximately 130,000 Life licensed representatives included in the total of about 800 individuals with either a co-contemporary license or a license with an extended renewal date.
As we noted last quarter, we now expect the majority of these licenses to age out, placing the normalized size of the sales force around 129,200.
Normalizing all periods to provide an apples-to-apples comparison, we ended June 2021 with 129,600 life licenses and December 2020 with 130,700 life licenses.
At this time, we expect to end 2021 with a sales force size roughly equal to the prior year end's normalized number, which would be a significant achievement given the numerous challenges we've navigated.
Turning to the next slide to review our Life Insurance segment.
While a pullback from COVID heightened sales levels was expected, we also believe that clients continue to place a higher value on financial protection for their families as sales remained above their pre-pandemic levels.
During the third quarter, we issued nearly 76,000 new life insurance policies with productivity at 0.19 policies per life license representative per month well within our historical range.
Total face amount of $894 billion in force rose 6% year-over-year.
We project fourth quarter sales to decline between 13% and 15% year-over-year.
While full year results would be down approximately 8% versus 2020's elevated levels, it will still represent more than a 10% increase over pre-COVID 2019 full year results.
Highlights from our Investment and Savings Products segment are presented on Slide 6.
Sales of $2.8 billion were up 52% year-over-year.
The strength of equity markets continues to support investors' confidence to invest for the future.
Solid demand persisted across all our investment products, including mutual funds, annuities and managed accounts.
Net inflows of $1 billion during the quarter remained well above historical levels.
Despite these robust inflows, significant equity market volatility during the quarter kept ending asset levels largely unchanged versus June levels.
Barring an unexpected change in market sentiment, we expect the fourth quarter investment sales to grow between 20% and 25% year-over-year and more than 40% full year 2021 versus 2020.
As I noted earlier, we've made significant strides in expanding our product offering over the last 2 years.
In our new mortgage business, we continue to make steady progress and are now actively doing business in 17 states through more than 1,200 license representatives.
We have closed nearly $1 billion in U.S. mortgage volume through the third quarter of this year, eclipsing the $442.5 million closed in the entire 12 months of 2020.
During the third quarter, we started to roll out the senior health referral program to Primerica representatives.
We've had broad acceptance of the launch from field leaders and Primerica reps are excited about how well the program serves their clients' needs.
We're seeing encouraging lead generation results since the Medicare annual election period began in mid-October.
After our first quarter of ownership, we were excited by the opportunities and are gaining experience in leading our senior health business.
Current headwinds caused by labor market issues have caused e-TeleQuote to experience recruiting and retention issues with the Senior Health sales center employees.
Given the lower staffing levels coming into AEP, we expect fourth quarter approved policy levels to be around 36,000 to 40,000 or approximately double third quarter levels.
We believe this labor market imbalance is temporary and expect the return to more favorable conditions, which will improve our ability to attract quality agents that are essential to scaling the e-TeleQuote business.
We're investing in technology and talent consistent with our pre-acquisition plans.
We believe in the long-term attractiveness of both e-TeleQuote and the senior health industry, and we are positioning ourselves to take advantage of this growing market.
As we look forward to 2022, we have confidence that we will continue to thrive in any business environment and be better positioned for ongoing success.
Our plans for the new year include a powerful live senior field leader event in early January to set an energetic tone for the year.
In June, we returned to the Mercedes-Benz Stadium for our biannual convention and the opportunity to cast our vision for the future, introduce product improvements and recognize our success.
Today, I will take you through third quarter results, including those for our new Senior Health segment, and highlight key additions to our financial metrics and disclosures introduced as part of the acquisition of 80% of e-TeleQuote on July 1.
Starting on Slide 7 with our Term Life segment, Topline growth remained strong with operating revenues up 12% to $401 million, driven by 13% growth in adjusted direct premiums.
The compounding impact of 18 months strong sales and policy persistency continues to drive adjusted direct premium growth and added $12 million pre-tax income during the quarter.
This compares to $5 million added in the prior year period.
Third quarter net COVID-related death claims were $14 million, up from $8 million in the prior year period.
This was above our prior estimate as the Delta wave led to higher COVID-related population deaths in the U.S. and Canada.
The rate of COVID mortality in our insured population also increased from around 11 million to 14 million per 100,000 deaths.
The increased rate was largely driven by deaths impacting younger individuals who are more heavily represented in our insured population and higher volume of claims in states where vaccination rates have been low.
COVID claims continue to be linked to older policies with less than 1% of claims coming from policies issued since the onset of the pandemic.
We incurred about $2 million of excess death claims in the quarter, not specifically identified as COVID, but that we believe are indirectly tied to the pandemic, either through delayed medical care, societal issues such as crime or the behavioral health crisis.
We continue to monitor our experience for any emerging long-term trends.
From a P&L perspective, this excess mortality was fully offset by a reduction in the reserves held for policy riders that provide for premiums to be waived if an individual becomes disabled.
Main drivers of the reductions were higher death claims in the waived population, along with expanding our third-party disability claims management to include Canada.
During the third quarter, lapses remained around 25% to 30% lower in pre-COVID levels for all durations except duration one, which was about 15% lower.
Compared to the pre-pandemic baseline, DAC amortization was favorable by $11 million, offset by $6 million in higher benefit reserves due to strong persistency for a net favorable impact of $5 million to pre-tax income.
The third quarter of 2020 experienced record persistency with lapses around 35% lower than pre-COVID across all durations, including Duration one for a net contribution to pre-tax income of $14 million.
Last year, we highlighted that these levels were unsustainable and as such, expected lapses to normalize over time.
Year-over-year DAC amortization was higher by $11 million and benefit reserves were lower by $2 million due to persistency changes with the increase in DAC amortization largely driven by duration one.
Given the higher COVID-related death claims and lower net contribution provided by persistency, pre-tax income growth was compressed to 2% year-over-year with margins remaining around 20%.
Looking to the fourth quarter, we expect adjusted direct premiums to grow by approximately 12% year-over-year and future growth rates to taper as we layer our new business and transact the pre-pandemic activity levels.
COVID-related deaths are estimated at $14 million based on 100,000 projected population deaths in the U.S. and Canada.
We expect strong persistency to continue lapses that are 20% to 25% lower than pre-pandemic levels across all durations except duration 1, where we expect lapses to be around 15% lower.
This translates to a similar persistency-related impact as seen this quarter.
We do not expect the new business assumption review performed annually in the fourth quarter to have a notable impact on earnings.
Overall, we anticipate Term Life margins in the range of 19% to 20% for the fourth quarter.
Turning next to the results of the ISP segment on Slide 8.
Operating revenues of $233 million increased $57 million or 32% year-over-year.
Our pre-tax income of $69 million increased 35%.
Third quarter results continue to reflect the combined benefit of strong sales volumes across all products and the positive impact of equity market appreciation.
Sales-based revenues increased 45%, slightly slowed the growth in revenue-generating sales due to a higher proportion of sales volumes in large dollar trades, which have a lower commission rate.
Asset-based revenues increased 31%, reflecting a similar increase in average client asset value.
Both sales and asset-based commission expenses increased in line with the associated revenue.
As Glenn mentioned, we expect fourth quarter ISP sales to grow between 20% and 25% year-over-year.
Based on the current sales mix, this would increase sales-based net revenue by approximately $4 million over the prior year period.
Assuming no significant market movement during the quarter, average assets under management would be approximately 20% higher year-over-year and asset-based net revenues would increase $7 million.
Turning to Slide 9.
This quarter, we are introducing our Senior Health segment as a result of the acquisition of 80% of e-TeleQuote.
The acquisition is being counted for as a business combination in accordance with GAAP, which generally requires the purchase price in excess of the estimated fair values of net assets acquired to be recorded as goodwill.
The table on Slide 9 shows the preliminary purchase price allocation, which is subject to change at fair values of the net assets acquired or finalized.
The most significant assets acquired were renewal commissions receivable for policies sold by e-TeleQuote prior to the acquisition date and identified intangible assets.
The key identified intangible asset is relationships with health insurance carriers of $159 million, which will be amortized over its estimated useful life of 15 years.
In the current period, we had intangible amortization expense of $2.9 million related to acquired intangible assets recognized in the operating results of our Senior Health segment.
The e-TeleQuote purchase agreement provides for the payment of contingent consideration in the form of earn-out payments to the Term shareholders based on e-TeleQuote's achieving earnings results as defined in the purchase agreement for the calendar year ending 2021 and 2022.
Given the substantial earnings required to achieve the earn-out, we do not anticipate nor did we expect many payments will be made.
As such, we have not recognized the liability for the earnout in our preliminary purchase price allocation and do not anticipate recognizing any expense associated with it.
We will acquire the remaining 20% interest at e-TeleQuote, which is held by or for the benefit of e-TeleQuote's management through a series of puts and calls based on formulaic price defined in the purchase agreement.
We have recognized the remaining interest outstanding in the preliminary purchase price allocation in 2 categories: redeemable non-controlling interest; and liability classified share-based compensation based on the terms and conditions of the individual shares.
And post-acquisition share-based compensation expense for the applicable shares as well as adjustments for change in the fair market value of liability classified shares subsequent to the acquisitions are excluded from our operating results as they represent acquisition-related expenses that will not reoccur subsequent to the exercise of the protocol.
The key areas of focus as we evaluate Senior Health performance going forward will be approved policies, commissions and fees, which includes both the lifetime commission revenues recognized at point of sale and any subsequent tail commission adjustments for changes in estimates on policies issued in previous periods and contract acquisition costs.
Other drivers include marketing development revenues reflected in other revenues and other operating expenses.
Each of these items is defined further on Page 13 of the financial supplement, where we also highlight the non-controlling interest and other purchase-related accounting items discussed earlier.
As the post-acquisition business matures, we plan to add cash collections by cohort to track the time it takes for the cohort of approved policies to become cash positive to our quarterly earnings discussion.
The Senior Health business experiences some notable seasonality with the fourth quarter being the strongest due to the annual election period or AEP, which runs from mid-October early December.
AEP generally has peak levels of demand, and as a result, e-TeleQuote has higher agent count.
The open enrollment period or OEP, during the first quarter is generally another strong period as individuals have an opportunity to switch between Medicare Advantage plans.
The second quarter tends to be a period of focus on individual to qualify for both Medicare and Medicaid, those who are allowed a special enrollment period and those aging into Medicare or coming from an employer sponsor plans.
Before of potential sales opportunities in the second quarter decreases relative to OEP and AEP, however, volumes are adequate to avoid laying off of quality agents.
The third quarter is typically the weakest quarter of the year financially with growing agent counts leading into AEP and lower lead volume, a basic supply and demand imbalance.
During the quarter, the Senior Health segment had an adjusted operating loss before taxes of $6.6 million, including purchase accounting adjustments.
As Glenn referenced, throughout COVID, there has been pressure around hiring and retaining the quality of agents e-TeleQuote typically attracted prior to COVID.
While there are generally third quarter hiring and preparation for AEP, heightened turnover early in the year led to higher-than-usual levels of hiring, training and licensing in the third quarter.
The cost associated with this drove contract acquisition costs per approved policy up to $1,287, which when combined with the low supply of leads typical in the quarter resulted in a loss for the period.
While staffing challenges remain in the fourth quarter, we believe the lead supply benefits of AEP, along the incremental Primerica generated leads will provide a positive impact to profitability.
We anticipate pre-tax operating earnings to be in the $20 million range fourth quarter with lifetime value commissions around $1,170 and contract acquisition costs around $640 per approved policy.
Moving next to Slide 10 in our Corporate and Other Distributed Products segment, the adjusted operating loss increased by $1.5 million year-over-year to $13.5 million.
Commissions and fee revenue were higher by $6 million, including $3.7 million from mortgage sales.
This was partially offset by $3.7 million lower net investment income as portfolio yields were lower and the allocation to the Term Life segment increased in support of the growing book of business.
Adjusted benefits and expenses increased $3.7 million, largely due to the expansion of the mortgage program, including $2.6 million higher sales commissions and operating expenses.
Operating results for the Corporate and Other segment excludes certain costs related to the acquisition of e-TeleQuote, most notably $9.6 million in transaction-related expenses.
Turning to Slide 11.
Consolidated insurance and other operating expenses increased $17.3 million or 16% year-over-year with $7.5 million coming from Senior Health and the remainder due largely to growth in our businesses.
Expenses were lower than projected last quarter, in part due to the timing of certain technology projects, lower licensing costs and savings on miscellaneous items.
Looking ahead, we expect fourth quarter insurance and other operating expenses to be around $129 million, including the layering unit e-TeleQuote other operating expenses of $8 million.
Turning to Slide 12.
Consolidated net investment income was $20 million, down slightly from the prior year period due to lower effective yields, partially offset by an increase in the size of the portfolio.
The portfolio had unrealized gains at the end of September of approximately $108 million, down slightly from the end of June as rates rose during the quarter.
The portfolio remains of high quality and well diversified across sectors and issuers.
On Slide 13, liquidity at the holding company remains strong, with invested assets in cash of $192 million.
The Primerica Life statutory risk-based capital ratio is estimated to be 420% at quarter end using the new NAIC bond factor approach.
We estimate that funding needed to support the Senior Health business in 2022 to be in the high $70 million range, up from earlier expectations of the mid-$40 million range.
The increase in negative cash flow is driven by lower-than-anticipated marketing development funds from carriers, elevated charge backs on the 2020 AEP book of business as seen throughout the industry and higher agent related costs as described earlier.
Given anticipated growth in this business, we expect negative cash flow to decline over time and approach breakeven in about 6 years.
Given our current liquidity and strong capital generation from our other businesses, this increase can be easily absorbed without any changes to our capital deployment plan for operations.
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Chosen response:
q3 adjusted operating earnings per share $2.98.
q3 revenue rose 22 percent to $693.2 million.