Wilma Burdis: Great. Thank you, very much.
Jay Jackson: Thank you, Wilma.
Operator: Our next question comes on the line of David Bastian with Kingdom Capital Advisors. Please proceed with your question.
David Bastian: Hi, Jay. Hi, Bill. Thanks for taking my question. Quick one for you guys on policy originations. I think you guys had said, previously that the vast majority of what you guys are doing right now is kind of the trading policies, where you buy them and flip them within a pretty short timeframe. Should we continue to expect kind of that cadence in 2024 or do you think there’ll be any move towards holding more on your balance sheet longer term?
Jay Jackson : We are always remaining flexible. The best opportunity to maximize return in any contract. And as it looks today, we tend to trade more contracts in our active management portfolio then hold on our balance sheet over time. I think that as there’s the balance sheet gets larger and larger I think it’s natural to think and progress that will hold some of these contracts for a longer period of time in our balance sheet. And we started to see a little bit of that in the fourth quarter. And you can track that through realized and unrealized gains on those contracts. But there will always be an active management element to what we do because there is such high demand for these contracts. And being able to realize that revenue and that profit today versus letting those contracts mature out over several years.
We think is a very smart business model. But I’ll also add to that is that, as we’re increasing our institutional relationships, whether that be with insurance carriers or whether that be with other private institutional asset managers, the demand is quite high for the asset. And I think it’s important that we always consider and maximize our capital and our capital flows in the most intelligent way. So, I think as we get into 2024 and we start to put more capital on our balance sheet that might alter some of the positioning on how much we hold versus how much we decide to trade and realize at that time. But just keep in mind, we’re holding terrific assets on our balance sheet that are historically great returns with essentially uncorrelated underlying asset that’s trades and feels much more like a mortality-driven zero.
So, to answer your question specifically, I think that we will remain flexible at this time and be opportunistic in what is the best way to manage and drive revenue for the company’s balance sheet.
David Bastian: Got it. Thanks. Certainly, a nice way to manage the cash flow problem that has set some of your predecessors. Second question, it sounds like, on the ABL Wealth and ABL Tech side, there’s been a pretty significant amount of costs in getting all those set up. Do you have a rough idea, like if we’re looking at the fourth quarter, kind of how much of the cost is going towards these new revenue lines that we’re going to start seeing in the next couple of quarters?
Jay Jackson : What’s interesting about that is that the cost were not as significant as you might suspect in launching those lines because keep in mind, let’s start with ABL Tech. We had been doing this for years, right? So, the infrastructure was essentially already in place. We just added to it. So, the overall costs weren’t startup-related because it already existed. It was just a matter of adding additional labor, and some technology behind that. So, I think that when we look at our relative costs, the cost increase related to the fourth quarter, we’re less about the build out of ABL Wealth and ABL Tech and driven more by origination costs related to acquiring more contracts in the fourth quarter specifically. One of the largest cost increases we had in the fourth quarter was marketing and advertising, and that was not related to ABL Wealth or ABL Tech.
So, from our perspective, we’re rolling out these additional lines based upon the foundation that we already had, and then your incremental costs are more labor driven versus infrastructure.
David Bastian: Got it. Well, that’s certainly good for incremental margins as we look into ‘24.
Jay Jackson: Right.
Operator: Our next question comes from the line of Matthew Howlett with B. Riley Securities. Please proceed with your question.
Matthew Howlett : Jay and Bill, thanks for taking my question. Just to follow on the investment to sales and marketing and, can we get the update on the direct-to-consumer channel? I mean, that’s your highest margin channel, Jay, I love seeing the ads, the commercials, Todd, give me the update. And that sounds like that could really contribute to the bottom line here as you invested and build out that channel.
Jay Jackson: The quick update there was that, yes, that channel was a significant contributor, not just in the fourth quarter, but all of 2023. We launched that advertising campaign in January of 2023, and it’s been, they succeeded our expectations, which is what led to the significant investment in the fourth quarter of 2023 later in the year we saw nearly a 2x in number of originations from the direct to consumer channel. So, from our perspective, as we look now into 2024, as Bill highlighted on the call earlier, — typically there’s a 90-day to 120-day kind of delay from when you spend your marketing advertising dollars to when you see the impact of that marketing. And so, what we think about and how we look at this is that 2024 is really well lined up based upon that marketing spend that we did in the fourth quarter of 2023. So, even though we took a little bit higher expense against our EBITDA, we think it was worth it as we look into 2024.
Matthew Howlett : Remind me again, the policy holder is getting just as good of a deal going directly through you as you would be going through a broker. You’re just essentially cutting out the middleman. Is that sort of how to look at that channel?