Suneet Kamath: Yes, thanks. So going back to Advice & Wealth Management, again, when we think about on balance sheet deposits versus certificates, I think both had similar gross fee yields, but how do the rates that you’re paying on those compare? And as we think about those two, are you fairly agnostic in terms of margin benefits to you between those two products? Or is one more favorable than the other?
Walter Berman: Are you saying certificates on bank or yes. Okay. Clearly, the bank has a higher margin than the certificates. And that’s where certainly we’re concentrating our growth, but we are getting very strong results, and we have very good margins in the CD business. And so the answer is, we feel we have the capacity to grow those two. And it is going to take a larger and larger percentage of the profitability that’s being generated. Certainly, we will be generating good earnings in the sweep activity, but the real growth potential is coming in a primary bank, and we will get a lift in CDs. But the margin is better in the bank versus the CDs because of different investment strategies and liquidity strategies.
Suneet Kamath: Yes, and is there a way to dimension that margin differential?
Walter Berman: No, I don’t have it, but I’m just telling you, it is better at the bank, and we can take a look at that and see if we can give more insight onto that.
Suneet Kamath: Yes. Makes sense. And then, I guess, you talked about an $800 million investment in both the bank and the certificates business over the course of the year. Is that something that you expect will continue into next year? Or any way to think about the level of capital investment that you expect for 2023?
Walter Berman: Yes. So the short answer is yes. We will be continuing it. It’s obviously a matter of equity and cash closing. And it is considering and we have the capacity to do that. And it’s really, from our standpoint, it is giving us very good returns.
Suneet Kamath: Got it. And then maybe if I could sneak one more in on the long-term care business, it looks like you’re taking advantage of extending portfolio duration there as well. Should we read into that as the sign that maybe a risk transfer solution is less likely? Or is that reading into it too much?
Walter Berman: Yes, possibly. Listen, for the longest time, we’ve kept short direction case where the third year was. And now we’re taking advantage and both in LTC and with the protection. So we are lengthening out duration, but it’s we’re running the business from that standpoint, and you can see we’re garnering good profitability, both on the claims side as we demonstrated in the fourth quarter and certainly now with the investment capabilities that it’s providing us. So no, if something comes along, that’s great, we’ll take a look. But right now, we’re managing it and we’re taking advantage of the opportunity that’s there.
Suneet Kamath: Okay, thanks, Walter.
Operator: Your next question is from the line of Erik Bass with Autonomous Research. Please go ahead.
Erik Bass: Hi, thank you. In Investment Management, I think you mentioned about $12 million of negative one-time items. But even adjusting for these, I think the margin was at the low-end of your target range. So how are you thinking about margins for 2023? And should we be expecting some improvement given the AUM rebound that you saw in the fourth quarter and then the emergence of BMO synergies over the course of the year?
Walter Berman: It’s an interesting situation at this stage because of the dislocation is taking course, especially as you look at the equity markets, you look at the fixed income, depreciation and foreign exchange. So — but there’s a lot of actions that we’re taking. I’m managing through, but it’s — the margins are — from that standpoint is deleveraging, just like the industry is. But I would say that at this point, as we look at it, it’s heavily dependent on certainly things we don’t control. But the things we do control, like you mentioned, BMO synergies and other things of that nature, we are on track. So we feel comfortable from that standpoint. So I think there’s a lot of variables now, but we are certainly cognizant that the margins breach through, but that’s related to a lot of market activity that we are now managing.
James Cracchiolo: We see — I mean, listen, again, we don’t know if it will hold enough, but you’ve seen some pickup on the international market front as far as appreciation occurred as well as the improvement in the Pound, et cetera. So we think that’s a little of the headwinds have relieved a bit. That will be helpful. And we’re not changing our range as we move forward.
Erik Bass: Got it. And then maybe moving to capital management. I think for the full-year, you returned about 85% of earnings to shareholders in the fourth quarter, the percentage was a little bit lower. So should we still think about 90% being the right target? Or has this come down at all given the capital being allocated to the bank and/or the uncertain macro outlook?
Walter Berman: Okay. You go ahead.
James Cracchiolo: So as we look at it, we’ve been one of the highest returning companies out there in capital and even last year was very strong. So as we look forward, we have flexibility. But as Walter said, we’re continuing to grow the bank, which is going to require some additional capital, but the returns are strong as well as our certificate company, which are all good uses of capital. In the past years, we have freed up capital. We used some of that to purchase the BMO as well as now growing the bank tremendously. So we think that we’re going to generate continuing good free cash flow that we will return to shareholders. But as far as the percentage and rate will depend on how we utilize that both our core investments in the business, as we said, as well as return to shareholders. So it is coming down from where it was because of those other growth opportunities, but will still be a strong return. So I’d leave it at that at this point in time.
Erik Bass: Got it, makes sense. Thank you.
Operator: Your next question is from the line of Tom Gallagher with Evercore ISI. Please go ahead.
Thomas Gallagher: Good morning. Walter, just coming with a follow-up on Retirement & Protection, the $800 million or so run rate for 2023, does that contemplate any LDTI accounting impacts. If it doesn’t, can you give us some indication up or down, whether that will have a negative or positive impact? And if $800 million is the right number, why was your $29 million of over-earning this quarter? Was it all back? Or maybe if you could quantify that.
