Walter Berman: I would have to get back to you exactly on the 12, but I think the majority of it is still related back to the breakage that we see — we saw. But let me get back to you on that.
Thomas Gallagher: The redeployment out of corporate into the segments, I think it’s around $15 million. Can you explain what happened there? Was it all NII or what happened on that reallocation of the segments?
Walter Berman: Yes. So what we have, obviously, intercompany cash transferring that goes between the segments. And we evaluated AWM that the crediting rate that we were giving that was not really, I would say, [indiscernible] and market-driven, and so we adjusted it based upon the condition sets that we saw today. And that will be something that will remain in AWM’s profitability going forward based — as long as the levels to stay where they are. The second one was really an element of relating to — we looked at our models as it relates to RPS, and it was — candidly, it was not the right rate. It was — we were just not crediting them with the right amount, as simple as that. And yes, it’s in all net interest income, and it has no effect on the company that shifts the money.
Thomas Gallagher: Right. Just a reallocation among segments, that makes sense. And then just final follow-up. This 90% sustainable free cash flow conversion, you returned to 80% in ’23. Do you plan on stepping that back up to 90% in ’24? Or should we expect it to remain closer to 80%? Do you have an idea of where…
Walter Berman: As we said, opportunistically, we have the capacity, we certainly — as you see, we generate a lot of free cash flow, and we evaluate that as looking at the opportunities we are continuing to invest and with in our business. So that’s not a constraining factor. So I would say right now, it’s a reasonable estimate to assume the level that we just had, and then we will adjust to be opportunistic about it.
Operator: Your next question comes from the line of Kenneth Lee from RBC Capital Markets.
Kenneth Lee: Just one on the expense management initiatives. Are there — wonder if you could just further flesh it out, looking for any other areas outside of Asset Management. And perhaps wondering if you could just give a little bit in terms of time frames, are these actions all to be completed within this year?
Walter Berman: Yes. So what you saw with the $26 million severance and certainly our plans, that these are all actionable and, certainly, from our standpoint, have already been put into play. And so we are — you should see the benefit of that materializing as — we’re basically looking at our expenses for 2024 will be flat at a minimum. And obviously, we continue to make substantial investments in the various businesses, especially in AWM. So it’s — we have pretty high confidence on this.
Kenneth Lee: Got you. Very helpful. And then just one follow-up. Any updated thinking in terms of potential reinsurance transaction on the RPS side, just especially given recent industry developments and the rate environment?
Walter Berman: Yes. Listen, we have certainly observed the recent transactions, and we feel that it creates an opportunity. And from that standpoint, as we always said, we’re always looking for the bid ask. And I think those bid asks are certainly coming in alignment and provides an opportunity.
Operator: Your next question comes from the line of Mark McLaughlin from Bank of America.
Mark McLaughlin: I believe in your opening remarks, you had mentioned you were seeing a stabilization of cash levels through January. I was just curious if you had any more color year-to-date on that. I would have expected more redeployments just from seasonality rebalancing and distributions and the like.
Walter Berman: In the sweep accounts, and this is as of 2 days ago, we have seen a complete stabilization from that standpoint, a little increase. So we’re obviously observing — understand the seasonality of it. But certainly, it’s what I indicated, and that’s through 2 days ago.
Mark McLaughlin: Awesome. And then my other question had to do with retirement and protection. You guys had a pretty sizable pickup in the yield for your net investment income. I was curious if you could give us an update on any color on the investment profile of that book. Just trying to get a better idea of sensitivity to rates there.
Walter Berman: No, that’s invested out now. We took advantage of the rate situation as we saw. So that is pretty much completed at this view. And also, as I indicated, it will get to pick up going forward of certainly the intercompany cash.
Operator: Your next question comes from the line of John Barnidge from Piper Sandler.
John Barnidge: In this PM reduction in Asset Management, it clearly followed a thorough review. In that review, were there areas of growth identified? Are you looking to get larger in any specific products that maybe have come to surface out of that PM review?
James Cracchiolo: Yes. So what we did is we had some teams that we felt they’re managing small levels of assets, and it wasn’t economical for us in those areas. But we have good teams that could have assumed those assets and had good performance. So we made adjustments there. But in so doing, yes, we have reviewed our overall front office and all of the products and the portfolios and the capabilities that we have on the investment side. We feel there’s a good opportunity. We always have that in the equity part of the arena. But we feel really that we do have a good fixed income and credit shop and that we think there’s opportunity for us to actually get a greater fair share there as we continue to look at what the environment is. And so — but we’ve evaluated that both domestically and internationally. And we’re picking our pockets of where we really want to double down.
John Barnidge: And then my follow-up question is around the risk transfers and the comment about the bid and ask. You’ve seen the market change a little bit to include third-party sidecars. Would that be an area of interest?
Walter Berman: Well, we’ve looked at it, and candidly for us, probably not because of the most people enter into that for growth purposes, and we have a fairly large share. So probably not. It’s not — but we continue to look.
