Marc Rowan: So the product set for annuities, if you look over a long period of time, has not evolved all that much. We entered the market [indiscernible] a decade ago. And the changes that we made to the product in the context of our industry we’re very substantial but in the context of financial service is not all that substantial. We stripped down many of the unused [indiscernible] and we added it to rate and simplified the product and simplified the administration of the product, and it turns out consumers prefer more to less. That has allowed us, along with capital and good asset availability, to move from a new entrant to the market to the largest-ever year of annuity sales in 2023 and a leading market position. I think we will continue to see modest changes around the traditional product in terms of custom indices.
And because the product, as you know, is not a straightforward you get a set rate, you actually get a percentage of a market’s index performance, subject to a floor; and investors like that mix of upside and downside. The holy grail of this business, in my opinion, is both simplification and a much simpler promise of guaranteed lifetime income. Currently firms taking one significant risk. That’s investment risk. When you move to guaranteed lifetime income, you’re taking both investment risk and longevity risk. We have elected, to date, not to take substantial amounts of longevity risk in our portfolio, but like any marketplace, there is the opportunity to work with market participants who are on the other side of the longevity bet to hedge out that risk.
Right now the costs of hedging that out would not allow for the distribution of a product that neutralized longevity risk in a commercial sale, but in a fiduciary sale, one is — that is not through a channel that is commission payable — one could, in fact, offer guaranteed lifetime income and halve the costs of a longevity hedge borne by commission. I think you will see a number of firms in our industry trial that this year. I think if we as an industry are successful in doing that, I think, we will open a different market and a market that is potentially very large and very attractive that provides long-term capital but leaves us as an industry participant focused on the risk we want to take, which is investment risk, rather than being in a longevity risk business.
The other is we think of this mostly in a U.S. context. Europe, I believe, is going to step back and evaluate how they have focused on this industry. There’s been a 40% drop in the availability of guaranteed income in European markets, primarily linked toward regulatory change. This problem is also in Australia, the most successful retirement market in the world in terms of superannuation. They’ve spent a lot of time thinking about accumulation but very little time thinking about decumulation. If you’re interested, there’s a treasury paper that’s out talking about this. This is in Hong Kong. This is elsewhere in the world, so the ability to take what we’ve done in the U.S. and adjust for the local flavor and local regulation is one significant growth area.
Growth in indices and the custom indices is another area. And finally, really cracking the code on guaranteed lifetime income, which is in its very early days, is a further potential growth area.
Operator: The next question is coming from Finian O’Shea of Wells Fargo Securities — actually, I — apologies. It looks like we have reached our allotted time for questions. I’ll turn it back to Mr. Noah Gunn for closing comments.
Noah Gunn: Great. Thanks for your help this morning, Donna. And thanks to everyone, for your interest and time this morning. If you have any questions or clarifications about anything discussed on today’s call or our results, please feel free to reach out to us. And we look forward to speaking with you again next quarter.
Operator: Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines at this time, and enjoy the rest of your day.
