Tracy Benguigui: And part of your playbook to grow fixed annuity sales is utilizing reinsurance flow as there’s a penalty on the C4 charge on first year sales. I imagine this year, there will be greater demand for reinsurance flow by a number of cedents. Can you touch on reinsurance capacity to meet this demand if there’s any deterioration in reinsurance costs where you may wish to retain more of this risk? .
Unidentified Company Representative: Tracy, this is David. I’ll start with that one. So we’re not going to get into necessarily the structure of our reinsurance agreement. But 2022 was across the industry a record year for fixed annuities. And we benefited from that as well, and that was partly in conjunction with our reinsurer. We had a competitive offering and strong distribution to sell the products. So we we had adequate reinsurance capacity to meet that demand. As we think forward into 2023, we’re not expecting a similar consumer demand to what we saw in 2022, but we will continue to assess that demand with — in conjunction with our reinsurance partner.
Ed Spehar: Sorry, one comment you made, I think, about the C4 charge. We have the full C4 charge on the fixed annuity premium. I think you said a portion of it, but we booked the full charge.
Tracy Benguigui: No, I said penalty, not portion. Yes. So that relationship you have, you have that preferred relationship where you would be first in line for capacity in ’23?
Eric Steigerwalt: I’m not going to get into the structure, but we have a reinsurance relationship with Athene for fixed rate annuities.
Operator: And it comes from the line of Ryan Kruger with KBW. Please proceed.
Ryan Krueger: My first question was, can you help us think about the, I guess, the level of new business strain that you would, I guess, that either maybe occurred in the fourth quarter or you’d expect on a run rate basis as we move into 23?
Ed Spehar: Sure. Ryan. For full year, we had a little bit more than 30 points of strain from new business. And in the fourth quarter, it was around 10%. So I would say for the full year, Strain was maybe 50% more than what we would see in a typical year. It’s good news because more strain meant more growth. And that was our decision to retain capital in BLIC because of the fact that we had this opportunity to produce more sales in the second half of the year than what we had anticipated on the fixed side.
Ryan Krueger: And then are you planning to provide updated distributable earnings scenarios like you’ve done in the past?
Ed Spehar: Yes is the short answer. I think timing will be different because as we head into this year, we have a lot of work to do on recasting financial supplement for LDTI, filing an 8-K that will effectively be a recast of our 10-K for LDTI. And in addition, leveraging our new valuation environment, that we completed actuarial transformation in 2022, leveraging that to enhance our DE projections. So all that suggests that timing of DE disclosure this year will be closer to midyear versus historically, we’ve done it in March.
Ryan Krueger: And then if I could sneak in one more. I think the statutory mean reversion rate when — I believe it went up 25 basis points at the start of this year. If that’s — well, one, is that accurate? And then two, what would be the impact of that on your RBC ratio?
Ed Spehar: Yes. So it did go up. And we have seen $200 million to $300 million impact from that. Last year, the impact was negative $250 to $300 million, so it was on the higher end. So we’ll get that benefit in the first quarter. In addition, given where rates are today, you would be looking at another 50 basis points to 75 basis point increase in the mean reversion point if you look out ’24 and ’25.
Operator: I see a question from the line of Suneet Kamath with Jefferies. Please go ahead.
