Erik Bass: Okay. And then maybe just on Group Retirement. Can you talk a little bit about how much of the legacy business with high guaranteed minimum interest rates has either been repriced or lapsed at point? And kind of how much of your block you would still sort of put in that category of sort of less profitable, high GMIR business?
Kevin Hogan: Well, the high GMIR business is one of the older cohorts in the portfolio, and it remains an open block. I mean participants are able to continue to contribute to those in-plan options. So we’ve seen modest outflows in the block, but it hasn’t changed materially in size over the last couple of years.
Erik Bass: Got it. Okay. I guess, I mean, putting it in context, I mean, the inflows, is it fair to think that the inflows that you’re seeing coming in would be at higher returns? And it sounds like more of the outflows are coming from the legacy blocks. So the mix is shifting favorably, but there’s still a relatively large portion that you’d call sort of the legacy block?
Elias Habayeb: That’s right. So if you look at what’s happening to base spreads, like even look sequentially, even though there’s net outflows, the base spread is improving because the weighted average spread between what’s on the in-force after you’ve taken what goes on and what comes in is expanding that spread. So that’s kind of evidence to the improving economics you’re seeing in that book.
Kevin Hogan: Yes. And actually, Erik, I mean you are thinking about it the right way. There’s the in plan business. And where we’re seeing inflows in, say, the 2% in lower GMIR, those are more attractive than the higher GMIR areas. But we also have to keep in mind the advisory and brokerage platform, which is outside of net flows and also the growth in the out-of-plan fixed annuities. Each of those are extremely economically attractive.
Operator: The next question comes from Suneet Kamath with Jefferies.
Suneet Kamath: Great. Just starting with the RBC ratio. I saw it was flat sequentially despite the strong sales, and I think you took out a $500 million dividend. So can you just maybe talk about some of the offsets that kept the RBC flat? And are you still looking at $2 billion in distributions to the holding company for this year?
Elias Habayeb: Suneet, it’s Elias. So if you look at the historical track record, our insurance companies have distributed about $2 billion a year. And right now, based on what we know, that’s sort of the expectation for this year. With respect to the offset, and there’s new business. We get — there’s also capital being generated by the earnings of the in-force, and we benefit from the diversification on kind of our businesses and how we make money. In addition, we are always kind of looking to optimize our balance sheet from that perspective. But looking at it specifically to this quarter, yes, we’ve had new business strain come through. It’s offset by the earnings of the in-force, and there was a small element of optimization on the investment portfolio. And I’d refer you there to my remarks where we’ve sold down below investment-grade securities, and we’re down about $1 billion since December.
Suneet Kamath: Yes, migration. That makes sense. I guess separately in your prepared remarks you talked…
Elias Habayeb: It’s now migration. I would say most of the $1 billion were sales.
Suneet Kamath : Right, right. At the shift in terms of the underlying ratings quality. But I got you. No problem. The other question I want to ask was on VA. You kind of said in your prepared remarks, you had some commentary there around the limited earnings contribution of that business. It does seem like it drags down your valuation to some degree. Would you be open to a risk transfer in that business, just given kind of the third-party valuations that we’re seeing in the market?
Kevin Hogan: We’re always looking for opportunities to optimize the portfolio. And what I’d say about the VA business, it is a modest part of our earnings. It has been in outflows. Right now, it is not among the most popular products from an investor perspective, mostly because of where rates are and where the equity markets are. If there were to be a change in that trend, then the VA product may become more popular. But in terms of optimization opportunities, we’re constantly looking, and we are aware of market conditions. We prioritized Laya and U.K. Life, and we’ll continue to look for further opportunities.
