And full plan terminations, because of the external market conditions that exist, many plans are fully funded and are anxious to move to a full plan termination. So we’re seeing more full plan terminations and we’re seeing larger full plan terminations. And that’s true both in the U.S. and in the UK. And we’re in a extremely strong position in both markets and the pipeline is very strong. And so I think we will continue to see robust opportunities in the institutional markets business.
Michael Ward: Okay. Thanks, guys.
Kevin Hogan: Thank you.
Operator: Thank you. Our next question comes from Suneet Kamath of Jefferies. Suneet, your line is open. Please go ahead.
Suneet Kamath: Thanks. Good morning. I guess to start with Elias, the $2 billion of annual distributions that you are sort of guiding to out of the insurance subsidiary. Should we expect that to increase as some of these one-time costs are behind you?
Elias Habayeb: Hey, Suneet, it’s Elias. So the one-time costs we’re paying out of the parents, we’re not paying out of the insurance companies. But right now, the insurance companies run rate is about $2 billion, what we expect over time as the profitability of the insurance companies improves, there will be more distributable earnings to maintain our 60% to 65% payout ratio over time.
Suneet Kamath: Okay, got it. And then I guess for Kevin sort of interested in your comment about it being the best environment for the life space in some time. Can you just talk about how that impacts your decisions on capital allocation maybe across businesses or in total?
Kevin Hogan: Sure. So, I think that we have demonstrated over the last 10 years, frankly, that our business model can be successful whether it is a high-rate environment or a lower-rate environment. And right now in the higher-rate environment, we’re certainly deploying capital into the spread businesses, whereas maybe some of those businesses may not have been as attractive five years or so ago, based on the environment at that time. And I think one of the great things about our business model is we can deploy capital where the risk-adjusted returns are the highest. And if we’re not able to make the hurdles, then we won’t necessarily deploy the capital into the new business. And so our strategy is to have a very strong balance sheet, a strong liquidity position, the appropriate leverage profile and allocate an appropriate amount of capital to new business, which is very attractive at this time, and still have the financial flexibility to return additional capital to shareholders.
So right now, the environment is very attractive. We expect it will continue to. And what I feel really good about is we’ve been able to grow the business, the new business significantly in the last three quarters and continue to grow the balance sheet, strengthen the balance sheet and enhance our liquidity position and improve our leverage position.
Suneet Kamath: Okay. Thanks.
Operator: Thank you. This is all the time we have questions for today. So I’ll hand back over to Kevin Hogan, CEO, for any closing remarks.
Kevin Hogan: Okay, thanks. Look, it’s been a year since our initial public offering and our results both for this quarter and since the IPO, I think, demonstrate the competitive strengths of our businesses as well as the resilience of our franchise. Our financial position is strong and our opportunities are robust. We’re well positioned to continue creating value for and returning capital to our shareholders, building on the outstanding progress we’ve already achieved in our first year as a public company. Thank you for joining us. Have a good day.
Operator: Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines.
