Elias Habayeb: Hey, Michael, hi. How are you? So with respect to your question on the portfolio, we have shifted over the course of the year some of the asset allocation. That was a deliberate action. As Kevin said, our investment strategy is driven by the liability side. But we’ve been working with our asset management partners to see what’s the opportunities and see what’s the appropriate asset classes for the business we write. You called out CLO specifically. So our total CLO portfolio as of the end of the year is about $9 billion out of about $200 billion in assets. And the vast majority is investment-grade and over 90% is in single A and better. And we like that asset class. We think it makes a lot of sense given some of the liabilities we issue.
And our portfolio over the last 10 years has performed really well. With respect to 2022, we invested a little over $2 billion in CLO, about $1.6 billion is AA rated class. So we like it, and we’re comfortable with it, and it fits our risk appetite.
Michael Ward: Awesome. Thanks, helpful. And then I was just wondering, as you look forward and recognizing you guys have a lot to work on between expense programs, capital distributions and secondaries, but strategically, just wondering how you think about liability repositioning as in — and I know we’ve touched on this in the past, but how do you guys think about your business mix going forward? Are you looking at making any changes from here?
Kevin Hogan : So yes, thanks, Michael. We feel very good about the portfolio that we have. I mean we’ve worked hard over the last 8, 10 years to focus on the four businesses where we have very strong market positions, strategically well positioned and supported by the tailwinds of the macro environment. But as I think we demonstrated when we created Fortitude Re, we are constantly looking to optimize the liability side of the portfolio. That was a big transaction for us and ultimately derisking with the disposition of that. We’re constantly looking for opportunities to optimize the in-force. And as you would expect, we are in the current conversation relative to where the market is relative to various transactions. We certainly haven’t seen anything yet that makes economic sense to us, but we will continue to look for opportunities to optimize.
But we’re extremely comfortable with the portfolio that we have. We don’t see any holes in the portfolio. And we have, as you said, a lot on our plate. We’re focused on executing the strategies necessary to deliver on our financial targets, the 12% to 14% ROE, having the financial flexibility to deliver beyond the dividend and engage in repurchases to get to that 60% to 65% payout ratio once we get through onetime expenses. So that’s what we’re fully focused on.
Michael Ward: Awesome, thank you guys.
Kevin Hogan : Thank you.
Operator: The next question comes from Erik Bass with Autonomous Research. Please go ahead, Erik.
Erik Bass: Hi, thank you. Just hoping you could give a little bit more color on how you see base NII building over the course of 2023. Maybe how much uplift there still could be from floating rate assets? How much incremental reinvestment is still happening with the assets transferred to Blackstone? And then any sense of just portfolio cash flows to invest at clearly a lot higher new money yields.
Kevin Hogan : Yes. Thanks, Eric. I’ll hand over to Elias in a minute here. But the first thing I want to say is that we do not have an intention of any portfolio trade relative to the assets that we transferred to Blackstone. That’s not the idea. We transferred them assets to manage, and those assets support our liabilities. So it’s not like there’s an intention of something like that. I’ll ask Elias relative to the further questions on NII, what’s happened and where we see it going.
