Elias Habayeb: Tom, it’s Elias. We have no foreclosures in the book. So the reduction in our allowance for offices more having to do with resolution loans, but there’s no foreclosures in our portfolio. And we continue to believe our allowance for loan loss in total and specifically on office continues to be pretty robust from there. With respect to multifamily, yes, it is our largest exposure, and we participate in it both on the debt and the equity side, and we feel comfortable with our portfolio. It’s high-quality. Cash flow to the property levels are strong. LTVs, debt service coverage ratios are strong. With respect to kind of concerns about rent control specifically in New York, our exposure to rent control is de minimis in our portfolio. So that’s not something we’re worried about.
Thomas Gallagher: Great. Thanks, Elias.
Operator: Next question is from Elyse Greenspan from Wells Fargo. Please go ahead.
Elyse Greenspan: Hi. Thanks. Good morning. My first question, just on capital return. You guys started right buying back shares in the open market. How should we think about, in 2024, the balance of buying back shares in the open market and then wanting to participate as there is future secondaries from AIG?
Elias Habayeb: Elyse, it’s Elias. Listen, I think our outlook is, we’re going to buy back shares in open market. And if there’s opportunities to participate in AIG sell-downs, we will consider it and do it. But our game plan, we’re not dependent on AIG to do a secondary for us to deliver on our capital return.
Elyse Greenspan: Okay. Thanks. And then my second question, we saw PRT activity picked up in the fourth quarter. My sense is we’re not seeing as much of the same seasonality with Q4 being the highest as we used to in the past. If you can you just give us a sense of the outlook that you have on the PRT side? And if you expect or don’t expect to see seasonality with transactions in 2024?
Kevin Hogan: Yes. Thanks, Elyse. What we see in pension risk transfer is a very strong pipeline continuing for the market segments that we’re focused on, which is full plan terminations. Full plan terminations are somewhat more structured and complex than some of the longevity-focused transactions. And the pipeline for those is a little bit longer term. I think there has been a bit of a change in calendarization with the change in the external market. But both for the U.S. and for the U.K., which are the two markets where we participate, we see a very robust pipeline coming into 2024.
Elyse Greenspan: Thank you.
Operator: Our next question is from John Barnidge at Piper Sandler. Please go ahead.
John Barnidge: Thank you very much. Good morning. With the expense saves fully earning in by the end of 2024 and a focus on continuous improvement, how should we be thinking about the operating expense growth as you would think — as you would look towards 2025?
Kevin Hogan: Yes, thanks. So we are very happy with the progress on Corebridge Forward so far. We’ve achieved about $350 million of the target there, and we expect about half of that to earn into our run rate this year. And we still have the continuing outcomes from Corebridge Forward to deliver. As we look beyond and adoption of a sense of continuous improvement, I think this is where we’ll benefit from the investments that we’ve made in our operating platform, and we’ll continue to respond to growth opportunities as they emerge. And so we would expect an incremental improvement in operational efficiency as we benefit from the work that we’ve done so far and continue to focus from that.
John Barnidge: Thank you very much. And then a question on the higher frequency and smaller claims in the life portfolio. Some have talked about infectious disease season being earlier this year, more 4Q than 1Q. Does that experience line up with that thought process as well?
Kevin Hogan: Actually, in our case, we haven’t observed this particular dynamic. And as I pointed out earlier, as we look into the data, we haven’t seen anything to suggest other than just an anomalous quarter. And mortality, while in many respects, is very predictable, the actual timing of mortality is not so predictable. And that’s why we do continue to expect them to see some volatility quarter-to-quarter, and we need to look at mortality over a longer time frame.
John Barnidge: Thank you very much.
Operator: Our next question is from Suneet Kamath from Jefferies. Please go ahead.
Suneet Kamath: Thank you. Listening to your prepared remarks, I had thought that the commentary that you made about optimization of the business mix was in your discussion on the Life Insurance business. So is that really where we should think about your focus being? Or is it broader than that?
Kevin Hogan: With respect to the Life Insurance business, we have changed our business mix in the last couple of years. We’ve been kind of open talking about that and moving away from more interest-sensitive products into our very successful term suite as well as simplified products for the middle market and our indexed universal life product range. And those are the segments that we continue to focus on and anticipate serve.
Elias Habayeb: Yes. Suneet, the other thing I had, given our broad suite of products, we’re constantly optimizing given where we see demand for product as well as where we think we can get the best risk-adjusted returns on the capital we deploy. So that’s a regular activity.
Suneet Kamath: Okay. Got it. And then I guess just going back to the annuity sales, obviously, very strong here in the quarter. Can you just provide some color on maybe where those sales are coming from, if it’s a particular channel? And maybe how much of that is coming from rollovers of 401(k) plans or assets?
Kevin Hogan: So the channels that are the most robust for us right now with respect to fixed and fixed-index annuities are the bank and the broker-dealer channels with a lesser participation in the IMO channel. And in terms of the sources of the assets, we don’t report on what the various sources of the asset is. What I’ll say is that as we’ve experienced and as we would expect, customers coming out of existing annuities products certainly have the opportunity to reinvest. And as people move from accumulation to decumulation, fixed income is an important part of the strategy of many of the advisers that they are working with. And so I think what we’re seeing is a combination of new investments in fixed income because the value proposition for fixed income investments is much stronger now than just a couple of years ago as well as some regular activity of people reinvesting in their existing annuity products.
Suneet Kamath: Okay. Thanks.
Operator: Our next question comes from Mike Ward at Citi. Please go ahead.
Michael Ward: Thanks, guys. Good morning. Maybe on the Bermuda entity real quick. I was just wondering if you could maybe help us think about any potential impact on free cash flow conversion from higher utilization of that over time?
Elias Habayeb: Hi, Mike, it’s Elias. So here’s what I’d say about the Bermuda entity at this point. We believe it will increase our financial flexibility that either gives us flexibility for more growth or to do other things with it. We’re still through the regulatory process. So we’re not going to quantify anything at this point. So we’re done through that process at this stage.
Michael Ward: Okay. And then maybe on CRE, just kind of curious, the maturities that you’ve had so far or the ones that are in the sort of the immediate future, just kind of wondering how the resolutions have progressed. Are you taking equity? Are you making equity investments at all? Or how have they gone so far?
Elias Habayeb: So on — if I look at the 2023 maturities, it’s been a combination where we got paid off or we’ve agreed to an extension. And generally, whenever we’ve agreed an extension, we either got a partial pay down or we had the equity put in more — the equity investor put in more equity in the property and draft cash, which ended up improving our credit position in there. We have not taken so far any equity in any of these properties.
Michael Ward: Okay. Thank you.
Operator: We have no further questions on the call at this time. So I will hand the call back to Kevin Hogan.
Kevin Hogan: Okay. Thank you. Before we end today’s call, I want to make one more point to our listeners and remind everyone of the enterprise we’re building here. At Corebridge, we operate with what is a unique collection of four businesses that together enables our company to perform across different macroeconomic environments. We’re flexible and nimble and can tailor our strategy to match changes in demand as well as our evolving view of profitability and risk. With this diversified and dynamic business model, supported by our strong balance sheet, our solid capital and liquidity positions and our history of disciplined execution, Corebridge remains focused on delivering attractive results and creating long-term value. Thank you for joining us this morning, and have a good day.
Operator: This concludes today’s conference call. Thank you all very much for joining. You may now disconnect.
