om Gallagher: That’s really helpful. Thanks.
Operator: Thank you. Our next question comes from the line of Ryan Krueger of KBW. Your line is now open. Please go ahead.
Ryan Krueger: Hi, thanks. Good morning. I have a somewhat related follow-up. But do you think that would — the potential solution would allow you to change your hedging program at all? Or is it more just making the statutory results move more sensibly relative to how your hedging approach already is?
Marcia Wadsten: Well, Ryan, I’ll — this is Marcia here. I think there is an implication that there would be some changes in kind of how our hedges would be positioned. I think we’ve talked regularly in the past that the way we think about hedging is to hedge the economic risk profile, but then to also consider our statutory position and make sure that we’re also protecting our statutory balance sheet and stabilizing distributable earnings over time. So what I think we would anticipate with this solution is that if you have less of an impact from the cash surrender value floor, you’re just not going to have quite as much of a need, not that it’s going to go entirely away potentially, but you’re not going to have quite as much of a need for — what we would call the macro hedge adjustments, those that are sort of statutory focused.
And you’d be kind of more economically hedging. So I think that just the balance between the economic focus within our hedging and that those sort of statutory lens that we have to look through today, would change and the amount of focus on economic would rise and the focus on the statutory piece would just naturally become a little bit less dominant without the heavy influence of the cash surrender value floor in the way we experience it now.
Ryan Krueger: Got it. No, that makes sense. And then maybe just one other one related to what Tom was asking. Is it more likely that it would be just a permitted practice or some sort of change to your existing legal entity or the use of a new legal entity, like a captive, that where you could move some of the reserves to the captive entity?
Marcia Wadsten: Well, I think we feel it’s a little premature to talk about the forum today, so unfortunately I have to pass on that and just let you know that we’ll come back with an update as soon as we can and share the details of all of that at that point.
Ryan Krueger: Okay, understood. Thank you.
Operator: Thank you. Our next question comes from the line of Sameer Kumar of Jeffries. Your line is now open. Please go ahead.
Sameer Kumar: Great. Thank you. Just a couple on capital, so first on the Michigan solution, assuming you get it in early ‘24. Would that change how you think about your RBC target of 425% to 500%?
Laura Prieskorn: I think that’s a likely outcome, Sameer, that we would want to revisit that, not indicating yet how it would change, but I do think that when we set that 425% to 500% target range you know we set a wider range purposefully given the volatility in our business. And I think if to the extent that some of that volatility was contributed to by the cash surrender value floor, a solution that mitigates that cash surrender value floor solution could very well likely mean that we don’t need such a wide range to think about. And therefore that’s something that we would be considering as we look forward and provide our outlook and targets for 2024.
Sameer Kumar: Got it, that makes sense. The second one was just on the RILA product. I think you had mentioned that there’s some capital benefits you get as that block grows. Can you just maybe talk about how much of a benefit are you getting and at sort of what point in terms of the size of that block does it really start to move the needle from a capital perspective?
