Alex Scott: Got it. Okay. The follow-up I had is just on the comments you made on the hedge budget. I mean it’s something we’ve been focused on because I think one thing that’s unique about your portfolio has got a little bit shorter duration, equity hedge or equity options on it than some other books we look at. So maybe a little more exposed to volatility. And I think there were comments about protecting the hedge budgets. I just wanted to understand like what are you doing there? I mean is that some kind of volatility protection? And when I think about all those things in aggregate, I mean, how much pressure is there on the hedge budget from just persisting sort of higher volatility than maybe a normal period?
Marcia Wadsten: Well, I’ll start off and I think maybe Steve can add some additional commentary. I mean, I think we view our fee, the fees that we collect on our guarantees as providing us a budget from which we can do our hedge activity. Overall, we typically would like to be able to stay within that budget. There are times when we might have to go over, and we would do what’s needed at the time to protect the statutory position. In this period, I think we shared that consistent with the last couple of quarters, we’ve been generally in line with those. So that’s been a good outcome despite the fact that we’ve been in a higher volatility environment, which would typically all else equal, increase our hedge spend. I think we’ve had the benefits of higher interest rates in the latter part of the year, which we talked about being a benefit in time because that increases or decreases the cost of our hedging when the short rates are up, and it decreases the kind of volume of hedging needed when the longer leases are up.
So we’ve had those benefits from higher interest rates coming through in the second part of the year, probably offsetting some of the pressure on the hedging with the ongoing higher level of realized volatility that we’ve experienced. But Steve, do you want to add anything
Steve Binioris: Offsetting movements on obviously the interest rate benefit that we’ve experienced, but 24% realized volatility in calendar year ’22, that’s still at an elevated level. So they’re kind of offsetting each other. But when it’s all put together, we price deepen the tail. So we’ve got the fees there to do what we need to do from a hedging perspective.
Alex Scott: Got it. Okay, thank you.
Operator: Thank you. Our next question comes from Ryan Krueger from Stifel. Please go ahead. Your line is now open.
Ryan Krueger: Hi, thanks. Good morning. My first question was on the $450 million to $550 million of capital return that you’re targeting. Is that a reasonable representation of what you’d expect to be ongoing capital generation on a normal market?
Laura Prieskorn: Good morning, Ryan. We’ve stated previously and we continue to see our capital return level as sustainable. And part of the reason for that is that we take a measured approach to returning cash with the mindset of earn it first, then pay it. Coming into 2023, we continue to see our Healthy VA book generate substantially positive cash flows from our base contracts. And I think as you just heard Marcia and Steve pointed out, our guarantee fee stream supports our hedging, and that also remains robust. We’ve established our targets with confidence, and that’s based on our history of capital generation in our business, combined with our proven ability to effectively manage through stress periods.
Ryan Krueger: Got it. Thanks. And then can you remind us what the impact of the mean reversion change was on your RBC ratio in 2022?
Laura Prieskorn: In 2022, it was a 28 point impact on the RBC ratio. It was 20, 22 points in the prior year.
Ryan Krueger: Okay, great. Thank you.
Operator: Thank you. Our next question comes from Erik Bass from Autonomous. Please go ahead. Your line is now open.
