Erik Bass: Hi, thank you. Have you seen any rebound in demand for traditional VAs as the equity markets have started to recover? Or do you think that some of the shift in consumer and distributor preference for RILA and FIAs could prove more durable given the simpler nature of these products?
Laura Prieskorn: Thanks for the question, Erik. Scott, do you want to address our outlook on sales?
Scott Romine: Yes, sure. I mean – and I think when we talk about outlook, I’ll just briefly touch on traditional VA RILA and then spread because they’re all interrelated. If we look at last year, $15.7 billion was really a healthy level of sales given the market climate. And as you mentioned, Erik, sales down industry-wide for VAs, but consistent with other periods of equity market declines. Our sales were down in line with industry or actually slightly outperforming. And in the rising interest rate, we do think that the shift towards consumer preferences is towards protection-oriented products, right? Believe it’s a cyclical shift, not a secular shift away from growth oriented VA. There’s a long-term demand for VA for the millions of Americans retiring each year.
They have a need for additional asset growth and income certainty. And these continue to be an important part of our diversified product mix. We’re still the leader in the space, and we saw significant sales levels. Shifting to the RILA front, we successfully established ourselves in the RILA market, full year sales of $1.8 billion run rate in the fourth quarter of over $2 billion. And we continue to see RILA as a meaningful growth opportunity, and it’s really helped us attract new producers to the Jackson suite of products and really highlights the importance of diversified product, and if we shift to spread just for a moment, we did see higher but modest sales levels for both fixed index annuities and fixed annuities. And as we’ve said, higher interest rates allow for more frequent repricing and that helps make these products more competitive going forward.
We’ve said in the past, we’ll continue to review pricing and distribution opportunities that best meet demand and strike balance between good consumer value and profitability targets. And certainly, having that diversified product mix is an advantage.
Erik Bass: Thank you. I appreciate the color there. And then one follow-up just on the individual annuities. Can you provide any color on where you would expect core DAC amortization to trend in 2023?
Laura Prieskorn: Well, Eric, I think the best way to look at that will be when we publish our financial supplement that’s restated for LDTI around the 22nd of March that will come out. We don’t anticipate it being significantly different, but just a little bit higher. The straight-line approach to amortization under LDTI is a bit – it’s going to be based more on, say, like the runoff of policy count as a sort of simplified way to think about it. So that’s still amortized over kind of like the same period we would have in the past. But because it’s not capturing any of the natural growth in gross profits that you might have previously seen under current 2022 and prior GAAP. It’s just a little bit more a little bit faster pace. But I don’t think you – we expect it to be anything super material. And I think that will come through a little bit more clearly when you’re able to take a look at that financial supplement.
Erik Bass: Got it. So we should view essentially what the run rate that gets reported in the restated supplement for 2022 as being a continued run rate in 2023?
Laura Prieskorn: Yes, I think that would be a reasonable proxy.
Erik Bass: Okay. Thank you.
Operator: Thank you. Our next question comes from Daniel Bergman from Jefferies. Please go ahead. Daniel, your line is now open.
