Thomas Gallagher: Sure. Steve, CNBS, did you see credit migration on that portfolio, downgrades, or did you have losses on that portfolio that you took this quarter?
Steven Goulart: No. We haven’t had any material losses in that portfolio.
Michel Khalaf: I’ll just add two things, Tom. So I think to Steve’s point around just losses, I think his reference to just materially less was relative to the stress that we had put out. The comments I made in the first quarter around what our expectations for kind of the maturities and kind of the potential loss there, I’d say no change is one. And then two, just maybe broadly speaking around just credit losses were very modest this quarter, as we said. And actually, I don’t know if we even had any in real estate and CECL went down because there was a revaluation of a hotel that actually went up. So there’s a lot of factors there. But I think all in all, the portfolio is performing well.
Thomas Gallagher: Thanks, guys.
Operator: Thank you. Your next question is from Suneet Kamath from Jeffries. Please go ahead.
Suneet Kamath: Thanks. Good morning. Just start out the best of luck to Steve. Just on the 69% of CML maturities that were, I guess, resolved here. I don’t know if you mentioned this, but what percentage of those were office, if you can disclose that?
John McCallion: Yes. Let’s see. The resolution was basically in line with the overall portfolio. And of the office loans, roughly the same percentage were resolved. Trying to get the actual percentage of the office. I’ll get that in one second for you.
Suneet Kamath: Okay. I can give it to my second question and then maybe circle back. I guess, for Ramy, we’ve seen good disability results sort of across the board, I guess, for a couple quarters now. Just curious, based on your experience, when do you think that some of these results might start to feather into pricing and we could start to see greater competition? I would imagine at some point, it would need to work its way through. Just wondering any thoughts on the timing of that. Thanks.
Ramy Tadros: Sure. I mean, I think if you’re thinking about this over kind of the short to medium term, and I would say that like four factors, driving disability margins, you’ve got very disciplined underwriting, you’ve got strong claim management, you’ve got customer service that drives persistency and the ability to get appropriate rates at renewal. And this one is particularly important if you’re in the business of providing bundled solutions, including absence and leave capabilities, which we are a market leader in. And then, of course, you got the macro factors in terms of the employment levels as well as the competitive environment. I would say for us, the first three drivers of this underwriting claims and capabilities are a core competitive advantage and will continue to be so as we continue to invest in this business.
If you think about the macro environment, we’re seeing some of those tailwinds right now, but we continue to be disciplined in our pricing because there’s a fair bit of uncertainty in the environment going forward. And we’re certainly continuing to bake that into our pricing as we look into ’24.
Suneet Kamath: So pretty rational environment in terms of pricing, not just you guys, but just in terms of what you’re seeing from a competitive perspective?
Ramy Tadros: Yes, I would say it’s competitive. It’s rational. And there’s also multiple levers to differentiate beyond price. And we’re certainly pulling on every single one of those levers given our scale and capabilities in this business.
Steven Goulart: Hey, Suneet, this is Steve too. And I just wanted to follow up. We did, sorry, I didn’t have that answer at the tip of my fingers. But basically, it’s just over five billion of total resolutions. And of that, nearly half were office.
Suneet Kamath: Got it. Okay. Thanks.
Operator: And our next question is from Michael Ward with Citi. Please go ahead.
Michael Ward: Thanks, guys. Good morning. Maybe just on VII or [also] overall, pretty solid result, I think, considering the macro and real estate dynamic. Just wondering if you can expand on your competence in that trough, the trough dynamic, thinking about the real estate equity, or I guess overall non-cash sort of gains, just hoping you can expand on that competence.
John McCallion: Hey, good morning, Mike. It’s John. Yes, I think, as both Michelle and I mentioned in our opening remarks, our view is, yes, we’ve come to a trough. I think, different assets are in kind of different positions. But all in all, in the trough, we’ve seen some headwinds in real estate, the funds that I mentioned, minus 1.9, but we saw some positive offsets in the PE portfolio. We think that dynamic continues into the next quarter, which is why I mentioned we would generally be in line with now. Obviously it’s early. We don’t have a ton of, I’ll say, objective insight. We have some qualitative commentary and views. We’ve seen a positive, equity markets, although might be driven by a small number of stocks, depending on how you look at the second quarter.
So, but, and that typically directionally translates into some level of, I’ll say, the positive in line return, but the betas are typically lower. So that’s kind of where we are. We kind of view this trough as more of a U-shaped recovery in this asset class versus kind of a sharp V. But, and we just don’t want to get ahead of ourselves. So right now we’re, we kind of view that the best view would be kind of in line with Q2.
Michael Ward: Thanks, John. And then maybe for just career benefits overall in the U.S., just curious from your guys’ perspective about the climate or the sentiment for U.S. employers, labor market’s been pretty resilient. Some headlines around headcount reductions. Just curious what you guys are hearing in that regard and also on wages or, and how that flows into demand for overall benefits. Thanks.
