Efrain Rivera: So, that’s an interesting point, David. I wonder whether they’re almost been raising short interest rates. I tend to agree with you, but I’m not so certain about it. But the levers you have there is what percentage you have long term versus what percentage you have short term? And where do you lock — where you lock long-term rates and over a period of time, so you can manage what happens on the downside of the cycle. So, we’re starting to extend duration now because we’re of the conviction that interest rates seem to be getting close to some sort of peak. Having said that, my prognostication skills on this or not anything anyone should take to the bank, but I do think from a portfolio management perspective, it’s probably better to start going longer now for us. We were shorter earlier in the year.
Operator: Thank you. Our next question comes from Ramsey El-Assal with Barclays.
Ramsey El-Assal: Efrain, can I ask you control down a little bit in terms of the factors that are giving you confidence that the insurance side of PEO will improve next year. Just curious about the drivers or sort of reasoning behind that expectation.
Efrain Rivera: Yes. So, two things, Ramsey, it’s interesting. It’s been an unusual year in the sense that we’ve seen softness in insurance inside the PEO, and we’ve seen softness in insurance particularly health care insurance, in our agency. I’d start with the kind of obvious point that — at some point, people do need health insurance. And at some point, as clients grow within the PEO, we add more clients. We’re going to get more health care attachment. What’s happened this year is that in the PEO in particular, you have renewals that occur in the fall and then you have renewals that occur at the beginning of the year. And if in that cycle, you don’t get what you expected. You basically have to wait for some period of time if we start all of that process a little over again.
So, we — as we went through the year — in the first half of the year, but okay, we’re going to come out of the year with robust insurance as we get to the end of the year, it was better, but it wasn’t what we expected. On the agency side, it’s been moderating as we’ve gone through the year. And we’ve gone through cycles like this over seems attachment is lower and then it picks up. So part of it is almost a new reversion phenomenon that we think will occur. But the second part is we put a number of different initiatives that don’t bear immediate fruit, but we think we’ll bear fruit as we go into next year. One thing that’s really interesting final point on that, John, just to highlight something John said, which is this preference for ASO versus PEO is a permanent preference for many clients eventually that want a PEO solution because they want the benefit of and we’re expecting that we’re going to see more of that as we head into next year.
So while PEO performance, I would just highlight the PEO performance has been lower than what we anticipated during the year. It’s still been growing at a decent clip. It’s being somewhat attenuated by the insurance business, which has been very, very sluggish through the year.
