And if we look at how we’re focused on profitability and driving increased revenues, we have very good trends in earning Principal managed assets throughout 2022 across all segments. We saw significant fewer investment changes out of Principal managed investments in the fourth quarter, and we’re seeing significance to assess winning mandates from existing customers who came over from IRT, all of which are very healthy. If we look at our historic strength in SMB for the full year, just looking at SMB flows, net cash flow was over $2 billion for 2022. So also health in that core part of our market. If we look at the fundamentals, I think Dan mentioned recurring deposits where we see healthy recurring deposit trends. The number of participants deferring are up, the number of participants receiving a match are up.
The average match dollars are up and the number of participants with account value are all up. So healthy trends there and specifically with respect to the first quarter, again, we do see seasonality. It tends to be a higher inflow quarter for us. We think that trend will continue. We expect to see positive net cash flow due to higher sales and healthy recurring deposit trends in the first quarter. So feel overall good about the overall business.
Dan Houston: Jimmy a lot of detail there. Was that helpful?
Jimmy Bhullar: It was very helpful. Thank you.
Operator: Our next question comes from Suneet Kamath with Jefferies. Please proceed with your question.
Suneet Kamath: Thanks. First question, just on capital as we think about 2023. I think Deanna in your comments you talked about having some prudence in terms of managing capital. But can you give us a sense of just capital return for next year, what your thoughts are and maybe couch it as a percentage of earnings? I know it’s all going to change under LDTI, but maybe under the current accounting construct if you could just help us with that.
Dan Houston: Yes, please go ahead.
Deanna Strable: Yes. Suneet, what I’d say is we plan to give more color on our 2023 capital deployment at Outlook, but I think you can go back to kind of what we’ve talked about. We continue to feel that 75% to 85% of net income is a really good free cash flow percentage given our portfolio of businesses and how we think about very high bars relative to organic deployment of capital. We are rolling over a slightly higher excess capital as we go into 2023 and we’ll assess whether to deploy that as we go throughout the year as we get more clarity on the economic environment. So that’s how I would think about it. But again, we look forward to discussing that more in early March.
Dan Houston: Follow up, Suneet.
Suneet Kamath: Got it. Yes, I did have €“ just one that just jumped out at me a little bit was the LDTI disclosure. The $60 million impact is not big for the overall company, but I think it’s a decent percentage of RISV or certainly larger than I thought. So maybe if you could just €“ can you just tell us like how much of RISV earnings come from variable annuities?
Dan Houston: Yes, please.
Deanna Strable: Yes. That isn’t something that we disclose. What I would say is, as you’re aware, we have about $9 billion enforce block of VA business. That business has consistently performed very well and contributed to our overall retirement franchise. We’ve always managed that on a net income basis because we knew there was some differences between the geographies of the fees and where the hedging gains and losses do. As we went through the LDTI process, which we’ve been working on for many, many years we got a better information that allowed us to split the fees between hedging and non-hedging fees. And even though there’s not a consistent treatment of this across the peers, we think this is a better alignment of those fees as well as where those hedging gains and losses go.
