Wes Carmichael: Thanks. And maybe just a quick follow-up on that. But do you think PRT is a good liability for Prismic. Does that make sense there?
Rob Falzon: PRT can be done economically, both within the US statutory regime and within the Bermuda statutory regime. We’ve advanced adopted a set of principles that are under consideration for pension risk transfer type liabilities with in coordination with our New Jersey supervisor, and so our ability or desire to use Bermuda versus United — the US status regime is less driven by differences in the regimes per se and more driven by the source of investors coming into it. So obviously, for our own balance sheet, operating within the US statutory regime works well for us. But to the extent we want to bring third-party capital into that that capital has a desire for a number of reasons. Those institutions providing that capital to come into jurisdictions like Barbuda, and that would be more of the primary driver as to why we would be funding some of PRT through our Bermuda framework as contrasted to a US framework.
Wes Carmichael: Thanks. That’s really helpful. And then maybe just one more on the regulatory front. But can you give us just an update on the transition to ESR in Japan, we’re getting closer to the implementation date here. So has there been any movement, particularly on how long duration FX products are treated or anything else? Any other color might be helpful.
Yanela Frias: Hi, Wes. This is Yanela. Let me give you an update on where we are with ESR. On ESR, we believe our Japan businesses are well-capitalized and financially strong, and that would be evident under any reasonable capital standard. We have been working with regulators and advocating for reasonable and responsible standards. And we have strategies to adapt to the potential new regime and to better match the economics of our business. And these strategies include reinsurance business internally in the US or Bermuda or reassuring externally. And as an example of these strategies, during the first quarter, we reinsured $3 billion of US dollar-denominated whole life products from Japan to our Bermuda affiliate, Gibraltar Re, which allows us to manage capital for that block on a more economic basis.
So we’re looking at this very carefully. The proposed regulations are still subject to change, but are expected to be finalized later this quarter ahead of being effective on April 1, 2025.
Wes Carmichael: Thank you.
Operator: Thank you. [Operator Instructions] Our next question today is coming from Elyse Greenspan from Wells Fargo. Your line is now live.
Elyse Greenspan: Hi. Thanks. Good morning. My first question, I guess, is on the M&A side, right? Can you just give us an update on the pipeline of things that you’re looking at? And given the action to exit Assurance IQ, how is that going to impact future M&A decisions?
Charlie Lowrey: Sure, Elyse. This is Charlie. Thanks for the question. We’ve executed on many transactions over time that have significantly grown the company. And we have pursued these transactions or acquisitions for a variety of reasons, such as expanding our capabilities, broadening our distribution, increasing scale and/or adding key talent. In every acquisition, there are things that have gone right as well as lessons we have learned. And certainly, we anticipated a different outcome when we purchased Assurance, and we’ve incorporated these lessons into our M&A approach, which gets to your question. As we look forward, we will focus on acquisitions of more established businesses that present opportunities to expand our capabilities and scale in our existing market-leading businesses.
And you’ve seen that — we’ve seen us do that with Deerpath Capital, Montana Capital Partners and Green Harvest as three examples. And we’re going to continue to be really thoughtful and very disciplined about how we execute with the goal of creating value for our shareholders.
Elyse Greenspan: Thanks. And then my second question, within group, good results in the quarter, you guys were towards the lower end of the target range for that business for the year. How do you – just anything you want to point out, especially in the disability side, results seem good in the quarter? And how you expect the benefits ratio in that business to trend over the other three quarters of the year.
Caroline Feeney: Sure. Of course, Elyse, it’s Caroline, and I’ll take your question. So first of all, we’re very pleased with our first quarter sales for group overall, which are influenced by the momentum we’ve seen in executing on our strategy to maintain our core product leadership while growing in the under 5,000 lives and association markets and further diversifying in disability and supplemental health. Our capabilities continue to resonate in the disability marketplace where our earned premiums were up nearly 15% and compared to the prior year quarter. In terms of drivers of our success, we’re continuing to expand our value proposition by enhancing our customer experience, including streamlining our claims process with simplified language, with more efficient technology.
That outcome is enabling customers to better understand their benefits. And then beyond these investments, at least in our core capabilities, we also remain highly focused on maintaining strong pricing discipline, only accepting those cases that make economic sense. So looking ahead at this year, as you know, most of our new business premiums are effective in the first quarter. So in general, the first quarter is when you will see the majority of the impact from new sales, renewals and enrollment on existing business. However, as we continue to grow in the under 5,000 lives in association market. We will see that sales season extend more into the second half of the year with business growth consistent with what we saw last year. So overall, we’re very excited about the growth trajectory that we’re seeing, not just in disability but across the board in our group business.
And you asked about benefits ratio, Elyse. And so I’ll just finally add that our overall — our group underwriting results as has quarter were strong. We’ve recorded a total benefit ratio of just under 85%, which is our best first quarter benefit ratio ever and is within our recently lowered target range of $83 million to $87 million. Specifically with regards to the disability underwriting results, it does reflect our focus on effective claims management and the continued tailwinds of strong employment as well as a high interest rate environment.
Elyse Greenspan: Thank you.
Caroline Feeney: Thanks, Elyse.
Operator: Thank you. Our next question is coming from Suneet Kamath from Jefferies. Your line is now live.
Suneet Kamath: Thanks. Good morning. Let me start with Individual Retirement. Caroline, you had mentioned the strong sales, and I think you’re expecting that will persist going forward for you in the industry. Just wanted to get a sense of where that money is coming from. Is this new money coming to the industry, maybe from the qualified market? Or are we seeing 1035 exchanges from existing annuities? Just wanted to get a sense of where that demand is coming from.
