Caroline Feeney: Yes, Suneet, it’s a great question. Thanks so much. I don’t think it’s really one thing. I think it’s the dynamic of individuals thinking more clearly as we have over 11,000 individuals turning 65 every single year over the next several years and 30 million Americans going to be turning 65 between now and 2030. And I think, unfortunately, many realizing that they have more work to do on retirement and understanding that protected income and protected savings is now increasingly more important to them and a priority. We’re seeing that. And I think that is why we have seen consecutive record years in the annuities market. It’s also why, as I mentioned earlier, we very much see that we’re on track for now a third consecutive record year of sales.
And so I think it’s really customer need and broader solutions that we as an industry are able to offer. And certainly, we’re very proud of the work that we have done in terms of expanding our portfolio the strength of our distribution and our brand that continues to resonate very well and positions us to be able to help many of these consumers with this growing need.
Suneet Kamath: Got it. Okay, that makes sense. And then I guess, one for Rob, if I could. I think in your script, Rob, you keep referencing this $48 billion of insurance margins I don’t know what that means. Like how was that calculated? And if that’s such a big number, is there a way that you can start to monetize that rather than just wait for it to flow through the income statement?
Rob Falzon: I’ll take a first stab at that, Suneet, and then I’ll answer — and then I’ll ask Yanela to jump in if she wants to clarify anything I’m about to say. So, with the change in accounting for long duration under LDTI, we now have the ability to actually calculate and share those margins. And that’s what we’ve been doing since the adoption of those updated GAAP standards. Think about that as the present value of profits in the individual products that we have over the remaining life of those products on a gross basis. It doesn’t include sort of net of expenses. So, think of that as sort of just on a product basis before corporate expenses that might be associated with continuing to maintain and administer those blocks.
As we think about that, that will naturally manifest over the life of the product as our experience than those margins become realized net income over the remaining period of time. There are opportunities to accelerate that. Reinsurance generally is a tool which we can use to do that, a large percentage of that — those margins and reserve that we have exist within our Japan businesses. And within those Japan businesses, as we look to do reinsure some of that business out of Japan and into either the U.S. or Bermuda as we regularly do, that gives us opportunities to accelerate the realization of some of that margin. But Yanela, I don’t know if you would like to add anything to that.
Yanela Frias: No, Rob, that was a great explanation, nothing to add.
Suneet Kamath: Got it. If I could just sneak 1 more in for Yanela. On Holdco cash, are there any big movements that you’re expecting as we move through the year in terms of capital structure, either issuances or repayments? Or are we kind of at a steady state at this point?
Yanela Frias: No. We had the hybrid issuance in the first quarter. That was a prefunding of a 2025 maturity. So, we issued $1 billion and we also did redeem $500 million of previously issued hybrids. So from an issuance perspective, nothing more expected. Our HLA balance did increase modestly during the quarter. As you saw, we did have net positive cash flows from our businesses after funding very strong growth, as you noted and as we’ve talked about, and the net proceeds of this hybrid issuance. These inflows were offset by shareholder distributions and net interest expense. Also important to note is that due to the timing of the closing of the GUL reinsurance transaction, those proceeds are in PICA and they have been factored into our capital plans for the year and that’s worth about eight RBC points.
So again, from an HLA perspective in a HoldCo cash perspective, we had strong inflows. We had the expected outflows, and we are at $4.2 billion, well within our liquidity objective of $3 billion to $5 billion.
Suneet Kamath: Okay. Thank you.
Operator: Thank you. Next question today is coming from Jimmy Bhullar from JPMorgan. Your line is now live.
Jimmy Bhullar: Hi. First question, just on the Assurance IQ business. Should we just assume that you’re shutting down the business? Or is it reasonable to assume that you’ll be able to sell it for like a decent consideration?
Yanela Frias: Hi, Jimmy, it’s Yanela. I’ll take your question. And as we say that we’ve begun a wind-down process for Assurance and have moved the results to divested businesses. First of all, let me acknowledge that these decisions are always difficult and our utmost focus is caring for the people involved. That said, this wind down will not have a material impact on earnings. Assurance has not been material to our results. We have accrued all wind-down costs this quarter in divested businesses. And we do have assets on the balance sheet, such as commission receivables, which will convert to cash over time. And beyond that, as we go through the wind-down process, we certainly will assess whether there is any incremental value to the assets and to the extent that there is, we will seek to monetize that value.
Jimmy Bhullar: And I would have thought that it would be — the exit would be slightly accretive to earnings given that Assurance IQ wasn’t really making much money. And in most of the years when you were reporting it standalone, it was actually losing money. But is that not correct?
Yanela Frias: Well, that’s the point. We had moved it to corporate other because it was not material. Now it’s in divested, and it’s just not material to the bottom line.
Jimmy Bhullar: And then on the CRE portfolio, it seems like on commercial mortgage loans, most of the credit metrics are fairly stable with what they had been recently. But if you just talk about what’s going on there and give us some insight into the percentage of loans or the number of loans that are maturing this year and what’s happened with loans that have matured — like are you having to extend more of them? Or are they just paying down? Or just anything to give us more color on how the portfolio has been performing.
