But regardless of size, we’re going to be thoughtful about evaluating the strategic and the financial merits of each transaction.
Andrew Sullivan: John, it’s Andy. Maybe I’ll just add in because you asked about PGIM we’re going to continue to work to globalize the business. And as we’ve talked about before, focus on higher growth, higher fee areas. So you should think about private alternatives and real asset capabilities.
Operator: Next question is coming from Wes Carmichael from Wells Fargo.
Wesley Carmichael: I had a question on RBC. I think your slide showed that PICA’s RBC ratio is in excess of 3.75. I just wanted to confirm, is the benefit of negative IMR within that RBC ratio? And could you maybe just size that for us?
Kenneth Tanji: Yes, sure. It’s Ken. Yes, that — the benefit of admitting the negative IMR as part of the new standard is — has been adopted and is in effect for our third quarter results. We were able to admit $1.3 billion, which is at the cap level relative to our surplus, so that is already reflected in there.
Wesley Carmichael: And maybe just a follow-up on an earlier question on Japan and ESR. Could you maybe just help us understand how your USD-denominated products are proposed to be treated under ESR versus the current SMR framework?
Robert Falzon: It’s Wes. Let me take that question. The — first of all, this is a regulatory framework that’s still in development, and I want to emphasize that. It’s a regulatory framework that to date has been based on the international, the ICS capital standards that have been developed, and those standards are actually not — don’t necessarily reflect the underlying economics of more iteration product, particularly in the U.S. So we continue to work on the international front on the ICS, and we continue to work with Japan as well in terms of how that ultimately gets reflected into their regime, whether it’s modified at the international level or not. But what we found is one of the coming of the current set of proposals is that they don’t quite get the economics right when you get into the — the types of long duration products that are typically sold in the U.S., both on the life side and on the retirement side.
So that’s an area where industry continues to work with the regulators and we’re hopeful of making progress there. As Ken mentioned earlier, to the extent that’s challenged any way that we do have alternatives that are available to us to think about how we would then manage that product on a go-forward basis. There’s a strong demand for the products in the Japan marketplace. So for Japanese consumers like the U.S. dollar-denominated products. And so the industry will want to continue to sell those products in the marketplace, and we’ll come up with solutions for being able to do that and be able to finance that on an economic basis. .
Andrew Sullivan: This is Andy. I was just going to add in. We have a lot of ability and flexibility to navigate those changes that are coming at us. We obviously have incredibly strong distribution, both captive and third party. We have a very wide product portfolio from both a yen and U.S. dollar perspective and single premium and recurring premium and we’ve been very successful at delivering a top-notch, great customer experience that we’ve been recognized for. So the strength of that business complex will really enable us to navigate the changes that are coming down the road.
Operator: Next question is coming from Jimmy Bhullar from JPMorgan.
Jimmy Bhullar: First a question on PGIM flows. If you could just talk about what drove the negative flows in both retail and institutional funds? And to what extent do you think it’s a function of just industry-wide issues that asset managers are seeing versus maybe the slight dip that you saw in your performance? And then relatedly, the impact on fees, should it be considered to the assets? Or are the fees lower or higher on the assets that you’ve lost?
