Tony Cheng: And sorry, gentleman, let me just add a few more comments on your first question. Thank you for asking the question around long-term value from LDTI. I’ll state the obvious that is only the business that’s under LDTI. There is a significant proportion of our business that is not covered under LDTI at the moment.
Joel Hurwitz: Got it. Thanks.
Operator: The next question comes from Tom Gallagher with Evercore ISI. Please go ahead.
Tom Gallagher: Good morning. Just a first question on the updated run rate earnings guidance. Is that should we view that as normalized ’23 run rates or exit rate? And so when we think about ’24, should we be growing that by your high-single-digit rate? Or should we think about that more as a run rate for ’24?
Todd Larson: Yes. So it is. We did look at 2023 on a sort of on a more normalized basis as we built up our projections going forward and developing our financial plan, that type of thing for 2024. So you could look at the updated run rates, more of our expectation of the run rates for 2024.
Tom Gallagher: So there’s some embedded growth expectation in those ranges. Is that fair, Todd?
Todd Larson: Yes, fair.
Tom Gallagher: My follow-up, Tony, I was interested in your comment about a greater percentage of your business coming from exclusive arrangements. Can you not that I’m looking for a history lesson, but just can you provide some perspective on how that’s trended over time? Like historically, as most of your reinsurance you’ve written been done with pools of other reinsurers. What does that look like now? Is it different between U.S. and Asia?
Tony Cheng: Yes. I mean, I’d say we haven’t kept track of those numbers necessarily. I mean, it’s always been part of our culture really from Day One. I would say it has broadly directionally increased over time. And as you allude to, it may differ in different geographies around the world and business units. Now what really delighted me is as the messaging within the organization under Anna and now myself got stronger, just the belief in the teams that perhaps were not pursuing that as vigorously. We obviously asked them to — look, that’s the direction, give it a try. And there’s nothing more fulfilling for any leader to see teams succeed in that, raise their own self belief that, hey, we can do this. And therefore, that’s why we’re so excited about our prospects and seeing some of the flywheel of the virtuous cycle really kicking off.
Tom Gallagher: And Tony, just one follow-up. Is the punch line there that the margins are — I presume the margins are a lot better when you do exclusive deals instead of like, call it, the pool deals. Is that — do you think that’s fair?
Tony Cheng: Yes. No. I mean definitely, the margins are better, but obviously, it’s a win-win with us and our clients, right? I mean we’re truly able to give them something that they’re willing to commit an exclusive too. So it must be of great value. It’s usually first to market or innovative. And then it’s a greater value creator for us and our partner. And obviously, we’re able to share some of that value.
Tom Gallagher: Okay, thanks.
Operator: The next question comes from Suneet Kamath with Jefferies. Please go ahead.
Suneet Kamath: Thanks. Just wanted to follow-up on Tom’s question, just so I understand the run rate guidance and all that stuff. So if I look at Slide 8, I think it shows that on a normalized basis, you did call it, $1.7 billion of pretax earnings in 2023. And if I take the midpoint of the range in terms of the run rate, that’s also around $1.7 billion. And I think what you said, Todd, is that’s probably a good indication of 2024. So is that right? I mean, basically, what you’re saying is 2024 pretax earnings should be in line with 2023 normalized?
Todd Larson: Yes, normalized. And we’ve — in 2023, we would as we’ve talked about, a very strong year, very solid underlying earnings. But when we came up with the 2024 run rate, we did look at what we would view some sort of not unusual items, but some one-off type items that we don’t expect to repeat and add to the ongoing run rate. That could be some of the impact of the in-force actions adjustments some related to experience that kind of thing.
Suneet Kamath: Okay, got it. And then I guess on capital, just maybe if I could just parse it into two pieces, the $933 million deployed in 2023, like how quickly should that kind of earn in? Is that will that earn in over the course of 2024? Or just — because it seems like a lot of that was back-end loaded in terms of the third and fourth quarter so just curious about that. And then somewhat relatedly, in terms of your excess capital, right? Like if I think about what you’re earning on that, I would guess that the drag on ROE is probably like 100, 150 basis points, something out like that. So when you say excess of $1 billion, is your view that, that is fully deployable and that you will take that down over time? Or is a portion of that sort of walled off for just risk management?
Todd Larson: Yes. So I’ll take the latter part of your second question first. No, we’re comfortable taking that excess capital level down. What we talked about in the past, down to the $600 million, $700 million range, we’re comfortable with. We do want to keep some level of cushion. But all that being said, we’ve done quite a bit of work over the years developing alternative forms of capital that we can access fairly quickly. For example, the Ruby Re transaction that Tony and I mentioned. So for the right transaction, the right underlying return profile, strategic profile, that kind of thing, we would be willing to dip down into that excess capital level when we’re confident that we can replenish it fairly quickly. And then on the — as we deployed the $933 million of capital throughout the year, the profits on that and returns tend to ramp up over time, depending on the type of underlying business so there will be some contribution in 2024, but it will be increasing over time.
Suneet Kamath: Okay, thanks.
Operator: The next question comes from Ryan Krueger with KBW. Please go ahead.
Ryan Krueger: Hey, good morning. My first question was on individual life mortality in the U.S. I heard your comments that 2023 in total was a bit favorable. I guess in the overall population, it seems like it’s been consistently running unfavorable still to pre-pandemic level. So I was interested in your thoughts on why you think you’re seeing that type of divergence between insured experience versus population experience at this point? Thanks.
