And I think those are going to be especially prevalent on the distribution side. And so I think that’s going to help us turbocharge growth at the platform level. So I’ll give you one quick stat. I think across the platform, we’ve got something like 1,300 institutional clients. Only about 50 of those clients invest with us in more than one area across our platform. That number should be much higher. And I think as we start to really try to connect those dots, we’re going to — that’s going to — we’re going to see that help us as well.
Lemar Persaud: So bottom line, you feel like you can still deliver on this even if we’re — even if rates don’t really move into 2025, just given the puts and takes, is that kind of the bottom line?
Steve Peacher: Yeah, I’ll say it in a different way. I don’t think our ability to achieve that, to hit that target is dependent upon rates falling. I hope they do. It will make things easier for us, but I think we can work through it if they don’t fall from there.
Lemar Persaud: Okay. Appreciate it. And then my second question just on the expectation for dental earnings in 2024. So $6 million this quarter and a week or two, so say somewhat in line with that. But then what happens in the back half of the year? Is it just a gradual build to get into that kind of $25 million a quarter in 2025? I’m just trying to figure out how the model is for the remainder of the year, just given all the moving parts of redeterminations, the repricing of DentaQuest and premiums from 2023 sales coming online. So any help there would be helpful.
Daniel Fishbein: Yeah. I don’t think we can give specifics quarter-by-quarter. But generally, we would expect the results to start getting significantly better in the third and especially the fourth quarter. And that relates to the timing of the rate increases. So we have three very large contracts yet to have their rates reset. One is on [7.1%, one is on 9.1%, and one is on 10.1%] (ph). So that affects the way we think about it. In addition, we have other initiatives, expense initiatives, claim management initiatives that are coming into play as well. Many of those are playing out in May and June. So that would actually start to help us in the third quarter. But we would expect meaningful improvement in the third and especially the fourth quarter.
Lemar Persaud: Thanks a lot, guys.
Operator: The next question is from Nigel D’Souza with Veritas Investment Research. Your line is open.
Nigel D’Souza: Good morning. Thank you for taking the question. I wanted to first follow-up and clarify on last favorable US morbidity experience for stop-loss. I just want to confirm if I understand it correctly, the utilization rates that normalized pre-pandemic levels, I think I heard you say that was driven by a resolution of capacity issues. Just want to confirm if that’s correct. And of course, the implication there is that we’re now at, I guess, the normal run rate for morbidity experience for that business. Is that the right way to think about it?
Daniel Fishbein: Well, the first part of what you said is what we said, absolutely. We’ve seen provider capacity. And that’s largely been a staffing issue recover to pre-pandemic levels, or at least very close to pre-pandemic levels. And we’ve seen utilization move in concert with that. It seems to be stabilizing, and this is based on external data. The way I would think about that for our business is we’ve seen the morbidity, which had been favorable beyond our expectations, return back close to where we would expect them to be, not quite where we’d expect them to be, but close to that level. So we still are generating favorable margins and favorable to our pricing, but certainly not as favorable as in the past. Whether — I’m not sure we can predict precisely what the morbidity will be each quarter. Remember, there is some volatility in this as well. But certainly, we’re close to the pre-pandemic levels at this point.
Nigel D’Souza: Great. And then…
Kevin Strain: Sorry, Nigel. Sorry, it’s Kevin. Like all of our businesses, and especially if you think about Health and Risk Solutions, the stop-loss business in the US, given the investments we’ve made, we expect that business to grow top line and bottom line alongside of it. So as Dan talks about the margins coming back in, we still expect growth in that business overall for the long-term because we really have a unique position there versus our competitors.
Nigel D’Souza: Got it. That makes sense. And I think where we’re going with this is, when you look at your experience gains last year, it was about $300 million, favorable. And trying to think through what picks up for that shortfall, if assuming experience is more neutral this year, I think you could point to growth in Asia, higher CSM amortization, Sun Life asset management delivering, higher underlying income as well. But I was wondering, if you could touch on another component, the investment earnings and earnings on surplus. What do you expect your outlook for that this year? The growth this quarter was relatively soft despite pretty constructive financial market conditions at the start of the year. So any color there would be helpful.
Tim Deacon: Hi, Nigel, it’s Tim. I can take the question on the earnings on surplus. So you’ll see in our disclosures, we break that into three components. We have what we call core investment income, and that’s really from the portfolio that’s backing our surplus, and that’s predominantly in fixed income like securities. And so you see a nice uptick from year-over-year and even quarter-over-quarter and that’s really because of the higher yields that we’re generating in that portfolio given the current environment. But there’s a couple of other pieces that are a little bit more variable. The second one being the realized gains on losses that are realized on the fair value through OCI securities. In last year, we had strong gains, particularly in Canada on that portfolio.
We had modest gains this quarter. We had slight losses last quarter, so that bounces around a little bit. And that’s really dependent on rate environment in terms of what’s the accumulated unrealized gain or loss balance in that portfolio. And then finally, the last item, which we described as other really has mark-to-market components from derivatives and other hedging activities, and that bounces around a little bit, but it’s not immaterial. So overall, you’ve seen healthy earnings on surplus. And offsetting all of that, we have interest on debt and that’s come down a bit just because we’ve had some repayments of some of our financing. So healthy portfolio, mostly fixed income will be rate dependent.
Nigel D’Souza: Anything on investment?
