Steve Zabel: Yes, this is Steve. I’ll start with the answer there and then turn it over to Chris to talk a little bit about pricing in the environment. So, how we’ve addressed group disability is just around — there’s really two drivers. One is the underlying claims performance whether it’s claims incidence or claims recovery. And then the other piece is pricing and what possible or potential pricing actions you take down the line to reflect that performance. So, I’ll start with performance. We’ve continued to see really good recovery patterns. That’s our claims department working well with both our customers as well as the employers to really get people back to work. That’s the shared objective of really what we do as a company.
So, the recovery trends have been pretty consistent in the first quarter. I’ll say incidence was a little favorable from what our expectations might have been in the first quarter. We guided to a benefit ratio that would have been in the low 60s for the year. This quarter was a little bit below that. And I would say that was because of favorable claims incidents. So, do we think that’s sustainable? We do. We’re seeing sustained trends in both of those areas. I would say we can kind of see backlogs around short-term disability and feel comfortable with the performance of long-term disability block for the remainder of the year. So, from just an operating performance perspective, feel good about sticking with the guidance that would be in the low 60s.
Then the other piece of that equation, though, is pricing. And would we do anything with pricing to incorporate that level of performance? And maybe Chris, just talk a little bit about how we think about group disability pricing.
Chris Pyne: Yes. Thanks, Steve, and Suneet, for the question. Again, it does get back to capabilities where we’re able to talk about — first, we have a strong disability portfolio, short-term long-term visibility as part of our bundle, the insurance coverage, we can extend to our employer customers is phenomenal, and that gives us a lot of flexibility. Couple that with Leave and you start — and those almost generally almost always go together, you’re starting to talk about being a critical partner to that employer and their employees that enables us to have conversations for the long-term about how we’re really going to be part of the solution to solve this challenging Leave topic while giving their employees great cover. Pricing-wise, people like long-term stability in their price.
So, you start to talk about how you can maintain this excellent experience through effective claim management and a renewal strategy that keeps prices kind of in check over time. That seems to resonate very well. So, it’s a combination of bundled portfolio with Leave management and long-term stability in pricing that fits very well with our underwriting DNA.
Suneet Kamath: Okay, that makes sense. Thanks for that. And then I guess the second one for Rick on long-term care. One of the things that we have observed in the market is just the combination of different types of insurance risks, particularly on the asset-intensive side in order to get risk transfer done. And post your individual IDI risk transfer solution a couple of years ago, I wouldn’t think that you would have a ton of that asset-intensive stuff, but just curious if that’s the right read or how you think about sort of combining different blocks of business, if you were to do something? Thanks.
Rick McKenney: Yes. So, you talked about asset intensity in terms of our blocks of business. So, the IDI was one that had some of that, we’re happy to go through that transaction. Long-term care is clearly our other asset-intensive business, and that’s why we made the comments about the current rate environment being good for us. Our team is doing a great job of putting money to work behind that block of business. And then the asset intensity kind of goes down throughout the course of the business. And you think about our group lines of business a little bit on the group disability, although that portfolio has shrunk as the claim inventory has shrunk there as well. And then on the voluntary benefits side, really very little in terms of asset intensity.
So, I think if your question is getting at kind of where we look at where that asset — it is in long-term care when we think about what we’re trying to do today. And making sure that we’re hedging what we’re doing there and the overall mix. But we’re happy about how it looks between our insurance risks, our asset mix that we have today and then the overall. Steve, do you want to add to that?
Steve Zabel: Yes, I mean, I think you might have been getting at a little bit is just around potential transactions and just different businesses that maybe you could pair up with a long-term care transaction. And I wouldn’t put that — I wouldn’t bucket that just in asset-intensive businesses to go with that. I think counterparties are looking at just risk diversification generally. And so we do have blocks that I think would match that criteria with different counterparties.
Suneet Kamath: Got it. Yes, that was the thrust of my question. so, thanks for that.
Operator: Your next question comes from the line of Tom Gallagher with Evercore ISI. Please go ahead.
Tom Gallagher: Good morning. A few follow-ups on long-term care. First one is, so I heard, Steve, your comment about long-term care claim trends. If they do remain elevated somewhat throughout the course of the year, is it likely you’d have to strengthen GAAP reserves again in the third quarter review or not necessarily, does that really just depend on a long-term assumption? And I assume statutory should be pretty bulletproof though, even if there was something adjusted for GAAP? That’s my first question.
