It’s gone from just under 9% to just under 6%. And we took the opportunity to redeploy a lot of that money, obviously, in other asset classes, but specifically into our alternative investment class. And that’s performed very well throughout the pandemic. That was a great move that we made. We do not think, though, going forward, we’re going to need to make significant shifts in how we think about our asset strategy and our investment strategy and just feel really good. We’re a credit shop. This is what we do. We’ve, I think, proved through a lot of different recessionary actual experience that we managed this portfolio well and can really mitigate impacts on our portfolio. So we show very good against benchmarks as you go through those types of scenarios.
Mike Ward: Awesome. Thanks guys.
Steve Zabel: Thanks Mike.
Rick McKenney: Thank you, Mike.
Operator: Thank you. Our final question today comes from the line of Suneet Kamath from Jefferies. Please go ahead, your line is now open.
Suneet Kamath: Great. Thanks for sticking me in here. So just wanted to talk about the disability claims. As I think back to the industry’s experience, it does seem like when we head into periods of economic weakness, disability claims tend to pick up a little bit. So just curious if that’s something that you guys or who you agree with, A? And then B, kind of how are you thinking about that as we kind of move through 2023, particularly given your kind of guidance on the benefit ratio?
Mike Simonds: Hey Suneet, this is Mike. Thanks. Really good question, opportunity . And I guess where I would start is you do see a linkage when you think about disability. The first thing I’d say is it varies a little bit recession to recession. But on average, it’s usually with a four- to six-quarter lag, so you do have lead time between the turn in some of the macroeconomic employment and any impact on disability. So that lag, I think, is important. The second is where that impact gets built. You can sort of see the brightest line when you look at social security disability. And the private industry tends to be a bit muted, but it is there. And our experience, at least in the last three recessions that Unum has done a bit muted still.
So not that it’s inconsequential, but it’s not terribly, terribly significant. And I think for us, we sort of look at it and say, certainly with respect to 2023, you do have a little bit of line of sight given that short-term disability tends to be integrated with LTV with a high level of frequency. You can sort of see some of those incidence trends come through early. As you play out the next, again, four to six quarters, could there be some pressure that emerges? Yes, I think there could be. I just kind of go back to where this most recent recession that we’ve come through, even with some of those environmentally sensitive diagnosis coming through recoveries really were quite strong and a really strong offset to it. So what it looks like in 2023, again, I think the mid-60s is a pretty reasonable estimate.
Where it ends in 2024, as you think about different scenarios, economically. It’s a little bit more uncertain. But again, based on our experience that through the last three recessions, we feel like we’ve got a pretty resilient franchise there.
