Alex Scott: Got it. Very helpful. And then I wanted to go back to some of the comments you’re making on, you know, being fully funded on LTC. I guess, when I look at the one slide that’s got the bullet on reserves peaking in 10-years, and there’s — I know you talked in the past about the natural sort of higher required capital is that reserve level builds. If we think through where interest rates are right now and sort of the $1 billion and change of PDR balance coming down, is that enough to be fully funded just for like some finite period of time? Or when you were looking at that reserve build and then getting over the peak of it, is it really that your base case is that you’re actually projecting at this point that you never have to fund it ever again? I mean, I just want to understand what you mean by being fully funded and if that’s changed at all?
Steve Zabel: Yes. This is Steve. So I would separate. When we say fully funded and those statements, that’s specific to — in 2023, we fully recognize the PDR and we downstream capital, okay? If I look forward, though, and we look at current interest rates and we look at our current best estimate assumptions that we do believe that, that will be kind of self-contained funding for all the required capital that would be needed for the build of those reserves over the next 10 years. And then once you get beyond that, those reserves will start to release, which we’ll start to release some of the required capital behind that as well. So right now, with our current projections, we do take a longer-term view that we’re not going to need to contribute capital to fund long-term care.
Alex Scott: Got it. Thanks.
Operator: Your next question comes from the line of Suneet Kamath from Jefferies. Your line is open.
Suneet Kamath: Thanks. Good morning. Just starting with long-term care, Rick, you had mentioned this, I think, in your opening comments about pursuing risk transfer. Obviously, the environment is dynamic. We saw a transaction late last year. Other companies have talked about bid-ask coming in. So can you just give us a sense maybe where you are in that process, what the conversations are like? Has there been a change, given some of the actions that you took last year as well as the rate environment?
Rick McKenney: Sure. Thanks, Suneet. Just a couple of comments. One, you mentioned the transaction that happened last year. It was good to see. It was a positive development. I think after many years, where we’ve been talking about it, but you haven’t seen anything in the market. So I just articulate a positive development. If you look at the transaction that was done, it’s very consistent with how we’ve been talking about it, in terms of parsing out certain risks within our block, taking on different things, finding the right counterparty. All of those are things that we’ve been talking about what a transaction might look like. For us, our message is very consistent around that. So we have the ability to work with counterparties, to do that, to parse out different things, the bid-ask spread that we look at.
And when that closes, we’ll be looking at a transaction. We’re not there in terms of what we’ve seen out there, but we’re going to stay very active in the markets. And I think that we’ll look forward to more buyers meeting sellers, but I don’t think there’s a change in our tone overall from a market perspective, but we’re very happy to see that positive development happen in the market. So hopefully, that answer — I think our messaging will be very consistent. The only thing that’s different is something has happened in the market, and that’s a good thing.
Suneet Kamath: Got it. That makes sense. And then I guess, as we think about your capital plans for 2024 and in particular, that slide that looked at where you expect to be at year-end ’24, I think all measures are higher than where you ended 2023. And so I guess the question is, is there a thought there around maybe holding back on some of the capital deployment in anticipation of some sort of transaction with respect to LTC? Is that part of the capital philosophy at the company?
Rick McKenney: It’s really not. When we think of a potential transaction out there, we think we — before this year, we had plenty of capital to do it. Steve had on his slide, we have a lot of debt capacity as well. So I really would take that out of it. We’re not earmarking any of those excess funds we’re talking about for any particular use. We’d love to see it in terms of the good M&A transaction. If something could happen in LTC, that would be good as well, but we’re not holding back any funds waiting for a transaction to happen. We’ve got the flexibility, the capacity to do something, even as we stood at — even as we stand today or as we project out over the course of the year.
Suneet Kamath: Got it. Okay, thanks.
Operator: Your next question comes from the line of Jimmy Bhullar from JPMorgan. Your line is open.
Jimmy Bhullar: Hey, good morning. So first had a question on competition in the disability market. If you look at margins, for you guys for most of your peers, they’ve been very strong. So just wondering why you haven’t seen competition pick up or — because I would have normally thought that with margins being as strong as they are, you would have seen prices come down a lot on one-one renewals, and it doesn’t seem like they’ve moved down as much?
Rick McKenney: Chris?
Chris Pyne: Yes. Thanks for the question, Jimmy. Competition is always out there, that’s for sure. But I would take you back to some of the things that we do, both from a capabilities perspective and from a claims management perspective. So again, our customers are buying a broader experience from us. I’ll give you an example from MyUnum. Smaller customers who are looking for a completely integrated set of products that work really well from an administration standpoint and an enrollment standpoint. We’ve got the right contracts and cover so they get really high-quality insurance. And of course, that ultimately ends up in a wonderful claim experience. Going upmarket. HR Connect is a great example, where somebody is buying our products because of deep integration with leading HCM platforms like ADP’s Workforce Now, Workday and UKG.
And then again, if somebody buys the total leave package from us, they’re looking for us to solve a very significant challenge with claims administration and compliance on leave management. With that comes of great insurance products. We’ve got a phenomenal claim team behind those products that do a wonderful job to make sure we pay exactly what we should pay and do it with great care and compassion. We do a great job of getting people back to work, and incidence has been favorable in the current environment, which we expect to continue. So you put that whole thing together, and we, again, I go back to where I started the conversation around strong disciplined underwriting. We’ve got a very kind of logical way to kind of describe fair price in that environment, and it’s generating strong returns.
