Matt Toms: Yeah, thanks, Wes. On the institutional side, again, we’re seeing more of a build. The relative stability or the lowering of volatility is the important thing and if the Fed staying still for an extended period while it may disappoint the market over a short-term horizon, that stability builds confidence in movement within the institutional asset base. We’ve already seen that on the retail base, both domestically and internationally. And we’ve seen that on the insurance side. The insurance side, which is a preeminent business of ours, really paused through last year that created a headwind has accelerated this year and we’re seeing that expand into the pension space where there’s a lot of industry articles around increased allocations to fixed income.
We are seeing client engagement increase there. Again, we’ve got strong products and strong performance. That’s really the next inflection point for us to see in our business. And again, the second quarter outlook for that is strong. But again, as we step back, it’s really the breadth of products and distribution channels, they’re all starting to improve. As we look to the second half, hard to know from a forecast, there’s an election, the Fed has activity to undertake. We have announcements today. But just — I would want to really highlight the point, stability at high level of rates is not harmful to client activity. It’s volatility and that’s been declining.
Operator: Our next question is from Tom Gallagher with Evercore ISI. Please proceed.
Tom Gallagher: Good morning. First question, just a follow-up on medical stop-loss. Rob, what did you do with pricing in that business for this past year renewal heading into ’24? Did you get rate over and above what you normally get, or was it just in line? And what are your plans? I assume we’re entering into getting close to where you’re thinking about pricing and renewal season for this year. Just given your current experience, would you expect to push through more rate than usual?
Rob Grubka: Yeah. So, the more than usual is the key part of that question. Look, we’re — I think as we completed the renewal cycle, it was very much in line with the target we set just to bring clarity to that piece of it. And the other thing I’d add is also our retention was in line with expectations. And just in a normal year, that’s losing 20% of the book roughly. That’s sort of the right benchmark. You vacillate a little bit around it. But so there’s always tension to the renewal process, as you would expect. So, I would say those two factors played in and played out relatively close to what we would have expected. Now as we think about the future, I will tell you every year, I’m thinking about getting more rate. It’s a business with inflationary trend perspective in it.
The risk that we take is leverage trend. So, you should think about it even being higher than sort of traditional medical trend. And so that’s always the element that we bring into it, as Heather and I have alluded to from a process standpoint, we’ll go through the same rigor that we go through every year. We’ll be sort of quarter turn, half turn, the screw on, the discipline, alignment with the team, and making sure there’s clarity on execution, for sure. You can expect that. But I wouldn’t also think about it as dramatic shifts. This is a market that continues to grow. We’ve done it over a long period of time and have a lot of confidence in the team and the process.
Heather Lavallee: Yeah. And maybe, Tom, just one clarification build for me on Rob’s comment is, first, when we’re setting the pricing, we look back over a three-year period. We’re not just looking at the prior year claims experience, which we know can be a little bit volatile. But to go back and I know, Tom, you know this is why do we like this product so much is that, there’s built-in protections in this product. The fact that we have the ability to annually reprice it, the fact that we use reinsurance to protect against large claims, stop-loss creates really nice growth opportunities and diversification, I think over the long term has demonstrated really strong contribution to shareholder value, and we expect that to continue going forward.
Tom Gallagher: I appreciate the color, Heather and Rob, on that. My follow-up is just on the pipeline in Wealth and how we should think about that translating into your flow guidance. I think the $15 billion is the number you’ve used. I don’t know if you’ve split that out between recordkeeping and full service of the $15 billion pipeline. But how do you — can you help us sort of map the $15 billion into the $1 billion for full service and $3 billion into recordkeeping, and how that, sort of — how we should think about the, I guess, overall deposits and then the persistency and how that all nets out? Thanks.
Rob Grubka: Yeah. No, great question, Tom. I’ll try to maybe just reiterate some things, but also hopefully make sure it’s crystal clear. From a flow perspective, we’ve again talked about the $1 billion for full service, $3 billion for recordkeeping. We implemented obviously part of that $15 million in the first quarter. So, you sort of see the net result and impact of that just in the ending point for the quarter. As we think about activity moving forward, we’ve tried to provide the guidance around general account, which is obviously a piece of the full service story more in particular. And so I feel like we’ve given the pieces in parts. You’ve got also the spread guide on what we think next quarter will look like. So, I think we’ve tried to make as much visible as we possibly can.
But the high-level fundamentals on new business activity, feel good about that. As we foreshadowed in Don’s comments, the second half of the year is where you’ll really see the net flow emerge. And as you know, in the larger end of the market, you get things swinging from quarter to quarter a little bit, but we feel really good about again that guide for the full year.
