Elyse Greenspan: And the size of those two mandates that moved?
Matt Toms: The size of the two mandates is — it’s — well, there’s always — there an array in mandates. Right? So you’re thinking on the order of a $10 billion pipeline, that’s never going to be equally weighted through the year, so don’t have precise numbers. Client demands are always moving as well. But again, very confident in the size of the pipeline throughout the year, and we expect it to build through the year, quarter-by-quarter.
Operator: Thank you. Our next question comes from the line of Wilma Burdis with Raymond James. Please proceed with your questions.
Wilma Burdis: Hey, good morning. Could you talk a little bit about the capital return outlook is — 4Q’23, is that kind of a good run rate [Technical Difficulty] ’24?
Donald Templin: Yeah, I think we are sort of — we want to make sure that we’re focused on the practice that we have been carrying out throughout 2023. I mean, we’ve thought it was prudent to be in a position where we were deploying capital in the current quarter that we generated in the prior quarter. So we generated about $200 million of capital in the fourth quarter. So I would expect that we would be deploying something in that neighborhood in the first quarter of 2024. And I — we’ve indicated that we expect to have a strong cash generation year. We’ve also indicated that our bias for 2024 will be on returning that capital through share repurchase and through dividends. So think about that. $800 million of excess capital will be biased to those activities.
Wilma Burdis: Thank you. And then anything to note in terms of alternative investment returns heading into 2024. I know your outlook assumes, I think, a 9% rate, but maybe just give us some color on what you’re seeing so far this year and how that will progress. Thank you.
Donald Templin: Yeah, you’re right, Wilma. Our guidance — our long term guidance continues to be at that 9% rate. We feel like over the long term, that’s been a return that is representative of our actual experience. So we have not adjusted that. We are confident in that over the long term. Obviously, in individual periods, you can deviate from that, but maybe I’ll turn it over to Matt to talk a little bit more about — we had a lot of conversation around this and we felt really comfortable when we put it in our guidance and maybe have Matt give you a little bit of color around how we got to that conclusion or reaffirm that conclusion.
Matt Toms: Right, Don. No, thanks. And look, precisely forecasting the return of any market is a difficult thing to do. The long term assumption, I think, is conservative. And something, if you look at our historical track record, we’re very confident in delivering. And if we look at market volatility, where we stand right now, and how markets perform across equity, fixed income, and into privates and alts, there’s been a lot of transition over the last year and a half. So as we step back and we look at the quality of our portfolio, what it’s delivered over time, and the area that it’s oriented towards, those are the areas of strength and of resilience. So I think we’re extremely confident because of the underlying asset quality within that portfolio.
Operator: Thank you. Our next question comes from the line of Joel Hurwitz with Dowling & Partners. Please proceed with your question.
Joel Hurwitz: Hey, good morning. So in Health, you highlighted the 15% plus enforced premium growth. Can you just talk about your outlook across the product lines and what you saw with one-one renewals?
Rob Grubka: Yeah. Joel. This is Rob. Look, I — the guidance at a high level is sort of where I’ll anchor us to and product by product, we’ll let the dust settle of one-one. And there’s things within that just that will feel nuancey, but are important is — re-enrollment activity influences things. There’s other elements of amendments within the book and so it can move the numbers around a little bit more than you might otherwise expect. But look, you should take from the 15% that we had momentum across all the products. We had a really strong Stop Loss season. We had a really strong supplemental health season, and life wasn’t too bad. Again to get us to 15%, we were firing on all cylinders for one-one and the team worked really hard to get us there collectively. But we feel good about the number in totality. We’ll give you obviously, the nitty gritty details as we get into 1Q reporting.
Joel Hurwitz: Okay. And then when I look at tax exempt flows, it was almost $5 billion of outflows for the full year. I know you called out the one large mandate redeeming in Q4, but just what’s going on there? And then, is that business have the majority of the concentration of the spread-based AUM and are you seeing some of these outflows pressuring the spread asset levels?
Rob Grubka: Yeah. So look, on TM, as Heather knows well and she may chime in here, that’s a business we’ve been in a long time. We’ve been extremely successful. We got market leadership position in that business and it is one where general account plays a bigger role versus the corporate segment. So — and as a reminder, we called out sort of what happened in fourth quarter, but as a reminder, in first quarter, we also had a large case go there. So that’s close to $4 billion of the number from those two particular cases that — been with us a long time, large general accounts. That was certainly a piece of the story. And then what we’ve seen and Don highlighted, the participant behavior is an element that has been nudged given where rates have moved in this sort of unique environment.
In our guide on — our best view of things as we sit here today is that will continue as we look out through ’24, but obviously quarter-to-quarter, we’ll be able to update you on what we’re seeing and how that’s actually transpiring. But we think how we’re guiding on it is prudent at this point and again gets back to all the other guidance that we’ve given around margins and growth. Those things are embedded in it. But Heather, you want to —
Heather Lavallee: Yeah. I think to me also, to the broader step back on the Wealth business, you’ve heard us talk about for a number of years of the diversification of the markets that we serve, from mega clients down to micro. There are different growth trends that we’ve been able to capitalize in over time. And that really emerges in not only the steady revenue growth but the strong margins, the high free cash flow of the business. And if you look at just last week’s job report, one of the highest growth sectors was in government and we happen to be the number one provider in the government market segment. And that will shift from time to time, but we feel like we’ve got an at-scale retirement franchise that is going to continue to be able to drive some steady growth for us across — and across all different segments, not just tax exempt, but corporate market as well.
Operator: Thank you. Our next question comes from the line of Alex Scott with Goldman Sachs. Please proceed with your questions.
