Brighthouse Financial, Inc.

Good morning, ladies and gentlemen, and welcome to Bright House Financial fourth quarter and full year 2023 earnings conference call. My name is Livia, and I'll be your coordinator today. At this time, all participants are on a listen-only mode. We will facilitate a question and answer session towards the end of the conference call. In fairness to all participants, please limit yourself to one question and one follow-up. As a reminder, this conference is being recorded for replay purposes. I would now like to send the presentation over to Dana Almonte, Head of Investor Relations. Ms. Almonte, you may proceed.

Thank you and good morning. Welcome to Bright House Financial's fourth quarter and full year 2023 earnings call. Materials for today's call were released last night and can be found on the investor relations section of our website. We encourage you to review all of these materials. Today, you will hear from Eric Stagerwald, our President and Chief Executive Officer and Ed Behar, our Chief Financial Officer. Following our prepared remarks, we will open the call up for a question and answer period. Also here with us today to participate in the discussions are Miles Lambert, our Chief Distribution and Marketing Officer, David Rosenbaum, Head of Product and Underwriting, and John Rosenthal, our Chief Investment Officer. Before we begin, I'd like to note that our discussion during this call may include forward-looking statements within the meaning of the federal securities laws. Bright House Financial's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties described from time to time in Bright House Financial's filings with the SEC. Information discussed on today's call speaks only as of today, February 13, 2024. The company undertakes no obligation to update any information discussed on today's call. During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliation of these non-GAAP measures on a historical basis to the most directly comparable GAAP measures and related definitions may be found in our earnings release, slide presentation, and financial supplement. And finally, references to statutory results including certain statutory-based measures used by management, are preliminary due to the timing of the filing of the statutory statements. And now, I'll turn the call over to our CEO, Eric Stagerwald.

Thank you, Dana, and good morning, everyone. Looking back on 2023, I'm proud of the progress we made as we continued to execute on our strategic priorities. We bought back a substantial amount of common stock, delivered strong sales results, enhanced and grew our core product suite, and nicely controlled expenses, all while maintaining our strong balance sheet and robust liquidity. We continue to return capital to shareholders through the company's common stock repurchase program. For the full year 2023, we repurchased $250 million of our common stock, reducing shares outstanding relative to year-end 2022 by approximately 7%, further demonstrating our ongoing commitment to return capital to our shareholders over time. In November, we announced a new share repurchase authorization of up to an additional $750 million. We delivered strong sales results and further strengthened our annuity and life insurance product portfolios. For full year 2023, total annuity sales were $10.6 billion, and total life insurance sales were $102 million, both of which exceeded our 2023 targets. Contributing to the strong total annuity sales results for the full year 2023 was a record sales year for our flagship SHIELD-level annuity products. SHIELD sales totaled $6.9 billion, an increase of 17% on a full year basis. Sales of our fixed-rate annuities were also a strong contributor to the overall annuity sales, totaling $2.7 billion. down from $3.7 billion in total fixed-rate annuity sales in 2022. As I mentioned, in 2023, we continue to strengthen our annuity and life insurance product portfolios. In May, we introduced new enhancements to our SHIELD-level annuities product suite as we continue to be a leader in the buffered annuity marketplace that we helped to create. In November, we launched Bright House Secure Key fixed-indexed annuities. expanding our distribution footprint in the fixed indexed annuity market. And we also expanded our life insurance suite with the launch of Bright House SmartGuard Plus, our first registered index-linked universal life insurance policy. Turning to expenses. We recognize that being a low-cost producer is a great way to a sustainable competitive advantage in this industry. Efficiency gains are what will allow us to consistently offer competitive products in the marketplace while also generating an appropriate return for shareholders. Our focus on controlling expenses was illustrated in 2023. With full-year corporate expenses up only 2%, to $885 million, that's a pre-tax number, in an environment with core inflation of approximately 4%. Finally, we continued to focus on maintaining the strength of our balance sheet. End of the year with an estimated combined risk-based capital or RBC ratio of approximately 420% and liquid assets at the holding company of $1.3 billion. The composition of the RBC ratio has changed, largely driven by the implementation of a new statutory requirement to reflect the effects of all anticipated future hedging on our variable annuity or VA reserves and required capital. The implementation of this new requirement had a favorable impact on our required capital with an offsetting increase in statutory reserves. So while our total combined adjusted capital, or TAC, declined to $6.3 billion as of year-end 2023, there was an insignificant impact to our RBC ratio. Ed will discuss our preliminary statutory results and the new statutory requirement in more detail in a moment. But I want to highlight that our overall risk management strategy remains unchanged, and we do not anticipate that this new statutory requirement will have a material impact on our long-term statutory free cash flows. Before turning the call over to Ed to discuss our fourth quarter financial results, I'd like to touch just for a moment on our priorities for 2024. First, we will continue to strengthen our product suite and leverage the depth and breadth of our expertise, along with our strong distribution relationships, to competitively position ourselves in the markets we choose to compete in. We believe that this combination will lead to continued growth in shield sales, an expanded presence in the fixed index annuity market, and the first dollar contributions into our work in partnership with BlackRock. We remain very excited about our expanded relationship with BlackRock to deliver BlackRock's LifePath paycheck. They are working with 14 plan sponsors at this point to implement this product offering. These 14 plan sponsors total $27 billion in target date fund assets, and include more than 500,000 individual employees. Initial plan sponsor funding is expected to occur this year. Second, we intend to continue to manage our expenses with the expectation that our corporate expenses will be down in 2024 versus 2023. Finally, balance sheet strength always remains a key priority and we believe that our strong rbc ratio and substantial holding company cash position will allow us to continue to return capital to shareholders i'm proud of all that we achieved in 2023 and look forward to 2024 as the bright house financial franchise continues to grow and evolve to a more diversified company. And with that, I'll turn the call over to Ed to discuss our fourth quarter financial results.

Thank you, Eric, and good morning, everyone. I am pleased with our results in the fourth quarter and for the full year 2023. Our estimated combined risk-based capital, or RBC ratio, increased approximately 10 points sequentially to 420%, even after $350 million in subsidiary dividends paid to the holding company in the fourth quarter. And the subsidiary dividends explain the sequential increase in holding company liquid assets to $1.3 billion at year end. Liquid assets at the holding company increased from $1 billion at year end 2022, even though we repurchased $250 million of stock in 2023. As Eric touched on earlier, our preliminary statutory results as of year end 2023 reflect the impact of a new statutory requirement, which mandates that life insurers reflect all anticipated future hedging in variable annuity reserves and capital. There are three things that I believe are important to highlight related to this new statutory requirement. First, our total asset requirement at CTE 98 was reduced by $1.14 billion because we now include the benefits from all anticipated future hedging. As a reminder, CTE98 is a conditional tail expectation that is the average of the worst 2% of capital market scenarios for the company. There is a substantial decrease in the total asset requirement at CTE98 from this new requirement because we now reflect the benefit of hedging over the life of the block of business versus previously only reflecting the benefit from existing hedges. Second, inclusion of all anticipated future hedges increased our total asset requirement at CTE 70 by $870 million, and this translated to an equivalent increase in reserves, reducing combined total adjusted capital, or TAC. CTE 70 is a conditional tail expectation that is the average of the worst 30% of capital market scenarios for the company. Given that we are hedging to protect CTE 98, which is a more conservative calculation, it is understandable that this new statutory requirement is a cost at CTE 70. And third, The net impact on the RBC ratio from this new statutory requirement was insignificant. The impact from reflecting future hedges has a favorable impact on required capital because the total risk is lower and more of the risk is now reflected in reserves. As a result, the decline in TAC associated with the new statutory requirement was effectively offset by a decline in required capital. Importantly, our risk management strategy remains unchanged. We continue to manage the existing shield and variable annuity blocks on a combined basis with a statutory hedge target and a $500 million maximum first loss tolerance. In addition, we do not anticipate material changes in hedge costs under the normal, moderate, and adverse scenarios that were the basis for the long-term statutory free cash flow projections we provided in September 2023. As of December 31st, 2023, our TAC was $6.3 billion, which compares with $7.3 billion as of the end of the third quarter of 2023. The key drivers of the sequential decline were the impact of the new statutory requirement and $350 million in subsidiary dividends to the holding company, with $266 million from Bright House Life Insurance Company, or BLIC, and $84 million from New England Life Insurance Company. Also, we realize the capital benefits associated with the internal reinsurance transaction between BLIC and its New York affiliate that we had discussed with you previously. And this included the release of approximately $200 million of asset adequacy testing reserves. I also want to note that largely because of the reserve increase associated with the new statutory requirement, we had a negative unassigned funds balance at Blick of approximately $1.1 billion at year end. Therefore, any potential dividend from Blick in 2024 would be subject to regulatory approval as an extraordinary dividend. Given the substantial amount of cash at the holding company, our capital return plan is not dependent on dividends from Blick. Now turning to adjusted earnings results in the fourth quarter. Adjusted earnings for the quarter of $177 million reflected a $12 million unfavorable notable item, or 19 cents per share, related to legal matters. Adjusted earnings Excluding the impact from the notable item were $189 million, which compares with adjusted earnings on the same basis of $275 million in the third quarter of 2023 and $282 million in the fourth quarter of 2022. Excluding the impact of the notable item, the adjusted earnings results in the fourth quarter were below our average quarterly run rate expectation, This was driven by lower alternative investment returns and seasonally higher expenses. Alternative investment income was approximately $60 million, or 95 cents per share, below our average quarterly run rate expectation. The alternative investment yield was 0.7 percent in the fourth quarter. Additionally, corporate expenses are typically higher in the fourth quarter. This seasonality resulted in higher expenses compared with our average quarterly run rate expectation. Turning to the segment results in the fourth quarter, the annuity segment reported adjusted earnings of $245 million. Sequentially, annuity results were driven by lower fees, higher expenses, and a lower underwriting margin. Adjusted earnings in the life segment were $4 million. On a sequential basis, life segment results reflect a higher underwriting margin partially offset by lower net investment income and higher expenses. The runoff segment reported an adjusted loss of $50 million. Sequentially, results reflect a lower underwriting margin and lower net investment income. Corporate and other had an adjusted loss excluding notable items of $10 million and sequentially reflects lower expenses partially offset by a lower tax benefit. In closing, we ended the year with a strong statutory balance sheet and substantial cash at the holding company. Our financial position allowed us to support growth as well as return capital to shareholders in 2023, and we expect this to continue in 2024. We would now like to turn the call over to the operator for your questions.

Thank you. Ladies and gentlemen, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, you may press star one one again. As a reminder, in fairness to all participants in the queue, please limit yourself to one question and one follow up. Please stand by while we compile the Q&A roster. And our first question coming from the line of Thomas Gallagher from Evercore, Yolanda Sulpon.

Good morning, guys. First question is, can you talk about this rule change, the impacts? Ed, I think I heard you say you now have negative assigned surplus, so that probably has some limitations on dividend flows to the holding company. But just kind of a broader question on, practically speaking, what does this mean for you with regard to near-term capital management plans? Will it prevent you from taking dividends out for a bit out of the subs? And what this might mean for cash flows and buybacks? Thanks.

Good morning, Tom. There are a lot of questions in there, but I'll try to go in order here. So First, you asked about unassigned funds. Number one, our capital return plans do not depend on subsidiary dividends. So you see we have a lot of cash at the holding company. We don't need dividends to cover holding company expenses, blick dividends to cover holding company expenses. You know, there are no debt maturities for us. you know, until 2027. So we're in a very strong position from the ability to continue our capital plan. The second thing I would point out is our current financial plan for 2024 does support us taking capital up from Bright House Life Insurance Company, or BLIC. So this suggests that the negative unassigned funds is more of a technical consideration than it is a fundamental one for us. But it's fair to say that given we have negative unassigned funds and we need regulatory approval for any dividends from Blick in 2024, we don't think it's appropriate to provide any dollar outlook for Blick dividends at this point. The broader question of what does this mean for us? I would say, you know, the summary sentence is that including all of our hedges in our financial statements today highlights the effectiveness of our strategy. because you see that the total risk is reduced and the range of outcomes is narrower. So that's specifically, you know, CTE 98 is down by $1.14 billion and you have about $2 billion of convergence between 98 and 70. So on a broader basis, I'd say it doesn't really mean anything in terms of how we manage the risk or how we think about our cash flows. specifically the comments I made about hedge costs under this new requirement. We see that there's more immediate interest rate sensitivity under this new requirement than we had previously. So we have purchased some additional rate protection. I'd say the additional rate protection that we've purchased is modest relative to the significant change we made in our interest rate positioning back in 2022. As a reminder, when interest rates went up a lot, we decided to put on a lot of protection. And so I would say this change is modest relative to that. The reason that hedge costs do not change under this new requirement for the scenarios that we've disclosed to you for our long-term statutory free cash flows is that the moderate scenario, we assume rates follow the forward curve, and adding additional hedges will not have any cost if rates follow the forward curve, because that is factored into your hedging that you're doing today. Under the normal scenario, the 20-year US Treasury is mean reverting to about 425 in our projection model. And if you look at where forwards are for the 20-year Treasury, 10-year forward, it's like north of 450 right now. So again, not materially different. And then I'd say on the adverse scenario, you know, that has rates going to 1%. So a significant drop in interest rates and obviously any additional interest rate hedging for an adverse scenario is a good thing. So I'm not sure if I missed anything, but I'm sure you'll follow up.

No, that, yeah, Ed, that's great. That was helpful color. And so really it sounds like it's more a technicality from their perspective of you need approval. before getting dividends out. And I see your RBC looks strong. So that shouldn't be a gating item, I wouldn't think, from regulators. So I guess my only follow-up is, Eric, I heard you mention long-term free cash flow is not impacted at all by this. Is intermediate-term cash flow? I'm just trying to get a sense for, I guess you mentioned, Ed, a little bit of higher interest rate hedging costs. Should we expect the next two, three years of your best guess for free cash flow is impacted by this? And if so, could you quantify it? Thanks.

Hey, Tom. We said long-term, and I'm saying intermediate is not affected either. So we don't really see any change. I liked your word technical. This is a technical accounting change here. um but we don't see any changes in cash flows and we're not going to change our buyback plans we will we will continue to buy back stock great thanks guys thank you and our next question coming from the line of ryan krueger with kbw yolani softman

Hi, thanks. Good morning. My first question was on the 50 basis point increase in the statutory mean reversion rate on January 1st. Can you give us an update on the sensitivity there? I guess, in particular, is it any different than it would have been prior to the change in the reflection of the hedges, or is it the same as you would have thought previously?

Good morning, Ryan. It's Ed. So we will get the 50 basis points in the first quarter. We have said in the past that 25 basis points equates to $200 to $250 million of an impact. It does look like it will be different under the new statutory requirement. I think it's too early to quantify, though, how much different it will be.

Okay, thanks. And then I guess maybe just higher level. I think previously you would have had the option to reflect all the hedges in your statutory reserves and total asset requirements. I think some VA companies were already doing that. But I guess maybe just curious, kind of from a high level, it seems like it doesn't really have, other than the impact on assigned surplus, it doesn't really have any negative impacts.

I guess I'm just curious, kind of what was the thought process on not already doing this previously?

Sure. So let me, let me start by saying that, um, you know, obviously we can't speak for other companies, but I think there are a couple of things to consider for us. The first is that based on peer commentary and industry sources, we do have a different approach to managing the risk. I'd say first, you know, you, you hear us, obviously we're focused on statutory. Secondly, we do hedge VA and shield on a combined basis, and then Within that statutory framework, we have a max loss tolerance of up to $500 million, and that is calibrated to limit the downside to the RBC ratio. So I think all of those in total mean that we have somewhat of a different approach than some other companies. You are correct, though. The second thing that I'd point out is we had been using a hedge runoff calculation, and if we had implemented a clearly defined hedging strategy or a CDHS, the impact from the requirement would have been different. When we think about CDHS, I think it's important to sort of go to a little bit of a timeline and history here for the company. You know, since we separated from MetLife, there was a lot of stuff that we needed to accomplish. And I would say that there were two significant initiatives related to VA that I think necessitated putting consideration of a CDHS out further in the future. The first was the meaningful change we had in our risk tolerance back in late 19, early 2020 when we de-risked our VA hedging strategy. We lowered the first loss tolerance significantly from where it was and where it was initially intended to go to at separation. And we also changed the nature of our hedging strategy back in late 19, early 2020. And as you may know, to effectively implement a CDHS, you need a sufficient performance history for that strategy to get the full benefit of the CDHS. And so when we did reset the max loss and the type of hedging we were doing, We viewed that as a restarting the clock in terms of the performance history needed to get the maximum benefit for CDHS. The other thing that occurred around that time and into through the end of 2022 was the significant amount of focus we put on actuarial transformation. So moving from multiple valuation systems to one valuation environment. that was a very significant initiative and you may recall that the last conversion we did was variable annuities which was by year end 2022. so we didn't think it made sense to go into doing a cdhs when we were in the middle of converting the va evaluation system and then obviously you know we're into 2023 and we have this new requirement so you know implementing a cdhs was sort of not even an option because we knew we were going into this new uh this new revision to VM21. I know that's a long answer to the question, but I think it is important to understand, you know, maybe how we're a little different in terms of how we manage the risk and also everything that we've been doing for the last several years since separation.

Thank you. That's really helpful. Appreciate it.

Thank you. Our next question coming from the lineup. John Barnis with Piper Sandler. You'll end us open.

Good morning. Thank you. Appreciate the opportunity. Previously, you talked about your outlook for surrender activity being a bit above what the prior run rate was. Given where the rate environment has gone and with the visibility of another year's experience, how should we be thinking about surrender activity given your outlook for sales volume? Thank you.

Sure. Thanks. Thanks, John. So I'll start. You know, as you said, as we've said on previous earnings calls, given the blocks of business that came out of the surrender charge period in 2023, coupled with the higher rates, we did expect higher outflows in 2023. And we saw that. And that was consistent with pricing assumptions. So when we think about the outflows, they are weighted to VA. But given the mix of business that we've sold, you know, over the last several years as Bright House, you know, coupled with the higher rates, the contribution of outflows from Shield and fixed annuities in certain years is growing, but again, in line with pricing assumptions. So, you know, maybe just for some context, so what changed in 2023 relative to 2022? So the overall dollar amount of contract holders using their benefits, so partial withdrawals, annuitizations, death benefits, that was about the same that was used in 2022. But what changed was the level of full withdrawals increased, again, because of the blocks of business coming out of surrender as well as the higher rates. So that was all consistent with pricing assumptions. So when we look forward to 2024, I would say that – kind of the same holds, the blocks of business coming out of surrender charge period and the higher rates, even though they've come back a little bit, if you think about rates over the last handful of years, still higher than that point in time. We expect a similar level of outflows to what we experienced in 2023 to recur in 2024, but the mix will be a little different based on the blocks of business coming out of the surrender charge period.

That's very helpful. Thank you very much. You normally put out your distributable earnings scenarios in March and put it out in September last year because of LBTI. Are you anticipating to go back to that normal cadence?

Hey, John. It's Ed. So, we do plan on publishing the long-term statutory free cash flows. We don't have a specific timeline at this point, but we will keep you up to date when we get closer to when we think we'll do it.

Thank you. Appreciate the answers.

Thank you. And as a reminder, ladies and gentlemen, to ask a question, please press star 1-1. And our next question, coming from the line of Elise Greenspan with Wells Fargo, your line is open.

Hi, thanks. Good morning. My first question, you know, the kind of normalized EPS, and if we adjust for alts, went down a little bit in the quarter. And I know, Ed, you alluded to higher Q4 corporate costs. So as we think about kind of run rate earnings, when you put, you know, kind of back into the range of something, you know, in the range of $4, assuming normal alts. And then with that being said, can you just give us a sense of just expectations for VII you know, for the Q1 and any thoughts for 2024 as well?

Sure. Hi, Elise. So you're correct. You're still going to get to a run rate type of number that's in the $4 range. And, you know, you start with the 292 X the notable and You adjust for the VII or alts that's 95 cents a share off of normal, approximately. And then the normal kind of corporate expense run rate, because the fourth quarter is, as you can see from our results historically, the fourth quarter is typically high relative to the average quarter. And that's probably in the neighborhood of 20 cents a share or something. So, you know, you're going to get to that $4, $4 plus type of number as a normal quarter. And in terms of alts, I'm going to pass that over to John.

Yeah, hi, Elise. I think as we've suggested in the past, we really don't want to get into the business of predicting near-term alt returns. So we'll just have to wait and see. And as a reminder, we invest in alternatives, which for us is essentially all private equity for the long term. and the asset class is a good fit for our long-term liabilities. We continue to expect to earn 9% to 11% over the life of these assets, recognizing there will be short-term volatility in the interim, and we use that midpoint of the 9% to 11% for planning purposes.

Thanks. And then my second question, you know, going back to some of the capital discussion is, and recognizing you guys have a good amount of capital to hold co, but with that being said, I mean, Ed, does the, you know, you guys bought back 60 million in the fourth quarter and, you know, 30 million year to date. Does it feel like that's kind of the cadence we should think about from a, you know, buyback perspective?

Hey, Elise. So, you know, we, we have, we made a decision a while back that we're not going to give a forward look on pace of repurchase. I think you heard Eric and I both said that buybacks are something that you should expect to continue this year. You can look at our history and what we've done in terms of amount and timing and I would just say you can base it off of that. One of the things that we have said, I guess starting back in late 22 was that we were a little more cautious on the environment. We haven't had a credit cycle in a long time. Obviously, this year or last year was a good year. There was, you know, a market that was strong, but we do think it's been a long time since the credit cycle, and it makes sense to be a little bit prudent about that.

Thank you. Thank you. And our next question coming from the lineup, Alex Scott with Goldman Sachs. Your line is open.

Hi, good morning. First one I have for you is going back to the CTE 98 level and it being lower. I just wanted to get a feel for how it changes the emergence of CTE over time. I think if we go back far enough, you guys used to give us an indication of when the CTE requirement would peak in different scenarios. And, you know, obviously not providing that level of detail, but was hoping maybe you could give us an indication of, you know, how far away at this point are we from that, and did this accounting change affect it at all?

Hey, Alex. So, our initial view is that it's not going to change that. that much, that the sort of the timing of that would be similar to what it was prior to this new requirement.

Got it. Okay. The second one I have is on the normalized statutory earnings. You know, it's weaker this year, a little negative, and I think that included, you know, one-time benefits from both the mean reversion point change. It sounded like some AAT release and 4Q. So, you know, the run rate there seems pretty low. Any help you can give us in thinking through how that will unfold over the next year or two or any kind of way to maybe further normalize? I know it's an already normalized number, but any help on just thinking where we are in terms of the statutory earnings power of the company?

So, Alex, I don't think I can give you any help on a one-year view. And the reason for that is that there is still a fair amount of volatility. So, you know, you're correct. We approximately $200 million loss in 2023. If you look at 2022, we had a billion dollars of norm stat earnings. You know, if you look at the range of norm stat earnings over the last five years or so, it's been pretty wide now. Obviously, we think that over time we're going to have more predictable cash flows, more predictable earnings. But at this point, it's still you know, it's still been pretty volatile. And I don't think even as you look at our cash flows that we talked about where we see convergence between the scenarios, we're not talking about any single year of of an outlook. If you go back over since 2018, our norm stat earnings is averaged slightly less than $400 million a year. And our net cash flow to the holding company is averaged like $335 million a year.

Got it. So, I mean, is that a rough way to think about, you know, recovering this negative unassigned funds and how long it can take to rebuild? I mean, that's what I'm trying to get at is just trying to understand the the period of time it could take to have that go away.

Yeah, so our ability to predict what's going to happen to unassigned funds is very difficult because you will see a lot of movement in CTE70 versus CTE98, depending on the market environment. And obviously, CTE70 is driving TAC, and that's going to have the impact and because it's driving reserves and that's going to impact TAC and that's driving the movement non-assigned funds. So I would just go back to what I said, I think, in response to Tom's question, which is when we look at our capital plan or expectation, what we could support over time, our financial plan would suggest that we should be able to take capital up from Blick in 2024. Now, obviously, with negative unassigned funds, we would need to have regulatory approval to do that. But as you can imagine, when we think about our financial position, we're looking at our risk-based capital ratio. And you see where it was at the end of the year. And, you know, we have an expectation that would suggest that we should be able to support taking capital up in 2024.

Thank you.

Thank you. And our next question, coming from the line-off, soon he'd come up with Jeffrey .

Thanks. Good morning. So I just wanted to go back to the September distributable earnings deck that you guys put out. If we looked at kind of the longer, longer term, sort of years six through ten in that scenario, it would seem to have implied sort of a step-up in distributable earnings. So I'm just wondering, does any of that change as a result of this in any kind of material way? And what I mean by this is obviously the accounting change.

Yeah, hey, Sunit. I would not think the pattern is going to change that much based on this new requirement.

OK. Got it. And then I guess we've been talking a lot about Blick and Nelco, but we haven't really talked about your captive reinsurance subsidiary. Does that come into play at all in terms of a source of holdco cash?

So you're talking about Bright House Reinsurance Company at Delaware, BRCD. That's right. Correct. So I would just repeat what I've said in the past, which is we do not view BRCD as a source of ongoing capital to the holding company or to Blick or the holding company. As you know, we took two $600 million dividends out of BRCD, so $1.2 billion. We think that brought the capitalization of that entity to a level that is appropriate. And, you know, it's a runoff business. It's our life risk with a lot of the concentration of the ULSG risk is in that entity. So I would not view that entity as an ongoing source of capital to the holding company. to Blick or to the holding company.

Okay, thanks. And then maybe if I could just sneak one more in, just in terms of your new sales and the strain associated with that, I think, Ed, in the past you talked about maybe five points of RBC. Is that still kind of where we are in terms of the new business and the plan for 24?

I think that's still a reasonable expectation.

Okay, thanks.

Thank you. I'm showing no further questions in the queue at this time. I will now turn the call back over to Dana Monte for closing remarks.

Thank you, Livia. Thank you, everyone, for joining our call this morning. Have a great day.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.