“The takeaway is that changes in interest rates are expected to have a relatively modest impact on adjusted earnings over the near-term.”

In context

“as the lagging nature of statutory dividend payments to the holding company. In addition, we remain committed to maintaining a full year direct expense ratio below 12.3%. We are raising our VII guidance in 2022 to $1.8 billion to $2 billion. After applying our historical average returns on higher asset balances, I’ll provide more detail on VII in a moment. Our Corporate & Other adjusted loss is expected to remain at $650 million to $750 million after tax but we are increasing our expected effective tax rate by 1 point to 21% to 23% to reflect our expectation for higher earnings in foreign markets and lower tax credits in the U.S. At the bottom of the page, you’ll see expected key interest rate sensitivities relative to our base case, which incorporates the forward curve as of December 31. The takeaway is that changes in interest rates are expected to have a relatively modest impact on adjusted earnings over the near-term. Now I’d like to provide you with more detail on what informed our 2022 VII guidance range of $1.8 billion to $2 billion, as highlighted on Page 12. The chart reflects the growth in our VII average asset balances from $8.4 billion in 2020 to nearly double at $16.5 billion expected in 2022. This growth is due to both the strong private equity returns in 2021 as well as the inclusion of over $2.6 billion of real estate and other funds in 2021. These were previously part of the recurring investment income portfolio and were reclassed to VII beginning in 2021 as we’ve begun to partially shift the form of our investment in certain asset classes, such as real estate equity investments through participation in funds. In addition, our 2022 average VII asset balance also factors in, our expected sa”