“In addition, our 2022 average VII asset balance also factors in, our expected sale of $1 billion of private equity in the secondary market in 2022.”

In context

“cted 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 sale of $1 billion of private equity in the secondary market in 2022. Finally, in addition to the asset balances, we are applying our historical annual returns for each asset class within VII. In addition to the PE return of 12%, which I previously discussed, we expect 6.5% return for hedge funds and a 7% return for real estate and other funds. So now I will discuss our near-term outlook for our business segments. Our comments will be anchored our full year 2021 reported results in our QFS, unless otherwise noted. Let’s start with the U.S. on Page 13. For Group Benefits, excluding the excess premium from participating Group Life contracts of $1.1 billion in 2021, adjusted PFOs are expected to resume their historical target range of 4% to 6% annually, albeit from a higher base. Regarding underwriting, we expect the annual Group Life mortality ratio to be bet”