Glenn Schorr: Thank you so much.
Operator: Our next question comes from the line of Ben Budish with Barclays. Please receive your question.
Benjamin Budish: Hey, good morning and thanks for taking the question. I wanted to ask about the performance in the insurance business. It sounds like a lot of things kind of firing well over there. But just when we look at the reported ROE, which is still ahead of your target, it looks like the decline from Q4 to Q1 to Q2 was a bit steeper than we would’ve expected. So, just curious if there’s any other color you can share there in terms of the kind of sequential growth in cost of insurance and G&A versus the investment income and how we should think about those various pieces going forward. Thanks.
Robert Lewin: Yeah. Great. Thanks a lot for the question. As you noted, GA continues to perform at a really high level, and in Q2 was ahead of our target returns for GA at a 15%-plus, pretax ROE. In terms of the operating earnings in the quarter and why you saw that quarter-on-quarter decline, that you referenced, really a function of a strategic decision at the GA level to position our book in more liquid securities at the beginning of Q2, more cash, more liquid fixed income. If you think back to early part of Q2, we were still in that regional bank crisis timeframe and I think we made the right decision to reposition the book at that point in time, gave up a little bit of ROE in the quarter, as you noted, but I think the right decision for the business.
Benjamin Budish: Got it. That’s very helpful. Thanks Rob.
Operator: The next question is from the line of Brian McKenna with JMP Securities. Please proceed with your question.
Brian McKenna: Thanks. Good morning, everyone. So, core private equity continues to be a great story, fair value now totals over $6 billion with about $3 billion in gains on the balance sheet, and it’s generated a 20% return. It also looks like core private equity AUMs total of $34 billion today. So, could you talk about demand for this product specifically from third parties? And then, is there a way to think about the absolute level of third-party fundraising for the strategy over time?
Craig Larson: Hey, Brian. It’s Craig. Why don’t I start? First, thanks for all of the detail and noticing core PE again, it’s one of the reasons we’d added that page in our press release focused on the asset class and the strategy. So, a lot of innovation in our firm happens when we can’t find a home for great investments, and that’s what happens with core private equity. It’s a long duration strategy where we expect to hold investments in compound value for 10 to 15 years, but the risk reward is fundamentally different than our relative to our opportunistic PE funds. And so, at this point, we put together what we think is a really great portfolio of companies diversified across the world. As you noted, since inception returns have been very positive.
That $34 billion of AUM was $12 billion three years ago. That’s all organic growth. And I think, another point just as it relates to this in our model, because you’re right, we’ve got the $6.2 billion of fair value relative to the $3 billion of cost. So with shareholders, we’re participating in the economics, both in terms of the management fees and performance fees on the third-party piece, the compounding you see on the balance sheet. And then on top of that, we’d expect capital markets revenues to continue to grow alongside. Capital markets revenues in the quarter were between $25 million and $30 million. So, we’ve got a number of ways to win. I think from an LP standpoint, the types of LPs who find this asset class most interesting are those — I think probably larger plans with longer dated liabilities and are interested in the matching aspect related to the asset class.
