Corebridge Financial, Inc. Q1 FY2025 earnings call

• Macro-economic uncertainty is present, but Corebridge's mission to partner with others in financial lives is relevant. They had a strong first quarter with operating earnings per share of $1.16 and ROE of 11.8%. - Four strategic pillars drive EPS growth and long-term value creation: organic growth (robust premiums and deposits of $9.3 billion, investing in digital capabilities etc.), balance sheet optimization (Bermuda as part of capital management, ceded ~$2 billion in reserves in Q1), expense efficiencies (voluntary early retirement program with ~$85 million one-time cost), and active capital management (reduced share count by over 10% in past 12 months via share repurchase).

Corebridge reported operating earnings per share of $1.16 and ROE of 11.8%. They returned $454 million to shareholders with a 70% payout ratio. The balance sheet is resilient with $2.4 billion in holding company liquidity. In terms of product segments: Individual Retirement had premiums and deposits of $4.7 billion; Group Retirement had steady periodic in-plan deposits; Life Insurance had attractive performance including strong sales and better-than-expected mortality results; Institutional Markets saw GIC reserves increase 48% year-over-year. Adjusted pre-tax operating income for individual retirement declined 10% year-over-year, while group retirement had core earnings of $167 million, life insurance increased 23% year-over-year, and institutional markets were virtually flat year-over-year but total sources of income grew 33%.

• Long-term expectation is for annual run rate EPS to increase on average in the range of 10% to 15%. - Achieved a run rate ROE of 12.3% in Q1, committed to 12% to 14% annual target. Life Fleet RBC ratio remains above target. Payout ratio is 70% and target is 60% to 65%. - 2025 EPS growth expected to be below long-term 10%-15% due to Fed rate actions drag,预计中个位数增长. Updated sensitivities to equity markets and interest rates, and expects alternative investment returns to fall short of long-term 8%-9% target in 2025, with Q2 alternative investment returns expected to be ~half of Q1's level.

• Macro-economic uncertainty and market volatility pose risks, including impact on retirees and those nearing retirement. - Investment portfolio value may fluctuate. - Market uncertainty may affect deal activity in certain businesses like pension risk transfer.

Q: Dan Bergman asked about the repositioning of the portfolio in Group Retirement and the competitive environment for Individual Retirement products.

A: Kevin Hogan said sequential increase in Group Retirement based spreads reflects opportunistic asset repositioning as part of regular active portfolio management, and demand for annuities remains robust with long-term macro drivers like aging population and supportive adviser community, and they see attractive new business margins. Elias Habayeb added they will continue to take advantage of asset repositioning opportunities within risk parameters.

Q: Elyse Greenspan asked about enhancing capital efficiency and pension risk transfer deals.

A: Kevin Hogan said they are expanding the Bermuda strategy, having ceded $14 billion in reserves to-date, and seeing a promising pipeline of pension risk transfer (PRT) deals with robust opportunities in full plan terminations.

Q: Joel Hurwitz asked about expenses and group business growth.

A: Elias Habayeb said about 50% of the increase in individual retirement expenses is tied to seasonality (Rule of 65 and payroll taxes/401(k) matches). For the early retirement program, savings will benefit expense run rate but not fully until early 2016. Kevin Hogan said Group Retirement's advisory and brokerage assets are $16 billion, up 5% year-over-year, with adviser force growing and positive signs in transitioning to fee-based business.

Q: Suneet Kamath asked about cash generation and group business out-of-plan growth.

A: Elias Habayeb said target is to grow insurance company dividends by 5%-10% in 2025 and is on track. Kevin Hogan said Group Retirement's out-of-plan and advisory/brokerage space has attractive opportunities, with advisory and brokerage assets $16 billion, up 5% year-over-year, and advisers building relationships with customers.

Q: Cave Montazeri asked about technology initiatives and asset portfolio credit event performance.

A: Kevin Hogan said they are investing in data, digital, and automation strategies in Life Insurance and other segments, with benefits seen in adviser efficiency. Elias Habayeb said the portfolio is diversified, 95% of fixed maturities are investment grade, and they proactively manage credit risk with diversification and protective covenants.

Q: Alex Scott asked about the relationship with Nippon and asset portfolio performance in scenarios.

A: Kevin Hogan said they are excited about the relationship with Nippon Life, working on mutually beneficial commercial activities. Elias Habayeb said the portfolio is diversified, 95% fixed maturities are investment grade, and they manage credit risk proactively with diversification and conservative reserving.

Q: Jimmy Bhullar asked about RBC ratio and sensitivity of earnings to market.

A: Elias Habayeb said RBC ratio impact from market volatility is limited due to hedging and diversification, and the impact is temporary. The impact on cash flows for fee income is mirrored, but they are confident in cash flows.

Q: Tom Gallagher asked about portfolio repositioning and risk transfer pricing.

A: Kevin Hogan said they control investment strategy and provide guidelines to partners. Elias Habayeb said they reposition assets in combination of public and private credit, and any risk transfer deal must be accretive on a risk-adjusted basis, considering price and structure.