- Operating Earnings Per Share (EPS): $1.13, a 9% increase year over year.
- Run Rate Operating EPS: $1.21, a 12% improvement year over year.
- Premiums and Deposits: $11.7 billion, a 17% increase year over year.
- Capital Returned to Shareholders: $575 million through dividends and share repurchases.
- General Operating Expenses: Lower by 6% year over year after adjusting for international life divestitures.
- Individual Retirement Sales: $6.8 billion, up 68% year over year.
- Fixed Annuity Sales: $4.1 billion, significantly higher than any quarter in recent history.
- Assets Under Management and Administration: $394 billion, a 6% increase year over year.
- Net Investment Income: $2.7 billion, a 10% improvement year over year.
- Base Portfolio Yield: 4.82%, a 22 basis points increase year over year.
- General Account Asset Origination: Approximately $19 billion in the first half of the year, 50% more than the previous year.
- Aggregate Core Sources of Income: Grew 5% year over year.
- Base Spread Income: Grew 3% year over year.
- Fee Income: Improved 8% year over year.
- Underwriting Margin: Improved 4% year over year.
- Group Retirement Fee Income: Grew 7% year over year.
- Life Insurance Underwriting Margin Ratio: 36.5%, up 130 basis points over the prior year.
- Institutional Markets Base Spread Income: Increased 8% year over year.
- General Operating Expenses: Lower by 6% after excluding the sale of the international life business.
- Holding Company Liquidity: $1.9 billion.
- Life Fleet RBC Ratios: Above target.
- Distributions from Insurance Companies: $1.1 billion year to date, a 10% increase over the prior year.
- Share Repurchases: Approximately $940 million over the first seven months of the year.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Corebridge Financial Inc (CRBG, Financial) reported strong operating results for Q2 2024, with operating earnings per share of $1.13, a 9% increase year over year.
- The company generated $11.7 billion in premiums and deposits, marking a 17% increase year over year, the highest in over a decade.
- Corebridge Financial Inc (CRBG) returned $575 million to shareholders through dividends and share repurchases in the quarter.
- The company achieved a 6% reduction in general operating expenses year over year, driven by its expense and modernization program.
- Corebridge Financial Inc (CRBG) began ceding premiums to its affiliated Bermuda reinsurer, enhancing capital efficiency and regulatory capital framework.
Negative Points
- Variable investment income declined over the prior year, driven by alternative investments, with real estate equity returns below long-term expectations.
- The company experienced a call event on a bond purchased during the pandemic, resulting in a loss.
- There is potential for marginal spread compression in the future due to higher cost of funds on new business compared to the in-force portfolio.
- Pension risk transfer transactions were absent in Q2 2024, despite a strong pipeline, indicating potential volatility in this segment.
- The company signaled potential losses in its hedge fund portfolio and call and tender activity for Q3 2024.
Q & A Highlights
Q: Now that you have started seeding business in Bermuda, can you give us an overview of what you expect and the capital efficiencies from this move?
A: We see Bermuda as an extension of our capital management toolkit. We began seeding part of our fixed annuity and indexed annuity new sales. We can also create in-force transactions and portfolio reinsurance opportunities. Bermuda is a long-term extension of our capital management strategy. β Kevin Hogan, President, Chief Executive Officer, Director
Q: Can you comment on the outlook for fixed annuity sales for the rest of the year and into next year?
A: The second quarter conditions were very strong for fixed and indexed annuities. Customer demand is driven by crediting rates and market conditions. We benefited from operational improvements and attractive assets. While we may not always have such strong quarters, we will continue to respond to market conditions. β Kevin Hogan, President, Chief Executive Officer, Director
Q: Should we think of Bermuda and other efficiency options as enabling you to grow more while achieving the targeted payout ratio, or is there potential upside to the payout ratio?
A: Bermuda is another tool in our capital management strategy, contributing to higher earnings and distributable cash flows over time. We are focused on delivering a 60% to 65% payout ratio for 2024, with proceeds from the UK sale being extra. β Elias Habayeb, Chief Financial Officer, Senior Vice President, Director
Q: With Nippon Life becoming a large shareholder, do you see any strategic opportunities beyond them being a passive shareholder?
A: We look forward to welcoming Nippon Life as a shareholder. They are successful in their market, and we will engage with them once regulatory approvals are concluded. They understand the industry and are supportive of our strategy. β Kevin Hogan, President, Chief Executive Officer, Director
Q: Do you see an opportunity to raise free cash flow conversion targets with Bermuda becoming a bigger part of the portfolio?
A: Bermuda enhances our financial flexibility and supports new business. We have other ideas to pursue that will grow distributable cash flows and earnings from our insurance companies. We are focused on delivering a 60% to 65% payout ratio for 2024. β Elias Habayeb, Chief Financial Officer, Senior Vice President, Director
Q: Can you provide more color on your pension risk transfer outlook for the second half and the competitive environment?
A: The pipelines for pension risk transfer continue to be strong. We focus on full plan terminations, and while there were no significant transactions in the second quarter, the pipeline remains robust. Conditions were favorable for guaranteed investment contracts, and we continue to see growth in structured settlements. β Kevin Hogan, President, Chief Executive Officer, Director
Q: How do you weigh external risk transfer opportunities or business mix changes going forward?
A: We have a strong position in our market-leading businesses and focus on optimizing the portfolio. We explore both internal and external opportunities to generate shareholder value, prioritizing the most important transactions. β Kevin Hogan, President, Chief Executive Officer, Director
Q: What drove the spike in fixed annuity sales, and how do you feel about the profit margins on those sales?
A: We manage pricing with great discipline and have the ability to reprice in-force products daily if needed. The second quarter saw strong customer demand and advisor support, particularly in the bank and broker-dealer channels. Margins on new business remain attractive. β Kevin Hogan, President, Chief Executive Officer, Director
Q: Are there any opportunities to get on the shelf with wirehouses or agencies in the near term?
A: We are already on the shelf with every major distribution firm in the broker-dealer channel. The broker-dealer channel has shown significant strength, and we continue to see growth opportunities there. β Kevin Hogan, President, Chief Executive Officer, Director
Q: What was the impact of the unfavorable alternative investments and negative call and tender income in the quarter?
A: We had a bond purchased during the pandemic at a premium that had a call event in the quarter, resulting in a loss. We expect another similar event in the third quarter but consider these limited occurrences. β Elias Habayeb, Chief Financial Officer, Senior Vice President, Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
