Release Date: November 05, 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 a 31% year-over-year increase in operating earnings per share, reaching $1.38.
- The company returned $848 million to shareholders in the third quarter, including proceeds from the sale of its UK life insurance business.
- Individual retirement premiums and deposits increased by 40% year-over-year, demonstrating strong growth in this segment.
- Corebridge launched its first registered index linked annuity (RILA), which has been well-received by distribution partners.
- The company achieved $320 million in savings from its modernization and expense efficiency program, with an additional $80 million expected by 2025.
Negative Points
- Base spread income declined 3% sequentially, driven by hedging impacts and elevated prepayments on higher-yielding assets.
- There is potential short-term pressure on spread income due to expected rate cuts by the Federal Reserve.
- The company faces seasonality in group retirement net flows, with increased outflows expected at year-end.
- Alternative investment returns were below long-term expectations, with a shortfall of $0.02 per share.
- The macroeconomic environment poses challenges, with potential impacts from lower rates at the short end of the yield curve.
Q & A Highlights
Q: Can you provide more context on the additional opportunities for financial flexibility you mentioned?
A: Elias Habayeb, CFO: We are proactive in managing our balance sheet and look for opportunities to improve financial flexibility, such as our Bermuda strategy. This strategy leverages excess capital in Bermuda to support new business generation, reducing strain on new business and growing earnings and cash flows over time. We see broader opportunities for Bermuda and will update when we have more to share.
Q: Could you elaborate on the expense efficiencies beyond Corebridge Forward?
A: Kevin Hogan, CEO: Corebridge Forward helped modernize our IT infrastructure, moving it to the cloud and upgrading enterprise platforms. The next phase involves automating and digitizing middle and back-office operations to improve customer and distribution partner experiences. We are also enhancing finance and actuarial practices, leveraging tools and investments made during our separation process.
Q: How are you viewing the contribution from the new RILA product in 2025?
A: Kevin Hogan, CEO: RILA has been well-received, with a strong initial reception and growing pipeline. It offers attractive margins and supports our diversification strategy. While we see it as a strong complement to our product offerings, we are not ready to provide specific targets for 2025 contributions.
Q: How sustainable are your annuity sales given the recent pullback in rates?
A: Kevin Hogan, CEO: The need for retirement planning remains strong, driven by long-term savings needs. The 5 to 10-year part of the curve is most relevant for pricing annuities, and current conditions support attractive margins. The advisor community's growing understanding of annuities' value also supports sustained demand.
Q: Can you clarify the impact of short-term rate changes on base spread income?
A: Elias Habayeb, CFO: A 25 basis point decrease in rates would impact base yield by less than 2 basis points initially. This impact will be mitigated by hedging activities and crediting rate management. While there could be short-term pressure, we expect spread income to grow over time, supporting our financial targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
