Corebridge Financial Announces Third Quarter 2022 Results

• Corebridge Financial, Inc. (“Corebridge” or the “Company”) completed its initial public offering and began trading on the New York Stock Exchange under the ticker symbol CRBG on September 15, 2022
• Net income per share of $3.63 compared to $2.20 per share for the prior year quarter
• Operating EPS¹ of $0.57 compared to $1.02 per share for the prior year quarter
• Premiums and deposits of $8.8 billion reflect 23% year-over-year growth, with improvement in all four businesses
• Base net investment spread expansion for Individual Retirement and Group Retirement businesses exceeded 5 basis points and 25 basis points on a prior year and sequential quarter basis, respectively
• Ahead of plan to achieve $400 million of run rate savings from Corebridge Forward
• Declared quarterly cash dividend of $0.23 per share of common stock on November 8, 2022

HOUSTON–(BUSINESS WIRE)–Corebridge Financial, Inc. (NYSE: CRBG) today reported financial results for the third quarter ended September 30, 2022. The results are the first quarterly earnings reported by the Company following the completion of its initial public offering during the third quarter of 2022 in which American International Group, Inc. (“AIG”) sold approximately 12.4% of Corebridge’s common stock.

Kevin Hogan, President and Chief Executive Officer of Corebridge, said “Our initial public offering marked an important milestone in our journey as Corebridge Financial. I want to thank all of our employees and partners who have worked together to build a strong company with a proud past and a bright future.

“This was a very good quarter for Corebridge, and our performance demonstrates the power of our franchise and the competitive strengths of our businesses. We delivered robust sales and deposit flows across all four businesses and we are gaining momentum from some of the most attractive pricing conditions in recent history. Rising interest rates and wider credit spreads have led to an important inflection point where we have moved from base net investment spread compression to base net investment spread expansion.

“We made significant progress on our growth, investment partnership and efficiency strategies, which will serve as the foundation to achieve our financial targets. As we look to the strength of our balance sheet, the consistency of our cash flows and the diversification of our businesses and earnings sources, we are confident in our ability to return significant capital to shareholders through a combination of dividends and share repurchases.”

CONSOLIDATED RESULTS

For the third quarter of 2022, net income was $2.4 billion compared to $1.4 billion in the prior year quarter. The change largely was driven by higher realized gains partially offset by lower net investment income. The company also completed its annual actuarial assumption review during the quarter which reduced pre-tax income by $6 million in the current quarter compared to $144 million in the prior year quarter.

Adjusted pre-tax operating income (“APTOI”) was $423 million, a 51% decline compared to the prior year quarter largely related to the impact from capital markets and structural changes in the business profile, including implementation of the Company’s new capital structure, as well as divestitures. Challenging global capital markets drove lower variable investment income as well as lower fee income in Individual Retirement and Group Retirement. These declines were partially offset by higher base spread income, a comparatively better impact from the annual actuarial assumption review and improved mortality experience when compared to the prior year quarter.

Premiums and deposits were $8.8 billion, up from $7.1 billion in the prior year quarter.² These results reflect strong Individual Retirement deposits, solid Group Retirement deposits and steady Life Insurance premiums and deposits. Additionally, the Company benefited from increased transactional activity in its Group Retirement and Institutional Markets businesses. Excluding transactional businesses such as pension risk transfer, guaranteed investment contracts and Group Retirement plan acquisitions, premiums and deposits were up 11%.

Net investment income was $2.2 billion, a 28% decline compared to the prior year quarter largely driven by lower variable investment income. Net investment income on an APTOI basis was $2.0 billion for the third quarter of 2022, down $0.5 billion year-over-year primarily driven by lower variable investment income partially offset by higher base portfolio income. New money reinvestment rates were above the base yield for the second consecutive quarter given the attractive interest rate and credit spread environment. Base yield expanded approximately 5 basis points and 24 basis points over the prior year quarter and sequential quarter, respectively.

The Company issued $1.0 billion of hybrid junior subordinated notes in August 2022, and ended the quarter with holding company liquidity of $2.0 billion as well as a Life Fleet RBC Ratio in excess of its 400% target.

BUSINESS RESULTS

• Premiums and deposits increased $546 million as compared to the prior year quarter driven by higher fixed index annuity and fixed annuity deposits, partially offset by lower variable annuity deposits. Fixed index annuity deposits totaled $1.7 billion for the three-month period ending September 30, 2022, while fixed annuity deposits totaled more than $1.3 billion for the third consecutive quarter. Net flows for the quarter were $696 million, up from $240 million in the prior year quarter
• Base net investment spread of 1.94% for the quarter reflects expansion of 8 basis points and 28 basis points on a prior year and sequential quarter basis, respectively
• APTOI decreased $58 million year-over-year primarily due to lower variable investment income and lower fee income, partially offset by higher base spread income and a comparatively better impact from the annual actuarial assumption review

• Premiums and deposits increased $208 million as compared to the prior year quarter driven by higher group plan acquisitions and higher out-of-plan fixed annuity deposits, partially offset by lower out-of-plan variable annuity deposits
• Base net investment spread of 1.59% for the quarter reflects expansion of 7 basis points and 25 basis points on a prior year and sequential quarter basis, respectively
• APTOI decreased $137 million year-over-year primarily due to lower variable investment income and lower fee income, partially offset by higher base spread income

• APTOI decreased $18 million as compared to prior year quarter primarily due to a comparatively less favorable impact from the annual actuarial assumption review and lower variable investment income, partially offset by unfavorable non-recurring items in the prior year quarter driving lower general operating expenses. Additionally, underwriting margin benefited from improved mortality experience
• COVID mortality experience in Life Insurance was in line with the previously disclosed estimate of exposure sensitivity of $65 million to $75 million per 100,000 population deaths based on the reported third quarter COVID-related deaths in the United States

• Premiums and deposits increased $903 million as compared to the prior year quarter driven by new pension risk transfer and guaranteed investment contract transactions during the quarter
• APTOI decreased $59 million as compared to the prior year quarter primarily due to lower variable investment income, partially offset by higher base portfolio income

• APTOI decreased $177 million as compared to the prior year quarter primarily due to higher interest expense on financial debt driven by the Company’s recapitalization as well as net investment losses on the unwind of internal securitizations as part of the separation from AIG

CAPITAL AND LIQUIDITY HIGHLIGHTS

• Financial leverage ratio rose approximately 80 basis points to 29.2%, within our 25% to 30% targeted range
• Adjusted book value declined $6.9 billion year-over-year largely driven by the $8.3 billion dividend declared in connection with the sale of the 9.9% equity interest to Blackstone in the fourth quarter of 2021
• Generated $549 million of normalized distributions from the insurance companies for the three months ended September 30, 2022, and $2 billion of normalized distributions from our insurance companies for the nine months ended September 30, 2022
• Paid first public company dividend of $0.23 per share of common stock on October 20, 2022
• Declared fourth quarter dividend of $0.23 per share of common stock on November 8, 2022, payable on December 30, 2022, to stockholders of record at the close of business on December 16, 2022
• Life Fleet RBC Ratio above targeted level of 400%
• Parent liquidity of $2.0 billion as of September 30, 2022

CONFERENCE CALL

Corebridge will host a conference call on Wednesday, November 9, 2022, at 8:30 a.m. EST to review these results. The call is open to the public and can be accessed via a live listen-only webcast in the Investors section of www.corebridgefinancial.com. A replay will be available after the call at the same location.

Supplemental financial data and our investor presentation are available in the Investors section of www.corebridgefinancial.com.

About Corebridge Financial

Corebridge Financial makes it possible for more people to take action in their financial lives. With more than $345 billion in assets under management and administration as of September 30, 2022, Corebridge is one of the largest providers of retirement solutions and insurance products in the United States. We proudly partner with financial professionals and institutions to help individuals plan, save for and achieve secure financial futures. For more information, visit www.corebridgefinancial.com and follow us on LinkedIn, YouTube, Facebook and Twitter. These references with additional information about Corebridge have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release.

In the discussion below, “we,” “us” and “our” refer to Corebridge and its consolidated subsidiaries, unless the context refers solely to Corebridge as a corporate entity.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This release contains forward-looking statements. Words such as “expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estimates,” “projects,” “should,” “would,” “could,” “may,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Also, forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Corebridge and its consolidated subsidiaries. There can be no assurance that future developments affecting Corebridge and its consolidated subsidiaries will be those anticipated by management.

Any forward-looking statements included herein are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others, risks related to:

• market conditions, including risks related to rapidly increasing interest rates, declining or negative interest rates, deterioration of market conditions, geopolitical tensions, equity market declines or volatility and the COVID-19 pandemic;
• insurance risk and related exposures, including risks related to insurance liability claims exceeding reserves, reinsurance becoming unavailable and the occurrence of events causing acceleration of the amortization of deferred acquisition costs;
• our investment portfolio and concentration of investments, including risks related to realization of gross unrealized losses on fixed maturity securities and changes in investment valuations;
• liquidity, capital and credit, including risks related to our access to funds from our subsidiaries being restricted, the possible incurrence of additional debt, the ability to refinance existing debt, the illiquidity of some of our investments, a downgrade in our insurer financial strength ratings and non-performance by counterparties;
• our business and operations, including risks related to pricing for our products, guarantees within certain of our products, our use of derivatives instruments, marketing and distribution of our products through third parties, our reliance on third parties to provide business and administrative services, maintaining the availability of our critical technology systems, our risk management policies becoming ineffective, significant legal or regulatory proceedings, our business strategy becoming ineffective, intense competition, catastrophes, changes in our accounting principles and financial reporting requirements, our foreign operations, business or asset acquisitions and dispositions and our ability to protect our intellectual property;
• the intense regulation of our business;
• estimates and assumptions, including risks related to estimates or assumptions used in the preparation of our financial statements differing materially from actual experience, the effectiveness of our productivity improvement initiatives and impairments of goodwill;
• competition and employees, including risks related to our ability to attract and retain key employees and employee error and misconduct;
• our investment managers, including our reliance on agreements with Blackstone ISG-1 Advisors L.L.C. which we have a limited ability to terminate or amend and increased regulation or scrutiny of investment advisers and investment activities;
• our separation from AIG, including risks related to the replacement or replication of functions and the loss of benefits from AIG’s global contracts, our inability to file a single US consolidated income federal income tax return for a five-year period, and limitations on our ability to use deferred tax assets to offset future taxable income;
• our agreements with Fortitude Reinsurance Company Ltd.; and
• other factors discussed in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Quarterly Report on Form 10-Q for the period ended September 30, 2022 and “Risk Factors” in our prospectus filed on September 16, 2022 with the U.S. Securities and Exchange Commission pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.

Forward-looking statements should be read in conjunction with the other cautionary statements, risks, uncertainties and other factors identified in our filings with the Securities and Exchange Commission. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.

NON-GAAP FINANCIAL MEASURES

Throughout this release, we present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. Some of the measurements we use are ‘‘Non-GAAP financial measures’’ under Securities and Exchange Commission rules and regulations. We believe presentation of these non-GAAP financial measures allows for a deeper understanding of the profitability drivers of our business, results of operations, financial condition and liquidity. These measures should be considered supplementary to our results of operations and financial condition that are presented in accordance with GAAP and should not be viewed as a substitute for GAAP measures. The non-GAAP financial measures we present may not be comparable to similarly-named measures reported by other companies.

Adjusted pre-tax operating income (“APTOI”) is derived by excluding the items set forth below from income from operations before income tax. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and recording adjustments to APTOI that we believe to be common in our industry. We believe the adjustments to pre-tax income are useful for gaining an understanding of our overall results of operations.

APTOI excludes the impact of the following items:

FORTITUDE RELATED ADJUSTMENTS:

The modco reinsurance agreements with Fortitude Re transfer the economics of the invested assets supporting the reinsurance agreements to Fortitude Re. Accordingly, the net investment income on Fortitude Re funds withheld assets and the net realized gains (losses) on Fortitude Re funds withheld assets are excluded from APTOI. Similarly, changes in the Fortitude Re funds withheld embedded derivative are also excluded from APTOI.

As a result of entering into the reinsurance agreements with Fortitude Re we recorded a loss which was primarily attributed to the write-off of DAC, VOBA and deferred cost of reinsurance assets. The total loss and the ongoing results associated with the reinsurance agreement with Fortitude Re have been excluded from APTOI as these are not indicative of our ongoing business operations.

INVESTMENT RELATED ADJUSTMENTS:

APTOI excludes “Net realized gains (losses),” including changes in the allowance for credit losses on available-for-sale securities and loans, as well as gains or losses from sales of securities, except for gains (losses) related to the disposition of real estate investments. Net realized gains (losses), except for gains (losses) related to the disposition of real estate investments, are excluded as the timing of sales on invested assets or changes in allowances depend largely on market credit cycles and can vary considerably across periods. In addition, changes in interest rates may create opportunistic scenarios to buy or sell invested assets. Our derivative results, including those used to economically hedge insurance liabilities, also included in net realized gains (losses) are similarly excluded from APTOI except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-qualifying (economic) hedges or for asset replication. Earned income on such economic hedges is reclassified from net realized gains and losses to specific APTOI line items based on the economic risk being hedged (e.g., net investment income and interest credited to policyholder account balances).

Our investment-oriented contracts, such as universal life insurance, and fixed, fixed index and variable annuities, are also impacted by net realized gains (losses), and these secondary impacts are also excluded from APTOI. Specifically, the changes in benefit reserves and DAC, VOBA and deferred sales inducement (“DSI”) assets related to net realized gains (losses) are excluded from APTOI.

VARIABLE, FIXED INDEX ANNUITIES AND INDEX UNIVERSAL LIFE INSURANCE PRODUCTS ADJUSTMENTS:

Certain of our variable annuity contracts contain guaranteed minimum withdrawal benefits (“GMWBs”) and are accounted for as embedded derivatives. Additionally, certain fixed index annuity contracts contain GMWB or indexed interest credits which are accounted for as embedded derivatives, and our index universal life insurance products also contain embedded derivatives. Changes in the fair value of these embedded derivatives, including rider fees attributed to the embedded derivatives, are recorded through “Net realized gains (losses)” and are excluded from APTOI.

Changes in the fair value of securities used to hedge guaranteed living benefits are excluded from APTOI.

OTHER ADJUSTMENTS:

Other adjustments represent all other adjustments that are excluded from APTOI and includes the net pre-tax operating income (losses) from noncontrolling interests related to consolidated investment entities. The excluded adjustments include, as applicable:

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Contacts

Josh Smith (Investors): [email protected]
Dana Ripley (Media): [email protected]

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