Corebridge Financial stuns analysts with 68% bump in annuity premium

Main takeaway: Corebridge Financial’s second-quarter annuity sales were so strong, Wall Street analysts had a hard time believing in the numbers.

Premium and deposits grew 68% to nearly $6.8 billion during the quarter, mainly off strong fixed annuity sales. Those sales came during a quarter that saw LIMRA report some fixed annuity sales declines across the industry.

Analysts asked repeated questions about the Corebridge annuity sales performance during a conference call Thursday morning.

“Look, I can't speak what for what other strategies may be. I can speak for what ours is,” CEO Kevin Hogan said near the end of the call. “We did make operational improvements. We increased our capacity and flexibility, which started coming online in the third quarter of last year. So, we were able to support the volumes of the second quarter without any unusual service issues or backlogs or anything like that.”

During one of his other answers, Hogan pointed to “a very strong distribution partnership with some significant distribution partners. We were able to mobilize that capability in the second quarter in response to the demand.”

The strong annuity sales boosted adjusted pre-tax operating income by 8% to $621 million over the year-ago quarter. According to LIMRA, Corebridge consistently ranks second in overall annuity sales to Athene Life & Annuity.

Hogan cautioned analysts against expecting such strong annuity sales numbers every quarter.

“These products are very valuable to customers as part of a long-term savings plan, and we've seen advisors very supportive, both in the bank channel and also the increasingly active broker-dealer channel,” he said. “Ultimately, customer demand is driven by crediting rates, which reflects where yields and spreads are, but also where customer expectations of the future are. And during the second quarter, the first two months, rates were rising and high.”

Additional takeaways

Hogan announced that Corebridge received regulatory approval to cede business to its Bermuda reinsurer. The offshore reinsurance practice has the attention of the National Association of Insurance Commissioners.

The Life Actuarial Task Force is in the early stages of work on a guideline that would strengthen the asset adequacy testing for offshore reinsurers. Analysts asked multiple questions on the Corebridge strategy for Bermuda.

“We think of Bermuda as an extension of our capital management toolkit,” Hogan said. “We have an existing entity that has capital. And we did begin ceding part of our very robust fixed annuity and index annuity new sales. … As we advance with our Bermuda strategy, we can see flow reinsurance on additional products relative to new business, those that are attractive in the Bermuda environment, and ultimately, we can also create in-force transactions in terms of portfolio reinsurance opportunities.”

Management Commentary

“Corebridge is firing on all cylinders and executing on the plans necessary to deliver on the commitments that we made.”

– CEO Kevin Hogan

Additional Notes

Partnerships: In May, American International Group (AIG) said it would sell a 20% stake in Corebridge Financial to Japan's largest life insurer, Nippon Life Insurance, for $3.8 billion.

“Nippon is tremendously successful in their market, and we'll have opportunities to begin to engage once we have concluded those regulatory approvals,” Hogan said. “They understand the industry. They're very supportive of our strategy. We believe our values are aligned and we're looking forward to welcoming them as an investor.”

Financial Overview

Net Income: $365 million ($771 million in Q2 2023)

Earnings Per Share: $1.13 ($1.04 in Q2 2023)

Operating Income: $692 million ($679 million in Q2 2023)

Share repurchases: $436 million

Dividend declared: 23 cents per share, or $139 million

Stock price movement: Corebridge shares were down 5% midday Thursday to $27.97

Segment Performance

Life Insurance:

• Premiums and Deposits: $846 million ($1.06 billion in Q2 2023)
• Underwriting Margin: $309 million ($361 million in Q2 2023)
• Operating Income: $95 million ($76 million in Q2 2023)

Individual Retirement (includes annuities):

• Premiums and Deposits: $6.8 billion ($4 billion in Q2 2023)
• Spread Income: $723 million ($684 million in Q2 2023)
• Operating Income: $621 million ($574 million in Q2 2023)

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.