Corebridge sheds health care business to focus on massive annuity sales

Corebridge Financial continues to streamline, separate from American International Group and shed businesses that do not involve the record-setting annuity market.

Corebridge reported net income of $771 million in the second quarter as premiums and deposits increased 42% year over year. The results follow a 26% bump in premiums and deposits in Q1.

"Second-quarter conditions remained attractive for spread-based products," said Kevin Hogan, Corebridge CEO, during a conference call today with analysts. "We produced another quarter of robust new business, most notably in pension risk transfer and fixed indexed annuities.

Corebridge is the rebranded former life and retirement unit of AIG. The Houston-based insurer sold a record $2.3 billion worth of fixed-indexed annuities.

"Conditions remain very favorable for fixed indexed products, and we expect a strong customer value proposition to continue driving sales in this environment," Hogan added.

After a second-quarter, secondary offering of Corebridge stock, AIG reduced its ownership to 65.3%. During its own earnings call Wednesday, AIG Chairman and CEO Peter Zaffino said the plan is for Corebridge to become a fully standalone company by the end of 2023.

Like many insurers, Corebridge recorded higher investment income as interest rates continue to rise. Net investment income was $2.7 billion, a 19% increase compared to the prior-year quarter.

Goodbye Laya

On Thursday, Corebridge announced that it reached a deal to sell Laya Healthcare to AXA for a 650 million pounds. The sale is expected to close in the fourth quarter of 2023, subject to regulatory approvals and other customary closing conditions.

Laya, the second-largest health insurance provider in Ireland, is a full-service managing general agent headquartered in Cork, Ireland, and offers a diverse suite of innovative health insurance benefits and services in the Irish health insurance market, along with life insurance and travel insurance.

Laya doesn't fit Corebridge's focus going forward, Hogan said. In addition, AIG has hired advisors to provide alternatives for the U.K. life business that is also part of Corebridge.

"Our focus is on the large U.S. life and retirement market," Hogan said. "It's the largest and fastest growing market relative to where our strategy is, and we have important strategic advantages in the U.S., including scale, as well as the supportive important macro trends."

In its individual retirement segment, premiums and deposits increased $0.4 billion, or 12%, as compared to the prior-year quarter. Growth was "largely driven" by fixed indexed annuity deposits, partially offset by lower fixed annuity and variable annuity deposits, Corebridge said in a news release.

Additionally, within the group retirement segment, premiums and deposits increased $151 million, or 9%, as compared to the prior-year quarter due to higher out-of-plan fixed annuity deposits, partially offset by lower out-of-plan variable annuity deposits and plan acquisitions.

Life mortality good

On the life insurance side, Corebridge reported a modest uptick in premium and deposits from $1.05 billion to $1.06 billion. Lower variable investment income resulted in a 22% decrease in adjusted pretax operating income.

But pandemic mortality projections are holding strong, Hogan said.

"We feel really good about the product suite that we now have, and our second-quarter mortality actually showed a bit of improvement, and continues to be within our pricing expectations," he said.

Hogan singled out the Corebridge distribution team for special recognition in producing significant sales during the quarter.

"Corebridge Financial Distributors is our team of in-house professionals with strategic long-term relationships across all of our distribution partners, including banks, broker-dealers, general and independent agencies, and independent marketing organizations," Hogan said. "In the second quarter, this team was responsible for delivering over $9 billion of our premiums and deposits. We believe the breadth of our product offerings and long history of partnerships strengthen our relationships and served as the foundation for our success."

Senior Editor John Hilton 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.

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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.