Corebridge Financial, Inc. (CRBG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A reveal positive elements such as regulatory approval for a new product, strong shareholder return plans, and optimistic market trends. Despite some uncertainties in alternative investment returns and management's lack of clarity on specific departures, the strong financial targets and strategic initiatives, like the focus on wealth management and retirement products, suggest a positive outlook. The planned share repurchases and strategic market positioning further support a positive sentiment, likely leading to a stock price increase in the near term.
Key Financial Performance
Earnings per share (EPS) EPS increased by 4% year-over-year. The increase was attributed to strong financial performance and strategic execution.
Return on average equity Increased by 20 basis points year-over-year. This reflects improved profitability and efficient capital management.
Capital returned to shareholders Increased by 13% year-over-year. This was driven by share repurchases and dividends, supported by proceeds from the VA reinsurance transaction.
Sales Sales grew by 4% to a record $42 billion. Growth was driven by the launch of the RILA product, MarketLock, and strong performance across annuity product categories.
Institutional Markets sales Grew by 24% year-over-year. Growth was led by pension risk transfers and guaranteed investment contracts.
Life Fleet RBC ratio Ended the year above 430%, exceeding targets. This indicates strong balance sheet health and financial flexibility.
Holding company liquidity Ended the year at $2.3 billion, exceeding targets. This reflects strong cash flow management and financial flexibility.
Adjusted pretax operating income (APTOI) Reported at $760 million for the quarter, representing a 15% year-over-year increase. Growth was driven by improved spread and fee income, partially offset by lower underwriting margins.
Operating EPS Reported at $1.22 for the quarter, a 15% year-over-year increase. Adjusted for notable items, the run rate operating EPS was $1.19, a 7% year-over-year increase.
Adjusted ROE Reported at 12.5% for the quarter, an increase of 140 basis points year-over-year. This reflects improved profitability and efficient capital management.
Fee income Increased by 9% year-over-year. Growth was driven by increased product fees and growth in assets under management and administration.
Base spread income Grew by 4% year-over-year. Growth was driven by strong sales, general account net flows, and effective portfolio management.
Underwriting margin Decreased by 10% year-over-year. The decline was due to lower mortality gains.
Full year capital return Totaled $2.6 billion, including $1.2 billion in the fourth quarter. This reflects strong cash flow generation and shareholder returns.
Individual Retirement APTOI Increased by 3% year-over-year. Growth was driven by an increase in both spread and fee income, partially offset by higher DAC and non-deferrable commissions.
Group Retirement APTOI Decreased by 1% year-over-year. The decline was due to lower base spread income, partially offset by growth in fee income.
Life Insurance APTOI Declined by 30% year-over-year. The decline was primarily due to lower underwriting margins and less favorable mortality experience.
Institutional Markets APTOI Increased by 8% year-over-year. Full year earnings were up 19%, driven by growth in reserves and attractive opportunities in pension risk transfer transactions and GICs.
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Operating Highlights
MarketLock RILA product: Launched in 2025, quickly joined the top 10 providers in a crowded field. Available through more than 200 distribution partners across the U.S. and expected to grow in 2026.
Institutional Markets: Sales grew by 24% in 2025, driven by pension risk transfers and guaranteed investment contracts.
Bermuda strategy: Expanded with approximately $20 billion of reserves ceded to date, providing financial optionality.
Variable annuity reinsurance transaction: Executed the industry's largest transaction, reducing legacy liabilities to approximately 1% of the balance sheet.
Life Fleet RBC ratio: Maintained above 430%, with holding company liquidity at $2.3 billion, exceeding targets.
Corebridge Forward program: Reduced expenses since IPO, focusing on operational leverage and strategic investments.
Customer-centric strategy: Added a fifth strategic pillar, 'Win With Customers,' focusing on product innovation, service, and digital experience.
Fee-based earnings growth: Plans to grow fee-based earnings faster, particularly in Group Retirement and Wealth Management, targeting a $30 billion opportunity.
Digitization investments: Investing in digitization to improve productivity and customer/distribution partner experience.
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Risk or Challenges
Interest Rate Sensitivity: The company faces reduced but still present sensitivity to short-term interest rate movements, with a potential impact of $20 million to $25 million on operating earnings for every 25 basis points reduction in SOFR.
Fee-Based Earnings Growth: The company acknowledges the need to grow fee-based earnings faster to achieve better balance across income sources, indicating a current imbalance that could affect financial stability.
Operating Expense Growth: Operating expenses are expected to grow by 4% to 5% in 2026, which could pressure margins before the benefits of strategic investments are realized.
Litigation Reserve: Slightly elevated expenses in the Group Retirement segment due to a modest litigation reserve, which could indicate potential legal or compliance risks.
Base Spread Compression: The Individual Retirement business faces base spread compression due to Federal Reserve rate cuts, which could impact profitability.
Alternative Investment Returns: Softness in alternative investment returns, particularly in real estate equity, is expected to persist into the first quarter of 2026, potentially impacting overall financial performance.
Strategic Investments: The company plans to invest in digitization and customer experience improvements, which may increase short-term costs and delay immediate financial benefits.
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Guidance & Outlook
MarketLock Product Growth: MarketLock, a RILA product, is expected to continue its growth in 2026, leveraging its availability through over 200 distribution partners across the U.S.
Institutional Markets Business Expansion: The company plans to continue allocating higher capital to its Institutional Markets business, which grew by 24% in 2025, focusing on pension risk transfers and guaranteed investment contracts to drive future earnings growth.
Fee-Based Earnings Growth: Corebridge aims to grow fee-based earnings faster to achieve better balance across its sources of earnings, particularly in Group Retirement and Wealth Management.
Wealth Management Expansion: The company plans to capture more IRA rollovers and consolidate household assets, representing a $30 billion opportunity. Investments will be made to enhance customer experience, add more advisers, and upgrade digital wealth management capabilities.
Digitization Investments: Corebridge will invest in digitization to improve productivity, customer experience, and distribution partner experience, aiming to capture greater market share from demographic growth.
Operating Expense Growth: Operating expenses are expected to grow modestly by 4% to 5% in 2026, reflecting strategic investments in digitization and internal capabilities.
Base Spread Income in Individual Retirement: Base spread income for the Individual Retirement business is projected to stabilize by the end of 2026, with an estimated income of approximately $2.55 billion for the year.
Share Repurchases: Approximately $900 million worth of share repurchases are planned for the first half of 2026, associated with the VA reinsurance transaction.
Adjusted ROE and EPS Growth Targets: Corebridge expects to meet its key financial targets for adjusted ROE, capital return, and run rate EPS growth, though at the lower end of the 10% to 15% range.
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Shareholder Return Plan
Dividend Increase: The Board of Directors approved a 4% increase in the quarterly common stock dividend to $0.25 per share, which is above the pace of inflation.
Insurance Company Dividends: Excluding the VA reinsurance transaction proceeds, insurance company dividends to the parent grew by 6% year-over-year, in line with guidance.
Share Repurchase Program: The company is returning the substantial majority of the proceeds from the VA reinsurance transaction to shareholders in the form of share repurchases, which helped lift the 2025 payout ratio to 110%. Additionally, approximately $900 million worth of share repurchases are expected in the first half of 2026, associated with the VA reinsurance transaction.
Payout Ratio: The 2025 payout ratio was 110%, or 75% when excluding the VA reinsurance proceeds.
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Key Q&A
Q:How was the company able to significantly reduce SOFR sensitivity?
A:The company managed its ALM profile tightly and adjusted its investment allocation, which allowed it to reduce macro hedges and better align the ALM profile with assets, eliminating the need for derivatives.
Q:Should the incremental $60 million investment spending for 2026 be viewed as the go-forward annual amount?
A:The $60 million investment spending is the forecast for 2026, but the company will continue to drive operating leverage and invest in digitizing distribution to deliver customer value.
Q:What is the outlook for PRT volume and operating globally in that market?
A:The Institutional Management business grew by over 24% in 2025, driven by a growing PRT and GIC franchise. The PRT business is lumpy but has a differentiated value proposition, and there is optimism about its future, especially with overfunded pension plans providing opportunities for corporate balance sheet derisking.
Q:What is the company's exposure to software and real estate footprint?
A:The company has $1 billion in public credit exposure to companies like Microsoft and Oracle, and $350 million in direct lending, which is minimal compared to its $250 billion balance sheet. For real estate, it invests in debt backed by data centers, ensuring debt maturity aligns with lease maturity.
Q:What is the outlook for Group Retirement spreads and fee growth in 2026?
A:The Group Retirement business is transitioning from spread business to fee business, which will take 12 to 24 months. Revenue is expected to hit a trough before increasing, with a focus on cross-selling and up-selling wealth management services to participants.
Q:What is the competitive landscape for Individual Retirement and the adequacy of IRRs and prices?
A:The segment is competitive, but the company has strong distribution and a differentiated value proposition, including income and living benefits. It aims to be a top 5 player in the RILA market and is responsive to rate and spread environments.
Q:What is the long-term EPS growth target and its drivers?
A:The company targets 10% to 15% EPS growth, driven by capital deployment, accelerating sales, deposit growth, and penetration across all business segments. 2027 guidance is expected to be in the upper half of the range.
Q:What are the planned departures in the second and third quarters?
A:The planned departures are expected to be in the $2 billion to $3 billion range.
Q:What is the company's competitive advantage in distribution?
A:The company aims to be the easiest to do business with and has a strong distribution network. It also has liability-driven and asset-driven expertise, allowing it to manage risks effectively.
Q:What is the outlook for cash flow and capital generation?
A:The company expects to grow insurance company dividends by 5% to 10% annually and maintain a 60% to 65% free cash flow conversion. The preferred security issuance supports Bermuda capital needs and is accretive to IRRs.
Q:What is the outlook for retail annuities and the competitive landscape?
A:The company had over $7 billion in positive net sales for Individual Retirement in 2025. It aims to grow the Fixed Annuity business in 2026 and become a top 5 player in the RILA market.
Q:What is the company's vision for the Wealth Management opportunity?
A:The company sees a $30 billion opportunity in cross-selling and up-selling to recordkeeping participants. Investments will focus on digitization, hiring wealth advisers, and professionalizing the workforce.
Q:Why did GICs take a step back in Q4 2025?
A:Volatility in the rate environment limited some windows for GICs in Q4 2025, but the market remains opportunistic, and the company issued a GIC in January 2026.
Q:What is the impact of the derivatives program change on short-term interest rate sensitivity?
A:The company reduced short-term interest rate sensitivity by eliminating derivatives, and exposure to potential Fed easing is expected to end in 2026.
Q:What is the outlook for alternative returns in 2026?
A:The company expects 8% to 9% returns on alternatives for 2026, with some softness in real estate equity returns in Q1 2026.
Q:Are there additional opportunities to optimize asset yields?
A:The company is satisfied with its partnerships with Blackstone and BlackRock, which provide attractive assets. It focuses on prudent long-term investments rather than chasing yield.
Q:What is the outlook for Individual Retirement spreads beyond 2026?
A:Margins are expected to grow beyond 2026 as the in-force portfolio dynamics change and pressures from the Fed ease.
Q:What is the impact of NAIC's VM-22 reserving changes?
A:The company is comfortable with the impact of VM-22 on its balance sheet and expects no surprises.
Q:What is the take-up rate for the crypto-linked RILA product?
A:It is too early to determine the take-up rate for the crypto-linked RILA product, but the company is confident in its risk management process.
Q:What is the company's approach to capital optimization and future needs?
A:The company uses Bermuda for capital optimization and plans to maintain its free cash flow guidance of 60% to 65%. It will continue to explore thoughtful capital management strategies.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the planned departures in the second and third quarters, only stating a range of $2 billion to $3 billion. Additionally, the take-up rate for the crypto-linked RILA product was not disclosed, as it was deemed too early to assess.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APTOI
Bermuda
CFO
Group Retirement
IPO
Individual Retirement
MarketLock
VA reinsurance
VII item
Wealth
addition
advantage
asset opportunity
base compression
capital return
chapter
class distribution
compression base
confidence
customer value
digitization
distribution shareholder
distributor
evolution
example
franchise
goal
impression
launch
lens
lever
pace
proceeds
proposition world
ratio VA
reinsurance transaction
sensitivity
strength opportunity
work
world class
CRBG Transcript
Corebridge Financial, Inc. (CRBG) Q4 2025 Earnings Call Transcript
Positive2-10
The earnings call summary and Q&A reveal positive elements such as regulatory approval for a new product, strong shareholder return plans, and optimistic market trends. Despite some uncertainties in alternative investment returns and management's lack of clarity on specific departures, the strong financial targets and strategic initiatives, like the focus on wealth management and retirement products, suggest a positive outlook. The planned share repurchases and strategic market positioning further support a positive sentiment, likely leading to a stock price increase in the near term.
Corebridge Financial, Inc. (CRBG) Q3 2025 Earnings Call Transcript
Positive11-4
The company demonstrates strong financial performance and strategic growth plans, including a significant reinsurance transaction and a focus on annuity products for an aging population. Despite some unclear management responses, the Q&A session reveals robust demand for annuities and effective risk management strategies. The company's commitment to EPS growth and capital management, along with strategic investments in its adviser force, supports a positive outlook. These factors, coupled with continued growth in institutional markets and a focus on expense efficiency, indicate a likely positive stock price movement.
Corebridge Financial, Inc. (CRBG) Presents At KBW Insurance Conference 2025 Transcript
Neutral9-3
Corebridge Financial, Inc. (CRBG) Q2 2025 Earnings Call Transcript
Unknown8-5
The earnings call presents a mixed picture: strong product sales and strategic growth initiatives are positive, but there are concerns about spread compression, alternative investment returns, and unclear timelines for certain financial improvements. The Q&A section reveals analysts' concerns about these uncertainties, impacting sentiment. Despite positive elements like the RILA product success and AI opportunities, the overall sentiment is balanced by financial challenges and management's lack of clarity on some issues, leading to a neutral prediction for stock price movement.
CRBG Slides
CRBG Report
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