Yahoo Finance Corebridge Financial Inc (CRBG) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth ...
Adjusted After-Tax Operating Income: $688 million
Operating Earnings Per Share: $1.10, up 13% year-over-year
Adjusted Return on Average Equity: 11.9%, a 110 basis point improvement over the prior year
Run Rate Return on Equity: 13.1%
Base Spread Income Growth: 14% year-over-year
Fee Income Growth: 9% year-over-year
Assets Under Management and Administration: $393 billion, up 7% year-over-year
Annual Cash Flows: Over $2 billion
Premiums and Deposits: $10.6 billion in Q1, $50 billion over the last 5 quarters
Share Repurchase Authorization: Increased by $2 billion
Adjusted Pretax Operating Income: $837 million
Net Investment Income: Improved 16% year-over-year
General Operating Expenses: $411 million, improved by 10% year-over-year
Holding Company Liquidity: Ended the quarter with $1.7 billion
Release Date: May 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Corebridge Financial Inc reported a strong start to the year with a 13% increase in adjusted after-tax operating income, reaching $688 million.
Adjusted return on average equity improved by 110 basis points over the prior year quarter to 11.9%, aligning solidly within the target range of 12% to 14%.
Assets under management and administration grew to $393 billion, a 7% improvement year-over-year, enhancing the company's earnings potential.
Corebridge Financial Inc achieved $10.6 billion of premiums and deposits in the first quarter, demonstrating robust sales volume and market demand.
The company successfully completed its modernization program, Corebridge Forward, realizing full $400 million of run rate savings, which positions it for continuous improvement and efficiency.
Negative Points
Underwriting margin was impacted by one-time reinsurance-related items and seasonal mortality, although overall mortality remains within expectations.
Variable investment income declined year-over-year due to losses in alternative investments, particularly from mark-to-market losses in real estate equity.
The company noted potential for further marginal compression in base net investment spread in the near term, particularly in individual retirement.
Life Insurance segment reported a 6% decrease in adjusted pretax operating income year-over-year after excluding variable investment income and notable items.
Despite strong financial performance, there remains uncertainty in investment returns, particularly with continued negative real estate equity returns expected in the near future.
Q & A Highlights
Q: Can you discuss the recent awareness among advisers about the value of annuities and where the growth is coming from in terms of channel? A: (Kevin Timothy Hogan - President, CEO & Director) Yes, the change in interest rates over the past couple of years has highlighted the value of fixed income asset allocation, making annuities an attractive option. This has led to a new generation of advisers who are now recognizing the value of annuities as part of a long-term investment strategy. The largest, fastest-growing distribution channels are professional distribution in broker-dealers, financial advisers, and banks.
Q: Regarding Individual Retirement, could you clarify the expectations around base spread investment income and the potential for spread compression? A: (Kevin Timothy Hogan - President, CEO & Director) While there might be some modest spread compression in the near term, the overall conditions for the business are supportive. The new business margins are attractive, and the general account is growing, which should lead to growth in spread income despite any potential compression in base spreads.
Q: What is the average age for customers in group and individual retirement, and how has this trended over the years? A: (Kevin Timothy Hogan - President, CEO & Director) In group retirement, the average age has incrementally increased and is now in the low 60s. In individual retirement, the age range varies by product, with fixed annuity customers tending to be older and index annuity customers slightly younger, generally between 50 and 70 years old.
Q: How does the final DOL rule impact your business, particularly in terms of compliance and distribution channels? A: (Kevin Timothy Hogan - President, CEO & Director) The final DOL rule, effective in September 2024, aligns with the industry's move towards a common standard of care. Most of Corebridge's distribution channels are already familiar with similar requirements, and the company is prepared to implement necessary changes, ensuring compliance across all channels.
Q: Can you provide more detail on the notable items around investments mentioned in the earnings report? A: (Elias Farid Habayeb - Executive VP & CFO) The notable items were identified during a system conversion and relate to a true-up on historical net investment income that was underreported over several years. These are one-time adjustments and have been highlighted for transparency.
Q: What are your expectations for pension risk transfer (PRT) transactions and the competitive environment in this space? A: (Kevin Timothy Hogan - President, CEO & Director) The market for PRT is robust, particularly for full plan terminations, which Corebridge focuses on. These transactions are complex and bespoke, requiring significant underwriting and administrative capabilities. Corebridge is well-positioned in this market, offering attractive economics and maintaining flexibility in transaction negotiations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
