Executive Summary / Key Takeaways

• Corebridge Financial, a leading U.S. retirement and life insurer, is executing a four-pillar strategy focused on organic growth, balance sheet optimization, expense efficiency, and active capital management to drive long-term shareholder value.
• The company reported solid Q1 2025 results with $810 million in Adjusted Pre-Tax Operating Income (APTOI) and $1.19 basic EPS, demonstrating resilience despite market volatility and a decrease from Q1 2024 primarily due to lower PRT premiums and higher net realized losses.
• Strategic initiatives like the launch of the RILA product, expansion of the Bermuda reinsurance strategy (ceding ~$2 billion in Q1 2025), and ongoing expense efficiency programs (building on $400 million Corebridge Forward savings) are enhancing growth potential and capital flexibility.
• Corebridge maintains a strong balance sheet with a high-quality investment portfolio (95% investment grade fixed maturities), ample holding company liquidity ($2.4 billion including facility), and a Life Fleet RBC ratio above its 400% target, supporting robust capital returns.
• Management targets long-term average annual run-rate EPS growth of 10-15% and a 60-65% payout ratio, expecting 2025 EPS growth to be on the lighter end (mid-single digits) due to near-term impacts from prior Fed rate actions.

Corebridge Financial: Building Momentum in a Dynamic Market

Corebridge Financial, Inc. stands as a significant force in the U.S. retirement solutions and life insurance landscape. Born out of American International Group (AIG), its journey to becoming a distinct public entity culminated in a pivotal IPO in September 2022. This separation, governed by a comprehensive Separation Agreement, marked the beginning of a focused strategy centered on capitalizing on the substantial addressable markets driven by an aging U.S. population and a persistent life insurance protection gap.

The company's overarching strategy is built upon four key pillars: driving organic growth, optimizing the balance sheet, enhancing expense efficiency, and actively managing capital. This framework is designed to leverage Corebridge's market-leading positions across its four core businesses – Individual Retirement, Group Retirement, Life Insurance, and Institutional Markets – to generate consistent cash flow and enhance shareholder returns, even amidst macroeconomic uncertainty and market volatility.

Competitive Positioning and Market Dynamics

Operating in a highly competitive environment, Corebridge faces established rivals such as MetLife (MET), Aflac (AFL), Prudential Financial (PRU), Unum Group (UNM), and Primerica (PRI), as well as indirect competitors like fintech firms in the advisory space. While competitors like MetLife and Prudential boast larger scale and broader global operations, Corebridge has strategically carved out its position through focused execution and differentiated capabilities.

Corebridge's competitive advantages stem partly from its historical ties and ongoing relationships, including access to distribution networks and potentially proprietary data insights. Its strategic partnerships with asset managers like Blackstone IM (BX) and BlackRock (BLK) are crucial, providing access to market-leading capabilities and enhancing asset origination, which management believes offers an enhanced competitive advantage by expanding investment capabilities and improving yields compared to traditional fixed income markets. While some peers may have lower operating costs per policy in certain segments (e.g., AFL in supplemental, UNM in benefits), Corebridge is actively addressing efficiency through modernization. The company's ability to offer a broad suite of products across major annuity categories, including being the only top three provider with offerings in every major category following the RILA launch, is a key differentiator in meeting diverse customer and advisor needs.

Technological Edge and Innovation

Technology is a critical component of Corebridge's strategy and competitive moat. The company has invested significantly in modernizing its IT infrastructure, migrating systems to the cloud, and upgrading enterprise platforms. This foundational work, initiated in part during the separation from AIG, is now enabling the next phase of operational efficiency and enhanced capabilities.

In the Life Insurance segment, data-driven practices and investments in digital and automated underwriting have been particularly impactful. These capabilities allow for a significant portion of newly issued policies (80% as of Q3 2024) to be auto-decisioned, streamlining the application process and contributing to sales growth that has outpaced the industry for multiple consecutive quarters. The development of digital policy application processes like Simply Now further enhances the customer and distribution partner experience, providing rapid underwriting decisions. In the retirement segments, technology supports adviser productivity and the development of new products like the Registered Index-Linked Annuity (RILA), which leverages the company's platform for distribution and servicing. Looking ahead, Corebridge is exploring tools like advanced practices and artificial intelligence to further digitize end-to-end processes, aiming to increase scalability and operating efficiency over time. While direct quantitative comparisons of the speed or cost advantages of these specific technologies versus all competitors are not detailed, the stated goals and operational metrics (like the auto-decisioning rate) indicate a focus on leveraging technology for efficiency and market responsiveness.

Business Segment Performance

Corebridge's diversified business model provides multiple sources of income, contributing to overall stability. In the first quarter of 2025, the company reported total Adjusted Revenues of $4.736 billion, down from $5.853 billion in Q1 2024, primarily reflecting lower premiums in Institutional Markets. Total Adjusted Pre-Tax Operating Income (APTOI) was $810 million, a decrease from $837 million in the prior year period.

The Individual Retirement segment reported APTOI of $554 million in Q1 2025, down from $622 million in Q1 2024. This decrease was primarily attributed to the impact of Fed rate actions and related hedging activities, as well as higher DAC and commissions tied to business growth. Despite the earnings decline, the segment saw robust premiums and deposits of $4.7 billion and generated $1.1 billion in general account net inflows, demonstrating strong underlying demand and origination capabilities. The recent launch of the RILA product contributed over $260 million in sales in Q1 2025 and is seen as a key growth driver.

Group Retirement delivered APTOI of $195 million in Q1 2025, slightly down from $200 million in Q1 2024. The segment continues its transition towards a more fee-based business model, with fee income contributing significantly. While net outflows were $1.8 billion in Q1 2025, consistent with levels observed in the first half of 2024, the company is investing in its adviser force and productivity, resulting in increased in-plan average enrollments (up 9%) and deposits (up 10%). The RILA product was also added to the out-of-plan offering, generating approximately $50 million in sales.

The Life Insurance segment saw a significant increase in APTOI, rising to $108 million in Q1 2025 from $54 million in Q1 2024. This strong performance was primarily driven by more favorable mortality experience and favorable one-time reinsurance adjustments in the prior year. The business continues to benefit from strong sales momentum, outpacing the industry, supported by its product positioning and automated underwriting capabilities.

Institutional Markets reported APTOI of $137 million in Q1 2025, an increase from $112 million in Q1 2024. While segment earnings can show quarterly volatility, total sources of income grew by 33%, underpinned by robust reserve growth of 17% year-over-year. This growth reflects the segment's focus on expanding its GIC program, with reserves increasing 48% year-over-year, and capturing opportunities in the pension risk transfer (PRT) market, where the company sees a promising pipeline for the remainder of 2025.

The Corporate and Other segment reported an adjusted pre-tax operating loss of $187 million in Q1 2025, compared to a loss of $148 million in Q1 2024. This larger loss was primarily due to higher interest expense from recent debt issuances and lower asset management income from legacy investments. The segment includes corporate expenses, interest expense on financial debt, and results from consolidated investment entities and legacy lines ceded to Fortitude Re.

Investment Portfolio and Financial Health

Corebridge manages a substantial investment portfolio, totaling $250.164 billion as of March 31, 2025, primarily supporting its insurance liabilities. The portfolio is diversified across asset classes, with a significant allocation to fixed maturity securities (97% of invested assets). As of March 31, 2025, 95% of fixed maturities (excluding Fortitude Re funds withheld assets) were rated investment grade, reflecting a high-quality bias. The portfolio includes public and private credit, structured products, and commercial mortgage loans, which are performing as expected. Commercial mortgage loans totaled $36.6 billion at March 31, 2025, with an allowance for credit losses of $656 million.

The company's investment strategy is liability-driven, aiming to match asset characteristics to insurance liabilities while generating attractive net investment income. Strategic partnerships with Blackstone and BlackRock are instrumental in sourcing assets and optimizing portfolio management. Net investment income was $3.189 billion in Q1 2025, up from $2.924 billion in Q1 2024, driven by higher base portfolio income and variable investment income. Net realized losses were $1.414 billion in Q1 2025, significantly higher than $320 million in Q1 2024, primarily due to losses on Fortitude Re balances, derivatives, and index-linked embedded derivatives.

Corebridge maintains a strong balance sheet. Total assets stood at $390.022 billion at March 31, 2025. Total Corebridge shareholders' equity was $11.980 billion. The Life Fleet RBC ratio remained above the company's 400% target as of December 31, 2024, indicating a well-capitalized position. Holding company liquidity was robust at $2.4 billion (including the revolving credit facility) as of March 31, 2025, exceeding the needs for the next 12 months. The company refinanced its revolving credit facility in Q1 2025, securing a new $3.0 billion facility maturing in March 2030. Debt of consolidated investment entities, totaling $1.861 billion, is non-recourse to Corebridge.

Liquidity and Capital Management

Active capital management is a core pillar of Corebridge's strategy. The company is committed to providing attractive and growing returns to shareholders while maintaining financial flexibility.

In Q1 2025, Corebridge Parent paid $133 million in cash dividends ($0.24 per share) and repurchased approximately 9.9 million shares for $321 million. The company targets a payout ratio of 60-65% for the year.

Distributions from insurance subsidiaries are a primary source of holding company liquidity, with $600 million received in Q1 2025. The company is expanding its Bermuda reinsurance strategy, ceding approximately $2 billion in reserves in Q1 2025, bringing the total ceded with the new strategy to $14 billion. This strategy leverages Bermuda's capital framework to enhance capital efficiency and support new business generation. Corebridge continues to explore further opportunities for both in-force and new business cessions in Bermuda, as well as potential external reinsurance transactions, all evaluated based on accretiveness on a risk-adjusted basis.

Outlook and Future Growth

Corebridge targets average annual run-rate EPS growth in the range of 10% to 15% over the long term, acknowledging that growth will not be linear. For 2025, management expects EPS growth to be on the lighter end of this range, projecting mid-single digits from the 2024 reported EPS base of $4.83. This expected moderation is primarily attributed to the near-term impact from the earn-in of prior Fed rate actions on floating rate exposures, which is anticipated to be a temporary headwind.

Management expects dividends from insurance companies to increase another 5% to 10% in 2025, supporting the targeted 60-65% payout ratio. The outlook assumes continued strong customer demand, attractive new business margins (though potentially marginally tighter than in-force spreads), and a recovery in alternative investment returns towards the long-term 8-9% target, albeit with expectations of falling short in 2025. The company provided sensitivities, noting that a 25 basis point decrease in SOFR impacts base portfolio income by approximately 2 basis points, and a 10% change in the S&P 500 impacts fee income/expense by approximately $85 million over 12 months. Continued growth in Institutional Markets spread earnings is also expected, aligned with business expansion.

Risks and Challenges

While the outlook is positive, Corebridge faces several risks. Macroeconomic uncertainty and market volatility, including changes in interest rates, credit spreads, and equity markets, can impact investment valuations, profitability, and policyholder behavior (e.g., surrender rates). The company actively manages these risks through portfolio construction, ALM, and hedging programs, but full mitigation is not always possible.

Credit risk from potential non-performance or defaults by counterparties or in the investment portfolio, particularly in sectors like real estate, remains a focus, managed through diversification, credit enhancements, and proactive monitoring. Regulatory changes, including potential new requirements for climate-related disclosures and evolving insurance capital standards (like NAIC initiatives), could impact operations and capital requirements. Litigation risks, such as the ongoing cases in California related to insurance code requirements, could result in significant liabilities. The collectability of reinsurance recoverables and potential disputes with reinsurers also pose risks. Furthermore, limitations on the utilization of U.S. net operating loss carryforwards due to the ownership change following the separation from AIG could affect future tax liabilities.

Conclusion

Corebridge Financial has established a strong foundation since its IPO, leveraging a diversified business model, a robust balance sheet, and disciplined execution. The company's strategic pillars are driving organic growth, optimizing its capital structure through initiatives like the Bermuda reinsurance strategy, and enhancing operational efficiency, building on the success of the Corebridge Forward program.

Despite facing near-term pressures from market volatility and interest rate dynamics, particularly impacting spread income, Corebridge's multiple sources of income and strong underlying business fundamentals position it for continued growth. The company's commitment to active capital management, demonstrated by consistent dividends and share repurchases, underscores its focus on shareholder value. While risks related to market conditions, regulation, and litigation persist, Corebridge's proactive risk management framework and financial strength provide resilience. The company's outlook for long-term EPS growth and increasing insurance subsidiary dividends reflects confidence in its strategy and ability to navigate the evolving market landscape, supported by its competitive positioning and technological capabilities.