Press release·05/06/2025 20:26:32

Corebridge’s Strong Financial Performance

Corebridge, one of the largest providers of retirement solutions and insurance products in the United States, has reported its financial results for the first quarter of 2025. Despite facing some challenges, the company has demonstrated its resilience and ability to navigate the evolving market conditions.

Overview of Corebridge’s Business

Corebridge operates four main business segments: Individual Retirement, Group Retirement, Life Insurance, and Institutional Markets. These segments collectively offer a broad range of products and services, including fixed and variable annuities, life insurance, and institutional investment solutions.

The company’s revenues come from various sources, such as premiums, policy fees, net investment income, and advisory fees. On the expense side, the company incurs costs related to policyholder benefits, interest credited to policyholders, amortization of deferred policy acquisition costs, and general operating expenses.

Significant Factors Impacting Corebridge’s Results

Several key factors have influenced Corebridge’s financial performance, both positively and negatively:

1. Impact of Fortitude Re: In 2018, Corebridge entered into reinsurance agreements with Fortitude Re, a subsidiary of Fortitude Group Holdings, to reinsure certain of its legacy operations. These agreements have created ongoing volatility in Corebridge’s net income due to the accounting treatment of the embedded derivative in the funds withheld payable. However, this volatility is largely offset by corresponding changes in other comprehensive income, resulting in minimal impact on the company’s overall financial position.

2. Variable Annuity Guaranteed Benefit Riders and Hedging: Corebridge’s variable annuity products with guaranteed benefit riders expose the company to market risks, such as changes in interest rates, equity prices, and volatility. To manage these risks, Corebridge has an economic hedging program that utilizes various derivative instruments.

3. Embedded Derivatives in Fixed Index Annuity, Registered Index-Linked Annuity, and Index Universal Life Products: These products contain index interest credits that are accounted for as embedded derivatives, resulting in changes in their fair value being recognized in net realized gains and losses.

4. Strategic Partnership with Blackstone: In 2021, Corebridge entered into a long-term asset management relationship with Blackstone, which now manages a significant portion of the company’s investment portfolio. This partnership has provided Corebridge with access to new asset classes and improved investment yields.

5. Investment Management Agreements with BlackRock: Corebridge has also entered into investment management agreements with BlackRock, which manages a portion of the company’s investment portfolio, primarily in liquid fixed income and private placement assets.

Macroeconomic, Industry, and Regulatory Trends

Corebridge’s business is affected by various industry and economic factors, including changes in interest rates, equity market performance, credit and currency market conditions, and regulatory developments.

1. Equity Markets: Corebridge’s financial results are impacted by the performance of equity markets, which affects the value of its variable annuity separate accounts, mutual fund assets, and brokerage and advisory assets, as well as the fair values of equity-exposed securities in its investment portfolio.

2. Interest Rate Environment: Rising interest rates generally benefit Corebridge’s spread income, as the company can reinvest cash flows from existing business at higher rates. However, rising rates can also lead to increased surrenders, particularly for fixed annuities, and impact statutory reserve or capital requirements.

3. Regulatory Environment: Corebridge’s operations are subject to regulation by various domestic and international authorities. The company closely monitors regulatory developments, such as new climate-related disclosure requirements and changes to the definition of investment advice fiduciary, to ensure compliance and assess potential impacts on its business.

Consolidated Results of Operations

In the first quarter of 2025, Corebridge reported a pre-tax loss of $862 million, compared to pre-tax income of $1.0 billion in the same period of 2024. This change was primarily due to lower premiums, higher net realized losses, an unfavorable change in the fair value of market risk benefits, and higher interest credited to policyholder account balances, partially offset by lower policyholder benefits and higher net investment income.

Corebridge’s adjusted pre-tax operating income (APTOI), which excludes certain items to provide a more meaningful representation of the company’s underlying performance, decreased from $837 million in the first quarter of 2024 to $810 million in the first quarter of 2025. This decrease was mainly driven by lower premiums, higher interest credited to policyholder account balances, and higher income attributable to noncontrolling interests, partially offset by lower policyholder benefits and higher net investment income.

Segment Performance

Corebridge’s four main business segments – Individual Retirement, Group Retirement, Life Insurance, and Institutional Markets – each contributed to the company’s overall results:

1. Individual Retirement: APTOI decreased by $68 million, primarily due to lower spread income, higher non-deferrable insurance commissions, higher amortization of deferred policy acquisition costs and deferred sales inducement assets, and higher general operating expenses.

2. Group Retirement: APTOI decreased by $5 million, mainly due to lower spread income reflecting lower base portfolio income, partially offset by higher variable investment income.

3. Life Insurance: APTOI increased by $54 million, driven by favorable domestic underwriting margin due to improved mortality experience and the absence of unfavorable one-time reinsurance adjustments in the prior year.

4. Institutional Markets: APTOI increased by $25 million, primarily due to higher spread income driven by higher variable investment income from private equity investments, partially offset by lower base portfolio spread income.

Investments and Asset-Liability Management

Corebridge’s investment strategies are tailored to the specific needs of each business segment, with a focus on generating investment income, preserving capital, managing liquidity, and growing surplus. The company’s investment portfolio is primarily composed of high-quality fixed maturity securities, including corporate debt, mortgage-backed securities, asset-backed securities, and collateralized loan obligations.

Corebridge actively manages its assets and liabilities, utilizing asset-liability management as a primary tool to monitor and manage interest rate and duration risk. The company also seeks to enhance portfolio returns through investments in alternative asset classes, such as private equity and real estate.

The company’s strategic partnerships with Blackstone and BlackRock have provided access to new investment opportunities and improved overall investment performance.

Liquidity and Capital Resources

Corebridge maintains a strong liquidity position, with sources of liquidity primarily in the form of cash, short-term investments, and publicly traded, investment-grade fixed maturity securities. The company also utilizes borrowings from the Federal Home Loan Bank system to supplement its liquidity.

Corebridge’s capital position remains robust, with total Corebridge shareholders’ equity of $11.98 billion as of March 31, 2025. The company’s adjusted book value per common share, which excludes the impact of accumulated other comprehensive income and the cumulative unrealized gains and losses related to Fortitude Re’s funds withheld assets, was $38.83 as of the same date.

Outlook and Key Risks

Corebridge’s outlook remains cautiously optimistic, as the company navigates the evolving macroeconomic and regulatory landscape. The company’s diversified business model, prudent risk management practices, and strategic partnerships position it well to capitalize on future growth opportunities.

However, Corebridge remains vigilant to potential risks, including:

1. Equity market declines or volatility
2. Adverse changes in interest rates and credit spreads
3. Increased credit impairments and losses in its investment portfolio
4. Regulatory changes that could impact its operations or capital requirements

By proactively addressing these risks and continuing to execute its strategic initiatives, Corebridge is well-positioned to deliver sustainable value for its shareholders and customers.