Q2 2025 Corebridge Financial Inc Earnings Call

Kevin Hogan: The only other source of income you can't outlive is an annuity. With more than 4 million Americans turning 65 every year, there's a massive need for both accumulation and decumulation annuity products to help people navigate retirement. Corebridge's broad annuity product suite and extensive distribution network position us well to win in this space. For example, excluding the VA seated to venerable, individual retirements net inflows in the second quarter were over $3 billion, a high watermark for the company. Each of our businesses is supported by these strong macro tailwinds. Our balance sheet is not only simpler post-transaction; it is better optimized for growth. In addition to our strength in product design, breadth of offering, and distribution reach, our Bermuda strategy provides us financial flexibility to support future growth across our company and is an important part of our capital management strategy.

The only other source of income, you can't outlive is an annuity.

With more than 4 million Americans, turning 65. Every year there's a massive need for both accumulation and decumulation annuity products to help people navigate retirement.

Corporate has brought annuity products, suite and extensive distribution Network position us well to win in this space.

For example, excluding the VA seated to venerable individual retirements, net inflows in the second quarter were over $3 billion—a high watermark for the company.

Each of our businesses is supported by these strong macro Tailwinds.

Our balance sheet is not only similar, but transaction, it is better optimized for growth.

Kevin Hogan: Our commitment to expense efficiency is unwavering. Corebridge Forward, which is now largely earned in, has helped reduce general operating expenses by 14% since the IPO. Through increased digitization and other modernization initiatives, we see additional opportunity to create a lean, competitive cost base while improving our customer and distribution partner experience. And by executing consistently on our first three pillars, we are able to deliver on the fourth: active capital management that directly rewards our shareholders through dividends and share repurchases. We can achieve our target payout ratio without the $2.1 billion of proceeds from the reinsurance transaction. With the transaction, we will exceed our payout ratio target for a period of time, and the additional share repurchases are expected to be EPS accretive on a pro forma basis when complete. We are confident our formula for success is proving out.

In addition to our strength and product design, breadth of offering and distribution, reach our Bermuda strategy provides US Financial flexibility to support future growth. Our company and is an important part of our Capital Management strategy.

Our commitment to expense efficiency is unwavering corporate forward, which is now largely earned in has helped reduce General operating expenses by 14% since the IPO

Through increased digitization and other modernization initiatives. We see additional opportunity to create a lean competitive cost base while improving our customer and distribution partner experience

And by executing consistently on our first three pillars, we are able to deliver on the fourth active capital management that directly rewards our shareholders through dividends and share repurchases.

We can achieve our target payout ratio with the $2.1 billion of proceeds from the reinsurance transaction.

With the transactions, we will exceed our payout ratio target for a period of time, and the additional share repurchases are expected to be EPS accretive on a pro forma basis. When complete,

Kevin Hogan: As we grow profitably, use our balance sheet efficiently, manage expenses diligently, and distribute cash consistently, we will continue to create long-term shareholder value, all accelerated by a transformative transaction that reduces risk, improves the quality of earnings, and drives higher distribution. We think it adds up to one of the most compelling value propositions in the sector and believe investors should take a fresh look at Corebridge Financial. With that, I will turn the call over to Elias to cover our second quarter results in detail.

we are confident our formula for success is proving out.

As we grow profitably, use our balance sheet, efficiently, manage expenses, diligently and distribute cash consistently, we will continue to create long-term shareholder value. All accelerated by a transformative transaction that reduces risk, improves the quality of earnings and drives higher distributions.

We think it adds up to 1 of the most compelling value propositions in the sector and believe investors should take a fresh look at corporate Financial.

Elias Habayeb: Thank you, Kevin. I'll begin my comments today on slide six. Corebridge reports a second quarter adjusted pre-tax operating income of $942 million, or operating earnings per share of $1.36, a 20% increase year over year. There were no notable items in the quarter. Annualized alternative investment returns this quarter were $0.06 per share, better than our long-term expectations, largely due to the impact of a weaker US dollar on our foreign fund investments and normal timing adjustments as year-end fund audits were completed. Adjusting alternative investment returns to long-term expectations, we delivered run rate operating earnings per share of $1.30, which represents an 8% year-over-year improvement and an adjusted run rate ROE of 13.7%, which is 90 basis points higher than the prior year.

With that, I will turn the call over to Elias Habayeb to cover our second quarter results in detail.

Thank you, Kevin. I'll begin my comments today on slide 6.

Corporate reports at second quarter adjusted pre-tax, operating income of 942 million or operating earnings per share of $1.36 a 20% increase year-over-year.

In the quarter.

Annualized, alternative investment returns. This quarter were 6 cents, per share better than our long-term expectations, largely due to the impact of a weaker US Dollar on our foreign fund Investments and normal timing adjustments. As year-end fund audits were completed

Elias Habayeb: Moving to slide seven, total sources of income increased 6% year over year, while core sources of income declined modestly by 2%, driven by improved underwriting margin in life insurance offset by decline in base spread income and fee income, consistent with our prior guidance. Base spread income declined by 6% year over year, driven by the combination of Fed rate actions in 2024 and net outflows in group retirement as the business continues to transition from spread to fee income. While reported fee income was down slightly year over year, excluding individual retirement variable annuities, fee income was actually up 3% year over year. Underwriting margin, excluding VII, continues to contribute strong results, growing 9% year over year, aided by favorable mortality experience and the continuing growth in our life business.

Adjusting alternative investment returns to long-term expectations. We delivered run rate to operating earnings per share of $1.30 which represents an 8% year-over-year Improvement and an adjusted run rate Roe of 13.7%, which is 90 basis points higher than the prior year.

Moving to slide 7.

Total sources of income increased 6% year-over-year while core sources of income, declined modestly by 2% driven by improved underwriting margin in life. Insurance offset by decline in base, spread income and fee income consistent with our prior guidance.

Base spread income declined by 6% year-over-year, driven by the combination of Fed rate actions in 2024 and net outflows in group retirement as the business continues to transition from spread to fee income.

While reporting fee income was down slightly year-over-year, excluding individual retirements variable. Annuities fee. Income was actually up, 3% year-over-year.

Elias Habayeb: Next, I'll briefly review a few highlights from each of our businesses, the details of which can be found in the appendix of our earnings presentation. As a reminder, results exclude the impact of variable investment income and notable items where applicable. In individual retirement, core sources of income were down 3% year over year, but were flat on a sequential basis. Year over year, base spread income was impacted by Fed rate actions and hedging activities to maintain alignment between our assets and liabilities, which we view as short-term in nature. Had it not been for these actions, base spread income would have been approximately $50 million higher. Even so, base spread income continued to grow on a sequential basis, reflecting the growth in the business.

VII continues to contribute strong results, growing 9% year-over-year, aided by favorable mortality experience and the continuing growth in our life business.

Next, I'll briefly review a few highlights from each of our businesses, the details of which can be found in the appendix of our earnings presentation, as a reminder results, exclude, the impact of variable investment, income, and notable items where applicable,

An individual retirement core sources of income.

Around 3% year-over-year but were flat on a sequential basis.

Year-over-year base, spread income was impacted by Fed rate actions, and hedging activities to maintain alignment between our assets and liabilities, which we view as short-term in nature.

For these actions.

Some would have been a.

Elias Habayeb: Individual retirement had record sales this quarter with premiums and deposits at $6.8 billion, benefiting from our broad product portfolio and deep distribution network. Notably, our new Rila product achieved sales of half a billion dollars in individual retirement this quarter, less than a year after product launch. Net inflows of $3.2 billion, excluding variable annuities, were up 4% year over year and more than doubled sequentially, resulting from robust organic growth. While adjusted pre-tax operating income, excluding VII, declined 8% year over year for the reasons just mentioned, the fundamentals in this business clearly remain strong and market conditions continue to be attractive. Our group retirement business continues to transition from a spread-based to a capital-led fee-based revenue stream. While fee income was flat year over year, sequentially fee-earning assets were up 7%, which should support fee income growth in the upcoming quarter.

Seller's higher, even. So base price income continued to grow on a sequential basis reflecting the growth in the business

Individual retirement had record sales. This quarter with premiums and deposits at 6.8 billion benefiting from our broad product portfolio and deep distribution Network. Notably our new Riya product achieved sales of half a billion dollars in individual retirement, this quarter less than a year after product launch.

Net inflows of 3.2 billion dollars, excluding variable annuities were up, 4% year-over-year and more than doubled. Sequentially. Resulting from robust organic growth.

While adjusted pre-tax operating income, excluding V declined, 8% year-over-year for the reasons, just mentioned, the fundamentals in this business clearly remains strong and market conditions continue to be attractive.

our group retirement business continues to

Trend while fee income was flat year-over-year.

Elias Habayeb: Base spread income decreased 18% year over year, given the ongoing demographic shift in our customer base and resulting net outflows. More broadly, from time to time, we do see some large plan exits, which you can see in our net flows. These flows tend to be concentrated in assets within separate accounts and mutual funds. As a result, these exits have a limited impact on our spread income. Looking forward to the third quarter, we expect two additional plan exits, which we expect will have a modest impact on our spread earnings. Excluding net outflows from large plan exits, total flows have remained stable and in line with the levels we've seen in recent quarters. Furthermore, general account net outflows have slowed, improving over 25% year over year. Premiums and deposits are up 8% sequentially, with out-of-plan deposits increasing 22%.

Sequentially sea earning assets were up 7% which it support fee income growth in the upcoming quarter.

They spread income decreased 18% year-over-year, given the ongoing demographic shift in our customer base and resulting. Net. Outflows

More broadly from time to time. We do see some large plan exits, which you can see in our net flows. These flows tend to be concentrated in assets within separate accounts and mutual funds as a result. These exits have a limited impact on our spread income.

Looking forward to the third quarter. We expect 2 additional plan exits, which we expect will have a modest impact on our spread earnings.

Excluding net outflows from large plan exits, total flows have remained stable and in line with the levels we've seen in recent quarters.

Furthermore, General accounts. Net outflows have slowed improving over 25% year-over-year.

Elias Habayeb: Demand for our Rila product remains strong, and Rila sales and group retirement have totaled over $160 million since we launched the products in this business in late January. In our advisory and brokerage business, the total assets under management and administration increased 10% year over year. We continue to be excited about the opportunities for group retirement and believe we have a unique value proposition. We differentiate ourselves with a field force of experienced financial professionals and proprietary tools that enhance financial planning capabilities, supporting growth in both our in-plan and our emerging wealth management business. Our life insurance business continues to perform exceptionally well, with a 12% increase year over year in underwriting margin and a 44% year over year increase in adjusted pre-tax operating income.

Premiums and deposits are up 8% sequentially, without a plan in place for deposits, increasing 22%.

Demand for our Riya product remains strong, and Riya sales and group retirement have totaled over $160 million, since we launched the products in this business, in late January.

In our advisory in brokerage business, the total assets under management and administration increased 10% year-over-year. We continue to be excited about the opportunities for group retirement and believe we have a unique value proposition.

We differentiate ourselves with a field force of experience Financial professionals and proprietary tools that enhance financial planning capabilities.

Supporting growth in both our implant and our emerging wealth management business.

Elias Habayeb: The increase in underwriting margin primarily reflects ongoing pricing discipline, including the benefit of our automated underwriting platform and resulting favorable mortality experience, as well as improved investment yield. New business sales were up slightly year over year, largely driven by growth in our traditional products, including both our guaranteed issue and simplified issue whole life products, as we saw increased demands from our emerging distribution partnerships that favored our newer digital application platform. In our institutional markets business, reserves increased 17% year over year, largely driven by strong GIC issuances and PRT transactions over the past year. This reserve growth has supported a 64% year over year increase in our total sources of income. We are very disciplined in sourcing assets for our new business.

Our life insurance business continues to perform exceptionally well with a 12% increase year-over-year in underwriting margin and a 44% year-over-year increase in the adjusted pre-tax operating income.

Another writing margin primarily reflects ongoing pricing discipline, including the benefit of our automated underwriting platform and resulting favorable mortality experience as well as improved investment yields.

New business sales were up slightly year-over-year. Largely driven by growth in our traditional products, including both our guaranteed issue and simplified issue Whole Life Products. As we saw increased demands from our emerging distribution Partnerships that favored our newer digital application platform.

In our institutional markets business reserves increased, 17% year-over-year, largely driven by strong gick issuances and PRT transactions. Over the past year, this reserved growth has supported the 64% year-over-year increase in our total sources of income.

Elias Habayeb: In the case of GICs we issued in the first and second quarters, given market volatility, some asset origination funding was deferred, but it has only a short-term effect and was factored into our pricing. As a result, we did see stronger reserve growth on a relative basis versus base spread income. Overall, we expect spread earnings to increase over time as reserves grow, but as we've referenced from time to time, there will be periods of inherent quarterly volatility. Turning to new business, we continue to grow our GIC program. This was the fifth sequential quarter with issuances exceeding $1 billion. As a result, our GIC reserves have grown by $4.7 billion, or 40% year over year. The PRT pipeline in both the US and UK continues to remain strong as we see ongoing appetite for de-risking solutions and high pension plan funded ratios.

We are very disciplined in sourcing assets for our new business. In the case of gix, we issued in the first and second quarter given Market volatility some asset origination funding was deferred but it has only a short-term effect and was factored into our pricing. As a result, we did see. Stronger reserved growth on a relative basis versus base, spread income

Overall, we expect spread earnings to increase over time as reserves grow, but as we've referenced from time to time, there will be periods of inherent quarterly volatility.

Elias Habayeb: Turning to slide eight, Corebridge continues to drive shareholder value through consistent cash generation. The insurance company dividends to the holding company in the second quarter totaled $600 million. We returned $442 million to shareholders through dividends and share repurchases, contributing to a 64% year-to-date payout ratio. Holding company liquidity was $1.3 billion at June 30, an amount that exceeds our needs for the next 12 months. As a reminder, first quarter holding company liquidity was elevated as we held additional funds to cover $1 billion worth of debt that matured in April. Looking forward, we have no material debt maturities until 2027. With our LIFE Fleet RBC ratio remaining above target and our recent VA transaction generating significant distributable proceeds, the board of directors authorized a $2 billion increase to our share repurchase authorization in June.

Turning to new business. We continue to grow our gick program. This was the 5th sequel quarter with issuances. Exceeding 1 billion dollars as a result, our gick reserves have grown by 4.7 billion or 40% year-over-year. The PRT pipeline in both. The US and UK continues to remain strong as we see ongoing appetite for de-risking Solutions and high pension plan funded ratios.

Turning to slide 8.

Corebridge continues to drive shareholder value through consistent cash generation.

The insurance company dividends to the holding company. In the second quarter totaled. 600 million, we returned 442 million dollars, to shareholders through dividends and share repurchases contributing to a 64%. Year-to-date payout ratio.

Holding company liquidity was 1.3 billion at June 30th, our needs for the next 12 months.

As a reminder, in the first quarter, the holding company had elevated liquidity as we held additional funds to cover $1 billion worth of debt that matured. In April, looking forward, we have no material debt maturities until 2027.

Elias Habayeb: I would like to note that we plan to update our financial supplement to reflect the impact of the individual retirement VA transaction. This will involve recasting the historical results to be presented on a consistent basis, which we plan to release in advance of third quarter earnings. So as we move to Q&A, a few closing comments. Corebridge continues to drive shareholder value by executing on our four strategic pillars: organic growth, balance sheet optimization, expense efficiency, and capital management. With the close in the third quarter of the vast majority of our variable annuity reinsurance transaction and the expected close of the remaining portion in the fourth quarter, we have strategically repositioned the company, fortifying an already diversified business mix and balance sheet, enhancing our financial flexibility, and putting the company firmly on the path to deliver continued growth, profitability, and shareholder value.

With our lifely RBC ratio remaining above Target and our recent VA transaction generating significant distributed precedes. The board of directors authorized a 2 billion dollar increase to our share repurchase authorization in June.

I would like to note that we plan to update,

Financial supplement.

To reflect the impact.

VA transaction.

This will involve recasting the historical results to be presented on a consistent basis, which we plan to release in advance of third quarter earnings.

so, as we move to Q&A, if you close in comments,

Corebridge continues to drive, shareholder value by executing, on our 4, strategic pillars.

Organic growth.

Balance sheet, optimization extension and Capital Management.

With the close in the third quarter of the vast majority of our variable annuity reinsurance transaction.

And the expected close of the remaining portion in the fourth quarter, we have strategically repositioned the company.

Elias Habayeb: We are immensely proud of the team and look forward to the balance of 2025 and beyond. With that, I will turn the call back to Isil.

Fortifying, an already Diversified business, mix and balance sheet, enhancing our financial flexibility, and putting the company on the path to deliver. Continued growth profitability, and shareholder value. We are immensely proud of the team and look forward to the balance of 2025 and Beyond.

Isil Muderrisoglu: Thank you, Elias. As a reminder, please limit yourself to one question and one follow-up. Operator, we are now ready to begin the Q&A portion of the call.

I will turn the call back to issue.

Thank you, Elias. As a reminder, please limit yourselves to 1 question and 1 follow-up operator. We are now ready to begin the Q&A portion of the call.

Operator: Thank you. As a reminder, to ask a question, please press star one on your telephone keypad or star two to withdraw your question. Our first question is from Wes Carmichael at Autonomous. Please go ahead.

Thank you as a reminder to ask a question. Please press star 1 on your telephone keypad or Star 2 to withdraw your question. Our first question is from Wes Carmichael at autonomous. Please, go ahead.

Wes Carmichael: Hey, thank you. Good morning. Just my first one on capital and insurance company dividends. I think you took $600 million or so of dividends to the holding company in the quarter. Just with the VA transaction, maybe Elias, do you have any view on how that quarterly dividend amount may trend once it's fully closed? I guess assuming a relatively consistent macro environment.

Elias Habayeb: Hey, Wes, it's Elias. So yeah, listen, from insurance company dividend, we've been growing that with the growth in earnings, and you know for 2025, our target's to grow it by 5% to 10%. There will be a minor impact with the VA transaction, given we would lose about $300 million of earnings, but we expect to continue to grow the dividend with the growth in the business, and we continue to expect to deliver a 60% to 65% payout ratio. And if I go back to one of the targets we've established, we shared earlier this year that our goal is to grow EPS by 10% to 15% on average over time per year. There's no change to that target. We reaffirmed it, and we expect to do that by growing both earnings as well as share repurchases.

Hey, thank you. Good morning. Um, just my first 1 on on Capitol and insurance company dividends. I I think it took millions or so of dividends to the holding company in the quarter. Uh just with the VA transaction. Maybe Elias do you have any any of you on how that quarterly dividend amount may may Trend once it's fully closed? Um I guess assuming a relatively consistent macro environment.

Hey Wes, it's Elias. So yeah listen um from an insurance company dividend. We've been growing that with the growth in earnings and, you know, for 2025 our targets to growth by 5, 5 to 10%. There will be a a minor impact with the VA transaction. Given we would lose about 300 million of earnings, but we expect to continue to grow the dividend with the growth in the business. And we continue to expect to deliver a 60 to 65% payout ratio. And if I go back to 1 of the targets we've established, we

Shared earlier this year that our goal is to grow EPS by 10 to 15% on average overtime per year. Uh, there's no change to that Target. We reaffirmed it and we expect to do that by growing both earnings as well as uh share repurchases.

Wes Carmichael: Got it. Thank you. Maybe a different topic, but it sounds like wealth management and group retirement is a business that you're looking to grow. Wondering if you could offer us a little more color on the size of that business today and your ambitions over the next few years, and maybe is that an area where you'd be open to inorganic growth or multiples for assets just too rich right now?

Kevin Hogan: Yeah, thanks, Wes. You know, look, we see a very attractive opportunity in the group retirement business. It's much more than a spread business, as you pointed out. Our fee income of $190 million in the quarter is always already larger than the spread income. But I think what's important is look at some of the sources of that future of wealth management opportunity. Our advisory and brokerage assets were already at $16.8 billion, which is up 10% year over year. And if you look at the fee income and the out-of-plan and the advisory and brokerage assets, that's already a big earnings base of $104 billion. It's up 3% year over year. And you know the reality is that of the 1.9 million customers in this business, 1.6 million of them are still in-plan only.

Got it. Thank you. Um, maybe a different topic, but it sounds like wealth management and group retirement are businesses that you're looking to grow. I’m wondering if you could offer us a little more color on the size of that business today and your ambitions over the next few years. And maybe is that an area where you'd be open to inorganic growth or are multiples for assets just too rich right now?

Yeah, thanks Wes. Uh you know look we see a very uh attractive opportunity in the group retirement business. It's much more than a a spread business. As you pointed out. Our fee, income of 190 million in the quarter is always already larger than the spread income. Uh but I think what's important is look at some of the sources of uh of that, you know, future wealth management opportunity. Our advisory and brokerage assets are already at 16.8 billion which is up 10% uh, year-over-year. And if you look at the fee income and the outer plan and the advisory, and brokerage assets, that's already a big earnings base of 104 billion. It's up, 3% year-over-year and you know the reality is is that of the 1.9 million customers in this business 1.

Kevin Hogan: So we have a tremendous future opportunity for that wealth management piece as the in-plan customers continue to work and as they reach their age of retirement, as we engage in household asset consolidation and have a chance to continue to serve them through the rest of their lives. We've started growing the advisor base again, supporting both the in-plan business as well as that wealth management business, and we anticipate continuing to grow the advisor force. You know, in terms of whether inorganic makes sense to accelerate the growth in that business, that's something that we would consider at the time, consistent with the rest of our strategy. But we see significant opportunities in the business, which is strategically very well positioned, irrespective.

Elias Habayeb: Hey, and Wes, just to want to add back to your question to me, you know I was answering you in the context of kind of independent of the VA reinsurance transaction. You know, as we've said before, with respect to the VA reinsurance transaction, we'd expect the substantial majority of the proceeds will be used for capital management, and we'll go through our normal process for dividends with the regulators and the insurance companies, and we'd expect the earliest that this would start being deployed will be in the fourth quarter.

6 million of them are still in plan only. So we have a tremendous future opportunity for that wealth management piece as the implant customers continue to work. And as they reach their age of retirement as we engage in household asset, uh, consolidation and have a chance to continue to serve them through the rest of their lives. We've started growing the advisor base again supporting both the implant, uh, you know, business as well as that, uh, wealth management business. Uh, and we anticipate continuing to grow the advisor Force, you know, in terms of whether inorganic makes sense to accelerate the growth in that business, that's something that we would consider at the time, consistent with, uh, the rest of our strategy. But uh, we see significant opportunities in the business, which is strategically very well positioned, uh, irrespective.

Hey and West just do want to add back to your question to me, you know, I was answering you in the context of kind of independent of the VA reinsurance transaction. You know, as we've said before, with respect to the VA reinsurance transaction, we'd expect the substantial majority of the proceeds will be used for Capital Management and we'll go through our normal process, uh, for dividends with the regulators and the insurance companies. And we'd expect the earliest that this would start being deployed will be in the fourth quarter.

Wes Carmichael: Thanks, Elias.

Thanks a lot.

Operator: Our next question comes from Ryan Kruger at KVW. Please go ahead.

Our next question comes from Ryan Krueger at KBW, please go ahead.

Various Analysts: Good morning. First question was on individual retirement sales. Can you talk a little bit more about what drove the strength this quarter? Was there anything particular about the environment that caused this? And I guess, you know, to what extent do you think this higher level of sales can be sustained going forward?

Kevin Hogan: Yeah, thanks, Ryan. You know, first of all, what I'd say is demand for the annuities remains robust across the board, and the conditions continue to be very attractive. Where the belly of the yield curve is, remains very supportive. And of course, you know, the long-term macro drivers are very powerful, whether that's the aging of the population, you know, the recognition that people have to look after themselves, and a very supportive advisor community. And we're very pleased with the conditions in the second quarter. You know, we've determined the rationality of the competition based on our ability to achieve our margins on new business sales, and the second quarter conditions were attractive. Let's take a step back and kind of unpack it a little.

This, this higher level of sales can be sustained, going forward.

Kevin Hogan: We were very pleased with our index suite, as well as our new Rila product, which has performed very well, and we continue to be disciplined in fixed annuities, which is really the most immediately sensitive of the businesses. And really, in the second quarter, you know, we did almost $500 million worth of our new Rila product. And then on top of that, we also had kind of a high watermark in index sales. So we haven't seen any signs of cannibalization, and you know, that's a very positive trend. We've seen incremental sales growth in both Rila and index, you know, pretty consistently through the first and the second quarter. And you know, we don't know if these favorable conditions of the second quarter will continue.

Yeah, thanks Ryan. You know, first of all, what I'd say, is demand for the annuities remains robust, uh, across the board. And the conditions continue to be very attractive where the belly of the yield curve is remains very supportive and of course, you know, the long-term macro drivers are very powerful. Uh, whether that's the Aging of the population, uh, you know, the recognition that people have to look after themselves and a very supportive advisor Community. Um, and we're, we're, we're very pleased with uh, you know, the conditions, uh, in the in the second quarter. You know, we've determined the rationality of the competition based on our ability to achieve our margins on new business sales and the second quarter conditions were attractive. Uh, let's take a step back and kind of unpack it a little. We were very pleased with our index Suite, uh, as well as our, our new Ria product, uh, which is performed very well and we continue to be disciplined and fixed annuities, which is really the most immediately sensitive of, uh, the businesses

Uh, and really in the second quarter, you know, we did almost $500 million worth of our new Rival product. And then, on top of that, we also had a kind of a high water mark in index sales. So we haven't seen any signs of cannibalization.

Kevin Hogan: Historically, the tax planning season does prompt a little extra attention in the second quarter, but the opportunities are there, the demand is there, and we have a broad capital management toolkit, including our new Bermuda strategy, and we continue to focus on allocating the capital where the risk-adjusted returns are the highest and the customer demands are the greatest. And in the second quarter, we saw those opportunities in individual retirement, and we continue to see a very robust, you know, position for that business. We were able to grow the spread income sequentially for individual retirement and had very attractive net flows into the general account that will further contribute to the future earnings base of this business. So we feel very well positioned in individual retirement. The conditions continue to be attractive. We expect to continue to grow the spread income from that business over time.

And, uh, and, and, you know, that's a very positive trend. We've seen incremental sales growth in both Riya and index, you know, pretty consistently through the first and the second quarter. Um, and uh, you know, we don't know if he's favorable conditions of the second quarter will continue historically. The tax planning, season does prompt a little extra attention, uh, in the second quarter. But uh, the opportunities are there that demand is there. And we have a broad Capital Management toolkit including our new Bermuda strategy. Uh, and we continue to focus on allocating the capital where the risk adjusted returns, are the highest and the customer demands of the greatest. And then the second quarter, uh, we saw those opportunities and individual retirement and, and, and we continue to see a very robust, uh, you know, position for that business, we were able to grow the, uh, spread income sequentially for individual, uh, retirements and and, and had uh, very attractive. Net flows into the general account.

That will further contribute to the Future earnings base of this business. So, uh, we feel very well positioned in individual retirement, the conditions continue to be attractive, we expect to continue to, grow the spread income from that business over time.

Various Analysts: Thank you. And then had a question on spread income. I think base spread income was up about $5 to $10 million sequentially this quarter if we normalize for the one-time item in the first quarter. Do you think that's a reasonable expectation now going forward in terms of the progression and trajectory of base spread income in the individual retirement business, assuming no further rate cuts from the Fed?

Kevin Hogan: As we pointed out, you know, there's a bleed-in period of the resets when the Fed rate cuts occur over a couple of quarters. We're largely through that, but it did have some impact on the second quarter. Looking ahead, we continue to that the base spread income will continue to grow. Over time, as I pointed out, new business pricing is at, you know, our sort of medium-term return expectations. As you saw, you know, where our new money is coming in, it's 50 bips over the roll-off. And you know, there might be some variability quarter to quarter, but the fundamental trend is that the general account reserves will continue to grow, and that will drive growth in the base spread income.

Thank you and then had a question. Had a question on spread income um I think bait spread income was up about 5 to 10 million sequentially this quarter. If we normalize for the the 1 time item in in the first quarter, do you think that's a a reasonable expectation now going forward in terms of the progression and trajectory of spreading based spread income in that in the individual retirement business? Assuming no further rate cuts from the Fed

As we pointed out, you know, there's a bleed in Period of the reset. When the Fed rate Cuts occur over a couple of quarters, we're largely through that. Uh, but it did have some impact on the, you know, the second, uh, quarter looking at ahead. We continue to that the base spread income will continue to grow, uh, over time, as I pointed out, new business pricing is at, uh, you know, our sort of medium-term return expectations as you saw, you know, where our new money is coming in its 50 BS, over the rolloff. And, you know, there might be some variability quarter to quarter, but the fundamental trend is that, the general account reserves will continue to grow and that will drive growth in the base, spread income.

Various Analysts: Thank you.

Thank you.

Operator: Our next question comes from John Barnage at Piper Sandler. Please go ahead.

Our next question comes from John barnidge at Piper Sandler. Please go ahead.

Various Analysts: Good morning. Thanks for the opportunity. With the Venerable Transaction being the biggest corporate event since the IPO and stock price reaction, how does that make you think about additional liability optionality?

Good morning, thanks for the opportunity. Um it's available on transaction being the biggest corporate event since the IPO and stock price reaction. How does that make you think about additional liability? Optionality?

Kevin Hogan: Well, look, we're always looking for the opportunity to, you know, create shareholder value, increase shareholder value, and to optimize the portfolio. You know, we focused on the variable annuity transaction, you know, significantly, but continue to evaluate other potential transactions. Any transaction needs to be accretive on a risk-adjusted basis to make sense for us, which means from both a pricing and a structure perspective. And so we continue to evaluate options, and to the extent that there's anything to announce, we'll bring it forward.

Well, look, we're always looking for the opportunity to, uh, you know, create shareholder value and increase shareholder value. Uh, and to optimize the portfolio, uh, you know, we focused on the variable annuity, uh, transaction. Uh, you know, significantly but, uh, continue to evaluate other potential, uh, transactions, uh, any transaction needs to be accretive on a, you know, risk adjusted basis to make sense for us, which means from both the pricing and, uh, structure, uh, perspective. And so, we continue to evaluate options and to the extent that there's anything to announce will bring it forward.

Various Analysts: Thanks for that answer and my follow-up. Can you maybe talk a little bit about the institutional markets volume? There's good earnings emergence, but I know it can be somewhat episodic and PRT volume is low. Some have cited litigation, others have cited more competitive dynamics. Thank you.

Talk a little bit about the institutional markets.

Kevin Hogan: Yeah, thanks, John. First of all, what I'd say is we're pleased to emerge as a more regular GIC issuer. We've had five quarters in a row, over a billion dollars in issuance, and this is consistent with what we talked about at about the time of the IPO, becoming a more regular, you know, GIC issuer. We're doing it our way, incrementally and with discipline. And then in terms of pension risk transfer, look, the pipelines remain very strong in both the US and the UK. For years, we've focused on full-plan terminations. They're a little bit, you know, more complex. They take a little longer to develop, and so they are maybe a little bit more episodic. But the pipelines continue to be strong. As Elias's prepared remarks pointed out, plans are fully funded, and companies are prepared to transact.

Volume good earnings emergence, but I know it can be somewhat episodic and PRT volumes are low. Some have cited litigation, while others have cited more competitive dynamics. Thank you.

Kevin Hogan: You know, when there's external volatility, there is some impact on that, but we're confident in the position, you know, in the pipeline over time for, you know, for both our US and our UK income. And we do expect that the spread income will continue to grow relative to reserves over time. It isn't going to be linear quarter to quarter, and we feel very comfortable with both our position in the GIC business as well as what we're seeing in pension risk transfer. We haven't seen any significant impact of some of these external events.

For a billion dollars in instruments. And this is consistent with what we talked about about the time of the IPO becoming a more regular, uh, you know, get gishler. Uh, we're doing it our way incrementally and with disciplines, um, and then, in terms of pension risk transfer, I look the pipelines for name, very strong in both the US and the UK for years. We've focused on full plan terminations, they're a little bit, you know, more complex. They take a little longer to develop, uh, and, uh, so they are maybe a little bit more, uh, episodic, uh, but the pipelines continue to be strong. As Elias is prepared remarks pointed out. Plans are fully funded, uh, and companies are prepared to transact. Uh, there, you know, when there's external volatility, there is some impact, uh, on that, but we're confident in the position, uh, you know, and the pipeline to over time for, you know, for both our us, and our, our UK income. And we do expect that the spread income will continue to grow relative to reserves over time. It isn't going to

Linear quarter to quarter. Uh, and um, and we feel very comfortable with both our position and to get business as well as, uh, what we're seeing in pension this transfer. We haven't seen any significant impact of some of these external, uh, events.

Elias Habayeb: Thank you.

Thank you.

Operator: Our next question is from Tom Gallagher at Evercore ISI. Please go ahead.

Our next question is from Tom Gallagher at evercore isi, please go ahead.

Various Analysts: Good morning. On the Apollo call this morning, they mentioned that the headwind of the roll-off of low-cost liability should be behind them by the end of 2026, and then they're implying spreads would stabilize from that point going forward, you know, approximately. Is that directionally similar to what the way you think this is going to play out for Corebridge, or do you have a different timeline for how you see the spread compression playing out?

Elias Habayeb: Hey, Tom, it's Elias. So listen, we're focused on growing earnings, and we expect to grow our spread income over time, given the current macro and demographic dynamics in the business. In terms of the base spread in and of itself, like if you look at what we've been experiencing, it's been like marginal compression. If you look at second quarter versus first quarter and adjust for the notable item, it was almost flat. So there could be more marginal compression given the dynamics of how much we've widened the spread on the inforce relative to where new business is. But you know, our focus is on growing earnings.

Good morning. Um, on on the Apollo call this morning, they mentioned that the headwind of the role off of lowcost liability, should be behind them by the end of 2026 and then they're implying spread with stabilized from that point going forward. You know, approximately is that directionally similar. What the way you think this is going to play out for corebridge or do you have a different timeline for how you see the spread compression playing out?

Hey Tom it's Elias. Um so listen we're focused on growing earnings and we expect to grow our spread income over time. Given the current uh macro and demographic Dynamics in the business.

Elias Habayeb: How long this marginal compression will last, there are different variables that will influence timing, but the key thing to us is where we're writing new business, it's meeting our pricing targets, and we expect to continue to grow our spread income. And remember, spread income is just over 50% of our revenue sources, and when you think about the other ways we make money, we're kind of always also optimistic about what the future holds for that. For example, fee income, you know, I called it out. We were up 3% if you exclude the variable annuity portfolio. We see that the Venerable on a year-on-year basis.

In terms of uh, the base spread. And if itself like if you look at what we've been experiencing, it's been like marginal compression. If you look at second quarter versus first quarter and then just for the notable item, it was almost flat. So there could be more marginal compression given the Dynamics of how much we've widened the spread on the enforce relative to where new businesses but you know our focus is on growing earnings. How long this marginal compression will last their different variables? That will influence timing. But the key thing to us is where we're writing new business. It's meeting our pricing targets and we expect to continue to grow our spread income. Uh, and remember spreading comes, don't just over 50% of our Revenue sources. And when you think about the other ways we make money, we're kind of always also optimistic about what the future holds for today. For example, fee income, you know, I called it out, we were up 3%.

If you exclude the variable annuity portfolio, we see that the venerable on a year-on-year basis.

Various Analysts: That's helpful, Elias. Thanks. And my follow-up, just on the VA deal, I think the majority of that is cash proceeds, not freed up capital. Are you now sitting on most of the $2.1 billion at the holding company, or is that cash consideration not at the holding company right now? And why would you have to wait until 4Q to begin to deploy that into larger buybacks?

That's that's awful lies thanks and my my follow-up just on the VA deal um I think the majority of that is Cash proceeds not uh freed up Capital. Do you are you now sitting on?

Elias Habayeb: So the, you know, the distributable proceeds are at the insurance company, so it's the insurance companies that transacted directly with Venerable. And so now, since we've increased the distributable proceeds from the insurance companies, we need to go through the normal process we do every quarter with our regulators to distribute it, and we'd expect to begin distributing it, the first batch, by the end of the quarter so it's available for the fourth quarter.

Most of the 2.1 billion at the holding company. Um, or or is there is that that cash consideration not at the holding company right now and why would you have to wait until 4:00 to begin to deploy that and to larger BuyBacks?

So, uh, the, you know, the distributed proceeds are at the insurance company. It's just the insurance companies that transacted directly with venerable. Um, and so now, since we've increased the distributable proceeds from the insurance companies, we need to go through the the normal process. We do every quarter with our Regulators to distribute it, um, and we'd expect to begin Distributing it, uh, the first batch by the end of the quarter, so it's available for the force for the fourth quarter.

Various Analysts: That makes sense. Thanks.

Makes sense. Thanks.

Operator: Our next question comes from KV Montezeri at Deutsche Bank. Please go ahead.

Our next question comes from, KV montazeri at Deutsche Bank, please go ahead.

Various Analysts: Thank you. First question on AI. Is life insurance your segment that is most advanced in terms of implementing Gen AI? And if so, what opportunities do you see in individual and group retirements?

Thank you. Um first question on AI um is life insurance your segment that is most advanced in terms of implementing Genai and if so what opportunities do you see in individual and group retirements?

Kevin Hogan: Well, look, I mean, you know, we believe that artificial intelligence represents a significant opportunity for the industry, and we're fortunate that through separation, we've modernized our tools and our platforms, and we have a strong foundation in place to build off of. As you pointed out, we've actually been using advanced practices, in particular in the life business, for a number of years now, and our automated underwriting capability in life, you know, is actually transacting around 80% of our new decisions, and those are effectively instantaneous decisions. And we feel, you know, very good about our capability there. But we see ongoing opportunities with respect to tools such as artificial intelligence and other advanced practices, including continuing to improve our operating leverage and our efficiency, enhancing the customer and the distribution partner experience, accelerating our software development lifecycle.

Well, well, look. I mean, you know, we, uh, believe that, uh, artificial intelligence represents a significant opportunity for, you know, the industry. Uh, and we're fortunate that through separation, we've modernized our tools and our platforms, and we have a strong, uh, foundation in place to build off of.

Kevin Hogan: And you know, we've worked hard to ensure that we have a sound governance process in place to ensure that we're, you know, understanding and managing the risks of the investments that we're making there. But we see, you know, significant opportunities for, you know, the technology enhancements, you know, to benefit the business in various areas. Now, back to the life insurance portfolio, you know, I think that our decision a number of years ago to narrow our product range and to move away from more of the interest-sensitive products has benefited us very well. And in addition to the automated underwriting, we've invested substantially in our, you know, digital platform for certain of the traditional products, which has served us very well.

Uh, as you pointed out, we've actually been using Advanced practices in particular in the Life business for a number of years now and our automated underwriting capability in in life. Uh, you know, is actually transacting around 80% of our, uh, new decisions. And those are effectively, instantaneous decisions. Uh, we feel, you know, very, you know, good about our capability there. Uh, but we see ongoing opportunities, uh, with respect to tools such as uh, artificial intelligence and other Advanced practices, including continuing to improve our operating leverage and our efficiency. Uh enhancing the customer and the distribution partner experience, accelerating our software development uh,

Life cycle. And uh, you know, we've worked hard to ensure that we have a sound governance process in place. To ensure that we're, you know, understanding and managing the risks of the Investments that we're making there. Uh, but we see, you know, significant opportunities for, you know, the technology enhancements. Uh, you know, to benefit the business in various areas.

Kevin Hogan: So, you know, we feel very well positioned both in the, you know, in the life business as well as in our use of technology, and you know, we expect to continue to benefit from that for years to come.

Insurance portfolio. You know, I think that our decision a number of years ago to narrow our product range. It's a move away from more of the interest sensitive products, uh, as benefited us very well. And in addition to the automated underwriting, we've invested substantially in our, you know, digital platform, uh, for certain of the traditional products, which is, uh, which has served us very well. So, yeah, you know, we um, we feel very well positioned both in the, you know, in the Life business as well as in our use of technology. And uh and uh, you know, we expect to continue to benefit from that for years to come.

Various Analysts: Thank you. And my follow-up is going to link to this in terms of your next phase of modernization. How far along do you think you are right now with regards to digitizing end-to-end processes in your insurance operation?

Thank you. And my follow-up is going to the link to this in terms of your next Facebook modernization.

How far along do you think you are right now with regards to your digitizing end to end processes in your insurance operations?

Kevin Hogan: Well, as I pointed out, through the separation process, we've made significant progress. We've moved all of our administrative systems, our administrative platforms to one version of a cloud or another, and that gives us a great platform to build off of. And we're working with some very capable partners in the journey of digitizing our various workflows. It depends business by business. In life insurance, we have virtually a digital business now. Some of our other businesses are earlier in the journey, but you know, we're confident in our ability to continue to improve our operating leverage over time.

Well, as I pointed out through the separation process, uh, We've made significant progress. We've um, we've moved all of our administrative systems, our administrative platforms to 1 version or the of the cloud, uh, or another. Uh, and that gives us a great platform to build off of and we're working with some very uh, capable Partners In the Journey of digitizing our various workflows. It depends business by business in life insurance, we have virtually a digital business. Now some of our other businesses are earlier in the journey uh but uh you know, we're confident in our ability to continue to improve our operating leverage over time.

Various Analysts: Thank you.

Thank you.

Operator: Our next question is from Alex Scott at Barclays. Please go ahead.

Various Analysts: Hi. First, what I have here is on the rollout of the Rila product. I was interested if you could just give us an update on sort of where that stands. Obviously, there's been a lot of success in the sales. I was just more wondering, you know, where you're at in terms of getting the shelf space you want, you know, rollout to different states, etc.

Our next question is from. Alex Scott at bar, please. Please. Go ahead.

Kevin Hogan: Yeah. Thanks, Alex. Appreciate it. Look, you know, I really feel Rila is off to a great start. In individual retirement in the second quarter, we had just shy of $500 million in sales, and then if you add group retirement on top of that, we, you know, we got on top of $600 million. That brings us to over a billion since the launch of the product, and you know, we're definitely seeing strong market dynamics and significant demand for Rila as well as all the individual retirement products. We've launched with over 200 distribution partners so far, and we're in all but one of the states, and you know, we're seeing two dynamics, right? A lot of the sales are coming from our existing distribution sources, distribution partners.

Hi. Uh, first, what I have here is on the roll out of the viola product was interested. If you could just give us an update on sort of where that stands obviously. The, uh, there's been a lot of success in the sales. I was just more wondering, you know, where where you're at. In terms of getting the Shelf space you want and roll out the different states Etc.

Kevin Hogan: One of the, you know, going back to one of the reasons we introduced to Rila is most of our major distribution partners were asking for us to introduce our offering and to bring our historical creativity to it, and we work closely with our partners in developing the product, and so far, it's resonated, you know, really well. So we're expanding our share of wallet with existing distribution partners. But if you look at the second quarter sales, more than 25% of them are from advisors and distribution sources that are new to Corebridge. So not only is it enhancing our position with existing distribution, but we're attracting new sources of distribution with it. And then, you know, on top of the great success with Rila, as I think I mentioned a little while ago, we also had the strongest index annuity quarter that we've seen.

Kevin Hogan: So we're not seeing any kind of cannibalization effect. We're seeing a multiplier effect, and frankly, we expect that to continue.

Distribution Partners, 1 of the going back to 1 of the reasons. We introduced. Aria is most of our Major Distribution Partners were asking for us, uh, to introduce our offering and to bring our historical creativity to it, and we work closely with our partners in developing the product and so far, it's resonated, uh, you know, really well. So, we're expanding our our share of wallet, with existing distribution Partners. But if you look at the second quarter sales, more than 25% of them are from advisors and distribution sources that are new to corporate. So not only is it enhancing our position with existing distribution but we're attracting new sources of distribution, uh, with it. And then, you know, on top of the great success with Ria, as I think, I mentioned a little while ago. Uh, we also had the strongest index annuity quarter uh, that we've seen. So we're not seeing any kind of cannibalization effect. We're seeing a multiplier effect. Uh and uh and and and frankly we

we expect that to continue.

Various Analysts: That's helpful. Second question I had is maybe just a broad one on new money yields, how they compare to the rolloff yield or portfolio yield, and further, you know, where are you finding good investment opportunities to fund the liabilities? You know, are there any shifts or, you know, allocations that you're leaning more into? I'm just trying to understand, you know, on one hand, it's a high-rate environment. On the other hand, spreads are quite tight. I just want to better understand the way that you guys are approaching the environment. Thanks.

Uh, that's helpful.

Second question, I had.

Is maybe just a broad 1 on new money yields. How they compare to the roll off field or portfolio yield um, and and further, you know, where are you finding good investment opportunities to fund the liabilities? Um, you know, are there any shifts or, you know, allocations that you're leaning more into? I'm just trying to understand, you know, 1

And it's a high rate environment on the other hand, spreads are quite tight and just want to better understand the way that you guys are approaching the environment.

Elias Habayeb: Hey, Alex. It's Elias. Right now, new money versus rolloff, it's a 50 basis point differential is what we saw in the second quarter. You know, we have not changed our investment strategy or philosophy on that front, you know, but we did, given supply in the market, we ended up with a higher allocation to public credit in the second quarter than like some of the structured credit or some of the other stuff. But we kind of view that as episodic and overall no change in our investment strategy. And remember, the other thing I would add is, listen, our investment strategy is liability-driven, so it'll evolve with what changes on the liability side of the house and where new business is coming from.

Thanks.

Hey Alex, it's Elias. Um, right now new money versus rolloff. That's a 50 basis. Point differentials. What we saw in the uh, second quarter? Um, you know, we have not, uh, changed our investment strategy or philosophy on that front, um, you know? But we did give in Supply in the market. We ended up with a higher allocation to Public Credit, uh, in the second quarter then like some of the structured credit or some of the other stuff, but we kind of view that as episodic and overall no change in our investment strategy.

Various Analysts: Got it. Okay, thanks.

And remember the other thing I would add is listen, our investment strategy is liability driven. So, it will evolve with what changes on the liability side of the house with where new businesses coming from.

Got it, okay. Thanks.

Operator: Our next question is from Sunit Kamasa Jeffries. Please go ahead.

Various Analysts: Great, thanks. Just going back to the VA transaction, it sounds like maybe there was a bit of a change in terms of the appreciation guidance. I believe on the VA call, you talked about appreciation in the second half of next year, and now it sounds like it's when the buybacks are complete. So I just wanted to make sure that I got that right. And then relatedly, over what time period would you expect to complete the needed buybacks to get to appreciation?

Our next question is from Sunni kamatha, Jeff. Please go ahead.

Elias Habayeb: Sunit, it's Elias. There's been no change from our end. So we expect the transaction to be EPS accretive once we fully deploy the capital that we intend to, and we expect to get there by the second half of 2026. And that kind of factors in, you know, we are thinking that deploying the proceeds that are going to go towards capital management over kind of a similar period. You know, we're mindful of market conditions as well, and kind of as well as about how much can we really deploy in a quarter, taking that into consideration.

Great thanks. Um, just going back to the VA transaction. It it sounds like maybe there was a bit of a change in terms of the accretion guidance. I believe, on the VA call, you talked about accretion in the second half of next year and now sounds like it's when the BuyBacks are are complete. So I just wanted to make sure that I got that, right? And then relatedly over what time period, would you expect to complete the needed BuyBacks to get to accretion?

There's been no change, uh, from our end. So we expect the transaction to be EPS accretive once we fully deploy, the capital that we intend to, um, and we expect to get there by the second half of 2026, um, and that's kind of factors in. You know, we are thinking that deploying the proceeds that are going to go to how its Capital Management over kind of a similar period. You know, we're mindful of market conditions as well, uh, and kind of as, but as well as about how much can we really deploy in a quarter taking that into consideration.

Various Analysts: Okay. And then I guess for Kevin on the annuity sales, you know, obviously we're seeing the industry at record levels. You guys are at record levels. But what is, can you just talk to what is unique about your distribution? Because as I think about, you know, competitive advantages, you know, products can be copied pretty easily, but distribution tends to have some staying power. So can you just talk about where you're different versus the industry?

Okay, and then, I guess for Kevin on the annuity sales, you know, obviously, we're we're seeing the industry at record levels. Um, you guys are at record levels, um, but what is, can you just talk to what is unique about your distribution? Because as I think about, you know, competitive advantages, you know, products can be calm, copy pretty easily, but distribution tends to have some staying power. So you can just talk about where your different versus the industry.

Kevin Hogan: Well, you know, we're very focused on having a broad product suite and having both an income-oriented solution and accumulation-oriented solution with each of our products. And we work with our key distribution partners to truly understand their strategies, not just for the short term, but for the longer term, so that we can mobilize products or services to be able to support their strategies for their advisors as they evolve. And as a result, depending upon what each of their strategies are, we can support them. So we're not married to any particular product at any particular time, and we maintain, you know, sort of optionality in terms of how to be able to serve their advisors. And the largest distribution partners, obviously, their strategies are evolving, and we're able to evolve with them over time.

Kevin Hogan: And you know, I think that that ultimately is one of the things that, you know, gives us an advantage. The other is that we work a lot to customize our products. And if you look at, you know, sort of the prior year's worth of sales, around 30% of our products have a proprietary feature that is unique to one of our major distribution partners. And so we have, you know, a broad product capability that we're able to support with respect to those various options. And then, you know, of course, we spend a lot of time building the relationships at the wholesaler and advisor level. And ultimately, those relationships are what we continue to build on and expand. So it's very strategic. It's very long-term in orientation.

Kevin Hogan: It allows us to not necessarily have to, you know, position ourselves one way or another, but we can evolve with the market cycles and maintain a strong position with our partners. We've never focused on market share as a strategy. I think market share is a good way of determining how well we're serving our distribution partners and their customers, and we remain disciplined in pricing, and they understand that part of our strategy as well.

In terms of how to be able to serve their, uh, their advisors and the largest distribution Partners. Obviously their strategies are evolving and we're able to evolve with them, uh, over time. Uh, and, and, you know, I think that that ultimately is 1 of the things that, you know, gives us an advantage. The other is, is that we work a lot to customize our products. And if you look at the, you know, sort of the prior Year's worth of sales around, 30% of our products have a proprietary feature that is unique to 1 of our major, uh, distribution partners. And so, we have, you know, a broad product capability that we're able to support, uh, with respect to those various options. And then, you know, of course, we spend a lot of time building the relationships of the wholesaler and advisor level, uh, and, uh, ultimately, those relationships are what we continue to build on and expand. So, it's very strategic, it's very long term and orientation it allows us to not necessarily

Have to, you know, position ourselves 1 way, or another. But we can evolve with the market cycles and maintain a strong position with our partners. We've never focused on market, share as a strategy I think market share is a good way of determining how well we're serving our distribution partners and their customers and we remain disciplined in pricing and they understand that part of our strategy as well.

Various Analysts: Got it. Okay, thanks.

Okay, thanks.

Operator: Our next question is from Elise Greenspan at Wells Fargo. Please go ahead.

Our next question is from Ellie Greenspan at Wells Fargo. Please go ahead.

Various Analysts: Hi, thanks. My first question is just on life insurance. I was hoping you could just provide a little bit more color on the favorable mortality that you guys saw in the quarter. And then, you know, is there any change in your go-forward, you know, quarterly guide for the business?

Elias Habayeb: Hey, Elise, it's Elias. In terms of mortality in the quarter, you know, we've found, you know, favorable severity, sorry, favorable frequency across the portfolio and favorable severity on our traditional life block. And from a go-forward, you know, we continue to stick with our 110 to 120 million per quarter as a run rate, other than the first quarter where we expect higher mortality given the winter season. But the mortality this quarter was really driven by favorable frequency and severity in the traditional book.

Hi thanks. Um my first question um it's just on life insurance. I was hoping you could just provide a little bit more color on the favorable mortality that you guys saw in the quarter and then um, you know is there any change in your go forward? Um, you know, quarterly guide for the business

Hey Lisa, it's Elias uh in terms of mortality in the quarter out, you know, we've found, you know, favorable severity, sorry, favorable. Frequency across the portfolio and favorable uh severity on our traditional life block. Um, and from a go forward, you know, we continue to stick with our 110 to 120 million per quarter as a run rate other than the first quarter, where we expect higher mortality, given the winter season, but the mortality this quarter was really driven by, uh, favorable frequency and severity in the traditional book.

Various Analysts: Thanks. And then my second question was just if you could just talk to, you know, the surrender wall you guys had guided to previously and how you guys expect that to play out.

Kevin Hogan: Yeah, thanks, Elise. You know, as we said last quarter, we do expect higher levels of, you know, fixed annuity and index annuity volumes to be exiting surrender charge periods in the second half of this year. This is really kind of natural given the historical growth in the whole portfolio. And it's not going to necessarily be consistent quarter to quarter because it does reflect when earlier large volumes of product were sold. You know, as we've discussed before, in terms of surrender rates, we believe that those will reflect where, you know, the external conditions are, where yields and credit spreads are at any given point in time. And the quotient of those two things, the rates and the volumes, is going to determine, you know, the level of surrenders. We're prepared for surrenders as part of managing this business.

Thanks. Um, and then my second question was just, if you could just talk to, you know, the surrender wall you guys had guided you previously, and how you guys expect that to play out.

Kevin Hogan: And you know, as we've seen historically, when at times when the conditions suggest surrender rates are higher, new business is also, you know, higher. And since we're focusing on long-term growth of the general account, you know, ultimately, you know, that's what we're focused on. So we expect that irrespective of the fact that we have higher volumes exiting the surrender charge periods. It's a natural dynamic of the business, and we expect that the general account and spread income will continue to grow over time.

Yeah, thanks Elise. Uh, you know, as we said last quarter, we do expect higher levels of uh, you know, fixed annuity and index. Annuity volumes to be exiting surrender charge periods in the second half of this year. Um, this is really kind of natural given the historical growth and the whole portfolio and it's not going to necessarily be consistent quarter to quarter because it does reflect when earlier large volumes of product were, were sold. Um, you know, as we've discussed before, in terms of surrender rates. We believe that those will reflect where, you know, the external conditions are where yields and credit spreads are at any given point in time, uh, and the quotient of those 2 things, the rates and the volumes is going to determine, you know, the level of surrenders uh we're prepared for surrenders as part of managing uh, this business. And, uh, you know, as we've seen historically, when at times, when the conditions suggest surrender, rates are higher, new business is also, you know, higher. Uh, and since we're focused,

Focusing on long-term growth of the general account, uh, you know, ultimately, you know, that's what we're focused on. So we expect that irrespective of the fact that we have higher volumes, exiting, the surrender charge periods, it's a natural Dynamic of the business and we expect that the general accountant spread income will continue to grow over time.

Various Analysts: Thank you.

Thank you.

Operator: The next question is from Michael Ward at UBS. Please go ahead.

Hey, next question, is from Michael Ward at UBS. Please go ahead.

Various Analysts: Good morning. I just had one on individual retirement. I appreciate the color on the yield side, but I was just curious about the crediting rate, the cost of funds component. You know, should we think about that pickup sort of persisting and just in the context of sales opportunities and maybe even suggestive of you guys just being squarely focused on spread products now?

Thanks. Good morning. Um, just had 1 on on individual retirement.

um, appreciate the the color on the on the yield side, but I was just curious curious about the

editing rate, uh, the cost of funds component. Um, you know, should we think about that pick up sort of persisting and um just in the context of sales opportunities and maybe even suggestive of you guys just being squarely focused on Spread spread products now

Kevin Hogan: Well, first, I'll address, you know, the last comment. We're not squarely focused only on spread products. Spread products are an important part of the opportunity right now. And actually, I feel really good about our performance over the last couple of years when the interest rate cycle has been extremely supportive of the spread business. But you go back a few years before that, we were successful with our spread businesses even in a lower rate environment, and that's really a reflection of pricing discipline and also the relationships, you know, in the distribution area that allow us to participate through various market cycles.

On spread products, spreads spread products are an important part of the opportunity right now. Uh and actually I feel really good about our performance over the last couple of years when the interest rate cycle has been extremely supportive of the spread business. But you go back a few years before that we were successful with our spread businesses, even in a a lower rate environment and that's really a reflection of pricing discipline. Uh,

Kevin Hogan: You know, in terms of the dynamic you're talking about in the portfolio with the creep in the cost of funds, that's more of a reflection of the fact that over the last couple of years, you know, we've widened spreads on the inforce, and the inforce cost of funds are lower than, you know, current money cost of funds because of the years over which those were acquired. And so, you know, as the new business becomes a larger part of the overall inforce portfolio and with some of the outflows coming in those lower costs of funds, that's where you see the marginal creep in the cost of funds. That's the difference there. You know, the new business margins and the cost of funds on new business reflect where the current conditions are, and we continue to find spreads very attractive.

And also the relationships, uh, you know, in the distribution area that allow us to participate, uh, through various Market Cycles, you know, in terms of the dynamic you're talking about in the portfolio with the creep and the cost of funds, that's more of a reflection of the fact that over the last couple of years you know we've widened spreads on the in force and the enforced cost of funds are lower than you know current money cost of funds because of the years over which those were acquired. Um and so you know as as um you know as as the new business becomes larger part of the overall enforced portfolio and with some of the outflows of flows coming in those lower cost of funds, that's where you see the marginal creep and the cost of funds. That's the difference there. You know, the new business margins and the cost of funds on new business reflect where the current conditions are and we continue to find spreads very attractive.

Various Analysts: Okay, thank you. And then just post-VA deal close and deployment of the proceeds, I was just wondering if you could help us think about the sources of your free cash flow and in terms of, you know, which businesses you expect to drive the majority. If you could quantify it at all, it'd be helpful.

Okay, thank you. Um, and then, uh, just

Post VA deal closed and deployment of the proceeds. I was just wondering if you could help us think about, um, the sources of your of your free cash flow and, uh, in terms of you know, which which businesses you expect to drive the majority if you could quantify it at all, be helpful.

Elias Habayeb: Hey, it's Elias on this one, Mike. But Mike, we've got four businesses, and the four businesses kind of contribute to the cash generation from our insurance companies. They're all profitable in their own ways from that perspective. And so the VA business was one product of many that we offer. And kind of going forward, we continue to be comfortable with the cash generation in the insurance companies and our ability to increase that over time as we are confident in our ability to deliver on the 60% to 65% payout ratio and growing our EPS by 10% to 15% per year on average.

Kevin Hogan: Yeah, Mike, and I'd also just, you know, kind of remind you that the variable annuity business has been in net outflows for eight years. And to the extent that it had a financial contribution, we would have expected that financial contribution to decline over time. So actually, you know, after the transaction, you know, we're positioned more attractively for long-term growth.

Hey, it's Elias. Uh, on this 1 mic mic, we've got 4 businesses in the 4 businesses, kind of contribute to the cash generation, uh, from our insurance companies. They're all profitable in their own ways, uh, from that perspective. And so the VA business was 1 product of many that we offer. And kind of going forward. We continue to be comfortable with the cash generation, and then the insurance companies and our ability to increase that over time. Uh, as we are confident in our ability to deliver on the 60 to 65% payout ratio and growing, our EPS by 10 to 15% per year on average,

Yeah, Mike and I'd also just you know kind of remind you that uh the variable annuity business has been a net outflows for 8 years. Uh and to the extent that it had a financial contribution, we would have expected that Financial contribution to decline over time. So it actually, you know, after the transaction, you know, we're positions more attractively for

Long-term growth.

Various Analysts: Thank you.

Thank you.

Operator: Our next question is from Joel Hewitt at Dowling & Partners. Please go ahead.

Our next question is from Joel, how it's at darling and partners, please go ahead.

Various Analysts: Hey, good morning. One on expenses. They look very well managed in a quarter. Anything unusual or timing-related that you would call it, or is that largely the Corebridge forward benefits? And then I guess would that mostly earn through? Can you elaborate on further opportunities to manage your expense base?

Hey, good morning. Uh, 1 on expenses, they they looked very well managed in a quarter, anything unusual or timing related they would call it or is that largely the corporate forward benefits. And then I guess with that mostly earned through. Can you elaborate on further opportunities

Elias Habayeb: Hey, Joel, we're doing a good job on managing our expenses. I think that's what's playing through our numbers. But on a serious note, no, listen, we've been very focused on improving our operating leverage. Corebridge Forward was version 1.0. We've largely gotten that done, and that's earned in. We are on version 2.0 right now. While we don't have a formal program like Corebridge Forward, we're pursuing a number of initiatives that will improve our operating leverage, and you're seeing some of the benefits of that come through. You know, we did have an early retirement program earlier in the year where some of the savings we expect to drop to the bottom line and are dropping to the bottom line, and some we will use to invest in additional capabilities for the future.

To manage your expense base.

Elias Habayeb: But we're pursuing digitization and modernization efforts in finance and actuarial, all of it, which should contribute to improving our operating leverage as well as making our processes more efficient and improve customer service along the way.

Hey Joe, we're doing a good job, uh, on managing our expenses, I think that's what's playing through our numbers, uh, but I'm serious. No, no listen, we've been very focused on improving our operating leverage. Uh, corporate forward was version 1.0. We've largely gotten that done and that's earned in. Um, we are on version 2.0 right now while we don't have a formal program like Corbridge forward, we're pursuing a number of initiatives that improve our operating leverage and you're seeing some of the benefits of that come through. Uh, you know we did have an early retirement program earlier the year, where some of the savings we expected to drop to the bottom line and are dropping to the bottom line. And some, we will use to invest in additional capabilities for the future, but we're pursuing digitization and modernization.

Efforts and finance and Actuarial all of it, which should contribute to improving our operating leverage as well as making our processes more efficient and improved customer service along the way.

Various Analysts: Okay, okay, helpful. And I didn't say you guys weren't doing a good job there. So just my follow-up on group retirement. Any way you could size the two large plan outflows that you had mentioned in your prepared remarks and any corresponding earnings impact from those outflows?

Elias Habayeb: Yeah, Joel, it's Elias again. Happy to. It's roughly about a billion and a half in outflows from the plans and the impact to earnings on a run rate basis, less than $5 million a year.

Yeah, Joe Salas again. Happy to report that it's roughly about $1.5 billion in outflows from the plans, and the impact to earnings on a run rate basis is less than $5 million a year.

Various Analysts: Awesome. Thank you.

Awesome. Thank you.

Operator: Our next question is from Wilma Bertus at Raymond James. Please go ahead.

Our next question is from Wilma Berdis at Raymond James. Please go ahead.

Various Analysts: Hey, good morning. How do you think about the economic trade-off or possibly expansion for fees for selling variable annuities versus bringing in spread-based earnings on Rila? Thanks.

Hey, good morning. Um how do you think about the economic trade-off or possibly expansion uh for feeds for selling variable? Annuities versus bringing in spread based on risk. Thanks.

Kevin Hogan: Well, we're trying to grow all of our sources of income, and as I pointed out, our strategy is to deploy the capital where the risk-adjusted returns are the most attractive and the customer needs are the greatest at any given point in time. And with respect to the variable annuity product, that is a product that has not been among the more popular for a number of years. As I just reminded everyone, it's been in net outflows for eight years. And so, you know, we consider each of our sources of income equally valuable, and we're looking for the opportunities to grow each of them according to where the opportunities were the greatest.

Elias Habayeb: Yeah, and Wilma, I'll add to that. You know, the financial contribution from that VA product and individual retirement has been declining. So if you look at our reported fee income, it's down 1% year over year. But if you exclude the block that we seeded to Venerable, our fee income is actually growing. It's up 3%. So when we look at this transaction, in addition to what Kevin said, you know, we're monetizing a book of business that's undervalued and has a decreasing financial contribution, and it unlocks significant value for shareholders, and it allows us to focus on the books of business where we see the growth opportunity. So that's kind of the math we've done from our perspective internally, and we got to sell this stream of earnings at a very attractive level to Venerable.

Well, we're trying to grow all of our sources of income, and as I pointed out, our strategy is to deploy the capital where the risk adjusted returns are the most attractive, and the customer needs are the greatest at any given point in time. And with respect to the variable annuity product, uh, that is a product that has not been among the more popular for a number of years. As I just reminded that everyone has been in net, outflows for uh, 8 years. Um, and so, you know, we can we we consider each of our sources of income equally valuable, uh, and we're looking for the opportunities to grow each of them according to where the opportunities for the greatest.

Yeah, and Wilma, I'll add to that, you know, the financial contribution from that VA product, and individual retirement has been declining. So, if you look at our reported fee income, it's down 1% year-over-year. But if you exclude, uh, the block that we see that the venerable our fee income is actually growing. It's up 3%. So when we look at this transaction in addition to what Kevin said, you know, we're monetizing a book of business that's undervalued and has a decreasing uh, Financial contribution and it unlocks significant value for shareholders. And it allows us to focus on the books of business, where we see the growth opportunities. So, that's kind of the math, we've done from our perspective internally, and we got to sell this stream of earnings, uh, at the very attractive level to venerable,

Various Analysts: Okay, thank you. And then could you give us a little bit more color on all the performance was good in 2Q? We think that that was possibly driven by year-end valuations coming in favorably. So should this persist in the second half of the year, or maybe you can give us a little bit more color? Thanks.

Elias Habayeb: No, I'm happy. And listen, when we gave the guidance on the last earnings call, it was based on the information we knew at that time, and they did come in much better. Two drivers behind what drove the better performance. One is, you know, the funds get their financial statement audits done as a fee on a calendar year basis, and we get them in the second quarter. So we had a more favorable throughout this year than prior years. And separately, we do have investments in foreign funds, and so with the weakening of the US dollar, it contributed to a favorable result on a reported basis.

Okay, thank you. And then could you give us a little bit more color on? All the performance was good and 2 Q? Uh, we we think that that was possibly driven by year, end, valuations, coming in favorably. So could should this persist in the second half of the year? Maybe you can give us a little bit more color. Thanks.

Elias Habayeb: Now, that being said, when we look at the second half of the year, and we continue to believe these are great assets to invest in, and they should deliver about an 8% to 9% over the long term, we expect the second half of the year to be below the 8% to 9% for two reasons. We expect continued weakness on evaluations around real estate equity in the second half of the year, and then the uncertainty we saw in the second quarter and it's somewhat continuing has slowed deal activity. So given the combination of those two drivers today, our outlook for the second half is, while it might be positive, it'll be below the 8% to 9%.

No I'm happy. And listen when we gave the guidance on the last earnings call, it was based on the information when you at that time and they did come in much better, 2 drivers behind what drove. The better performance 1 is, you know, the funds get their financial statement audits done as a few on a calendar year basis and we get them in the second quarter. So we had a more favorable through up uh, this year than prior years and separately. We do have investments in foreign funds and so with the weakening of the US dollar, it contributed to a favorable result on a reported basis. Now, that being said, when we look at the second half of the year and we continue to believe these are great assets to invest in and they should deliver about an 8 to 9% over the long term. We expect the second half of the year to be below the 8, to 9% for 2 reasons. We

We expect continued weakness on evaluations around real estate Equity uh in the second half of the year. And then the uncertainty we saw in the second quarter and the somewhat continuing has slowed uh deal activity. So given the combination of those 2 drivers today, are outlook for the second half. Is while it might be positive, it'll be below the 8 to 9%

Various Analysts: Thank you.

Thank you.

Operator: Thank you. This concludes the Q&A session, and I will now turn the call back to Kevin for closing remarks.

Kevin Hogan: Yeah, thanks. Today, I am going to end with a few closing remarks. As a result of our transformative transaction, the second quarter of 2025 is the most impactful of the 12 we've had since our IPO. Going forward, Corebridge has a fundamentally different financial profile. We're a simpler company with an improved risk profile and more opportunity for organic growth and attractive businesses. I want to thank the team that worked on the transaction, and I want to thank every Corebridge employee for executing with excellence on our strategic pillars. The value you are creating for our customers and shareholders alike is compelling. Thanks again to everyone who joined us for the call. Have a great day.

Thank you. This concludes the Q&A session, and I will now turn the call back to Kevin for closing remarks.

Yes, thanks. Uh today I am going to end with a few closing remarks as a result of our transformative transaction. The second quarter of 2025 is the most impactful of the 12 we've had since our IPO

Going forward, Corebridge has a fundamentally different financial profile.

We're a simpler company with an improved risk, profile and more opportunity for organic growth and attractive businesses.

I want to thank the team that worked on the transaction. And I want to thank every corporate employee for executing with Excellence on our strategic pillars.

For our customers and shareholders alike, this is compelling.

Thanks again to everyone who joined us for the call. Have a great day.

Operator: Thank you. This concludes today's conference call, and you may now disconnect.

Thank you. This concludes today's conference call. You may now disconnect.