Corebridge Financial Inc.

Good morning, everyone, and welcome to the Corbridge Financial Incorporated fourth quarter 2022 earnings call. My name is Emily, and I'll be coordinating your call today. After the prepared remarks, you will have the opportunity to ask any questions by pressing start, followed by the number one on your telephone keypad. I will now hand you over to our host, Josh Smith, head of investor relations to begin. Josh, please go ahead.

Good morning, everyone, and welcome to Corbridge Financial's fourth quarter earnings update. Joining me on the call are Kevin Hogan, President and Chief Executive Officer, and Elias Abayas, Chief Financial Officer. We will begin with prepared remarks by Kevin and Elias, and then we will take your questions. Today's remarks may contain forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based upon management's current expectations. Corbett's filings with the SEC provide details on important factors that may cause actual results or events to differ materially. Except as required by the applicable securities laws, Coverage is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change. Additionally, today's remarks may refer to non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release, financial supplement, and earnings presentation, all of which are available on our website at www.coveragefinancial.com. With that, I would now like to turn the call over to Kevin.

Thank you, Josh, and good morning to everyone. During our call today, we will present our fourth quarter and full year 2022 results. I will speak to the competitive landscape, review the progress we are making on our core strategies, reinforce our commitment to our financial goals, and discuss how CoreBridge is well-positioned to create long-term value for shareholders and other stakeholders. Elias will then deliver additional details on our financial results offer a few comments on LDTI, and provide some guidance for 2023. CoreBridge Financial had a strong debut in 2022, notwithstanding external conditions. We delivered operating earnings per share of $0.88 in the fourth quarter and $2.87 for the year. Our results for the fourth quarter and the full year demonstrate the resilience of our franchise and the competitive strengths of our businesses. Our diverse sources of earnings, our broad product platform, and our unrivaled network of distribution partners remain strategic advantages for CoreBridge and position us to perform well in different market environments. Our businesses grew in 2022 as we expanded our product range, enhanced customer solutions, advanced strategic initiatives, and began to implement a leaner operating model. all while completing our initial public offering last September. We are well on the way toward creating sustainable, profitable, and incremental growth while delivering on the strategies and financial goals we've previously outlined. Adjusting for earnings volatility related to market conditions, such as from variable investment income, the earnings power of our core insurance businesses improved, aided by tailwinds from higher interest rates wider credit spreads, and favorable mortality, which more than offset headwinds from equity market performance. New money rates more than doubled this year, climbing to 7% in the fourth quarter, an increase of approximately 400 basis points. Over the last 12 months, base net investment spread expanded during the second half of the year, contributing to a healthy level of organic growth. Looking at individual retirement, we delivered balanced sales with healthy margins and strong general account cash flows across our spread-based products. The breadth of our portfolio and the strength of our distribution partnerships helped us generate premiums and deposits of $3.8 billion in the fourth quarter, contributing to $15.1 billion of new deposits over the course of 2022, with positive net flows of $2.4 billion, reflecting nearly 200% growth in net flows year over year. In fixed annuity, we saw some of the best conditions in recent memory. At the same time, we remained disciplined, effectively balancing competitiveness and margin growth. We delivered sales of more than $1.3 billion in each quarter of 2022, contributing to $5.7 billion in premiums and deposits for full year 2022, an 89% increase year over year. This extraordinary level of new business reflects a strong appetite for fixed annuity products in the marketplace combined with the strength of our bank distribution relationships. Fixed index annuity also benefited from a very attractive landscape with $1.7 billion of premiums and deposits in the fourth quarter and over $6.3 billion for the full year. Full year net inflows were $4.5 billion. The strong position of this business is supported by our income and accumulation products, which we distribute across a broad range of channels. In group retirement, premiums and deposits were also strong at nearly $2.2 billion for the fourth quarter, or approximately $8 billion for the full year, supported by new plan acquisitions and growth of out-of-plan deposits, in particular in fixed annuities. These out-of-plan deposits reflect one part of our broader strategy for this business, which includes serving individuals outside of their traditional employer-sponsored retirement plans. And as a reminder, large new plan acquisitions or surrenders are nonlinear. Thinking about retirement across group and individual, we were pleased the US Congress was able to pass Secure 2.0. This federal legislation is another important step in building a stronger retirement system and improving retirement outcomes for all Americans. We anticipate a positive impact from Secure 2.0 across both our individual and group retirement businesses, as this legislation should result in increased contributions, larger account balances, and delayed withdrawals from retirement accounts. Life insurance generated stable premiums and deposits year over year as we continue to transform this business. Sales over the last year reflect our efforts to improve the mix of business in the US and to grow the business in the UK. And in institutional markets, we closed pension risk transfer transactions totaling $1.3 billion in the fourth quarter. While premiums and deposits were lower in the fourth quarter and full year versus 2021, we continue to see a robust pipeline for full plan terminations in the US and the UK. We also remain confident in our ability to become a more consistent issuer of GICs in the future subject to market conditions. Overall, I am very pleased with the performance of our businesses and the levels of organic growth we produced in spite of challenging market and industry conditions. We have a lot of momentum, particularly since completing our IPO, and we are well positioned to grow and continue to strengthen our relationships with distribution partners in the coming year. Next, I will discuss the progress we are making to advance our investment partnerships and our efficiency strategies that I outlined during our third quarter earnings call. Our partnerships with Blackstone and BlackRock continue to benefit us as they each bring considerable resources to bear in support of our strategic initiatives. Looking at Blackstone first, we continue to see great value from our growing relationship. Blackstone's asset sourcing capabilities have aided our product competitiveness as they are able to originate attractive assets at volumes we could not previously achieve. These assets are successfully supporting all four of our businesses. For the full year, Blackstone executed approximately $8 billion of new transactions across a variety of asset classes including private and structured credit at an average gross yield of just over 6.5% and an average credit quality of single A. The purchase yield on assets originated during the fourth quarter was 7.2%. We've been putting more money to work in private credit as we believe this asset class will generally perform better during a downturn due to the structural protections that are built into these transactions. With respect to BlackRock, they are now managing approximately $83 billion of our invested assets primarily focused on the public liquid credit portfolio. We also continue to make strides in our migration to BlackRock's Aladdin platform, which will further modernize our infrastructure and provide us with expanded analytics and accounting capabilities. We expect to be live on this platform in 2024. Partnering with these world-class asset managers greatly enhances our access to attractive assets but does not reflect a change to our investment strategy, risk appetite, or asset allocation process. We own the balance sheet and we will continue to direct asset allocation regardless of the source of origination. Our investment strategy has always been and will remain liability driven. Our diversified and high quality investment portfolio is well matched to our liability profile. Our risk appetite remains unchanged relative to our liabilities. We continue to actively manage both the performance and the risk of the entire portfolio, irrespective of origination, and we are proactive in taking action on individual assets when appropriate. We believe we will be able to respond effectively to any changes in the credit cycle. Now turning to CoreBridge Forward, our modernization program that will deliver both expense reduction and increased efficiency. We have contracted on $232 million of exit run rate savings. This equates to more than 50% of our stated goal of $400 million of run rate savings over the next three years. Much of the exit run rate savings to date represent refinements to our operating model, enhanced outsourcing with existing partners, real estate consolidation opportunities, and the early stages of our IT modernization, which will eventually lead to our ability to exit our data centers. We continue to expect the majority of the run rate savings to earn in within 24 months of our IPO. Elias will provide more information in his remarks. Turning to our financial goals, we remain focused on achieving each of the targets we outlined on our last earnings call as we continue to maintain a strong balance sheet, deliver disciplined growth, and provide an attractive return to shareholders. We maintain a clear line of sight toward achieving an ROAE of 12% to 14%. And we remain committed to delivering capital to our shareholders through a combination of $600 million in annual dividends, along with share repurchases, resulting in a 60% to 65% payout ratio on adjusted after-tax operating income. We are on target to achieve these goals within 24 months of our IPO. Before turning the call over to Alliance, I would like to add a few comments about our commitment to creating shareholder and broader stakeholder value. As I look back on 2022, market conditions were challenging. Our team demonstrated an ability to respond, leveraging our unique platform to maximize opportunities as they arose. While 2023 remains uncertain and volatile, we are well positioned to deliver to customers, shareholders, and our other stakeholders. Our broad diversification across products and channels continues to serve us well, as we are not dependent upon a single product or distribution channel. We remain nimble and will pursue profitable growth by focusing on areas where risk-adjusted returns are the most attractive and on new business growth as this is most accretive to our operating earnings. While we have recently been emphasizing capital deployment to our spread-based businesses, our fee-based business remains healthy and is poised to benefit when asset values recover and investor appetite rebounds. To summarize, the core strengths of CoreBridge, coupled with changes to our operating model and the execution of our strategic initiatives, position us to continue to generate attractive financial results under various scenarios. This, in combination with our active capital management strategy, puts us in position to create long-term shareholder value. I will now turn the call over to Elias.