Corebridge Financial Inc.

Hello everyone and welcome to the Corbridge Financial second quarter 2023 earnings call. My name is Emily and I'll be coordinating your call today. After the prepared remarks there will be the opportunity for any questions which you can ask by pressing start followed by the number one on your telephone keypad and we ask that you please limit yourself to one question and one follow-up. I'll now turn the call over to Josh Smith, Investor Relations with Corbridge Financial. Josh please go ahead.

Good morning, everyone, and welcome to Corbett Financial's earnings update for the second quarter of 2023. Joining me on the call are Kevin Hogan, President and Chief Executive Officer, and Elias Abayev, 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. Corbidge'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, Corbidge is under no obligation to update any forward-looking statements if circumstances or management 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 investors.corbridgefinancial.com. With that, I would now like to turn the call over to Kevin.

Thank you, Josh, and good morning, everyone. This was another excellent quarter for Corbridge. We continued to benefit from focused execution, disciplined risk management, and the competitive strengths of our diversified businesses. During the second quarter, we returned $750 million to shareholders, through a combination of dividends and share repurchases, bringing the total capital return since our initial public offering to $1.2 billion. With this milestone, we are honoring our commitment to begin to return capital beyond regular quarterly dividends within nine months of the IPO. We remain focused on our capital management strategies, and we are on track to achieve a 60 to 65% payout ratio in 2024. This morning, I will focus on our strong financial performance and provide an update on the progress we are making towards our key financial targets as well as our strategic and operational priorities. For the second quarter, CoreBridge reported operating earnings per share of $1.04 with an adjusted return on average equity of 11.7%. This reflects strong results from our core businesses as we remain well-positioned to capitalize on current market opportunities. Base spread income rose 42% year over year, benefiting from higher new money yields, as well as the cumulative effect of ongoing strong growth in our spread-based products. Across our four businesses, we delivered robust sales, generating approximately $10 billion of premiums and deposits, 42% higher than the prior year quarter. Second quarter conditions remained attractive for spread-based products, and we produced another quarter of robust new business, most notably in pension risk transfer and fixed index annuity. In institutional markets, we executed $1.9 billion of pension risk transfers. Our pipeline is strong, and we have positioned ourselves well to support the growing demand for full plan terminations. We also issued over $900 million of guaranteed investment contracts. For individual retirement, we produced $2.3 billion of fixed index annuity sales, a record-setting quarter for us in this product category. Conditions remain very favorable for fixed index products, and we expect a strong customer value proposition to continue driving sales in this environment. With respect to fixed annuity, we continue to deliver strong sales reaching nearly $1.3 billion. We balanced market opportunities with meeting the operational demands of this product in light of the volume of transactions associated with our record level first quarter. The market remains attractive and we will continue to respond within the context of our entire product portfolio. As the second quarter demonstrated, One of the key strengths of CoreBridge is the ability to operate across product lines and respond to market dynamics while continuing to pursue profitable organic growth where risk-adjusted returns are the greatest. Thinking about the second half of the year, we expect favorable conditions for spread-based products to continue. We will remain disciplined with our capital deployment, simultaneously balancing competitiveness with margins and operational demands. Before I move away from sales, I want to take a moment to recognize the significant contributions our distribution platform has made to our organic growth. Corbridge Financial Distributors is our team of in-house professionals with strategic long-term relationships across all of our distribution partners, including banks, broker-dealers, general and independent agencies, and independent marketing organizations. CoreBridge Financial Distributors has enabled us to build a leading distribution platform through a range of partnerships. In the second quarter, this team was responsible for delivering over $9 billion of our premiums and deposits. We believe the breadth of our product offerings and long history of partnerships strengthen our relationships and serve as the foundation for our success. Let me now shift to some other areas of strength for CoreBridge. In the nine months since our initial public offering, we have consistently focused on executing our strategic and operational priorities and achieving our financial targets. We have begun to deliver significant return of capital to shareholders, and we are on track to meet our targeted adjusted return on equity and payout ratio in 2024. We are also well in our way towards achieving the promised run rate savings from CoreBridge Forward that we have discussed on previous calls, and we are making consistent progress in our operational separation from AIG. Our actions over the last several quarters demonstrate the confidence we have in our balance sheet and the strength of our cash flows. Yesterday, we declared our fifth consecutive quarterly dividend of 23 cents per share. With this dividend, we will have returned over $1.35 billion in capital to shareholders since our IPO. This includes regular quarterly cash dividends totaling approximately $750 million, along with a special dividend in June of just over $400 million. Also in June, we repurchased $200 million of shares from AIG and Blackstone. This leaves us with $800 million remaining from the initial $1 billion share repurchase authorization we announced in May. Shifting to return on equity, our run rate ROE for the first half of 2023 was approximately 12%. At the time of our IPO, our run rate was about 10%. This improvement was driven in large part by strong organic growth and improving base spread income. Looking ahead, we believe we are on a firm trajectory to achieve a 12% to 14% ROE in 2024 in line with one of the key financial targets we laid out when we launched CoreBridge. With regards to Core Bridge Forward, our modernization program that will deliver both expense reduction and increased efficiency, we have accelerated timing wherever possible and remain ahead of plan, having achieved or contracted on 75% of our exit run rate savings goal of $400 million. Thus far, we have largely completed the initiatives related to refining our target operating model and expanding our outsourcing with existing partners. The bulk of the remaining work is focused on modernizing our IT infrastructure and rationalizing our real estate footprint, which is expected to be complete in 2024. The last leg of our incremental cost savings will be driven by significant milestones and will not be linear. Above all, we remain confident that CoreBridge Forward will be completed on time and that the majority of the run rate savings will be achieved within 24 months of our IPO. And we are on track with our operational separation from AIG. Given the progress we have made establishing our standalone capabilities as a publicly traded company, the majority of our remaining work will be on the separation of shared IT applications, which we continue to believe will be mostly complete in 2023, with some work extending into 2024. Turning to other strategic actions, You saw in our announcement yesterday that we've agreed to sell our health insurance business in Ireland, Leia Healthcare, to AXA for 650 million euros, unlocking significant value for our shareholders. We expect the transaction will close in the fourth quarter, subject to regulatory approvals. As noted on AIG's earnings call, we expect proceeds from this transaction will largely be used for a special dividend to Corbridge shareholders. Additionally, as also mentioned during AIG's earnings call, we recently retained advisors to analyze strategic alternatives for the disposition of our UK Life business. The dispositions of LEIA and UK Life will streamline our portfolio and allow us to focus on life and retirement products and solutions in the United States. In conclusion, I am very pleased with our performance in the second quarter. Our broad product platform, diverse sources of earnings, and very strong network of distribution partners stand as important strategic advantages for CoreBridge and position us well to perform in different market environments. We continue to see favorable operating trends driving an increase in aggregate core sources of income. We are executing our strategic initiatives and believe the strength of our franchise and balance sheet will enable us to continue to create value for our shareholders. We are delivering on our commitment to return attractive levels of capital beyond regular quarterly dividends, and we are on pace to achieve a 60 to 65% payout ratio, as well as a 12 to 14% return on equity in 2024. Now, I will turn the call over to Elias.