Corebridge Financial Inc.

Hello everyone and welcome to the Corbridge Financial Inc fourth quarter 2023 earnings call. My name is Seb and I will be the operator for your call today. If you would like to ask a question during the Q&A session you can do so by pressing star 1 on your telephone keypad or press star 2 if you would like to withdraw your question. In the interest of time and fairness please limit yourself to one question and one follow-up. I will now hand the floor over to Ishil Mudarisolu to begin the call. Please go ahead.

Good morning, everyone, and welcome to Corbridge Financial's earnings update for the fourth quarter and full year of 2023. Joining me on the call are Kevin Hogan, President and Chief Executive Officer, and Elias Habayev, Chief Financial Officer. We will begin with prepared remarks by Kevin and Elias, and then we will take your questions. Today's comments 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 and assumptions. Corbridge's filings with the SEC provide details on important factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. Except as required by the applicable securities law, Corbridge is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change, and you are cautioned to not place undue reliance on any forward-looking statements. 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 like to now turn the call over to Kevin and Elias for their prepared remarks. Kevin?

Thank you, Isha, and good morning. 2023 was both an important year for Corbridge and a successful one. We executed with focus and determination, capitalized on attractive market opportunities, made tremendous progress on our strategic and operational priorities, and in each and every quarter, we delivered quality financial results. This morning, I will review the first full calendar year for Corbridge through five different lenses, profitability, sales, sources of income, operating expenses, and capital return. Elias will then provide details on our fourth quarter results and offer some guidance for the year ahead. But first, I want to remind you of the value proposition we laid out at our IPO. Corbridge operates four market-leading businesses that provide a broad set of protection and retirement solutions to individuals and institutions. We manufacture a wide range of products that appeal to different market segments while also designed to generate attractive returns. We have a high-quality in-force portfolio and have managed it carefully. The diversity in our product suite and the breadth of our distribution strategy allow us to be nimble and react to evolving market conditions. We have the ability to dial up and dial down product sales based on changes in customer demand and where risk-adjusted returns are the most attractive, as evidenced by our recent emphasis on spread-based products, such as fixed annuities, which has grown over 200% since 2020, and pension risk transfer, which has grown 130% over the same period. Our leading distribution platform is also a significant contributor to our agility, with over 1,200 distribution relationships with banks, broker-dealers, wire houses, independent marketing organizations, and general and independent agencies, as well as our own financial advisor and our direct channel. We continue to invest in our platforms to improve efficiency, scalability, and productivity, such as we have been undertaking with CoreBridge Forward our modernization program. Our competitiveness is further supported by our asset origination capabilities that have been enhanced by our investment partnerships with Blackstone and BlackRock. Our strategy is to grow our company in a way that creates value for both our customers and our shareholders. Collectively, our diversified businesses and dynamic business model have a long track record of delivering attractive financial results and consistent cash flows under different macro environments. Together with our strong balance sheet, we are well positioned to deliver long-term value to our shareholders by remaining focused on improving profitability and returning a meaningful amount of capital. With that as background, I would like to review our 2023 financial results. Corbridge is pleased to report very strong results not only for the fourth quarter, but also for the full year. We grew 2023 adjusted after-tax operating income to $2.6 billion, a 12% increase year-over-year. Our full-year non-GAAP operating earnings per share also rose by 12% to $4.10, and our 2023 adjusted return on average equity increased on a run rate basis to 12.2%, an improvement of over 200 basis points from the prior year. Corbridge drove profitability through strong top-line growth, margin expansion, and expense efficiency. We benefited from the investments we have made in our operating model, which positioned us to capitalize on historic market opportunities. In 2023, we drew premiums and deposits across our broad portfolio of spread-based products by 60%. These products are particularly attractive now, producing strong margins with double-digit IRRs. Looking across the entire CoreBridge portfolio, premiums and deposits were $10.5 billion for the fourth quarter and $39.9 billion for the year. The full year volume of almost $40 billion is a new record for us and one of several high watermarks for 2023, including fixed annuities, fixed index annuities, guaranteed investment contracts, and pension risk transfer sales. Complementing this growth, we leveraged our unique investment platform to scale the origination of attractive assets that are well matched to our liabilities and to opportunistically lock in favorable yields from which we expect to see benefits for years to come. Our new operating model enabled us to rapidly expand capacity to support record sales volumes, especially in the latter part of the year. We also grew our aggregate core sources of income, which increased 12% for the full year to $7.1 billion. Our four established businesses generate an attractive mix of spread income, fee income, and underwriting margin. We enjoyed meaningful growth of spread income supported by market conditions, while at the same time, fee income stabilized with improved asset valuations and the expansion of our advisory and brokerage business in group retirement. And we continue to generate a solid underwriting margin from an improved full-year mortality experience. Taking a look at our spread businesses, we increased full-year base spread income by nearly $900 million, or 30% to $3.7 billion. We were able to serve our customers and distribution partners' needs with attractive products reflecting some of the most supportive market conditions in recent memories. With interest rates at levels not seen in over a decade, we seized the opportunity. As we look ahead to 2024, the environment remains attractive for new business, and we remain well positioned to serve our markets. Although we invested as appropriate to increase our capacity in both sales and operations to support this unique growth opportunity, we also remain steadfastly focused on expenses. Between the fourth quarter of 2022 In the fourth quarter of 2023, we reduced our operating expenses by 14%. A key contributor has been Corbridge Forward. We have achieved or contracted on 88% of our exit run rate savings goal of $400 million, and we expect the vast majority to earn into our results by the end of 2024. This program is near its completion as we transition to a focus on continuous improvement. Turning to capital management, we have been clear since the outset of Cordridge that we are committed to deploying capital to create value for shareholders. In 2023, we demonstrated our ability to do this with strong cash flows from our insurance companies supported by important strategic transactions. We closed the sale of Leia Healthcare in Ireland and remain on track to close the sale of our UK life business in the second quarter of 2024 as we streamline our portfolio with a continuing focus on life and retirement solutions in the United States. Collectively, the sale of our international life operations will generate over $1 billion of value. CoreBridge returned over $2.2 billion to shareholders in our first full calendar year as a public company, including special dividends, and we remain committed to delivering a 60% to 65% payout ratio in 2024. Our delivery of these attractive levels of shareholder return reflects the confidence we have in our financial position. We entered 2024 with a strong balance sheet and ample levels of liquidity and capital, representing enhanced financial flexibility. For over a decade and across various economic cycles, we have consistently maintained a life-sweet RBC ratio above our targets. At the same time, our insurance companies have distributed over $2 billion annually to our holding company. We are routinely able to maintain healthy capital levels regardless of the macro environment while simultaneously supporting new business volume and robust capital return. Finally, I want to turn to the operational separation from AIG. This has been a complex program demanding considerable expertise and coordination and we are nearing the end of our work. We established the capabilities required of a standalone public company, implemented our own capital structure, created and brought to life a new brand, and disentangled functions, systems, and infrastructure. On the IT side, just as one example, we migrated nearly 700 physical applications, hundreds of operating platforms, and thousands of end users. These efforts did not distract us from continuing to serve our customers and distribution partners. At the end of 2023, our total spend on operational separation was $425 million. As we said before, some work has indeed extended into 2024, along with a handful of transition services agreements. All of this required an extraordinary effort. For our employees, you have my gratitude. We asked a lot of all of you, and you delivered. I also want to thank our partners and AIG for helping to make our operational separation a success. Returning to where I began my remarks, 2023 was our first full calendar year as a public company, and it was a very productive one. The fourth quarter was a strong conclusion to what was a very good year. I will now turn the call over to Elias, who will go into more detail on the results for the quarter.