Corebridge Financial Inc.

My name is Becky and I'll be your operator today. During the presentation, you can register a question by pressing Start followed by 1 on your keypad. If you change your mind, please press Start followed by 2. I will now hand over to your host, Ishamu Durisola, Head of Investor and Rating Agency Relations, to begin. Please go ahead.

Good morning, everyone, and welcome to Corbridge Financial's earnings update for the third quarter of 2025. Joining me on the call are Kevin Hogan, President and Chief Executive Officer, and Elias Habayeb, 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 laws, Corbridge is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change. and your caution to not place and due 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.corbidgefinancial.com. With that, I would like to now turn the call over to Kevin and Elias for their prepared remarks. Kevin?

Good morning, everyone, and thank you for joining. I'll start this morning by providing some context around the announcement we made on Friday. As you have seen, our CFO, Elias Abayan, will be leaving Corbridge in April to take a senior leadership position at a publicly listed company that we do not consider a competitor. Elias and I have worked together for many years, and I know he will be missed at Corbridge. We've engaged a leading executive search firm and have begun a search process. We're pleased that there will be a six-month transition period that will allow for Elias to oversee the completion and filing of 2025 financial statements and the finalization of the 2026 budget and business and operating plans while the search is underway. I would also note that one of Elias' important contributions as CFO of Corbridge has been building a very strong finance team. that I am confident will support the ongoing execution of our four strategic pillars and our trajectory for continued growth. I know that this search will be one of Mark Costantini's top priorities when he arrives next month, and I am confident that he and the Board will select the right person for Corbidge's next chapter. We expect this to be a seamless transition. With that, let me turn to third quarter results. CoreBridge delivered another quarter of solid performance with our diversified businesses generating the highest sales since the IPO, even as we further strengthened our balance sheet and once again delivered both strong earnings and an attractive capital return to shareholders. Our financial results as presented reflect our position after the previously announced variable annuity transaction with Venerable, which marks an important inflection point for CoreBridge. Our company is now simpler with a lower risk profile, higher quality of earnings, and greater growth potential. Corbridge has been working since the IPO to strengthen every element of our value proposition. Our diversified business model is founded on a broad spectrum of products and services, distribution channels, and market segments, delivering diversified sources of income that enable us to generate sustainable cash flows and performed through various market cycles. Across our businesses, we are committed to deploying capital where the risk-adjusted returns are the highest and customer demand is the greatest. While our spread income is now a larger percentage of the whole, our sources of spread income streams themselves are diversified. We have a high-quality investment portfolio and minimal legacy liabilities. Our strong balance sheet provides us with financial flexibility to achieve our strategic objectives. We have maintained capital ratios of our insurance companies above their targets. And at $1.8 billion, including partial proceeds from the VA reinsurance transaction, we have more than ample liquidity at the parent. Finally, we continue to emphasize disciplined execution. The team at Corbridge has done an excellent job to date, managing through a complex corporate separation, divesting our international businesses, launching our strategy in Bermuda, executing one of the largest VA reinsurance transactions to date, upgrading our technology and customer service capabilities, and meeting or exceeding every financial target we set at the time of the IPO. It is a very strong foundation for continued success and shareholder value creation. Turning to slide four, our results in the quarter once again demonstrate that we continue to execute on all four of our strategic pillars. First, we delivered strong organic growth with total premiums and deposits of $12.3 billion, reflecting ongoing strength in individual retirement. Sales of our Ryla products were nearly $800 million in the third quarter and have topped $1.7 billion year to date. We are now the only company to have a top 10 ranking across all four major annuity product categories as measured by LIMRA. In October, we received regulatory approval to sell our Ryla in New York State. one of the nation's largest annuity markets and one where we feel very well positioned, and we remain on track to launch by the end of the year. In addition to our individual businesses, we had very strong performance in institutional markets in both GICs and pension risk transfer transactions. Overall, general account net inflows were $1.4 billion, up 27%, supporting general account growth of 6% year over year. Across all of our businesses, we remain disciplined in how we price new business, adjusting as market conditions evolve. For example, interest rates declined through the third quarter, prompting us to take rate actions to preserve margin. We generally respond quickly when conditions change, even at the risk of short-term production, and that discipline remains a hallmark of how we run the business. Our diversified business model gives us optionality to allocate capital to where it will earn the highest risk adjusted returns. We are focused on growing earnings and being responsible with the capital that our shareholders have entrusted us with. Turning to our second pillar, we remain focused on optimizing our balance sheet and creating greater capital efficiency. The capital freed up by our transformative VA reinsurance transaction was significant. And as we've said before, we continue to explore additional opportunities that would be value accretive. One example is expanding our Bermuda strategy, which is off to a great start with $18 billion of reserves seeded since inception. Third, we continue to focus on further improving our operating leverage, and we recently completed our voluntary early retirement program, which is creating capacity to invest in and upskill in key areas such as digital. By continuing to modernize our operations, we see ongoing opportunities to improve our customer and distribution partner experience, which is essential to growth and to further increase our operating leverage. Fourth and finally, we remain committed to active capital management. Year to date, we returned more than $1.4 billion to shareholders through buybacks and dividends. While our payout ratio over the period was 80%, reflecting the impact of the VA reinsurance transaction, our target payout ratio remains 60 to 65%. Reflecting on the market, the macro environment remains attractive. The need for people to take care of themselves financially by growing their assets and locking in secure retirement income is a powerful tailwind for our individual and group retirement businesses. In life insurance, the large protection gap continues to represent a significant opportunity in those areas of the market where our advantages can drive attractive returns. And in institutional markets, pension plan funding levels remain very strong and plan sponsors are resolute in their intention to divest these liabilities. Corbidge is well positioned to capitalize on those trends and will do it with the same commitment to strong financial metrics that you've come to expect from us. A 12 to 14% return on equity, an average 10 to 15% annual EPS growth rate over time, and a 60 to 65% payout ratio, all while maintaining the life fleet RBC ratio above target. As I prepare to hand the reins over to Mark, I'm pleased to be doing so from a position of strength. Corbridge has market-leading businesses, a very strong balance sheet, and robust opportunities for continued profitable growth. That's why I believe Corbridge remains a compelling investment proposition. With that, I'll turn the call over to Elias.

Thank you, Kevin. I'll begin my comments today on slide five. Excluding VII and notable items, Corbridge reported third quarter adjusted pre-tax operating income of $678 million and operating earnings per share of 99 cents. This quarter included one notable item that represented the charge of $98 million resulting from the impact of our annual actuarial assumption update. At the total company level, the annual actuarial assumption update is expected to have a limited impact on the go-forward run rate earnings. The details by business are provided in the appendix to the earnings deck. Annualized alternative investment returns this quarter were 11 cents per share below our long-term expectations, with outperformance in private equity partially offset by underperformance in hedge funds and real estate equity. Looking forward, we're beginning to see a pickup in M&A activity, which should benefit alternative investment returns. However, we're also seeing a continued lag in real estate equity performance. Accordingly, based on what we know today, we expect alternative investment returns for the fourth quarter will be below our long-term expectations of 8% to 9%. Adjusting alternative investment returns to long-term expectations and notable items. We delivered run rate operating EPS of $1.21, which represents a 6% year-over-year increase and an adjusted run rate ROE of 12.9%, which is up 70 basis points versus the prior year. Moving to slide six, total sources of income increased approximately 1% year over year after excluding VII and notable items. Despite the 100 basis points of Fed rate cuts in 2024, spread income was down only 1% as business growth paired with asset optimization action mitigated the headwind. Fee income was up 7% year over year, primarily from favorable markets, while underwriting margins were essentially flat year over year. Turning to slide seven, I'll focus on our capital and liquidity positions. In the quarter, our insurance company distributions totaled more than $1.3 billion in including approximately $700 million of proceeds from our VA reinsurance transactions. Capital return in the quarter was a strong $509 million, including $381 million of share repurchases. Furthermore, since September 30th, we have begun deploying the proceeds from the VA reinsurance transactions and have returned over $370 million to shareholders. Our holding company liquidity remains robust at $1.8 billion, well above our next 12-month needs, in large part due to undeployed proceeds from the transaction. With our life fleet RBC ratio remaining above target and our recent VA reinsurance transaction generating significant distributable proceeds, you can expect to see elevated levels of share repurchases in the coming quarters pursuant to the $2 billion increase to our share repurchase authorized by the Board in June. Next, I'll briefly review a few highlights from each of our businesses, the details of which can be found in the appendix to our earnings presentation. As a reminder, results exclude the impact of VII and notable items who are applicable. Additionally, while we remain focused on prudently managing our expenses, we did see a short-term increase across all segments resulting from higher compensation-related expenses consistent with our prior guidance, as well as a one-time medical expense accrual. In individual retirement, core sources of income were flat year over year, as the impact of Fed rate actions was partially offset by strong growth and asset optimization. We saw continued strength in new business. Index annuity sales were at an all-time high, and RILA sales continued to grow reflecting strong customer demand and the benefit of our deep distribution network. Net flows were up 13% year-over-year, mostly driven by higher index annuity and RILA sales. Adjusted pre-tax operating income declined by 90% year-over-year. The biggest driver was higher DAC amortization and commission, reflecting several factors, including growth in the business. Higher fee income and lower base spread income offset each other as a result of market movements over the past year. Group retirement results in the third quarter demonstrate the ongoing transition from a spread-based to a fee-based revenue stream. Core sources of income grew 1%, as fee income increased 4.5% year-over-year, while base-spread income declined by 4%. Overall, fee income now accounts for approximately 60% of group retirement's core revenue. Adjusted pre-tax operating income increased 1% year-over-year, as higher fee income offset lower base-spread incomes. While assets under management and administrations were flat year over year, advisory and brokerage assets continued their strong growth and were up 9% year over year to a new record high. Premiums and deposits, excluding advisory and brokerage, were down 10% year over year, reflecting previous plan exits, and lower out-of-plan fixed annuity sales. As we look ahead, we're making considerable investments in the business to upgrade the quality of our in-plan services and further build up our wealth management offerings, which should increase enrollment and rollover recapture. To that end, our advisor headcount is the highest it's been in two years, and our advisor productivity is up 10% year over year, both supporting our growth initiatives. We expect our growing number of financial advisors, as well as their increased productivity, to be a positive earnings driver for group retirement in the future. In our life insurance business, core sources of income were flat year over year. adjusted pre-tax operating income was down 8% year over year, largely due to some one-time costs related to systems conversion and higher expenses mentioned earlier. Mortality continues to trend favorably, demonstrating strong underwriting on the block. Adjusting for one-time items, this quarter's life adjusted pre-tax operating income was $115 million in line with our previous guidance. We continue to believe this business will generate earnings of $110 million to $120 million per quarter, other than in the first quarter, which typically has higher mortality. While new business sales were down 6% year over year, we grew our fully digital senior life products by 19%. In institutional markets, we had the strongest sales quarter since the IPO, with both PRT and GIC showing exceptional growth. This was the sixth consecutive quarter with GIC issuances in excess of $1 billion. Your trades are moving lower and the curve is steepening. With that, you have credit spreads at the tight end of the range and defaults remain relatively low. In addition, there's been recent headlines about increasing signs of pressure in the broadly syndicated loan market. We believe these events are idiosyncratic and we have negligible exposure to those names. The current market environment is factored into both our asset allocation and our asset and liability management strategy. We focus on liability origination and originate assets that are predominantly high quality and fixed rate to match those liabilities. Floating-grade assets, along with derivatives, play a smaller and specific role in our duration management. Floaters can also offer incremental value and diversification. Given the tightness and spread, we prefer higher quality assets that provide collateralized cash flows with credit enhancement and or covenants rather than lower quality unsecured or idiosyncratic risk. In the context of our broader investment portfolio, It remains resilient and well positioned to manage through volatility. The portfolio is 95% investment grade and is highly diversified among asset class, industrial sectors, and geography. In the third quarter, our portfolio continues to experience positive rating migration for bonds and commercial mortgages. We also have a deeply experienced credit team that operates in a highly rigorous and iterative underwriting process with multiple levels of approvals and ongoing monitoring and proactive portfolio management. We underwrite through the cycles and focus on capital preservation and risk of loss. In terms of the broader balance sheet, we carry moderate leverage a comfortable liquidity position, and access to the capital markets. We regularly run various stress tests of our capital and liquidity positions and remain comfortably within our risk appetite. I also want to provide a reminder about our earnings trajectory over the next few quarters. We published a revised financial supplement the precast individual retirement VA earnings below the line going back to the first quarter of 2024. As we have said previously, we expect the VA reinsurance transaction to be accretive to the pre-recast EPS by the second half of 2026 once we complete the share repurchases funded by the proceeds from the transaction. Due to timing, EPS over the next few quarters will be lower than they would have been if we had deployed the proceeds on day one. Additionally, similar to 2024, any Fed rate actions are expected to have a short-term impact on spread income, as we expect to mitigate the effects through growth in the business, asset optimization, and other management actions. Finally, as you know, this is our last earnings call with Kevin as CEO. I want to take this opportunity to thank Kevin for his friendship, guidance, and leadership. The value CoreBridge has created for shareholders on his watch has been truly outstanding, and I'm deeply honored to have worked with him. With regard to my announcement, I have worked at Corbridge and AIG for over 20 years, and it's been very gratifying both on a personal and professional level. I'm pursuing an opportunity that I believe is the right next chapter for me. I can't disclose details at this time, but an announcement will be made in due course. I'm very proud of the finance team we have built at Corbridge. and I am committed to ensuring a smooth transition for the benefit of the team, all my corporate colleagues, our incoming CEO, my successor, and our shareholders. With that, I will turn the call back to Isha.

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.

Thank you. If you wish to ask a question, please press Start followed by 1 on your telephone keypads now. If you feel your question has been answered or for any reason you would like to remove yourself from the queue, please press Start followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Joel Hurwitz from Dowling and Partners. Your line is now open. Please go ahead.

Hey, good morning. And first, just wanted to wish you both the best in the future. In terms of my questions, I wanted to start on individual retirement and the base spread yield. Could you just unpack the drivers of the seven basis point decline quarter over quarter?

Yeah, happy to, Joel. So listen, as we've said before, we expect spread income and individual retirement to grow over time, and that hasn't changed. We do expect some marginal compression for the dynamics we talked about in the past, you know, with the differential And that we expect to be marginal. And based on what we know today, factoring in the latest outlook on rate cuts, we expect that to go to the end of 26 and level off and potentially start growing from there. Now, when you come to this quarter itself, the base spread compression due to the dynamics we've explained is in the one to two basis points. But with the VA transaction that we did that we closed on the Texas side, which is about 90% of it, we had to reallocate the assets to come up with a portfolio that we transferred to the other side. And that's kind of creating noise, and it's a one-time impact of about five basis points. And that kind of level sets kind of a new baseline where to measure compression going forward from.

Got it. That's helpful. That makes sense. And then, Elias, in your prepared remarks, you mentioned considerable investments in the group business for, again, plan guarantees and wealth management. Can you just elaborate on that? the level of expected spend there and what exactly these investments are?

Yeah, Joel, hi. It's Kevin. Look, I mean, there's a couple of areas we're investing in the group retirement business. On the in-plan business, we continue to invest in our automation and digitization initiatives, improving the customer and participant experience there. And then in terms of the wealth management, it's really growing the advisor force and professionalizing the advisor force. And, you know, we've been investing in increasing the footprint of the advisors, serving both the in-plan and the out-of-plan opportunity. And then, you know, to a certain extent, expanding our product and service shelf to cater to the needs of that, you know, what we call wealth management, which is serving the former in-plan participants in the out-of-plan area. We're not putting a particular number on the investments that we're making. I mean, this is part of the opportunity that we have to continue investing in the growth of the business. And we've seen the results from it. Our advisory and brokerage assets are up 9% year over year to a new record of $17.6 billion. Our out-of-plan assets have reached $28.8 billion. And between the in-plan fee business, the out-of-plan business, and the advisory brokerage that really makes up what we think of as our wealth management platform, it's a big earning space of $108 billion in assets, which is up 2% year over year. So we're seeing green shoots, but we continue to invest in the business.

Got it. Thank you, Kevin.

Thank you. Our next question comes from Alex Scott from Barclays. Your line is now open. Please go ahead.

Hey, guys. My best wishes in your next phase here. I guess my first question is on the private credit. I know you gave some comments already, but was just interested if you could provide a little more color around some of the metrics, like, you know, how much your bonds or what you would consider private credit or, you know, any commentary on the way that you have those rated, you know, and which rating agencies you use. Just trying to get a little more color on some of the concerns that are more broadly out there on private credit?

Hey, Alex. It's Elias. Yes. So, you know, through private credit, you know, for us, you know, and private credit is a broad category. It includes private placements, which insurance companies created this asset class and have been in it for years. It's like in the $30 billion range. 90% of it is investment grades. We generally use the the main rating agencies from a rating perspective on it. Below investment grade and it's a small portfolio, it's largely the middle market loans. That's like a $3.5 billion portfolio on that. That's one we've originated some time ago. That's been originated some time ago and is performing well relative to that asset class and While we've seen some deterioration, it's all within the yield. We don't see a principal loss on that.

Got it. Can you also talk about just the competitive environment for pricing on the retail annuities that you're selling and how the tradeoff between volume and spread is expected to translate into absolute earnings growth and spread over the next couple years in that business?

Yeah, sure. Thanks, Alex. Look, I mean, first of all, the demand for annuities remains robust in the belly of the curve, and the forwards suggest it's going to remain supportive even while the short-term sort of rate outlook is a little uncertain. And the long-term macro drivers are there. you know, with the aging of the population and the supportive advisor community and people realizing that they need to look after themselves. And look, I mean, once again, in the third quarter, we saw conditions that were quite supportive. You know, rates did come down during the quarter, and so we repriced our fixed annuities and indexed annuities several times in response. and also actively managed our in-force crediting rates. But we still saw very strong opportunities in indexed annuities, especially those with income benefits, where we had a second successive record quarter. Our RILA was also very strong, $800 million across the company, $650 million in individual retirement, which... continues to be very well received in the market. And we just got our approval to launch in New York, which we believe is, if not the largest, one of the largest annuity markets in the country, which we expect before the end of the year. So that momentum will continue. And fixed annuities is the most immediately sensitive business. And while it was a little lower, we still produced $2 billion, which is quite strong. And we will continue to be disciplined in allocating capital where the risk-adjusted returns are the highest. And in the second half of the quarter, we saw compelling opportunities in institutional markets, including intention risk transfer, where we concluded a billion and a half dollars. Plus, we remain a regular GIC issuer with our sixth quarter in a row over a billion dollars. So, you know, we're comfortable with our overall position. The environment remains competitive, but we have tools by which to respond. Individual retirement is one of our spread businesses, but institutional markets is another one. And above all, you know, we remain confident in growing both our enterprise and our individual retirement general account and spread income over time. You know, Fed actions will present occasional short-term headwinds, but, you know, we expect spread income to continue to contribute to our, you know, EPS growth targets over time.

Thank you.

Thank you. Our next question comes from Jack Martin from BMO. The line is now open. Please go ahead. Your line is now open. Please ensure you're not muted. We currently aren't getting any response from this line, so we'll move on to our next question from Tom Gallagher from Evercore ISI. Your line is now open. Please go ahead.

Operator, we aren't hearing any questions come through. Can you please check?

Move me one second. I'm just going to try and open the line again. Tom, your line is now open. Please go ahead.

Thanks. Can you guys hear me?

We can, Tom. Thanks.

Okay, great. So I just had a few questions on the group retirement business. First one is just on how do I think about the surrenders and then how much you're capturing in your wealth management business? If I look at the numbers in the plan, it's about 5% annual decay. When you factor in how much you're retaining on the wealth management business, piece as you're capturing some of the outflows, how much would that shrink the 5% annually? How do I think about that as kind of a go-forward organic growth number when you add those two pieces in?

So, Tom, on the in-plan business, the average age of the participants exceeded 59 and a half about 10 years ago. And so there's kind of a natural outflow on the in-plan part of the business, which is consistent with what I think the entire defined contribution industry has been experiencing. And that's to a certain extent what you're seeing in the transition of the portfolio from spread income to you know, fee income over time. And that is, you know, the trend that we expect to, you know, to continue. As I mentioned, we're investing in the footprint of the advisor base to support both the in-plan and the out-of-plan businesses. And we do expect that to be a gradual transition as we shift to more of the fee income businesses. But this trend has been happening in the 403B space for some time. If you go back 10 years ago, most new customers were, you know, rolling into or investing in a 403B type of a program, whereas that shifted to the group mutual fund. And then over the last couple of years, we've seen a transition from the group mutual fund entry platform to the advisory platform. So, you know, there's a natural trend there that the in-plan business is gradually going to be replaced by the out-of-plan business. We haven't published a number on our recapture rate, but it is a very successful part. And you can see that in the growth of the advisory and brokerage assets, which are up 9% year over year. And then I'll just briefly touch on the larger surrenders. I mean, the larger surrenders that we saw continue to be in the healthcare space. There's a lot of consolidation that's going on there. Those are generally episodic. If there's a merger where our plan is the smaller of the two plans, those are ultimately consolidated. We don't know if that takes two or three years from the time of the merger, but we do try to provide an announcement when we learn about those. And those are generally the group mutual fund platform, which has a smaller impact on earnings than the 403B part of the business.

Thanks for that, Kevin. My follow-up is just, you know, I recognize both of you are going to be transitioning out, but I'm curious on your view of the strategic importance of Valak within Corbridge. You know, on one hand, I think it's a great franchise within the 403B market as its standalone legal entity. But on the other hand, it shrinks organically, and I recognize there's some offset there from the wealth business. But is this something... that would be under consideration of potential divestiture? If you got a great price on the asset, or do you think that's a long-term keeper when you think about within the broader franchise here?

Well, Tom, my personal opinion, and I think that this is something that is fully supported by the board as well as the executive leadership of the company is that retirement services, group retirement business is an extremely valuable strategic asset. And the differentiating aspect of the value proposition of that business is Valic Financial Advisors, which is our field force of financial professionals that support these customers through their working period and have the opportunity to develop a relationship with them and then continue to serve them and their families after they retire at the time of household asset consolidation, which is where, you know, the real opportunity and the wealth management piece of that business has been. And, you know, there's 1.9 million customers in this business. 1.6 million of those customers are still in plan only business, only customers, and therefore represent a future opportunity for that out-of-plan capability that we're enhancing through the investments we're making in both the advisor force and the platforms to support the advisor force. So this trend in the transition from a spread to a fee-based business is something that is going to take place over a longer period of time, but the strategic opportunity for this business is absolutely enormous. driven by the unique value proposition of Valic financial advisors. You know, it was over six or seven years ago we made the decision to double down on the role of the human advisor, and therefore we have been focusing on plans that want our advisors on-site and engaged, and that's what gives them the opportunity to develop those relationships. So, you know, I look straight past the short-term financial role sort of transition that's taking place. And I look at the bright future strategic opportunity of this business as a tremendous asset for the company.

And with that transition, Tom, you're improving the free cash flow conversion profile of the company over stream from a balance sheet heavy general account basis.

Thanks, guys.

Thank you. Our next question comes from Jack Matten from BMO. Your line is now open. Please go ahead.

Can you hear me now?

Yes.

Okay, great. The first question on institutional markets is a strong business quarter, not just for PRT, but also gigs and corporate markets. I guess for those non-PRT businesses, can you talk about what's driving your growth there, what you like about this product, and what you're achieving from a spread margin standpoint?

Well, you know, In the institutional markets, there's, you know, the main businesses are the guaranteed investment contracts and the pension risk transfer. And, you know, we manage those as we do any of our spread businesses relative to a target margin. There's also the, you know, the other businesses in institutional markets include the Boley business and the Coley business. which includes Insurance Coley, which is kind of similar to the Boley business, and occasionally we do also have transactions in that space. There's been an increasing demand for Insurance Coley that we've recently observed, and we are a participant in that market. And so those are the three main areas. We have a modest structured settlements business that has... grown incrementally, but really where we see the future of this business is in the GICs and in the pension risk transfers. In pension risk transfers, we focus on the full plan termination space. We have for almost 10 years now, and we've built specialized capabilities there. And full plan terminations are a subset of the overall PRT market, but the pipeline for full plan terms is very strong in both the U.S. and the U.K., and this is a significant part of the upside we see in the business.

Thank you. Follow up on cash flows. First part is on the timing of incremental dividends from the VA transaction, when do you expect to get the remainder of those up to the holding company? And the second part is on the, I guess, $600 million or so of maybe underlying dividends, X, those additional proceeds. Is that still a good run rate to think about moving forward, or would you expect in the near term to step down just from the VA transaction?

Hey, Jack, it's Elias. With respect first to the proceeds from the VA transactions, we expect to distribute those out of the insurance companies over a couple of quarters. We had 700 in September. We'd look to another piece in December and then another piece early next year on that front. With respect to the $600 million, that's been our run rate. It will step down a bit given the change in the distributable earnings profile of the insurance companies. That being said, we can expect to continue to grow it over time to deliver on our 60% to 65% payout ratio.

Thank you.

Thank you. Our next question comes from Ryan Kruger from . Your line is now open. Please go ahead.

Hi, thanks. Good morning. You had mentioned that you took actions to mitigate some of the short-term rate headwinds over the last year or so. I guess, are you seeing any existing opportunities now, given the Fed has begun a credit cutting cycle again, or I guess you view that as more opportunistic in the future?

Well, Ryan, let me just start. I mean, we're sort of managing in two different areas, and I think you may be aware of asking about two different things. Let me start about what I mentioned in terms of managing. We continue to look for opportunities across the portfolio, whether that's in the form of our Bermuda strategy, external reinsurance, or potential external transactions. But above all, we're very pleased with the performance of the life business. We've invested a lot in our underwriting capabilities over the years, and our mortality has continued to, you know, actually emerge at or better than pricing expectations. And we have a very healthy in force that, you know, we expect to continue to contribute, you know, at that level of earnings that we had earlier guided to the, you know, 110 to 120 million a quarter, except for the first quarter, which is always a little bit lower.

Thank you, and best wishes to you both.

Thank you.

Thank you. Our next question comes from Elise Greenspan from Wells Fargo. The line is now open. Please go ahead.

Hi, thanks. Good morning. My first question is on capital return. Elias, I think you said you guys returned $370 million Q4 to date. I'm assuming that's just repurchases and that ignores the dividend. Correct me if I'm wrong. And then is that the pace that we should think about for capital return for the rest of the quarter?

Hey, Lisa, it's Eli. So that number, you're correct, is only share repurchases. We expect to return a higher amount of capital in the fourth quarter. But given the distributions on the VA proceeds that we got in September, I would not go take the October number and extrapolate it as if it's all going to be at the same pace. It would be a bit more front-loaded in the quarter, but it would be less than this run rate.

And then I guess my second question is, you know, a follow-up on private credit. You know, it seems like you guys are comfortable with the allocation given, you know, Alex's question earlier in the call. You know, I'm just curious, you know, there's, you know, lots of headlines just on, you know, regulation. the regulatory regime and, you know, the directions things are headed in and just the overall, you know, allocation you guys have to private credit?

Happy to. So, you know, as I said before, you know, our investment strategy is liability-driven. And we look at the opportunities where we could get attractive returns and where we can afford to have private credit if we pursue it. But we're very disciplined on the underwriting side. We're aware of what's developing on the regulatory front. That kind of becomes a consideration if we think there's a risk on how we allocate capital. At this point, you know, you know, our strategy, we're comfortable with it. We understand the potential implications on the regulatory side. And based on what we know today, we don't think it'll have a material impact or material change what we've been doing.

Thank you. You know, and my best wishes to the both of you as well.

Kevin, in your prepared remarks, you'd mentioned that you're open to it, but Sort of in follow up to Tom's question, you do have a new CEO coming in. You do have a new CFO eventually coming in. Is it fair to assume that you're probably not going to do anything major until those two seats are filled and those folks have a chance to look at the overall strategy? Or is that not the right way of thinking about it?

Look, I would draw your attention to my prepared remarks relative to the transition. We have a very strong foundation in place. We have a strong team. We have a track record of execution. Looking forward to welcoming Mark. Elias is here for six months through the transition. I'm going to change my role to be an advisor to the board for six months. And we're looking forward to a very smooth transition process.

Yes. And Cindy, they're not letting me take a garden leave. I expect to be working the full six months.

Got it. Okay. Well, sorry to hear that. I guess on Bermuda, how should we think about Bermuda? Is that over the long term? I'm not talking about near term. Is this eventually going to allow you to increase your free cash flow conversion ratio? Or is it more an ability to just grow faster because the capital is more optimized?

The way I look at it is it gives us financial optionality. And with that optionality, we evaluate what's the best utility of that optionality and how we maximize shareholder value. And we'll allocate our capital accordingly.

Yeah, so just following up from that, I mean, it really gives us, you know, potentially as we further grow and develop our Bermuda strategy, the option to do both. And, you know, I think that is, you know, ultimately what a mature, you know, Bermuda strategy that leverages all the capabilities associated with that, you know, will lead us to.

Okay, that's helpful. Thank you.

Thank you. Our next question is from KV Montessori from Deutsche Bank. Your line is now open. Please go ahead.

Good morning and also good luck. My first question is – and first, thank you for all the color on the credit portfolio. It's quite helpful right now. I just want to follow up. You did mention that you well diversify by sector or whatnot, which makes a lot of sense. Can we assume within private credit specifically, is that also very well diversified from a sector point of view? Do you have any sectors that you're more overweight in exposure, like outside exposure to the auto sector, for example?

On the private credit side, the majority of our exposure is an investment-grade private placement, and that's kind of diversified. Across sectors from there, so we follow the same kind of principles on private credit as we do kind of overall allocation to credit in general. So I think it's a fair assumption that we've got.

International after the repositioning of the business, I guess. Are you still comfortable retaining international exposure when it comes to PRT, or would that eventually become a US business only? And what is kind of the near-term outlook for PRT?

Thanks, KV. So our UK business is a reinsurance business, and reinsurance is, to a certain extent, you know, kind of a global business. We can use our U.S. balance sheet as we do in the U.K. for PRT as a reinsurer for, you know, other potential international opportunities. And that is something that, you know, we have an opportunity to explore and to expand. And so, you know, whilst we don't have any admitted international operations, that doesn't mean that We don't retain the expertise and interest in growing in international markets in the form of reinsurance. Not your question about pension risk transfer. The pension risk transfer opportunity is extremely robust as per my prepared remarks. Pension plans are attractively funded. Companies are very interested in no longer having to be fiscally responsible or fiduciarily responsible for those plans. And so management teams are committed to exiting those liabilities. And there's a subset of the pension risk transfer market, both in the US and the UK, which is in a single negotiated transaction, a company can go through the multiple stages of of exiting a plan. That's called a full plan termination. And we are a specialist in that part of the market. There's fewer competitors in that part of the market. We find the economics more attractive as a result. We've built the administration capabilities to manage the complexity of those plans, the active and deferred populations in addition to the retirees, and also We've invested in the underwriting resources to have the expertise in managing the liabilities. So we have an excellent position in that business. The pipelines are extremely strong in the US and the UK. The economics are attractive and we remain very well positioned. So we're extremely optimistic about the pension risk transfer position that we have.

Thank you and good luck.

Thank you.

Thank you. Our next question comes from Wes Carmichael from Autonomous. The line is now open. Please go ahead.

Hi, thank you very much. First question, in individual retirement, I guess it's a question on margin, but for your fixed index annuity portfolio, is there an opportunity there to adjust crediting rates via caps and participation rates? And I guess relatedly, we're hearing from some of the market that there's some higher competition for FIAs where it's tied to the S&P 500. So curious if you're seeing that as well.

Look, the market is a competitive market. We're seeing competition, you know, I think, you know, everywhere there. I don't think it's any heightened in index annuities or fixed annuities or RIVA. It's an active and competitive space. And through a combination of the very strong distribution relationships that we have, the historical product creativity that we've been able to manage, and then also the discipline with which we manage our new business pricing. We continue to be able to, as well as our other products, and we work with a broad variety of distribution channels, which helps us overcome some of those market challenges competitive considerations. So we're very comfortable with the overall position in the individual retirement businesses, whether that's our index business, our RILA, which is performing very well, and the fixed annuity business, which is a little bit more sensitive to external conditions. And we are, as a result, you know, we respond very quickly when there are pricing changes in that environment.

Thank you, Kevin. And just a follow-up, but on longer-term guidance, I think you talked about a long-term UPS growth guide at 10 to 15 percent or something in that range. I'm just curious if anything has changed there. I know there's quite a bit of buyback that probably supports 2030. But if you think underneath the surface, when you think about rate, long-term, short-term, anything that's changed your view in that respect?

Hey, Wes, it's Elias. Listen, we still think that 10% to 15% average annual growth is the right guidance for the company. You know, this will be driven by growing earnings as well as share repurchases. Some years will be higher. Some years will be lower. But we think that's still the right target for this company. And I think it's a pretty attractive target to be able to deliver 10% to 15% on average. It will be influenced from time to time by different factors, some outsider control, but the things we're focused on are accretive to achieving that target, whether it's on organic growth, balance sheet optimization, you know, the expense discipline, and, you know, capital management, all those things, the stuff we control will be accretive to that target.

Thank you.

Thank you. This concludes our Q&A session for today, so I will hand back to Kevin for closing remarks.

Thank you, operator. This is my last earnings call, so I would like to share a few thoughts. In a career spanning four decades, it has been the honor of my professional life to serve Corbridge as CEO. I am very proud of our executive leadership, the ladies and gentlemen of Corbridge, and also our partners, and especially of the value we have created for Corbridge's stakeholders. Our employees now work for a strong, independent company with significant upside career potential. Our customers and distribution partners can rely on our commitment to innovation, modernization, and professional service. We work hard to give back to the communities in which we operate, and our shareholders have seen the value of their investment in CorBridge appreciate. Going forward, I'm confident the company is in very good hands with Mark Costantini, who can build this place. We look forward to introducing him to all of you soon. I've received a lot of notes from folks. I'd like to thank you for your wishes. And thanks to everyone again who joined us for the call. Have a great day.

Thank you. This concludes today's call. Thank you for joining us. You may now disconnect your lines.