Corebridge Financial Q2 2026 Earnings Call Transcript

Corebridge Financial (NYSE: CRBG ) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Corebridge Financial Inc. reported strong financial performance in Q2 2026, with core income up 5% and a 16% increase in run-rate earnings per share year over year. The company completed a successful shareholder vote for a merger with Equitable, highlighting future growth potential and strategic synergies. In Q2, Corebridge returned $412 million to shareholders, including $300 million in share repurchases, maintaining a strong balance sheet with cash generation exceeding $400 million for 14 consecutive quarters.

Individual Retirement maintained a top-five provider status, with strong sales momentum in June, while Group Retirement is transitioning from a spread- to fee-based business. 8 billion in GICs, indicating growth potential. The company is actively preparing for the merger completion by year-end, with leadership structures and regulatory processes in place. The company remains focused on improving customer experience and digital capabilities, with initiatives like AI agents in customer contact centers.

Investment portfolio management remains disciplined, with new money yields supporting net investment income growth, despite challenges in alternative investments. The company reaffirmed its full-year guidance despite market volatility, with plans for $350 million in share repurchases in the second half of the year. Full Transcript OPERATOR Hello everyone. Thank you for joining us and welcome to the Corebridge Financial Inc.

second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again.

I would now like to hand the conference over to Ishl Mudirisla, Head of Investor and Rating Agency Relations. Please go ahead. Ishl Mudirisla, Head of Investor and Rating Agency Relations Good morning everyone and welcome to Corebridge Financial's earnings update for the second quarter of 2026. Joining me on the call are Mark Costantini, President and Chief Executive Officer, Chris Biliagi, our Interim Chief Financial Officer, and Lisa Longino, our Chief Investment Officer.

We will begin with prepared remarks by Mark and Chris 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. Corebridge'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, Corebridge 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. com. With that, I would like to now turn the call over to Mark and Chris for their prepared remarks.

Mark, Marc Costantini, President and Chief Executive Officer Good morning and thanks for joining us. I'm delighted to be with you today. Following the successful shareholder vote approving the merger with Equitable, the shareholder support of this transaction is a powerful validation of the attractiveness of the combined company. We're more confident than ever about the future we're building together.

Turning to the second quarter highlights, we delivered strong results consistent with our full year guidance. Core sources of income were up 5% year over year while variable investment income came in below our long-term expectations. Our underlying fundamentals remain strong. Our run-rate earnings per share were up 16% year over year, consistent with guidance.

9% and our cash generation remains strong. We've now generated cash in excess of $400 million for 14 consecutive quarters, showcasing the strength of our balance sheet and underlying businesses. In the second quarter, we returned $412 million of capital to shareholders, including $300 million of share repurchases, for a year-to-date normalized payout ratio of 84%. Turning to Slide 4, our top-line performance was resilient.

While total company sales were down year over year, sales increased sequentially by 13%. Furthermore, on a rolling 12-month basis, which adjusts for seasonal fluctuations and the lumpy nature of the pension risk transfer business, we saw total company sales grow by 4% year over year. This is a testament to our product depth and commitment to margin integrity across cycles. Equally important, we excel at allocating capital efficiently.

Of note, our breadth of distribution enables us to shift between products and businesses to where the risk-adjusted returns are most attractive. In Individual Retirement, we've been a top five provider for more than a decade and are the only insurer with a top 10 sales ranking across all annuity products. We continue to prioritize pricing discipline given tighter competition. Conditions improved in the latter part of the quarter as yields rose and sales momentum resumed, making June the strongest sales month of the year.

All else being equal, we expect steady sales and positive net flows for the rest of the year. In Group Retirement, our transition from a spread- to fee-based business is continuing in line with expectations. In the quarter, our wealth management assets rose to $20 billion, an 18% increase year over year. We continue to see a $30 billion growth opportunity by further capturing IRA rollovers and consolidating household assets within our current customer base.

As a result of our efforts to improve the customer experience, we are also starting to see an uptick in Group Retirement business wins. In our Life business, we've been a top-tier provider of term life for nearly a decade. In the quarter we delivered run-rate earnings above our typical guide, reflecting strong underwriting results. Our sales continue to benefit from our platform that leverages automated underwriting for more than 80% of the new business.

Turning to Institutional Markets, the GIC market has grown rapidly over the past few years, with Corebridge's reserves nearly doubling over the same time period. 8 billion of GICs at attractive IRRs and we continue to see meaningful opportunities for the remainder of the year. Our GIC book represents 5% of our general account compared to 10% to 15% for major competitors, demonstrating ample room for additional growth. In the PRT market, we still expect activity to be weighted in the back half of the year.

Nothing in this market has changed. Pension plans remain overfunded, the appetite for de-risking solutions remains strong and we expect the double-digit reserve growth we've achieved since 2021 to continue. Turning to Slide 5. Since we announced the transaction, our conviction has only grown that the merged company will be uniquely positioned to deliver exceptional value.

Our industry is in the midst of significant growth opportunity. Annuity sales have grown from roughly $250 billion a year in 2021 to more than $450 billion in 2025. Despite this growth, new Corebridge research finds that only 28% of people are confident spending in retirement, with fears of running out of money being the top concern. By contrast, those with a decumulation plan, especially one that includes guaranteed lifetime income, are far more confident.

In short, many more Americans want and need our advice and solutions. Another powerful trend is the massive transfer of wealth between generations, with $100 trillion in assets that is expected to be transferred by mid-century, which will fuel growth in the wealth business. In addition, the life insurance protection gap remains significant with 100 million Americans expressing a need for coverage. The merger creates a company that is well positioned to capture this opportunity and drive profitable growth.

Starting out, the combined firm will have over 10 million customers. Given the tremendous financial needs we see, our aspiration is to significantly grow that number over time. We will have all the right attributes to succeed. Our scale will give us a lower cost of capital, greater efficiency, comprehensive customer solutions and the ability to invest more while attracting top talent.

We'll have a large and formidable multi-channel distribution system to reach the broadest possible customer base. Our integrated business model will capture the full value chain from manufacturing through distribution to asset management. And our commitment to sound financial principles means we'll write business at attractive margins and deliver consistent capital return. By 2027, the combined company is set to unlock a compelling financial performance with $5 billion of earnings, $4 billion in cash generation and a return on equity of over 15%.

With $500 million cost synergies directly supporting these targets and a clear pathway to additional value through revenue synergies, we have a clear right to win. We continue to make excellent progress toward closing the transaction. In addition to the successful shareholder vote, the leadership structure of the combined company continues to take shape. We have determined the first three levels of the organization and I'm confident we're building the right team to win.

The Joint Integration and Transformation Office continues to coordinate all merger activity with the goal of ensuring operational excellence for the new company. We are actively collaborating with key distribution partners to ensure a seamless transition and on day one we are well positioned to win with our customers. The regulatory review process is proceeding on pace. Federal antitrust review is complete, FINRA approval of the broker-dealer change in control is complete and all state and international regulatory filings have been submitted.

We expect to announce the board of the new company in the near future and we still anticipate that the transaction will close by year end, allowing us to hit the ground running in 2027. To win in our industry we need to have a differentiated customer value proposition, go to market with world-class distribution and be the easiest company to do business with. Putting the customer at the center of everything we do is a top-to-bottom commitment.

Our Customer Council, sponsored by the Executive Leadership Team, is driving customer focus across a number of initiatives—everything from the frontline service experience and the technology enablement to our corporate culture and customer safeguards. Our new Customer Champions Network, representing every business and function at Corebridge, is ensuring we bring the voice of the customer and our distribution partners to everything we do across every phase of the customer journey. We're committed to driving continuous improvement.

In Group Retirement, our Plan Sponsor Net Promoter Score, a key customer service metric, rose 19 points year over year, but we still have more work to do. My goal for the Group Retirement business is top quartile service. Digital remains a key focus area. For example, we recently launched AI agents in our Group Retirement customer contact center to provide a better call experience.

This quickly reduced repeat calls and average handling times. In Life, we enhanced our digital service infrastructure and more broadly we're implementing a new business acquisition platform. Our goal is an industry-leading new business experience that increases fully digital submissions and speeds up suitability checks, with 50% of policies issued in 30 minutes or less. Within Individual Retirement, our focus is on empowering financial advisors by removing friction from their day-to-day operations.

Through our support of the Insured Retirement Institute's Digital First initiative, we are modernizing the tools advisors rely on while simultaneously refining our internal workflows to eliminate application errors and accelerate policy issuance. By streamlining these touch points, we enable advisors to dedicate more time to their clients and the growth of their practices, all while driving greater operational efficiency behind the scenes. In closing, I want to express the strong commitment of the entire leadership team to exceptional value creation both now and in the future. Thank you again for your approval of the merger.

I'm confident the combined company has the right to win and I can't wait for day one to get here. With that I'll turn the call over to Chris. Chris Thank you, Mark. Starting with Slide 6, performance in the second quarter was on track with the full-year guidance provided at the start of the year, highlighting diverse earnings and sustained growth across our businesses.

12, driven by growth in base spread income and fee income. Second quarter results were impacted by underperformance for variable investment income excluding the impact of VII. EPS increased by 14% year over year. Within VII, alternative investments underperformed, impacted by the market decline in software coupled with market volatility related to the resurgence of conflict in the Middle East and the broader macro and geopolitical environment.

As we said earlier in the second quarter, we do not foresee this environment materially changing over the short term and expect VII returns to remain below target for the remainder of the year. 35, representing a 16% increase year over year. 8% on a run-rate basis within our 12% to 14% ROE targeted range excluding VII. This reflects a 90 basis point increase year over year, underscoring our commitment to consistent, profitable growth.

Turning to Slide 7, core sources of income, which excludes VII, increased 5% year over year, illustrating our ability to grow across a variety of markets. Within that, spread income increased by 4%, benefiting from asset repositioning and growth in the underlying business as we have consistently reported positive net flows. More notably, these earnings reflect the full earn-in of the 2025 Fed rate cuts and our reduced sensitivity to short-term interest rates. Fee income increased 15%, driven by growth in assets under management and administration and favorable market tailwinds.

Lastly, underwriting margins decreased 1% year over year. We continue to see positive underwriting results, though they were less favorable than the prior-year quarter. Echoing Mark's comments regarding the investments we are making to become the easiest company to do business with, we reported an increase in second-quarter general operating expenses in line with the guidance provided at the start of the year. Turning to Slide 8 and looking at our capital position, our balance sheet continues to be healthy and strong.

4 billion in holding company liquidity, supported by our insurance company distributions of $475 million of dividends in the quarter, and our liquidity exceeds the holding company's needs for the next 12 months. Capital returned to shareholders was $412 million in the quarter, excluding proceeds from the earlier VA reinsurance transaction. We maintained our payout target with a year-to-date payout ratio of 84%, which reflects the acceleration of share repurchases in the first half of the year. Looking ahead, we are committed to approximately $350 million in share repurchases in the second half of the year.

Lastly, our insurance companies remain well capitalized with capital ratios exceeding our targets. Next, I'll review a few highlights from each of our businesses, the details of which can be found in the appendix to our earnings presentation. Note that these results exclude the impact of variable investment income and notable items. 8 billion and net flows remained positive, contributing to continued growth in AUMA.

While sales declined year over year and sequentially, I want to emphasize Mark's point earlier: we continue to prioritize margin integrity over volume. By adhering to our rigorous pricing hurdles, we have effectively pivoted our capital deployment toward higher-growth areas of our portfolio that offer superior risk-adjusted returns. 55 billion. In addition, CSM increased 17% year over year, reflecting growth in the underlying business.

Lastly, APTOI was flat year over year, reflecting increased spread and fee income offset by higher sales-related expenses, while APTOI increased 5% sequentially.