Corebridge Financial Q2 Earnings Call Highlights

Key Points

• Corebridge’s Q2 results were in line with full-year guidance: Adjusted operating income was $664 million and EPS was $1.12, while operating EPS excluding variable investment income rose 14% year over year. Spread income increased 4% and fee income grew 15%.
• Alternative-investment weakness pressured results amid software-market declines and geopolitical uncertainty. Management expects variable investment income to remain below target through the rest of 2026, although alternatives represent less than 3% of the balance sheet.
• Capital returns and the Equitable merger remain key priorities: Corebridge returned $412 million to shareholders in Q2 and expects about $350 million in additional buybacks during the second half. The Equitable merger remains on track to close by year-end, with the combined company targeting $5 billion in earnings and $500 million in cost synergies by 2027.

Corebridge Financial NYSE: CRBG reported second-quarter 2026 results that management said were in line with its full-year guidance, supported by growth in spread income and fee income, while variable investment income remained below long-term expectations.

Adjusted pre-tax operating income was $664 million and earnings per share were $1.12, according to Interim Chief Financial Officer Chris Filiaggi. Excluding variable investment income, EPS increased 14% from a year earlier. On a run-rate basis that adjusts for long-term alternative-investment returns, operating EPS was $1.35, up 16% year over year.

Core sources of income, excluding variable investment income, rose 5% from the prior-year quarter. Spread income increased 4%, aided by asset repositioning and underlying business growth, while fee income climbed 15% on higher assets under management and administration and favorable markets. Underwriting margins declined 1% year over year, though Filiaggi said underwriting results remained positive.

Alternative Investments Weigh on Quarterly Results

Variable investment income underperformed during the quarter, primarily due to alternative investments. Filiaggi said alternative-investment performance was affected by a decline in the software market, Middle East conflict-related volatility, and broader macroeconomic and geopolitical uncertainty.

Chief Investment Officer Lisa Longino said the company’s alternative portfolio is primarily composed of private equity, real estate equity funds and hedge funds. While private equity had generally met long-term expectations previously, she said weakness was broad during the quarter and that a backlog of private-equity exits had not been reduced enough to generate gains that could offset portfolio marks.

Management said it expects variable investment income returns to remain below target for the rest of 2026 and does not expect the company to meet its long-term alternative-investment return expectations this year. Alternative investments account for less than 3% of the company’s balance sheet, Chief Executive Officer Marc Costantini said.

Adjusted return on equity was 11.4%, or 13.8% on a run-rate basis, within Corebridge’s 12% to 14% target range. Excluding variable investment income, adjusted ROE increased 90 basis points year over year to 10.9%.

Capital Returns and Investment Portfolio

Corebridge generated more than $400 million of cash for its 14th consecutive quarter, Costantini said. The company returned $412 million of capital to shareholders during the second quarter, including $300 million of share repurchases. Its year-to-date normalized payout ratio was 84%.

The company ended the quarter with more than $1.4 billion of holding-company liquidity, supported by $475 million of insurance-company dividends received during the quarter. Filiaggi said liquidity exceeded the holding company’s needs for the next 12 months. Corebridge expects to repurchase approximately $350 million of stock during the second half, which would bring total 2026 repurchases to about $1.9 billion.

Longino said the investment portfolio remained 96% investment grade, with an average credit rating of A-. New-money yields remained above roll-off yields, supporting net investment income growth. The company repositioned portions of the portfolio by selling lower-yielding high-yield, emerging-market and private assets and moving into investment-grade public assets, residential mortgage-backed securities and private asset-backed securities. More than half of those purchases were rated single-A or higher, she said.

Business Segment Trends

Individual Retirement sales totaled $3.8 billion, with positive net flows and continued growth in assets under management and administration. Sales were down from both the prior year and prior quarter, but management said it maintained pricing discipline rather than pursuing volume in a more competitive environment. Costantini said June was the strongest retail-annuity sales month of the year and momentum continued into July.

Corebridge reiterated its expectation for approximately $2.55 billion of Individual Retirement base spread income in 2026. Filiaggi said asset repositioning helped spreads, but older business rolling off should result in additional single-digit spread compression through the remainder of the year, with compression expected to bottom by the end of 2026.

In Group Retirement, fee income rose 15% year over year as the company continued shifting from spread-based products toward fee-based business. Wealth management assets reached $20 billion, up 18% from a year earlier. The segment’s adjusted pre-tax operating income declined 7%, reflecting lower spread income and higher operating expenses, partly offset by fee growth.

Life Insurance sales rose year over year and sequentially to $870 million. Segment adjusted pre-tax operating income fell 11% from the prior-year period, although management said mortality and underwriting results remained favorable. Costantini said the company is seeing early benefits from efforts to improve connectivity with distribution partners and intends to expand the Life business over time.

Institutional Markets posted sales of $2.6 billion, including more than $1.8 billion of guaranteed investment contract issuances. Adjusted pre-tax operating income increased 36% year over year, supported by a 17% increase in reserves and a 12% rise in assets under management and administration. Management expects pension risk transfer activity to increase in the second half, citing well-funded pension plans, attractive interest rates and an active pipeline.

Equitable Merger Progress

Costantini said shareholders approved the planned merger with Equitable, and the companies still expect the transaction to close by year-end. Federal antitrust review and FINRA approval for the broker-dealer change in control have been completed, while state and international filings have been submitted.

The combined company is targeting $5 billion in earnings, $4 billion in cash generation and return on equity above 15% by 2027. Management expects $500 million in cost synergies, with an additional potential benefit from revenue synergies. The leadership structure’s first three organizational levels have been determined, Costantini said, and the companies expect to announce the board of the combined firm soon.

Management also said the merger could expand capacity in Institutional Markets, including pension risk transfer and funding-agreement-backed business. Corebridge’s guaranteed investment contract and related funding-agreement business represents about 5% of its general account, compared with 10% to 15% for some major competitors, according to Costantini.

About Corebridge Financial (NYSE:CRBG)

Corebridge Financial NYSE: CRBG is a publicly traded provider of retirement, life insurance and asset management solutions. Formed from the separation of American International Group’s life and retirement operations, Corebridge focuses on helping individuals, employers and institutions manage retirement income, protect against longevity and mortality risks, and invest long-term savings. The company operates under a unified brand that brings together insurance products and investment capabilities to deliver integrated financial solutions.

Corebridge’s product suite includes retirement income and annuity products, individual and group life insurance, asset management and investment advisory services, and employer-sponsored retirement plan offerings.

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