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ebridge Financial(CRBG) - 2024 Q4 - Earnings Call Transcript
CRBGebridge Financial(CRBG)2025-02-13 21:38
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Financial Data and Key Metrics Changes - Corebridge Financial reported a full-year operating earnings per share (EPS) of 4.83,an184.83, an 18% increase year-over-year [14] - The return on equity (ROE) grew to 12.8%, with a run-rate ROE improvement of over 100 basis points year-over-year to 13.2% [15] - The company returned 2.3 billion to shareholders in 2024, with a cumulative payout ratio of 73% since the IPO [11][15] - Adjusted pretax operating income for Q4 was 878million,oroperatingEPSof878 million, or operating EPS of 1.23, an 18% increase year-over-year [28] Business Line Data and Key Metrics Changes - Individual retirement adjusted pretax operating income declined 7% year-over-year, primarily due to base spread compression [33] - Group retirement delivered steady performance, with net outflows of 3.5billioninQ4duetoplanlossesandrequiredminimumdistributions[37]−Lifeinsuranceadjustedpretaxoperatingincomeincreasedover1003.5 billion in Q4 due to plan losses and required minimum distributions [37] - Life insurance adjusted pretax operating income increased over 100% year-over-year, driven by favorable mortality experience [38] Market Data and Key Metrics Changes - Corebridge achieved premiums and deposits of 41.7 billion in 2024, a 5% increase over 2023 [17] - The fixed annuity surrender rate dropped to 9.7% in Q4, with expectations of an increase in the coming year as large blocks exit their surrender charge period [35] - The company reported full-year net inflows of 6.9billioninindividualretirement,nearlydoubletheprioryear[35]CompanyStrategyandDevelopmentDirection−Corebridgefocusesonfourstrategicpillars:organicgrowth,balancesheetoptimization,expenseefficiencies,andactivecapitalmanagement[16][25]−ThecompanylauncheditsMarketLockregisteredindex−linkedannuity(RILA)inQ4,expandingitsproductofferings[19]−Corebridgeaimsforannualrun−rateEPSgrowthof106.9 billion in individual retirement, nearly double the prior year [35] Company Strategy and Development Direction - Corebridge focuses on four strategic pillars: organic growth, balance sheet optimization, expense efficiencies, and active capital management [16][25] - The company launched its MarketLock registered index-linked annuity (RILA) in Q4, expanding its product offerings [19] - Corebridge aims for annual run-rate EPS growth of 10% to 15% over the long term, with expectations for dividends from insurance companies to increase by 5% to 10% in 2025 [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business conditions, stating that macro trends support growth in spread income and other revenue sources [50] - The company anticipates some pressure on base spread income due to short-term interest rate management but expects this to be temporary [26] - Management highlighted the importance of maintaining strong financial flexibility while pursuing profitable growth [11][24] Other Important Information - Corebridge achieved 350 million in run-rate savings ahead of schedule, with a total expense reduction of 13% on a comparable basis over the last two years [12] - The company ended the year with holding company liquidity of 2.2billion,including2.2 billion, including 1 billion from debt issuance [42] - The Life RBC ratio is estimated to be in the range of 420% to 430% as of the end of 2024 [45] Q&A Session Summary Question: Base spread income outlook for 2025 - Management expects spread income to grow over time despite short-term impacts from rate reductions, with a focus on individual retirement segment [50][54] Question: EPS growth target clarification - The baseline EPS for growth should be the reported EPS, excluding notable items and normalizing for variable investment income [56][74] Question: Cash flow components for 2025 - Cash generation stability is supported by diversified revenue sources and expense management, with Bermuda providing additional financial flexibility [61] Question: Future focus on capital optimization - The company continues to explore opportunities for reinsurance and balance sheet optimization, with expectations for VII to recover to long-term expectations [67] Question: Individual retirement surrender rates expectations - Surrender rates are expected to reflect market conditions, with a natural growth in the portfolio impacting the volume of products exiting surrender charge protection [82][85] Question: Impact of industry litigation on institutional markets - Management has not seen any impact on pipeline or transaction willingness due to industry litigation, maintaining optimism for pension risk transfer business [126] Question: DAC amortization and commission expenses - Elevated expenses are viewed as a growth component, with expectations for continued growth in the business [134]