stockrowWhat it does
Corebridge Financial provides retirement and insurance products, principally in the United States. It serves individuals saving for retirement, employers offering retirement plans, life insurance customers and institutions seeking to manage financial obligations. Marc Costantini is its president and chief executive officer.
Its Individual Retirement business sells annuities: contracts that help customers accumulate savings or receive retirement income. Fixed annuities offer principal protection and a specified return for a period. Fixed index annuities link returns to market indexes, while registered index-linked annuities offer some downside protection but can expose customers to losses beyond that protection. Some contracts offer optional lifetime income or death benefits.
Group Retirement provides workplace retirement plans, recordkeeping, financial planning and advice. Its employee financial advisors also offer annuities, brokerage and advisory services outside employer plans. Life Insurance sells protection products, including term, indexed universal life and whole life insurance.
Institutional Markets offers products including pension risk transfer annuities, structured settlements and guaranteed investment contracts. Pension risk transfer arrangements help plan sponsors transfer pension obligations to an insurer. Corebridge also manages investments backing its insurance obligations, using both internal capabilities and outside asset managers.
It distributes products through relationships with banks, broker-dealers, insurance agents and retirement plan sponsors, as well as through its own financial advisors.
How it makes money
Corebridge earns money from investment spreads, fees and underwriting margin. Its financial statements also include premiums, investment income and realized gains or losses. The mix varies by product: an annuity can generate a spread on invested assets and fees for optional benefits, while life insurance produces premiums and underwriting results.
Spread income is the difference between investment income earned on assets backing policies and interest credited to customers. Corebridge bears investment-performance risk on fixed annuities. It also bears the risk associated with index-linked credits on certain annuities and uses hedging to manage that exposure. It typically reprices its full fixed annuity product suite weekly, and can do so more often as conditions change.
Fees come from policy charges, guaranteed-benefit riders, recordkeeping, investment advice and brokerage services. Policy fees generally vary with the assets under administration, account value or benefit base of annuities. Group Retirement receives recordkeeping fees and advisory fees alongside spread income on fixed accounts. Its out-of-plan brokerage and advisory offerings provide another source of fee income.
In Life Insurance, premiums and claims experience contribute to underwriting results. Institutional Markets provides products including pension risk transfer annuities and guaranteed investment contracts. Results can vary with investment income, insurance claims, customer withdrawals and changes in the value of derivatives.
Customers and how it sells
Corebridge’s individual annuity customers are primarily mass-affluent and high-net-worth individuals using the products for retirement savings, income and legacy planning. Group Retirement serves employers and employees in tax-exempt and public-sector markets, including schools, higher education, healthcare and government. It serves plan sponsors across the United States and also offers products to individuals outside their employer-sponsored plans.
Individual Retirement annuities are offered through third-party distributors, including banks, broker-dealers, general agencies, independent marketing organizations and independent insurance agents. Corebridge Financial Distributors works with those firms and their advisors, while Group Retirement uses business development professionals, plan consultants and employee financial advisors to reach employers and participants.
Life insurance customers include higher-net-worth and middle-market buyers. Institutional customers include pension plan sponsors and buyers of guaranteed investment contracts and other institutional products. Corebridge also maintains a direct-to-consumer platform.
The majority of Corebridge’s businesses are based in the United States. Its institutional pension risk transfer pipeline also includes the U.K. market.
Suppliers and costs
Corebridge relies on both internal investment capabilities and third-party asset managers to invest assets supporting its obligations. Blackstone and BlackRock are strategic investment partners. Blackstone provides access to privately sourced fixed-income assets; BlackRock manages liquid fixed income and certain private placement assets.
Corebridge also relies on third parties for business, operations, investment advisory and administrative services. Its sales depend in part on external distributors, although Group Retirement also employs its own advisors.
The company’s costs include policyholder benefits, interest credited to account balances, employee compensation, professional services, interest on debt and amortization of deferred policy acquisition costs. Policyholder benefits reflect withdrawals and surrenders, life-contingent payments, reserve changes and assumptions about behavior, mortality and longevity. Investment management expenses affect net investment income.
Corebridge has a target of at least $500.0 million of annualized expense savings by the end of 2028 from its planned combination with Equitable. It has identified annualized savings that it expects to realize in the first half of the following year.
- Revenue$18.5B
- Cost of revenue−$14.1B
- Selling, general and administrative−$3.1B
- Other operating costs−$1.3B
- Operating income$11.0M
Competitive position
In individual annuities, Corebridge competes with life insurers and other financial services companies, including banks and asset managers. Competition includes price, product design, distribution, financial strength, service and ease of doing business. Certificates of deposit, mutual funds and other investments can also substitute for annuities. Corebridge says newer insurance entrants are frequently owned by or affiliated with alternative asset managers.
Group Retirement competes with insurers, recordkeepers and asset managers for employer plans, and with broker-dealers and registered investment advisors for individual customers. Life insurers compete on factors including product design, pricing, financial strength and digital capabilities. In pension risk transfer, Corebridge faces domestic and international insurers and reinsurers, including entrants backed by alternative asset managers.
Equitable, Corebridge’s planned combination partner, also has a position in registered index-linked annuities. The combination remained subject to state and international approvals at the time of Corebridge’s latest quarterly update.
Our reading: Distribution is a meaningful competitive asset because Corebridge can reach customers through outside firms as well as its own advisors, although those channels also offer customers alternatives. Our reading: Product breadth and frequent repricing provide flexibility, but they do not remove price competition. Our reading: The investment partnerships add asset-sourcing capabilities, while also creating reliance on outside managers.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Equitable | Registered index-linked annuities; also Corebridge’s planned combination partner | High |
Growth opportunities
Corebridge expects demand for retirement savings and income products to expand as the U.S. retirement-age population grows. It aims to deepen relationships with existing distributors, add distributors and adjust products and features as customer needs and market conditions change. In Group Retirement, it plans to expand financial planning and advisory services and seek more retirement plan relationships and participant business.
Corebridge sees a $30.0 billion opportunity to capture IRA rollovers and consolidate household assets among existing Group Retirement customers. Some of its in-plan participants do not have an out-of-plan product. The company also plans to invest in technology for advisors, customers and plan sponsors.
Individual retirement sales increased sequentially in the latest quarter. Corebridge launched Progressive Trigger, an index annuity crediting strategy designed to help preserve future growth potential after a down year. It also had been selected for over $1.5 billion in pension risk transfer transactions expected to close in the fourth quarter.
The planned Equitable combination is another part of Corebridge’s strategy. Corebridge is targeting a year-end close and expects access to Equitable’s advisor network to expand distribution. Federal approvals had been received, while state and international approvals remained outstanding. Corebridge expects the combined balance sheet to allow it to pursue larger institutional transactions.
- $23.3BFY2021
- $24.7BFY2022
- $18.8BFY2023
- $18.7BFY2024
- $18.5BFY2025
Structural risks
- Interest rates and markets: Changes in rates can affect investment spreads, reserve and capital requirements, hedging costs and customer withdrawals. Economic deterioration can also reduce premiums and deposits or increase investment impairments.
- Investment and hedging exposure: Credit deterioration, counterparty defaults, illiquid investments and inaccurate investment or derivative valuations can affect results and liquidity. Corebridge also relies on derivatives to hedge risks associated with insurance liabilities.
- Insurance and reinsurance: Claims timing and amounts are unpredictable, and actual customer behavior or mortality may differ from pricing assumptions. Reinsurance may become unavailable or uneconomical, and reinsurers may fail to perform their obligations.
- Access to capital: Corebridge’s parent depends on subsidiary dividends to meet its obligations. State insurance rules restrict subsidiary distributions, and regulatory or other legal restrictions can limit capital transfers.
- Third parties and regulation: Corebridge depends on outside asset managers and service providers. Its businesses face insurance, securities and other regulation, and changes in capital, reserve or investment requirements can affect operations and financial condition.
Bottom line
Our reading
Our reading: Corebridge is an insurance and retirement business whose earnings depend on both long-term customer relationships and the investment performance of assets backing its obligations (item1; item7). Its distribution reach and mix of spread, fee and underwriting income provide several ways to generate earnings, but interest rates, insurance assumptions and access to subsidiary capital remain central exposures (item1; item1a). The planned Equitable combination could extend distribution and institutional capacity, but its completion still depends on approvals (call_prepared; call_qa).