ebridge Financial(CRBG) - 2024 Q2 - Quarterly Results

Financial Performance Summary Second Quarter 2024 Highlights The company reported strong Q2 2024 results with 9% operating EPS growth, record premiums, and significant shareholder returns Q2 2024 Key Performance Indicators | Metric | Value | Source | | :--- | :--- | :--- | | Net Income | $365 million | Per Share: $0.59 | | Adjusted After-Tax Operating Income | $692 million | Per Share: $1.13 | | Premiums and Deposits | $11.7 billion | Highest in over a decade | | Shareholder Return | $575 million | $436M share repurchases, $139M dividends | | Holding Company Liquidity | $1.9 billion | - | - Aggregate core sources of income, including base spread income, fee income, and underwriting margin, increased by 5% compared to the prior year quarter[1] - The company has repurchased approximately $940 million in shares year-to-date through July 31, 2024[1] Consolidated Results Consolidated APTOI grew 3% to $859 million and premiums surged 17%, though GAAP net income declined due to net realized losses Consolidated Financial Results (Q2 2024 vs. Q2 2023) | Metric ($ in millions, except per share) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Income | $365 | $771 | | Income per Common Share | $0.59 | $1.18 | | Adjusted After-Tax Operating Income | $692 | $679 | | Operating EPS | $1.13 | $1.04 | | Adjusted Pre-Tax Operating Income (APTOI) | $859 | $836 | | Premiums and Deposits | $11,679 | $9,941 | | Net Investment Income | $2,988 | $2,714 | - The decrease in net income was largely driven by higher net realized losses, primarily from asset optimization activities[5] - Excluding variable investment income, APTOI grew 9% over the prior year quarter, reflecting higher core income sources and expense efficiencies[6] - Premiums and deposits grew 17% YoY, or 37% excluding transactional activity, mainly driven by fixed annuities[7] Capital and Liquidity Highlights The company maintained a strong capital position with $1.9 billion in liquidity and returned $575 million to shareholders - Holding Company Liquidity: $1.9 billion[7] - Financial Leverage Ratio: 28.4%[7] - Shareholder Returns (Q2): $575 million ($436M share repurchases, $139M dividends)[7] - Quarterly Dividend: Declared $0.23 per share, payable on September 30, 2024[7] Business Segment Performance Individual Retirement APTOI increased 8% to $621 million, driven by a 68% surge in premiums and deposits from strong fixed annuity sales Individual Retirement Financials (Q2 2024 vs. Q2 2023) | Metric ($ in millions) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Premiums and deposits | $6,787 | $4,045 | | Spread income | $723 | $684 | | Fee income | $308 | $280 | | Adjusted pre-tax operating income | $621 | $574 | - Premiums and deposits surged by $2.7 billion (68%) YoY, driven by growth in fixed annuity deposits[8] - APTOI increased by 8% due to higher base spread income from new business and higher fee income, partially offset by higher deferred acquisition costs[8] Group Retirement APTOI was stable, decreasing 1% to $195 million, as higher fee income and efficiencies offset lower spread income Group Retirement Financials (Q2 2024 vs. Q2 2023) | Metric ($ in millions) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Premiums and deposits | $1,998 | $1,923 | | Spread income | $191 | $213 | | Fee income | $191 | $178 | | Adjusted pre-tax operating income | $195 | $197 | - Premiums and deposits increased by 4% due to growth in in-plan deposits[9] - APTOI decreased by 1% as lower spread income was partially offset by higher fee income and expense efficiencies[9] Life Insurance APTOI grew 25% to $95 million, driven by favorable mortality experience and expense efficiencies Life Insurance Financials (Q2 2024 vs. Q2 2023) | Metric ($ in millions) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Premiums and deposits | $846 | $1,063 | | Underwriting margin | $309 | $361 | | Adjusted pre-tax operating income | $95 | $76 | - Excluding the impact of divested businesses, underwriting margin increased 4% over the prior year quarter, driven by favorable mortality[10] - APTOI increased by 25% due to more favorable mortality experience and expense efficiencies[10] Institutional Markets APTOI decreased 24% to $96 million due to lower variable investment income and a 30% decline in PRT-driven deposits Institutional Markets Financials (Q2 2024 vs. Q2 2023) | Metric ($ in millions) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Premiums and deposits | $2,048 | $2,910 | | Spread income | $88 | $117 | | Adjusted pre-tax operating income | $96 | $126 | - The 30% decrease in premiums and deposits was driven by lower premiums from pension risk transfer transactions[12] - APTOI decreased by 24% primarily due to lower variable investment income[12] Corporate and Other The segment's adjusted pre-tax operating loss increased to $148 million due to non-recurring gains in the prior year Corporate and Other Financials (Q2 2024 vs. Q2 2023) | Metric ($ in millions) | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Adjusted pre-tax operating income (loss) | $(148) | $(137) | - The increased loss was primarily due to non-recurring gains in asset management in the prior year, partially offset by lower corporate expenses driven by the Corebridge Forward modernization program[13] Appendix: Non-GAAP Measures and Reconciliations Non-GAAP Financial Measures This section defines key non-GAAP measures like APTOI and Adjusted Book Value to clarify operational performance - Adjusted Pre-Tax Operating Income (APTOI): Excludes items such as Fortitude Re related adjustments, most net realized gains/losses, and changes in the fair value of Market Risk Benefits (MRBs) to provide a view of ongoing operational performance[22][24][25] - Adjusted Book Value: Excludes Accumulated Other Comprehensive Income (AOCI) and adjusts for Fortitude Re related unrealized gains/losses to eliminate asymmetrical impacts from fair value changes in the available-for-sale securities portfolio[28] - Adjusted Return on Average Equity (Adjusted ROAE): Calculated by dividing AATOI by average Adjusted Book Value to evaluate recurring profitability and business trends, removing fair value asymmetries[29] Key Operating Metrics and Key Terms This section defines key operational metrics like AUMA and core income sources to measure business scale and profitability - Assets Under Management and Administration (AUMA): The sum of Assets Under Management (AUM) and Assets Under Administration (AUA), representing the total assets related to the company's life and annuity products, as well as third-party assets administered[32] - Core sources of income: Defined as the sum of base spread income, fee income, and underwriting margin, excluding variable investment income, representing the fundamental earnings power of the business[33] - Premiums and deposits: A non-GAAP measure that includes premiums on traditional life insurance and deposits on investment-type contracts, used to understand customer demand and sales performance[31] Reconciliations This section provides detailed tables reconciling GAAP financial measures to their non-GAAP counterparts Reconciliation of Net Income to Adjusted Operating Income This table reconciles GAAP net income of $365 million to non-GAAP AATOI of $692 million for Q2 2024 Income Reconciliation Summary (Q2 2024, in millions) | Metric | Value | | :--- | :--- | | Pre-tax income (GAAP) | $456 | | Adjusted pre-tax operating income (APTOI) | $859 | | Net income attributable to Corebridge (GAAP) | $365 | | Adjusted after-tax operating income (AATOI) | $692 | Adjusted Pre-Tax Operating Income (APTOI) by Segment This table details the APTOI for each business segment, with Individual Retirement being the largest contributor APTOI by Segment (Q2 2024, in millions) | Segment | APTOI | | :--- | :--- | | Individual Retirement | $621 | | Group Retirement | $195 | | Life Insurance | $95 | | Institutional Markets | $96 | | Corporate & Other | $(148) | | Total Corebridge | $859 | Spread, Fee, and Underwriting Margin These tables break down primary income sources, totaling $1.0B in spread, $514M in fees, and $329M in margin Total Income Sources (Q2 2024 vs Q2 2023, in millions) | Income Source | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Spread income | $1,002 | $1,014 | | Fee income | $514 | $474 | | Underwriting margin | $329 | $381 | Earnings Per Share (EPS) Reconciliation This table reconciles GAAP EPS of $0.59 to non-GAAP Operating EPS of $1.13 for Q2 2024 EPS Reconciliation (Q2 2024) | Metric | Per Share Value | | :--- | :--- | | Income per common share (GAAP) | $0.59 | | Operating EPS (Non-GAAP) | $1.13 | Adjusted Book Value Reconciliation This table reconciles GAAP book value per share of $18.32 to an adjusted value of $37.95 as of June 30, 2024 Book Value Reconciliation (as of June 30, 2024) | Metric | Per Share Value | | :--- | :--- | | Book value per common share (GAAP) | $18.32 | | Adjusted book value per common share (Non-GAAP) | $37.95 | Adjusted Return on Average Equity (ROAE) Reconciliation This table reconciles the annualized GAAP ROAE of 12.9% to the non-GAAP Adjusted ROAE of 12.0% for Q2 2024 ROAE Reconciliation (Q2 2024, Annualized) | Metric | Value | | :--- | :--- | | Return on Average Equity (GAAP) | 12.9% | | Adjusted ROAE (Non-GAAP) | 12.0% | Net Investment Income Reconciliation This table reconciles GAAP Net Investment Income of $2.99 billion to the APTOI basis amount of $2.72 billion Net Investment Income Reconciliation (Q2 2024, in millions) | Metric | Value | | :--- | :--- | | Net investment income (net income basis) | $2,988 | | Net investment income (APTOI basis) | $2,716 | Premiums and Deposits This table details the $11.7 billion in total premiums and deposits by business segment for Q2 2024 Premiums and Deposits by Segment (Q2 2024, in millions) | Segment | Premiums and Deposits | | :--- | :--- | | Individual Retirement | $6,787 | | Group Retirement | $1,998 | | Life Insurance | $846 | | Institutional Markets | $2,048 | | Total | $11,679 | Other Information Conference Call Information The company will host a conference call on August 1, 2024, to review the Q2 2024 financial results - A conference call to review Q2 2024 results is scheduled for Thursday, August 1, 2024, at 10:00 a.m. EDT[14] Cautionary Statement Regarding Forward-Looking Information This section outlines forward-looking statements and associated risks, including interest rates and economic conditions - The report contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[17] - Key risks include: changes in interest rates and credit spreads, economic slowdowns, reinsurance counterparty performance, competition, and challenges related to being a recently separated public company[18][19]