Corebridge Financial, Inc. Q1 FY2026 Earnings Call

Hello, everyone. Thank you for joining us, and welcome to Corebridge Financial Inc. First Quarter 2026 Earnings Call. I will now hand the conference over to Isil Muderrisoglu, Head of Investor and Rating Agency Relations. Please go ahead.

Good morning, everyone, and welcome to Corebridge Financial's earnings update for the first quarter of 2026. Joining me on the call are Marc Costantini, President and Chief Executive Officer; Chris Filiaggi, our Interim Chief Financial Officer and Chief Accounting Officer; and Lisa Longino, our Chief Investment Officer. We will begin with prepared remarks by Marc 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. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release, financial supplement and earnings presentation, all of which are available on our website at investors.corebridgefinancial.com. With that, I would now like to turn the call over to Marc and Chris for their prepared remarks. Marc?

Good morning, and thanks for joining us. I'd like to formally welcome our CFO, Chris Filiaggi, to the call as well as our Chief Investment Officer, Lisa Longino. I'll begin this morning with a recap on the strategic rationale of our transformative merger with Equitable and an update on progress we've made to date followed by some observations on the current market environment and how our corporate business model performed in the first quarter. I'll also summarize some of the actions we're taking to win with customers. Turning to Slide 3, we are bringing together three outstanding franchises to create a diversified financial services company with leading positions in retirement, life, wealth and asset management. Together, we will have more than 12 million customers and $1.5 trillion in assets under management and administration. Our combined distribution capabilities will be formidable. We will have a large multichannel distribution ecosystem to reach the broadest possible customer base. Our enhanced scale will drive significant synergies, $500 million in expense synergies plus meaningful upside opportunities from additional revenue, tax and capital synergies. Our greater scale should reduce our cost of capital to help us provide better customer solutions at lower cost, allow for greater investment and strengthen our ability to attract top talent. The transaction will allow us to further diversify our source of income, which helps provide resilient earnings across market cycles. Our growth prospects will be considerable across the combined company's businesses with our integrated model allowing us to capture the full value chain. The balance sheet of the combined company will be robust. By 2027, we expect earnings to exceed $5 billion per year, cash generation will be strong and consistent, topping $4 billion per year. The merger will be immediately accretive to both earnings per share and cash generation, both of which should increase to 10-plus percent by year-end 2028. Turning to Slide 4. The upside potential for all our businesses will be strengthened with the merger. In individual retirement and life, we will have meaningful revenue synergies. For example, our fixed and fixed index annuities will complement Equitable's annuity offerings and their variable universal life product will complement our life offerings. Together, we will be a leader in the large group retirement space with a large workplace distribution force. We will have more capabilities and balance sheet capacity to support our growth in institutional markets. In the combined company's asset management and wealth management businesses, AllianceBernstein will have nearly $1 trillion in AUM and we'll have over 5,000 advisers to drive growth. We are making good progress on steps required to close this transformative transaction. We already have completed a vast majority of our regulatory filings, our Form S-4, including the shareholder proxy statement, will be filed with the U.S. Securities and Exchange Commission shortly. We believe the shareholders of both companies will approve the transaction, given its compelling rationale. The executive team of the combined company has been determined and will be communicated soon. I'm confident we have the right leadership to execute on all our strategic objectives. Both companies have established integration management offices that are hard at work planning a seamless integration that captures the full value of the synergies. Finally, an important update on the timing of share repurchases. As we indicated in the 8-K filed earlier this month, we are exploring undertaking share repurchases prior to the closing of the merger including during the period from filing the preliminary proxy with the SEC until we mail the final proxy to shareholders. We also continue to expect another opportunity when we can repurchase shares after the shareholder vote, subject to normal blackout periods. Any remaining capital we plan to deploy will be facilitated post close likely through an accelerated share repurchase. Turning to Slide 5. Corebridge demonstrated strong performance driven by favorable industry demographics and sustained customer demand in the first quarter. Despite facing heightened market volatility and competition, our disciplined approach continues to deliver solid results. Our wide array of product and service offerings enable us to meet a wide variety of customer needs, enhance the stability of our financial results and allow us to allocate capital where returns are the highest. Our powerful balance sheet continues to give us financial flexibility and our disciplined execution shows up in everything we do. Our overall performance in the quarter was strong. Excluding variable investment income and notable items, year-over-year operating earnings per share were up 13% and adjusted return on equity was up 120 basis points. The foundation of our success is winning with customers and I include our distribution partners and plan sponsors in that category. We were proud to be ranked #1 by J.D. Power for partner satisfaction and annuity distribution. This validates our strategic focus on the adviser experience and our goal of being the easiest firm in the industry to do business with. We also continue to see strong momentum in our Group Retirement NPS and with plan sponsor satisfaction rising year-over-year. I'll have more to say about how we're investing in customer experience in a minute. In Individual Retirement, we delivered strong sales of $4.3 billion, while maintaining pricing discipline and consistently positive net flows. The market outlook remains positive — the Peak 65 surge is continuing with another 4 million Americans hitting that retirement milestone this year. In Group Retirement, we continue to see the transition from a spread-to-fee-based business. Fee-based earnings are approximately 60% of the total with advisory and brokerage assets rising to all-time highs, growing 14% year-over-year, benefiting from record levels of net inflows. In life, excluding variable investment income and seasonally higher mortality, we continue to deliver earnings within our guided range, reinforcing stable earnings for the company. And in institutional markets — the underlying business continues to grow with an 18% increase in reserves. We issued $1 billion of guaranteed investment contracts in January, including our first-ever Canadian dollar-denominated GIC. The pension risk transfer pipeline remains healthy with greater activity expected in the second half of the year. I believe the key to our success will be a relentless focus on putting the customer at the center of everything we do. Our road map is simple: to deliver a differentiated customer value proposition, be the easiest company to do business with and maintain a world-class distribution. That is how we generate more value for customers and investors alike. As I said on my first earnings call three months ago, we're going to make the investments needed to improve the customer experience. Those efforts are well underway at Corebridge in 2026. A few highlights. We've launched a customer council steered by the executive leadership group and comprised of cross-functional senior leaders from across the company. They are showcasing key initiatives, sharing best practices, identifying quick wins and above all, ensuring we maintain a customer-first mindset. Across our retail operations, we're modernizing how new business is onboarded by further enhancing digital submissions, strengthening upfront suitability checks and improving real-time application status, all of which has removed uncertainty, delay and friction from the process. We've launched a new wealth management digital experience last month that allows clients to seamlessly navigate their product and service relationship with us and stay connected with their financial adviser. We're moving permanent life products onto our digital submission platform, and we're launching a new payroll platform that makes it easier for group retirement plan sponsors to integrate their payroll data with us. In closing, we're excited about the future of our business. Externally, powerful demographic tailwinds are creating a large market opportunity. Internally, our customer-first mindset and emphasis on operating at speed will enable us to capture a significant share of that opportunity. The result will be a company that delivers significant growth in earnings per share, cash generation and shareholder value. This is true of Corebridge today and will continue into the future as a combined company. With that, I'm pleased to turn the call over to Chris.

Thank you, Marc. I'm excited to join today's call and will provide further color on our performance for the first quarter. Starting with Slide 6. Our results this quarter underscore the strength of the Corebridge model, consistent growth and active capital deployment balanced by expense control and portfolio optimization. Performance was largely in line with our guidance from the fourth quarter, highlighting our diverse stable earnings patterns and agility in capital management. We reported adjusted pretax operating income of $629 million and earnings per share of $1.05. The first quarter results were impacted by underperformance of our variable investment income. Excluding the impact of variable investment income and notables, EPS increased by 13% year-over-year, demonstrating the underlying strength of our core businesses. Variable investment income returns were impacted by several components including positive alternative investment returns, offset by unrealized mark-to-market losses on investments accounted for at fair value with changes in fair value reported in adjusted pretax operating income. Adjusting for long-term alternative investment returns and notable items, we delivered a run-rate operating EPS of $1.17, representing a 9% increase year-over-year. Finally, adjusted ROE was 10.6% or approximately 12% on a run-rate basis. Excluding variable investment income and notables, this reflects a 120 basis point increase year-over-year, underscoring our commitment to consistent profitable growth. Turning to Slide 7. Our businesses continue to evolve, delivering highly diversified sources of earnings and strong, stable cash generation regardless of the market environment. Our core sources of income, excluding alternatives and notable items, increased 1% year-over-year with some variation in the underlying components. Fee income increased by 9%, driven by growth in assets under management and advisory alongside favorable market tailwinds. Spread income increased by 1%, which is in line with our guidance around the timing of the majority of the 2025 Fed rate cuts. To put that in perspective, had those rate cuts not occurred, base spread income would have been approximately $20 million to $25 million higher. Underwriting margin decreased 2% year-over-year due to exceptionally favorable mortality in the first quarter of 2025. Lastly, general operating expenses were in line with our expectations. This reflects ongoing investments we are making in our platform, as Marc highlighted earlier, as well as typical first quarter seasonality. Looking ahead, we remain fully committed to disciplined expense management and improving our operating leverage over time. Turning to Slide 8 and looking at our capital position. Our balance sheet continues to be healthy and strong. We ended the quarter with over $1.7 billion in holding company liquidity, supported by our U.S. insurance companies distributing $925 million of dividends in the quarter and our level of liquidity exceeds the holding company's needs for the next 12 months. Capital return to shareholders reached $1.4 billion in the quarter. This included the completion of our planned capital returns related to the VA reinsurance transaction totaling $1.8 billion. Excluding those VA reinsurance proceeds, we maintained our payout target with a payout ratio of 88%. 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. These results exclude the impact of notable items and variable investment income. Starting with Individual Retirement, we continue to be very positive about this business. The outlook is backed by strong fundamentals and demographic tailwinds that continue to drive demand for our retirement solutions. Premiums and deposits were $4.3 billion, demonstrating growth both sequentially and on a year-over-year basis. Leveraging first quarter industry projections, we maintained our market share of total annuity sales year-over-year. This includes our newer VUL product, highlighting our success with key distribution partners. Net flows into the general account remained positive at approximately $0.5 billion, contributing to continued growth in the underlying business. We saw surrender activity in line with our expectations. This reflects fixed and index annuities reaching the end of their surrender charge periods. As we look at the full year, we reaffirm our estimate for base spread income to be approximately $2.55 billion. While we continue to see some spread compression, we still expect it to level off by the end of 2026, assuming the current market outlook and two additional Fed rate cuts. Lastly, APT OI increased 1% year-over-year, supported by growth in spread and fee income, highlighting the growth in the underlying business. Turning to Group Retirement. We are seeing this business evolve as a growing percentage of the American workforce is reaching retirement age. This demographic shift and the steps we are taking because of it are fundamentally changing how we generate value, moving us toward a more diversified and resilient earnings profile. Continued momentum in our advisory and brokerage initiatives resulted in a record level AUMA and net flows of over $300 million in the first quarter. The strong performance is directly related to our efforts focused on the adviser experience and operational ease of doing business, which is delivering early measurable wins as we continue to invest in the platform. APT OI decreased 17% year-over-year. This reflects lower spread income, partially offset by growth in fee income. This transition is intentional. As our clients move into the decumulation phase, we are seeing a natural mix shift away from the spread-based products and towards fee-based income. This aligns with our broader strategy to emphasize capital-light earnings, which now account for nearly 60% of group retirement earnings. Our Life Insurance business delivered another strong quarter, in line with the guidance we provided back in the fourth quarter, reflecting higher seasonal mortality in the range of $15 million to $20 million. This performance is consistent with both our historical experience and seasonal expectations for the start of the year. We generated $850 million in sales this quarter, in line with first quarter expectations. Underwriting margin declined 5% year-over-year. While mortality trends are favorable and aligned with first quarter expectations, they were below the exceptional mortality experienced in the prior year quarter. Going forward, we remain confident in the steady cash flow and stability this segment provides for the broader portfolio. Institutional markets continues to be a consistent growth engine with both underlying reserves and total earnings trending upward. First quarter sales included over $1 billion in GICs maintaining the consistent momentum we've seen highlighting our ongoing commitment to the GIC and FABN market. APT OI increased 15% year-over-year. This growth was underpinned by an 18% expansion in our reserves and a 13% increase in assets under management and administration. Lastly, a comment on pension risk transfer. Sales in this space are inherently episodic. While we expect volume variability from quarter-to-quarter, our pipeline remains strong. We anticipate an uptick in activity as we move into the second half of 2026. Next, I'd like to take a moment to address recent headlines regarding the life insurance industry and its investment portfolios. Corebridge has a long-standing history in private placements recognizing that the vast majority of companies today are privately held rather than public. We are able to utilize this asset class to achieve diversification across our portfolio that isn't available through public issuance alone. These assets are a natural fit for our liabilities and allow us to not only capture an illiquidity premium, but to do so with the protection of financial covenants, while maintaining a high-quality investment grade profile. Corebridge maintains control over all aspects of our asset portfolio and risk profile, whether our private debt is originated internally or externally, we maintain rigorous ongoing processes to underwrite, re-underwrite, rate and model our private assets. Out of the $284 billion statutory investment portfolio, $49 billion is in private debt, which is a high-quality diversified book, where 91% of the assets are rated investment grade. To provide further context on our private debt, I'll address a couple of recent areas of focus, beginning with private credit, what we categorize as middle-market lending. Our allocation here stands at $3.3 billion, representing only 1% of our total portfolio. These investments have attractive risk-adjusted returns and we continue to expect any losses in the middle-market lending will be yield adjustments and not credit events. Further, within the middle-market allocation, our debt exposure to the software sector is less than $300 million and all of it is currently performing. Another area of focus in the financial press has been BDCs. Like middle-market lending, this represents a small part of our portfolio where we hold $1.7 billion of debt issued by BDCs. Our entire exposure consists of debt instruments with no equity holdings in these originations. Generally, we are a senior lender in these investments and the average asset coverage ratio is approaching 2x, meaning significant asset impairment would be necessary to impact our position in the capital stack. Given our current exposure, robust management processes and the alignment of our liabilities, we remain very comfortable with our positioning. Our rating migration has been net positive over the last four years, and we routinely perform sensitivity testing to ensure we remain well capitalized across all market cycles. In closing, we remain focused on maintaining a strong balance sheet while generating growing returns to shareholders. Our guidance laid out in the fourth quarter remains largely in place, and we continue to believe 8% to 9% is the appropriate expectation for alternative investment returns over the long term although we do anticipate continued market-driven headwinds based on the current environment. With that, I will turn the call back to Isil.

Thank you, Chris. As a reminder, please limit yourself to one question and one follow-up. Operator, we are now ready to begin the Q&A portion of the call.

Your first question comes from the line of Suneet Kamath with Jefferies.

Marc, I wanted to start on distribution. Just curious what you're hearing from your distribution partners post the merger announcement, is there anything that we should be thinking about in terms of sort of limitations on how much product they want to get from any one counterparty? Or is that not really a concern?

Yes. Suneet, thanks for the question. I appreciate it. It's actually a very good question because as we were going through the process with Equitable when we're looking at various levels of synergies, we did challenge ourselves in terms of what I guess I would refer to as dis-synergies. And as we announced it, both firms obviously reached out to all of our distribution partners. I must say to our delight, we haven't heard any, I would say, apprehension about the depth and breadth of the presence we will have across these channels. And part of it is because the suite of products both companies are bringing to the merger are very complementary. So if you even pick the largest distributors on each side, the overlap is de minimis, and the overall volume and, at the end of the day, we feel strongly—and this is a strong premise around this transaction—that scale matters and the manufacturing depth and breadth matters. And it's easier, we feel, for an adviser to learn a handful of stories and be comfortable dealing with a handful of manufacturers, but when it comes to obviously the distribution side, there's a servicing side as well and how they live the brand. So we feel that's value add. So the answer to your question is we haven't heard of any, and we were obviously very pleased by that outcome.

Okay. That's helpful. And then, I guess, I just want to make sure we're thinking about this right. When you talk about the $4 billion of cash and the $5 billion of earnings, that would sort of imply free cash flow conversion of like 80%, which seems high. So I'm assuming that $4 billion of cash is sort of before holdco expenses, but just wanted to get a little bit more color on how you're coming up with those numbers and what they include.

Yes. Thank you, Suneet. Yes. So the short answer is, you are correct. And that's kind of the pro forma that both firms put out there when we obviously communicated this transaction a month or so ago. And so I'll leave it at that, but that's right. And that's pro forma guidance of where we expect the operating income to be and the flows from the operating entities. And it reflects, obviously, the very attractive synergies we'll get out of the transaction as well.

Your next question comes from Alex Scott with Barclays.

First on how you envision wealth management strategy evolving over time? I know you're not ready to give revenue synergies, that kind of thing. But Marc, I've heard you talk about Wealth Management. I know Equitable, I think, is maybe even gotten a little further down the road with their build-out of wealth management. How do you expect to leverage that? What are you planning to do on that front, even if you could just provide something more qualitative? Second, on artificial intelligence and investment that you're going to make there over time. I heard some of the comments in your introductory commentary around the initiatives you've already got going on some of the digital interfaces that I think you mentioned. How are you coordinating those efforts with Equitable? How quickly can you start working together on AI adoption given this transaction will take some time to close but many of these initiatives are taking shape very quickly?

Yes. Alex, it's great to take your question. So you're right. We—and the collective we—are very bullish on the wealth management space. I think if I objectively look at what Equitable Advisers has done and what they've done with that business and the margins and the accretion and the growth of the margins over time and the volume and the AUMs, I think they have a wonderful story. They have an operating model that's proven to be successful. And they've got 4,500, 4,600 advisers in the market. On our side, we have around 1,000 advisers as part of that business. We are investing a lot in the infrastructure there to, as you know, cross-sell and upsell into those plan participants, and we feel there's a great opportunity there. I think we mentioned in the last call that we think that's upwards of $30 billion of upside there, and as Chris mentioned in his remarks, we are harvesting that opportunity right now. Having said all that, your implicit observation that their platform is more mature and advanced is true. So in the details that we are working through now, between now and close and after close, we will determine how we bring both organizations to bear and ensure that one plus one equals three. We are very sensitive to the fact that we're talking about individuals who have clients and want to grow their own book of business, and we are being attentive to that as we bring the two organizations together. It's too early to tell exactly what it looks like, but we are very bullish on that business as we look forward. On AI, three perspectives. First, each firm is operating independently between now and close, so initiatives they have ongoing will, I'm sure, continue and some of ours will continue. We are being thoughtful if there's overlap so that we identify the go-forward platform or approach for integration. Second, we are accelerating our investment and deployment of AI capabilities. We want to invest in differentiated outcomes—invest heavily in the front end to enable and accelerate distribution of our products and services to our various channels. We want to arm and facilitate our distribution to provide better service and guidance, identify faster the better clients for our products and help people retire with confidence. That's a key focus. Third, it's about enabling a differentiated brand experience and how they live our brand, which comes to servicing and claims. A simple example of what we've deployed over the last few months is digital agents that help our group retirement plans manage their affairs. When people call and want to do certain things with their group retirement plan, there's a lot of complexity for the servicing individuals to get to the right information and outcome, and we've got digital agents now helping surface the right characteristics of every plan and contract that individual has. That would be one example of how we've deployed it. I think there will be more as time goes on. Winning with customers and putting the customer at the forefront of everything we do is very important, and thoughtful AI will be a key part of getting to that outcome.

Your next question comes from Tom Gallagher with Evercore ISI.

One question on the deal then a separate question on investment exposure. On the deal, my question is on the revenue synergies. Marc, I know you're still getting through more detailed estimates for what these opportunities represent. But the fact that you're highlighting it as one of the parts of the strategic rationale for doing the deal, is it fair to assume that this could be material to earnings? I'll define that as 5% or more as a percent of earnings when we look to 2028 and beyond in terms of the potential opportunity here. Or is it more modest? I just want to get a broader sense because I think this is part of the strategic rationale for doing the deal. Second, on the investment side, can you just give a little more clarity on the $1.7 billion of BDC debt — is it all investment grade? How is that very different than the underlying exposures that the BDCs have themselves?

Thanks for the question. I guess there will be ample revenue synergies that we expect from our transaction. We obviously guided towards the $100 billion of assets coming from the corporate side of the equation to AllianceBernstein over time, and that will be from the general account and separate account assets. There's a lot of cross revenue synergies around us corporate selling some of our fixed annuities and fixed index annuities through the adviser channel, which I think you've heard that there's billions being written that we have access to. There's a VUL product on their side that was on our design table that we'll be able to introduce and then there's the cross-sell and upsell into these group retirement plans that I was just talking about. But it's too early to put a precise number on it. I wouldn't want to say above or below your number and provide guidance we haven't worked through. As Robin and I have been mentioning to all of you, we will have an Investor Day in the first half of next year. At the top of the list will be additional guidance on these revenue synergies. So far, we've indexed on the expense synergies given they were easier to identify as we went through the process, and that's what we're guiding to. But there will be capital, tax and revenue synergies as well tied to the transaction, which is why we think this transaction is appealing across many dimensions.

Tom, it's nice to meet you. Thanks for the question. The way we think about BDCs is, first and foremost, we look at the larger ones. We look at ones that could be public or really the majority of ours are nontraded. Given they're closed-end funds, they are regulated under the 1940 Act, and they have some regulatory covenants in there that help. We view it as the portfolios are highly cash generative diversified pools, primarily first liens with conservative leverage and low loan-to-value metrics. We spend a lot of time looking at that. Our asset managers will go in and regularly look at the portfolio monthly, how is it doing, what does the cash look like, what trades are they doing. Because it is loan investments and there is leverage at the portfolio company level, we spend a lot of time doing that. The risk mitigants really are significant portfolio diversity, low leverage and even when we look at stress cases, it points to solid recovery through the secured BDC debt because of the structuring. We constantly review the asset coverage ratio. All of this is investment grade quality in our assessment, and as Chris mentioned, we don't have any equity exposure.

Your next question comes from Ryan Krueger with KBW.

I think your Individual Retirement sales were roughly flat year-over-year. And I think you said market share was pretty consistent. So that suggests that the industry was also about flat. Just any commentary on why you think sales have slowed at this point. I think the rate environment is still pretty similar to what it was. We obviously have the continued aging of the population. So I just was wondering if you had any perspective on why you think annuity sales have been slowing a bit after the big uptick in the last several years. And the second question, the Japan commercial partnership you're pursuing with Nippon Life — when do you think that could become operational? And how big an opportunity could that actually be for the company over time?

Yes. Ryan, thanks for the question. Our sales are relatively flat year-over-year and quarter-over-quarter on the individual retirement side. I would note that we continue to have very robust activity in the individual retirement side on the institutional side as well. We continue to believe that demographic trends are very positive and a tailwind. We don't have the finalized Q1 market share data from all sources yet, so when we say we've maintained our share, it's based on our internal distributor data. Our sense is our share may have increased somewhat, which could imply flows across the industry tempered a bit. I feel that is temporary and we believe there's robust demand overall. We don't make a quarter a trend given the variability and we continue to expect growth in the space overall. On the Nippon Life partnership, we have rich and ongoing discussions. Nippon is a very important strategic investor and they have world-class distribution in Japan. We're working on co-manufacturing products. Their economy is reflating, there's need for many of the same products we sell. They have processes to evaluate what goes through their distribution channels and what's right for their consumers. We're developing products with them that meet those needs; they have to be filed, approved, and put on distribution shelves. If anything is announced during 2026, it would typically take another nine to twelve months from that point to have something in market because of filing and regulatory timing. Post merger, AllianceBernstein has a great global presence and that is another place where we think there's revenue synergy potential as we partner across the world.

Your next question comes from Wes Carmichael with Wells Fargo.

First question was on individual retirement. Just on the surrender rate in fixed annuities and FIA that ticked up a little bit sequentially. So just curious if you think that's going to continue to kind of stay at that level from here? Was there a bit of maybe just volatility in the quarter from product exiting surrender charge. And did you see any elevated surrender charge income come through in the quarter? Second, on the insurance company cash distributions in the quarter. I think that was nearly $650 million when you exclude the VA proceeds. And that's up nicely sequentially and year-over-year. Do you kind of view that as indicative of a new run rate? Was there anything in the quarter that maybe favorably impacted that?

Thank you, Wes. I appreciate the question. As we've guided in prior quarters, there is some business that is approaching the surrender charge period across our fixed annuity and fixed index annuity blocks. Typically those products have a five- to six-year surrender charge period, and many are getting to the end of that point. Over the course of 2026, 2027 and 2028, we do see blocks of business maturing, and we would expect to see more redemptions as a natural behavior and maturity of the block. We always strive to have net positive flows, and I'd like to think of our business as having roughly $5 billion of gross flows per quarter through various cycles, so think about a circa $20 billion annuity flow on an annual basis. The maturity of the block will generate a steady stream of net positive flows to our book. So we do expect heightened surrenders as natural maturities of the business, not unexpected policyholder behavior. There was no unexpected surrender charge revenue or headwind tied to that in our business this quarter.

Wes, thanks. Let me reiterate our guidance on insurance company dividends. Our expectation was that we would have insurance company distributions at around $2.3 billion in 2026. That does include the dividend related to the reinsurance transactions we completed. That leaves us with about $2 billion of normalized insurance dividends. We did accelerate a portion of our dividends in Q1. Directionally, you should expect dividends to be lower for the rest of the year, more in the $450 million to $500 million range per quarter on average.

Next question comes from Cave Montazeri with Deutsche Bank.

Both of my questions are going to be on making Corebridge the easiest company to do business with. First, on this newly created customer council, the initiatives that they're working on — are they mainly digital initiatives? Or does that go beyond technology? Maybe can you share some of the quick wins you've identified that you want to start working on next? Second, merging with Equitable is going to help you be an easier company to do business with, but there could also be integration challenges in terms of platforms and IT systems. Do you plan on trying to run all of the back office separately for a while to make sure nothing breaks, or is there a plan to integrate everything under one umbrella as quickly as possible to optimize data and offer the best experience?

Cave, I appreciate that question. We are striving to be the easiest company to do business with. When we launched and rolled out the 'win with customers' initiative internally, we saw excitement across the organization to pivot back to this focus. The customer council comprises significant senior leadership participation. They share best practices, implement improvements and identify quick wins. Much of the early work is through digitization, but it goes beyond technology to encompass processes, operating model changes and training. You saw in my prepared remarks that we've deployed capabilities across several areas: improving straight-through processing on new business, enhancing digital submissions and real-time application status, launching a new wealth management digital experience, moving permanent life products onto our digital submission platform, and rolling out a payroll platform to make it easier for group retirement plan sponsors to integrate payroll. On integration with Equitable, when we worked closely with them to identify the $500 million of run-rate synergies, platform decisions and determining the go-forward platform were key. The teams are working through those details now. The objective is to enhance the customer experience while not being disruptive. The approach will vary by business and product line. It won't happen day one—given the intricacy of systems and processes—but we will plan for a deliberate approach that protects the customer experience while enabling long-term integration benefits.

The next question comes from Joel Hurwitz with Dowling & Partners.

I wanted to touch on variable investment income. Can you just provide some color on what flows through other variable investment income that was negative in the quarter? And then are you seeing any rebound thus far in Q2? And maybe talk about what you're expecting for VII in the second quarter. Also, on buybacks, you have a nice liquidity cushion at the holdco versus your needs. Any commentary on your willingness to significantly draw that down in this open window and particularly if AIG comes to the market with the rest of its stake?

Joe, nice to meet you. Thanks for the question. In the quarter, we had a bit lower variable investment income driven by some nonrecurring marks on otherwise fixed income assets that are held in vehicles. Those marks are reflected in operating income versus OCI. That has largely reversed and we're not expecting to see that again. As we look forward into the second quarter, in general we're seeing variable investment income slightly better, though given market volatility we still think second quarter could be below long-term expectations.

Got it. That's helpful. And then just on buybacks, you did $1.25 billion in Q1 before going quiet because of the proceedings with Equitable. Any thoughts on being active in this open window, and how you'd react if AIG comes to market with the rest of its stake?

Joe, thanks for that. As you noted, we did $1.25 billion of buybacks in Q1. As part of our 8-K and proxy filing process, as we file our proxy — which we expect to do — we do plan, in concert with Equitable, to be in the market to do buybacks between the filing and the mailing of the proxies. We won't guide to the exact amount we'll do in the market at that time. We also intend to be in the market after the shareholder vote later this summer. Regarding AIG, we don't have insight into their specific plans. Their CEO has indicated a desire to reduce their holdings by year-end, but we can't provide detail or speculate on their actions. We do have liquidity to deploy, and we'll make decisions consistent with our capital allocation framework and guidance.

Your next question comes from Jack Matten with BMO Capital Markets.

Maybe one on group retirement. I know it's been in transition. Can you help us frame the timeline for when Corebridge expects earnings to stabilize in that business? Are we getting close to that point now? Or do you think it's more likely after the merger closes and you see some synergies from that combination? Second, on the annuities marketplace, is competition still intensifying in any of the product categories where you currently focus? Or do you think the market is settling into a new equilibrium at this point? You mentioned spreads stabilizing by the end of this year, but also said higher surrenders could potentially persist into next year or 2028. Any color there would be helpful.

Francis, thanks. Our expectation is the group retirement transition will take another 12 to 24 months to play out. We're pivoting the business from spread-heavy products toward more fee-based offerings; you're seeing green shoots with record AUMA and positive net flows. The merger presents additional opportunities to accelerate cross-sell and penetration via Equitable Advisers, but execution will not be day one — it will likely take until the first half of 2027 to begin to see material effects from that initiative and then more visible results thereafter. On competition in annuities, competition ebbs and flows; there's always competition. At the low end of the market, more capital has been deployed, and we are judicious about capital allocation, often redeploying to institutional markets where returns can be attractive — you saw the $1 billion plus of GICs in Q1. Regarding spreads, we continue to believe spreads on the Individual Retirement business will level off toward year-end and then expand as the interest rate cycle evolves. Surrenders related to maturing blocks will persist as those products exit surrender periods, but this is a natural maturity phenomenon rather than unexpected policyholder behavior.

Your next question comes from Wilma Burdis with Raymond James.

Given the combined scale of Corebridge and Equitable and the investments you plan to make in wealth, is it possible to accelerate the goal of making the wealth business self-clearing? I recall this would add margin — any color on potential economics? Second, you commented on potential capital and tax benefits. We estimate back-of-the-envelope maybe $500 million to $1.5 billion of capital freed up from synergies. Is that in the ballpark or are we missing anything?

Wilma, thanks. On the self-clearing question, you're primarily referring to Equitable's wealth advisers business that is not currently self-clearing. Scale can enable that, and it could be accretive, but we're not ready to provide a view on timing or a commitment yet. We need more analysis and we'll provide more detail at Investor Day. On capital and tax benefits, we have not guided to specific dollar amounts or ranges for those items. What we have guided to is expectation of double-digit EPS accretion over the coming years and that accretion will be driven by expense synergies, revenue synergies, capital and tax efficiencies. We'll provide more specifics at Investor Day.

Your next question comes from Mike Ward with UBS.

I was just wondering about the Corebridge brand in the merger scenario. It's certainly younger than the Equitable brand. Based on what you saw coming out of AIG and thinking through any kind of shock lapse, is that kind of done with? Or could there be a temporary uptick post-merger? Also, on the proposed changes to the RBC factors for CLOs and collateral loans, any early read on the potential impact for you?

Mike, thanks. Regarding branding, we've decided to move forward with the Equitable brand post-merger. Equitable has an extensive legacy and a long-established brand, and AllianceBernstein on the asset management side will continue to be invested in. The Corebridge brand is relatively young, and while many of our employees are proud of it, going forward the combined company will be represented under the stronger legacy brand. We don't expect business disruption from that branding decision and we think it will be value-add to represent the combined firm under the Equitable name. On CLO RBC changes, I'll ask Lisa to provide color.

Mike, nice to meet you. Regarding the proposed changes for CLOs, which would increase capital charges for lower-rated tranches and reduce it for higher-rated tranches, our indications are it will have a minimal impact given the structure of our CLO portfolio. We're comfortable with our position.

We have run out of time, and therefore, we have reached the end of the Q&A session. This does conclude today's call. Thank you for attending. You may now disconnect.