Corebridge Financial (NYSE:CRBG) Q3 2026 Earnings Call

0:00 Hello everyone, thank you for joining us and welcome to the Corbridge Financial Inc. Third Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you'd like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Isil Muderrisoglu, Head of Investor and Rating Agency Relations. Please go ahead.

0:28 Good morning, everyone, and welcome to Corbidge Financial's earnings update for the third 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. Corbridge'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, Corbridge is under no obligation to update any forward-looking statements If circumstances or management estimates or opinions should change, and your caution to not place undue reliance on any forward-looking statements.

1:35 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.corbridgefinancial.com. With that, I would now like to turn the call over to Marc and Chris for their prepared remarks. Marc?

1:59 Thank you, Isil. Good morning, and thank you for joining us. Our results demonstrated the strength of our diversified business model, disciplined execution, and ability to capitalize on the powerful market trends shaping our industry. Operating earnings per share were $1.22, a 27% increase year over year. Adjusted return on average equity was 12.1%, An increase of 180 basis points year over year. And we returned $295 million of capital to shareholders in the form of dividends and share repurchases. These results not only reflect strong quarterly execution, but also our ability to generate attractive returns for shareholders. Our strong performance is occurring against a backdrop of highly favorable trends shaping the retirement and protection industry.

2:48 The need for retirement income and financial protection continues to grow. Millions of Americans are seeking guidance while preparing for and navigating retirement. At the same time, pension sponsors remain focused on reducing risk while institutional clients continue to prioritize certainty and stability. Together, these structural tailwinds are creating attractive opportunities across our businesses and underscore the value of our diversified platform. In individual retirement, the demand for both accumulation and guaranteed income products remains robust. More than 4 million Americans are reaching retirement age each year, many of them without pensions or other income sources to maintain their standard of living. That demand is broad-based across product categories.

3:33 Fixed and fixed index annuities continue to benefit from industry demand, as customers increasingly seek solutions that provide growth potential and protection. Industry RILA sales reached approximately $25 billion, a new quarterly record. and year-to-date traditional variable annuity sales increased 17% year-over-year, supported by favorable equity markets, all of which positions the combined company well as a leading provider across product categories. Importantly, this demand is not dependent on any single product or market environment. Rather, it reflects a growing need for solutions that help individuals accumulate assets, protect savings, and generate income in retirement. We believe our broad product portfolio, extensive distribution reach, and disciplined approach to pricing position us well to meet those needs.

4:22 Our third quarter individual retirement sales were $4.5 billion, up 17% sequentially, and our strongest quarter of the year. Based on preliminary LIMRA data, we increased market share in both fixed annuities and RILAs. These strong sales contribute to positive net flows of more than a billion dollars, and we expect to see this continued sales momentum through the end of the year. We also launched Progressive Trigger, a first-of-its-kind index annuity crediting strategy designed to help preserve future growth potential following a down year, illustrating our focus on innovation, ensuring we design products and features that prioritize customer needs. Our performance reflects our customer-first approach, combining innovative solutions tailored to evolving customer needs with the breadth of our product portfolio and the strength of our distribution network.

5:12 In group retirement, we continue to see strong demand driven by customers' growing need for guidance throughout their retirement journey, creating opportunities across both our retirement solutions and wealth management businesses. This favorable demand environment contributed to a 12% year-over-year increase in advisory and brokerage assets during the third quarter. We're also simplifying retirement plan distributions, a source of friction for participants. Additional processing capabilities for withdrawals are providing customers with easier access to their funds and a more seamless experience. In life, the protection gap remains significant, with 48% of Americans underinsured. Consumer awareness of financial vulnerability is growing, and digital tools are making it easier to start the conversation and complete the purchase.

6:00 Against that backdrop, we continue to deliver consistent performance, and we believe the growth opportunity in this business is significant. We see meaningful opportunities to expand our distribution footprint through process improvements and technology investments, which will be further enhanced by the addition of Equitable's Advisor Network and VUL product suite. In institutional markets, The underlying environment remains favorable. Demand for guaranteed investment contracts, or GICs, remain strong as institutional clients continue to prioritize principal protection, predictable returns, and the financial strength of trusted insurance providers. Our GIC program continued to perform exceptionally well, generating $1.5 billion of issuance during the quarter, above our historical average despite heightened market volatility.

6:47 While the pension risk transfer market has seen softness and jumbo transactions reflecting lower supply amid market volatility, activity in small and mid-sized plans and full plan terminations have remained comparatively resilient. Our third quarter PRT volume was modest at $156 million, but we remain encouraged by the opportunities ahead. We are working through a very robust pipeline in both the US and the UK markets, consistent with our view that activity would be back-weighted for the year. We have already been selected as the counterparty for over $1.5 billion in PRT transactions that are expected to close in the fourth quarter. Across all of our businesses, one team remains consistent. The combination of our product portfolio, broad distribution capabilities, and robust balance sheet provides a powerful platform for long-term growth.

7:38 Just as importantly, it allows us to be disciplined and efficient allocators of capital. Directing resources toward the most attractive opportunities to maximize risk-adjusted returns and shareholder value. Turning to our balance sheet, our diversified business model remains well positioned for the current interest rate environment. Higher rates are supporting both customer demand and investment returns, creating opportunities across our businesses. During the quarter, our new money yields of 6.1% exceeded portfolio roll-off rates of 5.7%. allowing us to continue capturing attractive spreads while maintaining a disciplined approach to risk management. As we've been doing all year, we continue to reduce exposure to select below investment grade assets where we see an opportunity to de-risk without compromising overall returns. Our investment portfolio continues to perform well with credit experience remaining in line with expectations and approximately 96% of assets rated investment grade. Taking together these factors support our strong financial position with capital levels remaining above our target ratios and holding company cash continuing to exceed our anticipated needs over the next 12 months.

8:50 Earlier, I touched on several initiatives focused on winning with customers, but I can't emphasize this point enough. Customer centricity has become an organizational principle across the entire company and every stage of the customer journey. From developing innovative products to making Corbridge the easiest company to do business with. Another hallmark of this approach is recent thought leadership we sponsored to better understand the financial challenges facing Americans and how they can overcome them. Our research found that many retirees are so concerned about outliving their savings that they are reluctant to spend their assets. Yet, when they have a plan for generating income in retirement, their confidence increases substantially. Rather than simply highlighting this challenge, we're using these insights to help inform how we develop products, engage with distributors, and support customers as they navigate retirement's most important financial decisions.

9:44 The companies that best understand their customers, solve their challenges, and deliver great experiences are the companies that create lasting value. That's the standard we're holding ourselves to and it's central to our strategy for long-term growth. Lastly, All of this reinforces why we remain so excited about our future as the new equitable. Throughout my remarks today, I've highlighted the powerful trends shaping our industry. Growing retirement needs, increasing demand for financial advice, continued demand for protection solutions, and institutional clients seeking certainty and stability. The combination of core bridge and equitable will further strengthen our ability to capitalize on those opportunities. We continue to make excellent progress toward completing the transaction. We have received all required federal approvals and continue to work through the remaining state and international approvals. We remain actively engaged with the remaining regulators as we work toward a targeted year-end close.

10:40 At the same time, we are preparing extensively for day one. Our Integration and Transformation Office continues to advance detail planning. We selected the members of our new board, and the Executive Leadership Team is working closely to ensure alignment and readiness. The synergies we committed to achieving are already starting to materialize. We've identified over $100 million of run rate expense savings that will be realized in the first half of 2027, placing us well on our way toward our $150 million synergy target for 2027, and we remain confident that we will achieve at least $500 million of expense saves on a run rate basis by the end of 2028. The strategic rationale for the new company remains as compelling as ever. On day one, we expect to serve approximately 10 million customers and become the leading U.S. life and annuity company by operating earnings.

11:30 Together, we will offer one of the broadest product portfolios in the industry, an unmatched distribution network built on decades of trusted relationships and complementary insurance, asset management, and wealth management capabilities that few can replicate. Combined with our greater scale, these strengths will allow us to serve more customers operated with a lower unit cost and create a powerful platform for long-term growth and value creation. We look forward to sharing more at an investor day in the second quarter of 2027, where we will outline our strategy and the opportunities we see to accelerate growth and value creation across the combined company. Before I turn the call over to Chris, I'd like to recognize him for his exceptional leadership as interim CFO of Corbridge. Chris has been an outstanding partner throughout this period of transformation and we are fortunate that his expertise will continue to benefit the organization. With that, I'll turn the call over to Chris to discuss our third quarter results in greater detail.

12:28 Thank you, Marc. Turning to our consolidated results, third quarter performance was in line with the expectations we outlined at the start of the year and reflects continued growth across our businesses. We reported adjusted pre-tax operating income of $677 million, an increase of 4% from the prior year period, and operating earnings per share of $1.22, up 27% year over year. Results included variable investment income that exceeded our long-term assumption by $29 million, as well as notable items reducing earnings by $107 million. Notable items reflected the modest impact of our annual actuarial assumption review of $99 million and a one-time $8 million adjustment related to group retirement fees.

13:18 At the total company level, the actuarial assumption update is expected to have a limited impact on the go-forward run rate earnings. The details by business are provided in the appendix to the earnings presentation. Third quarter variable investment income was above our long-term assumption, reflecting a combination of elevated IPO activity, which is inherently episodic, and favorable marks on selected investments. Looking ahead, we expect fourth quarter variable investment income to be above the levels reported in the first half of 2026, but below the strong results we experienced in the third quarter. Excluding notable items and assuming alternative investment returns at long-term expectations The current run rate operating earnings per share was $1.35, representing an increase of 12% from the prior year quarter. The adjusted return on equity was 12.1%.

14:11 On a run rate basis, it was 13.4%, which is within our long-term target of 12 to 14%, reflecting continued earnings growth and disciplined capital management. Turning to our sources of income. Total sources of income increased 7% year over year. Excluding variable investment income and notable items, it increased 2% year over year, reflecting the benefits of our balanced business mix and diversified earning streams. Base spread income was down modestly from the prior year period, primarily reflecting the earn-in of the fourth quarter 2025 Fed rate cuts. We continue to expect total company base spread income to level off by the end of 2026 as older business rolls off and higher new money yields continue to earn into the portfolio.

14:58 Importantly, excluding the impact of Fed rate cuts, total company base spreads declined three basis points from the prior year quarter, reflecting pricing discipline and active portfolio management. Fee income now represents approximately 21% of core sources of earnings. Excluding notable items, fee income increased 7% year over year, driven by favorable equity markets and continued growth in assets under management and administration. Excluding variable investment income, underwriting margin increased 2% from the prior year period, benefiting from favorable mortality experience. Finally, we continue to invest in our operating capabilities, technology and customer experience initiatives to further enhance the ease of doing business, which resulted in higher operating expenses compared to the prior year period.

15:48 Turning to capital. Our balance sheet remains strong. We ended the quarter with $2.2 billion of holding company liquidity, well in excess of our expected holding company needs over the next 12 months. This includes $750 million of pre-funded debt maturing in April 2027. During the quarter, our insurance subsidiaries distributed $475 million of dividends to the holding company. We returned $295 million to shareholders through both dividends and share repurchases, resulting in a year-to-date payout ratio of approximately 74% excluding the VA reinsurance proceeds. As a reminder, we accelerated our planned 2026 share repurchases in the first half of the year ahead of our merger with Equitable and taking advantage of the attractive share price.

16:39 Importantly, our insurance companies remain well capitalized with our risk-based capital ratio above our target range. Our diversified platform continues to give us flexibility to allocate capital toward the most attractive risk-adjusted opportunities while also returning excess capital to shareholders. 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. Note that these results exclude the impact of variable investment income and notable items. Starting with individual retirement, third quarter sales were $4.5 billion, representing a 17% increase sequentially with sales growth in both fixed annuities and RILA. Net flows remained positive at $1 billion and improved sequentially.

17:27 We delivered a solid quarter of sales and net flow performance, while results were below the prior year period's exceptionally high levels They underscore a disciplined approach to pricing and risk management while continuing to offer competitive solutions that resonate with customers and generate attractive returns. We continue to expect IR base spread income of $2.55 billion for the full year. While the recent increase in interest rates will take time to earn into the portfolio, higher reinvestment yields should help moderate spread compression with base spread income expected to level out by year end 2026 before improving. The income increased 18% year-over-year, reflecting growth in the underlying business. Adjusted pre-tax operating income was $429 million, down 4% from the prior year period, driven by higher DAC amortization from business growth, higher interest rates, and the go-forward impacts from assumption updates.

18:24 Overall, the quarter reflects the continued benefit of positive net flows, disciplined pricing, and sustained demand for annuities. positioning us for future earnings growth. Turning to group retirement, the business continues to benefit from the growing demand for retirement solutions and advice as more Americans prepare for and transition to retirement. The income increased $10 million or 5% from the prior year period driven by continued growth in advisory and fee-based assets. Wealth management sales hit a new record and contributed to more than half of our third quarter sales highlighting the progress we have made in expanding our advice-driven business and meeting customers where they increasingly seek guidance. Net outflows were $2 billion, improving both sequentially and year-over-year, reflecting the absence of any large plan surrenders during the quarter.

19:16 We do expect an uptick in outflows for the fourth quarter, reflecting seasonality associated with IRS-required minimum distributions or RMDs. Spread income increased sequentially, benefiting from higher new money yields, but remained below the prior year period due to expected general account outflows associated with the ongoing demographic shift from accumulation to decumulation. Adjusted pre-tax operating income was $142 million, a decrease of 12% from the prior year period. The decline was driven by lower spread income and higher amortization of acquisition costs, partially offset by growth in fee income. As we've discussed previously, the business continues to evolve from a predominantly spread-based earnings model towards a more capital-light fee-based earnings.

20:03 We believe this shift positions the business to benefit from the increasing demand for retirement products and wealth management solutions while continuing to generate attractive returns on capital. Turning to life insurance, sales were $840 million, reflecting continued demand across our distribution and product offerings. Underwriting margin was $329 million, supported by favorable mortality experience in the quarter. Mortality experience has now been favorable for 10 consecutive quarters, reflecting the quality of our portfolio and risk management. Adjusted pre-tax operating income was $109 million, flat from the prior year period with the increase in underwriting margin offset by increased operating expenses. We continue to invest in the future of the business through enhanced underwriting technology, product innovation, and distribution capabilities to improve customer experience, drive efficiency, and support long-term growth.

21:00 Turning to institutional markets, sales totaled $1.7 billion during the quarter, of which GIC issuances were $1.5 billion, exceeding our historical average, even with the volatile market conditions observed in the second half of the quarter. While pension risk transfer sales were modest at $156 million in the quarter, results were consistent with our expectation that activity would be higher in the second half of the year. We continue to see a robust pipeline across both the U.S. and U.K. markets, supporting our confidence and the outlook for the remainder of the year. While quarterly volumes can fluctuate given the transaction-driven nature of the business, the long-term market opportunity remains compelling. Adjusted pre-tax operating income was $107 million, an increase of 5% from the prior year period, driven by higher base spread income and favorable underwriting margins. The underlying business fundamentals remain strong, with reserves increasing 10% and AUMA growing 5% year over year. We remain encouraged by demand across both the GIC and PRT markets and believe our scale, distribution capabilities, and Disciplined Underwriting positions us well to capitalize on these opportunities over time.

22:15 Turning to investments, our portfolio continues to perform well with approximately 96% of assets rated investment grade. Positive year-to-date credit migration across corporate bonds and securitized investments highlights the portfolio's strength and resilience. Given the recent focus, I want to provide additional transparency into our digital infrastructure exposures and how we approach these investments. We have invested in this sector for many years, and we continue to actively monitor and manage these investments as part of our routine portfolio management. We expanded our technology holdings several years ago, seeing opportunities in securitized debt issued by large data center developers and operators with strong performance histories.

23:00 As a result, approximately 95% of our ABS data center exposure supports traditional cloud and broader enterprise applications with only a small portion tied to AI-specific demand. Furthermore, our investments are designed to mature prior to the expiration of the underlying lease arrangements, providing an additional layer of protection. More recently, we have selectively participated in GPU financing where the structures are shorter in duration and have limited refinancing risk. These securitizations are generally amortized over five years or less. Importantly, these assets are expected to remain productive well beyond the amortization period. As with all of our investments, we perform deep analysis of the credit structure, underlying collateral, and the fundamental and technical outlook.

23:51 While the underlying assets have evolved, our investment philosophy has remained unchanged. We apply rigorous underwriting and a disciplined approach to portfolio construction, favoring high quality assets and issuers, Thank you for joining us. Overall, the portfolio remains well positioned, diversified, and appropriately aligned with our liability profile, supporting the strength of our balance sheet and earnings profile.

24:36 In closing, our third quarter results reflect the resilience of our diversified business and the strength of the underlying fundamentals across our franchise. We continue to execute against our strategic priorities maintain a strong balance sheet, allocate capital with discipline, and invest in opportunities that create long-term value for shareholders. We remain confident in our outlook for the remainder of 2026 and believe the combination of our standalone momentum and the transformative benefits of the equitable merger positions us to generate attractive returns for shareholders going forward. With that, I'll turn the call back to Isil.

25:12 Thank you, Chris. As a reminder, please limit yourselves to one question and one follow-up. Operator, we are now ready to begin the Q&A portion of the call. We will now begin the question and answer session. Again, please remember to limit yourself to one question and one follow up. If you would like to ask a question, please press star one to raise your hand. To withdraw the question, press star one again. We do ask that you pick up your handset when asking a question to allow for optimum sound quality. And if you're muted locally, remember to unmute your device. Please stand by now while we compile the Q&A roster. Your first question comes from the line of Alex Scott with Barclays.

25:57 Your line is open. Please go ahead.

26:01 Hi, good morning. I thought I'd start with just asking about the impact of higher interest rates. Maybe you could comment on, you know, what that'll mean to the base spreads in individual retirement and group retirement.

26:16 Hey, Alex. Happy to unpack that for you. So for individual retirement on a base spread income basis, I want to reiterate our current guide to $2.55 billion for 2026 and our expectation that spreads bottom out by the end of the year for 2026. You saw some single digit compression this quarter in individual retirement. We would expect that to continue Marginally into the into the fourth quarter when we think about rate hikes. So remember the rate hike that would have occurred in September. That's really going to have no impact on the third quarter results. That's really going to start to earn into the fourth quarter. So you can assume about half of that rate impact is going to earn into the fourth quarter.

27:06 Assuming another rate hike in December, that's also not really going to have any meaningful impact on the 2026 results. That's really going to be a tailwind heading into the 2027 results. I know we're focused specifically on the net spreads where we do see the single-digit compression, but if you also look at our base yields and what the assets have done sequentially, you do see base yields in our assets also increasing as we're taking advantage of the higher rate environment and repositioning the portfolio without taking on incremental rate and not giving up yield. So we will continue to take advantage of that.

27:46 And as a follow-up, I guess along the same lines on interest rate exposure, but related more to surrenders and flows, what kind of impact are you seeing there? What kind of changes in behavior, if any? And then Maybe a comment on the related DAC impact that was called out and is that a dynamic assumption? Do we need to consider if rates continue to go up? Would that continue to increase?

28:12 Yeah, good morning, Alex. It's Marc. I'll start and I'll pass it to Chris to give you further detail on the DAC question. So in terms of obviously as the rates increase and we do expect obviously the Thank you for joining us. Thank you very much.

29:12 will happen during the quarter. So first, we would have had our actuarial unlocked during the quarter. So that would have resulted in some updates to our elapsed assumptions for individual retirement. So that's going to result in a $9 million run freight increase in the DAC. That's already in the 3Q results. Second, our IR business continues to grow. So that growth in the business is going to result in a natural increase in the DAC balance and then the related amortization, right? So I kind of view that as Good DAC, right? Growth tends to be an additional $2 to $4 million of DAC amortization per quarter. Third, if we think about the macro conditions that were specifically in play during the quarter, you do have rates rising. And so what that's going to do from a DAC perspective is that it's going to create an expectation of higher future surrenders, not necessarily current period, right?

30:04 That's an expectation. So just to give you some market data points, right? So the 10-year was at 529 as of September 30th compared to 446 at June 30th. So you have that large movement in treasury rates occurring over the course of the year, right? That's going to result in higher DAC. Since September 30th, the 10-year has come down a bit, right? And so when I think about the fourth quarter and how I would think about it, You know, that's going to point you to higher DAC relative to Q2, but likely not as high as 3Q, barring significant rate increases. You know, the other thing that I would remind you when you think about the DAC, remember that's a non-cash item, so it's not going to impact the cash generation ability of our insurance companies.

30:51 Your next question comes from the line of Tom Gallagher with Evercore ISI. Your line is open. Please go ahead.

31:01 Good morning. Marc, I think you mentioned being constructive on IR, sales and flow, momentum into Q4. But can you talk a little bit about what you're seeing broadly across the different products? I guess fixed annuities were up a lot, FIAs were soft, RILO was strong, and lapses were low in the quarter. So there's a lot of moving parts there. But what do you... Thank you, Tom. Good morning.

31:47 Yeah, I'll start maybe a high level and then give you a bit of detail on the product level. So when we came into Q3 and this call in Q2, we said we were seeing some positive momentum in our individual retirement business, our annuity business. And obviously that materialized as you saw in the actual results. And obviously the net flows as well, clipping above a billion. I would say we continue to see positive momentum into Q4, and I would share that we had a very robust October in our annuity business. I would expect the net flow in Q4 to be well above the billion-dollar level as well, based on what we're seeing early in Q4.

32:35 To break it down by product, one of the things that... We pride ourselves in, obviously, given the depth and breadth of the portfolio, is the allocation to the different funds. Product Suites as we see the various obviously competitive pressures and tension in the market and that includes you know in all the territories we're operating including New York which is more selective so and we did see as you mentioned some more robust fixed annuity sales and less so and fixed index annuity but I would tell you like and you know in my remarks I mentioned we introduced a new feature on an index annuity and you know we think it's going to It's going to help us obviously differentiate ourselves in the marketplace and go as well, as I said, for our Q4 flows. In terms of the broader effect, given some of the attention some of these companies you mentioned are getting, we're trying to track carefully to see what it does to our flows and what it does to our business.

33:30 And it's nuanced because some distributors obviously have taken action and then that helps everybody else that's on the shelf. And you see perhaps some... and some, I would say, transfers to N35 Exchange, but we haven't seen it materially affect, let's say, the volumes that we're reporting at this point. But there is logically going to be a movement to quality manufacturers and obviously we definitely see ourselves in that category.

34:04 Thanks for all that, Colin Mark. That was helpful. My follow-up is just on The AI and other technology related debt disclosure. So it's three and a half percent all in the general account. And I guess I can appreciate why this matters to the market more broadly from a CapEx build out tech cycle standpoint. But curious, how are you approaching that? Is that now in a risk surveillance bucket that you think Thank you for joining us.

35:04 Yeah, thank you, Tom. It's Marc here. I'll give you kind of some perspectives from where I sit, and then we have Lisa here, obviously, and I'll have her provide you some context, you know, and the details. So, you know, obviously, given the attention that this space is getting, we saw it, you know, warranted to provide, you know, a lot of transparency in our portfolio. And, you know, I'm sure as you're sensing in your comments here, When you look at our portfolio, it's like over 98% investment greater in that zip code. Obviously, we've got some unsecured debt there, but these are the high-quality companies. The things that are in the structures are getting a lot of the attention.

35:50 $3.4 billion is basically rolling off over the next couple of years. This is the $6 billion or so that the weighted average life is less than five years. and, you know, as I just mentioned, the majority of it is all investment grade. So it's not something we worry. And the last thing I'll say is two things. The first one is that, as you'll see here in Lisa's comments in a second, I'm sure she'll infer, obviously, the length of time we've been active in this space, right? And, you know, we've had a lot of vintages of investments in this space and our expertise and our ability to manage it. Your broader, like, do we put this in the risk bucket and how do we view it? We are not taking any additional risk. We're sticking to our basically our risk guidelines here.

36:38 And you'll hear more about that from Lisa. But and it is a category we track as we track all categories across all our asset classes, our credit exposure. So, Lisa.

36:49 Thanks. Thanks, Tom. You know, as Mark mentioned, we wanted to give you a full view of just Thank you so much for joining us. and we really view that digital portfolio characterized really as investment grade contractual infrastructure credit rather than a directional bet on AI adoption.

37:40 We really have always had a strong bias for short duration, high quality amortizing paper with credit enhancements where we have better transparency on the underlying collateral value. and so we really focus on strong hyperscale counterparties, amortizing structures, tangible collateral and debt maturities and Marc mentioned the $3.4 billion of roll-off really comes out of these categories two and three. And then also I would just say exposure is not synonymous with AI. We have been in this sector for some time and really if you look at the private ABS books that we have that's in these two categories, 95% is traditional infrastructure, so there's not AI-related functions. It's really cloud storage, business, enterprise applications, content delivery, and business continuity.

38:41 And even in our CMLs that are included here, there is just a very immaterial amount related to AI. Everything else is more to the enterprise. and then everything we will look at here has to have strong structural protections so we have limited refinancing dependence and you mentioned we do have internal limits or guardrails both at the issuer level but also at the sector. We will look at any sector whether it could be this or banking or energy and we will decide how much we want to own based on our views of the fundamentals and what we may see for an outlook. So we're very pragmatic, very deliberate, you know, and then right now in this sector, supply and demand for capital is so great, the lending is really highly skewed to the lender's favors, which provides opportunities because it allows structure and excess spread as well as very protective covenants that you really don't see in other sectors.

39:52 Your next question comes from the line of Ryan Krueger with KBW. Your line is open. Please go ahead. Hey, thanks. Good morning.

40:13 My first question was on the opportunity to be bigger in institutional markets following the merger. Do you see that as mostly related to increasing your GIC and funding agreement issuance, or is it broader than that and includes PRT and other sorts of institutional products as well?

40:36 Yeah, good morning, Ryan. It's Marc. Thanks for the question. So the the punch line is yes we do expect to be bigger in institutional markets and I think the combined balance sheet of the new equitable will allow us to get bigger and I think we still have a lot of room to grow in the funding or in gig business as you mentioned and I think we have a lot of room to grow in the PRT business as well and the sheer size of the combined company will give us access to PRT cases that otherwise would not be available to you know equitable or corporate stand alone so and as I mentioned in my remarks, in Q4 we already obviously got a $1.5 billion case that we expect will close later this quarter and we still see a very vibrant pipeline in the institutional markets PRT space in the quarter along with the fact that we do expect our gig business to be robust in Q4.

41:34 I would say IM is one of our business lines that we would expect to grow a fair bit coming out of the merger with Equible.

41:45 Thanks. And then on the Japan opportunity to partner with Nippon on the retail annuity market there, how far along would you say you're at at this point on developing that? And when do you think we could potentially see a launch there? Thank you.

42:07 So, Nippon obviously is a very important anchor, you know, strategic investor in our firm. You know, as you all know, they've been buying up their shares in Corbidge to make sure that when we close, you know, later this year, hopefully that they are above the 15% threshold that they have. They are seeking, tied to that, to your point, we've been having a lot of active discussions with them in terms of, you know, are there commercial products that we can help them manufacture in the Japanese market and obviously utilizing their great brand and distribution and We are still consciously optimistic that we will be able to do that, and we do see opportunities in that market and the solutions we have across the depth and breadth of our product portfolio.

42:59 And I will include the new equitable here when I say that as well. It's still something that we would like to actively pursue. And the only... The reality I would add to this is that if we do come to an agreement on the product and we decide to do something with Nippon and their local market, at this point, based on the regulatory process and review in Japan and obviously the operational infrastructure needed to introduce some of these products, it would be kind of a 2028 thing, but we would Thanks, good morning.

44:02 A couple on the transaction. One, we've been getting quite a few questions on revenue synergies, and I appreciate the work you've done on the cost side with the additional disclosure of the $100 million that you feel good about. That's good to see. But we haven't really heard anything number-wise on the revenue side. So maybe can you just give us an update on how you're feeling about that and maybe some of the opportunities that you see? Thanks.

44:29 Yeah, good morning, Sunit. Thanks for your question. I appreciate it. So, you are correct that we've guided more details on the expense synergies and as has well been documented, the 500 million run rate entering at the end of 28 and as well as has been mentioned in my remarks that we've already identified over 100 million towards that goal. So, we feel quite good about that. In tandem with this, I guess, we are working very actively on the revenue synergies and we We are preparing for, obviously, an investor day in Q2 where we will share a lot of the details. Now, you know, I will mention that we have guided to, you know, 100 billion of assets, you know, moving from the Corbridge balance sheet to Lyons Bernstein, which would, you know, would give you color. And, you know, and we're actively working on that transition that, you know, we start, you know, once we close later this year and But tied to that, I mean, I'll mention some of the things that are, you know, going to are in the pipeline and we're actively working like Equal Advisors, obviously, you know, as, you know, Robin and I have been mentioning, you know, they do sell a fair bit of fixed annuity and fixed index annuity. And we are looking to introduce, obviously, the corporate suite of products into that channel as early as possible.

45:49 They have a very Thank you very much. We do agree that there's a lot of upside, and this is a growth-oriented kind of merger and growth, and these synergies that we're discussing here will be a big part of the value proposition that we will share with you when we do investor day.

46:33 Got it. I thought you might say what we put out yesterday was spot on, but I guess you didn't want to go there.

46:42 We appreciate what you put out there, that's for sure, and we'll give you more color on the actual facts as time goes on.

46:52 Fair enough. Looking forward to that. Very good. My second question was just on something that's been, I guess, in the press or in the media related to permitted practices. There's some concern that maybe The two companies, different permitted practices could create some issues around timing of close or if things are allowed post-merger. Just wanted to get a sense of, or at least give you the opportunity to sort of discuss that because it was sort of cited by some folks in the market and we have been getting some questions on that. Thanks.

47:29 Yeah. Okay. Thank you. I appreciate that question. I will say that in my remarks, I mentioned that we secured all the federal support for the transaction. We've had a very engaged process with all the states and I would say we're making very good progress there. We're not giving specifics because we want to respect the process with the states. But I would tell you that all of the dialogue we're having with the states is very constructive and we continue to guide to year end as they're closed.

48:14 And I prefer not to get specifics, but I would tell you that what you're inferring there is not the case. When we look at the transaction and the discussions we have with our respective regulators, I know what you're referring to, and I would say that is not true. Your next question comes from the line of Joel Hurwitz with Dowling and Partners. Your line is open. Please go ahead.

48:46 Hey, good morning. Just wanted to follow up on the question on institutional markets growth post-merger and and specifically PRT. Historically, Corbridge has been focused on full plan terminations with some specialized capabilities. I guess post-merger, do you expect to expand outside of that space in pension risk transfer?

49:10 Yeah, good morning, Joel. Thanks for the question. It's Marc here again. I'll say just to make sure we level set we're very active in the space you're saying across that dimension both here in the U.S. and in the U.K. right through our reinsurance activities there and so and that'll continue to be much very much the case and we we do quote and look at all the cases we do find that you know like our specialty and our knowledge and understanding some of the behavioral attributes positions as well and some of the applications I think the merger will give us Thank you for joining us.

50:11 The expectation that higher rates will drive higher surrenders, but are you actually seeing that at this point? And just any more call around how surrenders are tracking versus your internal expectations?

50:25 Yeah, so thank you, Joel. So I would say that, you know, overall, and I'll go back to the fact that we wrote a fair bit of business four, five, six years ago, and I think we had Guided to the fact that, you know, we're going to see some velocity of surrenders as that business, you know, comes out of the surrender chart spirit and we would expect that and, you know, and that's why we guided that. Having said so, there'll be some, you know, some volatility from quarter to quarter in our termination rates and as you're, you know, highlighting here, we had a, you know, a more favorable quarter, you know, in Q3 and I think we're As I mentioned maybe in a prior question, we do see our net flows being very robust in Q4 as well, which speaks to obviously the top line activity as well, but we don't see anything out of the ordinary happening in Q4.

51:18 And as Chris, I'll pass it on to him to give some further detail, but he did mention in terms of the DAC question, how we're dealing with the surrenders and the assumptions

51:29 there is. Yeah, but I think that's a good summary. So, you know, while rates up, you know, may necessarily mean more surrenders, that plays out over time. Remember, for our products, there are surrender charges that are in place. So that does impact consumer behavior. You don't necessarily go in to surrender the policy, you know, while you're in the surrender charge period. And so I think importantly, what Mark mentioned, you know, while there may be an uptick in surrenders over time, Your next question comes from the line of Wes Carmichael with Wells Fargo. Your line is open. Please go ahead. Hey, thanks. Good morning. I just kind of wanted to follow up on the last question, but mark your comments around

52:23 The fourth quarter individual retirement sales being pretty robust and net blows likely above a billion dollars. Just wanted to unpack that a bit more. What products are you seeing strengthen early in the fourth quarter and where are you seeing the best new marginal returns?

52:39 Yeah, so thank you, Wes. Good morning. So I would say that entering Q4, I would say all of our product lines were performing well. I will note that our RIO sales are very close to clipping the billion-dollar mark. This continues to be something that we're penetrating in that market, and obviously it's not lost on us the dominant position that You know, Equible has there, which is going to bode well with, you know, what I just mentioned here. But, you know, we, and I, as I mentioned in my remarks, we did introduce a new fixed index annuity, and we do see some, you know, some positive tailwind side to that, and our fixed annuity was entering Q4 in a good stead. There are 60 days left, so we'll see how that happens, what happens there. We're not immune to the competitive backs and forwards.

53:39 The takeaway would be that we will pivot and allocate our capital where we think we're going to service it the best while meeting the client needs and making sure our solutions meet the clients where they need to. That's how I'd position at this point for Q4.

54:00 Got it, thanks. And just had maybe one more on the individual retirement competition, but I think there's a competitor call that's ongoing right now, and they're talking about the NAIC taking a pretty swift action approach against reinsurance arbitrage for non-reciprocal jurisdiction. So I guess that would include Cayman. But how are you guys thinking about that? Is there more market share opportunity if the regulator does take some meaningful action, or just how you're thinking about that generally?

54:27 Yeah, so without the knowledge of that other call and what's being discussed, I guess I would tell you maybe from where we sit, we have an affiliate in Bermuda. We have about 10% of our business that flows to Bermuda. I guess from a higher level, I feel that the regulatory process and the movement at the NAIC, I think is... It makes a lot of sense. And the attention that some jurisdictions are getting, I think, makes sense. And I think what we all want is a fair and equitable regulatory process that applies to all in the same way. And I think that's probably the sentiment that's being espoused in the other call.

55:14 And I would support that sentiment as well in terms of how we deal with these various jurisdictions. And then we make sure that, as I said, the regulatory process is is vibrant and fair and equitable for all manufacturers. So what that means for sales and flows, I think, you know, it remains to be seen. But, you know, I will again mention what I said earlier that any attention to this typically, you know, drives, you know, people to focus on quality. And we think, you know, that will benefit Corbridge and the new Equivalent. Your next question comes from the line of Mike Ward with UBS. And your line is open. Please go ahead.

55:59 Hi. Thanks, guys. Good morning. Just curious about the alternatives book. Solid result, I think, in three key relative to what you expected. But, you know, aside from the PE and IPO dynamic, are there offsetting dynamics? You know, offsetting revaluations coming through just driven by the higher rate environment pressuring asset values or anything we should be thinking about?

56:31 Yeah, good morning, Mike. It's Mark. Maybe I'll give a high-level view of how I and we see alts, right? We think ALTS is a great asset category to defease long-term liabilities. When you get down duration 20 plus, it's hard to get the appropriate credit exposure and all that. Naturally, as we would as savers ourselves, if you have that type of outlook, ALTS and equities are important. are the right asset and that's why we have exposure to that I will mention that our exposure overall is less than 2.5 percent of our of our balance sheet and that marries to you know the term of the liabilities we have that fits in the category I just described and you know in the and by nature of the the investor the investment and the accounting for the investment uh you know on a gap basis it'll be volatile from period to period and that's what we're seeing you know obviously uh and our results and as well a lot of the assets if not all and I'll ask Chris to correct me if I if I'm mistaken you know it's all fair value on a balance sheet so the real estate the PE and all of these are fair value where that's not necessarily the case depending on the structures and how they're held across you know all the players in the industry so for us there's more volatility by the fact that marked every quarter so with that bagged file I'll hand it to Chris and Lisa to add comments.

57:49 Hi, Mike, it's Lisa. Thanks for the question. I would just add, you know, really what drove performance this quarter was IPOs. And, you know, Chris had talked about the outlook for fourth quarter just based on our historical view of, you know, IPOs and how they trade afterwards when we're still locked into those investments. So it's too early to really change our view for fourth quarter. as far as the rest of the alternatives book you know it also incorporates a small amount of hedge funds which is just about rolled down but also um real estate equity funds which are marked to market uh quarterly um on a lag so there you know as if rates are higher there could be some impact there but um again still too early to to comment on it yeah i think that's a that's a good summary you know

58:44 Just to reiterate the, you know, the guidance here. So for the full year, the VII expectations were around 1 to 2% for the full year. Specific for the fourth quarter, you know, we're reiterating the 1 to 2% guide, but, you know, given some of the comments just heard from Marc and Lisa, our expectation would be closer to the higher end of that guide. You know, but there could be some overhang from the IPOs. Your final question comes from the line of Jack Matten with BMO. Your line is open. Please go ahead.

59:18 Hey, good morning. The first one I had was on group retirement. It looks like you're seeing the strategic benefits of the shift toward wealth management and fee-based earnings. I'm wondering how we should think about the timing of the earnings inflection from that shift. When would you expect to see fee-based growth more than offset the moderation in spread earnings?

59:40 Yeah, you know, so the way that I would think about it, you know, I think the next shift has been very successful from a group retirement perspective. At this point, the fee income makes up over 60% of the earnings of the group retirement business. You know, maybe the other item I would note this quarter, from a sales perspective, this was also our best out-of-plan sales period as well, with out-of-plan sales contributing over Thank you. And then just one follow-up on surrender activity.

1:00:35 How are you thinking about the trade-off between raising credited rates to defend persistency versus allowing more of that business to lapse and then recycling capital into new business at potentially more attractive returns?

1:00:50 Yeah, it's Marc here, Jack. Thank you. So, you know, I would say what you're asking there about is the intersection of how we manage the business, right? And I think this is where The experience that we have through various cycles of managing our enforced block and managing their reset activity to optimize their customer value, right? And let's not forget, we're here to serve as a customer and ensure that they can retire with dignity and confidence and we provide the solutions to it. But factoring that in and then factoring the economics and the cost of capital is how we have that dynamic equation. And when we mentioned the The roll-off in our investment of 6.1% versus what's rolling off 5.7%, some of that is going to end up in the reset rates for our customers. And it's that balance of obviously sustaining the book and generating some appropriate spread income versus obviously clipping a pace where it's too much and then you take the surrender over it.

1:01:53 And that's the dynamic kind of process that we follow. And I think We are quite comfortable with the process we have and we're quite pleased with how the business has performed to both interest rates when interest rates have contracted and when interest rates are expanding. We've got obviously experience in managing our portfolio under both scenarios.

1:02:16 Thank you. are no further questions at this time this concludes today's call thank you for attending you may now disconnect