Corebridge Financial has entered into a reinsurance agreement with CS Life Re, a subsidiary of Venerable Holdings, covering all variable annuities within its individual retirement business. The portfolio had a total account value of US$51 billion as of March 31.
The transaction is valued at US$2.8 billion, comprised of ceding commission and capital release. Corebridge said that it expects to generate approximately US$2.1 billion in net distributable proceeds after tax.
Corebridge will reinsure the entire in-force book through agreements with its insurance subsidiaries, American General Life Insurance Company (AGL) and The United States Life Insurance Company in the City of New York (USL).
Of the US$51 billion in account value, US$5 billion in general account value will be reinsured on a 100% coinsurance basis. The remaining US$46 billion in separate account value will be reinsured on a modified coinsurance basis.
New variable annuity contracts issued through the individual retirement business by AGL will also be reinsured under a flow reinsurance arrangement, effective upon the transaction's closing.
Kevin Hogan (pictured above), Corebridge president and CEO, said the agreement marks a strategic shift for the company by exiting the Individual Retirement variable annuity segment.
“This transaction delivers significant value for Corebridge and its shareholders. We are reaffirming our financial targets while reducing risk and maintaining our diversified business model. We expect to use the proceeds to accelerate our capital management objectives, including a substantial majority returned via share repurchases, with the remainder to support organic growth,” Hogan said.
In connection with the deal, the board of directors has approved a US$2 billion increase to the existing share repurchase authorization.
The deal also includes the sale of SAAMCo, an investment adviser and portfolio manager for Corebridge’s variable annuity products.
The AGL portion of the transaction is expected to close in the third quarter, with the USL component and the SAAMCo sale targeted for completion in the fourth quarter, pending regulatory and other customary approvals.
Financially, Corebridge expects the deal to carry an earnings multiple of approximately 9 to 10 times projected 2026 and 2027 operating earnings. The company is exiting a portfolio that has shown volatility in GAAP earnings and exposure to tail risks.
The reinsurance is projected to reduce Corebridge’s adjusted after-tax operating income (AATOI) by approximately US$300 million in 2026, with that impact expected to diminish significantly in the years that follow.
The transaction is also anticipated to increase the Life Fleet risk-based capital ratio by more than 50 points, prior to any share repurchase activity.
The announcement follows a challenging first quarter for Corebridge. The company posted a net loss of US$664 million during Q1 2025, driven primarily by realized losses tied to the Fortitude Re funds withheld embedded derivative, as well as unfavorable changes in the fair value of market risk benefits.
While adjusted pre-tax operating income stood at US$810 million, the figure marked a 3% decline compared to the same period last year.
The transaction also comes amid broader changes in how US life and annuity insurers manage capital-intensive liabilities. The use of sidecar structures in the annuity market has increased significantly in recent years, as companies look to ease risk-based capital pressures and manage large blocks of reserves.
Between 2021 and 2023, ceded reserves in the market nearly tripled to approximately US$55 billion, with players like Martello Re and Ivy Re II driving much of that activity. These structures enable insurers to transfer risk without fully offloading the liabilities, supporting more flexible balance sheet management while retaining strategic control over the business.
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