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Corebridge Exits Variable Annuity Block in $2.8B Reinsurance Deal

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Key Takeaways

  • CRBG is reinsuring its entire $51 billion variable annuity block in a $2.8 billion deal with CS Life Re.
  • The move will generate $2.1 billion in net distributable proceeds after taxes and reduce tail risk exposure.
  • CRBG boosts share buyback plan by $2 billion, with most proceeds earmarked for repurchases.

Corebridge Financial, Inc. (CRBG - Free Report) recently inked a deal with a subsidiary of Venerable Holdings, Inc., CS Life Re, to reinsure the entire block of variable annuities within its Individual Retirement segment. The total value of the transaction stands at $2.8 billion, comprising a combination of ceding commission and capital release, and is expected to yield roughly $2.1 billion in net distributable proceeds after taxes for Corebridge.

The reinsurance transaction encompasses the entire in-force book of variable annuity contracts within the Individual Retirement business. As of March 31, 2025, this portfolio held an account value (AV) of $51 billion. This AV includes $5 billion of General Account assets, which will be reinsured on a coinsurance basis, and $46 billion of Separate Account assets, which will be handled via modified coinsurance. Corebridge’s insurance subsidiaries, American General Life Insurance Company (“AGL”) and The United States Life Insurance Company in the City of New York (“USL”), will facilitate the reinsurance agreements. 

In addition to the reinsurance of annuity liabilities, the deal includes the divestiture of SAAMCo, an investment adviser and portfolio manager for Corebridge's variable annuity products. 

Subject to customary regulatory approvals and other closing conditions, the AGL transaction is anticipated to be completed in the third quarter of 2025, while the closing of the USL transaction and the sale of SAAMCo are expected in the fourth quarter.

Financial Impact of the Reinsurance Transaction on CRBG

From a financial standpoint, the transaction implies a valuation multiple of approximately nine-10 times Corebridge’s expected operating earnings for 2026 and 2027. Although CRBG anticipates a decrease in adjusted after-tax operating income of roughly $300 million in 2026, this impact is expected to decline significantly over the ensuing years. Furthermore, the transaction is projected to improve the company’s Life Fleet Risk-Based Capital ratio by more than 50 points, even before accounting for the effects of the share repurchase program.

Motive of Corebridge Behind the Latest Move

The reinsurance transaction with CS Life Re will enable Corebridge to completely exit a legacy business line known for its historically volatile GAAP earnings and potential tail risk exposure. As a result, CRBG is likely to significantly reshape its portfolio and boost shareholder value with proceeds derived from the transaction while reducing its risk exposure. 

The majority of the proceeds from the transaction will be returned to shareholders through share repurchases, while the remaining portion will be used to support future organic growth initiatives. In tandem with the reinsurance transaction announcement, the board of directors of Corebridge sanctioned a $2 billion increase to its existing share repurchase authorization. 

CRBG actively engages in share repurchases and management has authorized increases in share buyback programs over the past few years, evident by a $2 billion increase each in April 2024 and February 2025. As of May 1, 2025, around $2.3 billion remained under its share repurchase authorization.

CRBG’s Price Performance & Zacks Rank

Shares of Corebridge have gained 20.2% in the past year compared with the industry’s 10.7% growth. CRBG currently carries a Zacks Rank #3 (Hold).

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Stocks to Consider

Some better-ranked stocks in the insurance space are MGIC Investment Corporation (MTG - Free Report) , Old Republic International Corporation (ORI - Free Report) and Skyward Specialty Insurance Group, Inc. (SKWD - Free Report) . While MGIC Investment sports a Zacks Rank #1 (Strong Buy), Old Republic and Skyward Specialty carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

MGIC Investment’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.88%. The Zacks Consensus Estimate for MTG’s 2025 earnings indicates a 0.3% rise, while the estimate for revenues implies an improvement of 1.3% from the respective prior-year figures. 

The consensus mark for MTG’s earnings has moved 0.7% north in the past seven days. Shares of MGIC Investment have gained 28.2% in the past year. 

Old Republic’s earnings surpassed estimates in each of the last four quarters, the average surprise being 39.61%. The Zacks Consensus Estimate for ORI’s 2025 earnings indicates a 5.6% rise, while the estimate for revenues implies an improvement of 7.8% from the respective prior-year figures. 

The consensus mark for ORI’s earnings has moved 0.6% north in the past 60 days. Shares of Old Republic have gained 23.3% in the past year.

Skyward Specialty’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 12.86%. The Zacks Consensus Estimate for ORI’s 2025 earnings indicates a 15% rise, while the estimate for revenues implies an improvement of 16.3% from the respective prior-year figures. 

The consensus mark for SKWD’s earnings has moved up 2.9% in the past 60 days.  Shares of Skyward Specialty have gained 56.8% in the past year.

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