管理層發言
Hello, everyone. Thank you for joining us, and welcome to the Corebridge Financial, Inc. Second Quarter 2026 Earnings Call. I would now like to 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 second quarter of 2026. Joining me on the call are Marc Costantini, President and Chief Executive Officer; Chris Filiaggi, our Interim Chief Financial 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 plans 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 like to now turn the call over to Marc and Chris for their prepared remarks. Marc?
Good morning, and thanks for joining us. I'm delighted to be with you today following the successful shareholder vote approving the merger with Equitable. The shareholder support of this transaction is a powerful validation of the attractiveness of the combined company. We're more confident than ever about the future we're building together. Turning to the second quarter highlights. We delivered strong results consistent with our full year guidance. Core sources of income were up 5% year-over-year while Variable Investment Income came in below our long-term expectations, our underlying fundamentals remain strong. Our run rate earnings per share were up 16% year-over-year. Consistent with guidance, our adjusted return on equity, excluding VII, was up 90 basis points year-over-year to 10.9%. And our cash generation remains strong. We've now generated cash in excess of $400 million for 14 consecutive quarters, showcasing the strength of our balance sheet and underlying businesses. In the second quarter, we returned $412 million of capital to shareholders, including $300 million of share repurchases for our year-to-date normalized payout ratio of 84%. Turning to Slide 4. Our top line performance was resilient. While total company sales were down year-over-year, sales increased sequentially by 13%. Furthermore, on a rolling 12-month basis, which adjusts for seasonal fluctuations and the lumpy nature of the Pension Risk Transfer business, we saw total company sales grow 4% year-over-year. This is a testament to our product depth and commitment to margin integrity across cycles. Equally important, we excel at allocating capital efficiently. Of note, our breadth of distribution enables us to shift between products and businesses to where the risk-adjusted returns are most attractive. In Individual Retirement, we've been a top 5 provider for more than a decade and are the only insurer with a top 10 sales ranking across all annuity products. We continue to prioritize pricing discipline given tighter competition. Conditions improved in the latter part of the quarter as yields rose and sales momentum resumed making June the strongest sales month of the year. All else being equal, we expect steady sales and positive net flows for the rest of the year. In Group Retirement, our transition from a spread to fee-based business is continuing in line with expectations. In the quarter, our wealth management assets rose to $20 billion, an 18% increase year-over-year. We continue to see a $30 billion growth opportunity by further capturing IRA rollovers and consolidating household assets within our current customer base. As a result of our efforts to improve the customer experience, we are also starting to see an uptick in Group Retirement business wins. In our Life business, we've been a top-tier provider of term life for nearly a decade. In the quarter, we delivered run rate earnings above our typical guide, reflecting strong underwriting results. Our sales continue to benefit from our platform that leverages automated underwriting for more than 80% of the new business. Turning to Institutional Markets. The GIC market has grown rapidly over the past few years with coverage reserves nearly doubling over the same time period. In the quarter, we issued $1.8 billion of GICs at attractive IRRs, and we continue to see meaningful opportunities for the remainder of the year. Our GIC book represents 5% of our general account compared to 10% to 15% for major competitors, demonstrating ample room for additional growth. In the PRT market, we still expect activity to be weighted in the back half of the year. Nothing in this market has changed. Pension plans remain overfunded, the appetite for derisking solutions remains strong, and we expect the double-digit reserve growth we've achieved since 2021 to continue. Turning to Slide 5. Since we announced the transaction, our conviction has only grown that the merged company will be uniquely positioned to deliver exceptional value. Our industry is in the midst of significant growth opportunity. Annuity sales have grown from roughly $250 billion a year in 2021 to more than $450 billion in 2025. Despite this growth, new Corebridge research finds that only 28% of people are confident spending in retirement with fears of running out of money being the top concern. By contrast, those with a de-cumulation plan, especially one that includes guaranteed lifetime income, are far more confident. In short, many more Americans want and need our advice and guidance. Another powerful trend is the massive transfer of wealth between generations with $100 trillion in assets that is expected to be transferred by mid-century, which will fuel growth in the Wealth business. In addition, the life insurance protection gap remains significant with 100 million Americans expressing a need for coverage. The merger creates a company that is well positioned to capture this opportunity and drive profitable growth. Starting out, the combined firm will have over 10 million customers. Given the tremendous financial needs we see, our aspiration is to significantly grow that number over time. We will have all the right attributes to succeed. Our scale will give us a lower cost of capital, greater efficiency, comprehensive customer solutions and the ability to invest more while attracting top talent. We'll have a large and formidable multichannel distribution system to reach the broadest possible customer base. Our integrated business model will capture the full value chain from manufacturing through distribution to asset management, and our commitment to sound financial principles means we'll write business at attractive margins and deliver consistent capital return. By 2027, the combined company is set to unlock a compelling financial performance with $5 billion of earnings, $4 billion in cash generation and a return on equity of over 15%. With $500 million cost synergies directly supporting these targets and a clear pathway to additional revenue synergies, we have a clear right to win. We continue to make excellent progress towards closing the transaction. In addition to the successful shareholder vote, the leadership structure of the combined company continues to take shape. We have determined the first three levels of the organization, and I'm confident we're building the right team to win. The Joint Integration and Transformation Office continues to coordinate all merger activity with the goal of ensuring operational excellence for the new company. We are actively collaborating with key distribution partners to ensure a seamless transition, and on day 1, we are well positioned to win with our customers. The regulatory review process is proceeding on pace. Federal Antitrust Review is complete. FINRA approval of the broker-dealer change in control is complete, and all state and international regulatory filings have been submitted. We expect to announce the Board of the new company in the near future, and we still anticipate that the transaction will close by year-end, allowing us to hit the ground running in 2027. To win in our industry, we need to have a differentiated customer value proposition, go-to-market with world-class distribution and be the easiest company to do business with. Putting the customer in the center of everything we do is a top-to-bottom commitment. Our Customer Council, sponsored by the executive leadership team, is driving customer focus across a number of initiatives. Everything from the frontline service experience and the technology enablement to our corporate culture and customer safeguards. Our new Customer Champions Network representing every business and function at Corebridge is ensuring we bring the voice of the customer and our distribution partners to everything we do. Across every phase of the customer journey, we're committed to driving continuous improvement. In Group Retirement, our Plan Sponsor Net Promoter Score, a key customer service metric, rose 19 points year-over-year, but we still have more work to do. My goal for the Group Retirement business is top quartile service. Digital remains a key focus area. For example, we recently launched AI agents in our Group Retirement customer contact center to provide a better call experience. This quickly reduced repeat calls and average handling time. In Life, we enhanced our digital service infrastructure and more broadly, we're implementing a new business acquisition platform. Our goal is an industry-leading new business experience that increases fully digital submissions and speeds up suitability checks with 50% of policies issued in 30 minutes or less. Within Individual Retirement, our focus is on empowering financial advisers by removing friction from their day-to-day operations. Through our support of the Insured Retirement Institute's digital-first initiative we are modernizing the tools advisers rely on while simultaneously refining our internal workflows to eliminate application errors and accelerate policy issuance. By streamlining these touch points, we enable advisers to dedicate more time to their clients and the growth of their practices, all while driving greater operational efficiency behind the scenes. In closing, I want to express the strong commitment of the entire leadership team to exceptional value creation, both now and in the future. Thank you again for your approval of the merger. I'm confident the combined company has the right to win, and I can't wait for day 1 to get here. With that, I'll turn the call over to Chris.
Thank you, Marc. Starting with Slide 6. Performance in the second quarter was on track with the full year guidance provided at the start of the year, highlighting diversified earnings and diversified growth across our businesses. We reported adjusted pretax operating income of $664 million and earnings per share of $1.12, driven by growth in base spread income and fee income. Second quarter results were impacted by underperformance for Variable Investment Income. Excluding the impact of VII, EPS increased by 14% year-over-year. Within VII, Alternative Investments underperformed impacted by the market decline in software, coupled with market volatility related to the resurgence of conflict in the Middle East and the broader macro and geopolitical environment. As we said earlier in the second quarter, we do not foresee this environment materially changing over the short term and expect VII returns to remain below target for the remainder of the year. Adjusting for long-term alternative investment returns, we delivered a run rate operating EPS of $1.35, representing a 16% increase year-over-year. Finally, adjusted ROE was 11.4% or 13.8% on a run rate basis, within our 12% to 14% ROE targeted range. Excluding VII, this reflects a 90 basis point increase year-over-year, underscoring our commitment to consistent profitable growth. Turning to Slide 7. Core sources of income, which excludes VII, increased 5% year-over-year, illustrating our ability to grow across a variety of markets. Within that, spread income increased by 4%, benefiting from asset repositioning and growth in the underlying business as we have consistently reported positive net flows. More notably, these earnings reflect the full earn-in of the 2025 Fed rate cut and our reduced sensitivity to short-term interest rates. Fee income increased 15%, driven by growth in assets under management and administration and favorable market tailwinds. Lastly, underwriting margin decreased 1% year-over-year. We continue to see positive underwriting results, though they were less favorable than the prior year quarter. Echoing Marc's comments regarding the investments we are making to become the easiest company to do business with, we reported an increase in second quarter general operating expenses in line with the guidance provided at the start of the year. 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 $1.4 billion in holding company liquidity supported by our insurance company distributions of $475 million of dividends in the quarter and our liquidity exceeds the holding company's needs for the next 12 months. Capital return to shareholders was $412 million in the quarter. Excluding proceeds from the earlier VA Reinsurance transaction, we maintained our payout target with a year-to-date payout ratio of 84% which reflects the acceleration of share repurchases in the first half of the year. Looking ahead, we are committed to approximately $350 million in share repurchases in the second half of the year. Lastly, our insurance companies remain well capitalized with capital ratios exceeding our targets. Next, overview a few highlights in each of our businesses, the details of which can be found in the appendix to our earnings presentation. Note these results exclude the impact of Variable Investment Income and notable items. Starting with Individual Retirement, sales were $3.8 billion, and net flows remain positive contributing to continued growth in AUMA. While sales declined year-over-year and sequentially, I want to emphasize Marc's point earlier, we continue to prioritize margin integrity over volume. By adhering to our rigorous pricing drills, we have effectively pivoted our capital deployment towards higher growth areas of our portfolio that offer superior risk-adjusted returns. As we look at the full year, we still expect price compression to level off by the end of 2026 as older business continues to roll off, and we reaffirm our estimate for base spread income to be approximately $2.55 billion. In addition, fee income increased 17% year-over-year, reflecting growth in the underlying business. Lastly, APTOI was flat year-over-year reflecting increased present fee income, offset by higher sales-related expenses while APTOI increased 5% sequentially. Turning to Group Retirement, our results this quarter illustrate our broader strategy to grow capital-light earnings with the transition from spread-based products towards capital-light fee-based business. Reflecting that shift, fee income increased 15% year-over-year. Spreads increased sequentially, reflecting the benefit of asset repositioning though they remain lower year-over-year due to general account outflows in line with the demographic mix shift. AUMA continues to grow sequentially and year-over-year even with the net outflows for the quarter. Looking ahead, we do not expect any large planned surrenders for the remainder of the year. APTOI decreased 7% year-over-year, reflecting lower spread income and higher operating expenses, partially offset by growth in fee income. We continue to be excited about the opportunities for Group Retirement. We believe our competitive advantage lies in our ability to serve as a lifelong partner to our customers as they transition their needs from in-plan to out-of-plan ensuring we provide value every stage of their retirement journey. Turning to Life Insurance. We generated $870 million in sales this quarter and increased year-over-year and sequentially. The APTOI declined 11% year-over-year. Mortality and underwriting results were favorable, though less so than the prior year quarter. On a run rate basis, APTOI was $122 million, above the top end of our guide we provided at the start of the year. We remain confident in the steady cash flow and stability this segment provides for the broader portfolio. Institutional markets remains a consistent growth engine. We continue to be attracted to the risk-adjusted returns as evidenced by both underlying reserves and total earnings trending upwards. Second quarter sales were strong at $2.6 billion, illustrating our ability to efficiently allocate capital across our business. Sales included over $1.8 billion of GIC issuances maintaining the consistent momentum we've seen and highlighting our ongoing commitment to the market. APTOI increased 36% year-over-year. This growth was underpinned by a 17% expansion in our reserves and a 12% increase in AUMA. Lastly, on Pension Risk Transfer, sales in the space are inherently lumpy. While we and the entire industry have seen lower activity in the market, we still anticipate an uptick when we move into the second half of 2026. Looking at our investment portfolio. We continue to manage our portfolio with discipline through a dynamic market environment while remaining proactive in identifying opportunities that support attractive but risk-adjusted returns. The portfolio remains high quality with an average credit rating of A- and 96% investment grade. We also continue to see positive credit migration across both corporate bonds and securitized products, reinforcing the strength and resilience of the portfolio. New money yields remain above roll-off yields, which continues to support growth in net investment income. As I mentioned earlier, we were able to execute asset repositioning at higher yields further enhancing the earnings of our investment earnings without taking on additional risk. Within private debt, the book remains 91% investment grade, our private credit assets continued to perform in line with our expectations. Overall, we remain comfortable with the position of our investment portfolio. It is well diversified, actively managed and aligned with the nature and duration of our liabilities. In closing, our second quarter results reflect the resilience and strategic discipline that define Corebridge. We delivered solid performance in line with our expectations, reported by strong underlying fundamentals in our core businesses, and are well positioned to navigate the current environment. We remain confident in our ability to generate earnings and deliver on our commitment to shareholders. We appreciate your continued trust and are excited about the path ahead. We will now open the call for Q&A.
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.
分析師問答
Your first question comes from the line of Ryan Krueger with KBW.
My first question was on retail annuities and the competitive dynamics. I know you — I guess curious a little bit more on what you saw change during the quarter? I think you cited pretty competitive conditions earlier in the quarter that led to softer sales, but then a better June. So hoping to get a little bit more color on what you're seeing there?
Ryan, it's Marc here. Good to hear your voice. Thanks for your question. So yes, I would say as we were finishing up on Q1 and heading into Q2, we saw some additional competitive tension, I would say, in the simple designs. And as you know and as we've mentioned before, we have a significant depth and breadth of distribution across multiple channels. In our view, we see ourselves, first and foremost, as judicious capital allocators. And when I say distribution channels, I look at not only the retail channels, but our institutional markets as well. We saw more opportunities going into Q2 on the institutional market side, and we took advantage of that. We hold our risk-return attributes and objectives very strongly, and we manage very dynamically against those, and that's what you saw in Q2. Now as mentioned, we saw the dynamic fluctuate over the quarter, and we had a quarter in June being our strongest sales month on the retail side, and we entered July with some very good momentum. We saw that momentum continue through July. So we expect obviously our retail sales to rebound in Q3. Having said so, we see and we continue to see very significant opportunities on the Institutional Market side. So I think that capital allocation and the dynamic nature of our distribution is evidenced by these results and what we'll see for the rest of the year. So thank you.
And then I had a question on Individual Retirement based spread income. You reiterated the full year guidance despite some of the benefits from the opportunistic asset repositioning actions you took in the quarter. I mean maybe it's splitting hairs, but just curious kind of why no upside to the original guidance given those actions or maybe they were contemplated to begin with?
Ryan, it's Chris. Thanks for the question. So I think the way that I would think about it, yes, we are reiterating the guidance of $2.55 billion. While we did see some improvements in the base spread as the book continues to roll on, we would still expect to see some compression in spreads over the next couple of quarters, which we would still expect to bottom out at the end of 2026. So I think the place that you should think about it is, while there's some positivity this quarter, there's still going to be natural roll off in the book, which is going to have single-digit compression for the rest of the year.
Your next question comes from the line of Tom Gallagher with Evercore ISI.
First question, just a follow-up on Institutional spread product, Marc, that you were highlighting. Would you — is this really your growth there? Was that really a function of being more opportunistic at a time when retail was challenged? Or do you see that as a bigger runway and growth opportunity in the coming quarters as you think about capacity and pricing and margin and that sort of thing.
Yes, Tom, great to hear your voice as well. So I would say that overall, we see a lot of opportunity on the institutional market side, and we see a lot of upside as we move forward. I think as I mentioned in my remarks, our funding agreement and GIC business is about 5% or so of our balance sheet. If you look at the environment, many players are around 10% to 15%, I think. So we have a lot of runway and upside there. I think when you combine the balance sheets of ourselves and Equitable, you'll have even more demand and appeal for that type of offering for us. So I do see growth at attractive risk-return margins as we move forward. In addition, as Chris mentioned in his remarks, in the back half of the year, we see opportunities on the Pension Risk Transfer side. I would say we started Q3 with some tailwinds in both those businesses. Again, and I mentioned to Ryan, that we have some tailwinds on the retail side as well going into Q3. So that's kind of my perspective.
My follow-up is just any update on how things are progressing with potential collaboration with Nippon Life on Japanese annuity products? Is that still super early, unclear? Or is there any line of sight on anything tangible coming together there?
Thanks, Tom. I would say that we continue to have very robust discussions with Nippon about co-manufacturing products for the local Japanese market. We and they feel that the economy and the demand for products where we have significant expertise at manufacturing is growing in Japan. It's not lost on Nippon that there's a vibrant opportunity there through their proprietary channel and to their third-party broker-dealer and bank channels. So we're probably in the third or fourth inning of those discussions, but they are moving in a good direction. It's too early to tell when we might agree on a complete plan. And then obviously, like it is the case here in North America, you need to file the product with the FSA. It needs to be developed, manufactured and start issuing it. So there's a time lag there as well. But no, we are cautiously optimistic that there will be a lot of opportunity for us and Nippon; they have a wonderful brand and distribution there, and the collaboration is strong across both firms. So we are excited about the prospects.
Your next question comes from the line of Suneet Kamath with Jefferies.
I wanted to start with annuities and the expense ratio. Just based on some of the work we've done, it looks like on a pro forma basis, your expense ratio is going to be materially below some of your peers. So I wanted to sort of test that with you, and then relatedly, if that's true, I would assume one of the potential outcomes is in environments where things are a little bit irrational from a competitive perspective, that expense advantage should allow you to continue to grow and hit your return. So I just want to test those two ideas out with you.
Suneet, it's Marc. Thanks for your question. As we announced the transaction, you've heard us talk about the expected expense savings of more than $500 million a year within two years of the merger. That speaks to the expense efficiency. Scale is a big part of the reason that this market remains attractive to us. You need scale. There's a fixed cost to digitizing our business, implementing and deploying AI. There's an obvious scale advantage through expense ratio in our business. We do expect to see the benefit of that. It will span a number of dimensions from the efficiency of our capital use, the depth and breadth of our distribution, our ability to pivot products depending on where we see the opportunities and the client needs, and the institutional market side that I discussed with Tom. On the origination side, our partnership with AllianceBernstein and relationships with Blackstone and BlackRock will give us complementary origination capabilities. All of that will factor into how we see the market and our competitive positioning.
Okay. That's helpful. And then I guess shifting gears to alternatives. It sounds like a lot of the other companies that have reported are guiding to a better sort of second half relative to the first half. And I think you said things will still be challenged in the second half. So is there something sort of unique about your portfolio versus others? Or are you just being conservative there?
Suneet I'll mention one comment, and I'll pass it to Lisa, our Chief Investment Officer, who will give you some perspective. But I would remind everybody that when you look at the concentration of private equity on our balance sheet, it's less than 3%, and it's thoughtfully aligned to our long-tail liabilities. You can see a lot of the alternatives being deployed against our Institutional Markets and Pension Risk Transfer business, which has longer-tail liabilities, and some in our Life business. It's an economically attractive asset for those longer-tail liabilities because other credit assets aren't available with the same characteristics. That's the frame to think about how we manage the portfolio. Lisa?
Thanks, Marc. As Marc mentioned, when we think about our long-term return, it's over the very long term and over multiple cycles. Our private equity and alternatives portfolio is primarily private equity, with real estate equity in the form of funds and then residual hedge funds. Historically, private equity has generally met our long-term expectations, but in this quarter, the marks on our private equity funds drove the underperformance. Normally, our private equity portfolio is very broad and diverse and we'd have weakness in one sector offset by strength in another. Unfortunately, in this past quarter, the market was weaker broadly across sectors. The large backlog of private equity exits on existing investments have not been meaningfully reduced, so we're not getting the realizations that would generate gains to offset some of our marks. We guided lower and think that continued market uncertainty around AI valuation, geopolitical uncertainty, and higher rates can impact marks going forward. Although we think we could see positive returns in the second half, we do not expect to hit our long-term expectations for this year, in particular.
Our next question comes from the line of Joel Hurwitz with Dowling & Partners.
I wanted to start on base spreads to have another one there. Can you just provide some more color on the actions that you took in the quarter to support the expansion? How much was repositioned? And do you see further similar opportunities in the back half of the year?
Hi Joel, it's Lisa Longino. Thanks for the question. Our portfolio is very high quality and well diversified, and 96% is investment grade. The portfolio has remained resilient through a variety of cycles. We proactively manage the portfolio with a focus on our overall balance sheet. Regarding asset repositioning, it entails assessing names or sectors we're less sanguine on and rotating into other sectors where we prefer the outlook or see relative value opportunity. This is very proactive. Given moving rates, this repositioning has allowed us to increase yield while maintaining our credit quality. We feel pretty comfortable with it. It's something we continue to do.
Got it. That's helpful. And then just wanted to touch on buyback expectations for the back half of the year. Chris, I think you said around $350 million in the second half, which will bring you back to your payout ratio target. But I guess just given the strong capital and cash generation and where the stock is trading, would you consider drawing down some of the excess to exceed your payout ratio for this year?
Yes, Joel, it's Chris. Thanks for the question. We have about $1.4 billion of capital at the holdco that is in excess of our 12-month needs. At this point, we remain committed to approximately $350 million of share repurchases during the second half, in line with our pre-merger plans. For 2026, that would mean we repurchased about $1.9 billion in share repurchases year-to-date. If you look at 2025 and 2026 combined, we would repurchase over $4 billion of shares. Overall, at this point, we feel comfortable with our levels. As we look to the combined company with $4 billion of cash generation, I think we'll have an opportunity to revisit that as part of our Investor Day.
Your next question comes from the line of Wes Carmichael with Wells Fargo.
Just had a question. Equitable announced the divestiture of the company's Employee Benefits business. It sounds like maybe that was a little bit unique as the company was approached by Hartford. But as you look at the portfolio post the VA transaction, are there any other subscale businesses you think about divesting or any divestitures you might see ahead of the merger or closely after?
Wes, it's Marc here. Thanks for the question. That was a great transaction, in my opinion, a good outcome for Hartford and Equitable. It was the sale of a subscale business that augments what Hartford is doing — a win-win. To your question, that was the only subscale operation. When you look at the combination, everything else I think will have a leadership position and an opportunity for growth and upside. So the short answer is no, we don't see any other businesses currently that we see as having the same characteristics that led to that transaction.
Just switching gears. In Life Insurance, you've seen some pretty good core results there in the quarter. But just taking a step back, how are you thinking about longer-term mortality trends in that business? It seems like mortality for the industry at least has been more favorable. Do you see that continuing? And how are you thinking about that headed into the assumption review?
Thank you, Wes. That's a very good question. One of the things I noticed when I dug into the balance sheet and the businesses is mortality results have been very favorable here versus expected for a number of quarters, which speaks highly to the quality of the underwriting, the quality of the business and the quality of the distribution. That continued in Q2 with very strong mortality results. You've seen in some pockets across the industry some very favorable mortality, and there's some impact coming out of COVID as well as new drugs that affect longevity. All in all, we are bullish on the Life business. I see no reason why our business should not be twice the size it is right now given the distribution options we have and the attractive risk-return profile and complementary nature of that liability versus everything else we're doing. As we come together with Equitable, we'll have access to VUL products, and there are revenue synergies in adopting that chassis into our distribution. So we see upside on the Life side based on mortality and market demand for protection.
Your next question comes from the line of Yaron Kinar with Mizuho.
You had mentioned that sales in the Individual Retirement business were getting a bit better in June. Which of the retirement products are you seeing that improvement in? Is it kind of across the board? Or are you still seeing more pressure in fixed annuities?
Yaron, it's Marc. I would say that the nice trends in sales heading into June and into Q3 are across the board. We introduced some enhancements to our index annuity products, refined some of our living benefit offerings, and introduced additional indices and structures. So it's a complementary aspect of some new solutions for our distribution and some upside across a number of product lines. It's across the board, not one particular product. We continue to focus on more sophisticated client solutions rather than the simpler structures where competitive activity was stronger.
And then on the rotation into some of the new assets that allowed you to get some better yields. Can you maybe talk about the asset classes that you rotated into? Or are they still the same classes mainly — are you selling corporate debt? Or are you moving more into private credit? Where were these opportunities showing up?
I can answer that. In terms of what we sold, we sold lower-yielding high-yield assets, some emerging market exposure, and some lower-yielding private assets where we saw secondary market liquidity. What we rotated into was primarily investment-grade public assets, RMBS and some private ABS; over 50% of the purchases were in single-A or higher. So we felt we could increase incremental yield while maintaining or, in some cases, improving credit quality.
Your next question comes from the line of Tracy Benguigui with Wolfe Research.
A question on adding $100 billion of AUM to AllianceBernstein through the Equitable merger over time. How does that stack up against the existing Blackstone mandate, which looks about $20 billion short of the $92.5 billion target by the third quarter of '27. To confirm, is the base case just to absorb the make-whole rather than reallocate internally managed assets to Blackstone since forcing that mandate would actually skew the general account more heavily towards private credit? Otherwise, is satisfying the Blackstone commitment a priority that may push out the revenue synergies from the incremental AllianceBernstein AUM?
Tracy, it's Marc. Let me deconstruct your question. Blackstone is a great partner. They originate very good assets at attractive yields, and the fees they charge are more than made up by the overall yield and quality of origination and how complementary it is to the rest of what we do, as is the case for BlackRock and our own origination team and the relationship with AllianceBernstein. We have a commitment to get to $92.5 billion by end of Q3. We look at sourcing and the nature of liabilities, and we find the best origination to meet that need irrespective of order sources. If there's a make-whole to be made, it's a temporary charge. We will get to $92.5 billion given the size of the balance sheet and organic growth. Regarding the $100 billion flowing to AllianceBernstein over time, that will be complementary to what Blackstone does. The combined entity will need origination of $80-plus billion a year. With the duration on our products, about 15% turns over every year. You'll get natural attrition of current assets that will flow to AB. As we grow the business, we'll have origination and will reposition some current balance sheet assets to AllianceBernstein. We see significant opportunity partnering with AllianceBernstein while remaining complementary to Blackstone.
Great. I have a question on the GIC market where you're pretty active. We saw a reinsurer assume $500 million FABN as part of a risk transfer deal. This is more capital-light business. I could see the traction by the counterparty. Can you see yourselves leveraging your higher rating to get decent cost of funds and then reinsuring that to a counterparty with a lower rating and earning some fee from that? Could we see this type of market activity?
Thanks, Tracy. I think you're referring to a recent transaction that was announced. Best to ask them for transaction specifics. But in general, you're talking about leveraging our capital and capital allocation. Whether through similar structures or other tools, the combined entity will be highly focused on astute capital allocation. We optimize capital deployment and use various tools available to optimize outcomes for stakeholders. I won't point to that exact structure, but capital allocation optimization is something we do.
Your next question comes from the line of Pablo Singzon with JPMorgan.
First one, you had mentioned some of the product enhancements you implemented this quarter in retail annuities. But I was wondering if the asset repositioning was also meant to improve your competitive position in the market? Or was that adjustment just more about the portfolio and spread optimization?
Pablo, we lost you at the end but I got the gist. Any action Lisa spoke about tied to in-force management. We have a pricing matrix and a robust pricing approach that involves Lisa, ALM and our liability teams on a weekly basis for all new business activities. That's how we approach it, and then we optimize the portfolio and the balance sheet as capital markets and the environment evolve.
Got it. That makes sense, Marc. And then second question, just on mortality. I wanted to flip at the longevity and PRT side. I'm aware the covered populations are not exactly the same, but I was wondering if you're seeing some negative offset to the Life Insurance benefit as you look at your pension and PRT potentially having participants living longer?
Thank you for your question. If we're seeing better mortality on the insurance side, are we seeing additional longevity on our PRT business? Those are very different population bases, different origination and different mortality tables used in each market to price the business, which is reflective of the actual mortality in each market.
Your next question comes from the line of Joshua Shanker with Bank of America.
There was a lot of talk about the opportunity in the back half of the year on the PRT market. I want to understand, are those transaction discussions currently underway? Or do you have a high confidence that Corebridge will be the winner of those transactions? And are we in a new sort of era where PRT is a back-half weighted sort of business for you guys?
Thank you, Josh. I appreciate that question. You've seen evidence that our PRT sales and activity are weighted to the back half. What's different in 2026 is there was less activity in the front half than otherwise, which enhances expected activity in the back half. Specifically to Corebridge, we target certain case sizes and plan types with both current and deferred retirees that position us well. The pipeline for businesses like PRT takes four to six months to build. Plans are generally well funded and interest rate levels are attractive, so we expect robust activity in the back half. We feel we can get the business we target given the value add we bring to those structures, which is why we were clear about our expectations for the balance of the year.
But just to understand, is bidding occurring right now with you and a number of PRT competitors in the bidding process? Or is this already basically baked into the back half of the year?
Yes. It's a combination of everything you're saying. Processes are at different levels of maturity, and we have a sense of where we are in each process and our ability to be successful. We feel pretty good about our prospects in the second half of the year.
Your next question comes from the line of Wilma Burdis with Raymond James.
Life Insurance sales were stronger earlier this quarter. Is there anything in particular driving the increase that we can expect going forward for Life sales?
Wilma, thank you for your question. We are bullish on our Life business. I expect and want the business to grow meaningfully over time. We feel we have great distribution opportunity. Some of the things that have held us back were connectivity across our various distribution channels. We've been focused on separation and now are deploying investment dollars to make ourselves the easiest company to do business with, and we are seeing green shoots in our Life business tied to that. There's an unmet need for protection across America that we'd like to get ahead of.
Okay. And then going to tie in two questions. Pensions are well funded. Do you think that pushes some of the PRT deals into next year? And along those lines, can you talk a little bit more about the opportunity to expand institutional business when you combine with Equitable?
On the PRT side, we feel pretty good about the second half of the year and the space in 2027 and beyond. By bringing together the two balance sheets and a stronger, bigger capital base, we'll have an opportunity to take larger PRT sizes. Growing our Institutional Markets business across funding agreements and PRT will be one of the revenue synergies of the merger. As I mentioned earlier, our current GIC/funding agreement exposure is about 5% of our balance sheet while peers are higher, so there's a lot of upside for the combined company.
There are no further questions at this time. Thank you all for attending. This concludes today's call, and you may now disconnect.