Corebridge Financial Inc (NYSE: CRBG) Q3 2025 Earnings Call dated Nov. 04, 2025
Corporate Participants:
Isil Muderrisoglu — Head of Investor and Rating Agency Relations
Kevin Hogan — CEO
Elias Habayeb — CFO
Analysts:
Joel Hurwitz — Analyst
Alex Scott — Analyst
Jack Matton — Analyst
Tom Gallagher — Analyst
Ryan Krueger — Analyst
Elisa Greenspan — Analyst
Wes Carmichael — Analyst
KV Montessori — Analyst
Sunit Kamath — Analyst
Presentation:
operator
Hello and welcome everyone to the Corebridge Financial third quarter 2025 earnings call. My name is Becky and I’ll be your operator today. During the presentation, you can register a question by pressing Start followed by one on your keypad. If you change your mind, please press Start followed by two. I will now hand over to your host, Isil Muderrisoglu , Head of Investor and Rating Agency Relations. To begin, please go ahead.
Isil Muderrisoglu — Head of Investor and Rating Agency Relations
Good morning everyone and welcome to Corebridge Financial’s earnings update for the third quarter of 2025. Joining me on the call are Kevin Hogan, President and Chief Executive Officer and Elias Habayeb, Chief Financial Officer. We will begin with prepared remarks by Kevin and Elias and then we will take your questions. Today’s comments may contain forward looking statements which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based upon management’s current expectations and assumptions. Corebridge’s filings with the SEC provide details on important factors that may cause actual results or events to differ materially from those expressed or implied by such forward looking statements.
Except as required by the applicable securities laws, Corebridge is under no obligation to update any forward looking statements if circumstances or management’s estimates or opinions should change and you are cautioned to not place undue reliance on any forward looking statements. Additionally, today’s remarks may refer to non GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release, financial supplement and earnings presentation, all of which are available on our website@investors.corebridgefinancial.com with that, I would like to now turn the call over to Kevin and Elias for their prepared remarks.
Kevin Hogan — CEO
Kevin Good morning everyone and thank you for joining. I’ll start this morning by providing some context around the announcement we made on Friday. As you have seen, our CFO Elias Habayeb will be leaving Corebridge in April to take a senior leadership position at a publicly listed company that we do not consider a competitor. Elias and I have worked together for many years and I know he will be missed. At Corebridge, we’ve engaged a leading executive search firm and have begun a search process. We are pleased that there will be a six month transition period that will allow for Elias to oversee the completion and filing of 2025 financial statements and the finalization of the 2026 budget and business and operating plans.
While the search is underway, I would also note that one of Elias important contributions as CFO of Corebridge has been building A very strong finance team that I am confident will support the ongoing execution of our four strategic pillars and our trajectory for continued growth. I know that this search will be one of Mark Costantini’s top priorities when he arrives next month, and I am confident that he and the board will select the right person for Corebridge’s next chapter. We expect this to be a seamless transition. With that, let me turn to third quarter results.
Corebridge delivered another quarter of solid performance with our diversified businesses, generating the highest sales since the ipo even as we further strengthened our balance sheet and once again delivered both strong earnings and an attractive capital return to shareholders. Our financial results as presented reflect our position after the previously announced variable annuity transaction with Venerable, which marks an important inflection point for Corebridge. Our company is now simpler with a lower risk profile, higher quality of earnings and greater growth potential. Corebridge has been working since the IPO to strengthen every element of our value proposition. Our diversified business model is founded on a broad spectrum of products and services, distribution channels and market segments delivering diversified sources of income that enable us to generate sustainable cash flows and and perform through various market cycles across our businesses.
We are committed to deploying capital where the risk adjusted returns are the highest and customer demand is the greatest, while our spread income is now a larger percentage of the whole. Our sources of spread income streams themselves are diversified. We have a high quality investment portfolio and minimal legacy liabilities. Our strong balance sheet provides us with financial flexibility to achieve our strategic objectives. We have maintained capital ratios of our insurance companies above their targets and at $1.8 billion, including partial proceeds from the VA reinsurance transaction, we have more than ample liquidity at the parent. Finally, we we continue to emphasize disciplined execution.
The team at Corebridge has done an excellent job to date managing through a complex corporate separation, divesting our international businesses, launching our strategy in Bermuda, executing one of the largest VA reinsurance transactions to date, upgrading our technology and customer service capabilities, and meeting or exceeding every financial target we set at the time of the ipo. It is a very strong foundation for continued success and shareholder value creation. Turning to Slide 4, our results in the quarter once again demonstrate that we continue to execute on all four of our strategic pillars. First, we delivered strong organic growth with total premiums and deposits of $12.3 billion, reflecting ongoing strength in individual retirement.
Sales of our RILA product were nearly $800 million in the third quarter and have topped $1.7 billion year to date. We are now the only company to have a top 10 ranking across all four major annuity product categories as measured by Limra. In October, we received regulatory approval to sell our RILA in New York State, one of the nation’s largest annuity markets and one where we feel very well positioned and we remain on track to launch by the end of the year. In addition to our individual businesses, we had very strong performance in institutional markets in both GICs and pension risk transfer transactions.
Overall general account net inflows were $1.4 billion, up 27%, supporting general account growth of 6% year over year across all of our businesses. We remain disciplined in how we price new business adjusting as market conditions evolve. For example, interest rates declined through the third quarter, prompting us to take rate actions to preserve margin. We generally respond quickly when conditions change, even at the risk of short term production, and that discipline remains a hallmark of how we run the business. Our diversified business model gives us optionality to allocate capital to where it will earn the highest risk adjusted returns.
We are focused on growing earnings and being responsible with the capital that our shareholders have entrusted us with. Turning to our second pillar, we remain focused on optimizing our balance sheet and creating greater capital efficiency. The capital freed up by our transformative VA reinsurance transaction was significant and as we’ve said before, we continue to explore additional opportunities that would be value accretive. One example is expanding our Bermuda strategy, which is off to a great start with $18 billion of reserves exceeded since inception. Third, we continue to focus on further improving our operating leverage and we recently completed our voluntary early retirement program which is creating capacity to invest in and upskill in key areas such as digital.
By continuing to modernize our operations, we see ongoing opportunities to improve our customer and distribution partner experience, which is essential to growth and to further increase our operating leverage. Fourth and finally, we remain committed to active capital management. Year to date we returned more than $1.4 billion to shareholders through buybacks and dividends. While our payout ratio over the period was 80% reflecting the impact of the VA reinsurance transaction, our target payout ratio remains 60 to 65%. Reflecting on the market, the macro environment remains attractive. The need for people to take care of themselves financially by growing their assets and locking in secure retirement income is a powerful tailwind for our individual and group retirement businesses.
In life insurance, the large protection gap continues to represent a significant opportunity and in those areas of the market where our advantages can drive attractive returns. In institutional markets, pension plan funding levels remain very strong and plan sponsors are resolute in their intention to divest these liabilities. Corebridge is well positioned to capitalize on those trends. And we’ll do it with the same commitment to strong financial metrics that you’ve come to expect from us a 12 to 14% return on equity, an average 10 to 15% annual EPS growth rate over time and a 60 to 65% payout ratio, all while maintaining the Life Fleet RBC ratio above target.
As I prepare to hand the reins over to Mark, I’m pleased to be doing so from a position of strength. Corebridge has market leading businesses, a very strong balance sheet and robust opportunities for continued profitable growth. That’s why I believe Corebridge remains a compelling investment proposition. With that, I’ll turn the call over to Elias.
Elias Habayeb — CFO
Thank you Kevin. I’ll begin my comments today on Slide 5. Excluding VII and notable items, Corebridge reported third quarter adjusted pretax operating income of sales $678 million and operating earnings per share of $0.99. This quarter included one notable item that represented the charge of $98 million resulting from the impact of our annual actuarial assumption update. At the total company level. The annual 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 deck. Annualized alternative investment returns this quarter were $0.11 per share below our long term expectations, with outperformance in private equity partially offset by underperformance in hedge funds and real estate equity.
Looking forward, we’re beginning to see a pickup in MNA activity which should benefit alternative investment returns. However, we’re also seeing a continued lag in real estate equity performance. Accordingly, based on what we know today, we expect alternative investment returns for the fourth quarter will be below our long term expectations of 8 to 9%. Adjusting alternative investment returns to long term expectations and and notable items, we delivered run rate operating EPS of $1.21 which represents a 6% year over year increase and an adjusted run rate ROE of 12.9% which is up 70 basis points versus the prior year.
Moving to slide 6, total sources of income increased approximately 1% year over year after excluding VII and notable Items. Despite the 100 basis points of Fed rate cuts in 2024 spread income was down only 1% as business growth paired with asset optimization action mitigated the headwinds. Fee income was up 7% year over year, primarily from favorable markets, while underwriting margins were essentially flat year over year. Turning to Slide seven, I’ll focus on our capital and liquidity positions in the quarter. Our insurance company distributions totaled more than $1.3 billion, including approximately $700 million of proceeds from our VA Reinsurance transaction.
Capital return in the quarter was a strong $509 million, including $381 million of share repurchases. Furthermore, since September 30, we have begun deploying the proceeds from the VA Reinsurance transactions and have returned over $370 million to shareholders. Our holding company liquidity remains robust at $1.8 billion, well above our next 12 month needs in large part due to undeployed proceeds from the transaction. With our Live Fleet RBC ratio remaining above target and our recent VA Reinsurance transaction generating significant distributable proceeds, you can expect to see elevated levels of share repurchases in the coming quarters pursuant to the $2 billion increase to our share repurchase authorized by the Board in June.
Next, I’ll briefly review a few highlights from each of our businesses, the details of which can be found in the appendix to our earnings presentation. As a reminder, results exclude the impact of VIII and notable items where applicable. Additionally, while we remain focused on prudently managing our expenses, we did see a short term increase across all segments resulting from higher compensation related expenses consistent with our prior guidance as well as a one time medical expense accrual in individual retirement. Core sources of income were flat year over year as the impact of Fed rate actions was partially offset by strong growth and asset optimization.
We saw continued strength in new business. Index annuity sales were at an all time high and RILA sales continued to grow reflecting strong customer demand and the benefit of our deep distribution network. Net flows were up 13% year over year mostly driven by higher index annuity and RILA sales. Adjusted pre tax operating income declined by 9% year over year. The biggest driver was higher DAC amortization and commissions reflecting several factors including growth in the business. Higher fee income and lower base spread income offset each other as a result of market movements over the past year.
Group retirement results in the third quarter demonstrate the ongoing transition from a spread base to a fee fee based revenue stream. Core sources of income grew 1% as fee income increased 4.5% year over year while base spread income declined by 4%. Overall, fee income now accounts for approximately 60% of group retirement’s core revenue. Adjusted pre tax operating income increased 1% year over year as higher fee income offset lower base spread income while assets under management and administrations were flat year over year. Advisory and brokerage assets continued their strong growth and were up 9% year over year to a new record high.
Premiums and deposits excluding advisory and brokerage were down 10% year over year reflecting previous plan exits and lower out of plan fixed annuity sales. As we look ahead, we’re making considerable investments in the business to upgrade the quality of our in plan services and further build up our wealth management offerings which should increase enrollments and rollover recaptures. To that end, our advisor headcount is the highest it’s been in two years and our advisor productivity is up 10% year over year, both supporting our growth initiatives. We expect our growing number of financial advisors as well as their increased productivity to be a positive earnings driver for group retirement in the future.
In our life insurance business, core sources of income were flat year over year. Adjusted pretax operating income was down 8% year over year, largely due to some one time costs related to systems conversion and higher expenses mentioned earlier. Mortality continues to trend favorably, demonstrating strong underwriting on the block. Adjusting for one time items, this quarter’s life adjusted pretax operating income was $115 million. In line with our previous guidance, we continue to believe this business will generate earnings of 110 million to $120 million per quarter other than in the first quarter which typically has higher mortality.
While new business sales were down 6% year over year, we grew our fully digital senior life products to by 19%. In institutional markets, we had the strongest sales quarter since the ipo, with both PRT and GIC showing exceptional growth. This was the sixth consecutive quarter with GIC issuances in excess of $1 billion. The outlook for PRT transactions remains promising both for the fourth quarter and longer term as pension plans in the US and the UK have continued appetite for de risking as plan funding levels remain very strong. That said, given the nature of PRT transactions, you can expect some continued variability in quarterly volumes.
Total reserves grew by $8 billion or 19%. Core sources of income were up 5% year over year while adjusted pre tax operating income was up 3%. Before I close, I wanted to provide a few thoughts on the state of the market and credit in particular. Currently the Fed has begun its easing cycle, so short rates are moving lower and the curve is steepening. With that you have credit spreads at the tight end of the range and defaults remain relatively low. In addition, there’s been recent headlines about increasing signs of pressure in the broadly syndicated loan market.
We believe these events are idiosyncratic and we have negligible exposure to those names the current market environment is factored into both our asset allocation and our asset and liability management strategies strategy. We focus on liability origination and originate assets that are predominantly high quality and fixed rate to match those liabilities. Floating rate assets, along with derivatives play a smaller and specific role in our duration management. Floaters can also offer incremental value and diversification given the tightness and spread. We prefer higher quality assets that provide collateralized cash flows with credit enhancement and or covenants rather than lower quality unsecured or idiosyncratic risk.
In the context of our broader investment portfolio, it remains resilient and well positioned to manage through volatility. The portfolio’s 95% investment grade and is highly diversified among asset class, industrial sectors and geographies. In the third quarter, our portfolio continued to experience positive rating migration for bonds and commercial mortgages. We also have a deeply experienced credit team that operates in a highly rigorous and iterative underwriting process with multiple levels of approvals and ongoing monitoring and proactive portfolio management. We underwrite through the cycles and focus on capital preservation and risk of loss. In terms of the broader balance sheet, we carry moderate leverage, a comfortable liquidity position and access to the capital markets.
We regularly run various stress tests of our capital and liquidity positions and remain comfortably within our risk appetite. I also want to provide a reminder about our earnings trajectory over the next few quarters. We published a revised financial supplement that recasts individual retirement VA earnings below the line going back to the first quarter of 2024. As we have said previously, we expect the VA reinsurance transaction to be accretive to the pre recast eps by the second half of 2026. Once we complete the share repurchases funded by the proceeds from the transaction due to timing, EPS over the next few quarters will be lower than they would have been if we had deployed the proceeds on day one.
Additionally, similar to 2024, any Fed rate actions are expected to have a short term impact on on spread income as we expect to mitigate the effects through growth in the business, asset optimization and other management actions. Finally, as you know, this is our last earnings call with Kevin as CEO. I want to take this opportunity to thank Kevin for his friendship, guidance and leadership. The value Corebridge has created for shareholders on his watch has been truly outstanding and I’m deeply honored to have worked with him. With regard to my announcement, I have worked at Corebridge and aig for over 20 years and it’s been very gratifying both on a personal and professional level.
I’m pursuing an opportunity that I believe is the right next chapter for me. I can’t disclose details at this time, but an announcement will be made in due course. I’m very proud of the finance team we have built at Corebridge and I am committed to ensuring a smooth transition for the benefit of the team, all my core Bridge colleagues, our incoming CEO, my successor, and our shareholders. With that, I will turn the call back to Isho.
Isil Muderrisoglu — Head of Investor and Rating Agency Relations
Thank you, Elias. As a reminder, please limit yourselves to one question and one follow up operator. We are now ready to begin the Q and A portion of the call.
Questions and Answers:
operator
Thank you. If you wish to ask a question, please press start followed by one on your telephone keypads. Now, if you feel your question has been answered or for any reason you would like to remove yourself from the queue, please press start followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Joel Hurwitz from Dowling and Partners. Your line is now open. Please go ahead.
Joel Hurwitz
Hey, good morning. And first, just wanted to wish you both the best in the future. In terms of my questions, I wanted to start on individual retirement and the base spread yield. Could you just unpack the drivers of the 7 basis point decline quarter over quarter?
Kevin Hogan
Yeah, happy to, Joel. So listen, as we’ve said before, we expect spread income and individual retirement to grow over time and that hasn’t changed. We do expect some marginal compression for the dynamics we talked about in the past, you know, with the differential between the spread on new business versus in force and that we expect to be marginal. And based on what we know today, factoring in the latest outlook on rate cuts, we expect that to go through the end of 26 and level off and potentially start growing from there. Now, when you come to this quarter itself, the base spread compression due to the dynamics we’ve explained is in the 1 to 2 basis points.
But with the VA transaction that we did that we closed on the Texas side, which was about 90% of it, we had to reallocate the assets to come up with the portfolio that we transferred to the other side. And that’s kind of creating noise and it’s a one time impact of about five basis points. And that kind of, you know, level sets kind of a new baseline where to measure compression going forward from.
Joel Hurwitz
Got it. That’s helpful. That makes sense. And then Elias, in your prepared remarks, you mentioned considerable investments in the group business for in plan guarantees and wealth management. Can you just elaborate on the level of expected spend there and what Exactly. These investments are.
Kevin Hogan
Yeah, Joel, hi, it’s Kevin. Look, I mean, there’s a couple of areas. We’re investing in the group retirement business. On the in plan business, we continue to invest in our automation and digitization initiatives, improving the customer and participant experience there. And then in terms of the wealth management, it’s really growing the advisor force and professionalizing the advisor force. And you know, we’ve been investing in increasing the footprint of the advisors serving both the in plan and the out of plan opportunity. And then, you know, to a certain extent, expanding our product and service shelf to cater to the needs of that, you know, what we call wealth management, which is serving the former in plan participants.
In the out of plan area, we’re not putting a particular number on the investments that we’re making. I mean, this is part of, you know, the opportunity that we have to continue investing in the growth of the business. And we’ve seen the results from it. You know, our advisory and brokerage assets are up 9% year over year to a new record of 17.6 billion. Our out of plan assets have reached 28.8 billion. And between the in plan fee business, the out of plan business and the advisory brokerage, that really makes up our, what we think of as our wealth management platform.
You know, it’s a big earnings base of 108 billion in assets, which is up 2% year over year. So we’re seeing green shoots, but we continue to invest in the business.
Joel Hurwitz
Got it. Thank you, Kevin.
operator
Thank you. Our next question comes from Alex Scott from Barclays. Your line is now open. Please go ahead.
Alex Scott
Hey guys, best wishes in your next phase here. I guess my first question is on the private credit. I know you gave some comments already, but was just interested if you could provide a little more color around some of the metrics like how much of your bonds or what you would consider private credit or any commentary on the way that you have those rated and which of the rating agencies you use. Just trying to get a little more color on some of the concerns that are more broadly out there on private credit.
Elias Habayeb
Hey Alex, it’s Elias. Yes, so through private credit for us. And private credit is a broad category, includes private placements. Which insurance companies created this asset class and have been in it for years. It’s like in the $30 billion range, 90% of it is investment grades. We generally use the, you know, the main rating agencies from a rating perspective on it, you know, below investment grade. And it’s a small portfolio. It’s largely the middle market loans that’s like a $3.5 billion portfolio. And that’s one we’ve originated some time ago, that’s been originated some time ago and is performing well relative to that asset class.
And while we’ve seen some deterioration, it’s all within the yield. We don’t see a principal loss on that.
Alex Scott
Got it. Can you also talk about just the competitive environment for pricing on the retail annuities that you’re selling and how the trade off between volume and spread is expected to translate into absolute earnings growth and spread over the next couple years in that business?
Kevin Hogan
Yeah, sure. Thanks, Alex. Look, I mean, first of all, the demand for annuities remains robust and the belly of the curve and the forwards suggest it’s going to remain supportive, you know, even while the short term sort of rate outlook is a little uncertain in the long term. Macro drivers are there, you know, with the aging of the population and the supportive advisor community and people realizing they need to look after themselves. And look, I mean, once again in the third quarter we saw conditions that were quite supportive. You know, rates did come down during the quarter and so we repriced our fixed annuities and indexed annuities several times in response and also actively managed our in force crediting rates.
But we still saw very strong opportunities in indexed annuities, especially those with income benefits, where we had a second successive record quarter. You know, our RILA was also very strong. $800 million across the company, 650 million in individual retirement, which, you know, continues to be very well received in the market. And we just got our approval to launch in New York, which we believe is, you know, if not the largest, one of the largest annuity markets in the country, which we expect before the end of the year. So that momentum will continue. And fixed annuities is the most immediately sensitive business.
And you know, while it was a little lower, we still produced $2 billion, which is quite strong. And we will continue to be disciplined in allocating capital where the risk adjusted returns are the highest. And in the second half the quarter we saw compelling opportunities in institutional markets, including in pension risk transfer, where we concluded a billion and a half dollars plus, you know, we remain a regular DIC issuer with our sixth quarter in a row over, you know, a billion dollars. So, you know, we’re comfortable with our overall position, the environment remains competitive, but we have tools by which to respond.
And individual retirement is one of our spread businesses, but institutional markets is another one. And above all, you know, we remain confident in growing both our enterprise and Our individual retirement General account and Spread Income over time. You know, Fed actions will present occasional short term headwinds, but you know, we expect Spread Income to continue to contribute to our, you know, EPS growth targets over time.
Alex Scott
Thank you.
operator
Thank you. Our next question comes from Jack Matton from bmo. Your line is now open. Please go ahead. Jack, your line is now open. Please ensure you’re not muted. We currently aren’t getting any response from this line. So we’ll move on to our next question from Tom Gallagher from Evercore isi. Your line is now open. Please go ahead.
Isil Muderrisoglu
Operator, we aren’t hearing any questions come through. Can you please check?
operator
Bear with me one second. I’m just going to try and open the line again. Tom, your line is now open. Please go ahead.
Tom Gallagher
Thanks. Can you guys hear me?
Isil Muderrisoglu
We can, Tom, thanks.
Tom Gallagher
Okay, great. So I just had a few questions on the group retirement business. First one is just on how do I think about the surrenders and then how much you’re capturing in your wealth management business? You know, if I look at the numbers in plan, it’s about 5% annual decay. When you factor in how much you’re retaining on the wealth management piece as you’re capturing some of the outflows, how much would that shrink to 5% annually? How do I think about that as kind of a go forward organic growth number when you add those two pieces in?
Kevin Hogan
So you know, Tom, on the NPLAN business, the, you know, average age of the participants exceeded 59 and a half about 10 years ago. And so there’s kind of a natural outflow on the in plan part of the business which is consistent with what I think the entire defined contribution industry has been experiencing. And that’s to a certain extent what you’re seeing in the transition of the portfolio from spread income to fee income over time. And that is the trend that we expect to continue. As I mentioned, we’re investing in the footprint of the advisor base to support both the in plan and the out of plan businesses.
And we do expect that to be a gradual transition as we shift to more of the fee income businesses. But this trend has been happening in the 403 space for some time. If you go back 10 years ago, most new customers were, you know, rolling into or investing in a 403B type of a program, whereas that shifted to the group mutual fund. And then over the last couple of years we’ve seen a transition from the group mutual fund entry platform to the advisory platform. So you know, there’s a natural trend there that, you know, the implant business is gradually going to, you know, be replaced by the out of plan business.
We haven’t published a number on our recapture rate, but it is a very successful part and you can see that in the growth of the advisory and brokerage assets which are up 9% year over year. And then I’ll just briefly touch on the, you know, the larger surrenders, I mean the larger surrenders that we saw, you know, continue to be in the healthcare space, there’s a lot of consolidation that’s going on there. Those are generally episodic. If there’s a merger where, you know, our plan is the smaller of the two plans, those are ultimately consolidated.
We don’t know if that takes two or three years from the time of the merger. But we do, you know, try to provide an announcement when we learn about those. And those are generally the group mutual fund platform which has a smaller impact on earnings than the 403 part of the business.
Tom Gallagher
Thanks for that, Kevin. My follow up is just, you know, I recognize both of you are going to be transitioning out but curious on your view of the strategic importance of Valoc within Corebridge. You know, on one hand I think it’s a great franchise within the 403B market, has its standalone legal entity, but on the other hand it shrinks organically. And I recognize there’s some offset there from the wealth business. But is this something that would be under consideration of potential divestiture if you got a great price on the asset or do you think that’s a long term keeper when you think about within the broader franchise here?
Kevin Hogan
Well, Tom, my personal opinion, and I think that this is something that is fully supported by the board as well as the executive leadership of the company, is that retirement services group retirement business is an extremely valuable strategic asset. And the differentiating aspect of the value proposition of that business is Valak Financial Advisors, which is our field force of financial professionals that support these customers through their working period and have the opportunity to develop a relationship with them and then continue to serve them and their families after they retire at the time of household asset consolidation, which is where, you know, the real opportunity in the wealth management piece of that business has been and you know, there’s 1.9 million customers in this business, 1.6 million of those customers are still in plan only business only customers and therefore represent a future opportunity for that out of plan capability that we’re enhancing through the investments we’re making in both the Advisor Force and the platforms to support the Advisor force.
So this trend in the transition from a spread to a fee based business is something that is going to take place over a longer period of time. But the strategic opportunity for this business is absolutely enormous, driven by the unique value proposition of Valak Financial Advisors. You know, it was over six or seven years ago we made the decision to double down on the role of the human advisor. And therefore we have been focusing on plans that want our advisors on site and engaged and that’s what gives them the opportunity to develop those relationships. So you know, I look straight past the short term financial sort of transition that’s taking place and I look at the bright future strategic opportunity of this business as a tremendous asset for the company.
Elias Habayeb
And with that transition. Tom,
Tom Gallagher
thanks for that.
Elias Habayeb
Kevin. You’re improving the free cash flow conversion profile of the company over time by shifting the earnings to more of a capital lighter fee based stream from a balance sheet heavy general accounts basis.
Tom Gallagher
Thanks guys.
operator
Thank you. Our next question comes from Jack Matton from bmo. Your line is now open. Please go ahead.
Jack Matton
Can you hear me now?
Kevin Hogan
Yes.
Jack Matton
Okay, great. First question on institutional markets. Is it strong in the business core not just for PRT but also GICs and corporate markets, I guess those non PRT businesses. Can you talk about what’s driving your growth there, what you like about this product and what you’re achieving from a spread margin standpoint?
Kevin Hogan
Well, you know, in the institutional markets there’s, you know, the main businesses are the guaranteed investment contracts and the pension risk transfer. And you know, we manage those as we do any of our spread businesses relative to a target margin. There’s also the, you know, the other businesses in institutional markets include the Boli business and the Coley business, which includes insurance Coley which is kind of similar to the Boli business and occasionally we do also have transactions in that space. There’s been an increasing demand for insurance coli that we’re, you know, we’ve, we’ve recently observed and we are a participant in that market.
And so those are the three, you know, main areas. You know, we have a modest structured settlements business that you know, has grown incrementally. But really where we see the future of this business is in the GICs and in the pension risk transfers. The pension risk transfers, you know, we focus on the full plan termination space we have for almost 10 years now and we build specialized capabilities there. And full plan terminations are a subset of the overall PRT market. But the pipeline for full plan terms is very strong in both the US and the UK and This is a significant part of the upside we see in the business.
Jack Matton
Thank you. Follow up is on cash flows. First purchase on the timing of incremental dividends from the VA transaction. When do you expect to get the remainder of those up to the holding company? And the second purchase on the, I guess 600 million or so of maybe underlying dividends, exos, additional proceeds. Is that still a good run rate to think about moving forward or would you expect in the near term kind of step down just from the VA transaction?
Elias Habayeb
Hey, Jack, it’s Elias. With respect, first to the proceeds from the VA transactions, we expect to take to distribute those out of the insurance companies, you know, over, you know, a couple quarters. You know, we had 700 in September. We’d look to another piece in December and then another piece early next year on that front. With respect to the 600 million that’s been our run rate, it will step down a bit given the change in the distributed earnings profile of the insurance companies. That being said, we can expect to continue to grow it over time to deliver on our 60 to 65%, you know, payout ratio.
Jack Matton
Thank you.
operator
Thank you. Our next question comes from ryan Krueger from McKee, Brewer & Woods. Your line is now open. Please go ahead.
Ryan Krueger
Hi. Thanks. Good morning. You had mentioned that you took actions to mitigate some of the short term rate headwinds over the last year or so, I guess. Are you seeing any existing opportunities now given the Fed has begun a credit cutting cycle again, or I guess you view that as more opportunistic in the future?
Kevin Hogan
Well, Ryan, let me just start. I mean, we’re sort of managing in two different areas and I think you maybe are asking about two different things. Let me start about what I mentioned in terms of, you know, managing the pricing of the product. That’s more driven by where the belly of the curve is the 5 and 10 year part of it, not so much the short term Fed actions. You know, the Fed actions are more relative to, you know, the shorter end of the portfolio.
Elias Habayeb
Yeah. So, Ryan, based on the way we manage the balance sheet, we’re disciplined from an ALM perspective and so on the net floating rate exposure, we will evolve that as we see the liability side change and we’ve come down more than 50% or we’ve reduced our exposure by more than 50% since June of 24. And that’s something we monitor closely. And when there’s opportunities to reduce it, we will further reduce it, recognizing what’s the outlook there. That being said, the way we manage the balance sheet is we’ll always look for opportunities to optimize the balance sheet and improving return on capital.
And we’ve done that over the course. You’ve seen it, our track record since the ipo, we’ve taken action on the asset side to improve returns and we’ve done that as a tool to also help manage the impact of rate cuts on earnings. And we will continue to do that. And the other thing I would add is if you look year on year, our spread income is flat. And that’s in part because we were able to offset that with actions we’ve taken on the asset side as well as growth in the portfolio. And as we look forward, like to us, rate cuts will be a short term speed bump.
But we’ve got the tools to manage through it. And we expect to grow spread income over time because the fundamentals behind our spread products, you know, continue to be very strong. And remember, we offer spread products in three of our businesses and we’ve got the flexibility like we did in the third quarter to dial to where we see the most attractive returns and deploy our capital that way.
Ryan Krueger
Thank you. And then in the life insurance business, it’s performed pretty well over time, but there’s also been a robust market for enforce reinsurance transactions. Is there anything within that business that you see as a potential opportunity, you know, when it, when it comes to potential risk transfer?
Kevin Hogan
Well, you know, when it comes to risk transfer, you know, Ryan, we are always actively seeking opportunities to increase shareholder value and optimize the portfolio. You know, with respect to the life business, we have repositioned this business substantially, you know, over the last couple of years to focus on less interest sensitive businesses and more middle market. We’ve invested a lot in our automated underwriting and our digital platforms and we’re very pleased with the performance there. You know, we did move a substantial amount of life reserves into Fortitude Re when we created it, you know, a number of years ago before divesting that.
And you know, we continue to look for opportunities across the portfolio, you know, whether that’s in the form of our Bermuda strategy, external reinsurance or potential external transactions. But you know, above all we’re very pleased with the performance of the life business. We’ve invested a lot in our underwriting capabilities over the years and our mortality has continued to, you know, actually emerge at or better than pricing expectations. And we have a very healthy in force that, you know, we expect to continue to contribute, you know, at that level of earnings that we had early earlier guided to the you know, 110 to 120 million a quarter, except for the first quarter, which is always a little bit lower.
Ryan Krueger
Thank you and best wishes to you both.
Kevin Hogan
Thank you.
operator
Thank you. Our next question comes from Elisa Greenspan from Wells Fargo. The line is now open. Please go ahead.
Elisa Greenspan
Hi. Thanks. Good morning. My first question is on capital return. Elias, I think you said you guys returned 370 million Q4 to date. I’m assuming that’s just repurchases and that ignores the dividend. Correct me if I’m wrong. And then is that the pace that we should think about for capital return, you know, for the rest of the quarter?
Elias Habayeb
Hey, Lisa. It’s a lie. So that number, you’re correct, is only share repurchases. We expect to return a higher amount of capital in the fourth quarter. But I, given the distributions on the VA proceeds that we got in September, I would not, though, take the October number and extrapolate it as if it’s all going to be at the same time pace. It’ll be a bit more front loaded in the quarter, but it will be less than this run rate.
Elisa Greenspan
Thanks. And then I guess my second question is, you know, a follow up on private credit. You know, it seems like you guys are comfortable with the allocation given, you know, Alex’s question earlier in the call. You know, I’m just curious. You know, there’s, you know, lots of headlines just on, you know, regulation. Just if you have a view on just the regulatory regime and, you know, the directions are things are headed in and just the overall allocation you guys have to private credit.
Elias Habayeb
No, happy to. So, you know, as I’ve said before, you know, our investment strategy is liability driven and we look at opportunities where we could get, you know, attractive returns and where we could afford to have private credit. We pursue it, but we’re very disciplined on the underwriting side. We’re aware of what’s developing on the regulatory front and we’re engaged with it. And that kind of becomes a consideration if we think there’s a risk on how we allocate capital at this point. You know, our strategy, we’re comfortable with it. We understand the potential implications on the regulatory side.
And based on what we know today, we don’t think it’ll have a material impact or materially change what we’ve made doing.
Elisa Greenspan
Thank you. And my best wishes to the both of you as well.
Elias Habayeb
Thanks.
Kevin Hogan
Thank you.
operator
Thank you. Our next question comes from Sunit Kamath from Jefferies. The line is now open. Please go ahead.
Sunit Kamath
Thanks. Good morning. And Congrats to both of you. I wanted to come back to risk transfer because, Kevin, in your prepared remarks you’d mentioned that you’re open to it, but sort of in follow up to Tom’s question, you do have a new CEO coming in. You do have a new CFO eventually coming in. Is it fair to assume that you’re probably not going to do anything major until those two seats are filled and those folks have a chance to look at the overall strategy or is that not the right way of thinking about it?
Kevin Hogan
Look, I would draw your attention to my prepared remarks. Relative to the, you know, the transition. We have a very strong foundation in place, we have a strong team, we have a track record of execution. You know, looking forward to welcoming Mark. You know, Elias is here for six months through the transition. You know, I’m going to change my role to be an advisor to the board for six months and you know, we’re looking for forward to a very smooth transition process.
Elias Habayeb
Yeah, and sunit, they’re not letting me take a garden leave. I expect to be working the full six months.
Sunit Kamath
Got it. Okay. Well, sorry to hear that. I guess on Bermuda, how should we think about Bermuda? Is that over the long term? I’m not talking about near term. Is this eventually going to allow you to increase your free cash flow conversion ratio or is it more an ability to just grow faster because the capital is more optimized?
Elias Habayeb
The way I look at it is it gives us financial optionality and you know, with that optionality we evaluate, you know, what’s the best utility of that optionality and how we maximize shareholder value and we’ll, you know, allocate our capital accordingly.
Kevin Hogan
Yeah, so just following up from that, I mean it really gives us, you know, potentially, as we further grow and develop our Bermuda strategy, the option to do both. And you know, I think that is, you know, ultimately what a mature, you know, Bermuda strategy that leverages all the capabilities associated with that, you know, will lead us to.
Sunit Kamath
Okay, that’s helpful. Thank you.
operator
Thank you. Our next question is from KV Montessori from Deutsche Bank. Your line is now open. Please go ahead.
KV Montessori
Good morning and also good luck. My first question is. First, thank you for all the caller on the credit portfolio. It’s quite helpful right now. Just want to follow up. You did mention that, you know, you well diversify by sector or whatnot, which makes a lot of sense. Can we assume within private credit specifically? Is that also very well diversified from a sector point of view? Do you have any maybe sectors that you’re More overweight in exposure, like outside exposed to the auto sector, for example.
Elias Habayeb
On the private credit side, the majority of our exposure is an investment grade private placement and that’s kind of diversified across sectors from there. So we follow the same kind of principles on private credit as we do kind of overall allocation to credit in general. So I think it’s a fair assumption that we’ve got, it’s the private credit portfolio similarly diversified as the overall portfolio.
KV Montessori
Great. My follow up question is on prt, obviously quite a lumpy business and I think it’s the only business you have left that’s international after the repositioning of the business, I guess, do you, are you still comfortable retaining an international exposure when it comes to PRT or would that eventually become a US business only? And what is kind of the near term outlook for prt?
Kevin Hogan
Thanks, KV. So our UK business is a reinsurance business and reinsurance is to a certain extent, you know, kind of a global business. We can use our US balance sheet, as we do in the UK for prt, as a reinsurer, for, you know, other potential international opportunities. And that is something that, you know, we have an opportunity to explore and to expand. And so, you know, whilst we don’t have any admitted international operations, that doesn’t mean that we don’t retain the, you know, expertise and interest in growing in international markets in the form of reinsurance.
Now to your question about pension risk transfer looks. A pension risk transfer opportunity is extremely robust, as per, you know, my prepared remarks. You know, pension plans are, you know, attractively funded. Companies are very interested in no longer having to be fiscally responsible or fiduciarily responsible for those plans. And so, you know, management teams are committed to exiting those liabilities. And, you know, there’s a subset of the pension risk transfer market, both in the US and the uk, which is in a single negotiated transaction, a company can go through the multiple stages of exiting a plan.
That’s called a full plan termination. And we are a specialist in that part of the market. There’s fewer competitors in that part of the market. We find the economics more attractive. As a result, we’ve built the administration capabilities to manage the complexity of those plans. Plans, the active and deferred populations in addition to the retirees. And also we’ve invested in the underwriting resources to have the expertise in managing the liabilities. So we have an excellent position in that business. The pipelines are extremely strong in the US and the uk. The economics are attractive and we remain very well positioned.
So we’re Extremely optimistic about the pension risk transfer position that we have.
KV Montessori
Thank you and good luck.
Kevin Hogan
Thank you.
operator
Thank you. Our next question comes from Wes Carmichael from Autonomous. Your line is now open. Please go ahead.
Wes Carmichael
Hi. Thank you very much. First question, in individual retirement, I guess it’s a question on margin, but for your fixed indexed annuity portfolio, is there an opportunity there to adjust crediting rates, caps and participation rates? And I guess relatedly, we’re hearing from some in the market that there’s some higher competition for FIAs where it’s tied to the S&P 500. So curious if you’re seeing that as well.
Kevin Hogan
Look, the, the entire individual retirement market is a competitive market. We’re seeing competition, you know, I think, you know, everywhere there. I don’t think it’s any heightened in index annuities or, or fixed annuities or rival. It’s an active and competitive space. And you know, through a combination of the very strong distribution relationships that we have, the historical product creativity that we’ve been able to manage, and then also the discipline with which we manage our new business pricing, we continue to be able to, you know, produce attractive new business there. As I mentioned in the index annuity, we’re definitely seeing right now we’re focused more on the income benefit aspects of that part of the portfolio.
But we have a very broad range of index products as well as our other products and we work with a broad variety of distribution channels which helps us overcome some of those market competitive considerations. So we’re very comfortable with the overall position in the individual retirement businesses, whether that’s our index business, our rila, which is performing very well, and the fixed annuity business, which is a little bit more sensitive to external conditions. And we are, as a result, we respond very quickly when there are pricing changes in that environment.
Wes Carmichael
Thank you, Kevin. And just a follow up, but on longer term guidance, I think you talked about long term EPS growth guide at 10 to 15% or something in that range. Just curious if anything has changed there. I know there’s quite a bit of buyback that probably supports 2027, but if you think underneath the surface, when you think about rates long term, short term, anything that’s changed your view in that respect.
Elias Habayeb
Hey Wes, it’s Elias. Listen, we still think that 10 to 15% average annual growth is the right guidance for the company. You know, this will be driven by growing earnings as well as share repurchases. Some years will be higher, some years will be lower, but we think that’s still the right target for this company. And I think it’s a pretty attractive target to be able to deliver 10 to 15% on average. You know, it will be influenced from time to time by different factors, some outsider control, but the things we’re focused on, you know, are accretive to achieving that target, whether it’s on organic growth, balance sheet optimization, you know, the expense discipline, you know, look, capital management, all those things, the stuff we control will be accretive to that target.
Wes Carmichael
Thank you.
operator
Thank you. This concludes our Q and A session for today. Thank you. So I will hand back to Kevin for closing remarks.
Kevin Hogan
Thank you, operator. This is my last earnings call, so I would like to share a few thoughts. In a career spanning four decades, it has been the honor of my professional life to serve corebridge as CEO. I am very proud of our executive leadership, the ladies and gentlemen of Corebridge, and also our partners, and especially of the value we have created for Corebridge’s stakeholders. Our employees now work for a strong, independent company with significant upside career potential. Our customers and distribution partners can rely on our commitment to innovation, modernization and professional service. We work hard to give back to the communities in which we operate.
And our shareholders have seen the value of their investment in corebridge. Appreciate going forward. I’m confident the company is in very good hands with Mark Costantini, who can build off the strong foundation we have set in place. We look forward to introducing him to all of you soon. I’ve received a lot of notes from folks. I’d like to thank you for your wishes and thanks to everyone again who joined us for the call. Have a great day.
operator
Thank you. This concludes today’s call. Thank you for joining us. You may now disconnect your lines.