Gold prices steady ahead of Fed decision; weekly weakness noted
Investing.com -- Corebridge Financial Inc (NYSE:CRBG) stock surged 5.7% following the announcement of a transformative deal with CS Life Re, a subsidiary of Venerable Holdings, to reinsure its entire variable annuity portfolio valued at $51 billion.
The transaction, valued at $2.8 billion, will generate approximately $2.1 billion in after-tax distributable proceeds for Corebridge. The company plans to use these funds primarily for share repurchases, with its Board of Directors approving a $2 billion increase to its share repurchase authorization in connection with the deal.
The reinsurance agreement covers all variable annuities in Corebridge’s Individual Retirement business, including $5 billion of General Account assets and $46 billion of Separate Account assets. The deal also includes the sale of a related investment adviser and manager for portfolios offered in Corebridge variable annuity products.
Kevin Hogan, President and CEO of Corebridge, described the transaction as "transformative" that would deliver "significant value for Corebridge and its shareholders" while reducing risk and maintaining the company’s diversified business model.
The transaction is expected to exit a portfolio with historically volatile GAAP earnings and tail risk exposure. While Adjusted After-Tax Operating Income is expected to decrease by approximately $300 million in 2026, this impact is projected to decrease materially over the next few years.
Evercore ISI analyst Thomas Gallagher raised the price target on Corebridge Financial to $39.00 from $37.00 while maintaining an Outperform rating. "We think the sale should improve the overall valuation multiple and give them the dry powder to take down the remaining selldown from AIG (NYSE:AIG) should they choose to do so," Gallagher commented.
The American General Life Insurance (NSE:LIFI) Company transaction is expected to close in the third quarter, while the USL transaction and the sale of SAAMCo are anticipated to close in the fourth quarter, subject to regulatory approvals and other customary closing conditions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.