Corebridge Financial, AIG’s recently rebranded life and pensions business, has been assigned a Baa2 long-term issuer rating by Moody’s and affirmed the A2 insurance financial strength ratings of its insurance subsidiaries. life, with all ratings having a stable outlook.
Corebridge is an intermediate holding company which is currently majority-owned by AIG, and will serve as the public holding company for the life insurance group, as it completes an initial public offering (IPO) in its spin-off from the P&C transaction. of AIG announced last year.
Moody’s explained that the Corebridge issuer rating and the life insurance company’s credit rating assertions were based on Corebridge Life and Retirement Group’s leadership positions in a number of U.S. individual annuity and pension plans, its vast distribution network and its solid profitability.
The rating agency believes that the group’s standalone credit profile is in line with that of its similarly rated peers, with consolidated GAAP adjusted leverage expected in the 20% to 30% range and good coverage benefits.
However, these strengths are mitigated by significant interest rate risk and spread compression/disintermediation risks stemming from the group’s core fixed indexed annuity (FIA) and fixed annuity businesses, Moody’s said.
He also saw negative factors in Corebridge’s significant exposure to the equity market and hedging risks of its individual variable annuity (VA) and AIF liabilities, and due to its concentration in structured asset holdings. .
Commenting on the change in outlook from stable to negative, the rating agency said it expected a gradual increase in asset risk and illiquidity, and greater potential additional earnings volatility over time, although than in its current expectations for Corebridge Group ratings.
In November 2021, the former SAFG, now Corebridge, reached an investment agreement for Blackstone to manage up to $92.5 billion of the life insurance group’s invested assets over the next six years, including including the first $50 billion at the end of 2021.
Blackstone, which also owns 9.9% of Corebridge, will reinvest the assets in structured assets, private credit, real estate investments, etc., which are asset classes in which it has expertise.
Moody’s expects reinvestment to add additional return potential, as well as a gradual increase in earnings and capital volatility relative to publicly traded bonds.
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