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SAFG Retirement Services Targets IPO In Spin Out From AIG

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A Quick Take On SAFG Retirement Services

SAFG Retirement Services (CRBG) has filed to lift an undisclosed quantity, which might be as excessive as $3 billion in an IPO of its widespread inventory, in line with an S-1 registration assertion.

The agency offers retirement providers and life insurance coverage merchandise to customers.

With the ‘baby boomer’ era retiring in giant numbers, CRBG is properly positioned to develop for years to come back.

I’ll present an replace once we be taught extra concerning the IPO from administration.

Company

Houston, Texas-based SAFG was based as a part of insurance coverage big AIG to offer customers with retirement options and insurance coverage merchandise.

The firm can be rebranded as Corebridge earlier than the completion of the general public providing.

Management is headed by Chief Executive Officer Kevin Hogan, who has been with the agency since December 2014 and beforehand held a wide range of positions at AIG or Zurich Insurance Group since 1984.

The firm’s main choices embrace:

  • Individual Retirement

  • Group Retirement

  • Life Insurance

  • Institutional Markets

SAFG has booked truthful market worth funding of $8 billion as of December 31, 2021 from mother or father agency AIG.

SAFG – Customer Acquisition

The firm offers varied annuity and different retirement merchandise via distribution relationships with monetary advisors, insurance coverage plan sponsors, insurance coverage brokers, each externally and thru its direct-to-consumer platform.

Recently, the agency has introduced a strategic partnership with Blackstone to handle a portion of its investable belongings.

General Operating bills as a share of complete income have fallen as revenues have elevated, because the figures under point out:

General Operating

Expenses vs. Revenue

Period

Percentage

2021

9.0%

2020

13.5%

(Source)

The General Operating effectivity a number of, outlined as what number of {dollars} of further new income are generated by every greenback of General Operating spend, was 4.0x in the latest reporting interval. (Source)

SAFG’s Market & Competition

According to a 2022 market analysis report by IBISWorld, the U.S. marketplace for life insurance coverage and annuities is predicted to achieve $995 billion in 2022.

This represents an annual progress of 5.1% from 2022.

The common annual five-year progress charge is an estimated 2.9% from 2017 to 2022.

Also, under is a chart displaying the historic and projected progress trajectory of the U.S. life insurance coverage and annuity market:

U.S. Life Insurance And Annuity Market

U.S. Life Insurance And Annuity Market (IBISWorld)

Major aggressive or different business members embrace:

  • John Hancock

  • Lincoln Financial Group

  • MetLife

  • Nationwide

  • New York Life

  • Prudential

  • TIAA-CREF

SAFG Retirement Services Financial Performance

The firm’s current monetary outcomes might be summarized as follows:

  • Sharp progress in topline income

  • Much larger income internet of policyholder advantages and curiosity

  • High working and internet income

  • Reduced money circulate from operations

Below are related monetary outcomes derived from the agency’s registration assertion:

Total Revenue

Period

Total Revenue

% Variance vs. Prior

2021

$ 23,390,000,000

55.3%

2020

$ 15,062,000,000

Revenue Less Policyholder Benefits And Interest

Period

Revenue Less Policyholder Benefits And Interest

% Variance vs. Prior

2021

$ 11,791,000,000

139.1%

2020

$ 4,932,000,000

Revenue Less Policyholder Benefits And Interest Margin

Period

Revenue Less Policyholder Benefits And Interest Margin

2021

50.41%

2020

32.74%

Profit (Loss) Before Income Taxes

Period

Profit (Loss) Before Income Taxes

Operating Margin

2021

$ 10,127,000,000

43.3%

2020

$ 851,000,000

5.6%

Net Income (Loss)

Period

Net Income (Loss)

Net Margin

2021

$ 7,355,000,000

31.4%

2020

$ 642,000,000

2.7%

Cash Flow From Operations

Period

Cash Flow From Operations

2021

$ 2,461,000,000

2020

$ 3,327,000,000

(Glossary Of Terms)

(Source)

As of December 31, 2021, SAFG had $537 million in money and $387 billion in complete liabilities.

Free money circulate through the twelve months ended December 31, 2021, was $2.5 billion.

SAFG Retirement Services IPO Details

SAFG intends to lift an undisclosed quantity, which might be as excessive as $3 billion in gross proceeds from an IPO of its widespread inventory.

No present shareholders have indicated an curiosity to buy shares on the IPO worth.

Management says that every one IPO proceeds will go to the mother or father agency and SAFG will obtain no proceeds from the providing. (Source)

Management’s presentation of the corporate roadshow isn’t accessible.

Regarding excellent authorized proceedings, the agency is topic to varied monetary ensures and indemnity commitments and is ‘unable to develop an inexpensive estimate of the utmost potential payout beneath sure of those preparations. Overall, we imagine that it’s unlikely we should make any materials funds associated to accomplished gross sales beneath these preparations, and no materials liabilities associated to those preparations have been recorded within the Consolidated Balance Sheets.’

The listed bookrunners of the IPO are J.P. Morgan, Morgan Stanley and Piper Sandler.

Commentary About SAFG’s IPO

CRBG is searching for to go public because it spins out of mother or father agency AIG.

The firm’s financials have proven sharp progress in topline income, rising income internet of policyholder advantages and curiosity, substantial working and internet income however lowered money circulate from operations.

Free money circulate for the twelve months ended December 31, 2021, was $2.5 billion.

General Operating bills as a share of complete income have dropped as income has elevated markedly; its General Operating effectivity a number of was 4.0x in 2021.

The agency at present plans to pay quarterly dividends on its shares within the vary of $400 million to $600 million, though the ultimate quantities will rely upon a wide range of components such because the agency’s efficiency and regulatory constraints.

The market alternative for offering life insurance coverage and annuities within the United States is extraordinarily giant and anticipated to develop at a average charge of progress.

The variety of retirees within the U.S. is rising quickly, so demand for retirement providers will proceed to be sturdy, so the agency enjoys glorious progress prospects in its favor.

J.P. Morgan is the lead underwriter and IPOs led by the agency over the past 12-month interval have generated a mean return of detrimental (34.2%) since their IPO. This is a lower-tier efficiency for all main underwriters through the interval.

The main threat to the corporate’s outlook is shortly rising rates of interest or adjustments to credit score spreads which can influence the valuation of its long-dated investments.

It might be argued that we’re at present in such a risky rate of interest setting.

When we be taught administration’s pricing and valuation expectations, I’ll present a last opinion.

Expected IPO Pricing Date: To be introduced.

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