U.S. Markets open in 7 hrs 2 mins

Corebridge Financial, Inc. -- Moody’s assigns Baa3 (hyb) rating to Corebridge junior subordinated notes

·14 min read
background image
background image

Rating Action: 

Moody’s assigns Baa3 (hyb) rating to Corebridge junior

subordinated notes

18 August 2022

New York, August 18, 2022 – Moody’s Investor Service has assigned a Baa3 (hyb) rating to the

junior subordinated notes to be issued by Corebridge Financial, Inc. (Corebridge; senior unsecured

debt Baa2) maturing in 2052. Corebridge is the new holding company for the former AIG life

insurance subsidiaries, which is majority-owned by American International Group, Inc. (AIG). The

rating is subject to review of final documentation. The rating outlook on Corebridge is stable.
RATINGS RATIONALE
Moody’s said that the rating of the notes, whose interest payments may be deferred for up to

five years at Corebridge’s option and are cumulative, is based on the life insurance group's

leading positions in a number of US individual annuity and retirement product markets, their broad

distribution network, and solid profitability. Regulatory capital adequacy is also strong.
Moody’s said that the junior subordinated note issuance is another step on Corebridge’s path toward

the establishment of its own capitalization as it moves toward separation from AIG. In March 2022,

the company rebranded as Corebridge, filed for an IPO, and issued $6.5 billion of senior debt.

The net proceeds of the offering will be used 1), to repay a portion of the remaining $1.9 billion

balance of an $8.3 billion promissory note previously issued by Corebridge to AIG and 2), to reduce

commitments under Corebridge’s Delayed Draw Term Loan Agreement.
These strengths are mitigated by significant interest rate and disintermediation risks arising from the

group's core fixed indexed annuity (FIA) and fixed annuity businesses, among other risks.
Structured holdings, along with liquidity risk, are likely to rise, given the group's recent investment

arrangement with Blackstone for Blackstone to manage up to $92.5 billion of the life insurance

group’s invested assets over the next six years, including the first $50 billion as of year-end 2021.

Blackstone, which is also a 9.9% owner of Corebridge, will re-invest the assets in structured assets,

private credit and real estate investments, etc., which are asset classes in which it has expertise.

Moody’s expects the company to maintain leverage metrics within the 20-30% range and coverage

metrics in the mid- to high single digits.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The following factors could result in an upgrade of the Corebridge and the life and retirement

subsidiaries’ ratings: (i) appropriate capitalization and financial leverage for the business (e.g.,

RBC not less than 400% (company action level) on a consolidated basis including AGC Life), (ii)

profitability, as measured by return on capital, of over 7% on a consistent basis, (iii) no material

degradation of invested asset quality or liquidity beyond Moody’s expectations, and (iv) total

leverage of less than 30% (excluding AOCI, except for a modco adjustment).
The following factors could lead to a downgrade of Corebridge and the life and retirement

subsidiaries’ ratings: (i) a material increase in higher-risk, and/or illiquid assets beyond Moody’s

expectations; (ii) a deterioration in franchise value and profitability, (ii) a decline in consolidated RBC

background image
background image

below 350% including AGC Life, (iii) total leverage above 35% (excluding AOCI, except for a modco

adjustment).
RATING ACTIONS
Moody’s has assigned the following ratings:
Corebridge Financial, Inc.:
Junior subordinated note rating: Baa3 (hyb);
The rating outlook for this entity is stable.
Corebridge Financial, Inc., is a Delaware holding company of the AIG life and retirement services

companies. The group focuses on providing retirement and insurance product solutions in the

US. At June 30, 2022, the group had consolidated GAAP assets of approximately $368 billion and

shareholders' equity of $13 billion.
The principal methodology used in this rating was Life Insurers Methodology published in August

2022 and available at

https://ratings.moodys.com/api/rmc-documents/391815

. Alternatively, please

see the Rating Methodologies page on

https://ratings.moodys.com

for a copy of this methodology.

REGULATORY DISCLOSURES
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections

Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating

Symbols and Definitions can be found on

https://ratings.moodys.com/rating-definitions.

For ratings issued on a program, series, category/class of debt or security this announcement

provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or

note of the same series, category/class of debt, security or pursuant to a program for which the

ratings are derived exclusively from existing ratings in accordance with Moody's rating practices.

For ratings issued on a support provider, this announcement provides certain regulatory disclosures

in relation to the credit rating action on the support provider and in relation to each particular credit

rating action for securities that derive their credit ratings from the support provider's credit rating.

For provisional ratings, this announcement provides certain regulatory disclosures in relation to the

provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent

to the final issuance of the debt, in each case where the transaction structure and terms have not

changed prior to the assignment of the definitive rating in a manner that would have affected the

rating. For further information please see the issuer/deal page for the respective issuer on

https://

ratings.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies)

of this credit rating action, and whose ratings may change as a result of this credit rating action, the

associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach

exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated

entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s) and issued with no

amendment resulting from that disclosure.
This rating is solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited

Credit Ratings available on its website

https://ratings.moodys.com.

background image
background image

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the

related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our

credit analysis can be found at

https://ratings.moodys.com/documents/PBC_1288235.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt

am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No

1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the

Moody’s office that issued the credit rating is available on

https://ratings.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s

affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada

Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK.

Further information on the UK endorsement status and on the Moody’s office that issued the credit

rating is available on

https://ratings.moodys.com.

Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to

the Moody's legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures

for each credit rating.
Laura Bazer

VP-Sr Credit Officer

Financial Institutions Group

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Scott Robinson, CFA

Associate Managing Director

Financial Institutions Group

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Releasing Office:

Moody's Investors Service, Inc.

250 Greenwich Street

New York, NY 10007

U.S.A.

JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653

background image
background image

© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their

licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT

OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS,

OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND

INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE

SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN

ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME

DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT.

SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR

INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED

BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK,

INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE

VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND

OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS

OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE

QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS

OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO

NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S

CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND

DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR

SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND

PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY

PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND

OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND

UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY

AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE,

HOLDING, OR SALE.
MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS

ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS

AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS,

ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT

DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER

PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT

LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR

OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED,

DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR

ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY

MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE

NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED

FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT

IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be

accurate and reliable. Because of the possibility of human or mechanical error as well as other

factors, however, all information contained herein is provided “AS IS” without warranty of any kind.

background image
background image

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit

rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when

appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot

in every instance independently verify or validate information received in the rating process or in

preparing its Publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,

representatives, licensors and suppliers disclaim liability to any person or entity for any indirect,

special, consequential, or incidental losses or damages whatsoever arising from or in connection

with the information contained herein or the use of or inability to use any such information, even if

MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers

is advised in advance of the possibility of such losses or damages, including but not limited to:

(a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant

financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents,

representatives, licensors and suppliers disclaim liability for any direct or compensatory losses

or damages caused to any person or entity, including but not limited to by any negligence (but

excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt,

by law cannot be excluded) on the part of, or any contingency within or beyond the control of,

MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers,

arising from or in connection with the information contained herein or the use of or inability to use

any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,

COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF

ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE

BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s

Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and

municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s

Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s

Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from

$1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies

and procedures to address the independence of Moody’s Investors Service credit ratings and credit

rating processes. Information regarding certain affiliations that may exist between directors of MCO

and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and

have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted

annually at

www.moodys.com

under the heading “Investor Relations — Corporate Governance —

Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the

Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited

ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136

972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale

clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access

this document from within Australia, you represent to MOODY’S that you are, or are accessing

the document as a representative of, a “wholesale client” and that neither you nor the entity you

represent will directly or indirectly disseminate this document or its contents to “retail clients” within

the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as

to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or

any form of security that is available to retail investors.

background image
background image

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency

subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc.,

a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating

agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization

(“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-

NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated

obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit

rating agencies registered with the Japan Financial Services Agency and their registration numbers

are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including

corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated

by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to

MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging

from JPY100,000 to approximately JPY550,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory

requirements.