FG — F&G Annuities & Life, Inc.

Summary of F&G Annuities & Life, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Assets Under Management (AUM): Record AUM before flow reinsurance reached $73.1 billion, a 12% increase from 2024. Retained AUM was $57.6 billion, up 7%.
• Sales: Total gross sales for 2025 were $14.6 billion, with core sales of $9 billion and opportunistic sales of $5.6 billion. Q4 gross sales were $3.4 billion.
• Adjusted Net Earnings: Q4 adjusted net earnings were $123 million ($0.91 per share), while full-year earnings were $482 million ($3.64 per share).
• Investment Portfolio: Fixed income yield was 4.65%, and alternative investment income was $65 million in Q4, below long-term expectations.
• Capital Position: GAAP common equity was $6 billion, with book value per share at $44.43, up 62% since 2020.

2. Strategic Updates and Business Highlights

• Transitioning to a more fee-based, higher-margin, and less capital-intensive business model.
• Achieved significant progress towards 2023 Investor Day targets, including a 44% increase in AUM and improvements in return on assets (ROA) and return on equity (ROE).
• Strong performance in core products: indexed annuities, indexed universal life (IUL), and pension risk transfer (PRT).
• Successful execution of a $750 million FABN issuance in January 2026.
• Enhanced public float from 18% to 30% following a share distribution from FNF, improving market liquidity.

3. Forward Guidance and Outlook

• Expect continued growth in core business with a focus on optimizing capital allocation.
• Anticipate fee-based earnings to rise to approximately 25% of total earnings by year-end 2028.
• Projected improvement in operating expense ratio to about 45 basis points by year-end 2027.
• Management remains cautious about short-term interest rates and their impact on business, emphasizing the importance of long-term rates.

4. Bad News, Challenges, or Points of Concern

• Alternative investment income underperformed expectations, with a shift in long-term expected returns.
• Potential variability in earnings due to fluctuations in surrender fees and terminations, which could impact near-term spreads.
• Concerns regarding market competition and pricing discipline in the MYGA segment, leading to moderated sales.
• The company faces challenges in managing investor perceptions regarding its valuation, which is currently low compared to historical norms.

5. Notable Q&A Insights

• Management addressed concerns about software exposure in the investment portfolio, indicating it is manageable and well-underwritten.
• Discussed the outlook for variable investment income, maintaining a cautious but optimistic stance.
• Clarified that the company is capital independent and has sufficient resources to support growth without relying on external capital raises.
• Emphasized the importance of maintaining a diversified panel of reinsurance partners and the potential for increased demand in the market.
• Management acknowledged the need for better communication regarding the breakdown of fee-based versus spread-based earnings to improve shareholder understanding.

Overall, F&G Annuities & Life, Inc. demonstrated strong financial performance and strategic progress in 2025, while also navigating challenges related to market conditions and investor perceptions.