Summary of F&G Annuities & Life, Inc. Q1 2026 Earnings Call

1Key Financial Results and Metrics

Adjusted Net Earnings: $110 million, or $0.82 per share.

Alternative Investment Income: $44 million, or $0.32 per share, below long-term expectations.

Assets Under Management (AUM): Reached nearly $75 billion, an 11% increase from $67 billion in Q1 2025.

Net Sales: $2.2 billion for the quarter, driven by flow reinsurance and strong core sales.

Return on Equity (ROE): Adjusted ROE was 8.4%, with an adjusted Return on Assets (ROA) of 76 basis points.

Book Value per Share: Increased to $46.51, up 70% since the 2020 acquisition.

2Strategic Updates and Business Highlights

F&G continues to grow AUM at an 18% compound annual growth rate since 2019, positioning itself as a market leader in retirement solutions.

The company is focusing on a diversified product mix, balancing core and opportunistic sales to enhance margins and ROE.

Fee-based strategies, which represented 15% of adjusted net earnings in 2025, are expected to grow to 25% by the end of 2028.

The investment portfolio remains high quality, with 97% of fixed maturities rated investment grade, and a diversified approach across asset classes.

The company is exploring strategic alternatives for its owned distribution business, Peak Altitude, to unlock value.

3Forward Guidance and Outlook

F&G expects continued growth in AUM driven by strong demand for indexed annuities and pension risk transfer solutions.

The company anticipates annual pension risk transfer sales between $1.5 billion to $2 billion.

Management aims to improve the operating expense ratio to approximately 45 basis points by year-end 2027.

The focus remains on expanding ROE and transitioning to a more fee-based, capital-light business model.

4Bad News, Challenges, or Points of Concern

Alternative Investment Performance: The performance of alternative investments has been below expectations, impacting overall earnings.

Surrender Behavior: There are concerns about surrender charge income remaining consistent, with potential for a decline in industry surrenders.

Market Conditions: The company is cautious about the current interest rate environment, which could affect future sales of multiyear guaranteed annuities.

Credit Quality: While credit-related impairments have been low, the company is closely monitoring changes in capital charges for various asset classes.

5Notable Q&A Insights

Analysts inquired about the sustainability of Q1 EPS as a run rate, with management indicating that it could be a reasonable expectation moving forward.

There was discussion about the potential for capital generation from the Peak distribution business, with management indicating that proceeds could be used for debt repayment or growth initiatives.

Management acknowledged the need to remain conservative in asset allocation due to tight spreads, while also identifying pockets of opportunity in certain asset classes like mortgages.

The conversation highlighted the importance of managing expectations around alternative investment performance and its impact on pricing strategies. Overall, F&G Annuities & Life, Inc. demonstrated solid financial performance in Q1 2026, with a focus on strategic growth and capital efficiency, while also addressing challenges related to investment performance and market conditions.