F&G Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Assets Under Management (AUM): Increased to $74.7 billion, up 8% year-over-year.

Gross Sales: Totaled $2.7 billion, with $2 billion from core sales and $700 million from opportunistic sales.

Net Sales: Reported at $1.5 billion for the quarter.

Adjusted Net Earnings: $85 million ($0.65 per share), a decrease of $25 million from Q1 2026 and $18 million from Q2 2025.

Investment Portfolio: 97% of fixed maturities are investment grade, with a fixed income yield of 4.91%.

Return on Equity (ROE): Adjusted ROE was 8%, with an adjusted Return on Assets (ROA) of 68 basis points.

Book Value per Share: Increased to $45.93, up 68% since the 2020 acquisition.

2Strategic Updates and Business Highlights

Leadership Transition: Connor Murphy has taken over as CEO, with Mike Bailey joining as CFO.

Focus on Fee-Based Business: F&G is transitioning towards a fee-based, higher-margin model, leveraging its position in the annuities and life insurance market.

Core Retail Sales: Achieved strong momentum with $1.8 billion in core retail sales, marking one of the best quarters for the company despite industry challenges.

Reinsurance Partnerships: Added a new noteworthy flow reinsurance partner, enhancing operational flexibility.

Peak Altitude: Exploring strategic alternatives for Peak Altitude to unlock value, with Chris Blunt continuing to lead this initiative.

3Forward Guidance and Outlook

Growth Expectations: Anticipate continued growth in AUM and earnings, with a focus on disciplined capital allocation.

Pension Risk Transfer (PRT) Sales: Expect a seasonal increase in PRT sales in the second half of the year, targeting $1.5 billion to $2 billion in new business.

Operating Expense Ratio: Targeting a reduction to approximately 45 basis points by year-end 2027.

4Bad News, Challenges, or Points of Concern

Declining Alternative Investment Returns: Alternative investment income was $49 million, below the long-term expected return of 12%, impacting overall earnings.

Impact of FG Life Re Sale: The sale has reduced incremental earnings by $8 million compared to Q1 2026 and $12 million compared to Q2 2025.

Market Competition: Increased competition in the RILA and MYGA markets, with a noted decline in MYGA sales due to unattractive returns.

Economic Environment: The current economic landscape may lead to reduced pressure on companies to seek external solutions for pension plans, potentially affecting PRT sales.

5Notable Q&A Insights

Interest Rate Environment: Management noted stable spreads for core fixed income and maintained that crediting costs are consistent with expectations.

Buyback Strategy: Management emphasized that while the recent buybacks were opportunistic, future buybacks will be evaluated against other capital deployment opportunities.

Peak Altitude's Strategic Review: The intention is to find a strategic partner for Peak that allows F&G to retain growth potential while unlocking value.

Market Dynamics: Management acknowledged that while the PRT pipeline is expected to strengthen in the second half, the overall market remains somewhat muted due to well-funded plans. Overall, F&G reported solid financial results in Q2 2026, with strategic initiatives aimed at enhancing growth and shareholder value, despite facing challenges in investment returns and competitive pressures.