FGN Q4 2025 Earnings Call Summary

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, up 12% from year-end 2024; retained AUM was $57.6 billion, a 7% increase.
Sales: Total gross sales for 2025 were $14.6 billion, with core sales of $9 billion and opportunistic sales of $5.6 billion.
Adjusted Net Earnings: Q4 adjusted net earnings were $123 million ($0.91 per share); full-year adjusted net earnings totaled $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 (excluding AOCI) was $6 billion, with a book value per share of $44.43, up 62% since 2020.

2. Strategic Updates and Business Highlights

Transitioning to a more fee-based, higher-margin business model with a focus on disciplined growth and capital allocation.
Strong performance in the investment portfolio, with 97% of fixed maturities rated investment grade.
Successful execution of a $750 million FABN issuance in January 2026, expanding the investor base.
Continued growth in fee income from flow reinsurance, which increased 37% year-over-year to $56 million.

3. Forward Guidance and Outlook

Expectation to grow retained AUM while optimizing flow reinsurance strategies.
Anticipated increase in fee-based earnings to approximately 25% of total earnings by year-end 2028.
Operating expense ratio is projected to improve to about 45 basis points by year-end 2027.
Continued focus on core products, with a shift towards indexed annuities and life insurance.

4. Bad News, Challenges, or Points of Concern

Variable Investment Income: Underperformed in Q4, raising concerns about future income stability.
Surrender Fees: Expected decline in surrender fee income in 2026, which could pressure near-term spreads.
Market Conditions: Fluctuating demand for MYGA products and potential challenges in maintaining sales volumes in a competitive environment.
Credit Risk: Despite a strong credit profile, there are concerns about market perceptions and valuation, particularly regarding alternative investments.

5. Notable Q&A Insights

Management addressed concerns about software exposure in the investment portfolio, indicating it is manageable and well-understood.
The company emphasized its capital independence, stating it has sufficient capital to support growth without relying on external equity raises.
Discussions highlighted the importance of maintaining a diversified panel of reinsurance partners, with no anticipated changes in existing relationships.
Management acknowledged the potential for variability in surrender fee income and its impact on ROA, indicating a preference for retaining assets over short-term fee income.

Overall, F&G Annuities & Life, Inc. reported a strong year-end performance with significant growth in AUM and earnings, while also navigating challenges in investment income and market conditions. The company remains focused on strategic growth and enhancing shareholder value.

FGN — F&G Annuities & Life, Inc.