FGN — F&G Annuities & Life, Inc.

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

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, up 7%.
• Sales: Gross sales totaled $14.6 billion for the year, with core sales (indexed annuities, indexed universal life, pension risk transfer) at $9 billion. Opportunistic sales (MYGA, funding agreements) were $5.6 billion.
• Adjusted Net Earnings: Q4 adjusted net earnings were $123 million ($0.91 per share); full-year adjusted net earnings were $482 million ($3.64 per share).
• Investment Portfolio: Fixed income yield was 4.65% in Q4; alternative investment income was $65 million in Q4, below long-term expectations.
• Capital Position: Estimated RBC ratio was 430%, above the target of 400%. Returned $137 million to shareholders through dividends.

2. Strategic Updates and Business Highlights

• Transitioning to a more fee-based, higher-margin, and less capital-intensive business model.
• Strong performance in core products, with indexed annuities and indexed universal life showing steady growth.
• Continued focus on expense management, reducing the operating expense ratio to 50 basis points from 60 basis points year-over-year.
• Successful execution of a $750 million FABN issuance in January 2026, expanding the investor base.
• Completed a strategic transaction to sell F&G Life Re Limited, expecting net proceeds of approximately $300 million.

3. Forward Guidance and Outlook

• Anticipates continued growth in core business and fee-based earnings, aiming for fee-based earnings to comprise 25% of total earnings by 2028.
• Expectation of lower surrender fee income in 2026 compared to 2025, which may impact near-term ROA.
• Plans to maintain disciplined capital allocation, focusing on high-return opportunities while managing growth.

4. Bad News, Challenges, or Points of Concern

• Alternative investment income underperformed, with annualized returns at 7% compared to a long-term expectation of 10%.
• Potential variability in earnings due to fluctuations in surrender charges and prepayment fees.
• Market conditions may lead to lower MYGA sales as the company prioritizes capital allocation to more attractive products.
• Concerns regarding the valuation of the company, trading at a significant discount to book value, reflecting market skepticism about future performance.

5. Notable Q&A Insights

• Management expressed confidence in their investment portfolio, noting low exposure to disruptive sectors and strong credit quality.
• The company is capital independent, with sufficient capital to support growth without reliance on external funding.
• Management acknowledged the need for continued communication to clarify the value of their fee-based business and address market concerns.
• The Q&A highlighted the importance of maintaining flexibility in capital allocation amidst changing market conditions, particularly regarding MYGA and alternative investments.

Overall, F&G Annuities & Life, Inc. reported strong financial performance in 2025, with a clear strategic focus on transitioning to a more fee-based model while navigating potential market challenges and maintaining a robust capital position.