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

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): Nearly $75 billion, up 11% year-over-year.

Retained AUM: $56 billion, a 3% increase from the prior year.

Gross Sales: $3.2 billion, up 10% from $2.9 billion in Q1 2025.

Net Sales: $2.2 billion, reflecting flow reinsurance.

Operating Expense Ratio: Decreased to 48 basis points, down from 50 basis points at year-end 2025.

Return on Equity (ROE): Adjusted ROE excluding AOCI at 8.4%.

2Strategic Updates and Business Highlights

Growth Strategy: Focus on disciplined sales growth and capital allocation to enhance AUM and improve margins.

Product Diversification: Continued emphasis on fee-based strategies, with expectations for fee-based earnings to grow from 15% of adjusted net earnings in 2025 to 25% by 2028.

Investment Portfolio: $53 billion retained investment portfolio with 97% of fixed maturities rated investment grade.

Capital Allocation: Returned $67 million to shareholders via dividends and share repurchases; initiated a new three-year share repurchase program of up to $100 million.

Flow Reinsurance: Successfully reinsured over $15 billion of cumulative annuity new business, enhancing capital efficiency.

3Forward Guidance and Outlook

Sales Expectations: Anticipate continued growth in indexed annuity and indexed universal life sales, with pension risk transfer sales projected between $1.5 billion to $2 billion annually.

Expense Management: Targeting a further reduction in the operating expense ratio to approximately 45 basis points by year-end 2027.

Long-term Goals: Focus on growing core revenues, expanding ROE, and transitioning to a more fee-based, capital-light business model.

4Bad News, Challenges, or Points of Concern

Alternative Investment Performance: Q1 performance was below expectations, raising concerns about the impact on overall earnings and ROE.

Market Conditions: Tight credit spreads and a competitive landscape may limit opportunities for higher yields, necessitating a conservative approach to asset allocation.

Surrender Behavior: Consistent surrender charge income, but potential for declines in industry surrenders could impact future revenues.

Regulatory Changes: Potential changes in capital charges for CLOs could affect portfolio management and capital requirements.

5Notable Q&A Insights

EPS Growth: Management indicated that Q1 2026 EPS could serve as a good intermediate-term run rate, with expectations for continued growth aligned with AUM.

Investment Strategy: The company remains conservative in asset selection, focusing on high-quality investments while monitoring market conditions closely.

Capital Deployment: Discussions around potential capital raises from the owned distribution business (Peak) could provide additional flexibility for growth and debt reduction.

Software Exposure: Concerns about software investments were addressed, with management indicating that most exposures are manageable and not at high risk from AI disruption. Overall, F&G Annuities & Life, Inc. reported a solid start to 2026 with strong AUM growth and a focus on strategic initiatives to enhance profitability, despite facing challenges in alternative investment performance and market conditions.