F&g Annuities & Life, Inc. · NYSE:FG
F&g Annuities & Life — Q3 2024 Earnings Presentation
46 slides from F&g Annuities & Life's earnings presentation, Nov 6, 2024
Slide 1: F&G Investor Update Fall 2024
F&G Investor Update Fall 2024
Slide 2: Disclaimer & Forward-Looking Statements
Disclaimer & Forward-Looking Statements 2F&G Investor Update | Fall 2024 This presentation contains forward-looking statements that are subject to known and unknown risks and uncertainties, many of which are beyond our control. Some of the forward-looking statements can be identified by the use of t
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures 3F&G Investor Update | Fall 2024 Generally Accepted Accounting Principles ("GAAP") is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizi
Slide 4: Executing To Deliver Shareholder Value
LTM 3Q24 Adjusted ROA2, 3 1.26% Above 1.10% baseline Executing To Deliver Shareholder Value 4F&G Investor Update | Fall 2024 1As of 9/30/2024 2Attributable to common shareholders; metrics refer to return on assets ex significant items and adjusted return on equity ex AOCI and ex significant items 3L
Slide 5: Third Quarter Financial Highlights
ANE ($M) and Per Share 3Q23 3Q24 Favorable / (Unfavorable) ($M) Per share ($M) Per share Alternatives investment short-term returns versus long-term return expectations (28) ($0.22) (41) ($0.31) Other significant (income) expense items - - 18 $0.13 Third Quarter Financial Highlights 5F&G Investor Up
Slide 6: About F&G Snapshot
About F&G Snapshot 6F&G Investor Update | Fall 2024 Retail Annuities • Fixed indexed annuity (FIA) • Registered index-linked annuities (RILA) • Multi-year guaranteed annuity (MYGA) Pension Risk Transfer (PRT) Life Insurance • Indexed universal life (IUL) Funding Agreements • Funding agreement backed
Slide 7: F&G's Competitive Advantages
F&G’s Competitive Advantages 7F&G Investor Update | Fall 2024 v Track Record of Success We have delivered consistent top line growth and return on assets across varying market cycles, and we expect to continue to outperform the rest of the market, whether rates are rising or falling v Targeting Larg
Slide 8: We Have Generated Strong Returns Over Time
We Have Generated Strong Returns Over Time 8F&G Investor Update | Fall 2024 1Calculated as adjusted net earnings attributable to common shareholders ex significant items on a rolling four quarter basis, divided by average F&G equity attributable to common shareholders ex accumulated other comprehens
Slide 9: We Are Driving Toward Our Investor Day Targets
We Are Driving Toward Our Investor Day Targets • Spread-based earnings • Driven by asset growth • Margin expansion through investment margin & scale benefit Retained Sales • Fee-based earnings • Lower marginal cost of capital • Enhances cash flow • Accretive to return on equity Flow Reinsurance • Fe
Slide 10: We Have A Clean & Profitable Inforce Book
We Have A Clean & Profitable Inforce Book 10F&G Investor Update | Fall 2024 Our inforce liabilities are surrender charge protected and our asset and liability cash flows are well matched; our inforce book does not contain typical problematic legacy business • Our liability profile drives our investm
Slide 11: We Are Playing In High Growth Markets
We Are Playing In High Growth Markets 11F&G Investor Update | Fall 2024 The U.S. retirement and middle markets are growing and we are both well established and well positioned for continued growth in our retail channels and institutional markets 12Q24 Quarterly Retirement Market Data, Investment Com
Slide 12: With Secular Tailwinds Driving Demand
58 63 71 76 78 80 82 2022 2025 2030 2035 2040 2045 2050 … With Secular Tailwinds Driving Demand 12F&G Investor Update | Fall 2024 We continue to see sustainable demand for our retail fixed annuity products given current environment • U.S. consumers are holding more than $6 trillion in money market f
Slide 13: And We're Winning
… And We’re Winning … 13F&G Investor Update | Fall 2024 1CAGR reflects 2018-2023 annual periods Annual Gross Sales by Retail Channel and Institutional Market ($B) 2018 2019 2020 2021 2022 2023 Funding Agreements Agent PRT Broker Dealer Bank $9.6B $4.5B $3.9B $3.4B FNF and F&G Merger (June 2020) $11.
Slide 14: While Significantly Diversifying Our Business
45% 30% 5% 9% 11% $11.8B (9 Mos.) … While Significantly Diversifying Our Business 14F&G Investor Update | Fall 2024 Note: Reflects Total Gross Sales 38% 31% 7% 9% 15% $13.2B 84% 5% 7% 4% $4.5B FY2023 Sales C h a n n e l P ro d u c t 36% 39% 1% 9% 15% $13.2B 77% 17% 1% 5% $4.5B FY2020 Sales YTD 3Q24
Slide 15: Our Owned Distribution Track Record
Our Owned Distribution Track Record 15F&G Investor Update | Fall 2024 Our owned distribution strategy is contributing to margin expansion and is a capital light, diversified source of fee-based earnings Portfolio is performing as expected • FY2024 estimated EBITDA (cash): $65M - $70M • Owned distrib
Slide 16: Our High Quality & Well-Diversified Portfolio
Our High Quality & Well-Diversified Portfolio1 16F&G Investor Update | Fall 2024 1GAAP Fair Values as of 9/30/2024. For Alts LP, NAV as of 6/30/2024 (net of reinsurance FWH) 2Other consists of ICOLI, FHLB stock, LIHTC, options and private origination equity tranches 3Cash includes actual cash and tr
Slide 17: Our Investment Portfolio Key Attributes
Our Investment Portfolio Key Attributes 17 Investment Rationale • Core fixed income: Focus remains high grade public and private securities with strong risk adjusted returns • Structured credit: Provides access to well diversified, high-quality assets across CLOs, CMBS and ABS • Mortgage loans: Supe
Slide 18: Our Track Record of Profitable Growth
353 335 260 403 2022 2023 YTD 3Q23 YTD 3Q24 Our Track Record of Profitable Growth Gross Sales ($B) Average Assets Under Management (AAUM) ($B) Common Adjusted Net Earnings (ANE) ($M) F&G Investor Update | Fall 2024 18 40.1 46.0 45.4 51.0 2022 2023 YTD 3Q23 YTD 3Q24 12% VPY+15% VPY Ending AUM 43.6 49
Slide 19: Our Robust Gross Sales With Pricing Discipline
8.5 10.0 12.5 1.9 3.0 2.8 3.2 3.5 2.8 3.2 3.4 0.9 1.1 0.7 1.2 0.4 11.3 13.2 15.9 2.8 4.1 3.5 4.4 3.9 2022 2023 3Q24 LTM 3Q23 4Q23 1Q24 2Q24 3Q24 Institutional markets Retail channels Our Robust Gross Sales With Pricing Discipline Gross Sales Growth ($B) Gross sales sustainable across multi-channel n
Slide 20: Steady & Growing Adjusted Return on Assets
353 335 478 120 75 108 139 156 2022 2023 3Q24 LTM 3Q23 4Q23 1Q24 2Q24 3Q24 Net earnings (loss) 635 (58) 0 306 (299) 111 198 (10) Op Exp (bps)1 59 63 62 63 63 63 61 62 ANE per share $3.07 $2.68 $3.75 $0.96 $0.60 $0.86 $1.10 $1.22 Adj. ROA2 1.18% 1.17% 1.26% 1.20% 1.17% 1.25% 1.30% 1.32% Adj. ROE2 10%
Slide 21: Our Scalable Adjusted ROA Model
537 bps 292 bps 16 bps 9 bps (138) bps 132 bps1,2 Portfolio Earned Yield Cost of Funds Flow Reinsurance Fee Income Owned Distribution Margin Expenses (Operating, Interest, Taxes, Pref. Dividends) Common Adjusted Net Earnings excluding significant items Our Scalable Adjusted ROA Model1 – YTD 3Q24 21F
Slide 22: Our Expanding ROA Despite Volatile Rates
80 84 93 118 117 126 2019 2020 2021 2022 2023 LTM 3Q24 0 bps 20 bps 40 bps 60 bps 80 bps 100 bps 120 bps 140 bps 160 bps 180 bps 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Our Expanding ROA Despite Volatile Rates F&G’s primary “spread model” generates stable return on assets (ROA) despite volatility in inte
Slide 23: Our Stable and Strong Capital Profile
Our Stable and Strong Capital Profile 23F&G Investor Update | Fall 2024 Solid F&G capitalization; debt-to-capitalization ratio targeted at 25% over the long term • Net debt increase of $300M since YE2023 reflects senior note issuance and partial tender offer of upcoming 2025 senior note maturity in
Slide 24: We Are Achieving Higher Ratings Over Time
2020 2021 2022 2023 2024 We Are Achieving Higher Ratings Over Time 24F&G Investor Update | Fall 2024 Upgraded to ‘A-’ FNF Merger Completed F&G Partial Spinoff $2.4B Market Cap Launched Flow Reinsurance Launched Owned Distribution F&G at 9/30/2024 $5.6B Market Cap Upgraded to ‘A-’ Upgraded to ‘Baa1’
Slide 25: Our Capitalization Supports Growth & Dividend
Our Capitalization Supports Growth & Dividend 25F&G Investor Update | Fall 2024 F&G’s capital allocation priorities focus on deploying capital to best maximize shareholder value through both continued investment in our business and generation of distributable cash for return of capital to shareholde
Slide 26: Appendix – Investments
APPENDIX Appendix – Investments
Slide 27: Structured Credit – Why We Like It
39% Multifamily 14% Office 12% Industrial 11% Hotel 6% Retail 5% US Treasury 2% Mixed Use 1% Self-Storage 1% Special Purpose 1% ManufacturedHousing 8% Other (< Top 10) $4B Structured Credit – Why We Like It 27F&G Investor Update | Fall 2024 Investment Rationale • Collateralized loan obligation (CLO)
Slide 28: Portfolio Spotlight: CLO
Portfolio Spotlight: CLO 28F&G Investor Update | Fall 2024 Highly diversified portfolio with ample par subordination • Blackstone’s broad & deep understanding of the asset class, and ability to perform loan level underwriting, distinguishes F&G’s portfolio from its peers F&G CLO Portfolio Compositio
Slide 29: Our CLO Portfolio: Look Through Analysis
Our CLO Portfolio: Look Through Analysis 29F&G Investor Update | Fall 2024 Portfolio focused on high quality CLO securities backed by highly diversified pool of loans Note: GAAP Fair Values as of 9/30/2024 IndustriesCompaniesCLO Managers 89 CLO managers 1,837 Companies 31 Industries 7.7% 3.5% 3.4% 3
Slide 30: U.S. CLO Impairment Frontier
U.S. CLO Impairment Frontier 30F&G Investor Update | Fall 2024 CLO debt is well insulated from higher defaults and lower recovery rates • BBB CLOs can withstand an annualized default of 9.4% (that would have to occur every year) assuming a 63.5% average long- term loan recovery rate U.S. CLO Impairm
Slide 31: Portfolio Spotlight: Real Estate Debt
Portfolio Spotlight: Real Estate Debt 31F&G Investor Update | Fall 2024 Blackstone Real Estate Debt Strategies (BREDS) has assembled a high-quality portfolio with diversified exposure across asset classes and properties Note: GAAP Fair Values as of 9/30/2024 37% CMBS 27% RML 17% CML 15% RMBS 4% NNN
Slide 32: Portfolio Spotlight: CMBS & RMBS
Portfolio Spotlight: CMBS & RMBS 32F&G Investor Update | Fall 2024 Note: GAAP Fair Values as of 9/30/2024 By Asset Type By Property Type By NAIC Rating 29% 28% 18% 12% 8% 5% 3Q24 SASB RMBS CRE CLOs Conduit (Below A) Conduit (A or above) Agency 56% 10% 10% 9% 8% 4% 3% 3Q24 Multifamily Office Other In
Slide 33: Portfolio Spotlight: CMBS
Portfolio Spotlight: CMBS 33F&G Investor Update | Fall 2024 Prudent asset selection has led to more multifamily exposure and less retail vs. Conduit CMBS market averages Portfolio Construction Comparison1 Note: GAAP Fair Values as of 9/30/2024 1BAML Conduit Data as of 6/30/2024 39% 6% 13% 25% Multif
Slide 34: Portfolio Spotlight: CMLs
Portfolio Spotlight: CMLs 34F&G Investor Update | Fall 2024 Investment Rationale • Our Commercial Mortgage Loan (CML) portfolio is low risk, low leveraged and well diversified • All first mortgage loans, with average loan-to-value of ~60% • 73 holdings, with average loan size of $28M • 1.4% of CML p
Slide 35: Blackstone Related Important Disclosures
Blackstone Related Important Disclosures 35F&G Investor Update | Fall 2024 This document (together with any attachments, appendices, and related materials, the “Materials”) is provided for informational due diligence purposes only and is not, and may not be relied on in any manner as legal, tax, inv
Slide 36: Appendix – Finance
APPENDIX 36F&G Investor Update | Fall 2024 Appendix – Finance
Slide 37: Book Value Per Share Growth – Quarterly
Book Value Per Share Growth – Quarterly 37F&G Investor Update | Fall 2024 BVPS ex AOCI of $42.28 in line with prior quarter, and up 2% before MTM; BVPS ex AOCI has increased by $1.86, or 5%, since year-end • $1.11 per share increase due to underlying business performance • ($0.15) per share decrease
Slide 38: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations1 38F&G Investor Update | Fall 2024 1Refer to “Non-GAAP Measures Definitions” Year ended ($ in millions) December 31, 2022 December 31, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 September 30, 2023 September 30, 2024 Net
Slide 39: ANE – Significant Items
ANE – Significant Items1 39F&G Investor Update | Fall 2024 1Refer to Reconciliation of net earnings (loss) to adjusted net earnings attributable to common shareholders on page 41 ($ and shares in table in millions) Significant Income and Expense Items (Reflected in Adjusted Net Earnings) Alternative
Slide 40: ANE – Significant Items (cont.)
ANE – Significant Items1 (cont.) 40F&G Investor Update | Fall 2024 1Refer to Reconciliation of net earnings (loss) to adjusted net earnings attributable to common shareholders on page 41 ($ and shares in table in millions) Significant Income and Expense Items (Reflected in Adjusted Net Earnings) Alt
Slide 41: Non-GAAP Measures and Definitions
Non-GAAP Measures and Definitions 41F&G Investor Update | Fall 2024 The following represents the definitions of non-GAAP measures used by F&G Adjusted Net Earnings attributable to common shareholders Adjusted net earnings attributable to common shareholders is a non-GAAP economic measure we use to e
Slide 42: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 42F&G Investor Update | Fall 2024 Adjusted Net Earnings attributable to common shareholders per Diluted Share Adjusted net earnings attributable to common shareholders per diluted share is calculated as adjusted net earnings plus preferred stock dividend (if
Slide 43: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 43F&G Investor Update | Fall 2024 Adjusted Weighted Average Diluted Shares Outstanding Adjusted weighted average diluted shares outstanding is the same as weighted average diluted shares outstanding except for periods in which our preferred stocks are calcul
Slide 44: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 44F&G Investor Update | Fall 2024 AUM before Flow Reinsurance AUM before Flow Reinsurance is comprised of components consistent with AUM, but also includes flow reinsured assets. Management considers this non-GAAP financial measure to be useful internally an
Slide 45: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 45F&G Investor Update | Fall 2024 Sales Annuity, IUL, funding agreement and non-life contingent PRT sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determ
Slide 46: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 46F&G Investor Update | Fall 2024 Total F&G Equity attributable to common shareholders, excluding AOCI Total F&G equity attributable to common shareholder, excluding AOCI is based on total F&G Annuities & Life, Inc. shareholders' equity excluding the effect