Fidelity National Financial, Inc. · NYSE:FNF
Fidelity National Financial — Investor Day (September 2022)
99 slides from Fidelity National Financial's investor day presentation, Sep 7, 2022
Slide 1: F&G Analyst Day September 7, 2022
F&G Analyst Day September 7, 2022
Slide 2: Disclaimer & Forward-Looking Statements
F&G | Analyst Day 2 Disclaimer & Forward-Looking Statements 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 terms such as
Slide 3: Non-GAAP Financial Measures
F&G | Analyst Day 3 Non-GAAP Financial Measures 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 summarizing transactions
Slide 4: Welcome and Opening Remarks
Welcome and Opening Remarks F&G | Analyst Day 4
Slide 5: Agenda
F&G | Analyst Day 5 Agenda All times are Eastern Time (ET) 12:15-12:45 Q&A Session 10:30-10:45 BREAK Page 69 Closing Remarks Page 47 Institutional Scott Cochran President, Institutional & New Markets Page 4 Welcome & Opening Remarks F&G Overview Chris Blunt CEO & President Page 7 Page 22 Investments
Slide 6: Strong Rationale For F&G Partial Spin-off
F&G | Analyst Day 6 Strong Rationale For F&G Partial Spin-off F&G Ownership Before Partial Spin-off After Partial Spin-off F&G FNF ~85% (Majority ownership) FNF 100% ► Purpose of transaction is to create shareholder value and allow investors to invest directly in F&G ► FNF intends to dividend 15% of
Slide 7: I. F&G Strategic Overview
I. F&G Strategic Overview F&G | Analyst Day 7 Chris Blunt President and CEO
Slide 8: Creating A Compelling Investment Case for F&G
F&G | Analyst Day 8 Creating A Compelling Investment Case for F&G Targeting Large and Growing Markets F&G is a nationwide leader in the large markets we play in, and demographic trends will provide tailwinds to give us significant room to continue growing – including untapped Middle Market demand fo
Slide 9: About F&G Snapshot
F&G | Analyst Day 9 About F&G Snapshot Five Distinct Distribution ChannelsOur Product Lines ► Retail Channels ► Independent insurance agents (IMOs) ► Broker Dealer ► Banks ► Institutional Channels ► Pension risk transfer ► Funding agreements Background ► Founded in 1959 as a life insurance company ►
Slide 10: How F&G Makes Money – Illustrative
F&G | Analyst Day 10 How F&G Makes Money – Illustrative Client deposits $100K 1 F&G invests in high quality and well diversified portfolio 2 F&G’s yield outpaces cost of funds and expenses 3 F&G’s AAUM growth drives earnings 4 Spectrum of client needs met (accumulation, income & wealth transfer), wi
Slide 11: Our History
F&G | Analyst Day 11 Our History 1Reflects financial strength rating for primary operating subsidiaries OUR MISSION We help people turn their aspirations into reality OUR VISION Every day we will strive to improve the financial lives of more and more people, backed by the passion of our team and gro
Slide 12: FNF's Ownership Has Taken F&G From Aspirational to Realized
F&G | Analyst Day 12 FNF’s Ownership Has Taken F&G From “Aspirational” to “Realized” F&G Before FNF Merger: FY2019 F&G After FNF Merger: FY2021 FNF acquired F&G on June 1, 2020; we benefited from immediate financial strength ratings upgrades which positioned us to quickly expand in our existing chan
Slide 13: We Have A Clean & Profitable Inforce Book
60% 14% 10% 7% 5% 4% Fixed Indexed Annuities Fixed Rate Annuities Immediate Annuities Funding Agreement-Backed Notes Life Pension Risk Transfer $38.7B F&G | Analyst Day 13 We Have A Clean & Profitable Inforce Book Our inforce liabilities are surrender charge protected and our asset and liability cas
Slide 14: We Are Playing In High Growth Markets
F&G | Analyst Day 14 We Are Playing In High Growth Markets … U.S. Consumer Savings1 Certificates of Deposit2 Retail Life & Annuities3 Pension Risk Transfer4 Funding Agreements6 $140B $210B $354B 12020 USD in personal savings accounts per Statista (published 2/21/2022) 22018 USD held in CD Accounts <
Slide 15: And We're Winning
2018 2019 2020 2021 2022F F&G | Analyst Day 15 … And We’re Winning … Funding Agreements Agent PRT Broker Dealer Bank $9.6B $4.5B $3.9B$3.6B +39% CAGR1 Annual Total Gross Sales by Distribution Channel ($B) • FNF and F&G Merger • F&G ratings upgrades (June 2020) 1CAGR reflects 2018-2021 annual periods
Slide 16: While Significantly Diversifying Our Business
77% 17% 1% 4% $4.5B 46% 12% 6% 24% 12% $9.6B 39% 23%3% 25% 9% $5.7B (6 Mos.) 16 … While Significantly Diversifying Our Business Note: Reflects Total Gross Sales FY2021 SalesFY2020 Sales 1H22 Sales Bank Broker Dealer Agent Funding Agreements Pension Risk Transfer (PRT) C ha nn el Pr od uc t 45% 18%1%
Slide 17: We Have A Durable Investment Management Edge
Our strategic partnership with Blackstone provides a sustained competitive advantage, opportunities for entering higher margin lines, and potential to disintermediate investment banks in credit origination F&G | Analyst Day 17 We Have A Durable Investment Management Edge Note: Data as of January 1,
Slide 18: We Have A Clear Governance Structure
Our management team has a disciplined approach for considering which lines of business to enter, achieving our targeted new business profitability, and managing our capital and in-force book; we target and pursue opportunities that leverage our strengths ► After the partial spin-off, FNF and F&G wil
Slide 19: We Have A Track Record Of Attracting Top Talent
Our management team has a record of long-term success and has delivered impressive results in the last few years F&G | Analyst Day 19 We Have A Track Record of Attracting Top Talent John Currier President, Retail Markets 30+ years of experience ► Named President, Retail Markets in February 2021; pre
Slide 20: Consistent Growth In ROA Despite Volatile Rates
F&G | Analyst Day 20 Resulting In Consistent Growth In ROA Despite Volatile Rates Return On Assets vs. 10-Year UST Yield 86 100 103 109 113 110 2017 2018 2019 2020 2021 1H22 0 bps 20 bps 40 bps 60 bps 80 bps 100 bps 120 bps 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 10-Year UST GAAP Return on Assets (b
Slide 21: We Are At An Attractive Inflection Point
F&G | Analyst Day 21 We Are At An Attractive Inflection Point Growing Inforce Block >$40B AUM Cash generation to fund common dividend Capital generation to fund F&G’s organic growth Return on capital can be deployed to fund growth and common dividend Sources of capital Capital fuels growth Sales gro
Slide 22: II. Investments
II. Investments F&G | Analyst Day 22 Leena Punjabi SVP, Chief Investment Officer
Slide 23: Investments Key Highlights
F&G | Analyst Day 23 Investments Key Highlights We have a differentiated asset management model ► F&G sets investment strategy & risk limits ► F&G investment committee reviews & approves all strategic investment decisions ► Blackstone is responsible for idea generation and security selection ► Flexi
Slide 24: Our Differentiated Investment Approach
F&G | Analyst Day 24 Our Differentiated Investment Approach F&G Blackstone Strategy & Risk Idea Generation & Security Selection Investment Portfolio Clear & Robust Governance ► F&G’s Chief Investment & Risk Offices set strategic asset allocation and risk limits ► New investment asset classes undergo
Slide 25: Our Liability Profile & Risk Appetite Drives Our Investment Strategy
F&G | Analyst Day 25 Our Liability Profile & Risk Appetite Drives Our Investment Strategy Asset allocation decisions for the investment portfolio begin with a deep understanding of our liability profile, resulting in a well matched asset / liability profile Liabilities Assets ► Short, intermediate &
Slide 26: Our Origination Premiums Enhance Yield; No Added Credit Risk
Our Origination Premiums Enhance Yield; No Added Credit Risk F&G | Analyst Day 26 Structured Private Origination vs. Comparable Duration & Quality Corporates Our direct origination platform systemically provides additional spread, without any additional credit risk, as compared to the broadly syndic
Slide 27: We Benefit From Blackstone's Capabilities & Relationships
F&G | Analyst Day 27 We Benefit From Blackstone’s Capabilities & Relationships Data as of 3/31/2022, unless noted otherwise 1As of 1/1/2022 2Includes companies in which Blackstone owns >10% or has at least one board seat Credit A Leading Corporate Credit Investment Platform One of the world’s larges
Slide 28: We Have A Fully Developed Asset Class Toolkit
F&G | Analyst Day 28 We Have A Fully Developed Asset Class Toolkit ► 6 asset classes ► Access mostly limited to public markets ► Heavy reliance on credit risk premium for spread ► Lower portfolio credit quality ► 14 asset classes ► Access to both public and private markets ► Diversified exposure to
Slide 29: Our High Quality, Diversified Portfolio Is Well-Positioned
29% Corporates 24% Structured Securities 16% Private Origination 12% Mortgage Loans 6% Alternatives (LP) 4% Pfd/Hybrid 3% Municipal 3% EMD 2% Other 0% Cash 1% Gov't & Treasury $36B Our High Quality, Diversified Portfolio Is Well-Positioned F&G | Analyst Day 29 Portfolio remains conservatively positi
Slide 30: Our Investment Portfolio Key Attributes
51% Residential 24% Multi Family 12% Industrial 8% Office 3% Retail 2% Other 1% Hotel 46% Corporate Lending 27% Private Specialty Finance 25% Asset Backed & Consumer Loans 2% Triple Net Lease 42% CLO 37% CMBS 12% ABS 9% Non Agency RMBS 0% Agency RMBS Our Investment Portfolio Key Attributes F&G | Ana
Slide 31: We Are A Valuation Sensitive And Opportunistic Buyer
We Are A Valuation Sensitive And Opportunistic Buyer F&G was early to allocate to CLOs and reduced exposure as spreads tightened, while peers continued to add exposure to CLOs Note: As of 2/15/2021. Past performance is not necessarily indicative of future results. There is no assurance that any Blac
Slide 32: Stress Testing Scenarios and Methodology
Stress Testing Scenarios and Methodology Investment Portfolio Stress Testing F&G | Analyst Day 32 ► Moderate and Severe Recession scenarios are modeled by F&G and BIS investments and risk teams ► Moderate Recession: Based on characteristics from recessions in 1990/1991 (1st Gulf War), 2001 (dot-com
Slide 33: Stress Test Results by Asset Class
Stress Test Results by Asset Class F&G | Analyst Day 33 Stress Test: Results With No Management Actions ► Impact of default losses and credit drift are mitigated by reduced required capital from lower alternative asset market value and improved covariance benefit ► Mark-to-market (MTM) impact on alt
Slide 34: Stress Test: Management Actions To Mitigate Impact
517 (832) 315 0 Exc Cap 12/31/21 Stress Impact Mgmt Levers Used Exc Cap After Levers Severe Stress Impact on Excess Capital ($M) Capital Position Before & After Stress & Management Actions F&G | Analyst Day 34 Stress Test: Management Actions To Mitigate Impact Base modeling assumed no management act
Slide 35: III. Retail Markets
III. Retail Markets F&G | Analyst Day 35 John Currier President, Retail Markets
Slide 36: Our Successful And Diversified Growth In Retail Markets
We have a competitive product portfolio that meets a wide range of consumer needs ► Our product set is mission driven to help people turn their aspirations into reality ► We provide great service to policyholders as recognized by J.D. Powers, among leading annuity providers F&G | Analyst Day 36 Our
Slide 37: Our Current Product Offerings
F&G | Analyst Day 37 Our Current Product Offerings We choose to offer products that help our clients meet their aspirations, are aligned with our distribution partners, that F&G can manufacture and manage profitably, and have strong growth potential Fixed Indexed Annuity (FIA) Principal protection w
Slide 38: F&G Indexed Annuities – FIA
Summary of FIA Product Features ► Product: Simple deferred annuity product with principal protection ► Loss Protection: Index credit is never less than $0; policyholders are protected from loss ► Liquidity: Guaranteed surrender values and penalty free withdrawals up to specified amount ► Surrender C
Slide 39: F&G Fixed Annuities – MYGA
Summary of MYGA Product Features ► Product: Offers deferred annuities which credit a guaranteed interest rate for 3, 5 or 7 years and a principal guarantee ► Surrender Charges: Matching surrender charge to initial term, with reset upon renewal ► MYGA Advantage over CD: MYGA operates similar to a ban
Slide 40: F&G Indexed Annuities – RILA Launch Planned for 2023
F&G | Analyst Day 40 F&G Indexed Annuities – RILA Launch Planned for 2023 Source: Wink’s Sales & Market Report, 1H22 1CAGR reflects 2017-2021 annual periods 9 11 17 24 38 20 2017 2018 2019 2020 2021 1H22 Industry RILA Sales ($B) ► One of the fastest growing segments of the annuity space, Registered
Slide 41: F&G Indexed Universal Life
F&G | Analyst Day 41 F&G Indexed Universal Life Source: Wink’s Sales & Market Report, 1H22 1CAGR reflects 2017-2021 annual periods 1,970 2,220 2,370 2,160 2,470 1,316 2017 2018 2019 2020 2021 1H22 Industry IUL Sales ($M) 36 28 38 50 87 56 2017 2018 2019 2020 2021 1H22 F&G Total Gross Sales – IUL ($M
Slide 42: Our Retail Distribution Partnerships Are Unique and Proven
Our Retail Distribution Partnerships Are Unique and Proven Over 20 years of product development partnership and investment We have moved from significant to top positions within our partners and advisors as we grow together We adapt to how our partners’ businesses are changing F&G | Analyst Day 42 W
Slide 43: Our Retail Distribution Is A Competitive Advantage
F&G | Analyst Day 43 Our Retail Distribution Is A Competitive Advantage 1Source: Wink Annuities Sales Reports for 1H22 Agent IMO: Annuity • FIA market leader, #3 market share1 • $2B+ sales in 1H22; on record pace • Deep, long tenured partners • Proven track record of profitability Agent IMO: Life Br
Slide 44: We Are A Market Leader Across Our Markets And Channels
Industry Sales Ranking – FIA Industry Sales Ranking – IUL Industry Sales Ranking – MYGA We Are A Market Leader Across Our Markets And Channels F&G | Analyst Day 44 F&G 1H22 Channel Ranking – FIA ► # 3 in IMO Channel ► # 9 in Bank Channel Rank FY2018 1H22 (6 Mos) Company $ B Company $ B 1 Allianz 9.2
Slide 45: We Are Positioned To Win In Large & Growing Retail Markets
F&G | Analyst Day 45 We Are Positioned To Win In Large & Growing Retail Markets ► FIA in IMO was our primary focus ► IUL was steady but ‘niche’ distribution ► A steady but constrained competitor ► Leading positions in FIA, MYGA & IUL ► Strong positions in multiple distribution ► Steady and strong co
Slide 46: IV. Institutional Markets
Scott Cochran President, Institutional & New Markets IV. Institutional Markets F&G | Analyst Day 46
Slide 47: We Have Become A Player In Pension Risk Transfer
3Q21 ~$360M (3 deals)1 Dec ‘20 Selected proven TPA partner F&G | Analyst Day 47 We Have Become A Player In Pension Risk Transfer … Our proven track record of PRT execution … ► $2.3B plan transaction value from inception through August 2022; transfer of legacy defined benefit pensions to F&G group an
Slide 48: Pension Risk Transfer Market Landscape
F&G | Analyst Day 48 45,000+ Pension Plans $2.3T Assets $30-40B Annual PRT Market $8-10B F&G Current Target Mkt. ~$2-4B F&G annual sales run rate, based on appetite & market conditions Pension landscape… ► Pension plan liabilities have become increasingly difficult for companies to manage in today’s
Slide 49: We Have Scaled Our Funding Agreement Program
F&G | Analyst Day 49 We Have Scaled Our Funding Agreement Program … Our proven track record of funding agreement execution … ► $2.6B total AUM issuance from inception through 2Q22; 4 FABN issuances completed with laddered maturities ► Have attracted highly sophisticated institutional investors with
Slide 50: Successful Launch In Institutional Markets
F&G | Analyst Day 50 …Which Led To A Successful Launch In Institutional Markets Grew two businesses to ~$5B AUM in first 15 months providing meaningful profits, channel diversification and scale Proven track record of execution, including strong investment performance and well regarded operation
Slide 51: V. Financial Update
V. Financial Update Wendy Young EVP, Chief Financial Officer F&G | Analyst Day 51
Slide 52: Finance Highlights
Finance Highlights ► We have a track record of disciplined & profitable growth ► New business growth and stable inforce retention has driven AUM and earnings growth, as well as a stable and strong capital profile ► We have a scalable “return on assets” model that is durable through varying economic
Slide 53: F&G's Track Record of Disciplined & Profitable Growth
3.6 4.3 6.1 3.2 3.7 3.5 1.1 2.0 3.9 4.5 9.6 4.3 5.7 2019 2020 2021 1H21 1H22 Institutional Retail F&G’s Track Record of Disciplined & Profitable Growth F&G | Analyst Day 53 Adjusted GAAP Net Earnings1 ($M) Adjusted Return on Assets (ROA) (BPS) Total Gross Sales ($B) Average Assets Under Management (
Slide 54: Our Proven Track Record: Sales
F&G | Analyst Day 54 Our Proven Track Record: Sales 1CAGR reflects 2019-2021 annual periods 2Total Net Sales reflects sales attributable to flow reinsurance to third parties 3.6 4.3 6.1 3.2 3.7 0.3 0.2 3.5 1.1 2.0 3.9 4.5 9.6 4.3 5.7 2019 2020 2021 1H21 1H22 Institutional Retail 57% CAGR1 Total Gros
Slide 55: Our Proven Track Record: Earnings
F&G | Analyst Day 55 Our Proven Track Record: Earnings 1CAGR reflects 2019-2021 annual periods 22019 and 1H21 were not restated in Form 10 and therefore not available Strong GAAP Adjusted Net Earnings from organic growth ► Adjusted net earnings driven by AAUM growth & ROA expansion ► AAUM growth ref
Slide 56: Our Proven Track Record: Stable and Strong Capital Profile
F&G | Analyst Day 56 Our Proven Track Record: Stable and Strong Capital Profile 12.5-Year CAGR reflects 2020-2021 annual periods and six months ended June 30, 2022 Stable and Strong GAAP Capital ProfileSolid F&G capitalization and modest leverage position ► We expect to manage to a 25% adjusted debt
Slide 57: F&G's Recent Performance – 1H22 Result
F&G | Analyst Day 57 F&G’s Recent Performance – 1H22 Result As of and for the quarter ended June 30, 2022 Average Assets Under Mgmt Return on Assets Adjusted Net Earnings $38.4B 110 bps $210M Retail Sales Institutional Sales Total Sales Ending Assets Under Mgmt $3.7B $2.0B $5.7B $40.3B Scalable mode
Slide 58: Scalable Return on Asset Model – 1H22 Illustrated
F&G | Analyst Day 58 Scalable Return on Asset Model – 1H22 Illustrated 1Adjusted return on assets (ROA) is calculated on a year-to-date basis by dividing annualized adjusted net earnings (ANE) by year-to-date average assets under management (AAUM) 2Overall Product margin = portfolio earned yield – c
Slide 59: Consistent Growth In ROA Despite Volatile Rates
F&G | Analyst Day 59 Resulting In Consistent Growth In ROA Despite Volatile Rates Return On Assets vs. 10-Year UST Yield 86 100 103 109 113 110 2017 2018 2019 2020 2021 1H22 0 bps 20 bps 40 bps 60 bps 80 bps 100 bps 120 bps 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 10-Year UST GAAP Return on Assets (b
Slide 60: We Have Strong Solvency & Capital Profile
1Reflects company action level RBC for primary insurance operating subsidiary 2As of June 30, 2022 Strong Solvency Ratio • Maintain >400% RBC Ratio1 Solid Leverage Position • Debt/Capital Ratio of 11%, excl. AOCI2 • $550M Senior Note with 2025 Maturity ► FNF’s size, scale and financial strength prov
Slide 61: Our Strong Capitalization Supports Growth & Distributable Cash
F&G | Analyst Day 61 Our Strong Capitalization Supports Growth & Distributable Cash We have reached an inflection point where we expect to start distributing a portion of our adjusted net earnings to our shareholders over time, subject to F&G board of directors’ approval ► F&G’s capital allocation p
Slide 62: Selected GAAP Reporting Items
Selected GAAP Reporting Items F&G | Analyst Day 62
Slide 63: Reconciliation Of GAAP To Adjusted Net Earnings
F&G | Analyst Day 63 Reconciliation Of GAAP To Adjusted Net Earnings Six Months Ended June 30, 2022 ($M) 1H22 Net earnings (loss) from continuing operations $466 Recognized (gains) and losses, net 41 Indexed product related derivatives (418) Purchase price amortization 11 Transaction costs 4 Amortiz
Slide 64: GAAP Book Value & Accumulated Other Comprehensive Income
GAAP Book Value & Accumulated Other Comprehensive Income F&G | Analyst Day 64 ► As seen across much of the financial services sector, our investment portfolio net unrealized loss was higher as of 6/30/2022 due to higher interest rates and widening credit spreads which, in turn decreased book value b
Slide 65: Equity Rollforward, Excluding AOCI
65 Equity Rollforward, Excluding AOCI1 Equity (ex AOCI) of $4.6B at 6/30/2022 vs. $3.8B at 12/31/2021; $873M or 23% increase, driven by: ► $604M permanent, non-market driven movement including: ► $400M conversion of FNF intercompany loan to equity ► $210M adjusted net earnings (ANE) ► ($6M) other ad
Slide 66: Finance Key Takeaways
Finance Key Takeaways ► We have a simple business model ► We have a simple financial model ► We have a scalable “return on assets” model that is durable through varying economic cycles with potential for growth over time ► We have a strong solvency and capital profile and have reached an inflection
Slide 67: VI. Closing Remarks and Q&A
VI. Closing Remarks and Q&A F&G | Analyst Day 67
Slide 68: Creating A Compelling Investment Case for F&G
F&G | Analyst Day 68 Creating A Compelling Investment Case for F&G Targeting Large and Growing Markets F&G is a nationwide leader in the large markets we play in, and demographic trends will provide tailwinds to give us significant room to continue growing – including untapped Middle Market demand f
Slide 69: Appendix
Appendix F&G | Analyst Day 69
Slide 70: Appendix – Investments
*CONFIDENTIAL: Do Not Distribute Outside F&G Appendix – Investments F&G | Analyst Day 70
Slide 71: Structured Credit – Why We Like It
Structured Credit – Why We Like It F&G | Analyst Day 71 CLO Top 10 Industries2 ► Collateralized loan obligation (CLO) portfolio well diversified across industry, issuer and manager; focus on investment grade with ample par subordination ► Commercial mortgage-backed securities (CMBS) focus on seasone
Slide 72: History Demonstrates Lower Relative Risk For CLOs
History Demonstrates Lower Relative Risk For CLOs F&G | Analyst Day 72 ► CLOs have a different risk profile and economic outcomes than holding the underlying loans directly 1Source: Citi Research, US CLOs, July 7, 2022 2Source: Standard & Poor’s, Mid 1990s –March 2022 3Source: CLO impairment – Moody
Slide 73: F&G CLO Portfolio Composition
F&G CLO Portfolio Composition F&G | Analyst Day 73 Portfolio Spotlight: CLOs ► Highly diversified portfolio with ample par subordination ► Blackstone’s broad & deep understanding of the asset class, and ability to do loan level underwriting, distinguishes F&G’s portfolio from its peers Note: As of J
Slide 74: Our CLO Portfolio Look Through Analysis
12.6% 12.0% 8.6% 7.5% 5.1% 4.9% 4.3% 3.9% 3.8% 3.7% 33.6% 0.0% 5.0% 10.0% 15.0% 40.0% Industry 1 Industry 2 Industry 3 Industry 4 Industry 5 Industry 6 Industry 7 Industry 8 Industry 9 Industry 10 Other 0.7% 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 95.3% 0.0% 0.5% 1.0% 100% Issuer 1 Issuer 2 Iss
Slide 75: U.S. CLO Impairment Frontier
0% 2% 4% 6% 8% 10% 30%35%40%45%50%55%60%65%70% An nu al D ef au lt R at e Average Senior Loan Recovery Rate A BBB BB Long-Term Average Annual Default Rate U.S. CLO Impairment Frontier (First-loss scenarios among CLO tranches) F&G | Analyst Day 75 U.S. CLO Impairment Frontier ► CLO debt is well insul
Slide 76: Portfolio Spotlight: Real Estate Debt
F&G | Analyst Day 76 Portfolio Spotlight: Real Estate Debt ► BREDS (Blackstone Real Estate Debt Strategies) has assembled a high-quality portfolio with diversified exposure across asset classes and properties Note: As of June 30, 2022 Duration 4.5 years Spread 280 basis points Quality 1.6 NAIC ratin
Slide 77: Portfolio Spotlight: CMBS & RMBS
67% 12% 12% 8% 1% 0% 20% 40% 60% 80% 100% Q2'22 1 2 3 4 5 24% 20% 12% 24% 10% 10% 0% 20% 40% 60% 80% 100% Q2'22 Conduit (Below A) RMBS Conduit (A or above) SASB Agency CRE / CDOCLOs Q22 45% 20% 10% 13% 6% 6% 0% 20% 40% 60% 80% 100% Q2'22 Industrial / Self Storage Mixed Use / Other Hospitality Retail
Slide 78: Portfolio Spotlight: CMBS
32% 13% 14% 25% Multifamily Retail F&G Portfolio Post-Crisis Conduit CMBS Portfolio Construction Comparison F&G | Analyst Day 78 Portfolio Spotlight: CMBS ► Prudent asset selection has led to more multifamily exposure and less retail vs. Conduit CMBS market averages Note: As of June 30, 2022 1BAML C
Slide 79: Portfolio Spotlight: Commercial Mortgage Loans
48% Multifamily 24% Industrial 17% Office 5% Retail 5% Other 1% Hotel $2B F&G | Analyst Day 79 By Underlying Property Type Our CML portfolio is low risk, low leverage and well diversified ► All first mortgage loans, with average loan-to-value of 58% ► 78 holdings, with average loan size of $26M ► CM
Slide 80: Portfolio Spotlight: Alternatives
9.5% 5.4% 31.0% 7.3% FY 2019 FY 2020 FY 2021 YTD 2022H1 Annualized Net Returns over the trailing 3 years: 17.1% (as of 12/31/2021) F&G | Analyst Day 80 Portfolio Spotlight: Alternatives ► Commitments to Blackstone and non-Blackstone alternatives total $4.2B ► Funded $1.8B or approximately 6% of port
Slide 81: Blackstone Related Important Disclosures
This document (together with any attachments, appendices, and related materials, the “Materials”) is provided on a confidential basis for informational due diligence purposes only and is not, and may not be relied on in any manner as legal, tax, investment, accounting or other advice or as an offer
Slide 82: Blackstone Related Important Disclosures (continued)
F&G | Analyst Day 82 Blackstone Related Important Disclosures (continued) Diversification; Potential Lack Thereof. Diversification is not a guarantee of either a return or protection against loss in declining markets. The number of investments which a Fund makes may be limited, which would cause the
Slide 83: Index Comparison
Index Comparison. The volatility and risk profile of the indices presented is likely to be materially different from that of a Fund. In addition, the indices employ different investment guidelines and criteria than a Fund and do not employ leverage; as a result, the holdings in a Fund and the liquid
Slide 84: Blackstone Related Important Disclosures (continued)
F&G | Analyst Day 84 Blackstone Related Important Disclosures (continued) Target Allocations. There can be no assurance that a Fund will achieve its objectives or avoid substantial losses. Allocation strategies and targets depend on a variety of factors, including prevailing market conditions, inves
Slide 85: Appendix – Finance
*CONFIDENTIAL: Do Not Distribute Outside F&G Appendix – Finance F&G | Analyst Day 85
Slide 86: GAAP Net Earnings Trend: ANE Adjustment Impacts by Line Item
F&G | Analyst Day 86 GAAP Net Earnings Trend: ANE Adjustment Impacts by Line Item Condensed Consolidated Statement of Earnings Non-GAAP Adjustments Mapping (Dollars in millions) Twelve months ended Six months ended December 31, 2021 June 30, 2021 June 30, 2022 Revenues: Column1 Column2 Column3 Life
Slide 87: Adjusted Net Earnings Trend: Key Non-GAAP Measure
F&G | Analyst Day 87 Adjusted Net Earnings Trend: Key Non-GAAP Measure Adjusted Net Earnings Statement (Dollars in millions) Twelve months ended Six months ended December 31, 2021 June 30, 2021 June 30, 2022 Revenues: Column1 Column2 Column3 Life insurance premiums and other fees 1,396$ $126 $682 In
Slide 88: Aligning ANE to Scalable Spread Model
Six months ended June 30, 2022 ($M) (bps) Portfolio Earned Yield 911 475 Product Fees Offset by Cost of Funds (458) (238) Net Op Expense (130) (68) Interest & Taxes (113) (59) Adjusted Net Earnings 210$ 110 F&G | Analyst Day 88 Aligning ANE to Scalable Spread Model 1Adjusted return on assets (ROA) i
Slide 89: GAAP Product Accounting: $1,000 Sale Illustration
F&G | Analyst Day 89 GAAP Product Accounting: $1,000 Sale Illustration Deposit Accounting Model for Deferred Annuities Premium & Benefit Accounting Model for PRT Net investment income 45 4.5% x $1,000 Account value - beginning of year 0 Deposit – 1/1/2019 1,000 Sales Policy fees (2) Interest credite
Slide 90: Basis of Presentation
F&G | Analyst Day 90 Basis of Presentation ► The following tables set forth our summary historical consolidated financial and operating data. The summary historical consolidated financial and operating data as of June 30, 2022 and for each of the six months ended June 30, 2022 and 2021 have been der
Slide 91: Historical Financial Summary – Income Statement
2019 2020 2020 2021 2021 2022 Predecessor Predecessor (As Restated) Consolidated Statements of Earnings Data: Total revenues $1,894 $155 $1,233 $3,962 $1,341 $815 Total expenses 1,473 369 1,147 2,885 888 184 Earnings (loss) from continuing operations before income taxes 421 (214) 86 1,077 453 631 Ne
Slide 92: Historical Financial Summary – Balance Sheet Data
F&G | Analyst Day 92 Historical Financial Summary – Balance Sheet Data (Dollars in millions, except per share data) Summary Historical Consolidated Financial And Operating Balance Sheet Data (a) Debt-to-capital ratio is computed by dividing total debt by total capitalization (total debt plus total e
Slide 93: Historical Financial Summary – Select Metrics
Period from June 1 to December 31, 2019 2020 2020 2021 2021 2022 Predecessor Predecessor (As Restated) Select Metrics: Assets Under Management $26,420 $27,119 $28,553 $36,494 $31,760 $40,322 Average Assets Under Management 25,617 26,824 27,322 31,938 29,722 38,351 Adjusted Return on Assets 1.03% 0.5
Slide 94: Historical Financial Summary – Sales
Year ended December 31, Year ended December 31, Year ended December 31, 2019 2020 2021 2021 2022 Predecessor Fixed indexed annuities (“FIA”) $2,820 $3,459 $4,310 $2,182 $2,076 Fixed rate annuities (“MYGA”) 776 776 1,738 979 1,560 Total annuity 3,596 4,235 6,048 3,161 3,636 Indexed universal life (“I
Slide 95: Adjusted Net Earnings Reconciliation
Year ended December 31, Period from January 1 to May 31, Period from June 1 to December 31, Year ended December 31, 2019 2020 2020 2021 2021 2022 Predecessor Predecessor (As Restated) Net earnings (loss) from continuing operations $361 ($200) $161 $857 $360 $466 Less preferred stock dividend (31) (8
Slide 96: Non-GAAP Measures and Definitions
F&G | Analyst Day 96 Non-GAAP Measures and Definitions DEFINITIONS The following represents the definitions of non-GAAP measures used by the Company. Adjusted Net Earnings Attributable to Common Shareholders (Adjusted Net Earnings) Adjusted net earnings is a non-GAAP economic measure we use to evalu
Slide 97: Non-GAAP Measures and Definitions (continued)
F&G | Analyst Day 97 Non-GAAP Measures and Definitions (continued) Adjusted Return on Average Equity excluding AOCI (Adj. ROE) Adjusted return on equity excluding AOCI is calculated by dividing adjusted net earnings by total average equity excluding AOCI. Average equity excluding AOCI for the twelve
Slide 98: Non-GAAP Measures and Definitions (continued)
F&G | Analyst Day 98 Non-GAAP Measures and Definitions (continued) Debt-to-Capital ratio excluding AOCI Debt-to-capital ratio excluding AOCI is computed by dividing total debt by total capitalization excluding AOCI. Management considers this non-GAAP financial measure to be useful internally and to
Slide 99: Non-GAAP Measures and Definitions (continued)
F&G | Analyst Day 99 Non-GAAP Measures and Definitions (continued) Return on Average Equity excluding AOCI Return on average equity excluding AOCI is calculated by dividing net earnings (loss) available to common shareholders by total average equity excluding AOCI. Average equity excluding AOCI for
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