F&g Annuities & Life, Inc. · NYSE:FG
F&g Annuities & Life — Investor Presentation (August 2024)
48 slides from F&g Annuities & Life's investor presentation, August 2024
Slide 1: F&G Investor Update Summer 2024
F&G Investor Update Summer 2024
Slide 2: Disclaimer & Forward-Looking Statements
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 “believes”, “expects
Slide 3: Non-GAAP Financial Measures
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 and in the prepar
Slide 4: Executing To Deliver Shareholder Value
Executing To Deliver Shareholder Value Strong 2Q24 with record AUM, record gross sales and ROA expansion; well on pace to achieve Investor Day targets 1H24 Gross Sales 1H24 Net Sales ✓ Record gross sales of $4.4B in 2Q24 $7.9B $5.7B ✓ Record assets under management (AUM); well + 25% YoY + 30% YoY po
Slide 5: Second Quarter Financial Highlights
Second Quarter Financial Highlights F&G expects steady and growing adjusted net earnings over time, excluding significant items which include short-term mark-to-market effects Financial Highlights Significant Items – Quarterly ($M) - except per share data and ROA Quarterly Year-to-Date ANE ($M) and
Slide 6: We Are Driving Sustainable ROE Expansion
We Are Driving Sustainable ROE Expansion Adjusted ROE ex AOCI – 2020 to 2Q24 Adjusted ROE ex AOCI expansion +4% vs. 2020, 20% driven by strong profit generation and balanced capital management 15% 6% (2%) 12% • Adjusted net earnings reflects asset growth and margin 10% 8% expansion 5% • Change in eq
Slide 7: With Strong ROE Driving Book Value Growth
… With Strong ROE Driving Book Value Growth BVPS ex AOCI1 – 12/31/2020 to 6/30/2024 BVPS ex AOCI of $39.79; ↑ 45% before MTM vs. 2020 $45.00 $40.73 2.73 $42.52 12.74 (0.94) $39.79 BVPS ex AOCI of $42.52; $40.00 ↑ 55% after MTM vs. 2020 $35.00 4.08 (3.49) $30.00 $27.40 $27.99 • $12.74 per share incre
Slide 8: We Are Achieving Higher Ratings Over Time
We Are Achieving Higher Ratings Over Time F&G’s Recent History F&G has received multiple ratings upgrades over time, reflecting our Launched upward trajectory F&G at 7/31/2024 FNF Merger Institutional Completed Markets $5.4B Market Cap • Scaling business to generate (PRT & FABN) F&G Partial Spinoff
Slide 9: About F&G Snapshot
About F&G Snapshot Our Product Lines Five Distinct Distribution Channels / Markets Retail Annuities Retail Channels • Fixed indexed annuity (FIA) • Independent insurance agents (IMOs) • Registered index-linked annuities (RILA) • Broker Dealers • Multi-year guaranteed annuity (MYGA) • Banks Pension R
Slide 10: F&G's Competitive Advantages
F&G’s Competitive Advantages v Targeting Large and Growing Markets Superior Ecosystem F&G is a nationwide leader in the large markets we play in, and we expect demographic trends will We have long-standing relationships with multiple provide tailwinds to give us significant room to distribution chan
Slide 11: We Have A Clean & Profitable Inforce Book
We Have A Clean & Profitable Inforce Book Our inforce liabilities are surrender charge protected and our asset and liability cash flows are well matched; our inforce book does not contain typical problematic legacy business • Our liability profile drives our investment strategy • Retail fixed annuit
Slide 12: Our FIA Account Value Is Steadily Growing
Our FIA Account Value Is Steadily Growing FIA Deposits & Terminations Quarterly Trend ($M) F&G continues to have positive net inflows, although terminations are elevated in the higher rate environment as Deposits expected and seen across the industry Terminations 1,679 • Record new business volumes
Slide 13: We Are Playing In High Growth Markets
We Are Playing In High Growth Markets 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 Mutual Fund 401(k) Assets1 $5.1T Registered index linked annuities (RILAs) provide alter
Slide 14: With A Lot Of Cash Still On The Sidelines
… With A Lot Of Cash Still On The Sidelines U.S. Money Market Fund Assets ($Trillions) We continue to see sustainable demand for our retail fixed annuity products given current environment • U.S. consumers are holding more than $6 trillion in money market fund assets; once money market rates start t
Slide 15: And We're Winning
… And We’re Winning … Annual Gross Sales by Retail Channel and Institutional Market ($B) ~31% CAGR1 $13.2B $11.3B PRT $9.6B Funding Agreements FNF and F&G Merger (June 2020) Bank $4.5B Broker $3.9B Dealer $3.4B Agent 2018 2019 2020 2021 2022 2023 1CAGR reflects 2018-2023 annual periods F&G Investor
Slide 16: While Significantly Diversifying Our Business
… While Significantly Diversifying Our Business FY2020 Sales FY2023 Sales 1H24 Sales 4% 12% 15% Agent 7% 5% Channel 13% Bank 9% 42% $4.5B $13.2B 38% $7.9B Broker Dealer 7% 5% (6 Mos.) Funding Agreements Pension Risk Transfer (PRT) 84% 28% 31% 1% 5% 15% 12% Indexed Annuities (FIA/RILA) 17% Product 36
Slide 17: F&G's Owned Distribution Track Record
F&G’s Owned Distribution Track Record As a manufacturer, F&G is uniquely positioned to be a distribution consolidator F&G Is Building A Proven Track Record F&G is a consolidator of choice in the distribution space • Our deep distribution relationships, long-term focus, and product expertise provide
Slide 18: High Quality & Well-Diversified Portfolio
High Quality & Well-Diversified Portfolio1 Portfolio conservatively positioned & well-matched to Investment Portfolio by Asset Class liability profile 29% Corporates • Fixed income is 96% investment grade 23% Structured Securities 15% Private Origination • Modest credit-related impairments of 5 bps
Slide 19: Our Investment Portfolio Key Attributes
Our Investment Portfolio Key Attributes Investment Rationale Fixed Income1,2 (ex. Structured, Mortgage Loan & Private Origination) • Core fixed income: Focus remains high grade public and private securities with strong risk adjusted returns 78% Corporates • Structured credit: Provides access to well
Slide 20: Our Track Record of Profitable Growth
Our Track Record of Profitable Growth Gross Sales ($B) Common Adjusted Net Earnings (ANE) ($M) Institutional Markets Retail Channels +17% VPY +25% VPY 335 ANE 353 140 247 13.2 ANE ex 11.3 3.2 significant items 2.8 6.3 7.9 Significant items 8.5 10.0 5.1 6.0 2022 2023 1H23 1H24 2022 2023 1H23 1H24 Net
Slide 21: Robust Gross Sales With Pricing Discipline
Robust Gross Sales With Pricing Discipline Gross Sales Growth ($B) Gross sales sustainable across multi-channel new Institutional markets business platform; sales volumes effectively managed Retail channels within profitability & capital targets • Strong demand for our products given demographic tai
Slide 22: Growing Adjusted Net Earnings Over Time
Growing Adjusted Net Earnings Over Time Common Adjusted Net Earnings (ANE) ($M) F&G expects steady and growing adjusted net earnings over time, excluding significant items 442 ANE 353 335 • Growth in ANE ex significant items reflects: • asset growth, ANE ex significant items 79 120 75 108 139 • marg
Slide 23: Expanding ROA Despite Volatile Rates
Expanding ROA Despite Volatile Rates Adjusted Return on Assets1 vs. 10-year UST Yield F&G’s primary “spread model” generates stable return on assets (ROA) despite volatility in interest rates 10-Year UST • 2019-2021: Maintained adjusted ROA as interest rates Adjusted Return on Assets (bps) declined
Slide 24: Scalable Adjusted ROA Model – 1H24
Scalable Adjusted ROA Model1 – 1H24 1 2 3 4 5 6 Unique Attractively Scalable Investment Accretive Flow Owned Strong Earnings Priced Operating Capabilities Reinsurance Distribution Growth Potential Liabilities Platform Product Margin3: 2.42% 533 bps Above baseline of 110 bps; well on pace to achieve
Slide 25: Stable and Strong Capital Profile
Stable and Strong Capital Profile Total Capitalization ex AOCI1 ($M) Solid F&G capitalization; debt-to-capitalization ratio in line with long term target of 25% Debt Preferred Stock • $300M net increase in debt in 2Q24 reflects successful Total Equity ex. AOCI refinance and partial tender offer of u
Slide 26: Our Capitalization Supports Growth & Dividend
Our Capitalization Supports Growth & Dividend 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 shareholders • F&G has flexibility to adjust
Slide 27: Appendix – Investments
Appendix – Investments APPENDIX
Slide 28: Structured Credit – Why We Like It
Structured Credit – Why We Like It Investment Rationale CMBS by Property Type • Collateralized loan obligation (CLO) portfolio well diversified across industry, issuer and manager; focus on investment 38% Multifamily grade with ample par subordination 14% Office 11% Hotel • Commercial mortgage-backe
Slide 29: Portfolio Spotlight: CLO
Portfolio Spotlight: CLO 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 Composition – % Fair Value1 Market Value Cre
Slide 30: Our CLO Portfolio: Look Through Analysis
Our CLO Portfolio: Look Through Analysis Portfolio focused on high quality CLO securities backed by highly diversified pool of loans CLO Managers Companies Industries Manager 1 8.9% Issuer 1 0.7% Industry 1 12.3% Manager 2 3.9% Issuer 2 0.5% Industry 2 11.9% Manager 3 3.1% Issuer 3 0.5% Industry 3 9
Slide 31: U.S. CLO Impairment Frontier
U.S. CLO Impairment Frontier 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 Impairment Frontier (First-Loss Scenarios
Slide 32: Portfolio Spotlight: Real Estate Debt
Portfolio Spotlight: Real Estate Debt Blackstone Real Estate Debt Strategies (BREDS) has assembled a high-quality portfolio with diversified exposure across asset classes and properties Market Value Duration $10.5B 3.5 Real estate portfolio years 37% CMBS 28% RML $10.5B 17% CML 15% RMBS Weighted Ave
Slide 33: Portfolio Spotlight: CMBS & RMBS
Portfolio Spotlight: CMBS & RMBS By Asset Type By Property Type By NAIC Rating 5% 3% 3% 5% 4% 9% 8% 11% 11% 8% 10% 19% 10% 27% 82% 56% 29% 2Q24 2Q24 2Q24 RMBS Multifamily 1 SASB Office Other 2 CRE CLOs Conduit (Below A) Hotel 3 Industrial Conduit (A or above) Retail 4/5/6 Agency Defeased Note: GAAP
Slide 34: Portfolio Spotlight: CMBS
Portfolio Spotlight: CMBS Prudent asset selection has led to more multifamily exposure and less retail vs. Conduit CMBS market averages Portfolio Construction Comparison1 Market Value Credit Quality 38% $3.9B 90% CMBS portfolio Investment grade (NRSRO) 25% 13% Quality 7% Credit focus 1.4 A Average N
Slide 35: Portfolio Spotlight: CMLs
Portfolio Spotlight: CMLs By State By Loan-To-Value % 24% CA 12% FL 54% LTV 60% to 70% 6% NY 6% TX 32% LTV 50% to 60% $2B 5% NJ $2B 13% LTV < 50% 5% GA 1% LTV > 70% 4% CT 38% Other By Underlying Property Type Investment Rationale 48% Multifamily • Our Commercial Mortgage Loan (CML) portfolio is low
Slide 36: Portfolio Spotlight: Alternatives LPs
Portfolio Spotlight: Alternatives LPs Historical Performance Alternatives portfolio has demonstrated robust returns 35.4% • Commitments to Blackstone and non-Blackstone alternatives total $4.9B; invested capital of $2.6B • Total Alts NAV of $2.2B or 4% of total portfolio Historical Avg = 13% • The p
Slide 37: Blackstone Related Important Disclosures
Blackstone Related Important Disclosures 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, investment, accounting or other advic
Slide 38: Appendix – Finance
Appendix – Finance APPENDIX F&G Investor Update | Summer 2024 38
Slide 39: Book Value Per Share Growth – Quarterly
Book Value Per Share Growth – Quarterly BVPS ex. AOCI1 – 3/31/2024 to 6/30/2024 BVPS ex AOCI of $42.52; ↑ 3% after MTM vs. 1Q24 $43.00 0.56 $42.52 • $1.01 per share increase $42.50 $42.11 (0.15) due to underlying business 1.01 $42.00 $41.96 performance • ($0.15) per share decrease $41.50 $41.10 for
Slide 40: Non-GAAP Measure Reconciliations
Non-GAAP Measure Reconciliations1 Year ended Three months ended Six months ended December 31, December 31, June 30, September 30, December 31, March 31, June 30, June 30, June 30, 2022 2023 2023 2023 2023 2024 2024 2023 2024 Net earnings (loss) attributable to common shareholders $635 ($58) $130 $30
Slide 41: ANE – Significant Items
ANE – Significant Items1 Significant Alternatives Income and Long-term Weighted Expense Expected Average ($ and shares in table in millions) Items Return (Not Diluted (Reflected in Reflected in Shares Adjusted Net Adjusted Net Outstanding Earnings) Earnings) Three months ended June 30, 2024 Adjusted
Slide 42: ANE – Significant Items (cont.)
ANE – Significant Items1 (cont.) Significant Alternatives Income and Long-term Weighted Expense Expected Average ($ and shares in table in millions) Items Return (Not Diluted (Reflected in Reflected in Shares Adjusted Net Adjusted Net Outstanding Earnings) Earnings) Year ended December 31, 2023 Adju
Slide 43: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions 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 evaluate financial performance each per
Slide 44: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 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 calculated to be dilutive to either net
Slide 45: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) Adjusted Return on Average Common Shareholder Equity, excluding AOCI Adjusted return on average common shareholder equity is calculated by dividing the rolling four quarters adjusted net earnings attributable to common shareholders, by total average F&G equi
Slide 46: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 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 and to investors and analysts when a
Slide 47: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 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 determined in accordance with GAAP. Sale
Slide 48: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 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 of AOCI and preferred stocks, incl
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