Fidelity National Financial, Inc. · NYSE:FNF
Fidelity National Financial — Investor Presentation (July 2023)
50 slides from Fidelity National Financial's investor presentation, Jul 13, 2023
Slide 1: F&G Investor Update Spring 2023
F&G Investor Update Spring 2023 Note: Spring 2023 Investor Update refreshed per 8-K filed July 13, 2023
Slide 2: Disclaimer & Forward-Looking Statements
F&G Investor Update | Spring 2023 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 o
Slide 3: Non-GAAP Financial Measures
F&G Investor Update | Spring 2023 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 summariz
Slide 4: First Quarter Financial Highlights
F&G Investor Update | Spring 2023 4 First Quarter Financial Highlights 1Q23 Highlights (comparisons to PY) ► Record total gross sales of $3.3B for the first quarter, an increase of 27% over prior year, reflect higher rate environment and consumers seeking principal protection ► Record ending assets
Slide 5: About F&G Snapshot
F&G Investor Update | Spring 2023 5 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 ins
Slide 6: Compelling Investment Case for F&G
F&G Investor Update | Spring 2023 6 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 dema
Slide 7: How F&G Makes Money – Retained Sales
F&G Investor Update | Spring 2023 7 How F&G Makes Money – Retained Sales Client deposits premium with F&G 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, i
Slide 8: How F&G Makes Money – Flow Reinsurance
F&G Investor Update | Spring 2023 8 How F&G Makes Money – Flow Reinsurance Client deposits premium with F&G 1 F&G expands flow relationships given high market demand 2 F&G onboards new business at lower marginal cost of capital 3 F&G enhances cash flow, diversifies earnings & increases ROE 4 Spectru
Slide 9: How F&G Makes Money – Owned Distribution
F&G Investor Update | Spring 2023 9 How F&G Makes Money – Owned Distribution F&G takes equity stake in independent agent distribution 1 F&G earns dividend stream on “capital light” distribution 2 F&G generates higher margins at lower marginal cost of capital 3 F&G diversifies earnings through accret
Slide 10: We Have A Clean & Profitable Inforce Book
60% 14% 11% 6% 5%4% Fixed Indexed Annuities Fixed Rate Annuities Funding Agreements Pension Risk Transfer Life Immediate Annuities $42.7B F&G Investor Update | Spring 2023 We Have A Clean & Profitable Inforce Book GAAP Net Reserves1 Fixed Annuity Metrics1 10 Weighted average time remaining in surren
Slide 11: We Are Playing In High Growth Markets
F&G Investor Update | Spring 2023 11 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 12021 personal savings in the U.S. per Statista Research Department, May 10, 2022 22018 U
Slide 12: And We're Winning: Annual Gross Sales by Channel
2018 2019 2020 2021 2022 2023F F&G Investor Update | Spring 2023 12 Funding Agreements Agent PRT Broker Dealer Bank $9.6B $4.5B $3.9B $3.4B +35% CAGR1 Annual Total Gross Sales by Distribution Channel ($B) • FNF and F&G Merger • F&G ratings upgrades (June 2020) 1CAGR reflects 2018-2022 annual periods
Slide 13: While Significantly Diversifying Our Business
41% 35% 8% 8% 8% $3.3B (3 Mos.) 13 … While Significantly Diversifying Our Business Note: Reflects Total Gross Sales FY2022 SalesFY2020 Sales 1Q23 Sales Bank Broker Dealer Agent Funding Agreements Pension Risk Transfer (PRT) C h a n n e l P ro d u c t 37% 46% 1% 8% 8% $3.3B (3 Mos.) Multi-year Guaran
Slide 14: Our High Quality, Diversified Portfolio Is Well-Positioned
57% NAIC 1 27% NAIC 2 3% NACI 3 1% NAIC 4 0% NAIC 5 & 6 6% LP 3% Other ² 3% Cash 29% Corporates 23% Structured Securities 14% Private Origination 12% Mortgage Loans 6% Alts/Equity 4% Municipal 3% Prf/Hybrid 3% EMD 3% Other ² 2% Cash 1% Gov't & Treasury Our High Quality, Diversified Portfolio Is Well
Slide 15: Our Investment Portfolio Key Attributes
39% CLOs 33% CMBS 14% ABS 13% Non Agency RMBS <1% Agency RMBS 55% Residential 22% Multifamily 10% Industrial 7% Office 2% Retail 2% Student Housing 2% Other ³ 72% Corporates 10% Municipal 8% Prf/Hybrid 7% EMD 3% Gov't & Treasury Our Investment Portfolio Key Attributes F&G Investor Update | Spring 20
Slide 16: F&G's Track Record of Disciplined & Profitable Growth
31.9 40.1 37.5 44.4 2021 2022 1Q22 1Q23 F&G Investor Update | Spring 2023 16 F&G’s Track Record of Disciplined & Profitable Growth Total Gross Sales ($B) Average Assets Under Management (AAUM) ($B) Ending AUM 36.5 43.6 38.6 45.4 Return on Assets (ROA) – (YTD in bps) 200 88 85 55 Adjusted Net Earning
Slide 17: Our Proven Track Record: Sales
6.1 8.5 1.5 2.3 2.3 2.5 2.8 3.5 2.8 1.1 0.8 0.6 0.2 0.5 9.6 11.3 2.6 3.1 2.9 2.7 3.3 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 Institutional Retail F&G Investor Update | Spring 2023 17 Our Proven Track Record: Sales Gross Sales Growth ($B) Net Sales 8.7 9.0 2.4 2.5 2.2 1.9 2.2 AUM 36.5 43.6 38.6 40.3 42.0
Slide 18: Our Proven Track Record: Adjusted Net Earnings
640 353 80 155 (12) 130 61 FY21 FY22 1Q22 2Q22 3Q22 4Q22 1Q23 Significant Income & Expense Items ANE ex Significant Items F&G Investor Update | Spring 2023 18 Our Proven Track Record: Adjusted Net Earnings 1Excluding discontinued operations Adjusted Net Earnings (ANE) ($M) Net Earnings (Loss)1 1,232
Slide 19: LDTI Spotlight: Recast for Adjusted Net Earnings
551 345 83 112 12 138 640 353 80 155 (12) 130 FY21 FY22 1Q22 2Q22 3Q22 4Q22 ANE Pre-LDTI ANE Post-LDTI Recast Adjusted Net Earnings (Loss) ($M)1 LDTI Spotlight: Recast for Adjusted Net Earnings (Loss) F&G Investor Update | Spring 2023 19 1See discussion of significant income and expense items in the
Slide 20: LDTI Spotlight: Recast for Historic ANE Comparison
F&G Investor Update | Spring 2023 20 LDTI Spotlight: Recast for Historic ANE Comparison 1Accumulated other comprehensive income (AOCI) ($M) - except per share data Pre-LDTI Post-LDTI Recast LDTI Adoption Change Period ended December 31 2021 2022 2021 2022 2021 2022 Interest and investment income $1,
Slide 21: LDTI Spotlight: Recast for Historic Equity Comparison
$1,457 $2,061 $3,162 $3,162 ($2,803) ($2,818) $1,816 $2,405 AOCI APIC Retained Earnings LDTI Spotlight: Recast for Historic Equity Comparison F&G Investor Update | Spring 2023 Total Equity, including AOCI1 1Accumulated other comprehensive income (AOCI) and Additional paid-in-capital (APIC) 21 +32% +
Slide 22: Book Value Per Share Rollforward
F&G Investor Update | Spring 2023 1 $36.66 $41.45 $41.94 $39.94 4.79 0.49 (2.00) 2022 Pre-LDTI LDTI Impact 2022 Post-LDTI Recast ANE 1Q23 Before MTM MTM Movements 1Q23 ► Reflects recast of historic 2022 for the retrospective LDTI update ► Underlying business fundamentals deliver BVPS growth, before
Slide 23: Stable and Strong Capital Profile
F&G Investor Update | Spring 2023 23 Stable and Strong Capital Profile Stable and Strong GAAP Capital ProfileSolid F&G capitalization; debt-to-capitalization ratio in line with long term target of 25% ► 1Q23 capital markets highlights, as planned: ► $500M issuance of 7.40% senior unsecured notes due
Slide 24: Our Strong Capitalization Supports Growth & Distributable Cash
F&G Investor Update | Spring 2023 24 Our Strong Capitalization Supports Growth & Distributable Cash F&G’s board of directors has approved an initial common dividend program of approximately $100M per year, commencing in 2023, as well as the initiation of a 3-year $25 million share repurchase program
Slide 25: Appendix – Investments
Appendix – Investments F&G Investor Update | Spring 2023 25
Slide 26: Stress Testing Scenarios and Methodology
Stress Testing Scenarios and Methodology Investment Portfolio Stress Testing F&G Investor Update | Spring 2023 26 ► Recession and Stagflation scenarios are modeled by F&G and Blackstone investments and risk teams ► Moderate Recession: Based on characteristics from recessions in 1990/1991 (1st Gulf W
Slide 27: Stress Test Scenario Results by Asset Class
Stress Test Scenario Results by Asset Class F&G Investor Update | Spring 2023 27 Stress Test: Results With No Management Actions ► Impact of default losses and credit drift are mitigated by reduced required capital from lower alternative asset market value and improved covariance benefit ► Mark-to-m
Slide 28: Capital Position Before & After Stress & Management Actions
Capital Position Before & After Stress & Management Actions ($M) F&G Investor Update | Spring 2023 28 Stress Test: Management Actions To Mitigate Impact Total Excess CapitalDecreaseIncrease Moderate Stress Impact on Excess Capital Severe Stress Impact on Excess Capital Stagflation Impact on Excess C
Slide 29: Structured Credit – Why We Like It
Structured Credit – Why We Like It F&G Investor Update | Spring 2023 29 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)
Slide 30: F&G CLO Portfolio Overview
F&G CLO Portfolio Overview F&G Investor Update | Spring 2023 F&G CLO Portfolio Composition ► 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
Slide 31: F&G CLO Overview: Look Through Analysis
F&G Investor Update | Spring 2023 F&G CLO Overview: Look Through Analysis ► Portfolio focused on high quality CLO securities backed by highly diversified pool of loans Note: As of March 31, 2023 IndustriesCompaniesCLO Managers 31 93 CLO managers 1,862 companies 50 industries 11.1% 3.4% 3.3% 3.3% 3.2
Slide 32: U.S. CLO Impairment Frontier
U.S. CLO Impairment Frontier (First-loss scenarios among CLO tranches) U.S. CLO Impairment Frontier F&G Investor Update | Spring 2023 ► CLO debt is well insulated from higher defaults and lower recovery rates ► BBB CLOs can withstand an annualized default of 10% (that would have to occur every year)
Slide 33: Portfolio Spotlight: Real Estate Debt
F&G Investor Update | Spring 2023 33 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 March 31, 2023 CMBS 35% RMBS 15% RML 27% CML 20% NNN 3% $9B Dur
Slide 34: Portfolio Spotlight: CMBS & RMBS
By Asset Type By NAIC RatingBy Property Type Portfolio Spotlight: CMBS & RMBS F&G Investor Update | Spring 2023 Note: As of March 31, 2023 34 13% 29% 11% 21% 8% 18% 0% 20% 40% 60% 80% 100% Q1'23 Conduit (Below A) RMBS Conduit (A or above) SASB Agency CRE CLOs 55% 14% 6% 10% 9% 6% 0% 20% 40% 60% 80%
Slide 35: CMBS Portfolio Overview
► Prudent asset selection has led to more multifamily exposure and less retail vs. Conduit CMBS market averages Portfolio Construction Comparison1 CMBS Portfolio Overview F&G Investor Update | Spring 2023 Note: As of March 31, 2023 1BAML Conduit Data as of March 31, 2023 Credit Quality 87% Investmen
Slide 36: Portfolio Spotlight: Commercial Mortgage Loans
53% Multifamily 28% Industrial 11% Office 4% Student Housing 4% Other $2B F&G Investor Update | Spring 2023 36 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 ~60% ► 53 holdings, with average loan
Slide 37: Portfolio Spotlight: Alternatives
F&G Investor Update | Spring 2023 37 Portfolio Spotlight: Alternatives ► Commitments to Blackstone and non-Blackstone alternatives total $4.2B ► Funded ~$2.1B or approximately 6% of total portfolio ► The portfolio is well-diversified by underlying asset type, vintage year and geography Historical Pe
Slide 38: This document (together with any attachments, appendices, and related materials, the “Materials”) is provided
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 39: Blackstone Related Important Disclosures (continued)
F&G Investor Update | Spring 2023 39 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
Slide 40: 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 41: Blackstone Related Important Disclosures (continued)
F&G Investor Update | Spring 2023 41 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 c
Slide 42: Appendix – Finance
Appendix – Finance F&G Investor Update | Spring 2023 42
Slide 43: Scalable Return on Asset Model – 1Q23 YTD Illustrated
F&G Investor Update | Spring 2023 43 Scalable Return on Asset Model – 1Q23 YTD Illustrated 1See discussion of significant income and expense items in the Appendix 2Adjusted return on assets (ROA) in bps as reported, including short-term mark-to-market effects. 3Overall Product margin = portfolio ear
Slide 44: ANE Results – Significant Income and Expense Items
F&G Investor Update | Spring 2023 44 ANE Results – Significant Income and Expense Items1 1Refer to “Non-GAAP Financial Measures Definitions” Significant Income and Expense Items Reflected in ANE Alternatives Long-term Expected Return Not Reflected in ANE Weighted Average Diluted Shares Outstanding T
Slide 45: Adjusted Net Earnings Reconciliation
Three months ended March 31, 2022 June 30, 2022 September 30, 2022 Decembr 31, 2022 March 31, 2023 December 31, 2021 December 31, 2022 Net earnings (loss) from continuing operations $239 $385 $187 ($176) ($195) $1,232 $635 Non-GAAP adjustments (a) : Recognized (gains) and losses, net Net realized an
Slide 46: Non-GAAP Measures and Definitions
F&G Investor Update | Spring 2023 46 Non-GAAP Measures and Definitions DEFINITIONS The following represents the definitions of non-GAAP measures used by F&G. Adjusted Net Earnings Adjusted net earnings is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted net
Slide 47: Non-GAAP Measures and Definitions (continued)
F&G Investor Update | Spring 2023 47 Non-GAAP Measures and Definitions (continued) Adjusted Net Earnings per Common Share Adjusted net earnings per common share is calculated as adjusted net earnings divided by the weighted-average common shares outstanding. Management considers this non-GAAP financ
Slide 48: Non-GAAP Measures and Definitions (continued)
F&G Investor Update | Spring 2023 48 Non-GAAP Measures and Definitions (continued) Assets Under Management (AUM) AUM uses the following components: i. total invested assets at amortized cost, excluding derivatives, net of reinsurance qualifying for risk transfer in accordance with GAAP; ii. related
Slide 49: Non-GAAP Measures and Definitions (continued)
F&G Investor Update | Spring 2023 49 Non-GAAP Measures and Definitions (continued) Return on Average Equity excluding AOCI Return on average equity excluding AOCI is calculated by dividing the rolling four quarters net earnings (loss), by total average equity excluding AOCI. Average equity excluding
Slide 50: Non-GAAP Measures and Definitions (continued)
F&G Investor Update | Spring 2023 50 Non-GAAP Measures and Definitions (continued) Total Equity excluding AOCI Total equity excluding AOCI is based on total equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for
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