F&g Annuities & Life, Inc. · NYSE:FG
F&g Annuities & Life — Q1 2024 Earnings Presentation
47 slides from F&g Annuities & Life's earnings presentation, May 8, 2024
Slide 1: F&G Investor Update Spring 2024
F&G Investor Update Spring 2024
Slide 2: Disclaimer & Forward-Looking Statements
Disclaimer & Forward-Looking Statements 2F&G Investor Update | Spring 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
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures 3F&G Investor Update | Spring 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 summari
Slide 4: Executed Strategy & Delivered Shareholder Value
1Q24 Adjusted ROA2, ex significant items 1.25% Above 1.10% expected Executed Strategy & Delivered Shareholder Value 4F&G Investor Update | Spring 2024 1As of 3/31/2024 2Attributable to common shareholders ✓ Near record first quarter gross sales of $3.5B ✓ Record assets under management and positione
Slide 5: First Quarter Financial Highlights
Fourth Quarter Financial Highlights 5F&G Investor Update | Spring 2024 1Attributable to common shareholders ($M) - except per share data and ROA Full Year Quarterly Period ended December 31 2022 2023 1Q23 1Q24 Gross sales $11,254 $13,153 $3,281 $3,495 Net sales $9,006 $9,238 $2,209 $2,302 Assets und
Slide 6: About F&G Snapshot
About F&G Snapshot 6F&G Investor Update | Spring 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 back
Slide 7: F&G's Competitive Advantages
F&G’s Competitive Advantages 7F&G Investor Update | Spring 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 La
Slide 8: We Have A Clean & Profitable Inforce Book
We Have A Clean & Profitable Inforce Book 8F&G Investor Update | Spring 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 invest
Slide 9: FIA Account Value Is Steadily Growing
FIA Account Value Is Steadily Growing 9F&G Investor Update | Spring 2024 F&G continues to have positive net inflows, although terminations are elevated in the higher rate environment as expected and seen across the industry • Record new business volumes have improved the liability profile and genera
Slide 10: We Are Playing In High Growth Markets
We Are Playing In High Growth Markets 10F&G Investor Update | Spring 2024 Mutual Fund 401(k) Assets1 U.S. Consumer Savings2 Retail Life & Annuities3 Pension Risk Transfer4 Funding Agreements6 $4.8T $766B $400B $270B $183B The U.S. retirement and middle markets are growing and we are both well establ
Slide 11: ... And We're Winning ...
… And We’re Winning … 11F&G Investor Update | Spring 2024 1CAGR reflects 2018-2023 annual periods Annual Gross Sales by Retail Channel and Institutional Market ($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 • F&G rating
Slide 12: ... While Significantly Diversifying Our Business
46% 28% 6% 3% 17% $3.5B (3 Mos.) … While Significantly Diversifying Our Business 12F&G Investor Update | Spring 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% $4.5B FY2020 Sales 1Q24 Sal
Slide 13: High Quality & Well-Diversified Portfolio
High Quality & Well-Diversified Portfolio1 13F&G Investor Update | Spring 2024 1GAAP Fair Values as of 3/31/2024 (net of reinsurance FWH) 2Other consists of ICOLI, FHLB stock, LIHTC, options and private origination equity tranches 3Cash includes actual cash and treasuries Investment Portfolio by Ass
Slide 14: Our Investment Portfolio Key Attributes
Our Investment Portfolio Key Attributes 14 Investment Rationale • Core fixed income: Focus remains high grade public and private securities with strong risk adjusted returns • Structured credit: Provides access to well diversified, high-quality assets across CLOs, CMBS and ABS • Mortgage loans: Supe
Slide 15: Our Track Record of Profitable Growth
353 335 61 108 2022 2023 1Q23 1Q24 Significant items ANE ex significant items Our Track Record of Profitable Growth Gross Sales ($B) Average Assets Under Management (AAUM) ($B) Common Adjusted Net Earnings (ANE) ($M) F&G Investor Update | Spring 2024 15 8.5 10.0 2.8 2.8 2.8 3.2 11.3 13.2 3.3 3.5 202
Slide 16: Robust Gross Sales With Pricing Discipline
Robust Gross Sales With Pricing Discipline Gross Sales Growth ($B) Gross sales sustainable across multi-channel new business platform; sales volumes effectively managed within profitability & capital targets • Strong momentum and demand for our products in volatile and higher rate environment • Reta
Slide 17: Steady & Growing Adjusted Return on Assets
353 335 382 61 79 120 75 108 2022 2023 1Q24 LTM 1Q23 2Q23 3Q23 4Q23 1Q24 Significant items ANE ex significant items Net earnings (loss) 635 (58) 253 (195) 130 306 (299) 111 Op Exp (bps)1 59 63 63 61 61 63 63 63 ANE per share $3.07 $2.68 $3.06 $0.49 $0.63 $0.96 $0.60 $0.86 Adj. ROA2 1.18% 1.17% 1.19%
Slide 18: Expanding ROA Despite Volatile Rates
80 84 93 118 117 125 2019 2020 2021 2022 2023 1Q24 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% Expanding ROA Despite Volatile Rates F&G’s primary “spread model” generates stable return on assets (ROA) despite volatility in interest rat
Slide 19: Scalable ROA Model (ex Significant Items) – 1Q24
529 bps 293 bps 12 bps 11 bps (134) bps 125 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 Scalable ROA Model (ex Significant Items) – 1Q
Slide 20: Our Disciplined "Core" Margin Management
Our Disciplined “Core” Margin Management 20F&G Investor Update | Spring 2024 We strive to opportunistically grow stable liabilities that generate our targeted levels of profitability and have a proven track record of protecting our “core” spread-based margins in varying environments • Our multiple c
Slide 21: Our Accretive Flow Reinsurance Opportunity
Our Accretive Flow Reinsurance Opportunity 21F&G Investor Update | Spring 2024 Flow reinsurance provides a lower capital requirement on ceded new business, while allocating capital to the highest returning retained business, enhancing cash flow and generating fee-based earnings • Reinsurance allows
Slide 22: F&G's Owned Distribution Track Record
F&G’s Owned Distribution Track Record 22F&G Investor Update | Spring 2024 As a manufacturer, F&G is uniquely positioned to be a distribution consolidator • Our deep distribution relationships, long-term focus, and product expertise provide an opportunity for us to bring value to our network in ways
Slide 23: BVPS Rollforward (ex AOCI) – Quarterly
BVPS Rollforward (ex AOCI) – Quarterly 23F&G Investor Update | Spring 2024 BVPS ex AOCI of $41.10 after MTM movements, ↑ 2% vs. YE 2023 • $0.75 per share, ↑ 2%, due to underlying business performance • ($0.21) per share for return of capital, primarily common dividend • $0.14 per share increase due
Slide 24: BVPS Rollforward (ex AOCI) – Cumulative
BVPS Rollforward (ex AOCI) – Cumulative 24F&G Investor Update | Spring 2024 BVPS ex AOCI of $38.92 before MTM movements, ↑ 42% vs. YE 2020 BVPS ex AOCI of $41.10 after MTM movements, ↑ 50% vs. YE 2020 • $11.72 per share increase due to underlying business performance • ($0.79) per share for capital
Slide 25: Stable and Strong Capital Profile
Stable and Strong Capital Profile 25F&G Investor Update | Spring 2024 Solid F&G capitalization; debt-to-capitalization ratio in line with long term target of 25% • In January 2024, $250M mandatory convertible preferred stock investment from parent FNF; net proceeds to support growth of retained asse
Slide 26: Our Capitalization Supports Growth & Dividend
Our Capitalization Supports Growth & Dividend 26F&G Investor Update | Spring 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 sharehol
Slide 27: Appendix - Investments
APPENDIX Appendix - Investments 27F&G Investor Update | Spring 2024
Slide 28: Structured Credit – Why We Like It
Structured Credit – Why We Like It 28F&G Investor Update | Spring 2024 Investment Rationale • 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) foc
Slide 29: Portfolio Spotlight: CLO
Portfolio Spotlight: CLO 29F&G Investor Update | Spring 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 Composit
Slide 30: Our CLO Portfolio: Look Through Analysis
Our CLO Portfolio: Look Through Analysis 30F&G Investor Update | Spring 2024 Portfolio focused on high quality CLO securities backed by highly diversified pool of loans Note: GAAP Fair Values as of 3/31/2024 IndustriesCompaniesCLO Managers 96 CLO managers 1,918 Companies 33 Industries 8.7% 3.4% 2.8%
Slide 31: U.S. CLO Impairment Frontier
U.S. CLO Impairment Frontier 31F&G Investor Update | Spring 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 Impai
Slide 32: Portfolio Spotlight: Real Estate Debt
Portfolio Spotlight: Real Estate Debt 32F&G Investor Update | Spring 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 3/31/2024 36% CMBS 27% RML 18% CML 16% RMBS 3% NN
Slide 33: Portfolio Spotlight: CMBS & RMBS
Portfolio Spotlight: CMBS & RMBS 33F&G Investor Update | Spring 2024 Note: GAAP Fair Values as of 3/31/2024 By Asset Type By Property Type By NAIC Rating 30% 25% 19% 11% 10% 5% 1Q24 RMBS SASB CRE CLOs Conduit (Below A) Conduit (A or above) Agency 57% 10% 9% 8% 7% 5% 4% 1Q24 Multifamily Office Other
Slide 34: Portfolio Spotlight: CMBS
Portfolio Spotlight: CMBS 34F&G Investor Update | Spring 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 3/31/2024 1BAML Conduit Data as of 12/31/2023 39% 7% 13% 25% Mul
Slide 35: Portfolio Spotlight: CMLs
Portfolio Spotlight: CMLs 35F&G Investor Update | Spring 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% • 76 holdings, with average loan size of $27.5M • 1.3% of C
Slide 36: Portfolio Spotlight: Alternatives LPs
Portfolio Spotlight: Alternatives LPs 36F&G Investor Update | Spring 2024 • Alternatives portfolio has demonstrated robust returns • Commitments to Blackstone and non-Blackstone alternatives total $4.5B; invested capital of $2.5B • Total Alts NAV of $2.6B or 6% of total portfolio • The portfolio is
Slide 37: Blackstone Related Important Disclosures
Blackstone Related Important Disclosures 37F&G Investor Update | Spring 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, i
Slide 38: Appendix - Finance
APPENDIX 38F&G Investor Update | Spring 2024 Appendix - Finance
Slide 39: Reconciliation of net earnings to adjusted net earnings
Year ended Three months ended December 31, 2022 December 31, 2023 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Net earnings (loss) attributable to common shareholders $635 ($58) ($195) $130 $306 ($299) $111 Non-GAAP adjustments Recognized (gains) and losses, net N
Slide 40: ANE – Significant Items
ANE – Significant Items1 40F&G Investor Update | Spring 2024 1Refer to Reconciliation of net earnings (loss) to adjusted net earnings attributable to common shareholders on page 39 Significant Income and Expense Items (Reflected in Adjusted Net Earnings) Alternatives Long-term Expected Return (Not R
Slide 41: ANE – Significant Items (cont.)
ANE – Significant Items1 (cont.) 41F&G Investor Update | Spring 2024 1Refer to Reconciliation of net earnings (loss) to adjusted net earnings attributable to common shareholders on page 39 Significant Income and Expense Items (Reflected in Adjusted Net Earnings) Alternatives Long-term Expected Retur
Slide 42: Non-GAAP Measures Definitions
Non-GAAP Measures Definitions 42F&G Investor Update | Spring 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 eva
Slide 43: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 43F&G Investor Update | Spring 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 calc
Slide 44: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 44F&G Investor Update | Spring 2024 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 sha
Slide 45: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 45F&G Investor Update | Spring 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
Slide 46: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 46F&G Investor Update | Spring 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 dete
Slide 47: Non-GAAP Measures and Definitions (cont.)
Non-GAAP Measures and Definitions (cont.) 47F&G Investor Update | Spring 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 effec