F&G Investor Update
Winter 2023
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", "may", "will", "could", "seeks", "intends", "plans", "estimates", "anticipates" or other comparable terms. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance; natural disasters, public health crises, international tensions and conflicts, geopolitical events, terrorist acts, labor strikes, political crisis, accidents and other events; concentration in certain states for distribution of our products; the impact of interest rate fluctuations; equity market volatility or disruption; the impact of credit risk of our counterparties; changes in our assumptions and estimates regarding amortization of our deferred acquisition costs, deferred sales inducements and value of business acquired balances; regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) underwriting of insurance products and regulation of the sale, underwriting and pricing of products and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of our insurance subsidiaries to make cash distributions to us; and other factors discussed in "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.
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F&G Investor Update | Winter 2023 |
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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 preparation of financial statements. In addition to reporting financial results in accordance with GAAP, this presentation includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do. The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. By disclosing these non-GAAP financial measures, the Company believes it offers investors a greater understanding of, and an enhanced level of transparency into, the means by which the Company's management operates the Company. Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings, net earnings attributable to common shareholders, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided within.
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F&G Investor Update | Winter 2023 |
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Executed Strategy & Delivered Shareholder Value
- Record gross sales of $13.2B in 2023
- Record assets under management and positioned for sustained asset growth
- Diversified, high quality investment portfolio well matched to liabilities
- Consistent economics and margin expansion over time despite short-term earnings volatility
- Strong balance sheet with financial flexibility
- Capital allocation supports growth and return of capital to shareholders
1As of 12/31/2023
|
2023 Gross Sales |
2023 Net Sales |
|
$13.2B |
$9.2B |
|
+ 17% YoY |
On Plan |
|
Assets Under |
3-Year Average Portfolio |
|
Management (AUM)1 |
Credit-Related Impairments |
|
$49.5B |
5 bps |
|
+ 14% YoY |
Well below pricing |
|
2023 Adjusted ROA, |
2023 Adjusted ROE, |
|
ex significant items |
ex significant items |
|
1.17% |
10.4% |
|
Above |
+ 80 bps YoY |
|
1.10% expected |
|
|
2023 Capital Return to |
Market |
|
Shareholders |
Capitalization1 |
|
$119M |
$5.8B |
|
Dividends & |
+ 132% YoY |
|
Repurchases |
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Fourth Quarter Financial Highlights
F&G expects steady and growing adjusted net earnings over time, excluding significant items which include short-termmark-to-market effects
Financial Highlights
|
($M) - except per share data and ROA |
Quarterly |
Full Year |
||
|
Period ended December 31 |
4Q22 |
4Q23 |
2022 |
2023 |
|
Gross sales |
$2,719 |
$4,083 |
$11,254 |
$13,153 |
|
Net sales |
$1,911 |
$2,549 |
$9,006 |
$9,238 |
|
Assets under management (AUM) |
$43,568 |
$49,453 |
$43,568 |
$49,453 |
|
AUM before flow reinsurance |
$46,432 |
$56,278 |
$46,432 |
$56,278 |
|
Adjusted return on assets (ROA) |
0.88% |
0.72% |
0.88% |
0.72% |
|
Net earnings (loss) |
($176) |
($299) |
$635 |
($58) |
|
Net earnings (loss) per diluted share |
($1.41) ($2.41) |
$5.52 |
($0.47) |
|
|
Adjusted net earnings (ANE) |
$130 |
$75 |
$353 |
$335 |
|
Adjusted net earnings per diluted share |
$1.04 |
$0.60 |
$3.07 |
$2.68 |
|
Adjusted weighted average diluted shares |
125 |
125 |
115 |
125 |
|
Adjusted ROA - ex significant items |
1.18% |
1.17% |
1.18% |
1.17% |
|
ANE - ex significant items |
$144 |
$131 |
$471 |
$539 |
|
ANE per diluted share - ex significant items |
$1.15 |
$1.05 |
$4.10 |
$4.31 |
Significant Items - Quarterly
|
ANE ($M) and Per Share |
4Q22 |
4Q23 |
||||
|
Favorable / (Unfavorable) |
($M) |
Per |
($M) |
Per |
||
|
share |
share |
|||||
|
Alternatives investment short-term returns versus |
(72) |
($0.58) |
(37) |
($0.30) |
||
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long-term return expectations |
||||||
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Other significant (income) expense items |
58 |
$0.47 |
(19) |
($0.15) |
Significant Items - Full Year
|
ANE ($M) and Per Share |
2022 |
2023 |
||||
|
Favorable / (Unfavorable) |
($M) |
Per |
($M) |
Per |
||
|
share |
share |
|||||
|
Alternatives investment short-term returns versus |
(217) |
($1.89) |
(153) |
($1.22) |
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long-term return expectations |
||||||
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Other significant (income) expense items |
99 |
$0.86 |
(51) |
($0.41) |
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About F&G Snapshot
Our Product Lines
Fixed Deferred Annuities
- Fixed indexed annuity (FIA)
-
Multi-yearguaranteed annuity (MYGA)
Pension Risk Transfer (PRT) Life Insurance - Indexed universal life (IUL)
Funding Agreements
- Funding agreement backed notes (FABN)
- Federal Home Loan Bank (FHLB)
Background
- Founded in 1959 as a life insurance company
- Listed on the New York Stock Exchange (NYSE: FG) eff. 12/1/2022
- Fidelity National Financial (NYSE: FNF) retains ~85% ownership
- Headquartered in Des Moines, IA; nearly 1,200 employees
- Ranking as a Top Workplaces company for 6 consecutive years
Five Distinct Distribution Channels / Markets
Retail Channels
- Independent insurance agents (IMOs)
- Broker Dealers
- Banks
Institutional Markets
- Pension risk transfer
- Funding agreements
Financial Strength Ratings
|
A |
A- |
A- |
A3 |
|
Stable |
Stable |
Stable |
Stable |
|
A.M. Best |
S&P Global |
Fitch Ratings |
Moody's |
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F&G's Competitive Advantages
Targeting Large and Growing Markets
F&G is a nationwide leader in the large markets we play in, and we expect demographic trends will provide tailwinds to give us significant room to continue growing - including untapped Middle Market demand for Life coverage and the opportunity to migrate consumers from CDs to fixed annuities
Superior Ecosystem
We have long-standing relationships with multiple distribution channels, an investment edge, and a track record of attracting top talent which gives us a competitive advantage
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
Driving Margin Expansion and
Improved Returns
F&G is pursuing strategies to grow earnings, while generating significant positive net cash flow and
diversifying into "capital light" flow reinsurance and
accretive owned distribution to generate higher ROEs
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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 annuities are 92% surrender protected
- Non-surrenderableliabilities include funding agreements, pension risk transfer and immediate annuities
- New business and inforce are actively managed to maintain pricing targets
- Asset and liability cash flows are well matched
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GAAP Net Reserves1 |
Fixed Annuity Metrics1 |
||||
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4% |
Fixed Indexed Annuities |
Weighted average time remaining in surrender charge period |
6 Years |
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5% |
|||||
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9% |
Fixed Rate Annuities |
% Surrender protected |
92% |
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11% |
$47B |
Funding Agreements |
Average remaining surrender charge (% of account value) |
7% |
|
|
Pension Risk Transfer |
|||||
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59% |
% Subject to market value adjustment (MVA) |
75% |
|||
|
12% |
Life |
||||
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Average cost of options/interest credited |
2.6% |
||||
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Immediate Annuities |
|||||
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Distance to guaranteed minimum crediting rates |
170 bps |
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1As of 12/31/2023
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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
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Mutual Fund 401(k) Assets1 |
$4.3T |
||
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Registered index linked annuities (RILAs) provide alternative with upside potential and limited downside risk |
U.S. Consumer Savings2 $777B
Consumers increasingly rely on personal savings for retirement income
Retail Life & Annuities3 $326B
Untapped demand for permanent life insurance, especially in the Middle Market
Pension Risk Transfer4 $260B
Transaction volume likely to increase5
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Funding Agreements6 |
$182B |
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12Q23 Quarterly Retirement Market Data, Investment Company Institute, 12/13/2023 |
4Value of U.S. pension risk transfer (PRT) assets held with all current PRT writers per LIMRA 3Q23 Pension Risk Transfer Survey |
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2Personal savings in the U.S. per Federal Reserve Bank of St. Louis as of September 2023 |
5U.S. Pension Risk Transfer Market Posts Record-Breaking 2021 per Pensions & Investments, Source Legal & General, 2/8/2022 |
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32022 U.S. retail life sales (annualized premium) and U.S. individual annuity sales per LIMRA |
6Board of Governors of the Federal Reserve System, Funding Agreement-Backed Securities (FABS) as of 9/30/2023 |
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… And We're Winning …
Annual Gross Sales by Retail Channel and Institutional Market ($B)
|
~31% CAGR1 |
$13.2B |
|
|
$11.3B |
||
|
$9.6B |
PRT |
|
|
• FNF and F&G Merger |
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Funding |
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• F&G ratings upgrades |
Agreements |
|
|
(June 2020) |
$3.4B
$4.5B
$3.9B
Bank
Broker Dealer
Agent
|
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
1CAGR reflects 2018-2023 annual periods
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Attachments
Disclaimer
F&G Annuities & Life Inc. published this content on 21 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 February 2024 21:41:08 UTC.
