FG — F&G Annuities & Life, Inc.

Summary of F&G Annuities & Life, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Record Assets Under Management (AUM): Achieved $73.1 billion, a 12% increase from year-end 2024. Retained AUM reached $57.6 billion, up 7%.
• Sales Performance: Gross sales totaled $14.6 billion for the year, with core sales of $9 billion, including indexed annuities and pension risk transfer. Fourth-quarter gross sales were $3.4 billion.
• Adjusted Net Earnings: Reported at $123 million ($0.91 per share) for Q4 and $482 million ($3.64 per share) for the full year. Included favorable significant items totaling $30 million.
• Investment Portfolio: Fixed income yield was 4.65% in Q4. Credit-related impairments remained low at 8 basis points, well below pricing assumptions.
• Capital Position: Ended the year with a risk-based capital (RBC) ratio of approximately 430%, above the 400% target.

2. Strategic Updates and Business Highlights

• Transition to Fee-Based Model: The company is focusing on a more fee-based, higher margin, and less capital-intensive business model, with fee income from flow reinsurance growing 37% year-over-year.
• Investment Strategy: Continued emphasis on private asset origination, which represents 20% of the retained portfolio. The company maintains a strong credit profile with 92% of private origination debt rated investment grade.
• Ownership Changes: Following a distribution of shares from FNF, public float increased from 18% to 30%, enhancing market liquidity and institutional ownership.
• Expense Management: Operating expense ratio improved to 50 basis points, with a target of 45 basis points by year-end 2027.

3. Forward Guidance and Outlook

• Growth Expectations: The company aims to continue growing AUM primarily through core products and expects fee-based earnings to rise to approximately 25% of total earnings by year-end 2028.
• Market Positioning: F&G Annuities & Life, Inc. is well-positioned to leverage its distribution partners and expand its competitive advantages in the annuities and life insurance markets.

4. Bad News, Challenges, or Points of Concern

• Variable Investment Income: Underperformed in Q4, with management planning for continued mediocre returns in the near term.
• Surrender Fees: Expected to decline in 2026, which may pressure near-term returns. The company anticipates a potential 20% decrease in surrender-related fee income.
• Market Conditions: The competitive landscape remains challenging, particularly for MYGA products, which the company is moderating in volume due to pricing discipline and capital allocation strategies.

5. Notable Q&A Insights

• Investment Portfolio Exposure: Management indicated manageable software exposure in the investment portfolio, with a focus on durable use cases and structural moats.
• Reinsurance Partnerships: The company has a diversified panel of reinsurance partners and expressed confidence in maintaining these relationships despite market changes.
• Capital Independence: Management emphasized that the company is capital self-sufficient and does not rely on external equity raises for growth, addressing concerns raised in previous quarters.
• Future Sales Strategy: The company plans to remain selective with MYGA sales, focusing on higher-return opportunities in other products, while maintaining a strong pipeline for pension risk transfer deals.

Overall, F&G Annuities & Life, Inc. reported a strong performance in 2025, with strategic initiatives aimed at enhancing long-term shareholder value, despite facing some challenges in investment income and market competition.