FG — F&G Annuities & Life, Inc.

Summary of F&G Annuities & Life, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Net Earnings: $110 million, or $0.82 per share.
• Alternative Investment Income: $44 million, or $0.32 per share, below long-term expectations.
• Assets Under Management (AUM): Reached nearly $75 billion, an 11% increase from $67 billion in Q1 2025.
• Net Sales: $2.2 billion for the quarter, driven by flow reinsurance and strong core sales.
• Return on Equity (ROE): Adjusted ROE was 8.4%, with an adjusted Return on Assets (ROA) of 76 basis points.
• Book Value per Share: Increased to $46.51, up 70% since the 2020 acquisition.

2. Strategic Updates and Business Highlights

• F&G continues to grow AUM at an 18% compound annual growth rate since 2019, positioning itself as a market leader in retirement solutions.
• The company is focusing on a diversified product mix, balancing core and opportunistic sales to enhance margins and ROE.
• Fee-based strategies, which represented 15% of adjusted net earnings in 2025, are expected to grow to 25% by the end of 2028.
• The investment portfolio remains high quality, with 97% of fixed maturities rated investment grade, and a diversified approach across asset classes.
• The company is exploring strategic alternatives for its owned distribution business, Peak Altitude, to unlock value.

3. Forward Guidance and Outlook

• F&G expects continued growth in AUM driven by strong demand for indexed annuities and pension risk transfer solutions.
• The company anticipates annual pension risk transfer sales between $1.5 billion to $2 billion.
• Management aims to improve the operating expense ratio to approximately 45 basis points by year-end 2027.
• The focus remains on expanding ROE and transitioning to a more fee-based, capital-light business model.

4. Bad News, Challenges, or Points of Concern

• Alternative Investment Performance: The performance of alternative investments has been below expectations, impacting overall earnings.
• Surrender Behavior: There are concerns about surrender charge income remaining consistent, with potential for a decline in industry surrenders.
• Market Conditions: The company is cautious about the current interest rate environment, which could affect future sales of multiyear guaranteed annuities.
• Credit Quality: While credit-related impairments have been low, the company is closely monitoring changes in capital charges for various asset classes.

5. Notable Q&A Insights

• Analysts inquired about the sustainability of Q1 EPS as a run rate, with management indicating that it could be a reasonable expectation moving forward.
• There was discussion about the potential for capital generation from the Peak distribution business, with management indicating that proceeds could be used for debt repayment or growth initiatives.
• Management acknowledged the need to remain conservative in asset allocation due to tight spreads, while also identifying pockets of opportunity in certain asset classes like mortgages.
• The conversation highlighted the importance of managing expectations around alternative investment performance and its impact on pricing strategies.

Overall, F&G Annuities & Life, Inc. demonstrated solid financial performance in Q1 2026, with a focus on strategic growth and capital efficiency, while also addressing challenges related to investment performance and market conditions.