FG - Earnings call 3 2023 | F&G Annuities & Life, Inc.

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Operator

Greetings, and welcome to the F&G Annuities & Life Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Lisa Foxworthy-Parker, Senior Vice President, Investor and External Relations. Thank you.

You may begin.

Lisa Foxworthy-Parker

Great. everyone, Third welcome, Call. XXXX and operator, to Quarter F&G's Earnings Thanks,

addressing our me Chief Officer. Chief to Blunt, are We questions Officer; forward Joining Chris Young, Executive today remarks. prepared and Wendy look your following Financial

our such and undertake Today's Private under revise any do guarantee results to recent changes factors duty Securities expressed in materially forward-looking reflect performance. for strategy. discussion SEC or update from new which the future information, Act, events to projections events a refer earnings statements Reform filings We subsequent that include or Please could call to those not most of the may to implied. statements Litigation do cause or not or actual differ

measures to GAAP, be all supplement believe release, company's financial are This with and that in we investors. available earnings presentation, on measures to reconciled morning's rules meaningful discussion where been required, SEC financial investor have accordance may includes our Non-GAAP website. which also within of the non-GAAP

call for November It webcast will available X:XX replay be XXXX. today p.m. through is XX, available Eastern through at fglife.com. also be Time will and at being Today's replay telephone beginning recorded

call our over turn Chris Blunt. CEO, And I'll now the to

Christopher Blunt

expand process. an strategy to growth all thanks while well while future us and on done we maintaining for record items like which profitability deliver to X as assets our they value for this for above have assets, excluding is shareholders. for disciplined assets, generated significant have, and our recognize pursuing Good further turn, I'd morning, all in our adjusted sales first the quarter on the year, gross of grow to this expectations, to return record our diversified under team deliver set today. a long-term opportunities announce of management balanced and I'm that in joining months of pleased another third results and execute management that capital strong continue our thank and to

Starting on in Year-to-date billion, sales while over were XX, record have results, of of for sales year gross pension $X.X and period. XX% discipline were $X.X up executing flow prior the with September our strategy. billion, year. months sales billion over we $X X% up Gross sales year-to-date billion the ended X $X.X Institutional generated reinsurance the maintaining pricing retail funding comprised $XXX of and risk gross agreements. prior $X.X billion million were transfer

a to between goal track on are deliver stated and sales in billion $XX of We growing gross double-digit $XX at billion our annual clip. of line with XXXX

first our were Our billion the goal annual in that places the net $X us this On sales annualized stated well the AUM. our grow to continues $X.X year. retained $X sales net above retained level above managing X an billion to of months billion of basis,

quarter sharp more reinsurance a of XXXX. in to to year, record and fourth momentum third positions in at in environment, sales were quarter. the which our off and retail and seen September annuity this a October, features the finalized results the closely. Coming the position lower as looking we sales in quarter product us Next, first enhanced agreements half XXXX in for strong for growth in uptick market finish we've create sales annuity strong submitted in Within premium us intentionally

transfers Institutional and funding million quarter. $X.X were were down X% sequential both of market sequential of the and the second of the from Retail sales of sales third agreements. channel $XXX quarter, billion comprised sales quarter. X% million $XXX XX% Gross in $X.X in million 'XX third third from risk the a quarter decrease the billion of quarter, in $XXX decrease pension the billion year were in from $X.X a and prior quarter, third quarter

prior the in billion sales line with net quarters. were over $X sequential F&G's retained third year the and in quarter,

strong addition, we well feel confident in September. finishing increased In to Stepping of positioned XXXX sales reinsurance flow as MYGA about back, we as be and move XXXX. and into expected, have XX% we

the continues find growth, guaranteed principal solutions very we customer that #X recognition higher given to to proud attractive consumers sales on annuities The commitment prioritizing tax-advantaged biggest this And attribute deep industry experience. their matter their year's and Annuity Study. this and most relatively in our relationships satisfaction report as be in annuity to to were J.D. be protection excellence improvements to accumulation options. and record We Individual Power operational rates, customers to and distribution in annuitization have ranked impact

registered up quarter of new further the fourth to the with with launch sales, in to through access us customers suite, returns this protection. is to healthy in XXXX years, our market RILA typically one factors, product, key RILA pace excited recent well pipeline in fastest-growing broker-dealer gross enhances of we're record in partners Also, believe another at downside gross transfer for quarter together year markets product sets for XXXX. sales offering XXXX. continue retail index-linked and annuity, sales our and or growing way a gain first double-digit pension risk another These to we the of a providing

XX. under has to at its grown assets profitably a record F&G $XX retained management September billion

$X business flow were approximately under ceded. before for Assets adjusting billion, of management the billion new reinsurance cumulative $XX

allocation, well X with well investment the The below to have years, past profile. upside competitive positioning interest averaged basis rate investment and and continually matched well through Our over evaluate fixed and X Credit-related impairments opportunities pricing is assumption of for our liability in portfolio portfolio portfolio investment-grade. portfolio level XX% being clean our maturities stable high to our maintain to in yield below floating and perform points is portfolio and continues that our quality, quarter. asset enhancement remained returns rate downside protection hedge. third the risk-adjusted We opportunities

SOFR, incremental about we hedged yield financing $X.X pricing are in approximately or XX% is This of now secured the locking of or and points in. incremental billion X are above our billion assets, to hedgeable. in annual of the basis investing rate investment to of margin, rate, rate assets, Notably, billion what which basis $X.X portfolio to approximately XXX floating About the years. of originally $X easily versus points was linked overnight priced X floating next XX over translates have

evaluate floating to continue where rate and to expect hedging beneficial assets additional We possible.

Next, on turning growth. to recent included F&G's Investor which October our deep and was and of into X profitable track Day, dive held record diversified a proven

bright. market see to today, $X the capitalization and success of pleased partial billion as billion increased spinoff to are are We feel our the has time approximately our at recognition we $X.X from last December investor F&G's of prospects

the levers our team the to employing will our strategic that and benefit which During as create for is shareholder. value our highlighted majority Investor Day, stakeholders we FNF

recap, from To F&G following areas. the upside future sees potential

and from our pension strategies. risk transfer growth First, growth sustainable asset retail

reinsurance finally, we believe Next, more earnings distribution of scale and core investment there share is its accretive enhanced flow margin they reflect from X performance strategies as to F&G's accretive power flow effectively incremental the distribution. from potential and over nature price enhanced fully scale margin from business managing reinsurance opportunities, over time. time expansion for for its and owned And owned fee-based operating earnings sources: expenses benefit and operational

calls. strategic these quarterly look providing I earnings and and and on forward progress in priorities initiatives to Wendy updates future

provide over to F&G's the me on now details to Wendy financial turn third Young Let call highlights. further quarter

Wendy Young

Chris. Thanks,

successfully to financial financial and we strategy. our to in maintain strong quarter, F&G's the with pleased very performance and capitalization flexibility are continue growth execute We third

share from our of investments. or share with expected $XXX That net for third Starting per was or included share alternative return year, we of or $X.XX for $XXX Adjusted $XX income share XXXX million items. $X.XX of income third per XXXX. XX% investment other of year-over-year per expense the approximately million $X.XX Alternative net from an on or $XXX investments Last of included were adjusted million earnings and net investment and million or per share. $XX $X.XX per $X.XX of long-term quarter million of loss reported $XX increase. share alternative or the quarter investment loss based $X.XX investments million management's per

$XXX long-term $X.XX investment Alternative income based of was return investments management's approximately or on per million XX% share. expected

of items both to $XXX adjusted in year prior points quarter. assets the basis significant earnings was million XX% were these compared on XXX quarter periods, up XXX points and return from for adjusting third net in XXXX, basis comparison, $XXX in as the For million, adjusted

$XX growth net million basis in reimbursement, our X-basis-point and offset higher increase activity investments XX points by basis from growth, to with includes margin annual increase from ROA, with higher and floating XX and or basis operating increase and our $X points reinsurance, assets $XX which costs million earnings, related or $XX partially adjusted our an million line allowance X the assumption in million from operating basis from by This prior decrease higher rate $XX or uplift platform accretive and in million expense in line disciplined in decrease interest points over in X by was our and markets actuarial product points and other. expense asset generated pricing flow higher asset updates driven or capital continued sales expenses year,

on equity, XXXX. items, was AOCI, quarter X% XX.X% significant as the quarter third of excluding third compared approximately Excluding adjusted return the in in to

on and To only flow levers our of towards not enhanced performance progress growth, from record margin proven value builds earnings quarter's also targeted expansion our demonstrates recap, asset track creation this reinsurance. but

to owned distribution. turning Next,

an distribution expected transaction F&G to which $XXX brings deployed our the our Day, consolidator. largest Investor to stake a quarter, positioned third is million, signed in This early and a $XXX an our at cumulative XXXX. agreement approximately to said IMO for acquire date we annuity As million. is ownership majority uniquely capital to close above in is F&G In be

to price ROE see and few providing forward, drive marginal F&G distribution stream $XXX next generates a lower our roughly higher Owned which and at for Looking multiple margins from is stake, rerating of in dividend over ownership our million a another time. we deploy expected be cost to accretive for share capital to opportunity years. the an

to million over reflects X% quarter of XX. per sequential quarter. a turning common value shares sheet. providing the increase ended share. third with investor our page $XX.XX share, an September balance XXX per outstanding or with our is excluding billion presentation GAAP AOCI, as book the There Now value, a $X.X book analysis of We This a in of

as our XX%. below excluding target XX, September ratio, F&G's AOCI, was XX% of long-term debt-to-capitalization of

X capital $XX XXXX, months ROA the compared expected over the XXXX with XX interest our as has months. million X in or of in as of points the to of points XX line to ROA Our expense million activity X months of and increased markets basis or $XX in basis last

or Our remains a annual blended of approximately on the $XX total $X.X debt X% interest billion roughly outstanding. million expense yield

and assets coverage. target invested to company We at continue holding cash charge fixed Xx

cash. and supports distributable Our growth strong capitalization

share with of as F&G per repurchase. over generation, to capital million in-force growing opportunity third is million the shares F&G debt reinsurance time well $XX returned During XX,XXX of of sheet value we balance million third including average $XX.XX the share. future our quarter, common delevers In shareholders, continued approximately $X.X positioned with million positive of quarter, growth for for ample its to at growth and book and dividends repurchased an $XX price available capital and program. capacity fund $X

me turn questions. for concludes and This let operator back prepared the now our call remarks, to our

Operator

question of from first Our Campbell John Instructions] Stephens. [Operator with line the comes

John Campbell

Nice great the of continuation work on results. really

pressure upward at mean Chris, On expected Investor or the I possibly quarter. you over long-term it so that. your medium then Are think this Day, about so modestly maybe yield, of I hold time, think, higher, you keep kind to bps if that? meaningful, it, forward, in moving I been talked we you just ROA, And do creeping call degree momentum. that's think market, of but feeling can to we'd alternative factor the nothing still term, normalized you At moving normalize investment confident near XXX this maybe some near higher? upward

Christopher Blunt

Yes.

some right? scale it's reinsurance get flow drivers, is said Wendy We're we've I quite of it's to in time. was interest last we've done the thing in we an uptick getting So the the short-term some seen And quarter, expect as a there. mentioned to particularly floaters the rates trying bit we that's put think in then in of that floaters on would but the accretive a it place. we've deals some good the the And hedging then expense we've portfolio. lock over think helped outperformance little before, of same

about upside still of from good So yes, margin feel in we here. terms

John Campbell

Okay. Very X maybe Chris, And then, helpful. here. just more

you sales, $XX gross mentioned billion. the On billion to annual $XX

that the XQ, start range? end we I'm we low As key for the modeling but what high of for to doing kind factors answer in thinking is PRT the swing else here, of probably the consider should

Christopher Blunt

Yes.

it's quite across quarter, board. here. in good the retail think case usually and that's I pipeline, the PRT strong We're quarter fourth the fourth in and a having is

say going sales. end of to would, quite we're that gave higher we the for annual I the frankly, be So probably at range

John Campbell

payout might implying thinking like be you guys do And What a Okay. the able kind get lot ratio it dividend payout That's the paying earlier, mean of from announced nice probably comfortable great dividend, of you got out hoping a if to concerned? feel term, guys then It to yesterday. but ratio. hear. could are X% And ratio peers raise see standpoint? go later, months to XX% you as your was normalized wiggle last was as a I you've then this might talking be what the it. typically to looks off I longer the that payout I I shortcut room. of $X.XX it guys earnings on about XX is like far I'm

Christopher Blunt

Yes, one a all that think new earning right different our us, is don't on block that just that new It's and business. that's I peers legacy off. don't about because interesting. from running business, now we from way it's necessarily returns terrific we know really we're is, have frankly thing one, it

us So something forward. believe at return source healthy is believe we to it's primary we going a grow said for clip of -- can the sustainable. it's be dividend. We We've capital going

some limited that's anything because in I we've did the our had seen changes to make the lever just to that we So authorization. buyback share also stock, wanted respect don't up volatility and think float, of available. sure we We that. with some But more

you I there's anything if don't that. know, to add Wendy, want to

Wendy Young

No.

include ratios You key also programs. payout hit A factors. repurchase all of the competitors' lot larger the

ours high. So as be won't

Christopher Blunt

you're hear taking And income hey, business. Yes. about to returns effectively investors part think want if clear, types of directly the you're generating then is business, for from of investment-grade I continue the again, think to you the that, be this we risk, to which in generating we we how fixed invest is,

is it growing I a just dividend that and a like opens obviously dividend think the point up stream. the on investors of set steady

Operator

the for the turn session. reached would like end Blunt, to of floor have I you over comments. Mr. We question-and-answer closing back the to

Christopher Blunt

you. Thank

higher poised environment we're with as So and benefit quarter we XXXX. pleased, in current move from results to and the is fourth the obviously, despite F&G and the volatility overall uncertainty positioned our environment. this into remains macro rate well enter

outlined asset enhanced multiple we and recent with value Investor at we Day, As shareholders. levers will deliver believe have expansion we clear our expansion, growth to results, deliver a on and drive which focus to margin

your look to We F&G, appreciate you interest on fourth your and call. our quarter in for this forward time morning. updating we Thanks earnings

Operator

does today's gentlemen, conclude this teleconference. and Ladies

a You your may this time. your disconnect for Thank lines have Goodbye. you and participation, wonderful at day.

F&G Annuities & Life (FG) 8 Nov 232023 Q3 Earnings call transcript