F&G Annuities & Life Reports Strong Q1 Growth with Strategic Changes
F&G Annuities & Life, a major player in the financial services sector, reported strong financial results for the first quarter, demonstrating significant growth and strategic advancements. The company achieved adjusted net earnings of $110 million, alongside a 10% increase in gross sales to $3.2 billion. Assets under management (AUM) prior to reinsurance rose to nearly $75 billion, marking an 11% year-over-year increase.
The firm's management emphasized a strategic shift toward a fee-based, capital-light business model. They aim for fee-based strategies to represent 15% of adjusted earnings by 2025 and anticipate reaching 25% by 2028. Operating efficiency improved, evidenced by a reduction in the expense-to-AUM ratio to 48 basis points.
During the first quarter, F&G returned $67 million to shareholders and announced a new $100 million share repurchase program. Additionally, the company is exploring strategic options for its Peak Altitude distribution business while staying committed to AUM growth and leveraging the demand from the 'Peak 65' demographic.
Growth Driven by Retirement Market Demand
CEO Chris Blunt noted the growth in F&G’s AUM, driven by increased demand in the retirement market as more Americans reach retirement age. The company reported a compound annual growth rate of 18% in AUM since 2019. President and CFO Conor Murphy detailed the company’s earnings figures, stating that alternative investment income was below long-term expectations due to certain adjustments.
Gross AUM nearly reached $75 billion, and retained AUM was reported at $56 billion. Gross sales increased by 10% year-over-year, with notable contributions from indexed annuity, indexed universal life, and pension risk transfer products. The company strategically moderated some sales to align with high-return opportunities.
Diversified Strategies and Investment Portfolio
The company diversified its strategies over the past five years, emphasizing both spread-based and fee-based earnings. Blunt highlighted the balance between traditional investments and alternative strategies, with the latter predicted to grow significantly by 2028.
F&G’s investment portfolio is well-diversified, predominantly consisting of investment-grade fixed maturities. Blunt discussed the portfolio’s structure, including significant allocations in fixed income and private origination assets. The company maintains a conservative credit impairment rate, currently lower than its historical average.
Future Outlook and Strategic Focus
Looking ahead, F&G is concentrating on expanding its core revenue streams and enhancing return on equity. It plans to remain aligned with industry growth trends for key products while carefully navigating interest rate environments to optimize product sales. F&G Annuities & Life, as part of F&G Financial Group, plays a crucial role in designing financial products tailored to the needs of retirement, catering to both individual and institutional clients. Their offerings include fixed indexed annuities and a variety of life insurance products, supporting both capital preservation and wealth transfer solutions.