F&G Annuities Reports Strong Growth Despite Market Challenges
F&G Annuities & Life, Inc. (NYSE: FG), a primary subsidiary of F&G Financial Group, reported a second-quarter adjusted net earnings figure of $85 million or $0.65 per share. This outcome, slightly lower than previous quarters, was influenced by reduced returns from alternative investments and the impact of a reinsurance transaction with F&G Life Re.
Despite these headwinds, assets under management, excluding reinsurance, rose by 8% year-over-year, reaching $74.7 billion by June 30. Core retail sales, particularly in indexed annuities and indexed life insurance, remained strong, with $1.8 billion in sales. This growth underscores one of the company's strongest quarters, even as the broader industry experienced a contraction.
CEO Conor Murphy, in his inaugural earnings call, highlighted the company’s commitment to expanding both retail and institutional pathways while adhering to stringent capital distribution policies. Murphy, previously the Chief Financial Officer, stressed a strategic transition towards fee-based, higher-margin operations and disciplined capital management.
Reinsurance strategies played a significant role, with retained assets under management totaling $55.9 billion. This reflects positive asset flows, although moderated by a first-quarter block cession and a mature Funding Agreement-Backed Note. Gross sales for the quarter reached $2.7 billion, encompassing both core and opportunistic sales channels.
Alternative investments within the portfolio totaled approximately $4 billion, experiencing a decline in returns compared to the previous quarter. Interim CFO Mark Wiltse noted that alternative investment income aligns with post-tax estimates, despite being below long-term expected returns.
Operationally, management anticipates improvements in operational costs over the next few years, with current indicators showing a slight decrease in operating expenses relative to assets under management. F&G remains focused on enhancing return metrics and expanding reinsurance partnerships, projecting further engagement in pension risk transfers later this year.
F&G is also exploring strategic options for Peak Altitude, an in-house business development, including seeking a potential partner while retaining a minority stake. Recently, the company welcomed Mike Bailey as the incoming CFO, who will contribute to the next earnings communications. As F&G Annuities & Life realigns its strategies toward value-driven and capital-efficient lines, its offerings in retirement income solutions remain crucial, addressing challenges like longevity risk and wealth transference for both individual and institutional clients.