Business Context and Reporting Period
Company: F&G Annuities & Life, Inc. (F&G)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2024
Business Overview: F&G is a leading provider of insurance solutions, primarily serving retail annuity and life customers and institutional clients. The company operates through three retail channels (Independent Marketing Organizations, banks, and broker-dealers) and two institutional markets (Pension Risk Transfer and Funding Agreements). F&G is a majority-owned subsidiary of Fidelity National Financial, Inc. (FNF), which retains approximately 85% ownership.
Key Financial Metrics
| Metric (in millions) | 2024 | 2023 | 2022 |
|---|---|---|---|
| Total Revenues | $5,744 | $4,500 | $2,349 |
| Net Earnings Attributable to F&G | $639 | $(58) | $635 |
| Net Earnings Attributable to Common Shareholders | $622 | $(58) | $635 |
| Adjusted Net Earnings (Non-GAAP) | $546 | $335 | $353 |
| Operating Cash Flow | $5,999 | $5,834 | $3,171 |
| Assets Under Management (AUM) | $53.8 billion | $46.0 billion (AAUM) | $40.1 billion (AAUM) |
| Total Debt Outstanding | $2.171 billion | $1.754 billion | N/A |
| Cash and Cash Equivalents | $2.264 billion | $1.563 billion | $960 million |
Key Ratios:
- Adjusted Return on Assets (ROA): 106 basis points (2024)
- Yield on Average Assets Under Management (AAUM): 5.27% (2024)
- Risk-Based Capital (RBC) Ratio (FGL Insurance): Over 410% (2024)
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 27.6% to $5.744 billion, driven by higher life insurance premiums ($2.860 billion vs. $2.413 billion) and interest income ($2.719 billion vs. $2.211 billion). New "Owned distribution revenues" of $81 million were recognized in 2024 due to acquisitions.
- Profitability Turnaround: The company returned to profitability with $639 million in net earnings, reversing a $58 million net loss in 2023. This was largely due to favorable market movements, higher investment income, and reduced valuation allowance expenses.
- Investment Portfolio: Total investments grew to $60.1 billion. The portfolio includes significant holdings in asset-backed securities ($10.3 billion) and collateralized loan obligations ($5.4 billion). Gross unrealized losses on fixed maturity securities were $3.837 billion, primarily driven by interest rate fluctuations rather than credit concerns.
- Debt Structure: F&G issued $1.05 billion in new senior notes in 2024 (6.50% due 2029 and 6.250% due 2034) and repaid $365 million of its revolving credit facility. Total notes payable increased to $2.171 billion.
- Acquisitions: Completed majority acquisitions of Roar Joint Venture, LLC (70% stake) and PALH, LLC (100% stake) to expand owned distribution channels.
Guidance, Outlook, and Risks
Management Commentary: Management emphasizes a strategy of growing in-force liabilities and AUM through diversified channels. The company targets medium-term financial goals of growing assets, expanding ROA/ROE, and increasing its valuation multiple. The investment portfolio is managed by Blackstone ISG-I Advisors LLC, with a focus on high-quality fixed income and alternative investments.
Outlook: F&G expects to maintain its RBC ratio above its 400% target. The company anticipates continued growth in the retirement market driven by demographic tailwinds (Baby Boomers retiring) and the expansion of its RILA product line.
Key Risks and Contingencies:
- Interest Rate Risk: Rising rates have decreased the fair value of the investment portfolio, resulting in a $1.9 billion unrealized loss in AOCI. Rapid rate increases could trigger policy surrenders (disintermediation).
- Regulatory Risk: The Department of Labor's "New Fiduciary Rule" is currently stayed by federal courts but remains a significant uncertainty that could impact sales practices and agent compensation.
- Cybersecurity: The company was impacted by the June 2023 MOVEit vendor incident. While no material financial impact was recorded, the company faces ongoing litigation and reputational risk.
- Reinsurance Counterparty Risk: Significant exposure to reinsurers Aspida Re ($7.8 billion recoverable) and Somerset ($2.8 billion recoverable). Failure of these counterparties could materially impact financial condition.
- Dividend Restrictions: As a holding company, F&G relies on dividends from subsidiaries. FGL Insurance's maximum ordinary dividend capacity for 2025 is estimated at $0 due to regulatory limitations.
Investor Verification Checklist
- Verify AUM Growth: Confirm the sustainability of the 10% AUM growth rate and the mix of new business across retail vs. institutional channels.
- Monitor Interest Rate Sensitivity: Assess the impact of potential further rate hikes on the $3.8 billion unrealized loss position and potential policy surrender rates.
- Review Reinsurance Concentration: Evaluate the creditworthiness and collateral arrangements of top reinsurers (Aspida, Somerset, Everlake, Wilton).
- Track Regulatory Developments: Monitor the status of the DOL Fiduciary Rule litigation and potential impacts on the distribution model.
- Assess Acquisition Integration: Review the performance and integration progress of the Roar and PALH acquisitions, including contingent consideration obligations.
- Check Dividend Capacity: Verify the ability of insurance subsidiaries to generate surplus to support future holding company dividends, given the current $0 capacity estimate for FGL Insurance in 2025.