Summary Financial Results¹

(In millions, except per share data)

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

2024

2023

Total gross sales

$             3,878

$             2,781

$    11,793

$      9,070

Net sales

$             2,386

$             2,268

$      8,133

$      6,689

Assets under management (AUM)

$           52,464

$           47,103

$    52,464

$    47,103

Average assets under management (AAUM) YTD

$           50,970

$           45,357

$    50,970

$    45,357

AUM before flow reinsurance

$           62,875

$           52,577

$    62,875

$    52,577

Adjusted return on assets

1.05 %

1.05 %

0.76 %

Net earnings (loss)

$                 (10)

$                306

$         299

$         241

Net earnings (loss) per share

$              (0.08)

$               2.45

$        2.38

$        1.93

Adjusted net earnings

$                156

$                120

$         403

$         260

Adjusted net earnings per share

$               1.22

$               0.96

$        3.18

$        2.08

Book value per common share

$             32.51

$             18.98

$      32.51

$      18.98

Book value per common share, excluding AOCI

$             42.28

$             43.30

$      42.28

$      43.30

¹See definition of non-GAAP measures below

Book value per common share excluding AOCI as of June 30, 2024

$

42.52

Adjusted net earnings and other

1.11

Book value per common share excluding AOCI, before capital actions & mark-to-market

$

43.63

Capital actions

Book value per common share excluding AOCI, before mark-to-market

$

43.48

Mark-to-market movement

Book value per common share excluding AOCI as of September 30, 2024

$

42.28

Assets

September 30, 2024

December 31, 2023

Investments

Fixed maturity securities available for sale, at fair value, (amortized cost of $49,026), net of allowance for credit losses of $62 at September 30, 2024

$             46,909

$             40,419

Preferred securities, at fair value

289

469

Equity securities, at fair value

146

137

Derivative investments

1,401

797

Mortgage loans, net of allowance for credit losses of $69 at September 30, 2024

5,626

5,336

Investments in unconsolidated affiliates (certain investments at fair value of $272 at September 30, 2024)

3,666

3,071

Other long-term investments

675

608

Short-term investments

681

1,452

Total investments

$             59,393

$             52,289

Cash and cash equivalents

3,539

1,563

Reinsurance recoverable, net of allowance for credit losses of $21 at September 30, 2024

12,404

8,960

Goodwill

2,179

1,749

Prepaid expenses and other assets

942

931

Other intangible assets, net

5,349

4,207

Market risk benefits asset

134

88

Income taxes receivable

2

27

Deferred tax asset, net

181

388

Total assets

$             84,123

$             70,202

Liabilities and Equity

Contractholder funds

$             55,468

$             48,798

Future policy benefits

8,268

7,050

Market risk benefits liability

603

403

Accounts payable and accrued liabilities

3,291

2,011

Notes payable

2,038

1,754

Funds withheld for reinsurance liabilities

9,980

7,083

Total liabilities

$             79,648

$             67,099

Equity

Preferred stock $0.001 par value; authorized 25,000,000 shares as of September 30, 2024; outstanding and issued shares of 5,000,000 as of September 30, 2024

—

—

Common stock $0.001 par value; authorized 500,000,000 shares as of September 30, 2024;  outstanding and issued shares of 126,094,481 and 127,123,308 as of September 30, 2024, respectively

—

—

Additional paid-in-capital

3,456

3,185

Retained earnings

2,145

1,926

Accumulated other comprehensive income (loss) (“AOCI”)

(1,231)

(1,990)

Treasury stock, at cost (1,028,827 shares as of September 30, 2024)

(24)

(18)

Total F&G Annuities & Life, Inc. shareholders’ equity

$               4,346

$               3,103

Non-controlling interests

129

—

Total equity

$               4,475

$               3,103

Total liabilities and equity

$             84,123

$             70,202

F&G ANNUITIES & LIFE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

THIRD QUARTER INFORMATION

(In millions, except per share data)

(Unaudited)

Three months ended

Nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Revenues

Life insurance premiums and other fees

$                    506

$                    582

$                 1,711

$                 1,523

Interest and investment income

712

578

2,012

1,622

Owned distribution revenues

20

—

61

—

Recognized gains and (losses), net

206

(309)

401

(257)

Total revenues

1,444

851

4,185

2,888

Benefits and expenses

Benefits and other changes in policy reserves

1,095

292

2,864

1,921

Market risk benefit (gains) losses

71

(49)

80

(20)

Depreciation and amortization

147

108

417

302

Personnel costs

80

58

215

167

Other operating expenses

45

38

149

107

Interest expense

36

24

94

71

Total benefits and expenses

1,474

471

3,819

2,548

Earnings (loss) before income taxes

(30)

380

366

340

Income tax expense (benefit)

(25)

74

51

99

Net earnings (loss)

(5)

306

315

241

Less: Non-controlling interests

1

—

3

—

Net earnings (loss) attributable to F&G

(6)

306

312

241

Less: Preferred stock dividend

4

—

13

—

Net earnings (loss) attributable to F&G common shareholders

$                    (10)

$                    306

$                    299

$                    241

Net earnings (loss) attributable to F&G common shareholders per common share

Basic

$                 (0.08)

$                   2.47

$                   2.41

$                   1.94

Diluted

$                 (0.08)

$                   2.45

$                   2.38

$                   1.93

Weighted average common shares used in computing net earnings (loss) per common share

Basic

124

124

124

124

Diluted

124

125

131

125

Non-GAAP Measures and Other Information

RECONCILIATION OF NET EARNINGS (LOSS) AND ADJUSTED NET EARNINGS (LOSS)

Three months ended

Nine months ended

September 30,

2024

September 30,

2023

September 30,

2024

September 30,

2023

Reconciliation of net earnings (loss) to adjusted net

earnings attributable to common shareholders ¹

Net earnings (loss) attributable to common shareholders

$                  (10)

$                  306

$                  299

$                  241

Non-GAAP adjustments

Recognized (gains) and losses, net

Net realized and unrealized (gains) losses on fixed

maturity available-for-sale securities, equity securities

and other invested assets

(15)

14

(100)

89

Change in allowance for expected credit losses

10

5

32

33

Change in fair value of reinsurance related embedded derivatives

178

(36)

186

(34)

Change in fair value of other derivatives and embedded derivatives

(127)

13

(58)

12

Recognized (gains) losses, net

46

(4)

60

100

Market related liability adjustments

145

(237)

19

(95)

Purchase price amortization

22

5

63

16

Transaction costs and other non-recurring items

—

1

(3)

3

Non-controlling interest

(3)

—

(8)

—

Income taxes adjustment

(44)

49

(27)

(5)

Adjusted net earnings attributable to common shareholders ¹

$                  156

$                  120

$                  403

$                  260

¹See definition of non-GAAP measures below

RECONCILIATION OF TOTAL EQUITY, TOTAL EQUITY EXCLUDING ACCUMULATED OTHER COMPREHENSIVE INCOME (AOCI), BOOK VALUE PER SHARE AND BOOK VALUE PER SHARE EXCLUDING AOCI

Three months ended

(In millions)

September 30, 2024

June 30, 2024

March 31, 2024

Total F&G Annuities & Life, Inc. shareholders’ equity

4,346

3,654

3,546

Less: Preferred stock

250

250

250

Total F&G equity attributable to common shareholders

4,096

3,404

3,296

Less: AOCI

(1,231)

(1,953)

(1,883)

Total F&G equity attributable to common shareholders, excluding AOCI

$                    5,327

$                   5,357

$                   5,179

Common shares outstanding

126

126

126

Book value per common share

$                    32.51

$                   27.02

$                   26.16

Book value per common share, excluding AOCI

$                    42.28

$                   42.52

$                   41.10

ASSETS UNDER MANAGEMENT (AUM) ROLLFORWARD,  AVERAGE ASSETS UNDER MANAGEMENT (AAUM) AND AUM BEFORE FLOW REINSURANCE

Three months ended

(In millions)

September 30, 2024

June 30, 2024

March 31, 2024

AUM at beginning of period

$                  52,208

$                  49,787

$                 49,103

Net new business asset flows

1,726

3,057

2,116

Net flow reinsurance to third parties

(1,248)

(930)

(1,407)

Net capital transaction proceeds (disbursements)

(222)

294

(25)

AUM at end of period¹

$                  52,464

$                  52,208

$                 49,787

AAUM YTD¹

$                  50,970

$                  50,181

$                 49,400

AUM before flow reinsurance

$                  62,875

$                  61,370

$                 58,020

SALES HIGHLIGHTS

Three months ended

Nine months ended

(In millions)

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Total annuity sales

3,502

1,858

9,389

6,870

Indexed universal life (“IUL”)

39

38

125

117

Funding agreements (“FABN/FHLB”)

—

415

1,020

871

Pension risk transfer (“PRT”)

337

470

1,259

1,212

Gross sales⁽¹⁾

3,878

2,781

11,793

9,070

Sales attributable to flow reinsurance to third parties

(1,492)

(513)

(3,660)

(2,381)

Net sales⁽¹⁾

$                    2,386

$                    2,268

$                    8,133

$                    6,689

¹See definition of non-GAAP measures below  

DEFINITIONS

The following represents the definitions of non-GAAP measures used by F&G:

Adjusted Net Earnings attributable to common shareholders

Adjusted net earnings attributable to common shareholders is a non-GAAP economic measure we use to evaluate financial performance each period. Adjusted net earnings attributable to common shareholders is calculated by adjusting net earnings (loss) attributable to common shareholders to eliminate:

(i)   Recognized (gains) and losses, net: the impact of net investment gains/losses, including changes in allowance for expected credit losses and other than temporary impairment (“OTTI”) losses, recognized in operations; and the effects of changes in fair value of the reinsurance related embedded derivative and other derivatives, including interest rate swaps and forwards;

(ii)   Market related liability adjustments: the impacts related to changes in the fair value, including both realized and unrealized gains and losses, of index product related derivatives and embedded derivatives, net of hedging cost; the impact of initial pension risk transfer deferred profit liability losses, including amortization from previously deferred pension risk transfer deferred profit liability losses; and the changes in the fair value of market risk benefits by deferring current period changes and amortizing that amount over the life of the market risk benefit;

(iii)  Purchase price amortization: the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset and the change in fair value of liabilities recognized as a result of acquisition activities);

(iv)  Transaction costs: the impacts related to acquisition, integration and merger related items;

(v)  Other “non-recurring,” “infrequent” or “unusual items”:  Management excludes certain items determined to be “non-recurring,” “infrequent” or “unusual” from adjusted net earnings when incurred if it is determined these expenses are not a reflection of the core business and when the nature of the item is such that it is not reasonably likely to recur within two years and/or there was not a similar item in the preceding two years;

(vi)  Non-controlling interest on non-GAAP adjustments: the portion of the non-GAAP adjustments attributable to the equity interest of entities that F&G does not wholly own; and

(vii)  Income taxes: the income tax impact related to the above-mentioned adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction.

While these adjustments are an integral part of the overall performance of F&G, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. Adjusted net earnings should not be used as a substitute for net earnings (loss). However, we believe the adjustments made to net earnings (loss) in order to derive adjusted net earnings provide an understanding of our overall results of operations.

Adjusted Weighted Average Diluted Shares Outstanding

Adjusted weighted average diluted shares outstanding is the same as weighted average diluted shares outstanding except for periods in which our preferred stocks are calculated to be dilutive to either net earnings attributable to common shareholders or adjusted net earnings attributable to common shareholders, but not both, or there is a net earnings loss attributable to common shareholders on a GAAP basis, but positive adjusted net earnings attributable to common shareholders using the non-GAAP measure. The above exceptions are made to include relevant diluted shares when dilution occurs and exclude relevant diluted shares when dilution does not occur for adjusted net earnings attributable to common shareholders.

Management considers this non-GAAP financial measure to be useful internally and for investors and analysts to assess the level of return driven by the Company that is available to common shareholders.

Adjusted Net Earnings attributable to common shareholders per Diluted Share

Adjusted net earnings attributable to common shareholders per diluted share is calculated as adjusted net earnings plus preferred stock dividend (if the preferred stock has created dilution). This sum is then divided by the adjusted weighted-average diluted shares outstanding.

Management considers this non-GAAP financial measure to be useful internally and for investors and analysts to assess the level of return driven by the Company that is available to common shareholders.

Adjusted Return on Assets attributable to Common Shareholders

Adjusted return on assets attributable to common shareholders is calculated by dividing year-to-date annualized adjusted net earnings attributable to common shareholders by year-to-date AAUM.  Return on assets is comprised of net investment income, less cost of funds, flow reinsurance fee income, owned distribution margin and less expenses (including operating expenses, interest expense and income taxes) consistent with our adjusted net earnings definition and related adjustments. Cost of funds includes liability costs related to cost of crediting as well as other liability costs. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing financial performance and profitability earned on AAUM.

Adjusted Return on Average Common Shareholder Equity, excluding AOCI

Adjusted return on average common shareholder equity is calculated by dividing the rolling four quarters adjusted net earnings attributable to common shareholders, by total average F&G equity attributable to common shareholders, excluding AOCI.  Average equity attributable to common shareholders, excluding AOCI for the twelve month rolling period is the average of 5 points throughout the period. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, changes in instrument-specific credit risk for market risk benefits and discount rate assumption changes for the future policy benefits, management considers this non-GAAP financial measure to be a useful internally and for investors and analysts to assess the level return driven by the Company’s adjusted earnings.

Assets Under Management (AUM)

AUM is comprised of the following components and is reported net of reinsurance assets ceded in accordance with GAAP:

(i) total invested assets at amortized cost, excluding investments in unconsolidated affiliates, owned distribution and derivatives;

(ii) investments in unconsolidated affiliates at carrying value;

(iii) related party loans and investments;

(iv) accrued investment income;

(v) the net payable/receivable for the purchase/sale of investments; and

(vi) cash and cash equivalents excluding derivative collateral at the end of the period.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the size of our investment portfolio that is retained.

AUM before Flow Reinsurance

AUM before Flow Reinsurance is comprised of components consistent with AUM, but also includes flow reinsured assets.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the size of our investment portfolio including reinsured assets.

Average Assets Under Management (AAUM) (Quarterly and YTD)

AAUM is calculated as AUM at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. 

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on retained assets.

Book Value per Common Share, excluding AOCI

Book value per Common share, excluding AOCI is calculated as total F&G equity attributable to common shareholders divided by the total number of shares of common stock outstanding. Management considers this to be a useful measure internally and for investors and analysts to assess the capital position of the Company.

Debt-to-Capitalization Ratio, excluding AOCI

Debt-to-capitalization ratio is computed by dividing total aggregate principal amount of debt by total capitalization (total debt plus total equity, excluding AOCI). Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.

Return on Average F&G common shareholder Equity, excluding AOCI

Return on average F&G common shareholder equity, excluding AOCI  is calculated by dividing the rolling four quarters net earnings (loss) attributable to common shareholders, by total average F&G equity attributable to common shareholders, excluding AOCI. Average F&G equity attributable to common shareholders, excluding AOCI for the twelve month rolling period is the average of 5 points throughout the period. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, changes in instrument-specific credit risk for market risk benefits and discount rate assumption changes for the future policy benefits, management considers this non-GAAP financial measure to be useful internally and for investors and analysts to assess the level of return driven by the Company that is available to common shareholders.

Sales

Annuity, IUL, funding agreement and non-life contingent PRT sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP.  Sales from these products are recorded as deposit liabilities (i.e., contractholder funds) within the Company’s consolidated financial statements in accordance with GAAP.  Life contingent PRT sales are recorded as premiums in revenues within the consolidated financial statements. Management believes that presentation of sales, as measured for management purposes, enhances the understanding of our business and helps depict longer term trends that may not be apparent in the results of operations due to the timing of sales and revenue recognition.

Total Capitalization, excluding AOCI

Total capitalization, excluding AOCI is based on total equity excluding the effect of AOCI and the total aggregate principal amount of debt.  Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, changes in instrument-specific credit risk for market risk benefits and discount rate assumption changes for the future policy benefits, management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess the capital position of the Company.

Total Equity, excluding AOCI

Total equity, excluding AOCI is based on total equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, changes in instrument-specific credit risk for market risk benefits and discount rate assumption changes for the future policy benefits, management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned equity on total equity.

Total F&G Equity attributable to common shareholders, excluding AOCI

Total F&G equity attributable to common shareholder, excluding AOCI is based on total F&G Annuities & Life, Inc. shareholders’ equity excluding the effect of AOCI and preferred stocks, including additional paid-in-capital. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, changes in instrument-specific credit risk for market risk benefits and discount rate assumption changes for the future policy benefits, management considers this non-GAAP financial measure to be useful internally and for investors and analysts to assess the level of return driven by the Company that is available to common shareholders.