F&G Annuities & Life (FG) investor relations material

Strategic transition and business model evolution

• Transitioning from a spread-based to a more fee-based, less capital-intensive model, aiming for 25% of earnings from fee businesses by 2028, up from 15% in 2025.

• Significant growth in gross AUM from $25 billion to $75 billion, with $55 billion retained, focusing on ROA and ROE expansion.

• Reinsurance is a key lever, with 90% of MYGAs and 50% of FIAs reinsured, supporting capital-light growth and ROE improvement.

• Operational efficiency initiatives have reduced expense ratios from 60 to 47 basis points, targeting 45 by end of next year.

• Distribution strategy emphasizes independent channels, Middle America, and multicultural markets, with strong positions in FIA and IUL policy counts.

Competitive landscape and product performance

• FIA market remains healthy, with above-industry growth and stable long-term performance among top players.

• RILA segment is growing rapidly from a small base, while MYGA has been de-emphasized due to lower returns.

• PRT business is steady, focusing on $1–1.5 billion annual volume, with increased competition from larger carriers.

• Life insurance sales are strong in policy count but face lower average premiums due to affordability pressures.

• Market disruptions from competitor mergers present selective opportunities, but core business remains insulated from major impacts.

Financial metrics and capital management

• Current ROA is around 119 basis points, below the medium-term target range, influenced by high surrender fee income and low prepayments.

• ROE stands at 11–12%, with a target of 13–14%, driven by reinsurance and capital-light strategies.

• Private credit investments focus on established and institutional asset classes, avoiding untested segments, with Blackstone as a key partner.

• Regulatory changes have increased capital charges on CLOs and may affect residential mortgage loans, but impacts are manageable.

• Capital management balances dividends, debt service, new business growth, and opportunistic buybacks, with flexibility from reinsurance and potential monetization of distribution assets.