F&G Annuities & Life Reports Third Quarter 2024 Results
DES MOINES, Iowa, Nov. 6, 2024 /PRNewswire/ -- F&G Annuities & Life, Inc. (NYSE:FG) (F&G or the Company) a leading provider of insurance solutions serving retail annuity and life customers and institutional clients, today reported financial results for the third quarter ended September 30, 2024.
Net loss attributable to common shareholders (net loss) for the third quarter was $10 million, or $0.08 per diluted share (per share), compared to net earnings of $306 million, or $2.45 per share, for the third quarter of 2023. Net loss for the third quarter of 2024 included $150 million of net unfavorable mark-to-market effects and $16 million of other unfavorable items; all of which are excluded from adjusted net earnings. Net earnings for the third quarter of 2023 included $191 million of net favorable mark-to-market effects and $5 million of other unfavorable items; all of which are excluded from adjusted net earnings.
Adjusted net earnings attributable to common shareholders (adjusted net earnings) for the third quarter were $156 million, or $1.22 per share, compared to $120 million, or $0.96 per share for the third quarter of 2023. Adjusted net earnings include significant income and expense items and alternative investment portfolio returns from short-term mark-to-market movement that differ from long-term return expectations. The third quarter of 2024 includes short-term investment income from alternative investments, $21 million of CLO redemption gains and bond prepay income, and $14 million tax valuation allowance benefit; partially offset by $17 million net expense from actuarial assumption updates. The third quarter of 2023 included short-term investment income from alternative investments. Please see "Third Quarter 2024 Results" and "Non-GAAP Measures and Other Information" for further explanation.
Company Highlights
Sustainable sales growth across multi-channel platform: Gross sales of $3.9 billion for the third quarter, an increase of 39% over the third quarter 2023, primarily driven by record retail channel sales
Record invested assets with strong investment returns: Record assets under management before flow reinsurance of $62.9 billion at the end of the third quarter, an increase of 20% over the third quarter 2023. This included record assets under management (AUM) of $52.5 billion, an increase 11% over the third quarter 2023 driven by retained new business flows and net debt and equity proceeds over the past twelve months. The investment portfolio is performing well, as expected
Strong and expanding adjusted return on assets (ROA), excluding significant items: Demonstrated ROA expansion above baseline of 110 basis points shared at our Investor Day in October 2023
Solid balance sheet supports both organic growth and return of capital to shareholders: F&G returned $31 million of capital to shareholders from common and preferred dividends in the third quarter
Chris Blunt, Chief Executive Officer, commented, "Our strong results through the first nine months have positioned us well for the remainder of the year and we continue to make great progress toward our Investor Day targets. We have profitably grown assets under management before flow reinsurance to a record $62.9 billion at the end of the quarter. Gross sales of $3.9 billion increased 39% over the third quarter of 2023 and were boosted by record retail sales of $3.5 billion, nearly double the third quarter of 2023. We continue to benefit as consumers want to secure the relatively higher interest rates, guaranteed tax deferred growth and principal protection that annuity products offer, and we are seeing a healthy PRT pipeline with some significant early wins in the fourth quarter. Excluding significant items, we generated $179 million of adjusted net earnings in the third quarter and expanded our trailing twelve months adjusted return on assets to 126 basis points. I am confident in our ability to expand our margin even in a lower rate environment and we will continue to benefit from our accretive flow reinsurance and owned distribution strategies, setting F&G apart."
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 %
0.76 %
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
Third Quarter 2024 ResultsRobust profitable gross sales: Gross sales were $3.9 billion for the third quarter, an increase of 39% over the third quarter of 2023, primarily driven by record retail sales.
Record Retail channel sales were $3.5 billion for the third quarter, an increase of 84% over the third quarter of 2023, driven by favorable economic conditions and strong demand for retirement savings products.
Institutional market sales were nearly $0.4 billion of pension risk transfer for the third quarter, compared to $0.9 billion of pension risk transfer and funding agreements in third quarter of 2023. Institutional sales are opportunistic and volumes vary quarter to quarter.
Net sales were $2.4 billion for the third quarter, an increase of 4% over the third quarter of 2023.
Record assets under management before flow reinsurance was $62.9 billion at the end of the third quarter, an increase of 20% over the third quarter of 2023. This included record AUM of $52.5 billion, an increase of 11% from third quarter 2023. A rollforward of AUM can be found in the Non-GAAP Measures section of this release.
Adjusted net earnings were $156 million, or $1.22 per share, in the third quarter, compared to $120 million, or $0.96 per share for the third quarter of 2023. Adjusted net earnings include significant income and expense items and alternative investment portfolio returns from short-term mark-to-market movement that differ from long-term return expectations.
Adjusted net earnings of $156 million, or $1.22 per share, for the third quarter of 2024 include $131 million, or $1.00 per share, of investment income from alternative investments, $21 million, or $0.15 per share, of CLO redemption gains and bond prepay income, and $14 million, or $0.11 per share, of tax valuation allowance; partially offset by $17 million, or $0.13 per share, of net expense from actuarial assumption updates. Alternative investments investment income based on management's long-term expected return of approximately 10% was $172 million, or $1.31 per share.
Adjusted net earnings of $120 million, or $0.96 per share, for the third quarter of 2023 include $114 million, or $0.91 per share, of investment income from alternative investments. Alternative investments investment income based on management's long-term expected return of approximately 10% was $142 million, or $1.13 per share.
As compared to the prior year, the adjusted net earnings increase reflects asset growth, margin diversification from accretive flow reinsurance fees and owned distribution margin, disciplined expense management and higher interest expense due to planned capital market activity.
Capital and Liquidity HighlightsTotal F&G equity attributable to common shareholders excluding AOCI was $5.3 billion, or $42.28 per share, based on 126 million common shares outstanding as of September 30, 2024. This reflects an increase of $1.86 per share, or 5%, during the first nine months, as compared to $40.42 as of December 31, 2023, including the net decrease of $0.24, or 1%, during the current quarter as shown 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
(0.15)
Book value per common share excluding AOCI, before mark-to-market
$
43.48
Mark-to-market movement
(1.20)
Book value per common share excluding AOCI as of September 30, 2024
$
42.28
Our consolidated debt outstanding was $2.1 billion at September 30, 2024. Our debt to capitalization ratio, excluding AOCI, was 26.5% as of September 30, 2024. In early October, F&G issued $500 million of senior notes and net proceeds have been used to fully paydown its $365 million revolver balance, with the remainder to be used for general corporate purposes.
During the third quarter, F&G returned $31 million of capital to shareholders from common and preferred dividends.
Conference CallWe will host a call with investors and analysts to discuss F&G's third quarter 2024 results on Thursday, November 7, 2024, beginning at 9:00 a.m. Eastern Time. A live webcast of the conference call will be available on the F&G Investor Relations website at fglife.com. The conference call replay will be available via webcast through the F&G Investor Relations website at fglife.com.
About F&GF&G is committed to helping Americans turn their aspirations into reality. F&G is a leading provider of insurance solutions serving retail annuity and life customers and institutional clients and is headquartered in Des Moines, Iowa. For more information, please visit fglife.com.
Use of Non-GAAP Financial InformationGenerally Accepted Accounting Principles (GAAP) is the term used to refer to the standard framework of guidelines for financial accounting. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions and in the preparation of financial statements. In addition to reporting financial results in accordance with GAAP, this presentation includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do. The presentation of this financial information is not intended to be considered in isolation of or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. By disclosing these non-GAAP financial measures, the Company believes it offers investors a greater understanding of, and an enhanced level of transparency into, the means by which the Company's management operates the Company. Any non-GAAP measures should be considered in context with the GAAP financial presentation and should not be considered in isolation or as a substitute for GAAP net earnings, net earnings attributable to common shareholders, or any other measures derived in accordance with GAAP as measures of operating performance or liquidity. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided within.
Forward-Looking Statements and Risk FactorsThis press release contains forward-looking statements that are subject to known and unknown risks and uncertainties, many of which are beyond our control. Some of the forward-looking statements can be identified by the use of terms such as "believes", "expects", "may", "will", "could", "seeks", "intends", "plans", "estimates", "anticipates" or other comparable terms. Statements that are not historical facts, including statements regarding our expectations, hopes, intentions or strategies regarding the future are forward-looking statements. Forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The risks and uncertainties which forward-looking statements are subject to include, but are not limited to: general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance; natural disasters, public health crises, international tensions and conflicts, geopolitical events, terrorist acts, labor strikes, political crisis, accidents and other events; concentration in certain states for distribution of our products; the impact of interest rate fluctuations; equity market volatility or disruption; the impact of credit risk of our counterparties; changes in our assumptions and estimates regarding amortization of our deferred acquisition costs, deferred sales inducements and value of business acquired balances; regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) underwriting of insurance products and regulation of the sale, underwriting and pricing of products and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of our insurance subsidiaries to make cash distributions to us; and other factors discussed in "Risk Factors" and other sections of F&G's Form 10-K and other filings with the Securities and Exchange Commission (SEC).
CONTACT:Lisa Foxworthy-ParkerSVP of Investor & External
F&G ANNUITIES & LIFE, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
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
