F&G Annuities & Life Inc. Reports Record Growth

F&G Annuities & Life Inc ((FG)) has held its Q2 earnings call. Read on for the main highlights of the call.

F&G Annuities & Life Inc. recently held its earnings call, reflecting a strong performance with record assets under management and substantial sales growth. The company introduced a new reinsurance sidecar expected to enhance future profitability. However, challenges such as a decline in MYGA sales compared to the previous year and lower-than-expected returns from alternative investments were noted.

Record AUM Before Flow Reinsurance

F&G reported a record AUM before flow reinsurance of $69.2 billion at the end of the second quarter. This includes retained assets under management of $55.6 billion, marking a 13% increase compared to the second quarter of 2024. This growth underscores the company’s robust asset management capabilities and strategic growth initiatives.

Strong Sales Performance

The company delivered one of its best sales quarters in history with $4.1 billion in gross sales. This includes significant growth in core sales of fixed index annuities, index life, and pension risk transfer. Core product sales reached $2.2 billion, up 22% over the sequential first quarter and 10% over the second quarter of 2024, highlighting the company’s strong market position.

Launch of New Reinsurance Sidecar

F&G launched a new reinsurance vehicle in partnership with Blackstone Managed Funds, with approximately $1 billion in anticipated capital commitments. This strategic move is expected to contribute to higher return on equity (ROE) over time, enhancing the company’s profitability and market competitiveness.

Improved Operating Expense Ratio

The operating expense ratio to AUM before flow reinsurance decreased from 61 basis points in the second quarter of 2024 to 56 basis points in the second quarter of 2025. This improvement reflects the company’s ongoing efforts to optimize operational efficiency and cost management.

Decline in MYGA Sales Compared to 2024

MYGA sales experienced a 21% decline from the second quarter of 2024 due to the absence of funding agreements in the current quarter. This highlights a challenge the company faces in maintaining sales momentum in certain product lines.

Impact of Alternative Investments on Earnings

Investment income from alternative investments was $83 million or $0.62 per share below management’s long-term expected return. This shortfall indicates potential volatility and challenges in achieving expected returns from alternative investment strategies.

Forward-Looking Guidance

During the earnings call, F&G reported robust financial performance with record AUM before flow reinsurance and significant sales growth. The company anticipates further improvements in operational efficiency, aiming to reduce operating expenses to 50 basis points by the end of 2025. The new reinsurance vehicle is expected to enhance the company’s business model, focusing on fee-based, higher-margin, and less capital-intensive operations.

In summary, F&G Annuities & Life Inc.’s earnings call highlighted a strong financial performance with record asset management and sales growth. The introduction of a new reinsurance sidecar and improved operational efficiencies are expected to drive future profitability. However, challenges such as declining MYGA sales and lower-than-expected returns from alternative investments remain areas to watch.