F&G Annuities & Life, Inc. Annual Report: A Comprehensive Review for Investors

F&G Annuities & Life, Inc. (F&G) stands as a key player in the annuities and life insurance sector, empowering individuals to secure their financial futures. This annual report summary offers a concise yet comprehensive look at F&G's performance, strategic initiatives, and what these developments mean for you as an investor.

Business Overview

F&G primarily serves the retirement and life insurance markets. We offer a diverse suite of products, including fixed indexed annuities, immediate annuities, and universal life insurance policies. Our business model centers on delivering stable, long-term financial solutions that help individuals achieve retirement income and protect their wealth. F&G distributes these products through a broad network of independent marketing organizations, broker-dealers, and financial institutions.

Financial Performance

F&G delivered solid financial performance for the fiscal year ending December 31, 2023:

• Total Revenues: Grew by 12% to $3.5 billion, driven by strong sales of annuities and favorable investment returns.
• Net Income: Increased by 18% to $420 million, reflecting effective cost management and robust policy growth.
• Assets Under Management (AUM): Reached $45 billion, up 15% from the previous year, indicating successful asset accumulation and investment strategies.
• New Policy Sales: Surged by 20% year-over-year, particularly in fixed indexed annuities, highlighting strong market demand for our products.
• Shareholder Equity: Stood at $5.8 billion, providing a strong capital base.

Management Discussion and Analysis (MD&A) Highlights

Management attributes F&G's strong 2023 financial performance to several key factors. These include robust demand for our fixed indexed annuity products, effective management of assets and liabilities, and disciplined expense control.

Higher net investment income, driven by a rising interest rate environment and growth in our investment portfolio, primarily fueled the 12% increase in total revenues. This was further supported by increased premiums and policy charges from strong new business generation. The 18% growth in net income reflects these revenue gains, alongside efficient operational management and favorable underwriting results.

The significant rise in Assets Under Management (AUM) and new policy sales highlights F&G's success in attracting and retaining customers within a competitive market. Management also emphasized the strategic acquisition of Roar Joint Venture, LLC. This move aims to enhance product offerings and distribution capabilities, with expectations for positive contributions to future earnings and market position.

Financial Health

F&G maintains a strong financial position, built on a robust capital base and prudent liquidity management. Our $5.8 billion in Shareholder Equity provides a substantial buffer against unexpected events and supports future growth initiatives. We manage the company's capital adequacy ratios to meet or exceed regulatory requirements, ensuring financial stability.

• Debt and Capital Structure: F&G manages its long-term debt obligations and capital structure to optimize the cost of capital while maintaining financial flexibility.
• Cash and Liquidity: F&G maintains a diversified investment portfolio designed to generate stable returns and provide sufficient liquidity for policyholder obligations and operational needs. We manage cash and cash equivalents to ensure immediate liquidity, complemented by access to various funding sources, including credit facilities.

Competitive Position

F&G operates within a highly competitive and dynamic market for annuities and life insurance products. Our competitive advantages include:

• Product Innovation: We strongly focus on developing and offering attractive fixed indexed annuity products that meet evolving customer needs for growth and principal protection.
• Diversified Distribution: A broad and established distribution network provides us with extensive market reach.
• Investment Expertise: Our disciplined investment strategy and expertise allow us to manage a large asset portfolio, generating competitive returns while managing risk.
• Brand Reputation: A growing reputation for financial strength, reliability, and customer service.

F&G continuously monitors market trends and competitor activities to maintain our competitive edge and adapt our strategies accordingly.

Risk Factors

Investors should be aware of the inherent risks within the annuities and life insurance industry:

• Interest Rate Fluctuations: Changes in interest rates can significantly impact investment income, the valuation of fixed-income portfolios, the competitiveness of annuity products, and the cost of hedging strategies.
• Market Volatility: Economic downturns, market instability, or significant declines in equity markets can affect the value of F&G's investment portfolio, impact consumer demand for long-term savings products, and potentially lead to increased policy surrenders.
• Regulatory Changes: Extensive and evolving regulations govern the financial services industry. New laws, changes in existing regulations, or increased regulatory scrutiny could impact F&G's operations, product design, distribution practices, capital requirements, and profitability.
• Competition: F&G operates in a highly competitive market, facing pressure from other insurers, banks, and financial institutions offering similar or alternative products. Intense competition could lead to pricing pressure, reduced market share, or increased acquisition costs.
• Goodwill Impairment: While goodwill from the recent Roar acquisition and previous acquisitions is expected to generate future value, a risk exists that if acquired businesses do not perform as anticipated, F&G may need to record an impairment charge. Such a charge could negatively impact earnings and shareholder equity. Goodwill from the June 2020 acquisition of FNF has remained stable since its recognition, with no impairment charges recorded to date.

Future Outlook

Looking ahead, F&G plans to leverage the Roar acquisition to accelerate our growth trajectory, focusing on expanding our market share in the fixed indexed annuity space. We aim to continue our disciplined investment strategy, optimize our product portfolio to meet evolving market demands, and enhance our digital capabilities to improve customer experience and operational efficiency. F&G anticipates continued strong demand for retirement solutions, driven by demographic trends, and is well-positioned to capitalize on these market opportunities in the coming year. Management remains committed to driving sustainable growth and delivering long-term value to shareholders.