Regulatory Environment - F&G Insurance's maximum ordinary dividend capacity for 2025 is estimated to be $0 due to regulatory limitations[142]. - F&G Insurance is subject to comprehensive regulation in its domiciles, including Iowa and New York, affecting its operations and product offerings[132]. - FGL Insurance must provide advance written notice to the NYDFS for any dividends or distributions, even if prior consent is not required[145]. - The company is subject to the 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income effective January 1, 2023, but does not expect to be in a perpetual CAMT position[186]. - The DOL's new Fiduciary Rule, effective September 23, 2024, broadens the definition of "fiduciary" and may subject the company to greater regulatory risk[179]. - The company is monitoring developments related to market conduct standards that may materially affect its business operations and compliance practices[183]. - Changes in regulations in Bermuda and the Cayman Islands may limit the company's ability to offer existing or new products and services[356]. - Compliance with state laws may restrict the amount of dividends that can be paid by subsidiaries, impacting the company's liquidity[383]. - The maximum dividend allowed by law does not necessarily reflect the actual ability to pay dividends, which may be constrained by business and regulatory considerations[384]. Financial Strength and Ratings - As of the latest report, F&G Annuities & Life, Inc. holds a BBB- credit rating from S&P and Fitch, with a stable outlook[127]. - The financial strength rating for Fidelity & Guaranty Life Insurance Company is rated A by A.M. Best, with a stable outlook[127]. - F&G Insurance's access to funding and borrowing costs are influenced by its credit ratings and financial strength ratings[123]. - FGL Insurance's estimated U.S. RBC ratio was over 410% as of December 31, 2024, exceeding the 400% target[149]. - FGL Insurance and FGL NY Insurance each exceeded the minimum RBC requirements as of the most recent annual statutory financial statements[148]. - FGL Insurance's financial strength ratings could be adversely affected by a downgrade, increasing the cost of capital and hindering growth[149]. - Statutory surplus amounts and U.S. RBC ratios of F&G's insurance subsidiaries can fluctuate significantly due to external factors, affecting financial strength ratings[361]. - Rating agencies may change internal models, impacting the statutory capital requirements for F&G's insurance subsidiaries[363]. - Failure to meet RBC requirements could lead to regulatory actions, limiting the ability to write additional business and adversely affecting financial condition[364]. Operational Efficiency and Strategy - The company has designed an efficient corporate platform that allows for scalability and low incremental fixed operating costs[121]. - The company outsources various functions to third-party service providers to focus on core business operations[122]. - The owned distribution strategy, including investments in various distribution consolidators, exposes the company to operational and financial risks, with a focus on the performance of these businesses[339]. Risk Management - F&G Insurance has established risk limits associated with credit risk, liquidity risk, and interest rate risk, governed by the Enterprise Risk Management Committee[119]. - The company is exposed to liquidity risk, which may arise from market, insurance, investment, or operational risks, potentially leading to a shortfall in meeting near-term obligations[333][334]. - F&G's liquidity exposure includes derivative collateral market exposure, asset liability mismatch, and unexpected cash demands from insurance cash flows[335]. - The company faces significant risks from natural and man-made catastrophes, including pandemics, which could adversely affect operations and financial condition[337]. - The company is developing climate-related targets to enhance its existing risk management framework and improve understanding of climate risks[255]. - F&G's risk management framework includes ongoing monitoring of ESG-related regulations and climate risks, ensuring compliance with evolving standards[248]. Employee Engagement and Corporate Culture - As of December 31, 2024, F&G had 1,338 full-time equivalent employees, with no employees subject to collective bargaining agreements[217]. - F&G's employee turnover rates have consistently remained below national and industry-specific benchmarks, indicating strong employee retention[224]. - F&G has received multiple "Top Workplaces" designations, reflecting strong employee engagement and satisfaction[221]. - The company focuses on community engagement and charitable giving, particularly in addressing food insecurity and housing needs[226]. Investment and Financial Performance - The last financial examination by the IID found no material deficiencies in F&G Insurance's financial statements for the five-year period ending 2022[138]. - The company’s historical financial information may not accurately represent future results due to its recent separation from Fidelity National Financial, Inc. (FNF)[386]. - FNF retains significant control over the company, owning approximately 85% of its common stock, which may lead to conflicts of interest[387]. - The company may face higher ongoing capital costs compared to its previous access to FNF's cost of capital[390]. - Historical financial data prior to the separation does not account for new debt and associated interest expenses incurred post-separation[390]. - The company is exposed to potential assessments for policyholder losses due to insolvencies of other companies, which could impact financial stability[346]. Regulatory Changes and Compliance - The NAIC released new regulations in 2023 defining criteria for investments classified as bonds, which the company is implementing[166]. - The company has instituted new business procedures to comply with the revised NAIC model regulation regarding agent conduct in annuity transactions[176]. - Ongoing legal challenges to the DOL's fiduciary rule may delay its implementation and affect the insurance industry[352]. - The company has implemented a compliance program in response to the DOL's fiduciary regulations, requiring agents to acknowledge compliance with specific requirements[349]. ESG and Sustainability - F&G's governance includes a dedicated committee for overseeing sustainability risks, including climate risks as part of investment risks[227]. - The company completed a qualitative assessment of climate risks and opportunities in 2023, identifying potential impacts over short-, medium-, and long-term horizons[233]. - F&G's investment risk management integrates sustainability practices, focusing on climate-related risks and opportunities throughout the investment holding period[252]. - Changing ESG regulations may increase administrative expenses and management focus, potentially impacting access to capital[379]. - The company faces challenges in implementing ESG initiatives, which can be costly and time-consuming, potentially affecting its reputation and financial performance if goals are not met[380]. - Recent "anti-ESG" sentiment in the U.S. may lead to additional compliance obligations and reputational harm for the company[381].
F&G Annuities & Life(FG) - 2024 Q4 - Annual Report