F&G Annuities & Life(FG) - 2024 Q4 - Annual Results

Financial Performance - F&G achieved record gross sales of $15.3 billion in 2024, representing a 16% year-over-year increase[4] - The company reported net earnings of $622 million for 2024, with adjusted net earnings of $546 million, translating to $4.30 per diluted share[5] - Common Adjusted Net Earnings (ANE) for FY2024 are projected at $546 million, reflecting a significant recovery from a loss of $58 million in FY2023[61] - Adjusted net earnings attributable to common shareholders for the year ended December 31, 2024, were $546 million, including $514 million from alternative investments[137] - The company reported adjusted net earnings of $143 million for the three months ended December 31, 2024, which included $138 million from alternative investments[138] - Adjusted net earnings excluding significant items for the year ended December 31, 2024, were $657 million, reflecting a strong performance despite market volatility[137] Assets Under Management (AUM) - Assets under management (AUM) grew to $65.3 billion, up 17% year-over-year, with AUM before flow reinsurance also increasing to $65.3 billion[4] - Ending Assets Under Management (AUM) before flow reinsurance is expected to be $65.3 billion, up from $55.9 billion in FY2023[58] - The company achieved a record AUM of $53.8 billion, including retained ending AUM[60] - Assets Under Management (AUM) is reported net of reinsurance assets and includes total invested assets, investments in unconsolidated affiliates, related party loans, accrued investment income, and cash equivalents[144] Return Metrics - Adjusted return on assets (ROA) improved to 1.27% for 2024, exceeding the baseline of 1.10%[4] - The company aims to grow AUM by 50% and expand adjusted ROA to between 1.33% and 1.55% in the medium term[21] - The company expects steady growth in adjusted ROA, driven by asset growth and disciplined expense management[63] - F&G is targeting an increase in adjusted return on equity (ROE) to 13% to 14% and expanding its price-to-earnings (P/E) multiple to 7-8x[22] Capitalization and Debt - F&G's market capitalization increased to $5.3 billion at the end of 2024, up from $2.4 billion at the time of its NYSE listing[4] - The company reported a total capitalization of $8.269 billion as of year-end 2024, with a debt-to-capital ratio of 27.5%[72] - The Debt-to-Capital Ratio, excluding AOCI, is calculated by dividing total debt by total capitalization, which helps assess the company's capital position[146] - Total Capitalization, excluding AOCI, is based on total equity and total debt, offering insights into the company's capital structure[148] Investment Portfolio - The investment portfolio is conservatively positioned, with 97% of fixed income rated investment grade[46] - The CLO portfolio is well diversified, with 33% rated AAA and 40% par subordination, indicating strong structural protection[100][101] - The real estate debt portfolio has a market value of $11.2 billion, with a weighted average life of 5.7 years[111] - The CMBS portfolio has a market value of $4.0 billion, with an average NRSRO rating of A and a credit quality of 91%[118] - The commercial mortgage loan (CML) portfolio consists of 73 holdings, with an average loan size of $2 billion and a low leverage profile[125] - The investment strategy includes a focus on high-quality, directly originated specialty finance assets diversified by collateral type[97] Shareholder Returns - F&G returned $125 million of capital to shareholders in FY2024 through common and preferred dividends[81] - The total outstanding shares were 126,094,481 as of September 30, 2024, and are expected to increase to 126,792,844 by December 31, 2024[134] Economic Outlook - The U.S. retirement and middle markets are projected to grow significantly, with a 30% increase in the population aged 65-100 over the next 25 years[30] - The company continues to see sustainable demand for fixed annuity products, driven by current economic conditions and demographic trends[32] Risk Management - In a moderate recession scenario, the portfolio is expected to incur a loss of $0.1 billion, representing a loss percentage of -0.5% for corporates and municipals[86] - Under severe recession conditions, the total portfolio loss is projected at $1.1 billion, with a loss percentage of -2.3%[86] - The stress test indicates that after severe stress, management actions of $1.3 billion are sufficient to return to positive excess capital[89] Non-GAAP Measures - Management considers these non-GAAP financial measures useful for internal assessments and for investors and analysts to evaluate the company's financial health and performance[144] - Non-GAAP adjustments for the year ended December 31, 2024, included a $214 million market-related liability adjustment[136] - The company reported a change in fair value of reinsurance-related embedded derivatives of $33 million for the year ended December 31, 2024[136]