F&G Annuities & Life(FG) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for the company as of and for the periods ended June 30, 2025 Condensed Consolidated Balance Sheets Total assets grew to $91.8 billion, driven by increases in investments, while total equity rose to $4.6 billion Condensed Consolidated Balance Sheets Highlights (in millions) | Balance Sheet Item | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total investments | $64,589 | $60,109 | | Total assets | $91,816 | $84,931 | | Contractholder funds | $59,813 | $56,404 | | Total liabilities | $87,259 | $80,855 | | Total equity | $4,557 | $4,076 | Condensed Consolidated Statements of Operations Net earnings attributable to common shareholders decreased significantly to $35 million in Q2 2025 from $198 million in Q2 2024 Key Operating Results (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $1,364 | $1,172 | $2,272 | $2,741 | | Total benefits and expenses | $1,307 | $918 | $2,241 | $2,345 | | Net earnings | $42 | $204 | $21 | $320 | | Net earnings attributable to F&G common shareholders | $35 | $198 | $10 | $309 | | Diluted EPS | $0.26 | $1.55 | $0.08 | $2.45 | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income for Q2 2025 was $104 million, a decrease from $133 million in the prior-year period Comprehensive Income (Loss) Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net earnings | $42 | $204 | $21 | $320 | | Other comprehensive income (loss) | $64 | $(70) | $253 | $37 | | Comprehensive income (loss) attributable to F&G | $104 | $133 | $272 | $355 | Condensed Consolidated Statements of Equity Total equity increased to $4.56 billion, primarily due to common stock issuance and other comprehensive income - Key equity changes for the six months ended June 30, 2025 include an issuance of common stock of +$269 million, net earnings of +$19 million, other comprehensive income of +$253 million, and common and preferred stock dividends declared of -$65 million[19] Condensed Consolidated Statements of Cash Flows A net decrease in cash of $380 million was driven by higher net cash used in investing activities Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,576 | $2,589 | | Net cash used in investing activities | $(4,273) | $(3,229) | | Net cash provided by financing activities | $1,317 | $2,603 | | Net (decrease) increase in cash | $(380) | $1,963 | Notes to Unaudited Condensed Consolidated Financial Statements This section details accounting policies and financial data covering fair value, investments, derivatives, reinsurance, and regulatory matters Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, key business trends, investment portfolio composition, liquidity, and capital resources - Key business trends include market conditions, the interest rate environment, and the aging of the U.S. population, which is expected to increase demand for retirement products[285][289][291] - The company operates in three retail channels and two institutional markets, leveraging a strategic partnership with Blackstone[295] - Profitability is driven by Assets Under Management (AUM), the spread between net investment income and costs, reinsurance fee income, and distribution margin[304] Quantitative and Qualitative Disclosures about Market Risk The company outlines its primary market risk exposures, including interest rate, equity price, and foreign currency exchange rate risks - A 100 basis point increase in interest rates would decrease the fair value of fixed maturity securities by approximately $2.9 billion[419] - A 10% decrease in market prices would lead to a net decrease in the fair value of the equity securities portfolio by approximately $34 million[420] - The company hedges substantially all of its foreign currency exposure, primarily related to the Euro, using various derivative instruments[421] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[428] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[431] PART II. OTHER INFORMATION Legal Proceedings The company is involved in ordinary course litigation, including disputes over commission payments and a data compromise from a third-party vendor - The company is a defendant in a lawsuit alleging failure to pay over $162 million in commissions and other damages, which it is vigorously contesting[250] - F&G is a defendant in two putative class action lawsuits related to a data breach involving the MOVEit file transfer software used by a third-party vendor[252][253] Risk Factors This section updates risk factors, primarily concerning the Department of Labor's new "Fiduciary Rule" and its potential impact on business operations - The DOL released a new "Fiduciary Rule" in April 2024, which significantly expands the definition of an "investment advice fiduciary" under ERISA[437] - In July 2024, a U.S. District Court stayed the effective date of the new rule, a ruling which the DOL has appealed[439][441] - The final outcome is uncertain, but if implemented, the rule could materially affect agent business practices and adversely impact F&G's business[442] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities No shares were repurchased during the quarter under the company's stock repurchase program, with $32 million remaining authorized - No shares were repurchased during the three months ended June 30, 2025[445] - As of June 30, 2025, approximately $32 million remains authorized for repurchase under the current stock repurchase program[445] Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - There were no defaults upon senior securities during the period[447] Mine Safety Disclosures This section is not applicable to the company's operations - This item is not applicable to the company[448] Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[449] Exhibits This section lists all exhibits filed with the report, including required CEO and CFO certifications and XBRL data files - The report includes certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002[452]