F&G Annuities & Life(US:FG)2024-11-09 18:00Financial Data and Key Metrics Changes - Gross sales reached $3.9 billion in Q3 2024, a 39% increase year-over-year, with year-to-date sales at $11.8 billion, up 30% from the first nine months of 2023 [7] - Adjusted net earnings attributable to common shareholders for Q3 was $156 million or $1.22 per share, up 21% from $148 million in Q3 2023 [22] - Adjusted ROA, excluding significant items, was 132 basis points in Q3, up 12 basis points from 120 basis points in Q3 2023 [23] Business Line Data and Key Metrics Changes - Retail sales from agency bank and broker-dealer channels were a record $3.5 billion in Q3, nearly double the prior year quarter, bringing year-to-date retail sales to $9.5 billion [7] - Pension risk transfer (PRT) sales exceeded $300 million in Q3, totaling $2.1 billion for the first ten months of 2024, surpassing full-year 2023 sales [10] - Net sales of $2.4 billion increased 4% over the prior year quarter [11] Market Data and Key Metrics Changes - The company reported a record $62.9 billion in assets under management (AUM) at the end of Q3, a 20% increase year-over-year [13] - The investment portfolio remains diversified, with 96% of fixed maturities being investment-grade [14] Company Strategy and Development Direction - The company aims to grow AUM by 50% and expand adjusted ROA to 133 to 155 basis points by 2025 [19] - F&G is focused on sustainable asset growth through retail and pension risk transfer strategies, enhancing investment margins, and diversifying earnings [18] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong demand for retirement savings products, driven by demographic trends and favorable market conditions [8] - The company anticipates growth in PRT sales, projecting $2 billion to $4 billion in annual sales, depending on market conditions [42] Other Important Information - The company has invested $680 million in owned distribution, expecting EBITDA of $65 million to $70 million in 2024 [17] - The balance sheet remains strong, with equity attributable to common shareholders at $5.3 billion and a debt to capitalization ratio of 26.5% [29][30] Q&A Session Summary Question: Flow reinsurance growth opportunities - Management indicated optimism about flow reinsurance growth, emphasizing the importance of selecting quality partners and the absence of constraints on availability [36] Question: Impact of higher surrender charges - Management noted that elevated surrenders are expected to continue as long as interest rates remain high, but underlying ROA improvement is evident [40] Question: Outlook for funding agreements and PRTs - Management remains bullish on retail sales growth and expects strong PRT sales, with a robust pipeline for future opportunities [42] Question: Assumption review related to elevated surrenders - Management explained that elevated surrenders led to adjustments in assumptions, but the impact on future returns is expected to be minor [45] Question: Capitalization and management of offshore reinsurance - Management clarified that offshore reinsurance is conservatively managed and subject to regulatory approval, ensuring compliance with capital requirements [48]