F&G Annuities & Life(FG) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - F&G Annuities & Life, Inc. reported record gross sales of $15.3 billion for the full year 2024, a 16$3.5 billion in the fourth quarter [8] - Adjusted net earnings for Q4 2024 were $153 million, up 17$131 million in Q4 2023, and for the full year 2024, adjusted net earnings were $657 million, a 22$539 million in 2023 [36] - The company achieved a record adjusted return on equity (ROE) of over 12% in Q4 2024, compared to approximately 10% in Q4 2023 [42] Business Line Data and Key Metrics Changes - Retail channel sales reached $12 billion for the full year, a 20$3.3 billion for the year, with pension risk transfer (PRT) sales of nearly $2.3 billion, reflecting a 15$1 billion for the full year, down from $1.6 billion in 2023, with no funding agreements in Q4 [15] Market Data and Key Metrics Changes - The company’s assets under management (AUM) grew to a record$65.3 billion at the end of Q4 2024, a 17% increase from Q4 2023 [18] - The retained portfolio was high quality, with 97% of fixed maturities being investment grade, and the company holds very little office exposure at 1.7% of the total portfolio [19][20] Company Strategy and Development Direction - The company is focused on diversifying earnings beyond spread-based sources and driving margin expansion through strategic owned distribution companies, which generated EBITDA of 65 million in 2024 [24] - F&G Annuities & Life, Inc. aims to grow AUM by 50% and expand adjusted ROA to 133 to 155 basis points, while increasing adjusted ROE to 13% to 14% [48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing secular demand for their products, particularly as baby boomers age and seek fixed income solutions [64] - The company anticipates a moderate growth pace moving forward, focusing on sustainable asset growth and diversifying earnings through middle-market life insurance and owned distribution strategies [49] Other Important Information - The company has appointed Wendy Young as Chief Liability Officer and Connor Murphy as the new CFO, reflecting the importance of reinsurance and financial management in their growth strategy [27][30] - The company returned 125 million of capital to shareholders through dividends in 2024 and received upgrades in financial strength ratings from AM Best and Moody's [25] Q&A Session Summary Question: Can you talk about the evolving organizational structure at the company? - Management indicated that the organizational changes are in response to significant growth and opportunities in new distribution channels, particularly in the offshore environment [54] Question: Can you discuss the impact of industry lawsuits related to pension risk transfer? - Management noted that they have not felt a meaningful impact from industry lawsuits and continue to see opportunities in the $100 million to$1 billion deal size [57] Question: What is the outlook for growth in net sales or retained AUM? - Management remains optimistic about growth, citing strong secular demand and the addition of distribution partners as key drivers [63] Question: How do you expect the ROA to trend from here? - Management expects ROA to rebound in 2025, with adjustments made to asset allocation and renewal rate settings to mitigate any compression [71] Question: What is the outlook for MYGA sales? - Management believes that demand for MYGA remains strong, despite recent declines, and does not anticipate a significant secular decline in demand [114] Question: Can you touch on the regulatory environment and its impact? - Management acknowledged the complexity of the regulatory landscape and emphasized the importance of transparency and communication with regulators [117]