F&G Annuities & Life(FG) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted net earnings for Q3 2023 were $120 million or $0.96 per share, up 28% from $116 million in Q3 2022 [22][23] - Adjusted return on assets was 119 basis points compared to 111 basis points in the prior year quarter [23] - GAAP book value excluding AOCI was $5.4 billion or $43.30 per share, reflecting a 6% increase over the sequential quarter [26] Business Line Data and Key Metrics Changes - Growth sales for the first nine months of 2023 were $9.1 billion, with net sales of $6.7 billion, exceeding the goal of $6 billion to $7 billion [5][6] - Institutional market sales in Q3 were $900 million, with $500 million from pension risk transfers and $400 million from funding agreements [7] - Retail channel sales in Q3 were $1.9 billion, a decrease of 17% from Q3 2022 [43] Market Data and Key Metrics Changes - The company reported a sharp increase in submitted annuity premiums in September and October, indicating strong growth potential for Q4 [14] - The investment portfolio is high quality, with 95% of fixed maturities being investment grade, and credit-related impairments averaging five basis points over the past three years [46] Company Strategy and Development Direction - The company plans to launch a new Registered Index Link Annuity (RILA) product in Q1 2024, enhancing its retail product suite [16] - F&G aims for sustainable asset growth through retail and pension risk transfer strategies, with a target of $12 to $13 billion in annual growth sales for 2023 [13][20] - The company is positioned to benefit from a higher rate environment and plans to continue evaluating hedging opportunities for floating rate assets [19][65] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in finishing 2023 strong and being well-positioned for 2024, citing record annuity sales as consumers seek attractive solutions [15] - The company highlighted the importance of maintaining a disciplined capital management process while executing its diversified growth strategy [40] Other Important Information - F&G signed an agreement to acquire a majority ownership stake in an annuity IMO for approximately $270 million, expected to close in early 2024 [25] - The company returned $27 million of capital to shareholders in Q3, including $25 million in common dividends and $2 million in share repurchases [28] Q&A Session Summary Question: What are the key swing factors for annual growth sales? - Management indicated that the primary source of capital return will be the dividend, and they expect to be at the higher end of the annual sales range due to a strong fourth quarter pipeline [60][34] Question: What is the expected payout ratio compared to peers? - Management noted that the current dividend opens up a set of investors interested in a steady and growing dividend stream, while also emphasizing the importance of reinvesting in the business for growth [70][71]