F&G Annuities & Life Inc. (FG) Q1 2025 Earnings: Navigating Challenges with Strategic Momentum

F&G Annuities & Life Inc. (FG) delivered a mixed but cautiously optimistic performance in Q1 2025, balancing improved adjusted earnings against lingering GAAP net losses. The earnings call transcript, available on the company’s investor relations site, highlighted progress in key areas like asset growth and capital management, while underscoring the persistent headwinds facing the annuities sector. Here’s what investors need to know.

Key Financial Takeaways
FG reported a GAAP net loss of $25 million for Q1 2025, a significant improvement from the $111 million loss in the same period last year. However, the adjusted net earnings rose to $91 million ($0.72 per share), marking a 45% increase over Q1 2024’s adjusted earnings of $63 million. This divergence between GAAP and non-GAAP results reflects the company’s ongoing efforts to normalize results amid volatile market conditions and regulatory changes.

The star of the quarter was the record $67.4 billion in assets under management (AUM) before flow reinsurance—a 12% year-over-year jump. This growth underscores FG’s ability to attract capital amid rising interest in annuities as a retirement stability tool.

Strategic Priorities in Focus
CEO and CFO commentary during the call emphasized three strategic pillars:
1. Capital Allocation: FG is prioritizing debt reduction and shareholder returns. The company highlighted its progress toward its 2023 Investor Day targets, including maintaining a strong liquidity position.
2. Equity Offerings: Management noted plans to explore additional capital raises to support growth, though specifics remain under wraps.
3. Product Innovation: With the Spring 2025 investor presentation referencing new annuity products tailored to rising interest rates, FG aims to capitalize on demand for income-focused solutions.

The Q1 financial supplement also provided granular details on non-GAAP reconciliations, including adjustments for items like derivatives and deferred policy acquisition costs—a move likely aimed at boosting transparency for investors.

Challenges and Risks
Despite the positives, FG faces hurdles. The GAAP net loss, though narrowed, remains a red flag. Rising interest rates and volatile equity markets—key drivers of annuity profitability—could pressure margins further. Additionally, the company’s reliance on non-GAAP metrics to present its financial health risks skepticism from investors wary of “adjusted” results masking underlying issues.

The earnings call also hinted at operational complexity: the $67.4 billion AUM figure excludes flow reinsurance, a hedging tool that dilutes top-line growth but protects against risk. This trade-off is standard in the industry but underscores the delicate balancing act FG must maintain between growth and stability.

Market Context and Valuation
FG’s stock has lagged peers like Prudential (PRU) and MetLife (MET) over the past year, reflecting broader sector underperformance. However, the Q1 results—particularly the adjusted earnings beat—could catalyze a reevaluation.

Conclusion: A Steady Hand in Uncertain Waters
FG’s Q1 results paint a picture of a company making deliberate strides despite a challenging environment. The adjusted earnings improvement and record AUM suggest strong execution in its core annuities business, while strategic moves like capital management and product innovation position it to capitalize on long-term trends.

However, the GAAP net loss—a reminder of persistent operational pressures—means investors must weigh near-term risks against FG’s long-game strategy. With $67.4 billion in AUM and a 77% reduction in GAAP losses year-over-year, FG appears to be navigating its way toward sustainable growth. For investors seeking exposure to the annuities sector, this quarter’s results offer both hope and a call to remain vigilant.

The road ahead hinges on FG’s ability to convert AUM growth into consistent GAAP profitability—a balancing act that will define its valuation in the quarters to come.