F&G Annuities & Life's Q1 2025: Unpacking Key Contradictions in Growth Strategy and Market Dynamics

Impact of industry slowdown and distribution investment, MYGA sales strategy and demand, FIA market growth expectations, strategic opportunity with Prudential Investment Management business, and cost of funds and market competition are the key contradictions discussed in F&G Annuities & Life's latest 2025Q1 earnings call.



Sales and Product Performance:
- F&G reported gross sales of $2.9 billion, a 17% decrease from the previous year, primarily due to lower MYGA sales which were $562 million, down from $1.3 billion in the same period last year.
- The reduction in MYGA sales was due to market volatility and challenges faced by reinsurance partners, but there has been a rebound with more MYGA business written in April compared to the entire first quarter.
- Fixed indexed annuity sales and pension risk transfer (PRT) sales remained strong, with PRT sales reaching $311 million.

Financial Results and Headwinds:
- First quarter reported adjusted net earnings were $91 million, down from $108 million in the previous year.
- The decrease was primarily due to margin compression from near-term headwinds, including excess cash from CLO prepayments and lower surrender income, as well as a weaker performance in owned distribution.
- Investment income from alternative investments was $63 million below expectations, impacting financial results.

Investment Portfolio Strategy:
- F&G maintained a diversified investment portfolio with a fixed income yield of 4.53%, despite a 6 basis points sequential decrease due to runoff of higher-yielding assets.
- The company increased its hedge ratio to 75% of floating rate assets, which are now only 5% of the total portfolio, ensuring conservatism and preparedness against economic uncertainties.

Capital Raise and Deployment:
- F&G raised $269 million through a public offering of common stock, with plans to deploy the capital into organic growth opportunities.
- The company continues to prioritize disciplined pricing and capital allocation, despite the recent market volatility.