F&G Annuities & Life (FG) 2024 KBW Insurance Conference summary

Strategic growth and financial targets

• Five-year plan aims for 50% asset growth and ROA expansion from 110 to 133–155 basis points, with ROE targeted to rise by 300–400 basis points; current performance is ahead of schedule.

• ROA improvement is driven by investment optimization, operational scale, floaters, and flow reinsurance, with a current sustainable jump-off point at 1.24%.

• Flow reinsurance, especially on MYGA business, is highly accretive, contributing 14 basis points to spread last quarter and freeing up capital for growth.

• Capital generation exceeds $1 billion from in-force business, with capital redeployed for growth and dividends; buybacks are reserved for market dislocations.

• ROE is currently around 12% year-to-date, with further upside expected from continued ROA improvements.

Market dynamics and product outlook

• Annuity demand is expected to remain strong even if rates decline, supported by large cash reserves and demographic trends.

• RILA products target a younger, risk-seeking demographic and are expected to provide incremental business rather than cannibalize existing FIA sales.

• MYGA sales are supported by 1035 exchanges and relative rate advantages, making the business resilient to rate changes.

• Surrender activity has increased as expected in a higher rate environment, but new business is stickier and margins remain strong.

• Competitive environment remains stable, with disciplined pricing and no significant shifts in market dynamics.

Distribution and investment strategy

• Own distribution strategy involves $680 million invested in IMOs, focusing on long-term relationships and diversification rather than controlling sales.

• Investments in IMOs yield higher returns than retained annuity sales and offer potential for future synergies and possible spin-out.

• Opportunities exist for back-office synergies and collaboration among portfolio companies, with ongoing evaluation of further investments.

• Capital deployment prioritizes business growth and distribution investments over buybacks, with flexibility to pursue roll-ups and new opportunities.