F&G Annuities & Life Inc (FG) (Q3 2026) Earnings Call Highlights

Release Date: November 06, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• F&G Annuities & Life Inc FG achieved record core retail sales of $2.1 billion, a 24% year-over-year increase, significantly outperforming a contracting industry.
• Assets under management before flow reinsurance grew 7% year-over-year to a record $76.2 billion, driven by positive net flows.
• The retained investment portfolio is high-quality, with 97% of fixed maturities being investment grade and credit impairments remaining low and stable at 2 basis points for the first nine months.
• F&G Annuities & Life Inc (FG) is making strong progress on its operating expense target, with its expense ratio improving to 46 basis points, nearing its 45 basis point goal for year-end 2027.
• The company maintains a strong capital position with a debt-to-capital ratio below its 25% target and an estimated RBC ratio at its 400% target, providing financial flexibility.

Negative Points

• Adjusted net earnings decreased by $69 million year-over-year, primarily due to lower returns on alternative investments and the prior-year benefit from the F&G Life sale.
• Alternative investment returns were only 5% in the quarter, well below the long-term expected return of 12%, due to negative performance in the equity interest component.
• Moody’s has maintained a negative outlook on F&G Annuities & Life Inc (FG)’s ratings, citing the evolution of its stand-alone profile without the support of F&G.
• The company is experiencing elevated surrenders, which led to a $6 million after-tax increase in amortization expense and is expected to continue in the current higher rate environment.
• F&G Annuities & Life Inc (FG) has de-emphasized multi-year guaranteed annuity (MYGA) sales as returns are currently below its threshold, contributing to a decline in gross sales excluding MYGAs.

Q & A Highlights

Q: Can you discuss the drivers behind record core retail sales in fixed indexed annuities (FIA) and RILA, and whether market share has opened up amid regulatory pressures at other carriers?
A: CEO Connor Murphy attributed the record core retail quarter to sustained momentum from the sales team working with existing distribution partners, not new products or partners. He noted F&G’s FIA sales rose 12% in the first nine months of 2026 while the industry fell 6%, placing F&G around the fifth or sixth spot in FIA. RILA sales by August had already matched all of last year’s volume, though F&G remains a top-20 rather than top-10 player. He said any shelf space vacated by other carriers would be less meaningful for F&G given its heavier focus on independent marketing organizations versus the more competitive bank and broker-dealer channel.

Q: Are alternative investment returns of 12% to 14% achievable next year or in 2028, given the higher interest rate environment?
A: CEO Connor Murphy said the current expected return remains 12%. Limited partnerships, about three-quarters of the alternatives portfolio, returned over 9% in the quarter, but equity residuals dragged the total to roughly 5% due to negative market sentiment in valuation agent marks. He said early color on the fourth quarter is benign and positive, and he expects a better Q4 than Q3 but not the full 12%. He emphasized the portfolio is still maturing and returns will be revisited during the planning process.

Q: How is F&G thinking about potential NAIC risk charges on reinsurance to non-reciprocal jurisdictions like the Caymans, and what is the VM22 implementation update?
A: CFO Mike Bailey said the NAIC’s work is very manageable for F&G’s third-party reinsurance business. Most flow reinsurance partners are in Bermuda, a reciprocal jurisdiction; F&G holds assets equal to statutory reserves plus 3% to 4% overcollateralization; and every treaty is reviewed with the Iowa regulator and subject to AG55 asset adequacy testing. F&G’s Cayman entity, which cedes 80% of PRT business to differentiate white-collar and blue-collar mortality, has been reviewed by Iowa and undergoes AG55 cash flow testing. He expects VM22 to update PRT mortality requirements, after which F&G would reevaluate Cayman sessions and has the option to recapture business. The Blackstone sidecar uses full US statutory reserving with overcollateralization and full RBC. He does not expect a noteworthy capital impact from current proposals.

Q: With growth slowing and buybacks inactive in the quarter, where is capital being deployed and is capital building up?
A: CEO Connor Murphy pushed back on the premise, saying F&G achieved the growth it wanted and likely wrote more high-end core retail than expected at very profitable margins. He said the company deliberately avoided MYGAs and funding agreements where returns fell below thresholds, preserving capital to deploy when returns improve. He noted buybacks in Q1 and Q2 were opportunistic reallocations, the capital plan runs through 2029, and regulatory changes this year had roughly a $500 million capital impact that F&G navigated. CFO Mike Bailey added that the in-force block generates about $900 million to $1 billion of capital annually against roughly $300 million of holdco needs, with the balance funding new business growth. Murphy also announced the Board approved an additional $100 million of buyback capacity.

Q: What is F&G’s exposure to data centers and hyperscalers, and what risk-reward do you see?
A: CEO Connor Murphy said AI infrastructure debt is under 3% of the retained portfolio, focused on investment-grade deals with high-quality counterparties, contracts that fully amortize within the initial term, and no reliance on terminal value. He noted the mix spans longer construction and refinancing deals, mid-duration power deals, and shorter chip deals, with F&G able to select only the highest-end opportunities. He suggested recent market events could make existing investments more secure given potentially reduced supply of new deals.

Q: What is driving increased use of flow reinsurance on the FIA side, where the retained portion has dipped below 50% in recent quarters?
A: CEO Connor Murphy said the shift reflects product mix within FIA. The income product side had a particularly strong quarter and benefits from noteworthy reinsurance partners, one of which only came on board at the start of Q3, leading F&G to reinsure closer to two-thirds this period. The accumulation side uses the Blackstone sidecar. He said retention can move within the range based on the best economic return opportunity in conjunction with partners.

Q: What drove the actuarial assumption review impact, and is the $6 million after-tax DAC increase the only notable item in adjusted net earnings this quarter?
A: CFO Mike Bailey confirmed the $6 million after-tax figure is the notable adjusted net earnings item, alongside roughly $300 million of reserve releases and market risk benefit liability reductions that boosted net income. The unlocking reflects elevated surrenders, with the surrender assumption trued up to best estimate. The higher DAC amortization will persist through 2027 and normalize in 2028. He noted cost of funds improved about $11 million pre-tax sequentially including that item; normalized, the improvement was roughly $20 million, about half from favorable mortality timing flagged last quarter and the rest in line with block expectations.

Q: What are you seeing in surrender and withdrawal behavior given the rise in interest rates?
A: CFO Mike Bailey said surrenders were within the range of expectations. The 10-year Treasury rose about 83 basis points during the quarter to 5.29%, but most of the increase came at the tail end, and policyholder actions with advisors can lag. Behavior is bespoke depending on where policies sit in their surrender charge periods and market value adjustments. He continues to expect elevated surrenders in this rate environment.

Q: Has mortality in the IUL and PRT blocks leveled off for a steadier cost of funds?
A: CFO Mike Bailey said the roughly $10 million of adverse PRT mortality in Q2 was a timing issue that reversed. Normalizing for higher DAC amortization from the assumption update, cost of funds improved about $20 million period over period, with roughly half from the Q2 timing catch-up and the remaining half representing a new run rate consistent with expectations.

Q: Can you provide an update on Peak Altitude and the strategic alternatives process?

For the complete transcript of the earnings call, please refer to the full earnings call transcript.