8-K: F&G Annuities & Life Posts Strong Q3 2025 Results

F&G Annuities & Life reported robust third-quarter 2025 financial results, driven by record assets under management and strong sales across all product lines.

Summary

• Net earnings attributable to common shareholders were $114 million, or $0.85 per diluted share, a significant improvement from a net loss of $10 million, or $0.08 per share, in Q3 2024.
• Adjusted net earnings attributable to common shareholders increased to $165 million, or $1.22 per share, from $156 million, or $1.22 per share, in Q3 2024.
• Assets under management (AUM) before flow reinsurance reached a record $71.4 billion, up 14% year-over-year from $62.9 billion in Q3 2024.
• Retained AUM grew 8% year-over-year to $56.6 billion.
• Gross sales for the quarter were $4.2 billion, an 8% increase from $3.878 billion in Q3 2024, marking one of the best sales quarters in company history.
• Net sales were $2.8 billion, up from $2.4 billion in Q3 2024.
• The company returned $33 million in capital to shareholders through common and preferred dividends during the quarter.
• Operating expense to AUM before flow reinsurance improved to 52 basis points, down 10 basis points from Q3 2024, with further improvement anticipated by year-end.

Sentiment

Score: 8

Explanation: The company reported strong financial results with significant growth in net earnings, record AUM, and robust sales. Strategic initiatives like the reinsurance sidecar are progressing well, and expense management is effective. However, adjusted ROA and ROE saw slight year-over-year declines, and alternative investment income was below management's long-term expectations.

Positives

• Net earnings significantly improved to $114 million from a $10 million loss year-over-year.
• Adjusted net earnings increased to $165 million from $156 million year-over-year.
• Record assets under management before flow reinsurance of $71.4 billion, a 14% increase year-over-year.
• Strong gross sales of $4.2 billion, an 8% increase year-over-year, representing one of the best sales quarters in company history.
• Net sales increased to $2.8 billion from $2.4 billion year-over-year.
• Excellent credit performance in the investment portfolio, with 96% of fixed maturities being investment grade and credit-related impairments remaining low and stable at an average of 6 basis points over the past five years.
• Operating expense to AUM before flow reinsurance improved to 52 basis points, a 10 basis point reduction from Q3 2024.
• Successful launch of a new reinsurance sidecar, effective August 1, 2025, with approximately $1 billion in anticipated capital commitments, enhancing growth capital and moving towards a more capital-light business model.
• Book value per common share, excluding AOCI, increased to $44.07 as of September 30, 2025, from $42.28 as of September 30, 2024.
• The company is on track to achieve its medium-term Investor Day targets.

Negatives

• Adjusted return on assets (ROA) decreased to 0.87% in Q3 2025 from 1.05% in Q3 2024.
• Adjusted return on equity (ROE) excluding AOCI slightly decreased to 8.8% in Q3 2025 from 9.1% in Q3 2024.
• Investment income from alternative investments was $67 million ($0.48 per share) below management's long-term expected return of approximately 10% in Q3 2025.
• Higher interest expense on debt partially offset asset growth and margin improvements.

Risks

• General economic conditions, including prevailing interest and unemployment rate levels and stock and credit market performance.
• Volatility and strength of the capital markets, investor and consumer confidence.
• Foreign currency exchange rates, commodity prices, and inflation levels.
• Changes in trade policy, tariffs, trade sanctions, and trade wars.
• Supply chain disruptions, natural disasters, public health crises, international tensions and conflicts, geopolitical events, terrorist acts, labor strikes, political crisis, and accidents.
• Concentration in certain states for distribution of products.
• Impact of interest rate fluctuations and equity market volatility or disruption.
• Impact of credit risk of counterparties.
• Changes in assumptions and estimates regarding amortization of deferred acquisition costs, deferred sales inducements, and value of business acquired balances.
• Regulatory changes or actions, including those relating to regulation of financial services affecting underwriting of insurance products, sale, underwriting and pricing of products, and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of insurance subsidiaries to make cash distributions.

Future Outlook

The company continues to make strong progress toward the medium-term targets set out at its 2023 Investor Day, which include growing AUM by 50%, expanding adjusted ROA ex significant items to 1.33% to 1.55%, increasing adjusted ROE ex AOCI and significant items to 13% to 14%, and expanding its P/E multiple to 7-8x. Further improvement in the ratio of operating expense to AUM before flow reinsurance is expected by the end of the year. The company anticipates becoming a more fee-based, higher-margin, and capital-light business with strong cash flow generation in future years.

Management Comments

• "We delivered outstanding third quarter results highlighted by record assets under management before flow reinsurance of $71 billion fueled by one of our best sales quarters in history, the launch of our new reinsurance sidecar, and strong performance across our business through the third quarter as we execute on our strategy and make continued progress towards our 2023 Investor Day targets."
• "Our business continues to benefit from increased scale and disciplined expense management, as our ratio of operating expense to AUM before flow reinsurance has improved to 52 basis points, down 10 basis points from the third quarter of 2024, with further improvement expected by the end of the year."
• "Our high quality investment portfolio is performing well and credit related impairments remain below our pricing assumption."
• "F&G is becoming a more fee based, higher margin and capital light business as we leverage our position as one of the industry's largest sellers of annuities and life insurance."

Industry Context

F&G operates in large and growing U.S. retirement and middle markets, benefiting from secular tailwinds such as consumers increasingly relying on personal savings for retirement income and a growing retirement population. The company's focus on fixed annuities provides an attractive alternative to traditional investments, especially as money market rates may decline, prompting consumers to lock in higher interest rates. The launch of the reinsurance sidecar aligns with an industry trend towards capital-light business models and fee-based earnings.

Comparison to Industry Standards

• The company's investment portfolio is performing well, with 96% of fixed maturities being investment grade, and credit-related impairments averaging 6 basis points over the past five years, remaining below pricing assumptions for the first nine months of 2025. This indicates strong asset quality and risk management compared to general market expectations for credit performance.
• F&G is leveraging its position as one of the industry's largest sellers of annuities and life insurance, suggesting a competitive advantage in market share and scale.
• The company's strategic shift towards a more fee-based, higher-margin, and capital-light business model, including the reinsurance sidecar, positions it favorably against competitors by enhancing return on equity and cash flow generation.

Stakeholder Impact

• Shareholders: Positive impact due to significant increase in net earnings, record AUM, strong sales growth, and continued capital return through dividends. The company is on track to meet Investor Day targets, aiming for ROE expansion and BVPS growth.
• Customers: Strong demand for retirement savings products and insurance solutions indicates continued customer trust and satisfaction.
• Employees: The company is headquartered in Des Moines, IA, with ~1,200 employees, and has been recognized as a Top Workplaces company for 7 consecutive years, suggesting a positive impact on employees.
• Creditors: The investment portfolio's excellent credit performance (96% investment grade fixed maturities) and managed debt-to-capitalization ratio (26.4% vs. 25% target) indicate a stable financial position, positively impacting creditors.

Next Steps

• Host a conference call with the investment community on November 7, 2025, to discuss Q3 2025 results.
• Continue progress towards medium-term Investor Day targets (grow AUM by 50%, expand adjusted ROA ex significant items to 1.33%-1.55%, increase adjusted ROE ex AOCI and significant items to 13-14%, expand P/E multiple to 7-8x).
• Further improve the ratio of operating expense to AUM before flow reinsurance by the end of the year.
• Maintain efficient capital structure, targeting long-term debt-to-total capitalization excl. AOCI of approximately 25% and maintaining 400% RBC for the primary insurance operating subsidiary.
• Continue returning capital to shareholders through common dividend payout with potential targeted increases over time.
• Opportunistic share repurchases when shares trade at a discount to intrinsic value.
• Opportunistic M&A to expand the value of Owned Distribution.

Key Dates

Recommendation

The filing demonstrates robust financial performance with a significant turnaround from a net loss to strong net earnings, coupled with record assets under management and impressive sales growth. Strategic initiatives like the reinsurance sidecar are enhancing capital efficiency and positioning the company for future growth in a capital-light manner. While adjusted ROA and ROE saw slight year-over-year declines and alternative investment income was below expectations, the overall trajectory, disciplined expense management, and commitment to shareholder returns (dividends, potential buybacks) are highly positive. The company is actively pursuing its Investor Day targets, which, if achieved, promise substantial shareholder value creation. The strong credit quality of the investment portfolio further underpins financial stability.

Keywords

Annuities, Life Insurance, Financial Results, Assets Under Management, Sales Growth, Reinsurance, Investment Portfolio, Adjusted Net Earnings, Return on Equity, Capital Management, SEC Filing, Insurance Solutions, Fixed Indexed Annuity, Pension Risk Transfer, MYGA, IUL, Funding Agreements