8-K: F&G Reports Record AUM, Mixed Q4/FY25 Earnings

F&G Annuities & Life, Inc. reported record assets under management for full year 2025, despite a decline in both GAAP and adjusted net earnings compared to the prior year.

Summary

• Net earnings attributable to common shareholders for the fourth quarter were $124 million ($0.92 per diluted share), down from $323 million ($2.50 per share) in Q4 2024.
• Full year net earnings attributable to common shareholders were $248 million ($1.88 per share), down from $622 million ($4.88 per share) for the year ended December 31, 2024.
• Adjusted net earnings attributable to common shareholders for the fourth quarter were $123 million ($0.91 per share), compared to $143 million ($1.12 per share) for Q4 2024.
• Full year adjusted net earnings were $482 million ($3.64 per share), compared to $546 million ($4.30 per share) for the year ended December 31, 2024.
• Achieved record assets under management before flow reinsurance of $73.1 billion as of December 31, 2025, an increase of 12% over year-end 2024, including retained AUM of $57.6 billion.
• Gross sales for the full year 2025 were $14.6 billion, including $3.4 billion in the fourth quarter.
• Net sales for the full year 2025 were $10.0 billion, and $2.3 billion for the fourth quarter.
• The estimated risk-based capital (RBC) ratio for the primary operating subsidiary was approximately 430% as of December 31, 2025, exceeding the 400% target.
• F&G returned $137 million of capital to shareholders from common and preferred dividends during the full year 2025.
• FNF completed the distribution of approximately 12% of F&G common stock to FNF shareholders on December 31, 2025, increasing F&G's public float to approximately 30%.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed report. While the company achieved record AUM and maintained a strong capital position, the significant decline in both GAAP and adjusted net earnings, coupled with underperforming alternative investments, tempers the positive strategic progress.

Positives

• Record assets under management before flow reinsurance reached $73.1 billion as of December 31, 2025, marking a 12% increase year-over-year.
• The investment portfolio demonstrates excellent credit performance, with 97% of fixed maturities being investment grade and credit-related impairments averaging a low 6 basis points over the past five years.
• A strong solvency position is maintained with an estimated risk-based capital (RBC) ratio of approximately 430% for the primary operating subsidiary, surpassing the 400% target.
• The company is making strong progress toward its medium-term Investor Day targets, focusing on a more fee-based, higher margin, and less capital-intensive business model.
• F&G returned $137 million of capital to shareholders through common and preferred dividends during the full year 2025.
• The public float expanded to 30% following the distribution of approximately 12% of FNF's ownership of F&G to FNF shareholders, enhancing market liquidity and investor access.
• Book value per common share, excluding AOCI, increased to $44.43 as of December 31, 2025, up $0.78 per share from December 31, 2024, after the effect of the common stock offering.
• The operating expense ratio improved by 10 basis points, reaching 50 bps in 2025 compared to 60 bps in 2024, reflecting disciplined expense management and scale benefits.

Negatives

• Net earnings attributable to common shareholders significantly decreased to $124 million in Q4 2025 from $323 million in Q4 2024, and to $248 million for FY2025 from $622 million for FY2024.
• Adjusted net earnings attributable to common shareholders decreased to $123 million in Q4 2025 from $143 million in Q4 2024, and to $482 million for FY2025 from $546 million for FY2024.
• Investment income from alternative investments was below management's long-term expected return of approximately 10% for both Q4 2025 ($65 million, or $0.47 per share) and FY2025 ($278 million, or $2.03 per share).
• Gross sales for full year 2025 were $14.6 billion, down from the all-time record of $15.3 billion in 2024.
• Net sales for full year 2025 were $10.0 billion, down from $10.6 billion in 2024.
• Higher interest expense on debt partially offset benefits from asset growth, growing fees from accretive flow reinsurance, and disciplined expense management.

Risks

• General economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance.
• Consumer spending, government spending, the volatility and strength of the capital markets, and investor and consumer confidence.
• Foreign currency exchange rates, commodity prices, inflation levels, changes in trade policy, tariffs and trade sanctions on goods, trade wars, and supply chain disruptions.
• Natural disasters, public health crises, international tensions and conflicts, geopolitical events, terrorist acts, labor strikes, political crises, accidents and other events.
• Concentration in certain states for distribution of products.
• The impact of interest rate fluctuations and equity market volatility or disruption.
• The 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 and regulation of the 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

F&G remains focused on continuing to grow its core business and delivering long-term shareholder value in 2026. The company is executing on a strategy toward a more fee-based, higher margin, and less capital-intensive business model, aiming to increase fee-based earnings to approximately 25% by year-end 2028 from an estimated 15% in 2025. Management expects steady and growing adjusted net earnings over time, excluding significant items.

Management Comments

• "We delivered a strong finish to an outstanding year, highlighted by record assets under management before flow reinsurance of $73 billion fueled by $14.6 billion of gross sales in full year 2025, including $9 billion of gross sales in our core products – indexed annuities, indexed universal life and pension risk transfer."
• "Our high quality, diversified investment portfolio continues to perform extremely well with credit-related impairments remaining stable and below our expectations."
• "We are executing on our strategy toward a more fee-based, higher margin and less capital intensive business model to drive long-term growth."
• "We took action to improve our operating expense ratio by 10 basis points as compared to year end 2024 and we have strengthened our capital position, augmented by the launch of our reinsurance sidecar."
• "At the end of the year, we expanded our public float to 30% to enhance market liquidity and broaden investor access to the stock."
• "Looking ahead to 2026, we remain focused on continuing to grow our core business and delivering long-term shareholder value."

Industry Context

StockSavvy.ai notes that F&G's performance aligns with broader industry trends of increasing demand for retirement savings products, particularly fixed annuities, as U.S. consumers seek to lock in higher interest rates amidst declining money market rates. The company is well-positioned to capitalize on the growing retirement population, with over 11,000 Americans turning 65 daily, driving sustainable demand for guaranteed income solutions. The strategic shift towards a more fee-based, less capital-intensive model reflects an industry-wide effort to enhance profitability and reduce risk in a dynamic financial landscape.

Comparison to Industry Standards

• F&G's investment portfolio, with 97% of fixed maturities being investment grade and average credit-related impairments of 6 basis points over five years, demonstrates strong credit quality, comparable to leading insurance and annuity providers.
• The estimated RBC ratio of approximately 430% for its primary operating subsidiary exceeds its 400% target, indicating a robust capital position relative to regulatory benchmarks and industry peers.
• The company's strategic shift towards a more fee-based business model, targeting 25% fee-based earnings by 2028, is a common strategy among diversified financial services firms like BlackRock and Blackstone, aiming for more stable revenue streams and higher valuations.
• The expansion of public float to 30% through FNF's distribution of shares enhances market liquidity, a key factor for institutional investors comparing F&G to larger, more liquid competitors in the financial sector.

Stakeholder Impact

• Shareholders: Potential for long-term value creation through strategic shift and capital returns, but short-term earnings decline may impact sentiment. Increased public float enhances liquidity.
• Customers: Continued strong investment portfolio performance and diversified product offerings aim to meet retirement savings needs.
• Employees: Continued focus on growth and strategic evolution suggests stability and potential for development.
• Regulatory Authorities: Maintenance of strong RBC ratio (430% vs. 400% target) demonstrates compliance and financial health.

Next Steps

• Close the transaction to sell the Bermuda legal entity, F&G Life Re Ltd, including the remaining inforce block of approximately $1.9 billion, to Ancient Financial Holdings LP on March 1, 2026.
• Host a conference call with the investment community on February 20, 2026, at 9:00 a.m. Eastern Time to discuss the fourth quarter and full year 2025 results.
• Continue to grow the core business and deliver long-term shareholder value in 2026.
• Execute on the strategy to transition to a more fee-based, higher margin, and less capital-intensive business model, targeting approximately 25% fee-based earnings by year-end 2028.
• Maintain an efficient capital structure with a long-term debt-to-total capitalization (excluding AOCI) target of approximately 25% and a 400% RBC target.
• Potentially implement opportunistic share repurchases when shares trade at a discount to intrinsic value.
• Explore opportunistic M&A to expand the value of Owned Distribution through additional investments or new strategic partners.

Key Dates

Recommendation

While F&G demonstrated strong operational achievements like record AUM and a robust capital position, the significant year-over-year decline in both GAAP and adjusted net earnings, coupled with alternative investment income falling below expectations, presents a mixed financial picture. The strategic shift towards a more fee-based model and the increased public float are positive long-term drivers, but the immediate earnings performance warrants a cautious 'hold' recommendation as investors assess the execution of the strategy and the recovery of alternative investment returns.

Keywords

Annuities, Life Insurance, Financial Results, Earnings Report, Assets Under Management, AUM, Adjusted Net Earnings, Capital Return, Risk-Based Capital, RBC, Investment Portfolio, Fixed Maturities, Alternative Investments, Reinsurance, Corporate Governance, Shareholder Value, NYSE: FG, F&G Annuities & Life