Financial Performance Overview

F&G, a leading provider of annuity and life insurance products, has reported strong financial results for the first half of 2024. The company’s total revenues increased to $2,741 million for the six months ended June 30, 2024, up from $2,037 million in the same period of 2023. This growth was driven by higher sales across F&G’s product lines, including indexed annuities, fixed rate annuities, funding agreements, and pension risk transfer (PRT) solutions.

Revenue and Profit Trends

F&G’s life insurance premiums and other fees, which include premiums on life-contingent PRT and traditional life insurance products, as well as policy rider fees and surrender charges, increased to $1,205 million in the first half of 2024, up from $941 million in the same period of 2023. This was primarily due to higher PRT premiums and increased surrender charges on indexed annuity policies.

Interest and investment income also grew, reaching $1,300 million in the first six months of 2024, compared to $1,044 million in the prior-year period. This increase was driven by higher investment returns, particularly from alternative investments, as well as growth in the company’s asset base.

Net earnings attributable to F&G common shareholders were $309 million for the six months ended June 30, 2024, a significant improvement from a net loss of $65 million in the first half of 2023. This strong profitability was supported by the growth in revenues, as well as disciplined expense management and effective hedging strategies.

Strengths and Weaknesses

One of F&G’s key strengths is its diversified product portfolio, which includes indexed annuities, fixed rate annuities, IUL insurance, immediate annuities, funding agreements, and PRT solutions. This breadth of offerings allows the company to cater to the evolving needs of its target market of middle-income Americans.

F&G has also demonstrated its ability to effectively manage market risks, such as interest rate and equity market volatility, through its hedging strategies. The company’s use of derivatives, including equity options and futures contracts, has helped to offset the impact of market movements on its indexed annuity and IUL products.

However, F&G’s profitability remains sensitive to interest rate fluctuations. The company is required to pay guaranteed minimum crediting rates on its annuity products, even if investment earnings decline. This could negatively impact earnings if interest rates remain low for an extended period.

Additionally, the company’s results can be affected by changes in policyholder behavior, such as increased policy surrenders as interest rates rise. This could lead to lower earnings and cash flows for F&G.

Outlook and Future Prospects

F&G is well-positioned to capitalize on the growing demand for retirement savings and income products, driven by the aging of the U.S. population. The company’s focus on the underserved middle-income market represents a significant growth opportunity, as evidenced by the expansion of the fixed index annuity and registered index-linked annuities (RILA) markets in recent years.

To support its growth, F&G has been actively investing in its distribution channels, including independent marketing organizations (IMOs), banks, and broker-dealers. The company has also expanded into institutional markets, such as funding agreement-backed notes (FABN) and pension risk transfer (PRT) solutions, which leverage its existing capabilities and strategic partnerships.

Looking ahead, F&G’s management remains focused on disciplined expense management, effective risk management, and the continued development of innovative products to meet the evolving needs of its target market. The company’s strong liquidity position, with $3.5 billion in cash and short-term investments as of June 30, 2024, provides the financial flexibility to pursue strategic initiatives and support future growth.

Overall, F&G’s solid financial performance, diversified product portfolio, and focus on the growing retirement market position the company well for continued success in the years to come.