Overview of F&G’s Financial Performance

F&G, a leading provider of annuities and life insurance products, has reported its financial results for the three and nine months ended September 30, 2024. The company’s performance reflects strong growth in its core business lines, as well as strategic investments to expand its distribution capabilities and product offerings.

Revenue and Profit Trends

F&G’s total revenues for the three months ended September 30, 2024 were $1,444 million, up from $851 million in the same period of 2023. This increase was driven by higher life insurance premiums and other fees, as well as strong investment income and recognized gains.

For the nine months ended September 30, 2024, total revenues were $4,185 million, compared to $2,888 million in the prior-year period. The growth was primarily attributable to higher sales of annuity and life insurance products, as well as improved investment performance.

Net earnings (loss) attributable to F&G common shareholders for the three months ended September 30, 2024 was $(10) million, compared to $306 million in the same period of 2023. The decrease was largely due to higher benefits and expenses, including market-related liability movements and increased depreciation and amortization.

For the nine months ended September 30, 2024, net earnings attributable to F&G common shareholders was $299 million, up from $241 million in the prior-year period. This improvement was driven by the growth in revenues, partially offset by higher benefits and expenses.

Strengths and Weaknesses

One of F&G’s key strengths is its diversified product portfolio, which includes indexed annuities, fixed rate annuities, indexed universal life insurance, and pension risk transfer solutions. This breadth of offerings allows the company to meet the evolving needs of its target market of middle-income Americans.

Another strength is F&G’s strong distribution capabilities, with deep, long-tenured relationships with leading independent marketing organizations (IMOs) and its recent expansion into the bank and broker-dealer channels. This multi-channel approach has enabled the company to drive consistent sales growth.

F&G has also made strategic investments to expand its institutional business, including the launch of a Funding Agreement Backed Notes (FABN) program and a pension risk transfer (PRT) solutions business. These initiatives leverage the company’s existing spread-based capabilities and strategic partnership with Blackstone.

One potential weakness is F&G’s exposure to interest rate risk. The company’s fixed rate annuities and indexed annuities have guaranteed minimum crediting rates, which can negatively impact earnings if investment portfolio yields decline. Conversely, rising interest rates could lead policyholders to surrender existing policies with high guaranteed rates, also impacting earnings and cash flows.

Outlook and Future Prospects

F&G believes the aging of the U.S. population will increase demand for its indexed annuity and indexed universal life products, as the “baby boomer” generation prepares for retirement. The company sees the underserved middle-income market as a major growth opportunity, as many Americans seek the financial certainty that annuity products can provide.

The company’s strategic investments in distribution, product innovation, and institutional markets position it well to capitalize on these demographic trends and industry dynamics. F&G’s focus on disciplined risk management and expense control should also support its profitability and long-term sustainability.

However, the company will need to continue navigating the challenges posed by interest rate movements and managing the impact on its product guarantees and hedging strategies. Successful execution of its growth initiatives and prudent risk management will be critical to F&G’s future success.

Conclusion

F&G’s financial results for the three and nine months ended September 30, 2024 demonstrate the company’s ability to drive revenue growth and profitability in its core business lines. While facing some headwinds from interest rate risk, F&G has positioned itself for continued success through strategic investments, product innovation, and a diversified distribution platform. With a focus on serving the evolving needs of the middle-income market, the company appears well-equipped to capitalize on favorable industry trends and deliver value for its shareholders.