F&G Annuities & Life NYSE: FG reported a “solid start” to the year, with management highlighting record assets under management, higher sales and continued movement toward a more fee-based, capital-light business model during the company’s first-quarter earnings call.
Chief Executive Officer Chris Blunt said F&G ended the first quarter with assets under management before reinsurance of nearly $75 billion, reflecting an 18% compound annual growth rate since 2019. Blunt said the company is benefiting from retirement market demand tied to the “Peak 65” demographic wave, with more than 4 million Americans turning 65 each year through 2027.
“The first quarter was a solid start to the year and in line with our expectations,” Blunt said.
Adjusted Earnings and Sales Rise
President and Chief Financial Officer Conor Murphy said F&G reported adjusted net earnings of $110 million, or $0.82 per share, for the first quarter. Alternative investment income totaled $44 million, or $0.32 per share, below management’s long-term expected return for the quarter. Results also included an unfavorable significant item of $5 million, or $0.03 per share, from investment and other income true-up adjustments.
Murphy said adjusted net earnings benefited from retained asset growth, higher fees from flow reinsurance, steady owned distribution margin and operating expense discipline. He added that first-quarter results were in line with expectations and that the company’s core spread remained consistent with the fourth quarter of 2025.
Gross AUM reached nearly $75 billion, up 11% from $67 billion in the prior-year quarter. Retained AUM was $56 billion, up 3% from $55 billion a year earlier. Murphy noted that the current period excludes a $1.8 billion in-force block reinsured as part of the sale of the F&G Life Re legal entity, effective March 1, 2026.
F&G reported gross sales of $3.2 billion, up 10% from $2.9 billion in the first quarter of 2025. Core sales rose 11% to $2 billion, driven by higher retail indexed annuity, indexed universal life and pension risk transfer sales. Opportunistic sales increased 9% to $1.2 billion, including $1 billion of funding agreements and $200 million of Multi-Year Guaranteed Annuities.
Murphy said the company intentionally moderated Multi-Year Guaranteed Annuity sales “to allocate capital to the highest return opportunities.” Net sales were $2.2 billion in the quarter, reflecting flow reinsurance aligned with capital targets.
Management Emphasizes Fee-Based Earnings
Blunt said F&G has intentionally diversified its business over the past five years across spread-based and fee-based strategies. He said fee-based strategies, including flow reinsurance, owned distribution and middle-market life insurance, represented about 15% of adjusted net earnings excluding significant items in 2025. The company expects that mix to grow to about 25% by year-end 2028.
Fee income from flow reinsurance was $16 million in the first quarter, compared with $13 million in the prior-year quarter. Fee income from owned distribution margin contributed $9 million, up from $7 million a year earlier.
Murphy said the company’s operating expense-to-AUM ratio before reinsurance declined to 48 basis points at quarter-end, compared with 50 basis points at year-end 2025 and 60 basis points at the end of 2024. He said F&G expects the ratio to improve to approximately 45 basis points by year-end 2027.
Adjusted return on equity excluding accumulated other comprehensive income was 8.4% in the quarter. Adjusted return on assets was 76 basis points for the quarter and 87 basis points on a last-12-month basis. Murphy said using management’s long-term expected return for alternative investments and excluding the unfavorable significant item would have added 3.4 percentage points to ROE and 34 basis points to ROA for the quarter.
Investment Portfolio Remains a Focus
Blunt spent a significant portion of the call discussing F&G’s retained investment portfolio, which totaled $53 billion. He said 97% of fixed maturities were investment grade and described the portfolio as diversified across traditional liquid fixed income, public structured assets, private origination, mortgage loans and alternative investments.
The company’s traditional liquid fixed income portfolio totaled $18 billion, or 34% of the retained portfolio. Public structured assets totaled $11 billion, or 21%, including CMBS, non-agency RMBS, CLOs and ABS. Private origination assets also totaled $11 billion, or 21%, with approximately 90% of that debt portfolio rated investment grade.
Blunt said middle-market corporate lending represented nearly $5 billion, or 9% of the retained portfolio. He said 89% of those positions were investment grade and that the company has experienced “near zero credit losses” in the segment.
Mortgage loans totaled $7 billion, or 13% of the portfolio, with two-thirds in residential loans and the remainder in commercial loans concentrated in multifamily and industrial properties. Alternative investments totaled $4 billion, or about 7% of the retained portfolio.
Blunt said the company revised its long-term expected return assumption for its remaining limited partnership and equity portfolio to a range of 12% to 14% after reclassifying about $6 billion of lower-yielding debt-like assets into fixed income. He said annualized alternative investment returns improved to 8.3% in the first quarter from 7.8% in the sequential quarter.
Credit-related impairments were three basis points in the first quarter, compared with a five-year average of six basis points, according to Blunt.
Capital Returns and Peak Altitude Review
F&G returned $67 million to shareholders during the first quarter, including $38 million of common and preferred dividends and $29 million used to repurchase approximately 1.2 million common shares at an average price of $24.14. Blunt said the board views repurchasing shares at current levels as “a compelling use of capital.”
The company had about $3 million remaining under its existing $50 million repurchase authorization as of March 31, 2026. Blunt said the board authorized a new three-year share repurchase program allowing F&G to repurchase up to $100 million of common stock.
Blunt also said F&G has started a formal process to explore strategic alternatives for Peak Altitude, its owned distribution franchise. He said the company has deployed approximately $700 million into the business, which generates about $80 million in annual EBITDA.
During the question-and-answer session, Blunt said it is “pretty unlikely” that F&G would sell the entire Peak business at this stage, citing its growth prospects. He said the review is focused on determining the optimal place to hold the business, how to fund it and whether deconsolidation from F&G could be beneficial.
Outlook Centers on AUM Growth and ROE Expansion
Looking ahead, Murphy said F&G is focused on growing core revenues and earnings, expanding ROE and creating long-term shareholder value. He said the company expects indexed annuity and indexed universal life sales growth to track industry trends, while pension risk transfer sales are expected to be between $1.5 billion and $2 billion annually.
Murphy said F&G completed a $750 million Funding Agreement-Backed Notes issuance in early January, when market conditions were attractive, and will continue to monitor that market. He said Multi-Year Guaranteed Annuity sales are expected to keep moderating given the current rate environment.
In closing remarks, Blunt said F&G remains focused on shifting toward “a more fee-based, higher margin, and less capital-intensive business model” while using its diversified new business platform and retirement market tailwinds to grow AUM and expand return on equity.
About F&G Annuities & Life NYSE: FG
F&G Annuities & Life is the principal life insurance and annuity subsidiary of F&G Financial Group, Inc NYSE: FG, a publicly traded financial services holding company headquartered in Des Moines, Iowa. The company focuses on designing and issuing retirement income solutions that address longevity risk, capital preservation, and wealth transfer for individual and institutional clients.
Its product suite includes fixed indexed annuities, which offer the potential for market-linked growth with downside protection; fixed-rate annuities, delivering guaranteed interest over a defined term; and a range of life insurance policies such as term, universal, and variable universal life.
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