What F&G Annuities & Life (FG) Said on Its Q3 Earnings Call

Key Points

• Q3 adjusted net earnings were $96 million, or $0.74 per share, up $11 million from Q2 but down $69 million year over year, mainly due to weaker alternative investment returns and bond prepayment income.
• Record core retail sales of indexed annuities and indexed life insurance reached $2.1 billion, up 24% year over year, helping lift assets under management before reinsurance 7% to $76.2 billion. F&G continued to limit lower-return business, including multi-year guaranteed annuities.
• The company approved an additional $100 million in share repurchase capacity and expects its in-force business to generate $900 million to $1 billion in annual capital. F&G is also exploring strategic alternatives for Peak Altitude, with interest in the portfolio and individual businesses.

F&G Annuities & Life NYSE: FG reported third-quarter 2026 adjusted net earnings of $96 million, or $0.74 per share, as record core retail sales helped lift assets under management before reinsurance to $76.2 billion.

Adjusted earnings rose $11 million from the second quarter but fell $69 million from a year earlier. Chief Financial Officer Mike Bailey said the year-over-year decline reflected lower alternative investment returns and bond prepayment income, the absence of a prior-year benefit from F&G Life Re before its sale, and lower surrender charge income.

Chief Executive Officer and President Conor Murphy said the company remains focused on writing business that meets its return targets, even as sales volumes fluctuate. Assets under management before reinsurance increased 7% from a year earlier, including $56.2 billion in retained assets.

Record retail sales offset selective approach elsewhere

Gross sales totaled $3 billion in the quarter, including $2.3 billion of core sales and nearly $700 million of opportunistic sales. Core retail sales of indexed annuities and indexed life insurance reached a record $2.1 billion, up 24% from a year earlier and 17% from the second quarter.

Murphy attributed the retail performance to momentum with existing distribution partners rather than new products or relationships. He said industry data showed fixed indexed annuity sales fell 6% in the first nine months of the year, while F&G’s sales of those products rose 12%.

Core institutional sales of pension risk transfers were $200 million in the quarter. F&G sold more than $700 million of those products in the first nine months and expects $1 billion to $1.5 billion for the full year. The company continued to de-emphasize multi-year guaranteed annuities because returns were below its threshold, Murphy said.

Net sales were $1.4 billion in the quarter and $5.1 billion for the first nine months. Murphy said F&G reinsured closer to two-thirds of its fixed indexed annuity sales in the quarter, reflecting strong sales of income products and the appetite of reinsurance partners, including one added at the start of the period.

Alternative returns and assumption review affect earnings

Bailey said alternative investment income was $60 million, or $0.46 per share, below the level implied by management’s 12% long-term expected return. The $4 billion alternative portfolio generated an annualized return of about 5% in the quarter, down from 6% in the second quarter.

Limited partnerships returned approximately 9% annualized, but lower returns on other equity interests partially offset that performance. Murphy said he expects a better alternative investment return in the fourth quarter, though probably not the full 12% long-term expectation. He cautioned against looking much beyond one quarter because returns are difficult to predict.

The company’s annual actuarial assumption review increased third-quarter amortization expense by approximately $6 million after tax. Bailey said the higher expense is expected to persist through 2027 and diminish to neutral during 2028. Favorable mortality experience in pension risk transfer and indexed universal life business more than offset the third-quarter expense increase, he said.

Bailey also said F&G has seen elevated surrender activity and updated its assumptions accordingly. He expects surrenders to remain elevated, particularly in the current interest-rate environment, although third-quarter activity was within the company’s expectations.

Capital, regulation and Peak alternatives

F&G’s operating expense ratio fell to 46 basis points of assets under management before reinsurance, nearing its target of 45 basis points by year-end 2027. Its board also approved an additional $100 million of share repurchase capacity, Murphy said. The company repurchased $120 million of shares during the first nine months.

Bailey said the in-force business, including contributions from the Peak Altitude distribution operation, is expected to generate $900 million to $1 billion of capital annually. Approximately $300 million is planned for holding company needs, including dividends and debt service, with the balance available to fund new business growth.

F&G is continuing to explore strategic alternatives for Peak Altitude. Murphy said there is interest in the portfolio as a whole and in individual businesses, but offered no timetable or further details. The company has invested approximately $700 million in the distribution businesses, which generated about $80 million in annual EBITDA in 2025, he said.

On regulation, Bailey said F&G does not expect a noteworthy capital impact from proposals under discussion involving reinsurance to non-reciprocal jurisdictions. He said the company is monitoring the development of VM-22 statutory reserving rules and expects to consider early adoption for some businesses.

Bailey also noted that Moody’s affirmed F&G’s ratings but maintained a negative outlook. The ratings firm will evaluate the company’s standalone profile with and without its current one-notch support from FNF, he said.

Murphy addressed investment governance, saying Blackstone manages most of F&G’s retained portfolio but is not an affiliate and owns no equity stake in the company. F&G sets allocation and risk limits and approves major investment decisions, while Blackstone provides investment ideas and selects securities, he said.

About F&G Annuities & Life (NYSE:FG)

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