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F&G Annuities & Life, Inc. (FG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat vs Street on adjusted EPS ($0.77 vs $0.57 consensus; +35%) and revenue ($1.36B vs $1.18B consensus), driven by record retail channel sales and strong PRT volumes; GAAP diluted EPS was $0.26 reflecting mark-to-market impacts . Values retrieved from S&P Global.*
  • Record AUM before flow reinsurance reached $69.2B (+13% YoY); retained AUM rose to $55.6B (+7% YoY). Adjusted ROA was 0.71% and adjusted ROE ex AOCI was 8.8% .
  • Strategic catalyst: launch of Blackstone-backed reinsurance sidecar (~$1B commitments) to reinsure up to 75% of newly originated accumulation-focused FIA, accelerating the shift to a capital-light, fee-based earnings mix .
  • Operating expense ratio to AUM before flow reinsurance improved to 56 bps in Q2 (from 61 bps YoY), with management targeting ~50 bps by YE 2025; quarterly dividend declared at $0.22 per common share .

What Went Well and What Went Wrong

What Went Well

  • Record retail channel sales >$3.6B (+13% YoY) with strong FIAs, a record quarter for IUL and MYGA; total gross sales were $4.1B (near all-time record) . “We delivered one of our best sales quarters in history with $4.1 billion of gross sales” .
  • AUM growth and portfolio quality: 97% investment-grade fixed maturities; credit-related impairments averaged 6 bps over five years and remained below pricing assumptions in H1 2025 . “Credit related impairments have remained low and stable… below our pricing” .
  • Capital-light momentum: Blackstone sidecar adds multi-billion capacity for FIAs and is “highly accretive” to earnings/ROE over time, complementing flow reinsurance and owned distribution .

What Went Wrong

  • Alternative investments under-earned vs long-term assumptions, reducing adjusted EPS by ~$0.62/share ($83M below expectations) in Q2; similar headwind in Q1 ($63M) .
  • Net sales fell to $2.7B (vs $3.4B YoY) reflecting higher flow reinsurance cessions; institutional funding agreements were zero this quarter vs $915M YoY .
  • GAAP net earnings compressed to $35M (vs $198M YoY) as mark-to-market effects and other items weighed; interest expense rose to $41M (vs $28M YoY) amid capital markets activity .

Financial Results

Income Statement Highlights (GAAP and Adjusted)

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$1,172 $908 $1,364
Net Earnings to Common ($USD Millions)$198 $(25) $35
Diluted EPS (GAAP)$1.55 $(0.20) $0.26
Adjusted Net Earnings ($USD Millions)$139 $91 $103
Adjusted EPS$1.10 $0.72 $0.77
Adjusted ROA (%)0.98% 0.68% 0.71%
Adjusted ROE ex AOCI (%)8.4% 9.7% 8.8%

Actual vs Wall Street Consensus (S&P Global)

MetricQ2 2024Q1 2025Q2 2025
Revenue Actual ($USD Millions)$1,172 $908 $1,364
Revenue Consensus Mean ($USD Millions)$1,292*$1,473*$1,182*
EPS Actual (Adjusted)$1.10 $0.72 $0.77
EPS Consensus Mean$1.085*$0.962*$0.571*

Notes: Values marked with * are from S&P Global.

  • Q2 2025: Bold beat on both EPS (+35%) and revenue (+15%); Q1 2025 was a miss on both; Q2 2024 was essentially in-line on EPS and mixed on revenue . Values retrieved from S&P Global.*

Margins (S&P Global definitions)

MetricQ2 2024Q1 2025Q2 2025
EBITDA ($USD Millions)$300*$33*$116*
EBITDA Margin (%)25.6%*3.6%*8.5%*
EBIT ($USD Millions)$—$14*$98*
EBIT Margin (%)12.7%*1.5%*7.2%*
Net Income Margin (%)17.0%*(2.3%)*2.9%*

Notes: Values marked with * are from S&P Global.

Segment/Channel Sales Mix (Management Sales KPIs)

Sales ($USD Millions)Q2 2024Q1 2025Q2 2025
Indexed Annuities (FIA/RILA)$1,648 $1,461 $1,701
Fixed-Rate Annuities (MYGA)$1,475 $562 $1,907
Indexed Universal Life (IUL)$44 $43 $53
Funding Agreements (FABN/FHLB)$915 $525 $—
Pension Risk Transfer (PRT)$338 $311 $445
Gross Sales$4,420 $2,902 $4,106
Net Sales$3,445 $2,181 $2,744

Key Performance Indicators

KPIQ2 2024Q1 2025Q2 2025
AUM (Retained) ($USD Millions)$52,208 $54,546 $55,565
AUM Before Flow Reinsurance ($USD Millions)$61,370 $67,398 $69,161
AAUM YTD ($USD Millions)$50,181 $53,877 $54,521
Book Value/Share ex AOCI ($)$42.52 $43.31 $43.39
Capital Returned (Dividends, $USD Millions)$32 $30 $35

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating expense ratio to AUM before flow reinsuranceFY 2025 YE~60 bps at YE 2024 baseline ~50 bps by YE 2025 Lowered (improved)
RBC Ratio (primary operating subsidiary)Ongoing≥400% target ≥400% target maintained Maintained
Debt-to-capitalization ex AOCILong-term~25% target ~25% target maintained Maintained
Dividend per common shareQ3 payment (9/30/25)Not specified$0.22 declared Established/maintained payout

Additional narrative: Mix shift toward FIAs expected in H2 2025 given the sidecar economics; flexibility to adjust flow reinsurance and opportunistic MYGA/FABN volumes based on market spreads .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Capital-light strategy & reinsuranceFlow reinsurance central; leverage owned distribution; debt refinancings Launch of Blackstone-backed FIA sidecar (~$1B commitments), multi-billion incremental capacity; accretive to ROE Strengthening
Expense ratio disciplineOperating expense ratio 58 bps in Q1; focus on scale 56 bps in Q2 (vs 61 bps YoY); targeting ~50 bps YE 2025 Improving
Alternative investments performanceQ1 alts ~$63M below LT expectations Q2 alts ~$83M below expectations; management sees potential uplift as realizations normalize Mixed; potential tailwind later
Sales mix (FIA/MYGA/FABN/PRT)MYGA reduced in Q1; FABN opportunistic Record MYGA in Q2; zero FABN; expect FIAs to gain share H2 with sidecar Dynamic allocation
Surrenders and spreadElevated in 2024; lower in Q1; normalization expected Normalizing; Q2 spreads improved as excess cash deployed Stabilizing
Macro/tariffs & portfolio resilienceTariff analysis indicated resilience; defensive asset allocation Reinforced high-quality fixed maturities (97% IG), low impairments Stable risk posture

Management Commentary

  • “This sidecar will provide long term on demand capital to support our growth and move F&G further toward a more fee based, higher margin and less capital intensive business model” .
  • “We delivered one of our best sales quarters in history with 4,100,000,000.0 of gross sales” .
  • “We are benefiting from increased scale as our ratio of operating expenses to AUM before flow reinsurance has decreased to 56 basis points… and expect ~50 basis points by year end 2025” .
  • “The retained portfolio is high quality with 97% of fixed maturities being investment grade… impairments averaged six basis points over the last five years” .
  • On alts: “Our long term assumption… is 10%. We think that’s reasonable… a better deal environment would be a big tailwind” .

Q&A Highlights

  • Sidecar capacity and ROE: Management expects “multiple billions” of incremental AUM capacity and accretive earnings/ROE as FIAs are reinsured via the sidecar .
  • Sales mix outlook: Expect lower MYGA and higher FIAs in H2 2025; funding agreements remain opportunistic and could be attractive in Q3 .
  • RILA traction: Growing but currently small; many FIA sellers also licensed for RILAs; remains part of expansion plans .
  • ROA bridge and alts: Last-12-month adjusted ROA ~0.92% base plus ~37 bps from alts (~1.29%); alts under-earning may reverse with better realizations .
  • Crediting/rate actions: Company regularly reviews in-force rates to maintain spread amid volatility while balancing policyholder fairness .

Estimates Context

  • Q2 2025 beat vs S&P Global consensus: Adjusted EPS $0.77 vs $0.571*; revenue $1.364B vs $1.182B*. Q1 2025 had misses on both EPS ($0.72 vs $0.962*) and revenue ($0.908B vs $1.473B*) . Values retrieved from S&P Global.*
  • Implications: With alts and spreads normalizing and opex ratio trending down, Street models likely need to raise H2 EPS for fee-based earnings uplift (sidecar) and operating leverage; however, maintain caution on alts variability and opportunistic sales mix .

Key Takeaways for Investors

  • Strong beat and clean operational momentum: record retail sales, improving operating efficiency, and resilient credit underpin a constructive H2 setup .
  • Sidecar is a structural ROE catalyst, accelerating fee-based earnings and capital-light growth; expect mix shift toward FIAs in H2 .
  • Near-term noise from alternative investments persists, but potential tailwinds as realizations recover; monitor alts delta vs long-term 10% assumption .
  • Operating expense ratio targeting ~50 bps by YE 2025 provides visible margin lever and scale benefits; watch quarterly cadence vs goal .
  • Opportunistic channels (MYGA, FABN) will ebb/flow with spreads; core growth in FIAs/IUL/PRT remains intact .
  • Balance sheet and capital targets (RBC ≥400%, debt/cap ~25%) maintained, supporting dividends ($0.22 declared) and growth investments .
  • Trading lens: The beat plus sidecar announcement are positive sentiment drivers; focus on H2 trajectory in FIAs, opex ratio progress, and alts realization environment in upcoming quarters .

Notes: Values marked with * are from S&P Global.