F&G Annuities & Life, Inc. Q1 FY2026 earnings call

• Earnings: Adjusted net earnings 110 million or 82 cents per share in first quarter, alternative investment income 44 million or 32 cents per share below long-term expected return. - Asset growth: Record growth AUM of nearly $75 billion, up 11% over prior year, retained AUM $56 billion, growth sales $3.2 billion, net sales $2.2 billion. - Fee-based earnings: Fee income from accretive flow reinsurance $16 million, from owned distribution margin $9 million. - Scale benefit: Operating expense ratio to AUM before reinsurance decreased to 48 basis points, expected to improve to ~45 basis points by year-end 2027. - Capital position: Committed to long-term target of ~25% debt to capitalization, expects balance sheet to de-lever, maintains strong capitalization and financial flexibility. - Capital allocation: Returned 67 million of capital to shareholders, Board authorized additional $100 million share repurchase program.

Private origination portfolio: Middle market corporate lending is nearly $5 billion (9% of total retained portfolio), 89% investment grade, low LTV, strong subordination, lending to high-quality companies with near zero credit losses. Mortgage loan portfolio is $7 billion (13% of total retained portfolio), weighted toward defensive sectors with two-thirds in residential loans and remainder in commercial loans (multifamily and industrial). Alternatives portfolio is $4 billion (7% of total retained portfolio), includes ~$3 billion of limited partnerships and $1 billion of other equity interests. Fixed income yield was 4.77% in first quarter, credit-related impairments low and stable. Software exposure across total retained portfolio below 5% and relatively short duration.

• Top line: Focus on growing AUM with optimized sales mix, indexed annuity and indexed universal life sales growth to track industry trends, pension risk transfer sales between 1.5 - 2 billion, multi-year guaranteed annuity sales to continue moderating. - Priorities: Generate additional scale benefits, expand returns on equity excluding significant items, continue evolution toward more fee-based, higher margin, less capital-intensive business model.

• Q: Do you consider 1Q26 EPS a good intermediate term run rate off which to continue to grow and should EPS grow along with AUM over time?

A: Broadly speaking, yes, but core fixed income yield may tick down a bit, alt portfolio performance is a big unknown, core reinsurance on distributions should continue to grow, expense number focused on 25% reduction. - Q: Where do you see opportunities to take advantage on the asset side?

A: Mortgages attractive on residential side, some opportunities in asset-backed lending but more opportunistic, remain thoughtful and active in portfolio, monitor capital charges. - Q: Adjusted ROA impacted by return on alts, is run rate starting point go-forward basis 80 bps and alts performance impacts ROE?

A: Decline in ROA has some permanent and one-time components, pricing dynamic complicated depending on liability duration, modeling done on real-time and stochastic basis, not an outlier vs competition. - Q: Process to look at alternatives and impact on go-forward business model?

A: Exercise to determine best place to hold the business, unlikely to sell whole business at juncture, excited about the business. - Q: Investment portfolio, shifting AUM out of alternatives to fixed income, dimension of software in private origination?

A: Software exposure in private origination about 20%, vast majority not at high risk of AI disruption in near term. - Q: Opine on 144A private placements?

A: Do not have specific number handy but can dig out and follow up.