F&G Annuities & Life, Inc.

Greetings, and welcome to the F&G Annuities and LIFE fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Foxworthy-Parker, Senior Vice President, Investor Relations and External Relations. Thank you. You may begin.

Great. Thanks, Operator. And welcome, everyone, to F&G's fourth quarter and full year 2022 earnings call. Joining me today are Chris Blunt, Chief Executive Officer, and Wendy Young, Chief Financial Officer. We look forward to addressing your questions following our prepared remarks. Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy. Please refer to our most recent SEC filings for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. Non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules within our earnings release, financial supplement, and investor presentation, all of which are available on the company's website. Today's call is being recorded and will be available for webcast replay at FGLife.com. It will also be available through telephone replay beginning today at 1 p.m. Eastern Time through March 9, 2023. And now, I'll turn the call over to our CEO, Chris Blunt.

Good morning, and thanks for joining us today. We're proud to have reached a milestone in the quarter by becoming a publicly listed company. I'd like to start by thanking our team, our parent, Fidelity National Financial, and our partners for all of their contributions. to achieve F&G's December 1st listing on the New York Stock Exchange. For those new to our story, the purpose of this public listing is to provide for a sum-of-the-parts valuation. That is, to provide recognition of F&G's value creation as a standalone public company, and in turn, to unlock the value of the 85% majority ownership in F&G held by our parent, F&F. We view this as a win-win. For F&G, it allows investors to invest directly in F&G and creates new optionality for F&G as we gain access to the public markets over time, while continuing to benefit from F&F's majority ownership. F&F views this as a competitive advantage as F&G's primarily spread-based business provides a steady and growing source of earnings that will benefit F&F over time, as well as a counter-cyclical business model to their title business. I could not be more pleased with our overall results in this inaugural quarter following F&G's transition back to a public company. F&G is well positioned for growth through its multi-channel new business platform, and our entire team is working hard every day to create long-term shareholder value. Turning to our results, F&G reported total gross sales of $2.7 billion in the fourth quarter, a 23% increase over the prior year quarter. On a full year basis, F&G reported record gross sales of $11.3 billion in 2022, an 18% increase over full year 2021, boosting our ending assets under management to nearly $44 billion as of December 31st. The continued growth has us well ahead of our goal of doubling assets under management to $50 billion over five years, as outlined at the time of our acquisition by F&F in 2020. We are on target to achieve that goal this year. Our retail channels reported record gross sales of 2.5 billion in the fourth quarter, a 79% increase over the prior year quarter. On a full year basis, our retail channels reported record gross sales of 8.5 billion, a 37% increase over the full year 2021. We saw growth across all three retail channels, including agent, bank, and broker-dealer channels, which was driven by increased demand for our products in the rising rate environment, expanding relationships with new and existing distribution partners, traction from a comprehensive product portfolio that meets a broad range of consumer needs, and backed by strong customer satisfaction levels as F&G was ranked number two by J.D. Power among individual annuity providers in 2022. We are well-positioned for continued profitable growth in our retail channels and excited about several initiatives that are underway. In our bank and broker-dealer channels, we are a leading carrier with our top partners and have a growing product and partner footprint with nearly 20 partners at year-end. In our agent channel, we are committed to our deep, long-tenured partners as a leading provider of annuity and life insurance solutions. We are also pursuing a strategy to expand our owned life insurance distributions, while boosting our presence in underserved multicultural and middle market segments. We were pleased to announce a 49% equity investment in a leading independent agent life insurance distribution partner since this last month, which aligns to our diversified growth strategy and is accretive to our shareholders. This builds on our 30% equity investment in Freedom Equity Group, one of F&G's top independent agent life distribution partners, which closed in late 2021. Next, turning to institutional markets where we have achieved cumulative sales of 6.3 billion since launch in mid-2021, providing meaningful diversification and scale. These cumulative sales include 2.5 billion in pension risk transfer, with 11 transactions completed, ranging from 65 million to 500 million in size, and over 47,000 covered lives. $2.6 billion of funding agreement-backed note issuances under our $5 billion shelf registration and $1.2 billion of federal home loan bank funding agreements. For the fourth quarter, institutional sales included approximately $250 million of pension risk transfer. For the full year, we reported $2.8 billion of institutional sales in 2022 split evenly between pension risk transfer and funding agreements and in line with our expected 2 to 4 billion annual sales run rate, dependent on appetite and market conditions. F&G's total net sales retained were 1.9 billion in the fourth quarter and 9 billion for the full year, a 7% decrease and a 3% increase over fourth quarter and full year 2021, respectively. This reflects the increase of MIGA flow reinsurance from 50% to 75% with a speed of re, effective September 1st. As a reminder, we utilize flow reinsurance, which provides a lower capital requirement on seeded new business, while allocating capital to the highest returning retained business. From our perspective, this is a smart financial decision as it enhances cash flow, provides fee-based earnings, and is accretive to F&G's returns. Asset center management for the quarter totaled nearly $44 billion at December 31st, reflecting a $7 billion or 19% increase over the prior year quarter, driven primarily by new business growth and stable in-force retention. Our high-quality investment portfolio is performing very well, and our strategic investment management partnership with Blackstone remains a differentiated competitive advantage for F&G. Our portfolio is diversified and well positioned to withstand uncertainty in the macro environment and well matched to our clean and stable liability profile. Fixed income yield, excluding alternative investment volatility and variable investment income, has expanded to 4.27% for the fourth quarter as compared to 3.75% in the fourth quarter of 2021. This primarily reflects upside from the 18% of our portfolio held in floating rate assets and higher yields on new investments. Our targeted allocation to alternative assets remains approximately 5%. Since the FNF merger in June of 2020, FNG's alternative investment portfolio has returned 12% on average, and returns have been less volatile than the S&P 500 index. Our financial results for 2022 demonstrate the underlying earnings power of the F&G business model, where profitable asset growth drives earnings and we benefit from a rising rate environment. F&G's growth is underpinned by a strong balance sheet, ample sources of liquidity, and financial flexibility to optimize returns. Our management team is seasoned and has experience throughout various economic cycles. And we've reached an inflection point of scale where our strong capitalization supports both organic growth and the distribution of a portion of our adjusted net earnings to shareholders over time. Overall, 2022 is another breakout year for F&G. We continue to execute on our diversified growth strategy, win in our target markets, and position ourselves for the future as a public company. Looking ahead, we're in a great position to further grow the company and deliver value to our shareholders. As part of this, we see many opportunities to expand our profitability in addition to growing our assets under management. For 2023, we expect to generate double-digit growth in total gross sales. To recap, we have strong momentum as we head into 2023 with many opportunities ahead of us to further expand our business, which will ultimately drive margin expansion and improved returns. We're also focused on unlocking the inherent value in our business as we focus on delivering value to our shareholders. We look forward to updating you on our progress and execution through the balance of the year. Let me now turn the call over to Wendy Young to provide further details on F&G's fourth quarter highlights, strong balance sheet, and financial flexibility.