F&G Annuities & Life, Inc.

fourth quarter and full year 2024 earnings call. During today's presentation, all callers will be placed in a listen-only mode, and following management's prepared remarks, the conference will be open for questions with instructions to follow at that time. I would now like to turn the call over to Lisa Falkworthy-Parker, Senior Vice President, Investors in External Relations. Please go ahead.

Thanks, Operator, and welcome again, everyone, to our call. I'm joined today by 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 quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP measures which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for webcast replay. And with that, I'll hand the call over to Chris Blunt.

Good morning, everyone. Thanks for joining us to discuss our fourth quarter and full year results. Our fourth quarter results rounded out an exceptionally strong year, both in terms of results and execution. I'd like to start by recognizing our employees for their hard work and achievements over the last year. It is through their efforts that we have achieved record sales growth, record AUM, and record adjusted net earnings, excluding significant items, while also continuing to diversify our earnings and expand our margin beyond spread-based sources. All the while maintaining a strong balance sheet and returning capital to shareholders through our common and preferred dividends. In short, 2024's outperformance had many accomplishments worth highlighting, starting with sales. F&G reported record gross sales of $15.3 billion for the full year 2024, a 16% increase over the full year 2023. This included $3.5 billion of gross sales in the fourth quarter. Record retail channel sales were $12 billion for the full year, a 20% increase over the full year 2023, driven by continued strong demand for individual annuity and life solutions. This included $2.5 billion of retail gross sales in the fourth quarter. From a retail channel perspective, we achieved record FIA, record MIGA, and record IUL gross sales for the year, while maintaining targeted service levels despite higher volumes. Our distribution relationships are strong, and we saw annual growth across all three retail channels, including agent, bank and broker dealer as we continue to add and deepen distribution relationships. Notably, we've gained entry into a new market with our Ryla registered product launch in 2024. We have onboarded seven partners and our product is being well received. Although admittedly, it's taken longer to get onto platforms as this is our first registered product. Ryla is a fast growing market in the industry and we're just getting started. As we steadily expand on the broker-dealer channel, we continue to see the potential for RILA annual sales to be in the billions over the medium term. Robust institutional market sales were 3.3 billion for the full year, comprised of 2.3 billion of pension risk transfer and 1 billion in funding agreements. Record pension risk transfer sales of nearly 2.3 billion for the full year reflect a 15% increase over the full year 2023. This included a robust 1 billion of PRT sales in the fourth quarter. Our growing PRT-enforced block has now crossed the $6.5 billion milestone, and we serve more than 100,000 participants from a variety of plant types and industries. We continue to compete well in our targeted $100 million to $1 billion deal size. We have also added new market segments with our ability to strategically move more up market or down market as opportunities arise. And we have selectively broadened our opportunities through additional PRT consultants. To date, we've not seen any meaningful impact from industry lawsuits, although it is something that we continue to monitor. We have a lot of places to deploy capital and at this time see continued strength in the PRT market with a healthy pipeline of $3.8 trillion of U.S. corporate pension plans at or near full funding. Funding agreements were $1 billion for the full year as compared to $1.2 billion in the full year of 2023. There were no funding agreements in the fourth quarter. We view these sales as opportunistic and volumes vary quarter to quarter depending on market conditions. From a funding agreement perspective, in the second quarter, we successfully returned to the FABN market for the first time in two years, given favorable market conditions with a $600 million issuance. At year end, we had approximately $2.5 billion of funding agreement back notes outstanding in aggregate under our $5 billion shelf registration. In addition, funding agreements include $400 million of FHLB activity for the full year 2024. Overall, this year demonstrates the strength of our multichannel distribution platform. This year has also been a good example of how we consistently manage sales to achieve targeted returns, which can result in quarterly fluctuations. In the fourth quarter, we made the decision to allocate capital to the highest returning business, specifically indexed annuity and pension risk transfer sales, which resulted in a reduction in MIGA sales and funding agreements. F&G's net sales retained were $10.6 billion for the full year 2024, a 15% increase over the full year 2023. This included $2.5 billion of net sales in the fourth quarter. We have profitably grown assets under management before flow and reinsurance to a record $65.3 billion at the end of the quarter, an increase of 17% over the fourth quarter of 2023. This included record retained assets under management of 53.8 billion, a 10% increase over the fourth quarter of 2023. AUM growth was driven by net new business flows and net debt and equity proceeds over the last 12 months. As a quick update on our investment portfolio, since 2020, we have selectively repositioned 2.7 billion of assets to optimize, de-risk, and position the portfolio to perform in varying market conditions while also improving its credit quality. At year end, the retained portfolio is high quality with 97% of fixed maturities being investment grade. We continue to hold very little office exposure at 1.7% of our total portfolio. Credit related impairments remain low and stable, averaging seven basis points over the last three years and six basis points over the past five years. well below our pricing assumption. We have also hedged two-thirds of our floating rate assets, which are now only 6% of our total portfolio net of hedging. Our fixed income yield was 4.59% in the fourth quarter, 13 basis points higher than the fourth quarter of 2023, benefiting from higher yields on new investments. On a sequential basis, our fixed income yield decreased seven basis points from the third quarter, primarily due to higher cash balances and the runoff of some higher yielding in-force assets. We expect this to rebound in 2025 as we fully deploy cash, refine our strategic asset allocation between public and private assets, and align our pricing actions in response to the macro environment, helping to mitigate the impact of spread compression. Also, we have refreshed our annual portfolio stress test, which is conservative and assumes no management action. Once again, the stress test has confirmed that our portfolio is well-positioned to withstand a sharp downturn in the economy. Please see F&G's Winter 2024 investor presentation for further details. Beyond sales and AUM growth, we continue to diversify our earnings beyond spread-based sources, driving margin expansion. Adjusted ROA, excluding significant items, was 127 basis points for the year, up 10 basis points over the 117 basis points achieved in the full year of 2023. Wendy will provide further details in a few minutes. In aggregate, we have invested $680 million in strategic owned distribution companies through two majority stakes taken in 2024 and two minority stakes purchased in 2023. our strategic owned distribution portfolio is performing well. We generated EBITDA of 65 million in 2024 and estimate annualized EBITDA of approximately 90 million in 2025 with double digit annual growth expected over the medium term. One final area to highlight centers on our balance sheet strength and capital allocation. We were well prepared to drive growth and capture the market opportunity in 2024 while returning $125 million of capital to shareholders through common and preferred dividends. Additionally, our commitment to strong ratings and achieving ratings upgrades over time was recognized through our AMBEST financial strength rating upgrade to A, or excellent, in early 2024, and our Moody's long-term issuer rating upgrade in mid-2024. Overall, our strong performance has generated significant ROE expansion. We've expanded adjusted return on equity, excluding AOCI and significant items over the last year from 10% to over 12% as we advanced toward our targeted range of 13 to 14%. I'm very proud of our accomplishments and confident that F&G will continue to generate shareholder value through continued execution of our strategic priorities. Critical to our execution is ensuring that we have the people in place to effectively manage our rapid growth. As a result, we are evolving our organizational structure to ensure that we continue to maximize the many opportunities that I see ahead of us over both the medium and longer term. As we announced last evening, Wendy Young has been appointed Chief Liability Officer effective April 1st. This is a new role at F&G and reflects the importance of reinsurance to our go-forward strategy and the increasing complexity of our business. In her new role, Wendy will lead all aspects of the company's liability management, reinsurance activities, and our offshore entities. I am grateful that Wendy has agreed to lead this effort given its importance to our long-term success. Wendy's deep knowledge of F&G as well as her prior work as CEO of our Bermuda business makes her the ideal executive to assume this role. I am also very grateful for her partnership and leadership as our CFO over the last three years as she has been instrumental to our success. I am also very excited to welcome Connor Murphy to F&G as our next CFO. Connor brings extensive industry experience, having held a variety of executive roles at industry-leading insurance companies. Most recently, Connor was the president and CEO of Resolution Life US. Prior to that, He was the chief operating officer of Bright House Financial when it was spun off by MetLife. Connor also held CFO roles for MetLife's European and Latin American businesses during his 17-year tenure at Met. Connor's experience is a perfect match for our newly defined CFO role, which will oversee our financial management and help to guide the optimization of our business and strategic capital allocation as we continue to scale. Connor will start on April 1st, and I'd like to officially welcome him to F&G. As you can see, these are two very important roles that require two uniquely qualified executives. I look forward to partnering with both Wendy and Connor as they step into these positions, and I'm thankful to have such an accomplished team as we continue to build an industry-leading business. Let me now turn the call over to Wendy to provide further details on F&G's full year and fourth quarter financial highlights.