F&G Annuities & Life, Inc.

Good morning. Welcome to F&G's fourth quarter and full year 2025 earnings call. During today's presentation, all callers will be placed in listen-only mode. 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 Foxworthy-Parker, Senior Vice President, Investor, and External Relations. Please go ahead.

Thanks, Operator, and welcome, everyone. I'm joined today by Chris Blunt, Chief Executive Officer, and Connor Murphy, President and Chief Financial Officer. 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 websites. 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, and thanks for joining today's call. We delivered a strong finish to an outstanding year through disciplined growth and the proven ability and flexibility of our business model as we transitioned to be more fee-based, higher margin, and less capital intensive. And we've remained focused on creating long-term shareholder value. We are executing on our strategy and made further progress toward our 2023 investor day targets as we achieved record AUM before flow reinsurance fueled by one of our best years of sales. Excellent performance in our high quality diversified investment portfolio, strong performance across our business balanced with diligent expense management and a healthy financial and capital position. I'd especially like to thank our employees Their hard work and dedication are truly the foundation of everything we achieve for our business and for our customers. Now looking at our results more closely, we achieved record AUM before flow reinsurance of $73.1 billion, up 12% over year end 2024, as well as record retained AUM of $57.6 billion, up 7% over year end 2024. This record AUM was driven by 14.6 billion of gross sales, our second highest year on record. 2025 demonstrated our commitment to manage growth for the long term, as we prioritize pricing discipline and capital allocation to the highest return opportunities. For the full year, we delivered 9 billion of core sales, including indexed annuities, indexed universal life, and pension risk transfer. and 5.6 billion of opportunistic sales, including MIGA and funding agreements. Connor will provide more details on sales later in the call. Next, turning to the investment portfolio, our high quality diversified portfolio is performing very well. The retained portfolio is high quality with 97% of fixed maturities being investment grade at year end. Since 2020, we have selectively repositioned over 2 billion of assets to optimize de-risk and position the portfolio to perform in varying market conditions while also improving credit quality. Credit-related impairments have remained stable at eight basis points in 2025, well below our pricing assumption. This brings our five-year average since 2021 to six basis points, which is exceptionally low. Our fixed income yield was 4.65% in the fourth quarter, up six basis points over the fourth quarter of 2024. As a reminder, our fixed income yield excludes alternative investment income as well as variable investment income, which we define as prepayment fees. Looking at our alternative investment portfolio, our annualized return was approximately 7% in the fourth quarter as compared to our 10% long-term expected return. At year end, approximately 40% or $4 billion of our $11 billion alternative investment portfolio was comprised of equity interests including limited partnerships with the remaining 60% being investment grade fixed income debt with more predictable levels of investment income. Starting in the first quarter of 2026, we are updating our long-term expected return for alternative investments to reflect only the 40% or 4 billion of equity interests. We will reclassify the remaining 60% or nearly 7 billion into our fixed income yield and AUM as shown in the investment income and yield table on page eight in our financial supplement. We believe this will more appropriately delineate between the fixed income portfolio and alternative investments while also improving comparability to others in the industry. This disclosure refinement will not have any impact to adjusted net earnings on an as reported basis. We're often asked about the effect of short-term interest rates on our business following the recent Fed rate cuts. Given the nature of our spread-based business, longer-term rates and the shape of the yield curve are more significant to us than short-term interest rates. We do not have significant exposure to changes in short-term interest rates as we have hedged a majority of our floating rate portfolio to lock in higher rates over the past couple of years. Our floating rate exposure is now only $2.8 billion, or approximately 5% of our total portfolio net of hedging. Another consideration is variable investment income. We reported 7 million of pre-tax prepayment fees in the fourth quarter. This brought the full year to 56 million in line with full year 2024. As a reminder, prepayments fluctuate quarter to quarter and could present a headwind in 2026, if bond prepayments vary from 2025 levels, depending on market conditions. As far as our asset managers go, we really think we have the best of both worlds in terms of our competitive positioning and flexibility. We are now in the ninth year of our strong and seasoned relationship with a world-class manager in Blackstone. And we have the flexibility to work with other asset managers, whether for flow reinsurance or specialty asset classes that complement Blackstone's capabilities. Blackstone employs a robust and thorough underwriting approach by developing its own forecasts based on conservative macroeconomic views and historical sector performance. Next, turning to private asset origination, which is a key component of our investment strategy and represents 20% or $11 billion of our retained portfolio. Here, we utilize Blackstone's best-in-class origination, underwriting, and structuring teams to source high-quality pools of physical and financial assets. These include corporate and commercial lending, consumer loans, real estate, and other real asset exposures. When it comes to private asset origination, most of these directly originated asset classes have been in existence for decades within the bank channel and have long performance histories over multiple market cycles, providing observable data for thorough underwriting. Private asset originations allow us to mitigate our credit risk in a couple of ways. They provide diversification to investments that we can access through public markets. And the bilateral nature of these private origination transactions allow us to perform comprehensive analysis on an asset by asset basis and incorporate stronger covenant protections relative to the public markets. From a ratings perspective, our private asset origination portfolio has a strong credit profile. Approximately 92% of the private origination debt portfolio is investment grade. and included within the 97% investment grade for our total fixed income portfolio. We primarily use the top five nationally recognized statistical rating organizations. Approximately 90% of the private origination debt portfolio and 94% of our total fixed income portfolio are rated by a combination of the top five agencies, including Moody's, S&P, Fitch, Kroll, and DBRS. Egan Jones ratings are de minimis at less than 1% of our total retained portfolio. And private letter ratings account for approximately 17% of our total retained portfolio and undergo the same analytical rigor as public ratings. The combination of Blackstone's structuring talent, our ability to complement Blackstone's ability with other asset managers, the track record of these assets and our thorough due diligence has helped generate attractive risk-adjusted returns for F&G that have performed very well to date and through stress environments like the COVID pandemic. 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. In summary, we feel comfortable and confident in the credit soundness of our investment portfolio. Please see our winter 2025 investor presentation for further details on our stress test. Next, I'd like to provide an update on our strong progress toward our 2023 investor day medium term financial targets now that we are at the midpoint of our five year horizon. We have grown AUM before flow reinsurance from the $51 billion baseline to $73 billion at year end 2025 A 44% increase at the midpoint mark is compared to our target of 50% in five years. We have expanded ROA excluding significant items from the 110 basis point baseline and made significant progress toward the lower end of the 133 to 155 basis point targeted range. And we have increased ROE excluding AOCI and significant items from the 10% baseline and are closing in on the lower end of the 13 to 14 percent targeted range. The preferred stock investment from FNF in 2024, combined with our own internal capital generation, enable us to grow significantly faster than originally projected when we set our investor day targets. On December 31st, FNF completed the distribution of approximately 12 percent of the outstanding shares of FNG's common stock to FNF shareholders. Following the distribution, FNF retains control and a majority of ownership with approximately 70% of the outstanding shares in FNG. This has increased FNG's public float from approximately 18% to approximately 30% after the distribution, strengthening FNG's positioning within the equity markets and facilitating greater institutional ownership. This distribution reflects FNF's confidence in FNG's long-term prospects and is intended to unlock shareholder value by enhancing market liquidity and broadening investor access to F&G shares. On a standalone basis, we reported GAAP common equity excluding AOCI of $6 billion at year end, and we have grown book value per share excluding AOCI to $44.43, up 62% since the 2020 acquisition. In summary, F&G finished the year strong. I'm excited about the future and our ability to continue to deliver long-term shareholder value. Looking ahead, F&G has differentiated capabilities and is uniquely positioned in the industry. We have made significant progress executing on our strategy, leveraging the strength of our distribution partners to continue to grow our spread-based business alongside our growing sources of fee-based higher margin and less capital-intensive earnings through our flow reinsurance middle market life insurance, and own distribution strategies, all of which is showing up in our results as expected. Let me now turn the call over to Connor to provide further details on F&G's fourth quarter and full year highlights.