F&G Q2 2025 slides reveal sales recovery amid ongoing earnings challenges

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Introduction & Market Context

F&G Annuities & Life Inc (NYSE:FG) released its second quarter 2025 investor presentation on August 7, highlighting a significant rebound in sales after a disappointing first quarter. The presentation emphasized "regained momentum" heading into the second half of the year, with gross sales up 41% quarter-over-quarter to $4.1 billion. Despite the sales recovery, the company continues to face earnings challenges, with adjusted net earnings declining year-over-year.

The presentation comes after F&G's first quarter results missed EPS expectations, when the company reported $0.72 per share against a forecast of $1.30, causing a 12.42% stock price drop. F&G shares have since partially recovered, closing at $33.15 on August 6, 2025, up 2.31% but still well below the 52-week high of $50.75.

Quarterly Performance Highlights

F&G reported strong sales momentum in the second quarter, with gross sales reaching $4.1 billion, up 41% from Q1 2025 and representing one of the company's best sales quarters in history. Net sales totaled $2.7 billion, increasing 23% quarter-over-quarter.

As shown in the following performance metrics chart, the company maintained a stable adjusted return on assets (ROA) of 0.92% for the last twelve months, while adjusted return on equity (ROE) improved to 8.8% for the first half of 2025, up 40 basis points year-over-year:

Despite the sales recovery, F&G's earnings performance showed mixed results. Adjusted net earnings for Q2 2025 were $103 million ($0.77 per diluted share), down from $139 million ($1.10 per diluted share) in Q2 2024. More concerning, net earnings for the first half of 2025 were just $10 million ($0.08 per diluted share), compared to $309 million ($2.45 per diluted share) in the first half of 2024.

The company's assets under management (AUM) continued to grow, reaching $55.6 billion, up 7% year-over-year. Before flow reinsurance, AUM stood at $69.2 billion, representing a 13% increase from the previous year.

F&G highlighted its sales recovery in the following chart, showing the rebound in both core and opportunistic sales in Q2 2025:

Strategic Initiatives

F&G's presentation emphasized its ongoing diversification strategy across distribution channels and product lines. The company has significantly expanded its presence in bank and broker-dealer channels while maintaining its strong agent network. This diversification is illustrated in the following chart showing the evolution of sales by channel and product:

The company continues to execute on its three-pronged strategy focused on retained sales, flow reinsurance, and owned distribution. F&G reported that its owned distribution strategy is contributing to margin expansion and providing a capital-light, diversified source of fee-based earnings after cumulative investments of approximately $700 million.

F&G's investment portfolio remains well-diversified and conservatively positioned, with 97% in investment grade securities. The following chart breaks down the $53 billion portfolio by asset class and NAIC designation:

The company provided further details on its investment portfolio attributes, highlighting its allocation across fixed income, structured credit, mortgage loans, and private origination:

Forward-Looking Statements

F&G reiterated its medium-term financial targets presented at its 2023 Investor Day, aiming to grow AUM by 50%, expand adjusted ROA to 1.33-1.55%, increase adjusted ROE to 13-14%, and expand its P/E multiple to 7-8x. The company emphasized its focus on three strategic areas: retained sales, flow reinsurance, and owned distribution.

The presentation highlighted F&G's strong track record of book value per share growth, which has increased 58% since year-end 2020. This growth trajectory is illustrated in the following chart:

F&G also emphasized the quality and protection of its inforce book, with 92% of retail fixed annuities surrender protected and well-matched asset/liability cash flows:

Detailed Financial Analysis

While F&G's presentation focused on positive sales momentum and long-term growth potential, a closer examination of the financial data reveals ongoing challenges. The company's net earnings for the first half of 2025 were just $10 million, down 97% from $309 million in the first half of 2024. Similarly, net earnings per diluted share fell from $2.45 to $0.08 over the same period.

The company attributed the year-over-year decline in adjusted net earnings to "alternatives mark-to-market fluctuations and significant items," while highlighting positive factors including asset growth, higher fees from accretive flow reinsurance, higher owned distribution margin, and disciplined expense management.

F&G's investment case rests on its positioning in large and growing markets, with demographic trends expected to fuel future growth. The company highlighted the secular tailwinds driving demand, including the aging U.S. population and growth in money market fund assets, which create opportunities to migrate consumers from traditional banking products to fixed annuities.

Despite the earnings challenges, F&G maintains that its business model is resilient and well-positioned for future growth. The company's focus on disciplined pricing and capital allocation to the highest return opportunities suggests a strategic approach to navigating the current market environment while building long-term value.

Full presentation:

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