FG Annuities Life Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
FG$23.38+7.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001934850-24-000045
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001934850-24-000055
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 225 previous paragraphs and 234 current paragraphs.
161 unchanged; 61 reworded; 8 added; 3 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 28 previous and 28 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
F&G reinsures portions of its policy risks with other insurance companies. The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded. The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer. The portion of risks exceeding F&G's retention limit is reinsured. F&G primarily seeks reinsurance coverage in order to manage loss exposures, to enhance our capital position, to diversify risks and earnings, and to manage new business volume. F&G follows reinsurance accounting when the treaty adequately transfers insurance risk and any acquisition cost reimbursements reduce policy acquisition costs deferred and maintenance expense reimbursements reduce direct expenses incurred. Otherwise, F&G follows deposit accounting if there is inadequate transfer of insurance risk or if the underlying policy for which risk is being transferred is an investment contract that does not contain insurance risk. See Note E -Reinsurance to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
Current report
◦During the third quarter and nine months ended September 30, 2024, based on policyholder behavior, experience and interest rate movements, we reflected updates to surrender assumptions for recent and expected near term policyholder behavior, as well as updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds. These changes resulted in decreases in total benefits and other changes in policy reserves of approximately $136 million and $79 million for the three and nine months ended September 30, 2024, respectively.
Current report
•In addition, as a result of our annual actuarial assumption update process, we updated GMWB rider assumptions for emerging utilization rates related to policyholder behavior. These updates resulted in market risk benefit losses of $24 million for the three and nine months ended September 30, 2024.
Current report
•Adjusted net earnings of $156 million for the three months ended September 30, 2024 included $131 million of investment income from alternative investments, $21 million of CLO redemptions and bond prepay income, and $14 million tax valuation allowance, partially offset by $17 million of net expense from actuarial assumption updates. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $172 million.
Current report
•Adjusted net earnings of $120 million for the three months ended September 30, 2023 included $114 million of investment income from alternative investments. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $142 million.
Current report
Reinsurance. See Note E -Reinsurance to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information on our reinsurance.
Current report
Subsequent Event. On October 4, 2024, F&G completed its public offering of $500 million aggregate principal amount of its 6.250% Senior Notes due 2034 (the “6.250% F&G Notes”). The 6.250% F&G Notes are guaranteed on an unsecured, unsubordinated basis by each of F&G’s subsidiaries that are guarantors of F&G’s obligations under its existing credit agreement. A portion of the net proceeds were used to pay off the outstanding balance of $365 million on the Company’s revolving credit facility. F&G intends to use the remaining net proceeds of this offering for general corporate purposes, including the support of organic growth opportunities.
Current report
Subsequent to September 30, 2024, on October 4, 2024 F&G completed its public offering of $500 million aggregate principal amount of its 6.250% Senior Notes due 2034 (the “6.250% F&G Notes”). The 6.250% F&G Notes are guaranteed on an unsecured, unsubordinated basis by each of F&G’s subsidiaries that are guarantors of F&G’s obligations under its existing credit agreements. A portion of the net proceeds were used to payoff the outstanding balance of $365 million on the Company’s revolving credit facility.
Removed paragraphs (3)
Previous report
•For the three months ended June 30, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized gains on fixed maturity available-for-sale securities, mark-to-market gains on our equity securities and unrealized fair value option (“FVO”) gains on owned distribution investments.
Previous report
•Adjusted net earnings of $139 million for the three months ended June 30, 2024 included $145 million of investment income from alternative investments and $4 million of collateral loan obligations (“CLO”) redemptions and bond prepay income, partially offset by $16 million of actuarial model updates and refinements. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $165 million.
Previous report
•Adjusted net earnings of $79 million for the three months ended June 30, 2023 included $82 million of investment income from alternative investments and $5 million of bond prepay income. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $137 million.
Reworded paragraphs (61)
Previous wording
Some of our products include guaranteed minimum crediting rates, most notably our fixed rate annuities. As of June 30, 2024 and December 31, 2023, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were $6 billion and 4%, respectively. We are required to pay the guaranteed minimum crediting rates even if earnings on our investment portfolio decline, which would negatively impact earnings. In addition, we expect more policyholders to hold policies with comparatively high guaranteed rates for a longer period in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio would increase earnings if the average interest rate we pay on our products does not rise correspondingly. Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.
Current wording
Some of our products include guaranteed minimum crediting rates, most notably our fixed rate annuities. As of September 30, 2024 and December 31, 2023, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were $7 billion and 4%, respectively. We are required to pay the guaranteed minimum crediting rates even if earnings on our investment portfolio decline, which would negatively impact earnings. In addition, we expect more policyholders to hold policies with comparatively high guaranteed rates for a longer period in a low interest rate environment. Conversely, a rise in average yield on our investment portfolio would increase earnings if the average interest rate we pay on our products does not rise correspondingly. Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.
Previous wording
We are in three distinct retail channels and two institutional markets. Our three retail channels include agent-based Independent Marketing Organizations (“IMOs”), banks and broker dealers. We have deep, long-tenured relationships with our network of leading IMOs and their agents to serve the needs of the middle-income market and develop competitive annuity and life products to align with their evolving needs. Upon FNF’s acquisition of F&G on June 1, 2020 (the “FNF Acquisition”), and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers. Further, in 2021, we launched into two institutional markets to originate Funding Agreement Backed Notes (“FABN”) and pension risk transfer (“PRT”) transactions. The FABN Program offers funding agreements to institutional clients by means of capital markets transactions through investment banks. The funding agreements issued under the FABN Program are in addition to those issued to the Federal Home Loan Bank of Atlanta (“FHLB”). The PRT solutions business was launched by building an experienced team and then working with brokers and institutional consultants for distribution. These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone.
Current wording
We are in three distinct retail channels and two institutional markets. Our three retail channels include agent-based Independent Marketing Organizations (“IMOs”), banks and broker dealers. We have deep, long-tenured relationships with our network of leading IMOs and their agents to serve the needs of the middle-income market and develop competitive annuity and life products to align with their evolving needs. Upon FNF’s acquisition of F&G on June 1, 2020 (the “FNF Acquisition”), and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers. Further, in 2021, we launched into two institutional markets to originate Funding Agreement Backed Notes (“FABN”) and pension risk transfer (“PRT”) transactions. The FABN Program offers funding agreements to institutional clients by means of capital markets transactions through investment banks. The funding agreements issued under the FABN Program are in addition to those issued to the Federal Home Loan Bank of Atlanta (“FHLB”). The PRT solutions business was launched by building an experienced team and then working with brokers and institutional consultants for distribution. These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone ISG-I Advisors LLC (“Blackstone”).
Previous wording
We also own stakes in IMOs and Network Marketing Groups (“NMG”) through our owned distribution strategy. For our minority owned interests, our unaudited Condensed Consolidated Statements of Operations reflects dividend income in Interest and investment income. For our majority owned interests, unaffiliated commission revenue is recorded in Owned distribution revenue and unaffiliated expenses are recorded in Personnel costs and Other operating expenses in our unaudited Condensed Consolidated Statements of Operations
Current wording
We also own stakes in IMOs and Network Marketing Groups through our owned distribution strategy. For our minority owned interests, our unaudited Condensed Consolidated Statements of Operations reflects dividend income in Interest and investment income. For our majority owned interests, unaffiliated commission revenue is recorded in Owned distribution revenue and unaffiliated expenses are recorded in Personnel costs and Other operating expenses in our unaudited Condensed Consolidated Statements of Operations.
Previous wording
MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors. The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns. Generally higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses.
Current wording
Market risk benefits (“MRBs”) are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk. MRBs (inclusive of reinsured MRBs) are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors. The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns. Generally higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses. Reinsured MRBs are valued using a methodology consistent with direct MRBs, with the exception of the non-performance spread which reflects the credit of the reinsurer.
Previous wording
Yield on AAUM is calculated by dividing annualized net investment income on an adjusted net earnings basis by AAUM. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Current wording
Yield on AAUM is calculated by dividing annualized net investment income by AAUM. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Previous wording
The results of operations for the three and six months ended June 30, 2024 and June 30, 2023 were as follows (in millions):
Current wording
The results of operations for the three and nine months ended September 30, 2024 and September 30, 2023 were as follows (in millions):
Previous wording
•Total annuity sales were higher for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, reflecting F&G's productive and expanding retail distribution through independent agents, banks and broker dealers, enhanced product features and pricing actions taken to align to the macro environment.
Current wording
•Total annuity sales were higher for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, reflecting F&G's productive and expanding retail distribution through independent agents, banks and broker dealers, enhanced product features and pricing actions taken to align to the macro environment.
Previous wording
•Funding agreements, reflecting new FABN and FHLB agreements, were higher for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, and are subject to fluctuation period to period based on economic conditions and the timing of entering the new agreements.
Current wording
•Funding agreements, reflecting new FABN and FHLB agreements, were lower for the three months ended September 30, 2024 and higher for the nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, respectively, and are subject to fluctuation period to period based on economic conditions and the timing of entering the new agreements.
Previous wording
•PRT sales decreased for the three months ended June 30, 2024 and increased for the six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively, reflecting the timing of PRT transactions that are also subject to fluctuation period to period. During the three and six months ended June 30, 2024, we closed two and four pension risk transfer transactions, respectively.
Current wording
•PRT sales decreased for the three months ended September 30, 2024 and increased for the nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, respectively, reflecting the timing of PRT transactions that are also subject to fluctuation period to period. During the three and nine months ended September 30, 2024, we closed three and seven pension risk transfer transactions, respectively.
Previous wording
•Sales attributable to flow reinsurance to third parties were higher during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, primarily reflecting the higher level of multi-year guarantee annuities (“MYGA”) sales during the periods.
Current wording
•Sales attributable to flow reinsurance to third parties were higher during the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, primarily reflecting the addition of new reinsurance, the higher level of MYGA sales, and changes in the percentages ceded during the periods.
Previous wording
Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on indexed annuity policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations). The following table summarizes the Life insurance premiums and other fees, on the unaudited Condensed Consolidated Statements of Operations (in millions), for the three and six months ended June 30, 2024 and June 30, 2023:
Current wording
Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on indexed annuity policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations). The following table summarizes the Life insurance premiums and other fees, on the unaudited Condensed Consolidated Statements of Operations (in millions), for the three and nine months ended September 30, 2024 and September 30, 2023:
Previous wording
•Life-contingent pension risk transfer premiums decreased for the three months ended June 30, 2024 and increased for the six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively, reflecting the timing of PRT transactions. As noted above, PRT premiums are subject to fluctuation period to period.
Current wording
•Life-contingent pension risk transfer premiums decreased for the three months ended September 30, 2024 and increased for the nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, respectively, reflecting the timing of PRT transactions. As noted above, PRT premiums are subject to fluctuation period to period.
Previous wording
•Surrender charges increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily reflecting increases in withdrawals from policyholders with surrender charges and market value adjustments (“MVAs”), primarily on our indexed annuities policies.
Current wording
•Surrender charges increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily reflecting increases in withdrawals from policyholders with surrender charges and market value adjustments (“MVAs”), primarily on our indexed annuities policies.
Previous wording
•Policyholder fees and other income increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily due to increased guaranteed minimum withdrawal benefit (“GMWB”) rider fees and cost of insurance charges, net of changes in unearned revenue liabilities (“URL”) on IUL policies from growth in business. GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.
Current wording
•Policyholder fees and other income increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily due to increased cost of insurance charges, net of changes in unearned revenue liabilities (“URL”) on IUL policies from growth in business and higher guaranteed minimum withdrawal benefit (“GMWB”) rider fees. GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.
Previous wording
Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $155 million and $282 million for the three and six months ended June 30, 2024, respectively, and $76 million and $134 million for the three and six months ended June 30, 2023, respectively.
Current wording
Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $181 million and $463 million for the three and nine months ended September 30, 2024, respectively, and $102 million and $236 million for the three and nine months ended September 30, 2023, respectively.
Previous wording
•AAUM was higher for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, reflecting net new business asset flows, stable inforce retention and net debt proceeds.
Current wording
•AAUM was higher for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, reflecting net new business asset flows, stable inforce retention and net debt proceeds.
Previous wording
•Interest and investment income was higher for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to $120 million from invested asset growth, $96 million of all other rate impacts and $40 million from returns on alternative investments.
Current wording
•Interest and investment income was higher for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to $77 million from invested asset growth and $65 million of all other rate and mix impacts, partially offset by $8 million of lower returns on alternative investments.
Previous wording
•Interest and investment income was higher for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to $60 million from invested asset growth, $41 million of all other rate impacts and $58 million from returns on alternative investments.
Current wording
•Interest and investment income was higher for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to $201 million from invested asset growth, $152 million of all other rate and mix impacts and $37 million from returns on alternative investments.
Previous wording
•Owned distribution revenue represents commissions received from our majority owned distribution partner(s) generated by third-party annuity and life insurance sales. Override and bonus commissions are recognized as revenue upon policy issuance. Owned distribution revenues for the three and six months ended June 30, 2024 represent revenues associated with Roar, and primarily reflect commission revenues.
Current wording
•Owned distribution revenues represent commissions received from our majority owned distribution partner(s) generated by third-party annuity and life insurance sales. Override and bonus commissions are recognized as revenue upon policy issuance. Owned distribution revenues for the three and nine months ended September 30, 2024 represent revenues associated with the acquisitions of Roar and PALH, and primarily reflect commission revenues.
Previous wording
Recognized gains and (losses), net is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Recognized gains and (losses) attributable to these agreements, and thus excluded from the totals in the table above, was $10 million and $(9) million for the three and six months ended June 30, 2024, respectively, and $21 million and $(1) million for the three and six month periods ended June 30, 2023, respectively.
Current wording
Recognized gains and (losses), net is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements. Recognized gains and (losses) attributable to these agreements, and thus excluded from the totals in the table above, was $(177) million and $(186) million for the three and nine months ended September 30, 2024, respectively, and $43 million and $42 million for the three and nine month periods ended September 30, 2023, respectively.
Previous wording
•For the six months ended June 30, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of unrealized FVO gains on owned distribution investments and preferred securities and mark-to-market gains on our equity securities.
Current wording
•For the nine months ended September 30, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of unrealized FVO gains on owned distribution investments and mark-to-market gains on our preferred and equity securities.
Previous wording
•For the three and six months ended June 30, 2023, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of mark-to-market losses on our equity securities and realized losses on fixed maturity available-for-sale securities.
Current wording
•For the three and nine months ended September 30, 2023, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result realized losses on fixed maturity available-for-sale securities, partially offset by mark-to-market gains on our equity securities and realized gains on other invested assets.
Previous wording
•PRT agreements decreased for the three months ended June 30, 2024 and increased for the six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively, reflecting the timing of PRT transactions. PRT transactions are subject to fluctuation period to period.
Current wording
•PRT agreements decreased for the three months ended September 30, 2024 and increased for the nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, respectively, reflecting the timing of PRT transactions. PRT transactions are subject to fluctuation period to period.
Previous wording
•The indexed annuities/IUL market related liability movements during the three and six months ended June 30, 2024 and June 30, 2023, respectively, are mainly driven by changes in the equity markets, non-performance spreads, and risk free rates during the periods. The change in risk free rates and non-performance spreads (decreased) increased the indexed annuities market related liability by $(85) million and $(59) million during the three months ended June 30, 2024 and June 30, 2023. The change in risk free rates and non-performance spreads (decreased) increased the FIA market related liability by $(168) million and $6 million during the six months ended June 30, 2024 and June 30, 2023, respectively. The remaining changes in market value of the market related liability movements for all periods was driven by equity market impacts. See “Revenues—Recognized gains and (losses), net”above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.
Current wording
•The indexed annuities/IUL market related liability movements during the three and nine months ended September 30, 2024 and September 30, 2023, respectively, are mainly driven by changes in the equity markets, non-performance spreads, and risk free rates during the periods. The change in risk free rates and non-performance spreads increased (decreased) the indexed annuities market related liability by $255 million and $(196) million during the three months ended September 30, 2024 and September 30, 2023. The change in risk free rates and non-performance spreads increased (decreased) the FIA market related liability by $87 million and $(190) million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The remaining changes in market value of the market related liability movements for all periods was driven by equity market impacts. See “Revenues—Recognized gains and (losses), net”above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.
Previous wording
•Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees. During the first quarters of 2024 and 2023, based on increases in interest rates and pricing changes, we updated certain indexed annuity assumptions related to the option budget used to calculate the fair value of the embedded derivative component within contractholder funds. During the first quarter of 2023 we also aligned reserves to actual policyholder behavior. These changes resulted in increases in total benefits and other changes in policy reserves of approximately $57 million and $102 million for the six months ended June 30, 2024 and June 30, 2023, respectively.
Current wording
◦During the third quarter and nine months ended September 30, 2023, based on increases in interest rates and pricing changes, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and also aligned reserves to actual policyholder behavior. These changes resulted in a decrease in total benefits and other changes in policy reserves of approximately $23 million for the three months ended September 30, 2023 and an increase of approximately $74 million for the nine months ended September 30, 2023.
Previous wording
•Index credits, interest credited and bonuses for the three and six months ended June 30, 2024, were higher compared to the three and six months ended June 30, 2023, primarily reflecting higher index credits and interest credited on indexed annuities and other policies as a result of market movement during the respective periods and higher interest credited associated with the growth in PRT agreements.
Current wording
•Index credits, interest credited and bonuses for the three and nine months ended September 30, 2024, were higher compared to the three and nine months ended September 30, 2023, primarily reflecting higher index credits and interest credited on indexed annuities and other policies as a result of market movement during the respective periods and higher interest credited associated with the growth in PRT agreements.
Previous wording
•Changes in market risk benefit (gains) losses for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily reflect changes in market related movements for the respective periods.
Current wording
•Changes in market risk benefit (gains) losses for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily reflect changes in market related movements for the respective periods.
Previous wording
•DAC, VOBA and DSI are amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization. Amortization of DAC, VOBA and DSI increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily reflecting increased DAC and DSI associated with the growth of the business, as well as a slightly increased amortization rate on some DAC and DSI balances due to updates to the surrender and mortality assumptions for the indexed annuity and fixed-rate annuity blocks that occurred in the third quarter of 2023. In addition, VOBA amortization increased approximately $15 million for the three and six months ended June 30, 2024 reflecting actuarial model updates and refinements.
Current wording
DSI increased for the three and nine months ended September 30, 2024, compared to the three and nine months ended September 30, 2023, primarily reflecting increased DAC and DSI associated with the growth of the business. In addition, as a result of our annual actuarial assumption update process, amortization rates on some DAC and DSI balances increased primarily for indexed annuities. Amortization of VOBA also increased approximately $15 million for the nine months ended September 30, 2024 reflecting other actuarial model updates and refinements.
Previous wording
•Amortization of other intangible assets and fixed asset depreciation for the three and six months ended June 30, 2024 included amortization of other intangible assets from our majority owned interest in Roar.
Current wording
•Amortization of other intangible assets and fixed asset depreciation for the three and nine months ended September 30, 2024 included amortization of other intangible assets from our majority owned interests in Roar and PALH.
Previous wording
•Personnel costs and other operating expenses for the three and six months ended June 30, 2024 were higher compared to the three and six months ended June 30, 2023, reflecting costs in line with the growth in sales and assets along with continued investments in our operating platform. In addition, the three and six months ended June 30, 2024 includes $7 million and $18 million, respectively, from our majority owned interest in Roar.
Current wording
•Personnel costs and other operating expenses for the three and nine months ended September 30, 2024 were higher compared to the three and nine months ended September 30, 2023, reflecting costs in line with the growth in sales and assets along with continued investments in our operating platform. In addition, the three and nine months ended September 30, 2024 includes $10 million and $28 million, respectively, from our majority owned interests in Roar and PALH.
Previous wording
•Interest expense increased for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, primarily reflecting interest on the debt issuances in December 2023 and June 2024, partially offset by lower interest resulting from a partial repayment of the 5.5% F&G Notes in June 2024 and lower balances on the revolving credit facility.
Current wording
•Interest expense increased for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, primarily reflecting interest on the debt issuances in December 2023 and June 2024, partially offset by lower interest resulting from a partial repayment of the 5.5% F&G Notes in June 2024 and lower balances on the revolving credit facility.
Previous wording
•Income tax expense for the three months ended June 30, 2024 was $50 million, compared to income tax expense of $33 million for the three months ended June 30, 2023. The effective tax rate was 20% for both the three months ended June 30, 2024 and June 30, 2023, respectively. The increase in income tax expense period over period is primarily related to the increase in pre-tax income.
Current wording
•Income tax benefit for the three months ended September 30, 2024 was $25 million, compared to income tax expense of $74 million for the three months ended September 30, 2023. The effective tax rate was 83% and 19% for the three months ended September 30, 2024 and September 30, 2023, respectively. The decrease in income tax expense period over period is primarily related to the decrease in pre-tax income.
Previous wording
•Income tax expense for the six months ended June 30, 2024 was $76 million, compared to income tax expense of $25 million for the six months ended June 30, 2023. The effective tax rate was 19% and (63)% for the six months ended June 30, 2024 and June 30, 2023, respectively. The increase in income tax expense period over period is related to the increase in pre-tax income. Income tax expense for the six months ended June 30, 2023 contains an increase in the valuation allowance of $39 million and the period over period increase would have been larger absent this amount.
Current wording
•Income tax expense for the nine months ended September 30, 2024 was $51 million, compared to income tax expense of $99 million for the nine months ended September 30, 2023. The effective tax rate was 14% and 29% for the nine months ended September 30, 2024 and September 30, 2023, respectively. The decrease in income tax expense period over period is primarily related to the change in the valuation allowance expense.
Previous wording
•Adjusted net earnings of $247 million for the six months ended June 30, 2024 included $245 million of investment income from alternative investments and $10 million of CLO redemptions and bond prepay income, partially offset by $16 million of actuarial model updates and refinements. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $317 million.
Current wording
•Adjusted net earnings of $403 million for the nine months ended September 30, 2024 included $376 million of investment income from alternative investments, $31 million of CLO redemptions and bond prepay income, and $14 million tax valuation allowance, partially offset by $33 million of net expense from actuarial assumption and model updates. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $489 million.
Previous wording
•Adjusted net earnings of $140 million for the six months ended June 30, 2023 included $181 million of investment income from alternative investments and $5 million of bond prepay income, offset by $37 million tax valuation allowance expense. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $269 million.
Current wording
•Adjusted net earnings of $260 million for the nine months ended September 30, 2023 included $295 million of investment income from alternative investments and $5 million of bond prepay income, offset by $37 million tax valuation allowance. Alternative investments investment income based on management’s long-term expected return of approximately 10% was $411 million..
Previous wording
As of June 30, 2024 and December 31, 2023, the fair value of our investment portfolio was approximately $55 billion and $52 billion, respectively, and was divided among the following asset classes and sectors (dollars in millions):
Current wording
As of September 30, 2024 and December 31, 2023, the fair value of our investment portfolio was approximately $59 billion and $52 billion, respectively, and was divided among the following asset classes and sectors (dollars in millions):
Previous wording
(a)Includes investment grade non-redeemable preferred stocks ($283 million and $428 million at June 30, 2024 and December 31, 2023, respectively).
Current wording
(a)Includes investment grade non-redeemable preferred stocks ($239 million and $428 million at September 30, 2024 and December 31, 2023, respectively).
Previous wording
The NAIC determines ratings for non-agency Residential Mortgage-backed Securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) using modeling that estimates security level expected losses under a variety of economic scenarios. For such assets issued prior to January 1, 2013, an insurer’s amortized cost basis in applicable assets can impact the assigned rating. In the tables below, we present the rating of structured securities based on ratings from the NAIC rating methodologies described above (which in some cases do not correspond to rating agency designations). All NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.
Current wording
The NAIC determines ratings for non-agency Residential Mortgage-backed Securities (“RMBS”) and commercial mortgage-backed securities using modeling that estimates security level expected losses under a variety of economic scenarios. For such assets issued prior to January 1, 2013, an insurer’s amortized cost basis in applicable assets can impact the assigned rating. In the tables below, we present the rating of structured securities based on ratings from the NAIC rating methodologies described above (which in some cases do not correspond to rating agency designations). All NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.
Previous wording
As of June 30, 2024, the CLO and ABS positions were trading at a net unrealized gain position of $120 million and a net unrealized loss of $239 million, respectively. As of December 31, 2023, the CLO and ABS positions were trading at a net unrealized gain position of $65 million and a net unrealized loss of $344 million, respectively.
Current wording
As of September 30, 2024, the CLO and ABS positions were trading at a net unrealized gain of $103 million and a net unrealized loss of $114 million, respectively. As of December 31, 2023, the CLO and ABS positions were trading at a net unrealized gain of $65 million and a net unrealized loss of $344 million, respectively.
Previous wording
Our municipal bond exposure is a combination of general obligation bonds (fair value of $200 million and $231 million and an amortized cost of $241 million and $268 million as of June 30, 2024 and December 31, 2023, respectively) and special revenue bonds (fair value of $1,222 million and $1,334 million and an amortized cost of $1,417 million and $1,506 million as of June 30, 2024 and December 31, 2023, respectively).
Current wording
Our municipal bond exposure is a combination of general obligation bonds (fair value of $217 million and $231 million and an amortized cost of $248 million and $268 million as of September 30, 2024 and December 31, 2023, respectively) and special revenue bonds (fair value of $1,256 million and $1,334 million and an amortized cost of $1,387 million and $1,506 million as of September 30, 2024 and December 31, 2023, respectively).
Showing the first 40 of 61 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
•For the three months ended September 30, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of mark-to-market gains on our preferred and equity securities.
Current report — wording carried from elsewhere
•Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees.
Current report — wording carried from elsewhere
•DAC, VOBA and DSI are amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization. Amortization of DAC, VOBA and
Current report — wording carried from elsewhere
January 15, 2025, to FNF Preferred Stock record holders on January 1, 2025 and, (b) a quarterly cash dividend of $0.22 per common share, payable on December 31, 2024, to F&G common shareholders of record as of December 17, 2024.