Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
|---|
| For us, obviously, we want to continue to pay a strong and growing common dividend and we've been able to do that |
| We generated very strong positive net inflows in 2023, given our record new business volumes, which restart the surrender charge period, further improving liability profile |
| So yes, we feel really good about it |
| We've obviously done better than that in years past |
| Thank you as well to our many partners and to our customers whose feedback resulted in F&G being ranked number one for highest customer satisfaction among annuity providers in the U.S |
| But yes, I think the top line environment is fantastic |
| We're really pleased with the returns we're getting on new business right now |
| First, our retail and pension risk transfer businesses continue to generate sustainable asset growth |
| We reported record gross sales of $13.2 billion in 2023, which exceeded the top end of the $12 billion to $13 billion range we provided at our Investor Day in October and were up 17% over the prior year, well in line with our goal of growing annual gross sales of a double-digit clip |
| This demonstrates the strength of our multichannel distribution platform that is hitting on all cylinders and generated $10 billion of retail gross sales through our agent, bank and broker-dealer channels |
| We also had record net sales of $9.2 billion in 2023, well above the threshold of $6 billion to $7 billion of annual net sales needed to grow our retained AUM and managed in line with our capital targets |
| I mean we're in just a fantastic environment for our products |
| We think we're well positioned |
| The higher percentage of flow reinsurance provides a lower capital requirement of the ceded new business while allocating capital to the highest returning retained business, enhances cash flow and generates fee-based earnings resulting in accretive returns to F&G |
| We've profitably grown retained assets under management to a record $49.5 billion at December 31 |
| So yes, we're really, really excited about this |
| A second area to highlight has been the steady and predictable performance of our profitable in-force book |
| While markets were volatile through 2023, we benefited from the superior foundation that our in-force book provides |
| Our ownership stakes generate a higher margin earnings stream at a lower cost of capital, which we expect to be accretive to our returns over time |
| A third area of achievement over the last 12 months has been the outstanding performance of our investment portfolio that is well matched to our clean and stable liability profile |
| Lastly, we continue to diversify and enhance our earnings power as we execute on our own distribution strategy |
| We also expect to achieve 300 to 400 basis points of expansion to adjusted ROE, excluding AOCI, and significant items over that same time horizon |
| We expect to deliver 15 to 30 basis points of core margin expansion and an additional 8 to 15 basis points of own distribution margin expansion to increase our baseline adjusted ROA, excluding significant items over the medium term |
| This reflects upside from higher yields on new investments and floating rate assets |
| We also expect to deliver ongoing margin expansion from enhanced investment margin opportunities, effectively managing our operating expenses while scaling our organization over time and driving fee-based earnings from accretive flow reinsurance |
| The launch of our RILA product earlier this month will be a nice tailwind to our sales growth as we enter a large and fast-growing market |
| Also, we've refreshed our annual portfolio stress test, which is conservative and assumes no management action and is once again confirmed that our portfolio is well positioned to withstand a sharp downturn in the economy |
| A fourth area to highlight in 2023 centers on our balance sheet strength and capital allocation given we were well prepared to drive growth and capture the market opportunity |
| Importantly, I remain optimistic that we can continue to deliver double-digit gross sales growth in 2024, driven by our retail and pension risk transfer growth strategies |
| To conclude, we have real momentum across our platform as we enter 2024 that positions us to deliver sustainable asset growth, ongoing margin expansion and improved returns as well as enhanced earnings power as we strive to build upon this past year's many successes |
| Statement |
|---|
| Credit-related impairments remain low, averaging 5 basis points over the past three years, well below our pricing assumptions |
| The assumption about the 10% return, is that still a good return assumption? It seems like obviously, there's been a lot of market volatility lately that's been challenging with the better equity markets |
| During the fourth quarter, we saw some margin compression from the interest rate volatility that the annuities industry experienced as rates fell dramatically through the end of the year and consumers rush to lock in rates, creating a dynamic environment for crediting rates and strategy |
| As you can tell, I could not be more excited with the opportunities we have in front of us as we entered 2024 |
| Given the potential for an economic slowdown and lower interest rates in the years ahead, we took some downside risk off the table by hedging approximately $5 billion of our $10 billion floating rate asset portfolio, locking in about 190 basis points of incremental yield beyond what was originally priced in |
| But I would expect in the near term, it's going to come down |
| So it's an unusual scenario |
| For fixed indexed annuities, we have seen elevated surrenders this year, although offset by higher inflows |
| Adjusted net earnings for the fourth quarter of 2023 were $75 million or $0.60 per share and included $110 million or $0.88 per share of investment income from alternative investments and $19 million or $0.15 per share of other significant expense items comprised of $9 million unfavorable actuarial industry assumption update and $10 million onetime fixed asset impairment charge |
| It's going to continue to come down a bit more |
| I do think you're going to see more volatility just because of realizations are down |
| For comparison, adjusting for these significant items in both periods, adjusted net earnings were $131 million in the fourth quarter 2023, down 9% from $144 million in fourth quarter of 2022 and reflect modest product margin expansion due to inherent timing lag between the precipitous decline in rates and our pricing actions in the fourth quarter of 2023 and accretive flow reinsurance fees, which were more than offset by higher interest expense due to planned capital market activity and higher operating costs in line with our growth in sales and assets and continued investments in our operating platform |
| We reported $299 million net loss in the fourth quarter of 2023 and a $58 million net loss in 2023 for full year |
| But as you probably heard me say before, I think it's just scratching the surface |
| This is not the first time we have navigated these issues |
| Given adequate liquidity levers, we do not expect to sell securities and realize losses to meet corporate liquidity needs |
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