F&G Annuities & Life, Inc. (F&G) provides insurance solutions serving retail annuity and life customers, as well as institutional clients.
As of December 31, 2024, F&G had approximately 731,000 policyholders who count on the safety and protection of its fixed annuity and life insurance products. The company serves approximately 115,000 plan participants who will receive their pension payments from F&G through its pension risk transfer solutions.
Through the company’s insurance subsidiaries, in...
F&G Annuities & Life, Inc. (F&G) provides insurance solutions serving retail annuity and life customers, as well as institutional clients.
As of December 31, 2024, F&G had approximately 731,000 policyholders who count on the safety and protection of its fixed annuity and life insurance products. The company serves approximately 115,000 plan participants who will receive their pension payments from F&G through its pension risk transfer solutions.
Through the company’s insurance subsidiaries, including Fidelity & Guaranty Life Insurance Company (‘FGL Insurance’) and Fidelity & Guaranty Life Insurance Company of New York (‘FGL NY Insurance’), the company markets a broad portfolio of annuities, including fixed indexed annuities (‘FIAs’), registered index-linked annuities (‘RILAs’), (together referred to as ‘indexed annuities’), multi-year guarantee annuities (‘MYGAs’), as well as pension risk transfer (‘PRT’) solutions, indexed universal life (‘IUL’) insurance, and institutional funding agreements.
The company has long-standing relationships with a broad range of distributors representing nearly 138,000 independent agents and financial advisors, built on the company’s reputation for transparency and a consistently competitive product portfolio. The company offers fixed annuities and life insurance products through a network of approximately 22 leading banks and broker-dealers, and approximately 300 Independent Marketing Organizations (‘IMO’) that provide back-office support for thousands of independent insurance agents.
With the addition of the retail bank and broker-dealer channels, and the company’s success in entering the PRT and funding agreement institutional markets, F&G has diversified its product and distribution capabilities from one primary channel to now five, and from one primary product to now six, with its entrance into the RILA market in early 2024.
Strategy
Through a diversified growth strategy, F&G has demonstrated profitability. The company’s strategies are to target large and growing markets; a superior ecosystem of having strong and long-standing relationships with a diverse network of distributors; a durable investment edge through the company’s Blackstone partnership; and a scalable administrative platform. The company has successfully diversified products and channels, and driven margin expansion.
Products
F&G’s expertise in annuities, life insurance, pension risk transfer solutions, and funding agreements will allow the company to continue to introduce innovative products and solutions designed to meet customers’ changing needs. The company works hand-in-hand with its distributors and institutional advisors to devise the most suitable solutions for the ever-changing market. The company’s retail annuities serve as a retirement and savings tool on which its customers rely for principal protection and predictable income streams. In addition, the company’s life insurance products provide its customers with a complementary product that allows them to build on their savings and provide a payment to their designated beneficiaries upon the policyholder’s death. The company’s most popular products are FIAs that tie contractual returns to specific market indices, such as the S&P 500 Index. The company’s customers value its FIAs, which provide a portion of the gains of an underlying market index, while also providing principal protection. In 2021, the company launched into two institutional markets to originate FABN and PRT transactions. These markets leverage the company’s existing team's spread-based capabilities, as well as its strategic partnership with Blackstone.
The company invests the proceeds primarily in fixed income securities. The company also uses options and futures that hedge the index credit of its FIA and IUL liabilities by replicating the market index returns to its policyholders. The company invests in options on indices, such as the S&P 500 Index. The majority of the company’s products allow for active management to achieve targeted lifetime returns.
Annuities: Through F&G’s insurance subsidiaries, the company issues a broad portfolio of deferred annuities (indexed annuities and fixed rate annuities), immediate annuities, and PRT solutions. A deferred annuity is a type of contract that accumulates value on a tax-deferred basis and typically begins making specified periodic or lump sum payments a certain number of years after the contract has been issued. An immediate annuity is a type of contract that begins making specified payments within one annuity period (e.g., one month or one year) and typically pays principal and earnings in equal payments over some period of time.
Deferred Annuities – FIAs: The company’s FIAs allow contract owners the possibility of earning returns linked to the performance of a specified market index, such as the S&P 500 Index, while providing principal protection. The contract owners typically make a single deposit into its deferred annuities. The contracts include a provision for a minimum guaranteed surrender value calculated in accordance with applicable law. A market index tracks the performance of a specific group of stocks representing a particular segment of the market, or, in some cases, an entire market. For example, the S&P 500 Composite Stock Price Index is an index of 500 stocks intended to be representative of a broad segment of the market. All FIA products allow policyholders to allocate funds once a year among several different crediting strategies, including one or more index-based strategies and a traditional fixed rate strategy. Surrender charges apply for early withdrawal, typically for seven to fourteen years after purchase.
The company purchases derivatives consisting predominantly of over-the-counter options and, to a lesser degree, futures contracts (specifically for FIA contracts) on the equity indices underlying the applicable policy, such as the S&P 500 Index. These derivatives are used to fund the index credits due to policyholders under the FIA and IUL contracts based upon policyholders’ contract elections. The downside risk to F&G is limited to the cost of the options because if the value of the options decreases, there is no index credit. The cost of the hedge is included in the pricing of the product and can be reset on an annual basis for each policy based on market conditions. The majority of all such equity options are one-year options purchased to match the funding requirements underlying the FIA/IUL contracts. On the anniversary dates of the FIA/IUL contracts, the market index used to compute the annual index credit under the contracts is reset. At such time, the company purchases new equity options to fund the next index credit.
Approximately 39% of the FIA sales for the year ended December 31, 2024, involved premium bonuses. Approximately 48% of the company’s FIA contracts were issued with a guaranteed minimum withdrawal benefit (‘GMWB’) rider for the year ended December 31, 2024.
Deferred Annuities – Fixed Rate Annuities: Fixed rate annuities are typically single deposit contracts and include annual reset and multi-year rate guaranteed policies. Fixed rate annual reset annuities issued by the company have an annual interest rate (the ‘crediting rate’) that is guaranteed for the first policy year. After the first policy year, the company has the discretionary ability to change the crediting rate once annually to any rate at or above a guaranteed minimum rate.
Deferred Annuities - RILA: In early 2024, the company entered into the RILA markets. RILAs are similar to FIAs in offering the policyholder the opportunity for tax-deferred growth based in part on the performance of a market index. Compared to a FIA, RILAs have the potential for higher returns but also have the potential for risk of loss to principal and related earnings. RILAs provide the ability for the policyholder to participate in the positive performance of certain market indices during a term, limited by a cap or adjusted for a participation rate. Negative performance of the market indices during a term can result in negative policyholder returns, with downside protection typically provided in the form of either a ‘buffer’ or a ‘floor’ to limit the policyholder’s exposure to market loss.
Withdrawal Options for Deferred Annuities: After the first year following the issuance of a deferred annuity, policyholders of deferred annuities are typically permitted penalty-free withdrawals up to a contractually specified amount. The penalty-free withdrawal amount is typically 10% of the prior year account value for FIAs and is typically up to accumulated interest for fixed rate annuities, subject to certain restrictions. Withdrawals in excess of allowable penalty-free amounts are assessed a surrender charge if such withdrawals are made during the penalty period of the deferred annuity policy. The penalty period typically ranges from seven to fourteen years for FIAs and three to ten years for fixed rate annuities. This surrender charge initially ranges from 8% to 14% of the contract value for FIAs and is 8% of the contract value for fixed rate annuities, and generally decreases by approximately one to two percentage points per year during the penalty period. The average surrender charge was 8% for the company’s FIAs and 7% for the company’s fixed rate annuities as of December 31, 2024. A market value adjustment (‘MVA’) will also apply in most states to any withdrawal that incurs a surrender charge, subject to certain exceptions. The MVA is based on a formula that accounts for changes in interest rates since contract issuance.
Subsequent to the penalty period, the policyholder may elect to take the proceeds of the surrender either in a single payment or in a series of payments over the life of the policyholder or for a fixed number of years (or a combination of these payment options). In addition to the foregoing withdrawal rights, policyholders may also elect to have additional withdrawal benefits by purchasing a GMWB.
Single Premium Immediate Annuities: The company has previously sold single premium immediate annuities (‘SPIA’), which provide a series of periodic payments for a fixed period of time or for the life of the policyholder, according to the policyholder’s choice at the time of issue.
Life Insurance: The company offers IUL insurance policies and has previously sold universal life, term, and whole life insurance products. Holders of universal life insurance policies may make periodic payments over the life of the contract and earn returns on their policies, which are credited to the policyholder’s cash value account. The insurer periodically deducts its expenses and the cost of life insurance protection from the cash value account.
Funding Agreements: F&G utilizes two forms of funding agreement offerings. The first is through the issuance of collateralized funding agreements with the FHLB. This enables spread-based income without longevity or mortality exposure, given the certainty in liability profile. Funding agreements through the FHLB are flexible in their format and the ability to issue during broad windows, as long as sufficient eligible collateral has been deposited with the bank. The company and its predecessors have been entering into funding agreements with the FHLB since at least 2004.
In June 2021, the company established a FABN Program, which is a medium-term note program under which funding agreements are issued to a special-purpose trust that issues marketable notes. The notes are underwritten and marketed by major investment banks’ broker-dealer operations and are sold to institutional investors. These FABN offerings are more limited regarding timing of issuance, but do not require collateralization as with the FHLB. The maximum aggregate principal amount permitted to be outstanding at any one time under the FABN Program is currently $5.0 billion.
Pension Risk Transfer: In July 2021, the company entered the PRT market. The company is active in plan buy-outs, where it has a direct, irrevocable commitment to each covered participant to make the specified annuity payments based upon the terms of the pension plan. Plan buy-out transactions fully and permanently transfer all investment, mortality, and administrative risk associated with covered benefits from the pension plan sponsor to the insurance provider.
The company’s PRT products are comparable to income annuities, as it generally receives a single, upfront premium in exchange for paying a guaranteed stream of future income payments, which are typically fixed in nature but may vary in duration based on participant mortality experience. These products primarily create earnings through spread income. In each transaction, FGL Insurance and/or FGL NY Insurance issues a group annuity contract to discharge pension plan liabilities from a pension plan sponsor, either through a separate account or through a general account guarantee.
The company’s PRT solutions business is supported by a team of experienced professionals, and it partners with brokers and institutional consultants for distribution.
Reinsurance Philosophy/Arrangements: The company’s insurance subsidiaries cede insurance to other insurance companies. The company uses reinsurance to diversify risks and earnings, to manage loss exposures, to enhance its capital position, and to manage new business volume.
In instances where the company is the ceding company, it pays a premium to a reinsurer in exchange for the reinsurer assuming a portion of the company’s liabilities under the policies it issued and collects expense allowances in return for its administration of the ceded policies. The use of reinsurance does not discharge its liability as the ceding company because the company remains directly liable to its policyholders and is required to pay the full amount of its policy obligations in the event that its reinsurers fail to satisfy their obligations. The company collects reimbursement from its reinsurers when it pays claims on policies that are reinsured.
The company monitors the credit risk related to the ability of its reinsurers to honor their obligations under various agreements. To minimize the risk of credit loss on such contracts, the company generally diversifies its exposures among many reinsurers and limits the amount of exposure to each based on financial strength ratings, which are reviewed annually. The company is able to further manage risk with various forms of collateral or collateral arrangements, including secured trusts, funds withheld arrangements, and irrevocable letters of credit.
Wilton Reinsurance Transaction: Almost all of the life insurance policies in force issued before March 1, 2010, except for the return of premium benefits on term life insurance products, are subject to a reinsurance arrangement with Wilton Reassurance Company (‘Wilton Re’). Pursuant to the agreed-upon terms, Wilton Re purchased through a 100% quota share reinsurance agreement certain FGL Insurance life insurance policies that are subject to redundant reserves, reported on a statutory basis, under Regulation XXX and Guideline AXXX, as well as another block of FGL Insurance’s in-force traditional, universal life, and IUL insurance policies. The effects of this agreement are accounted for as reinsurance, as the ceded policies qualify as insurance products and because the agreement satisfies the risk transfer requirements for GAAP.
Hannover Reinsurance Transaction: Originally effective January 1, 2017, FGL Insurance has a reinsurance agreement with Hannover Life Reassurance Company of America, an unaffiliated reinsurer, to reinsure an in-force block of FGL Insurance’s FIA and fixed rate deferred annuity contracts with GMWB and Guaranteed Minimum Death Benefit (‘GMDB’) guarantees. In accordance with the terms of this agreement, FGL Insurance cedes 70% net retention of secondary guarantee payments in excess of account value for GMWB and death benefits in excess of account value for GMDB guarantees.
Kubera Reinsurance Transaction: FGL Insurance has a reinsurance agreement with Kubera Insurance (SAC) Ltd. (‘Kubera’), an unaffiliated reinsurer, to cede certain FIA statutory reserves on a coinsurance funds withheld quota share basis, net of applicable existing reinsurance.
Kubera & Somerset Reinsurance Transactions: FGL Insurance entered into a reinsurance agreement with Kubera, effective December 31, 2018, to cede certain fixed rate annuity (including MYGA) GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance. Effective October 31, 2021, this agreement was novated from Kubera to Somerset Reinsurance Ltd. (‘Somerset’). Effective December 1, 2023, FGL Insurance executed an additional coinsurance funds withheld agreement with Somerset to cede certain flow MYGA business written effective on or after December 1, 2023.
Everlake Reinsurance Transaction: Effective September 1, 2023, FGL Insurance executed a coinsurance agreement with Everlake Life Insurance Company (‘Everlake’), an unaffiliated reinsurer, to cede, on a quota share basis, certain flow MYGA business written effective on or after September 1, 2023. As the policies ceded to Everlake are investment contracts, there is no significant insurance risk present, and therefore the reinsurance agreement is accounted for as a separate investment contract.
Aspida Reinsurance Transaction: FGL Insurance has a reinsurance agreement with Aspida Life Re Ltd. (‘Aspida Re’), an unaffiliated reinsurer, to cede certain flow MYGA business, on a funds withheld coinsurance basis, net of applicable existing reinsurance, written effective on or after January 15, 2021. As the policies ceded to Aspida Re are investment contracts, there is no significant insurance risk present, and therefore the reinsurance agreement is accounted for as a separate investment contract.
New Re Reinsurance Transaction: Effective December 31, 2022, FGL Insurance entered into an indemnity reinsurance agreement with New Reinsurance Company Ltd., an unaffiliated reinsurer and wholly owned subsidiary of Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (d/b/a Munich Re), to cede certain FIA policies. Effective July 1, 2023, this agreement was amended to reinsure additional FIA products. The coinsurance quota share is only applicable to the base contract benefits under the FIA policies. The yearly renewable term is applicable to the waiver of surrender charges and return of premium.
The CARVM Facility: Life insurance companies operating in the United States must calculate required reserves for life and annuity policies based on statutory principles. The insurance divisions have adopted the methodology contained in the NAIC Valuation Manual as the prescribed methodology for the insurance industry. The industry has reduced or eliminated redundancies, thereby increasing capital using a variety of techniques, including reserve facilities.
FGL Insurance has a reinsurance treaty with Raven Reinsurance Company (‘Raven Re’), its wholly owned captive reinsurance company, to cede the Commissioners Annuity Reserve Valuation Method (‘CARVM’) liability for annuity benefits where surrender charges are waived related to certain FIA, deferred annuity, and MYGA policies. In connection with the CARVM reinsurance agreement, FGL Insurance and Raven Re entered into an agreement with Nomura Bank International plc (‘NBI’) to establish a reserve financing facility in the form of a letter of credit issued by NBI. The amended facility may terminate earlier than the current termination date of October 1, 2027, in accordance with the terms of the reimbursement agreement. Under the terms of the reimbursement agreement, in the event the letter of credit is drawn upon, Raven Re is required to repay the amounts utilized, and F&G Annuities & Life, Inc. (‘FGAL’) is obligated to repay the amounts utilized if Raven Re fails to make the required reimbursement. Under the terms of the agreement, FGAL is also required to make a capital contribution to Raven Re in certain circumstances, including in the event that Raven Re’s statutory capital and surplus falls below defined levels.
GMWB/GWP Reinsurance Transaction: Effective December 31, 2023, FGL Insurance recaptured its reinsurance arrangement with Canada Life Assurance Company (‘Canada Life’) United States Branch, covering FIA policies with GMWB and guaranteed withdrawal payment (‘GWP’) features, and entered into a reinsurance treaty with Corbeau Re, Inc. (‘Corbeau Re’), its wholly owned captive reinsurance company, to cede certain FIA policies with GMWB and GWP. In accordance with the terms of this agreement, FGL Insurance cedes a quota share of GMWB and GWP paid in excess of account value. In connection with the reinsurance agreement between FGL Insurance and Corbeau Re, Corbeau Re entered into an excess of loss reinsurance agreement (‘XOL’) with Canada Life Barbados Branch to finance the portion of statutory reserves considered to be non-economic. The XOL matured on December 31, 2043, and provided for coverage on losses up to $1,500 million as of December 31, 2024. With Corbeau Re, non-economic reserves were financed through the maturity date of the XOL, and statutory reserves are recorded for all risks expected to be incurred after the maturity date of the XOL. The XOL is not accounted for as reinsurance as it does not satisfy the risk transfer requirements for GAAP; therefore, deposit accounting is applied. Under the terms of the agreement, FGAL is required to make a capital contribution to Corbeau Re in certain circumstances, including in the event that Corbeau Re’s statutory capital and surplus falls below defined levels.
PRT Reinsurance Transaction: Effective October 1, 2023, FGL Insurance recaptured a reinsurance agreement with its affiliate F&G Life Re Ltd. (‘F&G Life Re’), a Bermuda reinsurer, covering a quota share of certain pension risk transfer group annuity contracts, and entered into an agreement with its affiliate F&G Cayman Re Ltd. (‘F&G Cayman Re’), a Cayman Islands reinsurer, to reinsure a quota share of certain pension risk transfer group annuity contracts (previously ceded to F&G Life Re) in addition to flow pension risk transfer group annuity contracts. Some of the contracts reinsured are held by FGL Insurance’s general account, and others are held by a FGL Insurance separate account (which does not meet the GAAP definition of a separate account). Reinsurance of the general account contracts is maintained on a coinsurance funds withheld basis for the general account statutory reserves. Reinsurance of the separate account contracts is maintained on a modified coinsurance basis for the separate account statutory reserves and a coinsurance basis for the general account statutory reserves supporting the separate account. In connection with the agreement, F&G Cayman Re entered into a financing agreement with Deutsche Bank AG (‘DB’), operating out of its New York branch, whereby DB issued a letter of credit used to support the coinsured general account statutory reserves (generally considered to be the non-economic reserves).
Retail Distribution Channels
The company distributes its annuity and life insurance products through three main retail channels of distribution: independent agents, banks, and broker-dealers.
In the company’s independent agent channel, the sale of its products typically occurs as part of a four-party, three-stage sales process between FGL Insurance, an IMO, the agent, and the customer. FGL Insurance designs, manufactures, issues, and services the product. The IMO provides training and discusses product options with agents in preparation for meetings with clients. The IMO staff also provide assistance to the agent during the selling and application process. The agent may get customer leads from the IMOs. The agent conducts a fact-finding and presents suitable product choices to the customers. The company monitors the business issued by each distribution partner for pricing metrics, mortality, persistency, as well as market conduct and suitability.
The company offers its products through a network of approximately 300 IMOs, representing approximately 126,000 agents. The company identifies Power Partners as those who have demonstrated the ability to generate significant production for its business. The company currently has 41 Power Partners, consisting of 19 annuity IMOs and 22 life insurance IMOs.
The company took a similar approach in launching products as a new entrant into the bank and broker-dealer channels by partnering with one of the largest broker-dealers in the industry. In 2020, F&G launched a set of fixed rate annuity and FIA products to banks and broker-dealers, and gained selling agreements with some of the largest banks and broker-dealers in the United States. The company offers its products through a network of approximately 22 banks and broker-dealers, representing approximately 12,000 financial advisers. The financial advisers at its bank and broker-dealer partners are able to offer their clients guaranteed rates of return, protected growth, and income for life through its Secure series of annuity products. The company employs a hybrid distribution model in this channel, whereby some financial institutions partner directly with F&G and its sales team, and others work with an intermediary. As such, the company partners with a select number of financial institution intermediaries who have expertise in the channel and maintain the appropriate field wholesaling forces to be successful in this channel. In 2024, the top 5 firms represented 77% of channel sales.
The top five states for the distribution of F&G’s retail products in the year ended December 31, 2024, were Florida, California, Pennsylvania, Texas, and Ohio, which together accounted for 38.7% of F&G’s retail sales.
Regulation
FGL Insurance, FGL NY Insurance, Raven Re, and Corbeau Re are subject to comprehensive regulation and supervision in their domiciles, Iowa, New York, Vermont, and Vermont, respectively, and in each state in which they do business. FGL Insurance does business throughout the United States and Puerto Rico, except for New York. FGL NY Insurance only does business in New York. Raven Re is a special purpose captive reinsurance company that only provides reinsurance to FGL Insurance under the CARVM Treaty. Corbeau Re, a wholly owned captive reinsurance company, reinsures certain of FGL Insurance’s FIA policies with GMWB and GWP. FGL Insurance’s principal insurance regulatory authority is the IID; however, state insurance departments throughout the United States also monitor FGL Insurance’s insurance operations as a licensed insurer. The New York State Department of Financial Services (‘NYDFS’) regulates the operations of FGL NY Insurance.
Certain provisions of the Dodd-Frank Act are applicable to the company.
F&G Life Re is a Bermuda exempted company incorporated under the Companies Act, 1981, as amended (the ‘Bermuda Companies Act’), and registered as a Class E insurer under the Insurance Act 1978, as amended, and its related regulations (the ‘Bermuda Insurance Act’). F&G Life Re is regulated by the Bermuda Monetary Authority (‘BMA’).
F&G Cayman Re is a Cayman Islands exempted company incorporated under the Companies Act, (2023 Revision), as amended, and licensed as a Class D insurer in the Cayman Islands under the Insurance Act, 2010, as amended, and its related regulations (the ‘Cayman Islands Insurance Act’). F&G Cayman Re is regulated by the Cayman Islands Monetary Authority (‘CIMA’).
History
F&G Annuities & Life, Inc. was founded in 1959. The company was incorporated in 2020.
