Greetings, and welcome to the F&G Annuities and Life Fourth Quarter and Full Year 2022 Earnings Conference Call. As a reminder, this conference has been recorded. It is now my pleasure to introduce your host, Lisa Foxworthy-Parker, Senior President, Investor Relations and External Relations. Thank you. You may begin.

Great. Thanks, operator, and welcome, everyone, to F&G's Fourth Quarter and Full Year 2022 Earnings Call. Joining me today are Chris Blunt, Chief Executive Officer; and Wendy Young, Chief Financial Officer. We look forward to addressing your questions following our prepared remarks. 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 SEC filings for a discussion of the factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP financial measures that we believe may be meaningful to investors. Non-GAAP measures have been reconciled to GAAP where required in accordance with SEC rules within our earnings release, financial supplement, and investor presentation, all of which are available on the company's website. Today's call is being recorded and will be available for webcast replay at fglife.com. It will also be available through telephone replay beginning today at 1:00 PM Eastern Time through March 9, 2023. And now I'll turn the call over to our CEO, Chris Blunt.

Good morning and thanks for joining us today. We're proud to have reached a milestone in the quarter by becoming a publicly listed company. I'd like to start by thanking our team, our parent Fidelity National Financial, and our partners for all of their contributions to achieve F&G's December 1 listing on the New York Stock Exchange. For those new to our story, the purpose of this public listing is to provide for a sum of the parts valuation. That is to provide recognition of F&G's value creation as a stand-alone public company and in turn, to unlock the value of the 85% majority ownership in F&G held by our parent FNF. We view this as a win-win for F&G. It allows investors to invest directly in F&G and creates new optionality for F&G, as we gain access to the public markets over time, while continuing to benefit from FNF's majority ownership. FNF uses this as a competitive advantage as F&G's primarily spread-based business provides a steady and growing source of earnings that will benefit FNF over time as well as a countercyclical business model to their title business. I could not be more pleased with our overall results in this inaugural quarter following F&G's transition back to a public company. F&G is well positioned for growth through its multichannel new business platform. And our entire team is working hard every day to create long-term shareholder value. Turning to our results. F&G reported total gross sales of $2.7 billion in the fourth quarter, a 23% increase over the prior year quarter. On a full-year basis, F&G reported record gross sales of $11.3 billion in 2022, an 18% increase over full-year 2021, boosting our ending assets under management to nearly $44 billion as of December 31. The continued growth has us well ahead of our goal of doubling assets under management to $50 billion over 5 years as outlined at the time of our acquisition by FNF in 2020. We are on target to achieve that goal this year. Our retail channels reported record gross sales of $2.5 billion in the fourth quarter, a 79% increase over the prior year quarter. On a full-year basis, our retail channels reported record gross sales of $8.5 billion, a 37% increase over the full-year 2021. We saw growth across all three retail channels, including agent, bank, and broker-dealer channels, which was driven by increased demand for our products in the rising rate environment, expanding relationships with new and existing distribution partners, traction from a comprehensive product portfolio that meets a broad range of consumer needs, and backed by strong customer satisfaction levels as F&G was ranked #2 by J.D. Power among individual annuity providers in 2022. We are well positioned for continued profitable growth in our retail channels and excited about several initiatives that are underway. In our bank and broker-dealer channels, we are a leading carrier with our top partners and have a growing product and partner footprint with nearly 20 partners at year-end. In our agent channel, we are committed to our deep long-tenured partners as a leading provider of annuity and life insurance solutions. We are also pursuing a strategy to expand our owned life insurance distribution while boosting our presence in underserved multicultural and middle-market segments. We were pleased to announce a 49% equity investment in a leading independent agent, life insurance distribution partner, SYNCIS, last month, which aligns with our diversified growth strategy and is accretive to our shareholders. This builds on our 30% equity investment in Freedom Equity Group, one of F&G's top independent agent life distribution partners, which closed in late 2021. Next, turning to institutional markets, where we have achieved cumulative sales of $6.3 billion since launch in mid-2021, providing meaningful diversification and scale. These cumulative sales include $2.5 billion in pension risk transfer with 11 transactions completed, ranging from $65 million to $500 million in size and over 47,000 covered lives, $2.6 billion of funding agreement-backed note issuances under our $5 billion shelf registration, and $1.2 billion of federal home loan bank funding agreements. For the fourth quarter, institutional sales included approximately $250 million of pension risk transfer. For the full year, we reported $2.8 billion of institutional sales in 2022, split evenly between pension risk transfer and funding agreements and in line with our expected $2 billion to $4 billion annual sales run rate dependent on appetite and market conditions. F&G's total net sales retained were $1.9 billion in the fourth quarter and $9 billion for the full year, a 7% decrease and a 3% increase over fourth quarter and full year 2021, respectively. This reflects the increase of MYGA flow reinsurance from 50% to 75% with Aspida Re effective September 1. As a reminder, we utilize flow reinsurance, which provides a lower capital requirement on ceded new business while allocating capital to the highest returning retained business. From our perspective, this is a smart financial decision as it enhances cash flow, provides fee-based earnings, and is accretive to F&G's returns. Assets under management for the quarter totaled nearly $44 billion at December 31, reflecting a $7 billion or 19% increase over the prior year quarter, driven primarily by new business growth and stable in-force retention. Our high-quality investment portfolio is performing very well, and our strategic investment management partnership with Blackstone remains a differentiated competitive advantage for F&G. Our portfolio is diversified and well positioned to withstand uncertainty in the macro environment and is well matched to our clean and stable liability profile. Fixed income yield, excluding alternative investment volatility and variable investment income, has expanded to 4.27% for the fourth quarter as compared to 3.75% in the fourth quarter of 2021. This primarily reflects upside from the 18% of our portfolio held in floating rate assets and higher yields on new investments. Our targeted allocation to alternative assets remains approximately 5%. Since the FNF merger in June of 2020, F&G's alternative investment portfolio has returned 12% on average, and returns have been less volatile than the S&P 500 Index. Our financial results for 2022 demonstrate the underlying earnings power of the F&G business model, where profitable asset growth drives earnings, and we benefit from a rising rate environment. F&G's growth is underpinned by a strong balance sheet, ample sources of liquidity, and financial flexibility to optimize returns. Our management team is seasoned and has experience throughout various economic cycles. And we've reached an inflection point of scale where our strong capitalization supports both organic growth and the distribution of a portion of our adjusted net earnings to shareholders over time. Overall, 2022 was another breakout year for F&G. We continue to execute on our diversified growth strategy, win in our target markets, and position ourselves for the future as a public company. Looking ahead, we're in a great position to further grow the company and deliver value to our shareholders. As part of this, we see many opportunities to expand our profitability in addition to growing our assets under management. For 2023, we expect to generate double-digit growth in total gross sales. To recap, we have strong momentum as we head into 2023 with many opportunities ahead of us to further expand our business, which will ultimately drive margin expansion and improved returns. We're also focused on unlocking the inherent value in our business as we focus on delivering value to our shareholders. We look forward to updating you on our progress and execution through the balance of the year. Let me now turn the call over to Wendy Young to provide further details on F&G's fourth quarter highlights, strong balance sheet, and financial flexibility.

Thanks, Chris. Today, I’ll share insights on our financial results, key performance indicators, the new LDTI accounting standard, and our capital, liquidity, and leverage situation. Overall, F&G's financial performance in the fourth quarter was strong and reinforces our successful track record. We have solid capitalization and financial flexibility, which enables us to execute our growth strategy effectively. For the fourth quarter, we reported adjusted net earnings of $138 million, or $1.10 per share. This includes a $34 million gain from alternative investments, a $58 million one-time tax benefit from the carryback of capital losses, $12 million from updates to actuarial assumptions, and other income items. The net investment income from alternative investments, based on management's long-term expected return of around 10%, was $91 million. For the entire year of 2022, we reported adjusted net earnings of $345 million, or $3 per share. This amounted to a $100 million gain from alternative investments, $49 million from updates on actuarial assumptions and reserves, $21 million from CLO redemption gains and other income, $20 million in net income tax benefits, and $5 million in other expenses. The net investment income from alternative investments for the full year, based on our long-term expected return of about 10%, totaled $265 million. It's important to note that on a net income basis, we had a $100 million loss in the previous quarter before non-GAAP adjustments, primarily due to mark-to-market movements and updates to economic assumptions aligned with prevailing macroeconomic conditions. Despite short-term volatility in our quarterly results, F&G continues to demonstrate consistent performance over time. Since merging with FNF over two years ago, F&G has significantly surpassed our initial growth expectations, delivering around $1.1 billion in adjusted net earnings over the past 10 quarters cumulatively. Our adjusted return on assets continues to exceed our target of 100 basis points, even with moderated net retained sales. More details are available in our earnings release, quarterly financial supplements, and investor presentation on our website. Looking ahead to 2023, the new accounting standard for long-duration targeted improvements, or LDTI, will take effect, focusing on fair value assessments of certain long-dated liabilities. We believe adopting LDTI will have an insignificant effect on our total book value, given our business mix, prudent liability assumptions, and the fair value adjustments made upon FNF's acquisition on June 1, 2020. Additionally, six indexed annuity-based reserves are already assessed at fair value and will not be affected by LDTI. We expect an increase in GAAP shareholders' equity of up to $200 million, reflecting the net after-tax impact of the new LDTI measurement drivers, partially offset by the elimination of shadow accounting for actuarial intangible balances. By December 31, 2022, we anticipate that the LDTI impact related to current market conditions will positively influence total shareholders' equity, potentially exceeding the transition impact, although this is dependent on our ongoing implementation process. The ultimate impact of adopting LDTI on January 1, 2023, may vary from our estimates based on our business performance throughout 2022 and macroeconomic factors, including interest rate changes. We plan to provide further updates with our first-quarter 2023 results, which will include recasted results under the new LDTI framework. There may be timing differences related to when actual earnings become available, but the underlying product profitability remains steady. It is crucial to remember that this standard applies solely to U.S. GAAP, with no impact on statutory results, insurance company cash flows, or regulatory capital. Regarding our balance sheet, our capital, liquidity, and leverage position is robust. We concluded the quarter with a GAAP book value, excluding AOCI, of $4.6 billion, or $36.66 per share, and we had 126 million common shares outstanding as of December 31, 2022. Our core business fundamentals yielded a solid 7% year-over-year growth in GAAP book value, excluding AOCI, prior to capital actions and non-economic mark-to-market movements. You can find an analysis of our book value per share in our investor presentation. As previously mentioned, our GAAP shareholders' equity will be adjusted for the LDTI adoption in the first quarter of 2023. Our robust capitalization facilitates growth and cash distribution. Our Board of Directors has approved the initiation of a dividend program, targeting an initial total of about $100 million annually, which corresponds to a yield of approximately 3.6% based on F&G's current market capitalization of about $2.7 billion, and reflects the strength of our business and our dedication to shareholder value. We paid our first public company quarterly dividend in January 2023, amounting to $0.20 per share of common stock, or $25 million. In the upcoming quarters, we will announce the record and payment dates for each dividend, subject to Board approval, following the completion of the respective fiscal quarter, with payments made in the third month of each subsequent quarter. Moving on to leverage, F&G's debt-to-capitalization ratio, excluding AOCI, was 19% as of December 31 and included $550 million from a new senior unsecured revolving credit facility that closed in the fourth quarter. We also successfully completed our first debt issuance as a public company on January 13, 2023, issuing $500 million of 7.4% senior unsecured notes due in 2028. This senior note issuance and a $35 million partial pay down on the revolving credit facility in January are not included in our capital position as of December 31. Currently, our pro forma debt-to-capitalization ratio, excluding AOCI, aligns with our long-term target of 25%, and our annual interest expense on outstanding debt is about $95 million. We plan to utilize the proceeds from the revolver and senior note issuance to support our business growth and future liquidity requirements. On February 21, 2023, we amended our revolving credit facility, increasing its limit from an undisclosed amount to $665 million, although we have not yet drawn upon the additional capacity. F&G has received strong support from its banking partners, and the additional undrawn capacity enhances our financial flexibility to execute our growth strategy and capital deployment as we aim to boost returns for our shareholders. Regarding our statutory capital standing, we commenced 2022 with a solid balance sheet, which helped us navigate significant market volatility while also expanding the business. As anticipated, we ended the year with a strong and stable capital position, estimating a company action level risk-based capital ratio of around 440% for our primary operating subsidiary, providing a buffer well above our 400% target. For the full year 2022, we experienced positive capital generation from our in-force book and successfully implemented planned reinsurance and debt capacity measures to bolster our business growth. In summary, F&G is well prepared to finance its ongoing growth with positive and increasing in-force capital generation, ample opportunities for future reinsurance programs, and available debt capacity as our balance sheet improves with book value growth over time. Concerning ratings, we are pleased that A.M. Best revised our outlook to positive from stable in December, and we maintain a positive outlook with Moody's. This reflects our concentrated efforts to engage with rating agencies, along with our proven track record, balance sheet strength, financial transparency, and commitment to achieving ratings upgrades over time.

Thanks, Wendy. We're excited about our current opportunities and well positioned to execute on our growth strategy. We expect to continue growing, albeit at a moderated pace compared to recent record levels, and to expand our business with a focus on further improving our profitability, which we believe over time will drive multiple expansion to deliver value to shareholders. I look forward to providing further details on our first quarter earnings call. This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

Thank you. We will now conduct a question-and-answer session. Our first question comes from Andrew Kligerman with Credit Suisse.

The first question is about the cost of funds, which was approximately 2.38% this quarter. Last quarter, it was 2.35%, and a year ago, it was 2.83%. Can you discuss the factors affecting this, particularly in the context of a higher interest rate environment compared to last year, and what we might expect for its trajectory throughout the year?

Wendy, do you want to start, and I'll jump in?

Basically, being a spread business, even though interest rates are up, we're able to purchase the exact option that we need to credit whatever the policyholders are requesting in their policy. So we don't view that number as fluctuating a whole lot. It might with depending on the volatility, but it stays pretty range-bound. So I don't expect that just because interest rates are going up that our option cost on the FIA business are going to increase substantially, which is the main driver in that bucket.

So FIA option costs will remain stable unless there's a significant spike in volatility. Regarding the revolving credit, I believe it's $552 million for the year. What is the reasoning for choosing that over long-term debt?

Andrew, this is Chris. Please continue, Wendy.

So great question. At the end of the year, I wanted to make sure that we were starting the year with capital to grow the business. The debt markets were not that favorable towards the end of the year. And as you know, we were able to raise debt at the beginning of the year, but I wanted to have a revolver as a stand-alone company to begin with, and it was just optimized to be able to start the year with growth capital. And we're planning on to go back during the year, but it just depends on the debt market and availability. And we'll pay down the revolver if we're successful later in the year with raising debt.

And Wendy, the cost of those funds currently are at what yield?

The blended rate is approximately the same between the two.

If I could ask one last question, could you discuss your efforts in acquiring distribution? How are your distribution partners perceiving this? Do they see it as a conflict? Additionally, what are the carriers' thoughts on the distributors you are acquiring?

So Andrew, yes, it's just a space that we've always loved. It's a source of strength traditionally for F&G, particularly on the life side. These are organizations that we've worked with for decades. And so a number of them are growing so quickly. They need capital and their choices effectively are private equity. Private equity has been gobbling up a number of these firms. But many of them don't want to go that route, either looking for a more permanent partnership as opposed to more time-bound, fund investment in their company. And so in a lot of cases, folks have approached us and said, "Hey, we need capital to grow. You guys are strategic partners, is this something you would be interested in?" So for us, we just view it as one, further strengthening our relationships with firms we've known for a long time. But more importantly, it's a source of earnings that doesn't have big capital intensity going forward. So we love the space so far. It's really been in the life area, and these are middle-market, predominantly cultural market-focused organizations. So yes, that's just the space that we love. And if there's an opportunity to do more of that, we would do it. We haven't gotten pushback because, again, a number of our other distribution partners see the same dynamic that is happening right now. Firms are getting larger, firms are starting to consolidate. So I think they look at it and view it positively.

Our next question comes from the line of A.J. Hayes with Stephens.

Based on past commentary, it appears your index universal life products continue to exceed expectations. Just wanted to see if we could get some color on what's driving the strength and then how you think '23 may stack up in comparison to the strong year you saw in '22?

Yes, as I mentioned earlier, this ties back to our previous discussion. It's really driven by similar factors. There is a significant demand among the middle market, especially within the cultural markets of the U.S., for life insurance. This is where young families are starting to form. I’ve remarked that the life insurance industry feels reminiscent of the 1960s in the United States. That’s what's fueling our growth, along with some established brokerage relationships from over the years. When I joined four years ago, our recurring premium was around $28 million, and now it’s reached $130 million. So, we have a strong appreciation for this segment, and everything is interconnected. We are enhancing our distribution relationships. While we focus on the middle market, many of our competitors target the affluent market, which is an area we find appealing due to its profit potential and growth prospects. We’ve risen to the third position in index universal life policies, making it a key area for us. Although it's still smaller compared to our annuity business, it's growing rapidly, and we expect that trend to continue for the foreseeable future.

Chris, in your prepared remarks, you mentioned that total institutional sales fell within your target of about $2 billion to $4 billion annually. If I recall correctly, this target was specifically for PRT. Should we view total institutional sales going forward as expected to remain within that $2 billion to $4 billion range annually?

I believe that is the overall figure. The reason for the wide range is that we are very enthusiastic about the PRT market. Our expectation is that we will see consistent growth in that segment every year. We appreciate our market position and the positive reception from both intermediaries and plan sponsors. We have a fantastic team, and alongside FIA and retail, this is a key product that we anticipate will grow annually. If it doesn't, we would be disappointed. Another segment of our institutional business involves funding agreement-backed notes, which we also value highly. They provide a solid source of premiums and spreads, though this market can be more unpredictable and opportunistic. This year has proven to be challenging due to fluctuating rates and spreads, in addition to our active role in raising debt, which can increase competition. If the rate environment stabilizes, we plan to re-enter the FABN market, though predicting that is more difficult. We are currently exploring many growth opportunities to optimize our return on capital. I view part of the institutional business as recurring and focus on pursuing those opportunities regularly, while some aspects are more opportunistic.

Our next question comes from Mark Hughes with Truist.

Can you talk about the surrenders, if I'm looking at them properly, maybe up a little bit? I think we might have seen that with some of your competitors, but how are you looking at that number?

Mark, it's not outside a range of expectation. It's up a little bit from the September quarter. But again, it's within our expectation. Half of the lenders for the quarter were just normal MYGA runoff. So MYGAs that we've issued 5, 7 years ago maturing, so not out of our expectations. And just a reminder, 90% of our block is surrender charge protected and a majority of it has MBA coverage. And so our surrender charges were actually up on the higher surrenders because of the MBA that you saw a little bit of increase in that surrender charge fee.

How about the PRT market? I don't know if you mentioned that, but are you seeing any kind of pipeline there? It seems like pension funding is pretty good these days, but interest rates may or may not help. How are you seeing that pipeline?

That pipeline is great, I'm sure, for us and for competitors as well. So hit on the head, if you went back, I don't know, 5 years ago, I think average funding ratios were in the 80% and now it's over 100%. And so yes, I think that's a great market. The timing is good, and we're quite optimistic on it.

On the FIA sales, mixing properly the up about 29%. How do you feel like you're positioned in that market? Is that going to be a good growth market here in 2023?

Yes, it should be. And for all the reasons that we talk about, one, the rate environment is actually constructive here, meaning option budgets are higher when there's just more crediting to play around with. So that's a positive. And then the volatility that we've seen in the markets. Just people are much more open to the idea of giving up a little upside for some downside protection. So we think opportunities there are great. Our business through our core independent agents continues to be really strong. Our relationships there are really good. And then again, we've added a number of bank and broker-dealer partners. We'll typically add 5 or 6 new relationships per year. So we would expect same-store sales growth, if you will, but we're adding stores as well. So yes, that's a market we're still quite excited about.

Wendy, can you confirm if you mentioned the 1% return on assets as a solid benchmark? Is that still accurate?

Yes, it's still a bogey. But as you've seen in the last 10 quarters, we've been increasing that. And as we diversify our earnings, you'll see that uptick a little bit. And then with 15% of our portfolio in floaters, we saw great expansion. In the QFS, there's a page that shows the quarter-over-quarter for '22, the expansion that we got from the floaters. So even though that's our target, you should see that expand in '23.

And the only thing I'd add to that is a little bit of expense scale here too. We've doubled our assets in just about 3 years, and while we don't have a ton of fixed expenses, we do have some. So there's some margin upside from that as well.

We have reached the end of the question-and-answer session. Ms. Foxworthy-Parker, I'd now like to turn the floor back over to you for closing comments.

Thanks for joining us this morning. If you have any questions regarding our results or anything discussed on today's call, please feel free to contact us. We appreciate your interest in F&G and look forward to updating you on our first quarter earnings call. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.