Good morning, ladies and gentlemen, and welcome to the F&G's third quarter earnings call. During the presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Lisa Foxworthy-Parker, Senior Vice President, Investor and External Relations. Please go ahead.

Great. Thanks, operator, and welcome, everyone. 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 on our website following the call. And now I'll turn the call over to our CEO, Chris Blunt.

Good morning, everyone. Thanks for joining us to discuss our third quarter results. I want to begin by thanking our employees for their hard work and dedication that has fueled the incredible growth of our business. We have reported another terrific quarter and continue to build on our proven track record. Starting with sales. We delivered strong gross sales of $3.9 billion in the third quarter, up 39% over the prior year quarter, and $11.8 billion year-to-date, up 30% over the first 9 months of 2023. Retail sales from our agency bank and broker-dealer channels were a record $3.5 billion in the third quarter, nearly double the prior year quarter, bringing year-to-date retail sales to $9.5 billion. F&G's retail sales continue to surge, driven by favorable market conditions and strong demand for retirement savings products. We are benefiting from a significant demographic trend with a long tail, as consumers want to secure the relatively higher rates, guaranteed tax-deferred growth, and principal protection that our products offer. We expect this strong demand to continue in the near term across the industry. As a quick update on RILA, as of the end of October, we have successfully launched with four broker-dealer distribution partners and expect a modest level of sales in 2024. However, we see the potential for RILA sales to be in the billions over the medium term as we continue to ramp up sales and add additional distribution partners. Pension risk transfer sales were over $300 million in the third quarter. With strong sales in October, we have now generated $2.1 billion of PRT sales for the first 10 months of 2024, exceeding our full year 2023 sales and with an average deal size of $187 million. Looking ahead to 2025, we continue to see a healthy PRT pipeline with $3.8 trillion of corporate pension plans at or near full funding. We are positioned to compete in our targeted $100 million to $1 billion deal size, with the potential to strategically move more upmarket or down market as opportunities arise. While there were no funding agreements in the third quarter, as a reminder, we issued $1 billion in the first half of the year. Funding agreements are opportunistic and are dependent on our capital allocation priorities based on relative returns across our products. Net sales of $2.4 billion increased 4% over the prior year quarter. Following the September Fed rate cut, one question that I'm frequently asked is what the impact of lower rates is on our sales. As we've seen recently, a Fed rate cut has a more significant impact on short-term rates than long-term rates. Perhaps even more important than interest rates, though, are the tailwinds from long-term demographics, with 10,000 baby boomers retiring every day and a lot of cash remaining on the sidelines. Consumers have more than $6 trillion of cash parked in money market funds and continue to look to lock in the relatively higher interest rates that annuities provide. Importantly, we have a lot of opportunities for sales growth, regardless of the macro environment. We are still adding new distribution partners. The depth and breadth of our retail distribution is going to continue to expand as we add new bank and broker-dealer partners and as we further penetrate existing distribution with new selling agents. We continue to add new products and enter new fast-growing markets like RILA and PRT. We have profitably grown assets under management before flow reinsurance to a record $62.9 billion at the end of the quarter, an increase of 20% over the third quarter of 2023. This included record retained assets under management of $52.5 billion, an 11% increase over the third quarter of 2023. AUM growth was driven by net new business flows and net debt and equity proceeds over the last 12 months. Turning to our investment portfolio, overall, the portfolio was diversified, well-positioned, and high quality, with 96% of fixed maturities being investment-grade. Since 2020, we have selectively repositioned more than $2.5 billion of assets to optimize and derisk the portfolio to perform in varying market conditions while also improving the credit quality. Over the last 5 years, we have expanded from 6 to 14 asset classes, further diversifying our portfolio. Our asset allocation strategy remains stable, and our invested assets are well matched to our liability profile. Excluding alternative investment volatility and variable investment income, our fixed income yield was 4.66% in the third quarter, 15 basis points higher than the third quarter of 2023, benefiting from higher yields on new investments. Our partnership with Blackstone provides the flexibility to pivot between public and private assets, helping to mitigate the impact of spread compression. Credit-related impairments have averaged 5 basis points since 2020, which is exceptionally low. Through the first 9 months of the year, credit-related impairments remained below our pricing. Regarding our commercial real estate debt portfolio, it is high quality, diversified, and defensive, with the vast majority invested in resilient sectors like residential, multifamily, and industrial. We have very little office exposure at less than 2% of our total portfolio, which is significantly below the industry average. Next, turning to our own distribution strategy. Independent agent distribution is rapidly consolidating in the industry and generating strong returns for owners. To date, we have invested $680 million in owned distribution. Our current portfolio is performing well, and we now estimate EBITDA of $65 million to $70 million in 2024, and expect double-digit annual growth over the medium term. Overall, F&G's strong results through the first 9 months of the year have positioned us well for the remainder of 2024. We have great momentum and remain focused on continuing to deliver long-term growth by driving sustainable asset growth from our retail and pension risk transfer growth strategies, generating ROA expansion from enhanced investment margin, scale benefits, and fee-based earnings from accretive flow reinsurance and diversifying earnings through strong growth in our middle-market life insurance business and owned distribution strategies. We continue to make good progress towards the medium-term financial targets we laid out at our 2023 Investor Day: growing AUM by 50%; expanding adjusted ROA, excluding significant items to 133 to 155 basis points; increasing adjusted ROE, excluding AOCI and significant items, to 13% to 14%; and expanding our multiple. Let me now turn the call over to Wendy to provide further details on F&G's third-quarter financial highlights.

Thanks, Chris. This morning, I'll focus my comments on the following: Adjusted net earnings; highlights for the quarter including updates on flow reinsurance; surrenders; and our floating rate asset hedging program as well as our strong capital and liquidity position. Starting with earnings, adjusted net earnings attributable to common shareholders for the third quarter was $156 million or $1.22 per share, and included $131 million of investment income from alternative investments, $21 million of CLO redemption gains and bond prepayment income, and $14 million tax valuation allowance benefit. This was partially offset by $17 million of net expense from the actuarial assumption review, reflecting experience updates to surrender assumptions for recent and expected near-term policyholder behavior, as well as GMWB rider assumptions for emergent utilization rates. Investment income from alternative investments based on management's long-term expected return of approximately 10% was $172 million. Excluding significant items, adjusted net earnings were $179 million in the third quarter, up 21% over $148 million in the third quarter of '23. This increase reflects asset growth, margin diversification from accretive flow reinsurance and owned distribution, disciplined expense management, and higher interest expense as a result of planned capital market activities. Adjusted ROA, excluding significant items, was 132 basis points in the third quarter. This was comprised of 107 basis points of retained ROA, 16 basis points of flow reinsurance fee income, and 9 basis points of owned distribution margin. Adjusted ROA, excluding significant items, was up 12 basis points as compared to 120 basis points in the third quarter of 2023 and brings our adjusted ROA over the last 12 months to 126 basis points. Looking ahead, I'm confident in our ability to deliver on our Investor Day promises to grow assets, expand ROA and ROE and increase our multiples as we grow our retail distribution win our share of healthy PRT pipeline, maintain spreads even in a lower rate environment, benefit from demographic tailwinds, and diversify through our accretive flow reinsurance and owned distribution strategies, which set F&G apart. Turning to some additional highlights for the quarter, starting with flow reinsurance. In addition to existing flow reinsurance for 90% of MYGA sales, we have initiated flow reinsurance on 80% of sales of one of our FIA products, effective July 1. This allows us to continue to meet consumer demand for one of our best-selling and most profitable products while expanding our capital light and accretive flow reinsurance initiatives. As a reminder, we are able to adjust the level of flow reinsurance up and down over time as market economics change and in line with our capital targets. This allows us to manage net sales above the threshold needed to continue to grow our retained AUM. Turning to surrenders, we continue to see steady growth in our FIA account value despite the industry refinancing due to our record new business volume that continues to well outpace terminations. For insurance companies like F&G, terminations provide a boost to earnings from higher surrender charge fees and free up capital that can be deployed to new business volumes with renewed surrender charges and longer surrender periods than older contracts. This should further improve the liability profile and result in stickier in-force liabilities going forward. Our retail fixed annuities are 93% surrender charge protected. Our funding agreements, pension risk transfer, and immediate annuities are not surrenderable. And our fixed-rate multiyear guaranteed annuities are predictable, typically having 3, 5, or 7-year contractual maturities that vary quarter-to-quarter. Moving to our floating rate asset portfolio. As discussed on prior calls, we have hedged two-thirds of our floating rate assets, which are now only 6% of our total portfolio. Through hedging, we have increased our earnings stability and predictability going forward by locking in 188 basis points of incremental yield above original pricing. Finally, turning to our balance sheet, we ended the quarter with F&G equity attributable to common shareholders, excluding AOCI, of $5.3 billion or $42.28 per share. Additional details of book value per share are provided in our investor presentation. Consolidated debt outstanding was unchanged from the second quarter at $2.1 billion, and our debt to capitalization ratio, excluding AOCI, was 26.5%. During October, we issued $500 million of senior notes, and net proceeds were used to fully pay down our $365 million revolver balance, with the remainder being used for general corporate purposes. We continue to target holding company cash and invested assets at 2 times interest coverage and debt to capitalization, excluding AOCI, at 25% over the long term. Additionally, we expect that our balance sheet will naturally delever over time as shareholders' equity excluding AOCI grows. Our capital allocation priorities focus on deploying our capital to maximize shareholder value through continued investment in our business as well as returning cash to shareholders. F&G is well positioned to generate growth at attractive returns, and our scale allows us to self-fund our growth with in-force capital generation, reinsurance, and capital markets issuances. Our capital allocation priorities also support our now $110 million annual common dividend commitment as well as $16 million annual dividend on the preferred stock held by FNF. We feel the common dividend is sustainable and expected to increase over time. F&G continues to maintain strong capitalization and financial flexibility across all of our statutory balance sheet, including our offshore entities, which are conservatively managed to the most stringent capital requirements of our regulators and four rating agencies. Notably, all of our new business is originated in our U.S. subsidiaries. We only use our offshore entities for affiliated reinsurance, and each treaty requires formal approval by the Iowa regulator. We have similar reserve and risk management practices for our offshore entities as our onshore operating companies. Overall, our third quarter performance once again builds on our proven track record, and we are well-positioned for the remainder of the year. We continue to make significant progress towards our Investor Day targets of asset growth, margin expansion, and enhanced earnings from flow reinsurance and owned distribution. This concludes our prepared remarks, and let me now turn the call back to our operator for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of John Barnidge of Piper Sandler. Your line is open.

Good morning. Thanks for the opportunity. My first question is on the flow reinsurance. Given your comments about the optimistic view of the positioning of the product to participate in the silver tsunami that's coming, especially with RILA being added. How do you view the opportunity to grow that flow reinsurance with the existing partners into those new products? And where do you view settling in from a flow reinsurance percent rate of net to gross?

Yeah. Good morning, John. It's Chris. I know Wendy wants to weigh in as well. I don't think that we set a target of what we want to reinsure. It's more about what's the capacity that's out there. How does it fit a particular product category? How accretive is it? And then we make those individual decisions. I would say right now, I don't see a lot of constraints to the availability of flow reinsurance. Obviously, we're selective about who we would partner with when it comes to flow reinsurance. But yeah, I think we continue to be quite optimistic about the impact that it can have on margins for us and the availability of quality partners.

Thank you. And then my follow-up question is, given the opportunity in owned distribution to grow in a more capital-light manner, given financial sponsors' interest in getting more into the wealth solutions business, does that give you an opportunity to maybe use that as a currency to go larger in owned distribution than maybe you had thought before?

Yeah. I think like everything else, as you know, we're quite bullish on the opportunity. It started from the bottom up with some partners we've worked with for a long time, engaging us in their strategic thought process. So we continue to be optimistic. But having said that, we want to be thoughtful and careful. The goal here isn't to scale for scale's sake, right? We're not trying to be the largest rollup provider there. We want to make sure that these are strategic partnerships and we're picking them well. We feel great about the portfolio. It's nice to hear. I do think it's starting to get recognized in our stock price. So yes, we think this is a great asset that at some point could even be its own entity. So we're quite optimistic about it.

Your next question comes from the line of Alex Scott of Barclays. Your line is open.

Good morning, everyone. This is Jack on for Alex. So my question has to do with these higher surrender charges. What exactly was the impact? And how did it compare to last quarter? And how would you view a more normal level over time? Thanks.

Thanks, Jack. As long as interest rates stay high, we will continue to see increased surrenders in the industry related to refinancing. If we examine our results, we direct attention to the last 12 months' return on assets, which stands at about 126 basis points. This helps to account for the fluctuations in surrenders we've seen over the past year, as some quarters experienced more surrenders than others. Recently, we've had a couple of quarters with slightly higher surrenders, but overall, even aside from this, the last 12 months reflect a clear improvement in our underlying return on assets without considering the significant surrenders. Does that clarify things?

And the only thing I'd add is I think when you look at it quarter-to-quarter, it wasn't a gigantic differential. It's fairly consistent.

Great. And then I guess one quick follow-up. Do you mind discussing the outlook for flows, in particular, funding agreements and PRTs heading into the new year?

Sure, this is Chris. I'll begin with retail. We remain highly optimistic about the opportunities there. I believe industry sales will continue to grow, but even if they don’t, we have yet to fully tap into our distribution footprint. Therefore, we can still achieve growth regardless of the overall market conditions. Regarding PRT, we had an excellent October and have already exceeded last year's sales pipelines, which remain strong. We anticipate growth in that category of about $2 billion to $4 billion in any given year. The range varies based on our target pipeline's availability, capital status, and the returns we are generating in PRT compared to retail and our owned distribution. It's a bit more complex, but I am confident there will be numerous PRT opportunities. Our approach to funding agreements is more opportunistic; we continually assess the market for issuing, investing, and comparing spreads with our other opportunities. We aim to be issuers of funding agreement-backed notes, but this will remain largely opportunistic.

Your next question comes from the line of Wesley Carmichael of Autonomous. Your line is open.

Hey, good morning. The first question, Wendy, I think you had talked about the assumption review and that being driven by elevated surrender activity. Can you just talk about what's happening near term? And just maybe unpack that a little bit for us?

Sure. So the surrenders are elevated, as you've seen, right? So as we're looking at our assumptions, we're just making a decision on how long we think it's going to continue. And as I said earlier to the other question, as rates stay elevated, there's still going to be elevated surrenders. So we just changed the assumption going over the shorter term, not necessarily a larger longer-term assumption. And that was a very small part of the overall $17 million. So call it about $5 million unlocking on the DAC from that we'll see that as just a minor impact on the go-forward returns from that surrender assumption. Now on the GMWB utilization unlocking this new product that we've been selling a lot of the product features there, policyholders are electing right away. And what that's going to do is with this product is make the MRB changes less volatile because you're locking in the actual benefit right away, and so there's no fluctuation going forward for those policies. So it's a one-time kind of hit for the increase in reserve for that assumption change, but there's no volatility to it going forward.

Got it. And a follow-up, I guess, one of your big competitors this quarter had some maybe less than positive comments around Cayman as a jurisdiction for flow reinsurance, saying you can kind of haircut capital there by 50%. So Wendy, I know you talked about in your comments that you manage offshore reinsurance conservatively. But can you maybe just talk about Cayman in particular and how that business is capitalized and managed?

Sure. So we run our Cayman on a statutory basis and also calculate RBC. So it's very similar. I think you've heard us talk about the difference is basically around the mortality assumption that's being utilized in the reserves onshore versus offshore. You can use a more best estimate for blue-collar and white-collar instead of the blended table. So it's not around required capital; it's purely around the redundancy in the reserves.

And Wes, it's Chris. As a reminder, all of this gets approved by Iowa, and all of it gets reported to Iowa. When we do stress testing around capital, it's done on an aggregated basis, and that is shared. So yes, the short answer is none of those comments apply to us in any way, shape, or form.

Next question comes from the line of Maxwell Fritscher from Truist. Your line is open.

Hi, good morning. I'm here for Mark Hughes. Last quarter, you mentioned focusing on the younger demographic for RILA products. Have you noticed any progress in the third quarter and possibly early fourth quarter? I recall you mentioned there might be a minimal impact in 2024, so any additional information would be appreciated.

Yeah. The honest answer is I think that the volumes are still too small to draw any really meaningful conclusions there. But there's a pretty good body of data for the entire industry that you are reaching a younger demographic with that product. So yes, I would say too soon to tell but I'd be really surprised if for some reason we are an outlier to the broader trend.

And we have a follow-up question coming from the line of Wes Carmichael. Your line is open.

Thank you for the follow-up. Could you provide details on your current new money allocation, specifically where you are investing the majority of that new capital, particularly if there are some appealing opportunities for better spread and privately originated investments from Blackstone?

Yeah. Wes, I probably don't want to share too much, right? It's not necessarily a secret sauce, but I would say as a general matter, we'll tend to rotate between private and public, depending on where the opportunity is and what's being originated. Blackstone has done a really good job of keeping up with origination and continuing to find new diversifying asset classes. I think you've heard Leena say this before, we've gone from 6 asset classes pre-Blackstone to now 14. So the private opportunities have been quite robust for us this year, whereas last year, when rates spiked up pretty quickly, there was a lot of opportunity in corporate. So yes, I would say probably a slight tilt toward privates year-to-date, but those are decisions that are being made literally real-time depending on where the opportunities are.

I got it. And I guess my follow-up on the investment portfolio would be regarding the alts allocation. Like, is that where you kind of want to trend longer term? Or is that higher or lower than you'd expect to be?

The way we view true alternatives, specifically in terms of limited partnership commitments, is currently at 6%. This is slightly above our long-term expectation of around 5%. It's challenging to be exact since these commitments are made based on assumptions about how the capital will be called and utilized. The allocation to alternatives is performing well overall, even though it has recently underperformed relative to long-term expectations. We had significant success in prior years while deploying capital. When we refer to pure alternatives, we estimate the allocation to be around 6% now, and we anticipate it will be in the 5% to 6% range in the long run. There are equity residual tranches that occasionally fall into this category, but generally, true limited partnership commitments are heavily weighted towards private equity, which makes up nearly half of the portfolio. The following significant portion is real estate, which includes typical Blackstone investments such as solar infrastructure and data centers, rather than commercial real estate, along with a small allocation to credit funds. I hope this clarifies things.

There are no further questions at this time. Turning the call over to Chris Blunt for concluding remarks.

Great. Look, we're very pleased with our overall performance. F&G's business is well positioned for the current market, and we're excited about the opportunities ahead to continue to drive asset growth, deliver margin expansion, and generate accretive returns. Thank you for joining us. We appreciate your interest in F&G and look forward to updating you on our fourth quarter earnings call.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Thank you.