F&G Annuities & Life Q2FY26 Results: AUM up 8% to $74.7B, EPS at $0.65
- F&G Annuities & Life reported Q2 2026 adjusted net earnings of $85 million, or $0.65 per share
- AUM before reinsurance rose 8% to $74.7 billion as of June 30, with retained AUM at $55.9 billion
- Gross sales were $2.7 billion; core retail sales of indexed annuities and indexed life reached $1.8 billion, described as one of the strongest quarters on record
- Fixed-income yield increased to 4.91%, up 14 basis points over Q1 2026; alternative investment annualised return was approximately 5.9%, down from 8.3% in Q1 2026
- A formal strategic review of Peak Altitude was announced, with approximately $700 million deployed and approximately $80 million in annual EBITDA in 2025
*this image is generated using AI for illustrative purposes only.
F&G Annuities & Life Inc reported second-quarter 2026 adjusted net earnings of $85 million, or $0.65 per share, with assets under management before reinsurance rising 8% to $74.7 billion as of June 30.
Gross sales for the quarter were $2.7 billion, comprising $2.0 billion of core sales and $700 million of opportunistic sales. Net sales stood at $1.5 billion, reflecting flow reinsurance in line with capital targets for fixed indexed annuities and multi-year guaranteed annuities. Core retail sales of indexed annuities and indexed life reached $1.8 billion, described as one of the strongest quarters on record for core retail sales. Institutional pension risk transfer sales were $200 million for the quarter.
Key financial metrics
The table below summarises the primary financial and portfolio indicators reported for the second quarter.
| Metric | Q2 2026 | Q1 2026 | Q2 2025 |
|---|---|---|---|
| Adjusted net earnings | $85 million | — | — |
| Adjusted net earnings per share | $0.65 | — | — |
| AUM before reinsurance | $74.7 billion | — | — |
| Retained AUM | $55.9 billion | — | — |
| Gross sales | $2.7 billion | — | — |
| Net sales | $1.5 billion | — | — |
| Core retail sales | $1.8 billion | — | — |
| Fixed-income yield | 4.91% | — | — |
| Alternative investments portfolio | $4 billion | — | — |
| Annualised alt. investment return | ~5.9% | ~8.3% | — |
| Adjusted ROE (excl. AOCI) | 8% | — | — |
| Adjusted ROA | 68 bps | — | — |
| Operating expense to AUM ratio | 47 bps | 48 bps | — |
| GAAP equity excl. AOCI | $6 billion | — | — |
| Book value per share excl. AOCI | $45.93 | — | — |
Earnings drivers and quarter-on-quarter changes
Compared to the first quarter of 2026, adjusted net earnings decreased by $25 million. The after-tax impact of lower returns on alternative investments accounted for $21 million of the decline, while the after-tax effect of the F&G Life re-sale on March 1, 2026 reduced incremental earnings by $8 million in the second quarter relative to the first quarter. These items were partially offset by consistent core spread, growing fees from accretive flow reinsurance and owned distribution margin, and operating expense discipline.
Compared to the second quarter of 2025, adjusted net earnings decreased by $18 million. The after-tax effect of the F&G Life re-sale reduced earnings by $12 million versus the prior-year quarter. Product margin also reflected lower surrender charge fee income and higher other liability costs, including increased amortisation expense.
Investment portfolio performance
The retained investment portfolio comprised 97% investment-grade fixed maturities. The fixed-income yield was 4.91% in the second quarter, an increase of 14 basis points over the first quarter of 2026 and 8 basis points over the second quarter of 2025. Credit-related impairments averaged 6 basis points over the past five years and 2 basis points in the first half of the year.
The alternative investments portfolio stood at $4 billion, approximately 8% of the total retained portfolio, comprising approximately $3 billion of limited partnerships and $1 billion of other equity interests. The annualised return on alternative investments was approximately 5.9% in the second quarter, down from 8.3% in the first quarter of 2026. Management's current long-term expected return for alternative investments remains 12%.
Capital position and shareholder returns
F&G Annuities & Life targets a debt to capitalisation ratio of approximately 25% excluding AOCI and an estimated company action level risk-based capital ratio above 400%. Annualised interest expense is approximately $165 million, representing roughly a 7% blended yield on $2.3 billion of debt outstanding.
For the first six months, capital self-funded the following:
- $75 million of common and preferred dividends paid
- $80 million of holding company interest expense
- $120 million in opportunistic share repurchases, covering 4.5 million shares at an average price of $26.44
The estimated effect of new NAIC capital charges on the CLO portfolio as of June 30 would translate to a decrease in RBC of approximately 10 points, before any management action ahead of year-end. The operating expense to AUM ratio decreased to 47 basis points at the end of the second quarter from 48 basis points in the first quarter of 2026, down from 60 basis points at the end of 2024 and 50 basis points at year-end 2025.
Strategic review of Peak Altitude
F&G Annuities & Life announced a formal process to explore strategic alternatives for Peak Altitude, its owned distribution subsidiary. With approximately $700 million deployed into the business and approximately $80 million in annual EBITDA in 2025, management stated the market is ascribing little to no value in the share price for Peak Altitude. The company's book value per share excluding AOCI has grown to $45.93, up 68% since the 2020 FNF acquisition.
How might the strategic review of Peak Altitude influence F&G's long-term distribution strategy and potential valuation re-rating if a sale or spin-off materializes?
What impact could the proposed NAIC capital charges on the CLO portfolio have on F&G's future dividend capacity and share repurchase pace?
Can F&G realistically bridge the gap between its current 5.9% alternative investment return and the 12% long-term target without significantly increasing risk exposure?
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