Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Fidelity & Guaranty Life | fgl-3312014x10xqpressrelea.htm |
| EX-99.1 - EXHIBIT 99.1 EARNINGS RELEASE - Fidelity & Guaranty Life | a3312014fglearningsrelease.htm |
Exhibit 99.2
Investor Supplement
Second Fiscal Quarter 2014
(Fiscal Year Ended September 30)
The financial statements and financial exhibits included herein are unaudited. These financial statements and exhibits should be read in conjunction with the Company's periodic reports on Form 10-K, Form 10-Q and Form 8-K. The results of operations for interim periods should not be considered indicative of results to be expected for the full year.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures to analyze the Company's operating performance for the periods presented. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP financial measures to those of other companies.
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement
March 31, 2014
Page | |
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Consolidated Financial Highlights
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | March 31, 2014 | March 31, 2013 | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||
Premiums | $ | 14.6 | 13.7 | 11.8 | 19.0 | $ | 14.1 | $ | 28.3 | $ | 27.9 | ||||||||||||||||
Net investment income | 184.3 | 183.4 | 185.2 | 184.6 | 167.9 | 367.7 | 338.2 | ||||||||||||||||||||
Net investment (losses) gains | (1.7 | ) | 123.4 | 106.2 | 58.3 | 206.7 | 121.7 | 353.2 | |||||||||||||||||||
Insurance and investment product fees and other | 17.1 | 15.6 | 17.1 | 16.1 | 14.6 | 32.7 | 28.5 | ||||||||||||||||||||
Total revenues | 214.3 | 336.1 | 320.3 | 278.0 | 403.3 | 550.4 | 747.8 | ||||||||||||||||||||
Adjusted Operating Income ("AOI") | $ | 47.8 | $ | 25.0 | $ | 79.7 | $ | 14.0 | $ | 20.0 | 72.8 | 44.6 | |||||||||||||||
Net income | $ | 24.8 | $ | 42.7 | $ | 110.7 | $ | 53.2 | $ | 73.2 | $ | 67.5 | $ | 183.8 | |||||||||||||
Per Unrestricted Common Shares Amounts: | |||||||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||||
AOI | $ | 0.82 | $ | 0.51 | $ | 1.70 | $ | 0.30 | $ | 0.43 | $ | 1.36 | $ | 0.95 | |||||||||||||
Net Income | $ | 0.43 | $ | 0.87 | $ | 2.36 | $ | 1.13 | $ | 1.56 | $ | 1.26 | $ | 3.91 | |||||||||||||
Diluted: | |||||||||||||||||||||||||||
AOI | $ | 0.82 | $ | 0.51 | $ | 1.70 | $ | 0.30 | $ | 0.43 | $ | 1.35 | $ | 0.95 | |||||||||||||
Net Income | $ | 0.42 | $ | 0.87 | $ | 2.36 | $ | 1.13 | $ | 1.56 | $ | 1.26 | $ | 3.91 | |||||||||||||
Dividends Paid to Shareholders Per Share | $ | 0.065 | $ | — | $ | — | $ | — | $ | — | $ | 0.065 | $ | — | |||||||||||||
At Period End | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 701.5 | $ | 759.5 | $ | 1,204.3 | $ | 1,003.0 | $ | 1,194.5 | $ | 701.5 | $ | 1,194.5 | |||||||||||||
Total investments | $ | 17,814.6 | $ | 17,225.6 | $ | 16,222.5 | $ | 16,419.9 | $ | 16,734.1 | $ | 17,814.6 | $ | 16,734.1 | |||||||||||||
Total assets | $ | 23,382.4 | $ | 22,945.7 | $ | 22,429.1 | $ | 21,012.6 | $ | 21,295.2 | $ | 23,382.4 | $ | 21,295.2 | |||||||||||||
Contractholder funds | $ | 15,998.3 | $ | 15,519.7 | $ | 15,248.2 | $ | 15,342.7 | $ | 15,409.9 | $ | 15,998.3 | $ | 15,409.9 | |||||||||||||
Future policy benefits | $ | 3,533.7 | $ | 3,545.9 | $ | 3,556.8 | $ | 3,576.2 | $ | 3,569.1 | $ | 3,533.7 | $ | 3,569.1 | |||||||||||||
Notes payable | $ | 300.0 | $ | 300.0 | $ | 300.0 | $ | 300.0 | $ | 300.0 | $ | 300.0 | $ | 300.0 | |||||||||||||
Total equity | $ | 1,522.7 | $ | 1,331.8 | $ | 1,164.9 | $ | 1,285.6 | $ | 1,463.3 | $ | 1,522.7 | $ | 1,463.3 | |||||||||||||
Total equity excluding accumulated other comprehensive income ("AOCI") | $ | 1,247.2 | $ | 1,225.7 | $ | 1,052.0 | $ | 1,110.2 | $ | 1,039.5 | $ | 1,247.2 | $ | 1,039.5 | |||||||||||||
Common shares issued and outstanding | 58.44 | $ | 58.27 | $ | 47.00 | $ | 47.00 | $ | 47.00 | $ | 58.44 | $ | 47.00 | ||||||||||||||
Book value per share | $ | 26.1 | $ | 22.9 | $ | 24.8 | $ | 27.4 | $ | 31.1 | $ | 26.1 | $ | 31.1 | |||||||||||||
Book Value per Share excluding AOCI | 21.3 | 21.0 | 22.4 | 23.6 | 22.1 | 21.3 | 22.1 | ||||||||||||||||||||
Debt to total Capitalization | 19.4 | % | 19.7 | % | 22.2 | % | 21.3 | % | 22.4 | % | 19.4 | % | 22.4 | % | |||||||||||||
Return on average shareholder's equity | 8.0 | % | 15.0 | % | 41.0 | % | 19.8 | % | 29.4 | % | 11.5 | % | 35.4 | % | |||||||||||||
3
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
March 31, 2014 | September 30, 2013 | ||||||
ASSETS | |||||||
Investments: | |||||||
Fixed maturities securities, available-for-sale, at fair value | $ | 16,865.1 | $ | 15,541.4 | |||
Equity securities, available-for-sale, at fair value | 353.1 | 271.1 | |||||
Derivative investments | 273.0 | 221.8 | |||||
Other invested assets | 323.4 | 188.2 | |||||
Total investments | 17,814.6 | 16,222.5 | |||||
Related party loans and investments | 145.7 | 119.0 | |||||
Cash and cash equivalents | 701.5 | 1,204.3 | |||||
Accrued investment income | 178.7 | 159.3 | |||||
Reinsurance recoverable | 3,694.0 | 3,728.6 | |||||
Intangibles, net | 540.3 | 563.8 | |||||
Deferred tax assets | 173.2 | 226.4 | |||||
Other assets | 134.4 | 205.2 | |||||
Total assets | $ | 23,382.4 | $ | 22,429.1 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Contractholder funds | $ | 15,998.3 | $ | 15,248.2 | |||
Future policy benefits | 3,533.7 | 3,556.8 | |||||
Funds withheld for reinsurance liabilities | 1,362.3 | 1,407.7 | |||||
Liability for policy and contract claims | 60.5 | 51.5 | |||||
Long-term debt | 300.0 | 300.0 | |||||
Other liabilities | 604.9 | 700.0 | |||||
Total liabilities | 21,859.7 | 21,264.2 | |||||
Shareholders' equity: | |||||||
Common stock ($.01 par value, 500,000,000 shares authorized, 58,439,476 issued and outstanding at March 31, 2014; 47,000,000 shares issued and outstanding at September 30, 2013) | 0.6 | — | |||||
Additional paid-in capital | 701.1 | 527.1 | |||||
Retained earnings | 545.5 | 524.9 | |||||
Accumulated other comprehensive income | 275.5 | 112.9 | |||||
Total shareholders' equity | 1,522.7 | 1,164.9 | |||||
Total liabilities and shareholders' equity | $ | 23,382.4 | $ | 22,429.1 | |||
4
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Quarterly Summary - Most Recent 5 Quarters
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | March 31, 2014 | March 31, 2013 | |||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||
Traditional life insurance premiums | $ | 12.4 | $ | 11.4 | $ | 11.2 | $ | 16.4 | $ | 12.8 | $ | 23.8 | $ | 24.0 | |||||||||||||
Life contingent immediate annuity | 2.2 | 2.3 | 0.6 | 2.6 | 1.3 | 4.5 | 3.9 | ||||||||||||||||||||
Net investment income | 184.3 | 183.4 | 185.2 | 184.6 | 167.9 | 367.7 | 338.2 | ||||||||||||||||||||
Net investment (losses) gains | (1.7 | ) | 123.4 | 106.2 | 58.3 | 206.7 | 121.7 | 353.2 | |||||||||||||||||||
Surrender charges | 4.7 | 5.6 | 9.4 | 6.6 | 4.7 | 10.3 | 4.7 | ||||||||||||||||||||
Cost of insurance fees and other income | 12.4 | 10.0 | 7.7 | 9.5 | 9.9 | 22.4 | 23.8 | ||||||||||||||||||||
Total revenues | 214.3 | 336.1 | 320.3 | 278.0 | 403.3 | 550.4 | 747.8 | ||||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||||
Traditional life insurance policy benefits and change in future policy benefits | 15.7 | 16.3 | 16.9 | 20.6 | 13.8 | 32.0 | 33.9 | ||||||||||||||||||||
Life contingent immediate annuity benefits and changes in future policy benefits | 17.1 | 10.5 | 15.2 | 39.6 | 13.6 | 27.6 | 24.1 | ||||||||||||||||||||
Interest sensitive and index product benefits | 146.1 | 190.1 | 69.1 | 47.0 | 213.5 | 336.2 | 266.5 | ||||||||||||||||||||
Acquisition and operating expenses, net of deferrals | 32.0 | 26.0 | 33.8 | 25.6 | 23.4 | 58.0 | 50.4 | ||||||||||||||||||||
Amortization of intangibles | 11.3 | 22.9 | 21.4 | 64.7 | 28.9 | 34.2 | 98.4 | ||||||||||||||||||||
Total benefits and expenses | 222.2 | 265.8 | 156.4 | 197.5 | 293.2 | 488.0 | 473.3 | ||||||||||||||||||||
Operating (loss) income | (7.9 | ) | 70.3 | 163.9 | 80.5 | 110.1 | 62.4 | 274.5 | |||||||||||||||||||
Interest expense | (5.6 | ) | (5.6 | ) | (5.6 | ) | (5.9 | ) | — | (11.2 | ) | — | |||||||||||||||
(Loss) income before income taxes | (13.5 | ) | 64.7 | 158.3 | 74.6 | 110.1 | 51.2 | 274.5 | |||||||||||||||||||
Income tax (benefit) expense | (38.3 | ) | 22.0 | 47.6 | 21.4 | 36.9 | (16.3 | ) | 90.7 | ||||||||||||||||||
Net income | $ | 24.8 | $ | 42.7 | $ | 110.7 | $ | 53.2 | $ | 73.2 | $ | 67.5 | $ | 183.8 | |||||||||||||
Net income per common share: | |||||||||||||||||||||||||||
Basic | $ | 0.43 | $ | 0.87 | $ | 2.36 | $ | 1.13 | $ | 1.56 | $ | 1.26 | $ | 3.91 | |||||||||||||
Diluted | $ | 0.42 | $ | 0.87 | $ | 2.36 | $ | 1.13 | $ | 1.56 | $ | 1.26 | $ | 3.91 | |||||||||||||
Weighted average common shares used in computing net income per common share: | |||||||||||||||||||||||||||
Basic | 58.27 | 49.14 | 47.00 | 47.00 | 47.00 | 53.66 | 47.00 | ||||||||||||||||||||
Diluted | 58.45 | 49.26 | 47.00 | 47.00 | 47.00 | 53.76 | 47.00 | ||||||||||||||||||||
5
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Reconciliation from Net Income (Loss) to Adjusted Operating Income ("AOI ")
All amounts are net of offsets related to value of business acquired ("VOBA") and deferred acquisition cost ("DAC") amortization and income taxes.
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | March 31, 2014 | March 31, 2013 | ||||||||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||||||||||
Net Income | $ | 24.8 | $ | 42.7 | $ | 110.7 | $ | 53.2 | $ | 73.2 | $ | 67.5 | $ | 183.8 | ||||||||||||||
Adjustments to arrive at AOI: | ||||||||||||||||||||||||||||
Effect of investment (gains) losses, net of offsets | (3.6 | ) | (6.4 | ) | (33.9 | ) | (13.3 | ) | (39.0 | ) | (10.0 | ) | (120.7 | ) | ||||||||||||||
Effect of change in FIA embedded derivative discount rate, net of offsets | 10.4 | (13.9 | ) | 3.4 | (22.4 | ) | (11.5 | ) | (3.5 | ) | (15.8 | ) | ||||||||||||||||
Effect of change in fair value of reinsurance related embedded derivative, net of offsets | 15.1 | 2.6 | (2.2 | ) | — | — | 17.7 | — | ||||||||||||||||||||
Effects of class action litigation reserves, net of offsets | 1.1 | — | — | — | — | 1.1 | — | |||||||||||||||||||||
Residual net income of distributed subsidiaries | — | — | 1.7 | (3.5 | ) | (2.7 | ) | — | (2.7 | ) | ||||||||||||||||||
AOI | $ | 47.8 | $ | 25.0 | $ | 79.7 | $ | 14.0 | $ | 20.0 | $ | 72.8 | $ | 44.6 | ||||||||||||||
Per diluted common share: | ||||||||||||||||||||||||||||
Net income (loss) | $ | 0.42 | $ | 0.87 | $ | 2.36 | $ | 1.13 | $ | 1.56 | $ | 1.26 | $ | 3.91 | ||||||||||||||
Adjustments to arrive at AOI: | ||||||||||||||||||||||||||||
Effect of investment (gains) losses, net of offsets | (0.06 | ) | (0.13 | ) | (0.72 | ) | (0.28 | ) | (0.83 | ) | (0.19 | ) | (2.56 | ) | ||||||||||||||
Effect of change in FIA embedded derivative discount rate, net of offsets | 0.18 | (0.28 | ) | 0.07 | (0.48 | ) | (0.24 | ) | (0.07 | ) | (0.34 | ) | ||||||||||||||||
Effect of change in fair value of reinsurance related embedded derivative, net of offsets | 0.26 | 0.05 | (0.05 | ) | — | — | 0.33 | — | ||||||||||||||||||||
Effects of class action litigation reserves, net of offsets | 0.02 | — | — | — | — | 0.02 | — | |||||||||||||||||||||
Residual net income of distributed subsidiaries | — | — | 0.04 | (0.07 | ) | (0.06 | ) | — | (0.06 | ) | ||||||||||||||||||
AOI per diluted share | $ | 0.82 | $ | 0.51 | $ | 1.70 | $ | 0.30 | $ | 0.43 | $ | 1.35 | $ | 0.95 | ||||||||||||||
NON-GAAP FINANCIAL MEASURES
AOI is a non-GAAP economic measure we use to evaluate financial performance each period for the periods subsequent to the FGLH Acquisition. AOI is calculated by adjusting net income to eliminate (i) the impact of net investment gains, excluding gains and losses on derivatives and including OTTI losses recognized in operations, (ii) the effect of changes in the rates used to discount the FIA embedded derivative liability, (iii) the effect of change in fair value of reinsurance related embedded derivative, (iv) the effect of class action litigation reserves and (v) residual net income of distributed subsidiaries we no longer own. All adjustments to AOI are net of the corresponding VOBA, DAC and income tax impact related to these adjustments as appropriate. While these adjustments are an integral part of the overall performance of FGL, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations. Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do.
6
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
In the second quarter of 2014, we revised our definition of AOI from a pre-tax basis to an after-tax basis to better reflect the basis on which the performance of our business is internally assessed. AOI now includes interest expense and an effective tax rate of 35% is now applied to reconciling items made to net income. All prior periods presented have been revised to reflect this new definition. Additionally, during the second quarter of 2014 we revised our definition of AOI to exclude the effect of class action litigation reserves, net of the corresponding VOBA, DAC and income tax impact related to these adjustments. This change has been reflected in the current period calculation. Lastly, during the second quarter of 2014 we revised our definition of AOI to exclude residual net income of distributed subsidiaries; specifically the portion of Front Street Re income not already accounted for in the AOI adjustments above. From the inception of the reinsurance treaty on December 31, 2012 through August 9, 2013, Front Street Re was a fully consolidated subsidiary of FGL. On August 9, 2013 in preparation for the IPO, FGL distributed this subsidiary to its parent company. Adjusting for this distribution provides a better view of the underlying performance of FGL as it is now structured post-IPO.
Together with net income we believe AOI provide meaningful financial metrics that help investors understand our underlying results and profitability. Our AOI may not be comparable to similarly titled measures of other organizations because other organizations may not calculate AOI in the same manner as we do.
7
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Capitalization/Book Value per Share
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | ||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||
Capitalization: | |||||||||||||||
Long-term debt | $ | 300.0 | $ | 300.0 | $ | 300.0 | $ | 300.0 | |||||||
Total debt | 300.0 | 300.0 | 300.0 | 300.0 | |||||||||||
Total shareholders' equity | 1,522.7 | 1,331.8 | 1,164.9 | 1,285.6 | |||||||||||
Total capitalization | 1,822.7 | 1,631.8 | 1,464.9 | 1,585.6 | |||||||||||
AOCI | 275.5 | 106.1 | 112.9 | 175.4 | |||||||||||
Total capitalization excluding AOCI (a) | $ | 1,547.2 | $ | 1,525.7 | $ | 1,352.0 | $ | 1,410.2 | |||||||
Total shareholders' equity | 1,522.7 | 1,331.8 | 1,164.9 | 1,285.6 | |||||||||||
AOCI | 275.5 | 106.1 | 112.9 | 175.4 | |||||||||||
Total shareholder's equity excluding AOCI (a) | $ | 1,247.2 | $ | 1,225.7 | $ | 1,052.0 | $ | 1,110.2 | |||||||
Common shares outstanding | 58.44 | 58.27 | 47.00 | 47.00 | |||||||||||
Book Value per Share: (b) | |||||||||||||||
Book value per share including AOCI | 26.1 | 22.9 | 24.8 | 27.4 | |||||||||||
Book value per share excluding AOCI (a) | 21.3 | 21.0 | 22.4 | 23.6 | |||||||||||
Twelve months ended | |||||||||||||||
Twelve Month Rolling Average Return on Equity ("ROE") | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | |||||||||||
Return on average shareholder's equity, excluding AOCI (c) | 20.4 | % | 21.5 | % | 34.7 | % | 50.8 | % | |||||||
Adjusted Operating ROE, excluding AOCI (d) | 14.7 | % | 10.6 | % | 14.3 | % | 8.4 | % | |||||||
Three months ended | |||||||||||||||
Quarterly Average ROE | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | |||||||||||
Return on average shareholder's equity, excluding AOCI (c) | 8.0 | % | 15.0 | % | 41.0 | % | 19.8 | % | |||||||
Adjusted Operating ROE, excluding AOCI (d) | 15.5 | % | 8.8 | % | 29.5 | % | 5.2 | % | |||||||
Debt-to-Capital Ratios: (e) | |||||||||||||||
Long-term debt/Total capitalization excluding AOCI | 19.4 | % | 19.7 | % | 22.2 | % | 21.3 | % | |||||||
8
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
(a) Total capitalization, total stockholders’ equity and book value per share excluding AOCI (a non-GAAP financial measure) are based on stockholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, we believe these non-GAAP financial measures provide useful supplemental information.
(b) Book value per share including and excluding AOCI is calculated as total stockholders’ equity and total stockholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding.
(c) Return on Equity, excluding AOCI is calculated by dividing net income by total average equity excluding AOCI. Average equity (excluding AOCI) is the sum of the equity at the end of each quarter divided by the number of quarters in the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized.
(d) Adjusted Operating ROE, excluding AOCI is a non-GAAP measure. It is calculated by dividing AOI by total average equity excluding AOCI. Average equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average equity is calculated using the beginning and ending equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized.
(e) Debt-to-capital ratios are computed using total capitalization excluding AOCI. Adjusted debt includes the total senior unsecured debentures.
Financial Strength Ratings
S&P | A.M. Best | Moody's | Fitch | |||||
As of Date of Financial Supplement | ||||||||
Fidelity and Guaranty Life Insurance Company | BBB- | B++ | Ba1 | BBB | ||||
Fidelity and Guaranty Life Insurance Company of New York | BBB- | B++ | Ba1 | BBB | ||||
Rating Agency Outlook | Positive | Stable | Positive | Stable | ||||
9
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Net Investment Spread Results
(Dollars in millions) | Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Yield on average assets under management "AAUM" (at amortized cost) | 4.6 | % | 4.1 | % | 4.7 | % | 4.2 | % | |||||||
Less: Interest credited and option cost | 3.0 | % | 2.9 | % | 3.1 | % | 3.1 | % | |||||||
Net investment spread | 1.6 | % | 1.2 | % | 1.6 | % | 1.1 | % | |||||||
Investment yield - bonds purchased during the period | 5.1 | % | 3.3 | % | 4.6 | % | 2.9 | % | |||||||
AAUM (a) | $ | 16,259.4 | $ | 16,621.4 | $ | 15,999.8 | $ | 16,478.6 | |||||||
AAUM excluding FSR (b) | $ | 16,259.4 | $ | 15,589.1 | $ | 15,999.8 | $ | 15,888.7 | |||||||
(a) AAUM is the sum of (i) total invested assets at amortized cost, excluding derivatives; and including (ii) related party loans and investments and (iii) cash and cash equivalents at the end of each month in the period divided by the number of months in the period.
(b) AAUM excluding FSR, removes the impact of the Front Street Re funds withheld assets in the prior year AAUM calculation.
Sales Results by Product
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | March 31, 2014 | March 31, 2013 | ||||||||||||||||||||||
Fixed index annuities | $ | 318.2 | $ | 300.7 | $ | 237.3 | $ | 263.8 | $ | 238.6 | $ | 618.9 | $ | 481.7 | ||||||||||||||
Fixed rate annuities | 409.4 | 239.7 | 9.4 | 6.5 | 5.1 | 649.1 | 9.0 | |||||||||||||||||||||
Index universal life | 4.8 | 5.0 | 4.7 | 4.3 | 4.3 | 9.8 | 9.8 | |||||||||||||||||||||
10
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Annuity Account Balance Rollforward (a)
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Account balances at beginning of period: | $ | 11,626.0 | $ | 12,353.7 | $ | 11,339.0 | $ | 12,383.0 | ||||||||
Net deposits | 721.3 | 246.4 | 1,266.7 | 501.5 | ||||||||||||
Premium and interest bonuses | 8.4 | 9.0 | 15.9 | 17.6 | ||||||||||||
Fixed interest credited and index credits | 119.8 | 100.6 | 244.5 | 210.8 | ||||||||||||
Guaranteed product rider fees | (5.9 | ) | (4.7 | ) | (10.0 | ) | (7.3 | ) | ||||||||
Surrenders, withdrawals, deaths, etc. | (325.0 | ) | (363.7 | ) | (711.4 | ) | (764.4 | ) | ||||||||
Account balance at end of period | $ | 12,144.7 | $ | 12,341.2 | $ | 12,144.7 | $ | 12,341.2 | ||||||||
(a) The rollforward reflects the account balance of our fixed index annuities and fixed rate annuities.
11
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Annuity Deposits by Product Type
Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||
Product Type | 2014 | 2013 | 2014 | 2013 | ||||||||||||
(Dollars in millions) | ||||||||||||||||
Fixed Index Annuities: | ||||||||||||||||
Index Strategies | $ | 271.3 | $ | 175.5 | $ | 522.8 | $ | 352.2 | ||||||||
Fixed Strategy | 44.9 | 60.9 | 95.6 | 131.0 | ||||||||||||
316.2 | 236.4 | 618.4 | 483.2 | |||||||||||||
Fixed Rate Annuities: | ||||||||||||||||
Single-Year Rate Guaranteed | 14.1 | 5.0 | 26.3 | 9.0 | ||||||||||||
Multi-Year Rate Guaranteed | 391.5 | 5.0 | 623.4 | 9.2 | ||||||||||||
Total before coinsurance ceded | 721.8 | 246.4 | 1,268.1 | 501.4 | ||||||||||||
Coinsurance ceded | 0.5 | — | 1.4 | — | ||||||||||||
Net after coinsurance ceded | $ | 721.3 | $ | 246.4 | $ | 1,266.7 | $ | 501.4 | ||||||||
Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Account Values (net of reinsurance) at March 31, 2014:
Surrender Charge | Net Account Value | |||||||||||||
Product Type | Avg. Years at Issue | Avg. Years Remaining | Avg. % Remaining | Dollars in millions | % | |||||||||
Fixed Index Annuities | 11.7 | 6.0 | 9.2 | % | $ | 9,351.6 | 77.0 | % | ||||||
Single-Year Rate Guaranteed | 11.6 | 0.7 | 0.9 | % | 681.9 | 5.6 | % | |||||||
Multi-Year Rate Guaranteed | 5.6 | 3.8 | 7.7 | % | 2,111.2 | 17.4 | % | |||||||
Total | $ | 12,144.7 | 100.0 | % | ||||||||||
12
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Annuity Liability Characteristics
Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||
(Dollars in millions) | ||||||||
SURRENDER CHARGE PERCENTAGES: | ||||||||
No surrender charge | $ | 658.3 | $ | 872.4 | ||||
0.0% < 2.0% | 43.7 | 102.2 | ||||||
2.0% < 4.0% | 97.9 | 486.5 | ||||||
4.0% < 6.0% | 183.7 | 946.7 | ||||||
6.0% < 8.0% | 481.8 | 1,134.8 | ||||||
8.0% < 10.0% | 1,291.8 | 1,094.4 | ||||||
10.0% or greater | 35.9 | 4,714.6 | ||||||
$ | 2,793.1 | $ | 9,351.6 | |||||
Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | ||||||
(Dollars in millions) | |||||||
SURRENDER CHARGE EXPIRATION BY YEAR: | |||||||
Out of Surrender Charge | $ | 1,607.0 | — | % | |||
2014 | 539.9 | 3.9 | % | ||||
2015-2016 | 1,817.5 | 5.6 | % | ||||
2017-2018 | 2,796.5 | 8.7 | % | ||||
Thereafter | 5,383.8 | 12.2 | % | ||||
$ | 12,144.7 | ||||||
13
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||
(Dollars in millions) | ||||||||
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL: | ||||||||
No differential | $ | 1,172.1 | $ | 891.8 | ||||
0.0% - 1.0% | 528.1 | 1,013.8 | ||||||
1.0% - 2.0% | 210.1 | 187.9 | ||||||
2.0% - 3.0% | 653.8 | 17.1 | ||||||
3.0% - 4.0% | 228.9 | 0.4 | ||||||
4.0% - 5.0% | 0.1 | — | ||||||
Allocated to index strategies | — | $ | 7,240.6 | |||||
$ | 2,793.1 | $ | 9,351.6 | |||||
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES
Monthly Average, Point to Point and Gain Trigger Strategies with Cap
Minimum Guaranteed Cap | ||||||||||||||||
1% | 3% | 5% | 6% | |||||||||||||
Current Cap | ||||||||||||||||
At minimum | $ | — | $ | 342.0 | $ | 1,004.8 | $ | — | ||||||||
2-3% | 29.8 | — | — | — | ||||||||||||
3-4% | 139.9 | 310.7 | — | — | ||||||||||||
4-5% | 86.4 | 1,113.5 | — | — | ||||||||||||
5-6% | 11.5 | 622.9 | 81.3 | — | ||||||||||||
6-7% | — | 189.6 | 24.2 | 2.1 | ||||||||||||
7% + | — | 89.8 | 9.7 | 51.8 | ||||||||||||
Total | $ | 267.6 | $ | 2,668.5 | $ | 1,120.0 | $ | 53.9 | ||||||||
14
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Monthly Point-to-Point with Cap
Minimum Guaranteed Cap 1% | ||||
Current Cap | (Dollars in millions) | |||
At minimum | $ | 6.9 | ||
1% to 2% | 1,758.3 | |||
2% to 3% | 846.8 | |||
3% + | 297.0 | |||
Total | $ | 2,909.0 | ||
3 Year Step Forward with Cap
Minimum Guaranteed Cap 5% | ||||
Current Cap | (Dollars in millions) | |||
At minimum | $ | 17.2 | ||
5% to 7% | 32.8 | |||
7% to 9% | 68.2 | |||
9% to 11% | 24.9 | |||
11% to 13% | 10.7 | |||
13% + | 5.0 | |||
Total | $ | 158.8 | ||
There is an additional $62.6 Account Value allocated to strategies not listed above. Of this $62.6 million, $27.5 million is at the guaranteed rates.
15
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Summary of Invested Assets
(dollars in millions) | March 31, 2014 | September 30, 2013 | ||||||||||||
Fair Value | Percent | Fair Value | Percent | |||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
United States Government full faith and credit | $ | 392.6 | 2.2 | % | $ | 1,001.8 | 6.2 | % | ||||||
United States Government sponsored entities | 99.4 | 0.6 | % | 98.6 | 0.6 | % | ||||||||
United States municipalities, states and territories | 1,240.0 | 7.0 | % | 1,007.0 | 6.2 | % | ||||||||
Corporate securities: | ||||||||||||||
Finance, insurance and real estate | 5,563.7 | 31.2 | % | 5,053.8 | 31.1 | % | ||||||||
Manufacturing, construction and mining | 873.0 | 5.0 | % | 1,746.2 | 10.8 | % | ||||||||
Utilities and related sectors | 1,995.9 | 11.2 | % | 757.3 | 4.7 | % | ||||||||
Wholesale/retail trade | 951.7 | 5.3 | % | 844.1 | 5.2 | % | ||||||||
Services, media and other | 1,137.8 | 6.4 | % | 1,016.9 | 6.3 | % | ||||||||
Hybrid securities | 451.6 | 2.5 | % | 428.8 | 2.6 | % | ||||||||
Non-agency residential mortgage backed securities | 1,847.1 | 10.4 | % | 1,368.0 | 8.4 | % | ||||||||
Commercial mortgage backed securities | 486.6 | 2.7 | % | 454.3 | 2.8 | % | ||||||||
Asset backed securities | 1,825.7 | 10.2 | % | 1,764.6 | 10.9 | % | ||||||||
Equity securities (a) | 353.1 | 2.0 | % | 271.1 | 1.7 | % | ||||||||
Other (primarily derivatives, policy loans and CMLS) | 596.4 | 3.3 | % | 410.0 | 2.5 | % | ||||||||
Total | $ | 17,814.6 | 100.0 | % | $ | 16,222.5 | 100.0 | % | ||||||
Credit Quality of Fixed Maturity Securities - March 31, 2014
NAIC Designation | Fair Value | Percent | Rating Agency Rating | Fair Value | Percent | |||||||||||
(Dollars in millions) | (Dollars in millions) | |||||||||||||||
1 | $ | 9,961.9 | 59.1 | % | AAA | $ | 1,671.2 | 9.9 | % | |||||||
2 | 6,060.3 | 35.9 | % | AA | 2,282.6 | 13.5 | % | |||||||||
3 | 487.5 | 2.9 | % | A | 4,067.7 | 24.1 | % | |||||||||
4 | 258.7 | 1.5 | % | BBB | 6,324.5 | 37.5 | % | |||||||||
5 | 96.7 | 0.6 | % | BB (a) | 591.5 | 3.5 | % | |||||||||
6 | — | — | % | B and below (b) | 1,927.6 | 11.5 | % | |||||||||
$ | 16,865.1 | 100.0 | % | $ | 16,865.1 | 100.0 | % | |||||||||
16
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Summary of Residential Mortgage Backed Securities
Collateral Type | Principal Amount | Amortized Cost | Fair Value | |||||||||
(Dollars in millions) | ||||||||||||
Total by collateral type | ||||||||||||
Government agency | $ | 89.3 | $ | 94.8 | $ | 97.1 | ||||||
Prime | 302.3 | 250.8 | 265.8 | |||||||||
Subprime | 628.7 | 508.9 | 537.3 | |||||||||
Alt-A | 784.9 | 556.2 | 588.0 | |||||||||
Option arm | 590.50 | 417.10 | 458.30 | |||||||||
$ | 2,395.7 | $ | 1,827.8 | $ | 1,946.5 | |||||||
Total by NAIC designation | ||||||||||||
1 | $ | 2,343.4 | $ | 1,784.5 | $ | 1,901.6 | ||||||
2 | 25.3 | 21.8 | 24.8 | |||||||||
3 | 24.1 | 19.4 | 18.0 | |||||||||
4 | 2.9 | 2.1 | 2.1 | |||||||||
5 | — | — | — | |||||||||
6 | — | — | — | |||||||||
$ | 2,395.7 | $ | 1,827.8 | $ | 1,946.5 | |||||||
17
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Fixed Maturity Securities by Sector
March 31, 2014 | September 30, 2013 | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
(Dollars in millions) | |||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
United States Government full faith and credit | $ | 389.1 | $ | 392.6 | $ | 998.5 | $ | 1,001.8 | |||||||
United States Government sponsored entities | 96.9 | 99.4 | 96.5 | 98.6 | |||||||||||
United States municipalities, states and territories | 1,182.8 | 1,240.0 | 998.8 | 1,007.0 | |||||||||||
Corporate securities: | |||||||||||||||
Finance, insurance and real estate | 5,356.4 | 5,563.7 | 4,972.3 | 5,053.8 | |||||||||||
Manufacturing, construction and mining | 872.7 | 873.0 | 781.5 | 1,746.2 | |||||||||||
Utilities and related sectors | 1,916.6 | 1,995.9 | 833.0 | 757.3 | |||||||||||
Wholesale/retail trade | 923.9 | 951.7 | 1,702.5 | 844.1 | |||||||||||
Services, media and other | 1,107.7 | 1,137.8 | 1,025.4 | 1,016.9 | |||||||||||
Hybrid securities | 423.6 | 451.6 | 412.6 | 428.8 | |||||||||||
Non-agency residential mortgage backed securities | 1,730.9 | 1,847.1 | 1,304.0 | 1,368.0 | |||||||||||
Commercial mortgage backed securities | 463.3 | 486.6 | 431.3 | 454.3 | |||||||||||
Asset backed securities | 1,816.2 | 1,825.7 | 1,745.2 | 1,764.6 | |||||||||||
Equity securities (a) | 346.6 | 353.1 | 274.6 | 271.1 | |||||||||||
Other (primarily derivatives, policy loans and CMLS) | 478.0 | 596.4 | 329.9 | 410.0 | |||||||||||
Total | $ | 17,104.7 | $ | 17,814.6 | $ | 15,906.1 | $ | 16,222.5 | |||||||
18
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Top 10 Holdings by Issuers
March 31, 2014 | |||||||
Issuer (a): | Fair Value | Percentage | |||||
JP Morgan Chase & Co. | $ | 136.8 | 0.8% | ||||
Goldman Sachs Group, Inc. | 136.7 | 0.8 | % | ||||
Wells Fargo & Company | 132.5 | 0.7 | % | ||||
Metropolitan Transportation Authority (NY) | 125.4 | 0.7 | % | ||||
Citigroup Inc. | 120.6 | 0.7 | % | ||||
Prudential Financial Inc | 120.4 | 0.7 | % | ||||
Bank of America Corp | 119.0 | 0.7 | % | ||||
General Electric Company | 117.4 | 0.7 | % | ||||
Metlife Inc | 105.7 | 0.6 | % | ||||
Morgan Stanley | 100.4 | 0.6 | % | ||||
(a) Issuers excluding U.S. Governmental securities, and any securities held in our funds withheld portfolio.
19
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Reinsurance Counterparty Risk (a)
Financial Strength Rating | ||||||||||
Top 5: Parent Company/Principal Reinsurers | Reinsurance Recoverable | AM Best | S&P | Moody's | ||||||
Wilton Reinsurance | $ | 1,500.0 | A | Not Rated | Not Rated | |||||
Front Street Re | 1,306.5 | Not Rated | Not Rated | Not Rated | ||||||
Security Life of Denver | 174.5 | A | A- | A3 | ||||||
Scottish Re | 134.7 | Not Rated | Not Rated | Not Rated | ||||||
Sunlife/Keyport | 106.6 | A- | BBB | Baa2 | ||||||
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.
20
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Shareholder Information
Corporate Offices:
Fidelity & Guaranty Life
1001 Fleet Street, 6th Floor
Baltimore, MD
Investor Contact:
Molly Carman
Fidelity & Guaranty Life
molly.carman@fglife.com
410-895-1008
Media Contact:
Sard Verbinnen & Co
Jamie Tully or David Millar, 212-687-8080
Common stock and Dividend Information:
New York Stock Exchange symbol: "FGL"
High | Low | Close | Dividend Declared | |||||||||||||
FY2014 | ||||||||||||||||
First Quarter | $ | 19.10 | $ | 18.80 | $ | 18.94 | $ | — | ||||||||
Second Quarter | $ | 23.91 | $ | 22.28 | $ | 23.60 | $ | 0.065 | ||||||||
Transfer Agent
American Stock Transfer & Trust
59 Maiden Lane, Plaza Level
New York, NY 10038
Phone: (800) 937-5449
Fax: (718) 236-2641
http://www.amstock.com
21
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES
Financial Supplement - March 31, 2014
(unaudited)
Research Analyst Coverage
Thomas Gallagher
Credit Suisse
(215) 538-2010
thomas.gallagher@credit-suisse.com
Eric Berg
RBC Capital Markets
(212) 618-7593
eric.berg@rbccm.com
Jimmy Bhullar
J.P. Morgan
(212) 622-6397
jimmy.s.bhullar@jpmorgancom
Edward Shields
Sandler O'Neill & Partners
(312) 281-3487
eshields@sandleroneill.com
Mike Bokoff
Dowling & Partners
(860) 676-8600
bokoff@dowling.com
Sean Dargan
Macquarie Capital (USA) Inc.
212-231-0663
sean.dargan@macquarie.com
22