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8-K - 8-KINVESTORPRESENTATION - Fidelity & Guaranty Life | a8-kfilingxinvestorpresent.htm |
CF Corporation to Acquire Fidelity & Guaranty Life
June 2017
Investor Presentation
Important Information
This investor presentation (“Investor Presentation”) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other
financial instruments of CF Corporation (“CF Corp.”) or Fidelity & Guaranty Life (“F&G”) or any of CF Corp.’s or F&G’s affiliates. The Investor Presentation has been prepared to assist parties in making their own evaluation with
respect to the proposed business combination (the “Business Combination”), as contemplated in the Agreement and Plan of Merger (the “Merger Agreement”), of CF Corp. and F&G and for no other purpose. It is not intended
to form the basis of any investment decision or any other decision in respect of the Business Combination. The information contained herein does not purport to be all-inclusive. The data contained herein is derived from
various internal and external sources. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any projections or modeling or any other information contained
herein. Any data on past performance or modeling contained herein is not an indication as to future performance. CF Corp. and F&G assume no obligation to update the information in this Investor Presentation.
Important Information About the Business Combination and Where to Find It
In connection with the proposed Business Combination, CF Corp. intends to file a preliminary proxy statement and a definitive proxy statement with the United States Securities and Exchange Commission (“SEC”). CF Corp.’s
shareholders and other interested persons are advised to read, when available, the preliminary proxy statement and the amendments thereto and the definitive proxy statement and documents incorporated by reference
therein as these materials will contain important information about F&G, CF Corp. and the Business Combination. When available, the definitive proxy statement and other relevant materials will be mailed to shareholders of
CF Corp. as of a record date to be established for voting on the Business Combination. Shareholders will also be able to obtain copies of the preliminary proxy statement, the definitive proxy statement and other documents
filed with the SEC that will be incorporated by reference therein, without charge, once available, at the SEC’s web site at www.sec.gov, or by directing a request to: CF Corporation, 1701 Village Center Circle, Las Vegas, Nevada
89134, Attention: Douglas B. Newton, Chief Financial Officer (212) 355-5515 or by accessing CF Corp.’s website at www.cfcorpandfidelity.com.
Participants in the Solicitation
CF Corp. and its directors and executive officers may be deemed participants in the solicitation of proxies from CF Corp.’s shareholders with respect to the Business Combination. A list of the names of those directors and
executive officers and a description of their interests in CF Corp. is contained in CF Corp.’s annual report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC and is available free of charge at
the SEC’s web site at www.sec.gov, or by directing a request to CF Corporation, 1701 Village Center Circle, Las Vegas, Nevada 89134, Attention: Douglas B. Newton, Chief Financial Officer (212) 355-5515. Additional information
regarding the interests of such participants will be contained in the proxy statement for the Business Combination when available.
F&G and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the shareholders of CF Corp. in connection with the Business Combination. A list of the names of such
directors and executive officers and information regarding their interests in the Business Combination will be included in the proxy statement for the Business Combination when available.
Forward-Looking Statements
This presentation includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. CF Corp.’s and F&G’s actual results may differ from their
expectations, estimates and projections and consequently, you should not rely on these forward looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions, and references to FY1, are intended to identify such forward-looking statements. These
forward-looking statements include, without limitation, CF Corp.’s and F&G’s expectations and projections with respect to future performance and anticipated financial impacts of the Business Combination, the satisfaction of
the closing conditions to the Business Combination and the timing of the completion of the Business Combination. These forward-looking statements involve significant risks and uncertainties (including without limitation
regarding value creation, share price appreciation and return on equity) that could cause the actual results to differ materially from the expected results. Most of these factors are outside CF Corp.’s and F&G’s control and are
difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (2) the
outcome of any legal proceedings that may be instituted against CF Corp. and/or F&G following the announcement of the Merger Agreement and the transactions contemplated therein; (3) the inability to complete the Business
Combination, including due to failure to obtain approval of the shareholders of CF Corp. or other conditions to closing in the Merger Agreement; (4) delays in obtaining, adverse conditions contained in, or the inability to obtain
necessary regulatory approvals (including approval from in insurance regulators) required to complete the transactions contemplated by the Merger Agreement; (5) the inability to achieve tax efficiencies or to achieve
incremental investment returns from asset management; (6) the inability to identify and consummate accretive, value-added acquisitions; (7) the inability to obtain or maintain the listing of the post-acquisition company’s
ordinary shares on a stock exchange following the business combination; (8) the risk that the Business Combination disrupts current plans and operations as a result of the announcement and consummation of the Business
Combination; (9) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth
profitably and retain its key employees; (10) costs related to the Business Combination; (11) changes in applicable laws or regulations; (12) the possibility that F&G or the combined company may be adversely affected by other
economic, business, and/or competitive factors; (13) the risks set forth under this Investor Presentation; and (14) other risks and uncertainties indicated from time to time in the proxy statement relating to the Business
Combination, including those under “Risk Factors” therein, and in CF Corp.’s other filings with the SEC. CF Corp. cautions that the foregoing list of factors is not exclusive. CF Corp. cautions readers not to place undue reliance
upon any forward-looking statements, which speak only as of the date made. CF Corp. does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
No Offer or Solicitation
This presentation shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This presentation shall also not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of section 10 of the Securities Act of 1933, as amended.
Industry and Market Data
In this presentation, we rely on and refer to information and statistics regarding market participants in the sectors in which F&G competes and other industry data. We obtained this information and statistics from third-party
sources, including reports by market research firms, and company filings.
2
Introduction
3
Today’s Presenters
4
Chinh Chu
Founder and Co-Chairman, CF Corporation
Chris Littlefield
CEO, Fidelity & Guaranty Life
Dennis Vigneau
CFO, Fidelity & Guaranty Life
Transaction Overview
5
CF Corporation
6
CF Corporation (“CF Corp.”) is a publicly-listed company founded by Chinh Chu and William Foley which raised, and obtained
commitments for, an aggregate of $1.2 billion of proceeds to acquire a high quality operating company
Primary objective is to build a high quality, enduring business by using permanent capital, a core tenet of the CF Corp. structure
One of the largest U.S.-listed special purpose acquisition companies (“SPAC”)
Large founder co-investment ($71 million); results in alignment of interests
CF Corp. raised capital from blue-chip, long-term investors
Well-
respected
reputations
Operational
expertise
Stewards of
all
stakeholders’
interests
History of
strategic
investments
with long-term
horizon
CF
Corp.
Founders
Track record
of delivering
stability and
value
Broad and
deep
insurance
industry
expertise
William P. Foley II
Founder and Co-Chairman (30+ Years Experience)
$54 billion of public market value creation
3 separate multi-billion dollar public market platforms, with
over 100 acquisitions across all platforms
Chairman of the Board of Fidelity National Financial (“FNF”)
Vice-Chairman of the Board of Fidelity National Information
Services (“FIS”)
Chinh E. Chu
Founder and Co-Chairman (25+ Years Experience)
Previously a Senior Managing Director at Blackstone and
member of Blackstone’s Executive Committee
• Longest tenured partner aside from Stephen Schwarzman
Served on Boards of Kronos, NCR, SunGard, London
Financial Futures Exchange, BankUnited, Stearns Mortgage,
Celanese, Nalco, Catalent, Nycomed, Stiefel, Allied Barton,
and Graham Packaging
Transaction Overview
7
Acquisition of
Fidelity &
Guaranty Life
CF Corp. to acquire 100% of the common shares of Fidelity & Guaranty Life (“F&G”) for total consideration of $1.835
billion ($31.10 per share) in cash plus the assumption of $405 million of existing debt
• Acquisition implied P/BV (ex. AOCI) of 1.1x(1)
Reinsurance
Transactions
Concurrent with the acquisition of F&G, CF Corp. will acquire certain reinsurance companies from HRG Group
(“HRG”)
Following the transaction F&G will reinsure a significant share of its existing and new business to a newly-created
affiliated reinsurance company
Transaction
Financing
The transaction will be financed with $1.2 billion from CF Corp.’s IPO and forward purchase agreements, and more
than $700 million in additional common and preferred equity(2)
Funds advised by Blackstone and FNF have provided a full backstop funding commitment to ensure certainty of
funding
Management
and Board
CF Corp. intends to retain F&G’s strong management team
Board will be comprised of a majority of independent directors
Chinh Chu and William Foley will become Co-Chairmen, bringing significant investment, acquisition, and operational
experience
Investment
Management
Agreement
F&G will enter into an investment management agreement with affiliates of Blackstone
Chinh Chu and William Foley will be involved and lend their expertise to the asset management function
Continue F&G’s current focus on high-quality investment grade assets under the current F&G investment team
Required
Approvals and
Timing
Regulatory approvals and other customary closing conditions
Shareholder approvals for both CF Corp. as well as F&G
• HRG, in its capacity as the majority stockholder of F&G, delivered to CF Corp. a written consent approving and
adopting the merger agreement
• Holders of ~18% of CF Corp. ordinary shares have entered into voting agreements in favor of the business
combination
Expected closing in Q4’17
(1) Based on GAAP equity excluding Accumulated Other Comprehensive Income (“AOCI”) as of 3/31/17. Life and annuity insurance companies evaluated excluding AOCI, as
AOCI captures interest rate-related unrealized gains/losses that are non-operating in nature.
(2) See page 26.
Expected Transaction Value Creation
8
$10.00
F&G Status Quo Reinsurance
Structure
Asset
Management
Multiple Re-Rating Additional
Acquisitions
+$2.00
+$2.50
+$1.50 - $4.50
(1.0 - 3.0x
Multiple Uplift)
Implementation of expected
reinsurance structure to drive
meaningful and structural
earnings uplift
Proven Reinsurance Structure 1
Blackstone and CF Founders
will manage the $23 billion
investment portfolio(5)
Assumes 40bps net portfolio
yield enhancement achieved out
of 120bps of gross opportunity
identified
Optimize Asset Management 2
$2.5bn of assets can yield
approximately 5-10%
incremental equity value under
new F&G structure
Leverage extensive experience
of CF Founders
Accretive, Value-Add Acquisitions 4
+$0.50 - $3.50
~$20.00+
Illustrative Share Price at 10.0x Price-to-Normalized Earnings
Note: Assumes 186.1 million Basic Shares, 8.4 million New Warrants ($0.01 strike), and 69.4 million warrants outstanding ($11.50 Exercise, $18.00 Ceiling). See page 26.
(1) Deal fees, premium, founder promote and dilutive effect of warrants allocated pro rata across each Baseline item.
(2) $55 to $65 million of incremental Net Income from proven reinsurance structure
(3) $80 to $90 million of incremental Net Income from optimized asset management.
(4) Range reflects acquisition of $2.5 billion to $10.0 billion of assets. Assumes target acquired at 1.0x P/BV. Assumes target standalone ROE of 10% improved pro forma to 15-19%.
(5) 9/30/17E invested assets.
Immediate Near-Term Medium-Term
Immediate / Near-Term Baseline Further Upside Pre-Transaction
~$14.50+ $10.00
1
2
3
4
(1)
Structurally-improved ROE
results in higher compounding
and net income growth
Selected industry comparables
trade at a range of 10x to 13x
P/E
Multiple Re-rating 3
(2) (3) (4)
Clear Levers to Enhance Expected Return on Average Equity
9
Transformational transaction – with clear levers for expected ROE migration in the near-term
+3-4%
+4-5%
+2-5%
9-11%
~15-19%
F&G Status Quo Reinsurance
Structure
Asset
Management
Additional
Acquisitions
Run-Rate ROE
Implementation of expected reinsurance
structure to drive meaningful and
structural earnings uplift
Proven Reinsurance Structure 1
Blackstone and CF Founders will manage
the $23 billion investment portfolio(4)
Assumes 40bps net portfolio yield
enhancement achieved out of 120bps of
gross opportunity identified
Optimize Asset Management 2
$2.5bn of assets can yield approximately
5-10% incremental equity value under
new F&G structure
Leverage extensive experience of CF
Founders
Accretive, Value-Add Acquisitions 3
(1) $55 to $65 million of incremental Net Income from proven reinsurance structure
(2) $80 to $90 million of incremental Net Income from optimized asset management.
(3) Range reflects acquisition of $2.5 billion to $10.0 billion of assets. Assumes target acquired at 1.0x P/BV. Assumes target standalone ROE of 10% improved pro forma to 15-19%.
(4) 9/30/17E invested assets.
(3) (1) (2)
1
2
3
Attractive Entry Valuation Relative to Peers
10
10.6x 10.2x
11.7x
8.0x
Athene American
Equity
Life Insurance
Peers
F&G F&G
F&G FY1 P/E vs. Selected Peers
Mean: 10.4x
Source: Factset (6/2/2017).
(1) Life insurance peers include: Prudential Financial, Ameriprise Financial, Principal Financial Group, CNO Financial Group, Torchmark Corporation, American Financial Group, Horace Mann,
Lincoln Financial, MetLife, and Voya Financial
(2) F&G pro forma multiple reflects expected F&G earnings power. Assumes $11.57 share price as of 6/2/2017 close.
Transaction
multiple adjusted
for expected
synergies;
reflects
significant
discount to peers
Opportunity to participate in high growth platform in early stage of development
(Fully-phased
Run-rate)(2)
Life Insurance
Peers(1)
F&G Investment Highlights and Overview
11
Investment Highlights
12
F&G
Transformational transaction with meaningful value creation opportunities and a high-quality base business
Accelerated earnings momentum through an efficient reinsurance structure and enhanced
asset management performance through relationship with Blackstone
Capabilities to pursue ongoing strategic acquisitions by leveraging the experience and
professional network of CF Founders
Well Defined CF
Corp. Value
Creation Levers
1
Primary life insurance company with a well-established Fixed Indexed Annuity (“FIA”), Fixed
Rate, Multi-Year Guaranty Annuity (“MYGA”), and Indexed Universal Life (“IUL”) platform
Offers a comprehensive suite of underlying product offerings through its longstanding and
stable distribution relationships
Established Life &
Annuity Franchise
2
Favorable demographic trends and growing retirement population drives broader demand for
FIA, MYGA, and IUL products
F&G experienced ~10% annual sales growth from 2012-2016
Attractive
Sector and
Company Growth
3
F&G will maintain conservative financial leverage and strong capitalization at levels
consistent with those to date
F&G significant und erlying cash and investable assets of $22bn
Prudent Capital
Position with
Significant
Investable assets
4
CF Corp. Founders Chinh Chu and William Foley bring significant investment and
operational expertise to F&G
Total investment of $900+ million from Chinh Chu, William Foley, FNF and Blackstone
demonstrates significant ongoing commitment to the franchise
Strong
Sponsorship with
Significant Capital
Investment
5
Best-In-Class management team with an average industry tenure of 26 years for executive
officers
Have extensive experience in the insurance sector with both large and small companies,
successfully managing them through multiple economic cycles
Strong
Management Team
6
F&G Overview
13
Overview
Fidelity & Guaranty Life is a Des Moines, Iowa-based
provider of primarily:
• Fixed indexed annuity (“FIA”) products (71% of FY
’16A(1) Sales; 12th largest industry provider overall)
• Multi-year guaranty annuity (“MYGA”) and similar
products (27% of FY ’16A(1) Sales, 11th largest
industry provider overall)
• Indexed universal life (“IUL”) products ($60mm of
target in FY ’16A(1); 13th largest industry provider
overall)
Distribution via long-standing relationships with
Independent Marketing Organizations (“IMOs”)
• The top 10 IMOs have average relationship tenure
with F&G of 16+ years
• F&G is a top 5 player in the IMO distribution channel
• F&G sells through network of ~100 IMOs and 30,000+
contracted agents
~700,000 policies in force
F&G has grown sales by approximately 10% annually
from 2012 to 2016, supported by its long-standing
relationships with distribution partners, changing U.S.
retirement demographics and an attractive product
value proposition to policyholders
F&G generates income by matching stable, long-term
liabilities against a high-quality investment portfolio to
earn a net spread
Fiscal Year 2016 Sales Mix
Business Mix – U.S. GAAP Net Reserves (1) (2)
Fixed Indexed
Annuities
65%
Fixed Rate
Annuities
(MYGAs)
17%
Immediate
Annuities
13%
Life
(IUL and runoff life)
5%
$19bn
Fixed Indexed
Annuities
71%
Fixed Rate
Annuities(3)
(MYGAs)
27%
Indexed Universal
Life
2%
$2.6bn
(1) Fiscal year ended 9/30/16.
(2) GAAP net reserves comprised $22b contractholder funds and future policy benefits, net of $3bn reinsurance recoverable.
(3) Includes institutional products.
Demographics Support Retirement Market Growth
Market Growth
• Aging population needs retirement savings & income
– Longevity risk favors lifetime guaranty
– 2008 – 2009 financial crisis illustrated risk of equity
market exposure during retirement
• Index annuity characteristics attracting attention
– Low volatility of returns
– Principal protection
– Upside potential versus straight fixed income
– Tax deferred accumulation
– Guaranteed lifetime income (with benefit rider)
Growing Market Demographic
• Average age of policyholder is 65-70 years old
• Average account value of ~$100K
Insufficient Retirement Savings(1)
Retirement
Account
55%
No
Retirement
Account
45%
45% of all working-age households do not currently own assets in a
retirement account – savings “catch up” will be necessary for retirement
(1) Based on household retirement account ownership for all heads of households aged 25 – 64. National Institute of Retirement Security.
(2) Issued Annuity Contracts April 2016- April 2017. F&G data.
(3) U.S. Census Bureau.
23.7%
39.5%
24.5%
12.3%
< 60 60-69 70-79 80+
Percentage of New Business by Policyholder Age(2) Summary
Projected Growth in Target Market(3)
0%
20%
40%
60%
80%
100%
120%
140%
0
10
20
30
40
50
60
70
80
90
2010 2020 2030 2040 2050 2060
Number of Americans Aged 65 and Older (millions)
Cumulative Growth Rate of Americans Aged 65 and Older from 2010
14
F&G Business Strategy
F&G has successively managed volume and profit targets through periods of corporate uncertainty, regulatory changes & increased competition
F&G’s growth strategy leverages increasing market demand for retirement products with income and principal protection features
Stable new shareholder base provides opportunity to optimize business performance and pursue growth opportunities
Future ratings upgrade would increase growth potential via expansion into new channels (banks, broker-dealers) and IUL sales growth
15
How Will
We Drive
Growth?
Strengthen
the
Foundation
Execute foundational
initiatives that strengthen the
business, improve returns
and provide a platform for
sustainable growth
Enhance the
F&G Experience
Create a more engaging,
customer-focused
experience – through
accelerating the use of
digital and improving the
ease of doing business –
for distribution partners,
customers, and employees
Leverage Product
Capabilities for
Additional
Distribution
Build capabilities to grow
sales of USD products for
international markets
Grow and Diversify
Through Acquisition
Capture accretive
opportunities for growth and
diversification
Execute Key Initiatives With Stable, New Shareholder Base
DOL Strategy
16
DOL
Rule Background
F&G
Implementation
Strategy
Expands definition of fiduciary under ERISA to cover brokers and insurance agents
Agent must comply with impartial conduct standards when selling qualified financial products
Agent must disclose compensation and conflicts of interests, receive only reasonable
compensation and act in best interests of client
Worked closely with key IMOs over past year to prepare for implementation
Most IMOs have affiliated with RIAs or BDs to serve as required FI
F&G will serve as FI if IMO does not have affiliated RIA or BD relationship
F&G will accept qualified business from select IMOs who implement compensation structure
changes, supervise agent sales and conduct transaction review
F&G will accelerate its digital strategy to simplify new business process and assist with
compliance
DOL Rule does not detract from fundamental demand for guaranteed income retirement products
Independent distribution will adapt to new requirements to continue to serve their clients
Adoption of technology solutions and compliance automation contribute to operational efficiency efforts
Current Status
Effective June 9, agents must comply with impartial conduct standards under PTE 84-24
Effective January 1, financial institution (FI) must enter into best interest contract (BIC) with
agent and customer
FIAs and VAs subject to BIC, while FAs and MYGAs subject to PTE 84-24
$15.7
$18.7
$20.0
2013 2016 1H17
F&G Historical Financial Performance
Net Investment Income(1)
Average Assets Under Management (AAUM)(1)
GAAP Net Income(1)
($ in billions)
Consistent asset growth at 7% CAGR driven by sales and
stable retention trends and proactive in-force management
Highly rated, diversified and liquid investment portfolio
Asset duration well-matched to liabilities
Portfolio well-positioned for upside from both rising rates and
further diversification
NII increasing both from AAUM growth and active re-
positioning of portfolio to drive earnings
Earned yield has risen meaningfully over last 3 years from
4.31% to 4.88%
Impairments continue to run below pricing at ~15 bps per yr.
Steady growth in adjusted operating income, net of notable
items -- CAGR of ~20% since 2013 driven by:
AUM growth with disciplined new business pricing
In-force management
Stable operating expenses
($ in millions)
($ in millions)
$708
$923
$487
2013 2016 1H17
2013 2016 1H17
17
GAAP Net Income $348 $97 $130
Adjusted
Operating
Income
$138
$77
$162
(1) Fiscal year ended 9/30.
492 bps
226 bps
203 bps
146 bps
86 bps
265 bps
23 bps
57 bps
60 bps
226 bps
203 bps
146 bps
86 bps
Investment Yield Interest Credited
and Option Cost
Other liability
Cost
Operating
Expenses
Interest Expense
and Tax
Adjusted
Operating Return
on Average AUM
Stable Legacy Business With Significant ROE Expansion Upside
F&G generates returns by earning a spread between low-cost, stable liabilities matched with a
conservatively managed asset portfolio
Note: Operating metrics calculated based on average AUM (amortized cost).
(1) Includes other adjustment due to convention of calculating cost of crediting based on reserves. 18
Net investment spread of 227 bps / ~290 bps FIA only
ROE
(ex. AOCI):
11.1%
(1)
Business Model for Fiscal Year Ended September 30, 2016
Investment
Leverage:
13.8x
Current
Pro Forma
with CF Corp.
Enhancements
ROE
(ex. AOCI):
15% - 19%
High quality investment portfolio with focus on NAIC 1 and 2 rated securities; broadly diversified by sector and geography
Current portfolio earned yield = 4.92%; room for yield enhancement given current modest exposure to alternatives
Conservative ALM profile with Asset/Liability gap of ~ 0.2 years(4); large exposure to floating rate assets provide incremental investment
flexibility in changing rate environment
Ability to focus on structural complexity and less liquid situations allows for incremental spread opportunities to enhance portfolio yields
Income-oriented total return mandate is supportive of long-term portfolio and product economics
High Quality & Well Diversified Portfolio
19
Investment Philosophy
Investment Portfolio by Asset Class(1) Investment Portfolio by NAIC Designation(1)
Corporates
45%
Structured Securities
25%
Municipal
8%
Pfd/Hybrid
9%
EMD
5%
Cash
1%
Treasury
3%
Gov't
2% Options & Other
2%
$20b(3) NAIC 1
(A & above)
52% NAIC 2
(BBB)
38%
NAIC 3
(BB)
4%
NAIC 4
(B)
1%
NAIC 5 & 6
(CCC and below)
<1%
Unrated(2)
2%
Cash & Cash
Equivalents
3%
$20b(3)
(1) GAAP book values as of 9/30/16.
(2) Unrated consists of cash, U.S. treasuries, equity securities, options, and other.
(3) GAAP investment portfolio totals $20bn investments, including related party loans and
cash/cash equivalents; chart is net of $1bn Front Street Re funds withheld (FWH) assets
(4) Data as of 12/31/16.
Simple & Stable Liability Profile
20
(1) Fiscal year ended 9/30/16 and where applicable, crediting rates consider the fixed portion of FIA business
(2) GAAP net reserves comprised $22bn contractholder funds and future policy benefits, net of $3bn reinsurance recoverable.
Primarily FIAs and FAs; with growing IUL mortality reserves
Total liabilities average duration ~7 years; well-matched to assets
During accumulation, customer’s money credited with interest
linked to an index strategy (e.g. S&P 500)
Surrender charges and market value adjustments protect against
disintermediation in rising interest rate environment
MVA now on all products
Actual crediting rates are typically set above contractual minimum
guarantees, providing flexibility during low interest rates
Fixed Indexed
Annuities
65%
Fixed Rate
Annuities
(MYGAs)
17%
Immediate
Annuities
13%
Life
(IUL and runoff life)
5%
$19bn
Liability Profile U.S. GAAP Net Reserves(1)(2)
Annuity Metrics(1)
Fixed Indexed Annuities
(FIA)
Fixed Rate Annuities
(FRA)
Weighted- ver ge Life 7 years 4 years
% Surrender Charge Protected 85% 78%
Average Remaining Surrender Charge (% of Account Value) 9% 5%
% Subject to MVA 18% 75%
Average Cost of Crediting 1.92% 2.68%
Distance to Guaranteed Minimum Crediting Rates 120bps 85bps
Sustainable Growth with Disciplined Pricing of New Business
21
Total Sales (1)
($ in mm)
Step 1
Monthly pricing assumptions updated
to determine expected profit / IRR
Premium volume
Benchmark yields,
Option costs, and
Product mix demographics
Fully allocated costs
Step 3
Actual performance is determined for
vs. key assumptions – product mix,
yields, option costs
The actual IRR for the month’s new
business is determined and reviewed
against projected pricing IRR
Monthly achieved IRR is tracked
throughout lifecycle and managed to
by adjusting caps and crediting rates
Step 2
Review and Approval By Cross-
Functional Pricing Committee
Product
Investments
Sales
Finance
Risk
Pricing Process Has Resulted in Stable to Rising IRR’s
Annuity
Achieved IRR
~12.0% ~12.0% ~14.0% ~13.0%
$1,039
$2,204
$2,501 $2,581
2013 2014 2015 2016
Fixed Indexed Annuities (FIAs) Fixed Rate Annuities (MYGAs) Indexed Universal Life (IUL)
(1) Based on fiscal year ended 9/30.
(2) Includes institutional products.
(2)
Closing Remarks
22
Investment Highlights
23
F&G
Transformational transaction with meaningful value creation opportunities and a high-quality base business
Accelerated earnings momentum through an efficient reinsurance structure and enhanced
asset management performance through relationship with Blackstone
Capabilities to pursue ongoing strategic acquisitions by leveraging the experience and
professional network of CF Founders
Well Defined CF
Corp. Value
Creation Levers
1
Primary life insurance company with a well-established Fixed Indexed Annuity (“FIA”), Fixed
Rate, Multi-Year Guaranty Annuity (“MYGA”), and Indexed Universal Life (“IUL”) platform
Offers a comprehensive suite of underlying product offerings through its longstanding and
stable distribution relationships
Established Life &
Annuity Franchise
2
Favorable demographic trends and growing retirement population drives broader demand for
FIA, MYGA, and IUL products
F&G experienced ~10% annual sales growth from 2012-2016
Attractive
Sector and
Company Growth
3
F&G will maintain conservative financial leverage and strong capitalization at levels
consistent with those to date
F&G significant und erlying cash and investable assets of $22bn
Prudent Capital
Position with
Significant
Investable assets
4
CF Corp. Founders Chinh Chu and William Foley bring significant investment and
operational expertise to F&G
Total investment of $900+ million from Chinh Chu, William Foley, FNF and Blackstone
demonstrates significant ongoing commitment to the franchise
Strong
Sponsorship with
Significant Capital
Investment
5
Best-In-Class management team with an average industry tenure of 26 years for executive
officers
Have extensive experience in the insurance sector with both large and small companies,
successfully managing them through multiple economic cycles
Strong
Management Team
6
Key Milestones to Transaction Closing
24
Key Process Milestones
Announce Transaction 5/24/2017
F&G Shareholder Approval 5/24/2017
CF Corp. Shareholder Vote
Obtain Required Regulatory Approvals
Transaction Target Closing Q4'17
Appendix
25
26
(1) Fees and capital structure are subject to change partly depending
on the level of redemptions, if any, and the level of capitalization as
determined by CF Corp. and Management.
(2) Based on common equity excluding other comprehensive income.
(3) Debt excludes preferred equity.
(4) Consolidated insurance and reinsurance affiliate companies.
(5) Data as of 12/31/2016.
(6) 7.5% PIK coupon.
(7) $0.01 strike price.
(8) $11.50 Exercise, $18.00 Ceiling.
(9) Assuming no redemption of public shares.
(10) Including affiliates.
Transaction Overview (cont’d)
Transaction Sources and Uses(1)
Sources and Uses
($ in mm, except for per share data)
CF Corp. Founders(9) 20-25%
Blackstone 20-25%
Other Shareholders (Incl. Management) 50-60%
Total 100%
Pro Forma Common Equity Ownership of CF Corp.(10)
(6)
(5)
Transaction Setup Historical & Pro Forma Capital Structure
($ in mm) F&G % of Pro Forma % of
(3/31/2017) Total (12/31/17E) Total
Purchase Price per Share $31.10 Debt $405 20% $405 17%
X Fully Diluted Shares Outstanding 59 Preferred Equity 0 37 6
&G Eq ity Purcha e Price $1,836 CF Corp. Common Equity 0 1,200 51
Acquisition of Reinsurance Affiliates, Fees & Other Adj. 99 ommon Equity(2) 1,617 8 % 36 15%
Rollover Existing Debt 405 T tal Equity(2) $ , 0 1,935 83
Total U es $2,340 ot l Capital(2) 2,022 10 $2,340 100
Debt / Capit l (3) 2 % 17%
Risk Based Capital Ratio (4) 412 > 400
Total Common Shares 186.0
t l New Warrants (7) 8.4
Total SPAC Warrants (8) 69.
*
*
*
*
*
*
* Fees and other adjustments are estimates and currently are expected to total approximately $110 million as of the closing. In addition, the company may choose to raise up to an
additional $200 million of common equity from now until closing for a number of purposes including: (1) the satisfaction of any redemptions, if any, and any funding needed to complete the
transaction; (2) to strengthen the balance sheet for purposes of regulatory approval; and (3) for general purposes including growth and expansion. Such equity, if raised, shall be funded at
$10.00 per share by the Anchor Investors pursuant to the ROFO.
Fidelity & Guaranty Life Management Team
Extensive experience in the insurance sector
Managed large and small companies
Operated through numerous economic cycles
26 years avg. industry experience for executives
27
Name / Title Biography
Chris Littlefield
President & Chief
Executive Officer
President since October 2014, with 10+ years of life insurance experience
Formerly served as President and Chief Executive Officer of Aviva USA Corporation, and
COO & EVP General Counsel for AmerUs Group
Dennis Vigneau
EVP & Chief Financial
Officer
CFO since January 2014, with 25 years of life insurance experience
Previously CFO at Kemper Corporation, and held senior finance positions with American
Life Insurance Company and Genworth Financial
Raj Krishnan
EVP & Chief
Investment Officer
CIO since 2009, with 23 years of life insurance experience
Previously Chief Investment Officer with Old Mutual US Life (predecessor), and Fixed
Income Portfolio Manager and Associate Partner with Wellington Management Company
Eric L. Marhoun
EVP & General
Counsel
29 years experience in insurance
Previously VP, Lead Group Counsel and Secretary with American Express Financial
Advisors, and Of Counsel at Lord, Bissell & Brook
Rose Boehm
SVP Human
Resources
31 years experience in industry
Formerly AVP Organizational Development, Old Mutual US Life (predecessor); additional
experience with Honeywell Technical Services and Pace Incorporated
Fidelity & Guaranty Life Management Team (Cont’d)
Extensive experience in the insurance sector
Managed large and small companies
Operated through numerous economic cycles
26 years avg. industry experience for executives
28
Name / Title Biography
John Currier
SVP & Chief Actuary
27 years actuarial experience in life insurance
Formerly served as EVP – Chief Actuary of Aviva USA, Chief Product Officer for AmerUs
Group, and Chief Actuary – Life Companies for Farm Bureau Financial Services
Chris Fleming
SVP Operations & IT
21 years experience in insurance industry
Previously Head of Life Strategic Planning & Six Sigma for ING, and held executive
positions with ING Central Europe Insurance and AIG
John O’Shaughnessy
SVP Business
Development
International
32 years experience in life insurance
Previously SVP & Chief Actuary for FGL, and actuarial positions at Great American
Financial, Lincoln Financial, Travelers, and Nationwide Financial
John Phelps
SVP & Chief
Distribution Officer
35 years experience in insurance
Formerly SVP Life & Fixed Annuity Distribution, Old Mutual US Life (predecessor);
additional experience with Executive Marketing Insurers and Conseco Life Insurance Co
Wendy Young
SVP & Chief Risk
Officer
31 years experience in insurance
Formerly VP Financial Planning & Analysis, Old Mutual US Life (predecessor); additional
actuarial experience with The Acacia Group and Ernst & Young LLP
William Foley: Preeminent Operator
29
0.0
10.0
20.0
30.0
40.0
$50.0
Jan 96 Apr 00 Jul 04 Oct 08 Feb 13 May 17
One dollar invested in FNF in
January 1996 has produced
3x compounded returns vs.
the S&P 500
$54 billion in public market value creation
Operational expertise building market share leaders
Industry consolidator, with over 100 strategic acquisitions
Consistent track record of exceeding cost synergy targets
Delivered superior shareholder returns
Market Capitalization ($ billion)
• Leading provider of title insurance, technology
and transaction services to the real estate and
mortgage industries (~$14 billion enterprise
value)
• Utilized disciplined strategy to complete over
80 acquisitions
• Leader in operational efficiency with ~500
basis points better margins than its
competitor's
• Global leader in financial services technology,
with a focus on retail and institutional banking,
payments, asset and wealth management,
risk and compliance, consulting, and
outsourcing solutions (~$37 billion enterprise
value)
• Spun out of FNF in 2004
• Has completed over 15 acquisitions, including
Certegy, Metavante and recently announced
SunGard
• Industry leading margins
• Leading provider of integrated technology,
data and analytics solutions that facilitate and
automate many of the business processes
across the mortgage lifecycle (~$8 billion in
enterprise value)
• More than doubled acquisition equity value of
$2.9 billion (May 2013 acquisition of LPS)
$0.4bn
20x
8x
6x
FNF BRK S&P 500
15%
$54bn
10% 9%
CAGR
Source: FactSet, SNL Financial, public filings, company management. Market Data as of 5/23/2017.
(1) Market capitalization adjusted for dividends reinvested. Takes into account FNF stock dividends. Includes FNFV, JAX, and REMY.
(1)
30
Fixed Indexed Annuities Value Proposition
FIA are an insured retirement planning tool. While often compared to other wealth accumulation options, there is no
comparison as a tool for a huge portion of the population to secure their retirement with dignity.
Fixed Indexed
Annuities
Variable
Annuities
Traditional Fixed
Annuities
CD’s Bonds / ETFs
Guarantee Principal
Protection (Annually)
Long Term Potential
Accumulation
Liquidity Options
Tax Efficient
Enhanced Death Benefit
(optional)
Guaranteed Lifetime
Income w Flexibility
(optional)
Option Rider Costs Low High Low
Potential for Upside
Returns
Return Potential Mid / High
Mid / High with all
guarantee options
Low / Mid Low High
Loss Potential 0 High 0 0 High