Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - FGL Holdings | fglholdings9302018earnings.htm |
| 8-K - 8-K - FGL Holdings | fglholdings930201810-qpres.htm |
Exhibit 99.2
FGL Holdings (“F&G”; NYSE: FG)
Investor Supplement
September 30, 2018
(Year Ended December 31)
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.
Fidelity & Guaranty Life (“FGL”; NYSE: FGL), a former majority owned subsidiary of HRG Group, Inc. (“HRG”; NYSE: HRG), completed the merger with CF Corporation (NASDAQ: CFCO) (“CF Corp”) and its related entities (“CF Entities”), on November 30, 2017 ("Closing Date"). As a result of the Business Combination completed November 30, 2017, CF Corp changed their name to FGL Holdings (NYSE: FG). For accounting purposes, FGL Holdings was determined to be the acquirer and FGL was deemed the acquired party and accounting predecessor. In addition, on November 30, 2017 CF Corp acquired all of the issued and outstanding shares of Front Street Re Cayman Ltd. (“FSRC”) and F&G Reinsurance, Ltd. (formerly known as Front Street Re Ltd., and, together with FSRC herein referred to as the "FSR Companies"). Our financial statement presentation includes the financial statements of FGL and its subsidiaries as “Predecessor” for the periods prior to the completion of the Business Combination and FGL Holdings, including the consolidation of FGL and its subsidiaries and FSR Companies, as "Successor" for periods from and after the Closing Date.
As disclosed in the Company’s Form 10-Q for the period ended September 30, 2018, the Company identified immaterial errors during the quarter ended September 30, 2018. Management recorded immaterial out of period adjustments and updated the respective balance previously reported for the quarters ended June 30, 2018 and March 31, 2018 and the period ended December 31, 2017 within the financial statements and financial exhibits included herein. See "Note 2. Significant Accounting Policies and Practices" to our unaudited condensed consolidated financial statements for additional information.
Non-GAAP Financial Measures
This document contains certain non-GAAP financial measures commonly used in our industry that, together with the relevant GAAP measures, may enhance a user’s ability to analyze the Company's operating performance and capital position for the periods presented. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures.
FGL HOLDINGS
Financial Supplement
September 30, 2018
(All periods are unaudited)
Page | |
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
NON-GAAP FINANCIAL MEASURES : Successor
While management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace GAAP financial results and should be read in conjunction with those GAAP results. 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. The following represents the definitions of non-GAAP measures used by the Successor entity.
Adjusted Operating Income (AOI)
AOI is a non-GAAP economic measure we use to evaluate financial performance each period. AOI is calculated by adjusting net income (loss) to eliminate (i) the impact of net investment gains/losses including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging our indexed annuity policies, (ii) the effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging cost, (iii) the tax effect of affiliated reinsurance embedded derivative, (iv) the effect of integration, merger related & other non-operating items, (v) impact of extinguishment of debt, and (vi) net impact from Tax Cuts and Jobs Act. Adjustments to AOI are net of the corresponding impact on amortization of intangibles, as appropriate. The income tax impact related to these adjustments is measured using an effective tax rate of 21%, as appropriate. While these adjustments are an integral part of the overall performance of the Company, market conditions and/or the non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, Management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. Beginning with the quarter ended March 31, 2018, the Company updated its AOI definition to remove the residual impacts of fair value accounting on its FIA products, including gains and losses on derivatives hedging those policies. Management believes the revised measure enhances the understanding of the business post-merger and is more useful and relevant to investors as compared to the previous definition which eliminated only the effects of changes in the interest rates used to discount the FIA embedded derivative. Periods shown prior to March 31, 2018 have not been adjusted to reflect the new definition.
AOI Available to Common Shareholders
AOI available to common shareholders is a non-GAAP economic measure we use to evaluate financial performance attributable to our common shareholders each period. AOI available to common shareholders is calculated by adjusting net income (loss) available to common shareholders to eliminate the same items as described in the AOI paragraph above. While these adjustments are an integral part of the overall performance of the Company, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, Management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations.
Common Shareholders’ Equity
Common Shareholders’ Equity is based on Total Shareholders’ Equity excluding Equity Available to Preferred Shareholders. Management considers this to be a useful measure internally and to investors to assess the level of equity that is attributable common stock holders.
Common Shareholders’ Equity Excluding AOCI
Common Shareholders’ Equity Excluding AOCI is based on Common Shareholders' 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, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned equity on common equity.
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FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Equity Available to Preferred Shareholders
Equity available to preferred shareholders is equal to the product of (a) the number of preferred shares outstanding plus share dividends declared but not yet issued and (b) the original liquidation preference amount per share. Management considers this non-GAAP measure to provide useful information internally and to investors and analysts to assess the level of equity that is attributable to preferred stock holders.
Total Capitalization Excluding AOCI
Total Capitalization Excluding AOCI is based on shareholders’ 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, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess the capital position of the Company.
GAAP Book Value per Common Share (including and excluding AOCI)
GAAP Book Value per Common Share including and excluding AOCI is calculated as Common Shareholders’ Equity and Common Shareholders Equity Excluding AOCI divided by the total number of shares of common stock outstanding. Management considers this to be a useful measure internally and for investors and analysts to assess the capital position of the Company.
Statutory Book Value per Common Share (including and excluding Interest maintenance reserve ("IMR") and asset valuation reserve ("AVR"))
Statutory Book Value per Common Share including IMR and AVR is calculated as Fidelity & Guaranty Life Insurance Company ("FGLIC")’s statutory basis capital and surplus plus F&G Life Re's U.S. GAAP Common Shareholder's Equity excluding the impact of reinsurance embedded derivatives and AOCI, plus FSRC’s U.S. GAAP Common Shareholder's Equity excluding AOCI divided by the total number of shares of common stock outstanding at FGL Holdings. Statutory Book Value per Common Share excluding IMR and AVR is calculated as FGLIC’s statutory basis capital and surplus excluding IMR and AVR plus F&G Life Re's U.S. GAAP Common Shareholder's Equity excluding the impact of reinsurance embedded derivatives and AOCI, plus FSRC’s U.S. GAAP Common Shareholder's Equity excluding AOCI divided by the total number of shares of common stock outstanding at FGL Holdings. Management considers this to be a useful measure internally and for investors and analysts to assess the capital position of our primary insurance entities.
Return on Average Common Shareholders’ Equity
Return on Average Common Shareholders' Equity is calculated by dividing net income (loss) available to common shareholders by total average Common Shareholders’ Equity. Average Common Shareholders Equity for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average Common Shareholders Equity is calculated using the beginning and ending Common Shareholders’ Equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. As a result of the merger, the starting point for calculation of average Common Shareholders’ Equity was reset to December 1, 2017. The rolling average will be updated from the merger date forward to use available historical data points for the successor until 5 historical data points are available. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this to be a useful measure internally and for investors and analysts to assess the level of return driven by the Company that is attributable to common shareholders.
Return on Average Common Shareholders Equity Excluding AOCI
Return on Average Common Shareholders' Equity Excluding AOCI is calculated by dividing net income (loss) available to common shareholders by total average Common Shareholders’ Equity Excluding AOCI. Average Common Shareholders Equity Excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average Common Shareholders Equity Excluding AOCI is calculated using the beginning and ending Common Shareholders’ Equity, excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. As a result of the merger, the starting point for calculation of average Common Shareholders’ Equity was reset to December 1, 2017. The rolling average will be updated from the merger date forward to use available historical data points for the successor until 5 historical data points are available. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this to be a useful measure internally and for investors and analysts to assess the level of return driven by the Company that is attributable to common shareholders.
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FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Adjusted Operating Return on Average Common Shareholders’ Equity Excluding AOCI
Adjusted Operating Return on Common Shareholders’ Equity Excluding AOCI is calculated by dividing AOI Available to Common Shareholders’ by total average Common Shareholders’ Equity Excluding AOCI. Average Common Shareholders’ Equity Excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average Common Shareholders Equity is calculated using the beginning and ending Common Shareholders Equity, Excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. As a result of the merger, the starting point for calculation of average Common Shareholders’ Equity was reset to December 1, 2017. The rolling average will be updated from the merger date forward to use available historical data points for the successor until 5 historical data points are available. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of adjusted earned return on common equity.
Debt-to-Capital excluding AOCI
Debt-to-capital ratio is computed by dividing total debt by total capitalization excluding AOCI. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.
Rating Agency Adjusted Debt to Capitalization, excluding AOCI
Rating Agency Adjusted Debt to Capitalization, excluding AOCI is computed by dividing the sum of total debt and 50% Equity Available to Preferred Shareholders by total capitalization excluding AOCI less a 50% credit for Equity Available to Preferred Shareholders. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.
Average Assets Under Management (AAUM)
AAUM is the sum of (i) total invested assets at amortized cost, excluding derivatives; (ii) related party loans and investments; (iii) accrued investment income; (iv) funds withheld at fair value; (v) the net payable/receivable for the purchase/sale of investments and (iv) cash and cash equivalents, excluding derivative collateral, at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Yield on AAUM
Yield on AAUM is calculated by dividing annualized net investment income by AAUM. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Net Investment Spread
Net investment spread is the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on FIA policies. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Company’s invested assets against the level of investment return provided to policyholders, inclusive of hedging costs.
Investment Book Yield
Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return on the Company’s income generating invested assets.
5
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
NON-GAAP FINANCIAL MEASURES : Predecessor
While management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace GAAP financial results and should be read in conjunction with those GAAP results. The Predecessor's 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. The following represents the definitions of non-GAAP measures used by the Predecessor entity.
AOI
AOI is a non-GAAP economic measure the Predecessor used to evaluate financial performance each period. AOI is calculated by adjusting net income to eliminate (i) the impact of net investment gains including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging indexed annuity policies, (ii) the effect of changes in the interest rates used to discount the FIA embedded derivative liability, (iii) the effect of change in fair value of the reinsurance related embedded derivative and (iv) the effect of integration and merger related expenses. All adjustments to AOI are net of the corresponding VOBA and DAC impact. The income tax impact related to these adjustments is measured using an effective tax rate of 35%, as appropriate. While these adjustments were an integral part of the overall performance of the Predecessor, market conditions impacting these items could overshadow the underlying performance of the Predecessor's business. Accordingly, the Predecessor believed using a measure which excluded their impact was effective in analyzing the trends of their operations. For the period ended November 30, 2017, the Predecessor changed their definition of AOI to exclude the effects of integration and merger related expenses due to the volume of integration and merger expenses incurred during the two months ended November 30, 2017. Predecessor management believed the exclusion of these charges provided users of the financial statements a more representative view of the results of the core business of the Predecessor for that period. Predecessor periods shown prior to November 30, 2017 have been adjusted to reflect the new definition.
Total Capitalization Excluding AOCI
Total Capitalization Excluding AOCI is based on shareholders’ 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, the Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess capital position of the Predecessor.
Book Value per share (including and excluding AOCI) (presented herein as Book Value per common share including and excluding AOCI)
Book Value per share including and excluding AOCI is calculated as shareholders’ equity and shareholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding. The Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess capital position of the Predecessor.
Return on Average Shareholders’ Equity (presented herein as Return on Average Common Shareholders’ Equity)
Return on Average Shareholders’ Equity is calculated by dividing net income (loss) available to shareholders by total average shareholders’ equity. Average shareholders’ equity for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average shareholders’ equity is calculated using the beginning and ending shareholders’ equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. The Predecessor considered this to be a useful measure internally and for investors and analysts to assess the level of return driven by the Company that is attributable to common shareholders.
Return on Average Shareholders’ Excluding AOCI (presented herein as Return on Average Common Shareholders’ Equity Excluding AOCI)
Return on Average Shareholders’ Equity Excluding AOCI is calculated by dividing net income (loss) available to common shareholders by total average shareholders’ equity excluding AOCI. Average shareholders’ equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average shareholders’ equity excluding AOCI is calculated using the beginning and ending shareholders’ equity, excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, the Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned return on shareholders’ equity.
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FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Adjusted Operating Return on Equity Excluding AOCI (presented herein as Adjusting Operating return on common shareholders’ equity, excluding AOCI)
Adjusted Operating Return on Equity Excluding AOCI is calculated by dividing AOI by total average shareholders’ equity excluding AOCI. Average shareholders’ equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average shareholders’ equity is calculated using the beginning and ending shareholders’ equity, excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. The Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of adjusted earned return on equity.
Total Debt to Capitalization, excluding AOCI
Total Debt to Capitalization, excluding AOCI is computed by dividing total debt by total capitalization excluding AOCI. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.
Rating Agency Adjusted Debt to Capitalization, excluding AOCI
Rating Agency Adjusted Debt to Capitalization, excluding AOCI is computed by dividing the sum of total debt and 50% preferred equity by total capitalization excluding AOCI less a 50% preferred equity credit. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.
Average Assets Under Management (AAUM)
AAUM is the sum of (i) total invested assets at amortized cost, excluding derivatives; (ii) related party loans and investments; and (iii) cash and cash equivalents, excluding derivative collateral, at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Yield on AAUM
Yield on AAUM is calculated by dividing annualized net investment income by AAUM. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.
Net Investment Spread
Net investment spread is the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging the Predecessor’s risk on FIA policies. The Predecessor considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Predecessor’s invested assets against the level of investment return provided to policyholders, inclusive of hedging costs.
Investment Book Yield
Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return on their income generating invested assets.
7
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
FGL HOLDINGS
Consolidated Financial Highlights
Three months ended | One month ended | Two months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||
Premiums | $ | 12 | $ | 15 | $ | 18 | $ | 3 | $ | 7 | $ | 16 | $ | 45 | $ | 31 | |||||||||||||||||
Net investment income | 267 | 282 | 263 | 92 | 174 | 261 | 812 | 765 | |||||||||||||||||||||||||
Net investment gains (losses) | 119 | (2 | ) | (191 | ) | 42 | 146 | 117 | (74 | ) | 265 | ||||||||||||||||||||||
Insurance and investment product fees and other | 46 | 45 | 48 | 28 | 35 | 41 | 139 | 129 | |||||||||||||||||||||||||
Total revenues | 444 | 340 | 138 | 165 | 362 | 435 | 922 | 1,190 | |||||||||||||||||||||||||
Net income (loss) | $ | 56 | $ | 40 | $ | 65 | $ | (91 | ) | $ | 28 | $ | 61 | $ | 161 | $ | 115 | ||||||||||||||||
Adjusted Operating Income ("AOI") (1) | $ | 69 | $ | 65 | $ | 68 | $ | 3 | $ | 36 | $ | 65 | $ | 202 | $ | 145 | |||||||||||||||||
Dividends on preferred stock | (7 | ) | (7 | ) | (7 | ) | (2 | ) | — | — | (21 | ) | — | ||||||||||||||||||||
AOI available to common shareholders | 62 | 58 | 61 | 1 | 36 | 65 | 181 | 145 | |||||||||||||||||||||||||
Per Unrestricted Common Shares Amounts: | |||||||||||||||||||||||||||||||||
Basic: | |||||||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | 0.23 | $ | 0.15 | $ | 0.27 | $ | (0.44 | ) | $ | 0.48 | $ | 1.06 | $ | 0.65 | $ | 1.98 | ||||||||||||||||
AOI available to common shareholders (1) | $ | 0.29 | $ | 0.27 | $ | 0.28 | $ | — | $ | 0.62 | $ | 1.11 | $ | 0.84 | $ | 2.49 | |||||||||||||||||
Diluted: | |||||||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | 0.23 | $ | 0.15 | $ | 0.27 | $ | (0.44 | ) | $ | 0.47 | $ | 1.06 | $ | 0.65 | $ | 1.98 | ||||||||||||||||
AOI available to common shareholders (1) | $ | 0.29 | $ | 0.27 | $ | 0.28 | $ | — | $ | 0.62 | $ | 1.11 | $ | 0.84 | $ | 2.48 | |||||||||||||||||
Dividends Paid to Common Shareholders Per Share | $ | — | $ | — | $ | — | $ | — | $ | 0.065 | $ | 0.065 | $ | — | $ | 0.195 | |||||||||||||||||
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FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Three months ended | One month ended | Two months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
At Period End | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 944 | $ | 1,710 | $ | 1,157 | $ | 1,215 | $ | 924 | $ | 885 | $ | 944 | $ | 885 | |||||||||||||||||
Total investments | $ | 24,411 | $ | 22,860 | $ | 23,232 | $ | 23,604 | $ | 23,326 | $ | 23,072 | $ | 24,411 | $ | 23,072 | |||||||||||||||||
Total assets | $ | 30,960 | $ | 30,004 | $ | 29,651 | $ | 29,923 | $ | 29,227 | $ | 28,965 | $ | 30,960 | $ | 28,965 | |||||||||||||||||
Contractholder funds | $ | 23,164 | $ | 22,504 | $ | 22,045 | $ | 21,827 | $ | 21,083 | $ | 20,792 | $ | 23,164 | $ | 20,792 | |||||||||||||||||
Future policy benefits | $ | 4,631 | $ | 4,710 | $ | 4,711 | $ | 4,751 | $ | 3,401 | $ | 3,412 | $ | 4,631 | $ | 3,412 | |||||||||||||||||
Debt (including revolving credit facility) | $ | 540 | $ | 540 | $ | 442 | $ | 412 | $ | 405 | $ | 405 | $ | 540 | $ | 405 | |||||||||||||||||
Total equity | $ | 1,474 | $ | 1,382 | $ | 1,666 | $ | 1,963 | $ | 2,284 | $ | 2,247 | $ | 1,474 | $ | 2,247 | |||||||||||||||||
Total equity excluding Accumulated Other Comprehensive Income (AOCI) | $ | 2,043 | $ | 1,985 | $ | 1,944 | $ | 1,888 | $ | 1,729 | $ | 1,704 | $ | 2,043 | $ | 1,704 | |||||||||||||||||
Common shares issued and outstanding | 214.37 | 214.37 | 214.37 | 214.37 | 59.00 | 58.93 | 214.37 | 58.93 | |||||||||||||||||||||||||
GAAP Book value per common share (1) | $ | 5.02 | $ | 4.62 | $ | 5.98 | $ | 7.40 | $ | 38.71 | $ | 38.13 | $ | 5.02 | $ | 38.13 | |||||||||||||||||
GAAP Book value per common share excluding AOCI (1) | $ | 7.67 | $ | 7.44 | $ | 7.28 | $ | 7.05 | $ | 29.31 | $ | 28.92 | $ | 7.67 | $ | 28.92 | |||||||||||||||||
Debt to total Capitalization excluding AOCI (1) | 21.2 | % | 21.7 | % | 18.5 | % | 17.9 | % | 19.0 | % | 19.2 | % | 21.2 | % | 19.2 | % | |||||||||||||||||
Return on average common shareholders' equity excluding AOCI (1) | 12.1 | % | 8.4 | % | 15.1 | % | N/M | 6.5 | % | 14.6 | % | 11.8 | % | 14.6 | % | ||||||||||||||||||
Statutory Book value per share (1) | $ | 8.51 | 8.55 | 8.13 | 8.04 | $ | 25.91 | $ | 25.91 | $ | 8.51 | $ | 25.91 | ||||||||||||||||||||
Statutory Book value per share excluding IMR and AVR (1) | $ | 11.34 | 11.27 | 10.80 | 10.70 | $ | 34.99 | $ | 34.99 | $ | 11.34 | $ | 34.99 | ||||||||||||||||||||
(1) Refer to "Non-GAAP Financial Measures" for further details
N/M - Not meaningful
9
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
FGL HOLDINGS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities, available-for-sale, at fair value (amortized cost: September 30, 2018 - $22,143; December 31, 2017 - $20,847) | $ | 21,421 | $ | 20,326 | $ | 21,040 | $ | 20,963 | $ | 21,154 | ||||||||||
Equity securities, at fair value (cost: September 30, 2018 - $1,490; December 31, 2017 - $1,392) | 1,440 | 1,344 | 1,095 | 1,388 | 773 | |||||||||||||||
Derivative investments | 432 | 312 | 293 | 492 | 413 | |||||||||||||||
Short term investments | 15 | — | — | 25 | — | |||||||||||||||
Commercial mortgage loans | 497 | 525 | 528 | 548 | 547 | |||||||||||||||
Other invested assets | 606 | 353 | 276 | 188 | 185 | |||||||||||||||
Total investments | 24,411 | 22,860 | 23,232 | 23,604 | 23,072 | |||||||||||||||
Related party loans | — | — | — | — | 71 | |||||||||||||||
Cash and cash equivalents | 944 | 1,710 | 1,157 | 1,215 | 885 | |||||||||||||||
Accrued investment income | 230 | 215 | 240 | 211 | 231 | |||||||||||||||
Funds withheld for reinsurance receivables, at fair value | 708 | 769 | 748 | 756 | — | |||||||||||||||
Reinsurance recoverable | 2,460 | 2,476 | 2,495 | 2,494 | 3,375 | |||||||||||||||
Intangibles, net | 1,205 | 1,070 | 947 | 853 | 1,129 | |||||||||||||||
Deferred tax assets, net | 285 | 283 | 260 | 182 | — | |||||||||||||||
Goodwill | 467 | 467 | 467 | 467 | — | |||||||||||||||
Other assets | 250 | 154 | 105 | 141 | 202 | |||||||||||||||
Total assets | $ | 30,960 | $ | 30,004 | $ | 29,651 | $ | 29,923 | $ | 28,965 | ||||||||||
10
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
Contractholder funds (a) | $ | 23,164 | $ | 22,504 | $ | 22,045 | $ | 21,827 | $ | 20,792 | ||||||||||
Future policy benefits, including $684 and $728 at fair value at September 30, 2018 and December 31, 2017, respectively (b) | 4,631 | 4,710 | 4,711 | 4,751 | 3,412 | |||||||||||||||
Funds withheld for reinsurance liabilities (d) | — | — | — | — | 1,083 | |||||||||||||||
Liability for policy and contract claims (c) | 60 | 74 | 70 | 78 | 67 | |||||||||||||||
Debt | 540 | 540 | 307 | 307 | 300 | |||||||||||||||
Revolving credit facility | — | — | 135 | 105 | 105 | |||||||||||||||
Deferred tax liability, net | — | — | — | — | 62 | |||||||||||||||
Other liabilities | 1,091 | 794 | 717 | 892 | 897 | |||||||||||||||
Total liabilities | 29,486 | 28,622 | 27,985 | 27,960 | 26,718 | |||||||||||||||
Shareholders' equity: | ||||||||||||||||||||
Preferred stock ($.0001 par value, 100,000,000 shares authorized, 391,694 and 375,000 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively) | — | — | — | — | — | |||||||||||||||
Common stock ($.0001 par value, 800,000,000 shares authorized, 214,370,000 issued and outstanding at September 30, 2018 and December 31, 2017, respectively) | — | — | — | — | 1 | |||||||||||||||
Additional paid-in capital | 2,056 | 2,047 | 2,039 | 2,037 | 716 | |||||||||||||||
Retained earnings (Accumulated deficit) | (13 | ) | (62 | ) | (95 | ) | (149 | ) | 1,000 | |||||||||||
Accumulated other comprehensive income (loss) | (569 | ) | (603 | ) | (278 | ) | 75 | 543 | ||||||||||||
Treasury stock, at cost (no shares at September 30, 2018; no shares at December 31, 2017) | — | — | — | — | (13 | ) | ||||||||||||||
Total shareholders' equity | 1,474 | 1,382 | 1,666 | 1,963 | 2,247 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 30,960 | $ | 30,004 | $ | 29,651 | $ | 29,923 | $ | 28,965 | ||||||||||
Equity attributable to preferred shareholders (1) | $ | 398 | $ | 391 | $ | 384 | $ | 377 | $ | — | ||||||||||
(1) Refer to "Non-GAAP Financial Measures" for further details
(a) Contractholder funds include amounts on deposit for annuity and universal life contracts plus the fair value of future index credits and guarantees on our FIA and IUL products.
(b) Future policy benefits include the present value of future benefits on our traditional life insurance products and life contingent SPIA contracts.
(c) Liability for policy and contract claims represents policyholder pending claims.
(d) Funds withheld for reinsurance liabilities are collapsed into "Other liabilities" beginning with December 31, 2017, as the amount became immaterial for individual presentation following the merger.
11
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Quarterly Summary - Most Recent 5 Quarters
Three months ended | One month ended | Two months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||
Traditional life insurance premiums | $ | 7 | $ | 7 | $ | 9 | $ | 3 | $ | 6 | $ | 10 | $ | 23 | $ | 17 | |||||||||||||||||
Life contingent immediate annuity | 5 | 8 | 9 | — | 1 | 6 | 22 | 14 | |||||||||||||||||||||||||
Net investment income | 267 | 282 | 263 | 92 | 174 | 261 | 812 | 765 | |||||||||||||||||||||||||
Net investment gains (losses) | 119 | (2 | ) | (191 | ) | 42 | 146 | 117 | (74 | ) | 265 | ||||||||||||||||||||||
Surrender charges | 9 | 12 | 14 | 3 | 10 | 9 | 35 | 27 | |||||||||||||||||||||||||
Cost of insurance fees and other income | 37 | 33 | 34 | 25 | 25 | 32 | 104 | 102 | |||||||||||||||||||||||||
Total revenues | 444 | 340 | 138 | 165 | 362 | 435 | 922 | 1,190 | |||||||||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||||||||||
Traditional life insurance policy benefits and change in future policy benefits | 17 | 22 | 18 | 7 | 12 | 18 | 57 | 50 | |||||||||||||||||||||||||
Life contingent immediate annuity benefits and changes in future policy benefits | 13 | 13 | 18 | 11 | 13 | 26 | 44 | 64 | |||||||||||||||||||||||||
Interest sensitive and index product benefits and changes in future policy benefits | 267 | 182 | (75 | ) | 106 | 202 | 276 | 374 | 709 | ||||||||||||||||||||||||
General expenses | 31 | 37 | 34 | 11 | 47 | 30 | 103 | 95 | |||||||||||||||||||||||||
Acquisition expenses | 94 | 94 | 55 | 27 | 44 | 65 | 242 | 218 | |||||||||||||||||||||||||
Deferred acquisition costs ("DAC") | (85 | ) | (85 | ) | (49 | ) | (22 | ) | (40 | ) | (59 | ) | (219 | ) | (204 | ) | |||||||||||||||||
Amortization of intangibles | 28 | 17 | 27 | 4 | 36 | (14 | ) | 72 | 70 | ||||||||||||||||||||||||
Total benefits and expenses | 365 | 280 | 28 | 144 | 314 | 342 | 673 | 1,002 | |||||||||||||||||||||||||
Operating income | 79 | 60 | 110 | 21 | 48 | 93 | 249 | 188 | |||||||||||||||||||||||||
Interest expense | (8 | ) | (7 | ) | (6 | ) | (2 | ) | (4 | ) | (6 | ) | (21 | ) | (18 | ) | |||||||||||||||||
Income before income taxes | 71 | 53 | 104 | 19 | 44 | 87 | 228 | 170 | |||||||||||||||||||||||||
Income tax expense | (15 | ) | (13 | ) | (39 | ) | (110 | ) | (16 | ) | (26 | ) | (67 | ) | (55 | ) | |||||||||||||||||
Net income (loss) | $ | 56 | $ | 40 | $ | 65 | $ | (91 | ) | $ | 28 | $ | 61 | $ | 161 | $ | 115 | ||||||||||||||||
Less Preferred stock dividend | 7 | 7 | 7 | 2 | — | — | 21 | — | |||||||||||||||||||||||||
Net income (loss) available to common shareholders | 49 | 33 | 58 | (93 | ) | 28 | 61 | 140 | 115 | ||||||||||||||||||||||||
Net income (loss) per common share: | |||||||||||||||||||||||||||||||||
Basic | $ | 0.23 | $ | 0.15 | $ | 0.27 | $ | (0.44 | ) | $ | 0.48 | $ | 1.06 | $ | 0.65 | $ | 1.98 | ||||||||||||||||
Diluted | $ | 0.23 | $ | 0.15 | $ | 0.27 | $ | (0.44 | ) | $ | 0.47 | $ | 1.06 | $ | 0.65 | $ | 1.98 | ||||||||||||||||
Weighted average common shares used in computing net income per common share: | |||||||||||||||||||||||||||||||||
Basic | 214.37 | 214.37 | 214.37 | 214.37 | 58.34 | 58.34 | 214.37 | 58.33 | |||||||||||||||||||||||||
Diluted | 214.42 | 214.38 | 214.37 | 214.37 | 58.49 | 58.48 | 214.39 | 58.44 | |||||||||||||||||||||||||
12
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Reconciliation from Net Income (Loss) to Adjusted Operating Income ("AOI ")
Three months ended | One month ended | Two months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||||||||||||||||||||
Net income (loss) | $ | 56 | $ | 40 | $ | 65 | $ | (91 | ) | $ | 28 | $ | 61 | $ | 161 | $ | 115 | ||||||||||||||||
Adjustments to arrive at AOI: | |||||||||||||||||||||||||||||||||
Effect of investment losses (gains), net of offsets (a) | 38 | 37 | 39 | — | (6 | ) | (5 | ) | 114 | 14 | |||||||||||||||||||||||
Effect of changes in fair values of FIA related derivatives, net of hedging costs (a) (b) | (30 | ) | (9 | ) | (63 | ) | (8 | ) | (10 | ) | 3 | (102 | ) | (3 | ) | ||||||||||||||||||
Effect of change in fair value of reinsurance related embedded derivative, net of offsets (a) (c) | — | — | — | — | (1 | ) | 5 | — | 21 | ||||||||||||||||||||||||
Effect of integration, merger related & other non-operating items | 4 | 3 | 8 | (8 | ) | 29 | 2 | 15 | 9 | ||||||||||||||||||||||||
Effects of extinguishment of debt | — | (2 | ) | — | — | — | — | (2 | ) | — | |||||||||||||||||||||||
Tax effect of affiliated reinsurance embedded derivative | — | — | 15 | (20 | ) | — | — | 15 | — | ||||||||||||||||||||||||
Net impact of Tax Cuts and Jobs Act | 3 | — | — | 131 | — | — | 3 | — | |||||||||||||||||||||||||
Tax impact of adjusting items | (2 | ) | (4 | ) | 4 | (1 | ) | (4 | ) | (1 | ) | (2 | ) | (11 | ) | ||||||||||||||||||
AOI | $ | 69 | $ | 65 | $ | 68 | $ | 3 | $ | 36 | $ | 65 | $ | 202 | $ | 145 | |||||||||||||||||
Dividends on preferred stock | (7 | ) | (7 | ) | (7 | ) | (2 | ) | — | — | (21 | ) | — | ||||||||||||||||||||
AOI available to common shareholders | $ | 62 | $ | 58 | $ | 61 | $ | 1 | $ | 36 | $ | 65 | $ | 181 | $ | 145 | |||||||||||||||||
Per diluted common share: | |||||||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | 0.23 | $ | 0.15 | $ | 0.27 | $ | (0.44 | ) | $ | 0.47 | $ | 1.06 | $ | 0.65 | $ | 1.98 | ||||||||||||||||
Adjustments to arrive at AOI: | |||||||||||||||||||||||||||||||||
Effect of investment (gains) losses, net of offsets (a) | 0.18 | 0.17 | 0.18 | — | (0.10 | ) | (0.09 | ) | 0.53 | 0.24 | |||||||||||||||||||||||
Effect of changes in fair values of FIA related derivatives, net of hedging costs (a) (b) | (0.14 | ) | (0.04 | ) | (0.29 | ) | (0.04 | ) | (0.17 | ) | 0.05 | (0.47 | ) | (0.06 | ) | ||||||||||||||||||
Effect of change in fair value of reinsurance related embedded derivative, net of offsets (a) (c) | — | — | — | — | (0.02 | ) | 0.09 | — | 0.37 | ||||||||||||||||||||||||
Effect of integration, merger related & other non-operating items | 0.02 | 0.01 | 0.04 | (0.04 | ) | 0.50 | 0.02 | 0.07 | 0.14 | ||||||||||||||||||||||||
Effects of extinguishment of debt | — | (0.01 | ) | — | — | — | — | (0.01 | ) | — | |||||||||||||||||||||||
Tax effect of affiliated reinsurance embedded derivative | — | — | 0.07 | (0.09 | ) | — | — | 0.07 | — | ||||||||||||||||||||||||
Net impact of Tax Cuts and Jobs Act | 0.01 | — | — | 0.61 | — | — | 0.01 | — | |||||||||||||||||||||||||
Tax impact of adjusting items | (0.01 | ) | (0.01 | ) | 0.01 | — | (0.06 | ) | (0.02 | ) | (0.01 | ) | (0.19 | ) | |||||||||||||||||||
AOI available to common shareholders per diluted share | $ | 0.29 | $ | 0.27 | $ | 0.28 | $ | — | $ | 0.62 | $ | 1.11 | $ | 0.84 | $ | 2.48 | |||||||||||||||||
(a) Amounts are net of offsets related to value of business acquired ("VOBA"), deferred acquisition cost ("DAC"), deferred sale inducement ("DSI"), and unearned revenue ("UREV") amortization, as applicable.
(b) The updated definition of AOI removes the impact of fair value accounting on FIA products for periods after December 31, 2017. Included in the one-month period ended December 31, 2017 is the impact of the immaterial error resulting from the model code error, net of VOBA amortization, as disclosed within the Company's Form 10-Q.
(c) Adjustment is not applicable subsequent to the Business Combination as the reinsurance agreement and related activity are eliminated via consolidation for U.S. GAAP reporting.
(d) The Company recorded an immaterial out of period adjustment related to the December 1, 2017 fair value of the deferred income tax valuation allowance acquired from the Business Combination. See "Note 2. Significant Accounting Policies and Practices" of the Company’s Form 10-Q for additional information.
13
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Summary of Adjustments to Arrive at AOI
Three months ended | One month ended | Two months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||
Insurance and investment product fees and other (a) | $ | — | $ | — | $ | — | $ | (12 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Net investment gains (losses) (b) | (92 | ) | (3 | ) | 163 | — | (8 | ) | 1 | 68 | 44 | ||||||||||||||||||||||
Increase (decrease) in total revenues | (92 | ) | (3 | ) | 163 | (12 | ) | (8 | ) | 1 | 68 | 44 | |||||||||||||||||||||
Benefits and expenses: | |||||||||||||||||||||||||||||||||
Benefits and other changes in policy reserves (c) | 105 | 39 | (188 | ) | (10 | ) | (19 | ) | 12 | (44 | ) | 1 | |||||||||||||||||||||
Acquisition and operating expenses, net of deferrals | (1 | ) | 3 | 8 | 4 | 29 | 2 | 10 | 9 | ||||||||||||||||||||||||
Amortization of intangibles (d) | — | (8 | ) | 1 | 2 | 10 | (10 | ) | (7 | ) | (13 | ) | |||||||||||||||||||||
(Decrease) increase in total benefits and expenses | 104 | 34 | (179 | ) | (4 | ) | 20 | 4 | (41 | ) | (3 | ) | |||||||||||||||||||||
Increase (decrease) in pre-tax operating income | 12 | 31 | (16 | ) | (16 | ) | 12 | 5 | 27 | 41 | |||||||||||||||||||||||
(Decrease) increase in interest expense | — | (2 | ) | — | — | — | — | (2 | ) | — | |||||||||||||||||||||||
(Decrease) increase in income tax expense (benefit) (e) | 1 | (4 | ) | 19 | 110 | (4 | ) | (1 | ) | 16 | (11 | ) | |||||||||||||||||||||
Increase (decrease) in net income | $ | 13 | $ | 25 | $ | 3 | $ | 94 | $ | 8 | $ | 4 | $ | 41 | $ | 30 | |||||||||||||||||
(a) Insurance and investment product fees and other: includes the effect of contract fee termination.
(b) Net investment gains: includes the effect of net investment gains including OTTI, changes in fair values of FIA related derivatives and embedded derivatives, net of hedging costs. For the Predecessor, effects of net investment gains include the change in fair value of the reinsurance related embedded derivative.
(c) Benefits and other changes in policy reserves: includes the effects of the changes in fair values of FIA embedded derivatives.
(d) Amortization of intangibles includes the impact on DAC, VOBA, and DSI of the adjustments in b-c above.
(e) The tax expense (benefit) includes the tax impact of the adjustments in a-d above, and for the Successor only, the impact of tax reform and the impact of affiliated reinsurance embedded derivative.
14
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Notable Items Included in Net Income (Loss) and AOI
Each quarterly reporting period, we identify notable items that help explain the trends in our Net Income and AOI. The amounts below are included in disclosures within the Company's earnings releases to explain our Net Income and AOI results as we believe these items provide further clarity to the financial performance of the business.
Three months ended | One month ended | Two months ended | Three months ended | Nine months ended | |||||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||
Net income (loss) | $ | 56 | $ | 40 | $ | 65 | $ | (91 | ) | $ | 28 | $ | 61 | $ | 161 | $ | 115 | ||||||||||||||||
AOI | $ | 69 | $ | 65 | $ | 68 | $ | 3 | $ | 36 | $ | 65 | $ | 202 | $ | 145 | |||||||||||||||||
Notable Items (Not Trendable) Included within AOI and Net Income [(unfavorable)/favorable] | |||||||||||||||||||||||||||||||||
Legacy incentive compensation (a) | — | — | — | — | — | — | — | (2 | ) | ||||||||||||||||||||||||
Project expenses (b) | — | (3 | ) | — | — | — | — | (3 | ) | — | |||||||||||||||||||||||
Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (c) | 5 | 5 | 8 | (2 | ) | 1 | (2 | ) | 18 | 3 | |||||||||||||||||||||||
Assumption review & DAC, VOBA and DSI unlocking (d) | 5 | — | — | (9 | ) | 4 | 21 | 5 | 18 | ||||||||||||||||||||||||
Bond prepay income / other (e) | — | 4 | — | — | — | 2 | 4 | 2 | |||||||||||||||||||||||||
(a) Change in certain long term incentive compensation costs, including the change in the liability for our FGLH stock compensation plan, which as a liability plan, is settled in cash and accounted for at fair value each reporting period (Predecessor only).
(b) Project related expenses.
(c) The release of annuity reserves associated with mortality of annuitants, which varies due to timing, volume and severity of experience, and other reserve adjustments.
(d) Reflects unlocking from updating our DAC, VOBA and DSI amortization models for actual experience and equity market fluctuations. Also, annually in the 3rd calendar quarter, we complete our Annual Assumption Review & Unlocking process by adjusting our valuation assumptions to align with actual experience.
(e) Bond prepayment income/loss, changes in tax valuation, and other allowances related to reinsurance and agent debt, reinsurance settlements and other net favorable activity.
15
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Capitalization/Book Value per Share
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||
Capitalization: | ||||||||||||||||||||
Debt | $ | 550 | $ | 550 | $ | 442 | $ | 412 | $ | 405 | ||||||||||
Total debt | 550 | 550 | 442 | 412 | 405 | |||||||||||||||
Total shareholders' equity | 1,474 | 1,382 | 1,666 | 1,963 | 2,247 | |||||||||||||||
Total capitalization | 2,024 | 1,932 | 2,108 | 2,375 | 2,652 | |||||||||||||||
AOCI | (569 | ) | (603 | ) | (278 | ) | 75 | 543 | ||||||||||||
Total capitalization excluding AOCI (1) | $ | 2,593 | $ | 2,535 | $ | 2,386 | $ | 2,300 | $ | 2,109 | ||||||||||
Total shareholders' equity | 1,474 | 1,382 | 1,666 | 1,963 | 2,247 | |||||||||||||||
Equity available to preferred shareholders | 398 | 391 | 384 | 377 | — | |||||||||||||||
Common shareholders' equity | 1,076 | 991 | 1,282 | 1,586 | 2,247 | |||||||||||||||
AOCI | (569 | ) | (603 | ) | (278 | ) | 75 | 543 | ||||||||||||
Total common shareholders' equity excluding AOCI (1) | $ | 1,645 | $ | 1,594 | $ | 1,560 | $ | 1,511 | $ | 1,704 | ||||||||||
Common shares outstanding | 214.37 | 214.37 | 214.37 | 214.37 | 58.93 | |||||||||||||||
Book Value per Share: (1) | ||||||||||||||||||||
GAAP Book value per common share including AOCI (1) | $ | 5.02 | $ | 4.62 | $ | 5.98 | $ | 7.40 | $ | 38.13 | ||||||||||
GAAP Book value per common share excluding AOCI (1) | $ | 7.67 | $ | 7.44 | $ | 7.28 | $ | 7.05 | $ | 28.92 | ||||||||||
Debt-to-Capital Ratios: (1) | ||||||||||||||||||||
Total Debt to Capitalization, excluding AOCI (1) | 21.2 | % | 21.7 | % | 18.5 | % | 17.9 | % | 19.2 | % | ||||||||||
Rating Agency Adjusted Debt to Capitalization, excluding AOCI (1) | 28.9 | % | 29.4 | % | 26.6 | % | 26.1 | % | 19.2 | % | ||||||||||
Twelve months ended | ||||||||||||||||||||
Twelve Month Rolling Average Return on Equity ("ROE") | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Return on Common Shareholders' Equity (1) | ||||||||||||||||||||
Return on average common shareholders' equity | 15.1 | % | 14.1 | % | 16.2 | % | N/M | 11.2 | % | |||||||||||
Return on average common shareholders' equity, excluding AOCI (1) | 11.8 | % | 11.7 | % | 15.1 | % | N/M | 13.8 | % | |||||||||||
Return on Common Shareholders' Equity - AOI (1) | ||||||||||||||||||||
Adjusted Operating return on common shareholders' equity, excluding AOCI (1) | 15.3 | % | 15.3 | % | 15.9 | % | 0.8 | % | 11.5 | % | ||||||||||
16
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Three months ended | ||||||||||||||||||||
Quarterly Average ROE | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Return on average common shareholders' equity | 19.0 | % | 11.6 | % | 16.2 | % | N/M | 11.2 | % | |||||||||||
Return on average common shareholders' equity, excluding AOCI (1) | 12.1 | % | 8.4 | % | 15.1 | % | N/M | 14.6 | % | |||||||||||
Adjusted Operating return on common shareholders' equity, excluding AOCI (1) | 15.3 | % | 14.7 | % | 15.9 | % | 0.8 | % | 15.5 | % | ||||||||||
(1) Refer to "Non-GAAP Financial Measures" for further details
N/M - Not meaningful.
17
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Financial Strength Ratings
A.M. Best | Fitch | Moody's | S&P | |||||
Holding Companies | ||||||||
FGL Holdings | ||||||||
Issuer Credit / Default Rating | Not Rated | BB+ | Ba3 | BB+ | ||||
Outlook | Stable | Stable | Positive | |||||
CF Bermuda Holdings Limited | ||||||||
Issuer Credit / Default Rating | Not Rated | BB+ | Ba2 | BB+ | ||||
Outlook | Stable | Stable | Positive | |||||
Fidelity &Guaranty Life Holdings, Inc. | ||||||||
Issuer Credit / Default Rating | bb+ | BB+ | Not Rated | BB+ | ||||
Outlook | Positive | Stable | Not Rated | Positive | ||||
Senior Unsecured Notes | bb+ | BB | Ba2 | BB+ | ||||
Outlook | Positive | Stable | Stable | |||||
Insurance Subsidiaries | ||||||||
F&G Life Re Ltd | ||||||||
Financial Strength Rating | Not Rated | BBB | Baa2 | BBB+ | ||||
Outlook | Stable | Stable | Stable | |||||
Fidelity & Guaranty Life Insurance Company | ||||||||
Financial Strength Rating | B++ | BBB | Baa2 | BBB+ | ||||
Outlook | Positive | Stable | Stable | Stable | ||||
Fidelity & Guaranty Life Insurance Company of New York | ||||||||
Financial Strength Rating | B++ | BBB | Not Rated | BBB+ | ||||
Outlook | Positive | Stable | Not Rated | Stable | ||||
*Reflects current ratings and outlooks as of date of filing | ||||||||
18
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Net Investment Spread Results
(Dollars in millions) | Three months ended | Nine months ended | ||||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Yield on average assets under management "AAUM" (1) | 4.13 | % | 5.02 | % | 4.26 | % | 4.98 | % | ||||||||||
Less: Interest credited and option cost | (2.42 | )% | (2.58 | )% | (2.37 | )% | (2.52 | )% | ||||||||||
Total net investment spread - All product lines (1) | 1.71 | % | 2.44 | % | 1.89 | % | 2.46 | % | ||||||||||
FIA net investment spread | 2.16 | % | 3.00 | % | 2.36 | % | 3.02 | % | ||||||||||
Gross investment book yield - bonds purchased during the period (1) | 5.58 | % | 4.92 | % | 5.25 | % | 4.86 | % | ||||||||||
Net investment book yield - bonds purchased during the period (1) | 5.23 | % | 4.82 | % | 4.99 | % | 4.75 | % | ||||||||||
AAUM (1) | $ | 25,883 | $ | 20,840 | $ | 25,437 | $ | 20,524 | ||||||||||
(1) Refer to "Non-GAAP Financial Measures" for further details | ||||||||||||||||||
Total Product Net Investment Spread | ||||||||||||||||||
(Dollars in millions) | Three months ended | Nine months ended | ||||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Net Investment Income | $ | 267 | $ | 261 | $ | 812 | $ | 765 | ||||||||||
AAUM | 25,883 | 20,840 | 25,437 | 20,524 | ||||||||||||||
Yield | 4.13 | % | 5.02 | % | 4.26 | % | 4.98 | % | ||||||||||
Interest Credits, less DSI | $ | 77 | $ | 75 | $ | 222 | $ | 220 | ||||||||||
Option & Futures Costs | 59 | 50 | 167 | 139 | ||||||||||||||
Total interest credited and option costs | $ | 136 | $ | 125 | $ | 389 | $ | 359 | ||||||||||
Average Account Value | 22,367 | 19,371 | 21,895 | 19,026 | ||||||||||||||
Interest credited & option cost | 2.42 | % | 2.58 | % | 2.37 | % | 2.52 | % | ||||||||||
Net Investment spread | 1.71 | % | 2.44 | % | 1.89 | % | 2.46 | % | ||||||||||
19
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
FIA Net Investment Spread | ||||||||||||||||||
(Dollars in millions) | Three months ended | Nine months ended | ||||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Net Investment Income | $ | 158 | $ | 164 | $ | 491 | $ | 476 | ||||||||||
AAUM | 15,181 | 13,020 | 15,143 | 12,778 | ||||||||||||||
Yield | 4.15 | % | 5.03 | % | 4.32 | % | 4.96 | % | ||||||||||
Interest Credits, less DSI | $ | 15 | $ | 17 | $ | 46 | $ | 49 | ||||||||||
Option & Futures Costs | 59 | 50 | 167 | 139 | ||||||||||||||
Total interest credited and option costs | $ | 74 | $ | 67 | $ | 213 | $ | 188 | ||||||||||
Average Account Value | 14,766 | 13,140 | 14,495 | 12,892 | ||||||||||||||
Interest credited & option cost | 1.99 | % | 2.03 | % | 1.96 | % | 1.94 | % | ||||||||||
Net Investment spread | 2.16 | % | 3.00 | % | 2.36 | % | 3.02 | % | ||||||||||
Sales Results by Product
(Dollars in millions) | Three months ended | Nine months ended | |||||||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||
Fixed index annuities (FIA) | $ | 631 | $ | 549 | $ | 436 | $ | 462 | $ | 424 | $ | 1,616 | $ | 1,317 | |||||||||||||||
Fixed rate annuities (MYGA) | 211 | 220 | 142 | 161 | 164 | 573 | 449 | ||||||||||||||||||||||
Institutional spread based | — | — | 200 | — | — | 200 | 136 | ||||||||||||||||||||||
Total annuity | $ | 842 | $ | 769 | $ | 778 | $ | 623 | $ | 588 | $ | 2,389 | $ | 1,902 | |||||||||||||||
Index universal life | 7 | 7 | 6 | 7 | 6 | 20 | 29 | ||||||||||||||||||||||
International flow reinsurance | 45 | $ | 54 | $ | 33 | 8 | — | 132 | — | ||||||||||||||||||||
Total Sales | $ | 894 | $ | 830 | $ | 817 | $ | 638 | $ | 594 | $ | 2,541 | $ | 1,931 | |||||||||||||||
(1) Institutional spread based product sales from funding agreement investment contracts issued with the Federal Home Loan Bank and held in our separate account.
20
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Annuity Account Balance Rollforward (a)
(Dollars in millions) | Three months ended | One month ended (b) | Two months ended (a) | Three months ended | ||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | November 30, 2017 | September 30, 2017 | |||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
Account balances at beginning of period: | $ | 18,769 | $ | 18,326 | $ | 18,041 | $ | 17,892 | $ | 16,819 | $ | 16,430 | ||||||||||||
Net deposits | 845 | 756 | 548 | 223 | 404 | 598 | ||||||||||||||||||
Premium and interest bonuses | 14 | 14 | 14 | 5 | 9 | 11 | ||||||||||||||||||
Fixed interest credited and index credits | 148 | 143 | 177 | 71 | 130 | 147 | ||||||||||||||||||
Guaranteed product rider fees | (21 | ) | (23 | ) | (22 | ) | (8 | ) | (14 | ) | (17 | ) | ||||||||||||
Surrenders, withdrawals, deaths, etc. | (420 | ) | (447 | ) | (432 | ) | (142 | ) | (256 | ) | (350 | ) | ||||||||||||
Account balance at end of period | $ | 19,335 | $ | 18,769 | $ | 18,326 | $ | 18,041 | $ | 17,092 | $ | 16,819 | ||||||||||||
(a) The rollforward reflects the vested account balance of our fixed index annuities and fixed rate annuities, net of reinsurance.
(b) Beginning balance as of December 1, 2017 is inclusive of FSR after the Business Combination was completed and therefore does not agree to the November 30, 2017 ending balance.
Annuity Deposits by Product Type
Three months ended | Nine months ended | ||||||||||||||||
Product Type | September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
Successor | Predecessor | Successor | Predecessor | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
(Dollars in millions) | |||||||||||||||||
Fixed Index Annuities: | |||||||||||||||||
Index Strategies | $ | 556 | $ | 347 | $ | 1,338 | $ | 1,066 | |||||||||
Fixed Strategy | 75 | 84 | 229 | 271 | |||||||||||||
631 | 431 | 1,567 | 1,337 | ||||||||||||||
Fixed Rate Annuities: | |||||||||||||||||
Single-Year Rate Guaranteed | 1 | 2 | 4 | 8 | |||||||||||||
Multi-Year Rate Guaranteed | 213 | 165 | 578 | 450 | |||||||||||||
Total before coinsurance ceded | 845 | 598 | 2,149 | 1,795 | |||||||||||||
Coinsurance ceded | — | — | — | 2 | |||||||||||||
Net after coinsurance ceded | $ | 845 | $ | 598 | $ | 2,149 | $ | 1,793 | |||||||||
21
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Account Values (net of reinsurance) at September 30, 2018 (unaudited):
Surrender Charge | Net Account Value | |||||||||||||
(Unaudited) | ||||||||||||||
Product Type | Avg. Years at Issue | Avg. Years Remaining | Avg. % Remaining | Dollars in millions | % | |||||||||
Fixed Index Annuities | 11 | 6 | 8 | % | $ | 14,975 | 78 | % | ||||||
Single-Year Rate Guaranteed | 10 | 1 | 1 | % | 604 | 3 | % | |||||||
Multi-Year Rate Guaranteed | 5 | 3 | 7 | % | 3,756 | 19 | % | |||||||
Total | $ | 19,335 | 100 | % | ||||||||||
22
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Annuity Liability Characteristics
Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||
(Unaudited) | ||||||||
(Dollars in millions) | ||||||||
SURRENDER CHARGE PERCENTAGES: | ||||||||
No surrender charge | $ | 757 | $ | 2,383 | ||||
0.0% < 2.0% | 13 | 190 | ||||||
2.0% < 4.0% | 31 | 206 | ||||||
4.0% < 6.0% | 760 | 931 | ||||||
6.0% < 8.0% | 864 | 2,067 | ||||||
8.0% < 10.0% | 1,909 | 2,936 | ||||||
10.0% or greater | 25 | 6,262 | ||||||
$ | 4,359 | $ | 14,975 | |||||
Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | ||||||
(Unaudited) | |||||||
(Dollars in millions) | |||||||
SURRENDER CHARGE EXPIRATION BY YEAR: | |||||||
Out of surrender charge | $ | 2,991 | — | % | |||
2018 | 591 | 4 | % | ||||
2019 - 2020 | 3,035 | 6 | % | ||||
2021 - 2022 | 2,973 | 7 | % | ||||
2023 - 2024 | 2,789 | 9 | % | ||||
Thereafter | 6,956 | 11 | % | ||||
$ | 19,335 | 8 | % | ||||
23
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||
(Unaudited) | ||||||||
(Dollars in millions) | ||||||||
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL: | ||||||||
No differential | $ | 1,000 | $ | 1,342 | ||||
0.0% - 1.0% | 385 | 1,301 | ||||||
1.0% - 2.0% | 317 | 39 | ||||||
2.0% - 3.0% | 2,644 | 10 | ||||||
3.0% - 4.0% | 13 | — | ||||||
Allocated to index strategies | — | 12,284 | ||||||
$ | 4,359 | $ | 14,976 | |||||
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES
Monthly Average, Point to Point and Gain Trigger Strategies with Cap
Minimum Guaranteed Cap | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
1% | 2% | 3% | 5% | 6% | ||||||||||||||||
Current Cap | (Dollars in millions) | |||||||||||||||||||
At minimum | $ | — | $ | — | $ | 1,650 | $ | 613 | $ | 3 | ||||||||||
2-3% | 982 | — | — | — | — | |||||||||||||||
3-4% | 1,064 | — | 376 | — | — | |||||||||||||||
4-5% | 441 | — | 285 | — | — | |||||||||||||||
5-6% | 156 | 3 | 36 | 1 | — | |||||||||||||||
6-7% | 71 | 3 | 21 | — | 4 | |||||||||||||||
7% + | 87 | 51 | 200 | — | 69 | |||||||||||||||
Total: | $ | 2,801 | $ | 57 | $ | 2,568 | $ | 614 | $ | 76 | ||||||||||
24
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Monthly Point-to-Point with Cap
Minimum Guaranteed Cap 1% | ||||
(Unaudited) | ||||
Current Cap | (Dollars in millions) | |||
At minimum | $ | 2,014 | ||
1% to 2% | 2,656 | |||
2% to 3% | 613 | |||
3% + | 108 | |||
Total: | $ | 5,391 | ||
3 Year Step Forward with Cap
Minimum Guaranteed Cap 2% | Minimum Guaranteed Cap 5% | |||||||
(Unaudited) | ||||||||
Current Cap | (Dollars in millions) | |||||||
At minimum | $ | — | $ | 19 | ||||
2% to 5% | 2 | — | ||||||
5% to 7% | 12 | 50 | ||||||
7% to 9% | — | 41 | ||||||
9% to 11% | — | 17 | ||||||
11% to 13% | — | 8 | ||||||
Total: | $ | 14 | $ | 135 | ||||
There is an additional $628 million Account Value allocated to strategies not listed above. Of this $628 million, $13 million is at the guaranteed rates.
25
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Summary of Invested Assets by Asset Class
(Dollars in millions) | September 30, 2018 | December 31, 2017 | |||||||||||||||||||||
Successor | Successor | ||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||
Amortized Cost | Fair Value | Percent | Amortized Cost | Fair Value | Percent | ||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||
United States Government full faith and credit | $ | 141 | $ | 139 | 1 | % | $ | 84 | $ | 84 | 1 | % | |||||||||||
United States Government sponsored entities | 115 | 108 | — | % | 123 | 122 | 1 | % | |||||||||||||||
United States municipalities, states and territories | 1,562 | 1,381 | 6 | % | 1,736 | 1,747 | 7 | % | |||||||||||||||
Foreign Governments | 164 | 160 | 1 | % | 198 | 197 | 1 | % | |||||||||||||||
Corporate securities: | |||||||||||||||||||||||
Finance, insurance and real estate | 4,755 | 4,524 | 19 | % | 5,464 | 5,500 | 23 | % | |||||||||||||||
Manufacturing, construction and mining | 969 | 616 | 3 | % | 994 | 1,002 | 4 | % | |||||||||||||||
Utilities, energy and related sectors | 2,408 | 2,545 | 10 | % | 2,262 | 2,281 | 10 | % | |||||||||||||||
Wholesale/retail trade | 1,550 | 1,503 | 6 | % | 1,420 | 1,428 | 6 | % | |||||||||||||||
Services, media and other | 2,785 | 2,446 | 10 | % | 2,327 | 2,359 | 10 | % | |||||||||||||||
Hybrid securities | 956 | 951 | 4 | % | 1,066 | 1,067 | 4 | % | |||||||||||||||
Non-agency residential mortgage-backed securities | 1,241 | 1,572 | 6 | % | 1,156 | 1,155 | 5 | % | |||||||||||||||
Commercial mortgage-backed securities | 1,257 | 1,794 | 7 | % | 956 | 956 | 4 | % | |||||||||||||||
Asset-backed securities | 3,158 | 3,682 | 15 | % | 3,061 | 3,065 | 13 | % | |||||||||||||||
Equity securities | 1,378 | 1,440 | 6 | % | 1,392 | 1,388 | 6 | % | |||||||||||||||
Commercial mortgage loans | 525 | 488 | 2 | % | 548 | 549 | 2 | % | |||||||||||||||
Other (primarily derivatives) | 687 | 1,034 | 4 | % | 647 | 678 | 3 | % | |||||||||||||||
Short term investments | — | 15 | — | % | 25 | 25 | — | % | |||||||||||||||
Total (a) | $ | 23,651 | $ | 24,398 | 100 | % | $ | 23,459 | $ | 23,603 | 100 | % | |||||||||||
(a) Asset duration, including cash and cash equivalents, of 7.02 years and 6.72 years vs. liability duration of 6.34 years and 6.76 years for the periods ending September 30, 2018 and December 31, 2017, respectively | |||||||||||||||||||||||
26
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Credit Quality of Fixed Maturity Securities at September 30, 2018 (unaudited)
NAIC Designation | Fair Value | Percent | Rating Agency Rating | Fair Value | Percent | ||||||||||||
(Dollars in millions) | (Dollars in millions) | ||||||||||||||||
1 | $ | 10,915 | 51 | % | AAA | $ | 2,711 | 13 | % | ||||||||
2 | 9,031 | 42 | % | AA | 1,454 | 7 | % | ||||||||||
3 | 1,270 | 6 | % | A | 5,159 | 24 | % | ||||||||||
4 | 167 | 1 | % | BBB | 9,829 | 46 | % | ||||||||||
5 | 33 | — | % | BB | 1,326 | 6 | % | ||||||||||
6 | 5 | — | % | B and below | 942 | 4 | % | ||||||||||
$ | 21,421 | 100 | % | $ | 21,421 | 100 | % | ||||||||||
27
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation
Successor | ||||||||
(Unaudited) | ||||||||
Collateral Type | Amortized Cost | Fair Value | ||||||
Total by collateral type | ||||||||
Government agency | $ | 111 | $ | 108 | ||||
Prime | 722 | 721 | ||||||
Subprime | 228 | 228 | ||||||
Alt-A | 616 | 622 | ||||||
$ | 1,677 | $ | 1,679 | |||||
Total by NAIC designation | ||||||||
1 | $ | 1,652 | $ | 1,655 | ||||
2 | 19 | 19 | ||||||
3 | 4 | 4 | ||||||
4 | — | — | ||||||
5 | 1 | 1 | ||||||
$ | 1,676 | $ | 1,679 | |||||
28
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Top 10 Holdings by Issuers
(Dollars in millions) | September 30, 2018 | ||||||
Successor | |||||||
(Unaudited) | |||||||
Issuer (a): | Fair Value | Percentage of Total Invested Assets | |||||
AT&T Inc. | $ | 119 | 0.5 | % | |||
JP Morgan Chase & Co. | 119 | 0.5 | % | ||||
Wells Fargo & Company | 116 | 0.5 | % | ||||
HSBC Holdings | 114 | 0.5 | % | ||||
General Motors Co | 114 | 0.5 | % | ||||
Metropolitan Transportation Authority (NY) | 114 | 0.5 | % | ||||
United Mexican States | 114 | 0.5 | % | ||||
Verizon Communications Inc. | 111 | 0.5 | % | ||||
Metlife, Inc. | 108 | 0.4 | % | ||||
Energy Transfer Partners | 107 | 0.4 | % | ||||
(a) Issuers excluding U.S. Governmental securities.
29
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Reinsurance Counterparty Risk Top 5 Reinsurers
(Dollars in millions) | (Unaudited) | |||||||||
Financial Strength Rating | ||||||||||
Parent Company/Principal Reinsurers | Reinsurance Recoverable (a) | AM Best | S&P | Moody's | ||||||
Wilton Re. | $ | 1,546 | A+ | Not Rated | Not Rated | |||||
Security Life of Denver | 164 | A | A | A2 | ||||||
Hannover Re | 125 | A+ | AA- | Not Rated | ||||||
London Life | 110 | A+ | Not Rated | Not Rated | ||||||
Swiss Re Life and Health | 103 | A+ | AA- | Aa3 | ||||||
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.
30
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Shareholder Information
Corporate Offices:
FGL Holdings
Boundary Hall, Cricket Square, 4th Floor
Grand Cayman KY1-1102
Cayman Islands
Investor Contact:
Diana Hickert-Hill
Investors@fglife.com
(410) 487-8898
Common stock and Dividend Information:
NYSE symbol: "FG"
High | Low | Close | Dividend Declared | |||||||||||||
2018 (Successor unaudited) | ||||||||||||||||
First Quarter | $ | 10.74 | $ | 8.65 | $ | 10.15 | $ | — | ||||||||
Second Quarter | $ | 10.22 | $ | 8.14 | $ | 8.39 | $ | — | ||||||||
Third Quarter | $ | 9.63 | $ | 8.35 | $ | 8.95 | $ | — | ||||||||
Transfer Agent
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Phone: (212) 509-4000
http://www.continentalstock.com
31
FGL HOLDINGS
Financial Supplement - September 30, 2018
(unaudited)
Research Analyst Coverage
Andrew Kligerman
Credit Suisse
(212) 325-5069
andrew.kligerman@credit-suisse.com
Alex Scott
Goldman Sachs
(917) 343-7160
alex.scott@gs.com
Pablo Singzon
J.P. Morgan
(212) 622-2295
pablo.s.singzon@jpmorgan.com
Kenneth Lee
RBC Capital Markets
(212) 905-5995
kenneth.s.lee@rbccm.com
John Barnidge
Sandler O'Neill + Partners
(312) 281-3412
jbarnidge@sandleroneill.com
John Nadel
UBS Research
(212) 713-4299
john.nadel@ubs.com
32