F&G Q3 2026 Earnings: Record AUM and Lower Adjusted Profit

F&G Annuities & Life (NYSE: FG) reported Q3 2026 revenue of $1.13 billion, down from $1.69 billion a year earlier, while diluted GAAP EPS rose to $5.48 from $0.85. The GAAP profit increase was driven by $648 million of favorable mark-to-market effects, while adjusted EPS fell to $0.74 from $1.22 as product margins and alternative investment returns came under pressure.

Core Earnings Data

Revenue declined about 33%, but net earnings attributable to common shareholders increased more than sixfold. This divergence reflects the significant effect of market-related accounting on F&G’s GAAP results rather than a comparable improvement in underlying profitability.

Adjusted net earnings declined 42% to $96 million. Reported adjusted returns also weakened, with adjusted return on average equity excluding AOCI falling to 6.7% from 8.8%.

AUM is a period-end balance as of September 30. Adjusted earnings and adjusted return measures are non-GAAP metrics.

Business and Sales Performance

F&G’s sales mix shifted toward core retail products and away from lower-return opportunistic business. Core sales increased about 5%, supported by record indexed annuity sales, but this was more than offset at the consolidated level by lower pension risk transfer, multiyear guaranteed annuity, and funding agreement volumes.

Core retail sales—indexed annuities and indexed universal life combined—were approximately $2.19 billion, up about 28% and a company record. F&G said it has de-emphasized multiyear guaranteed annuities because returns were below its threshold, illustrating management’s decision to prioritize pricing and capital returns over total sales volume.

Net sales were also reduced by $1.60 billion of sales attributable to flow reinsurance, compared with $1.44 billion a year earlier. Before reinsurance, AUM reached a record $76.23 billion, but retained AUM was $56.21 billion, slightly below $56.65 billion in the prior-year quarter. Sequentially, retained AUM increased from $55.87 billion after $1.55 billion of net new business flows and $1.20 billion of net flow reinsurance to third parties.

Market-Related Accounting Lifted GAAP Earnings While Adjusted Profit Fell

F&G’s lower revenue and sharply higher GAAP earnings were possible because total benefits and expenses declined to $195 million from $1.56 billion. Benefits and other changes in policy reserves fell to $26 million from $1.18 billion, while market risk benefits produced a $167 million gain compared with a $43 million loss a year earlier. As a result, pretax earnings reached $936 million despite the revenue decline.

Net earnings included $648 million of favorable mark-to-market effects and $8 million of other unfavorable items, all excluded from adjusted earnings. The resulting $96 million of adjusted net earnings therefore offers a substantially different view of the quarter than the $736 million GAAP result.

Underlying product margin was reduced by the F&G Life Re (Bermuda) sale, lower surrender-charge fee income, and higher other liability costs, including increased amortization expense. Alternative investments generated $60 million of income, but their short-term returns remained below management’s long-term expectation of approximately 12%. These pressures were partly offset by consistent core spread, fees from flow reinsurance, owned distribution margin, and expense discipline.

Capital, Book Value, and Portfolio Quality

Common shareholders’ equity excluding AOCI reached $6.73 billion, or $51.37 per share, up from $6.02 billion and $45.93 per share at June 30. The $712 million quarterly increase was primarily driven by $652 million of favorable market-related liability adjustments, including a $297 million actuarial reserve release following the annual assumption review.

The AOCI treatment creates another important accounting distinction. Book value per common share excluding AOCI increased from $44.07 a year earlier to $51.37, while reported book value per share fell from $33.88 to $31.48. F&G had negative AOCI of $2.61 billion at September 30, compared with negative $1.49 billion at the end of 2025.

F&G reported that 97% of its fixed-maturity portfolio was investment grade. Credit-related impairments averaged six basis points over the previous five years and remained below pricing assumptions through the first nine months of 2026.

The company returned $37 million through common and preferred dividends during the quarter. For the first nine months of 2026, capital returns totaled $232 million, consisting of $112 million of dividends and $120 million of share repurchases.

Management’s Priorities

Management is emphasizing business that meets its return thresholds rather than maximizing sales volume. This approach is visible in the reduction of multiyear guaranteed annuity sales and the continued allocation of capital toward core retail products.

F&G is also seeking a more fee-based, higher-margin, and less capital-intensive earnings mix while continuing to expand its spread-based insurance business. Management identified strategic reinsurance relationships and owned distribution as sources of fee income and financial flexibility.

Recent Insider Transactions

The insider data show no purchase or sale transactions in the reported six-month summary, while total insider holdings were approximately 3.58 million shares. Among the latest 10 records over two years, nine were director stock awards and one was a direct purchase; no sales were listed.

The March purchase falls outside the six-month window represented by the latest transaction dates. The stock awards should not be interpreted as open-market purchases.

Risks Investors Need to Watch

• Adjusted profitability remains under pressure. Adjusted net earnings, adjusted EPS, adjusted return on assets, and adjusted return on equity all declined from the prior year as product margins and liability costs weighed on results.
• Sales depend increasingly on business mix. Record core retail sales did not prevent gross and net sales from declining because opportunistic and pension risk transfer volumes fell sharply. F&G expects opportunistic volumes to vary with market economics.
• GAAP results can be highly volatile. Market-related liability adjustments, derivative values, actuarial assumptions, and AOCI produced large differences between GAAP earnings, adjusted earnings, and the two book value measures.
• Pre-reinsurance growth does not translate directly into retained assets. AUM before reinsurance reached a record, while retained AUM remained slightly below the prior-year level as flow reinsurance reduced net sales and retained asset growth.
• Alternative investment returns remain a variable. Alternative investment income was positive, but short-term performance remained below management’s long-term return expectation.

Summary

F&G’s Q3 2026 results combined record AUM before reinsurance and record core retail sales with lower adjusted earnings and sharply reduced gross and net sales. The increase in GAAP profit primarily reflected favorable market-related accounting, while underlying results faced pressure from lower product margins, liability costs, and alternative investment performance. Future quarters will show whether growth in core retail products and fee-based earnings can improve adjusted returns while management continues to limit lower-return opportunistic business.