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Item 7. Management’s Discussion and Analysis

2024-02-29 compared with 2023-02-27 · 429 added, 412 removed, 547 unchanged (61% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 (following the FNF Acquisition), and the “Predecessor” results for the period from January 1, 2020 to May 31, 2020 (prior to the FNF Acquisition) should be read together with, and is qualified in its entirety by reference to, our Consolidated Financial Statements and related notes included elsewhere in this Annual Report which have been prepared in accordance with GAAP.

The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 should be read together with, and is qualified in its entirety by reference to, our Consolidated Financial Statements and related notes included elsewhere in this Annual Report on Form 10-K which have been prepared in accordance with GAAP.

The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable.

Our actual results could differ materially from those discussed in these forward-looking statements.

Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report, particularly in “Risk Factors” and “Note Regarding Forward-Looking Statements.”

For a description of our business see the discussion under “ Business ” in Item 1 of Part I of this Annual Report, and Note A Business and Summary of Significant Accounting Policies in Item 8 of Part II of this Annual Report, which are incorporated by reference into this Item 7 of Part II of this Annual Report.

Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors” and “Note Regarding Forward-Looking Statements.”

The following describes the business of F&G Annuities & Life, Inc.

and its subsidiaries.

Except where otherwise noted in this Report, all references to “we,” “us,” “our,” the “Company,” or “F&G” are to F&G Annuities & Life, Inc.

and its subsidiaries, taken together.

For a description of our business see the discussion under “ Business ” in Item 1 of Part I of this Annual Report on Form 10-K, and Note A - Business and Summary of Significant Accounting Policies in Part II - Item 8 of this Annual Report on Form 10-K, which are incorporated by reference into this Item 7 of Part II of this Annual Report on Form 10-K.

F&G adopted Accounting Standards Update (“ASU”) 2018-12, Financial Services-Insurance (Topic 944), Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”) on January 1, 2023, with a transition date of January 1, 2021, which is the earliest period presented in the annual December 31, 2023 Consolidated Financial Statements.

We elected to adopt ASU 2018-12 using the full retrospective transition method and balances for liability for future policy benefits (“FPB”), deferred acquisition costs (“DAC”) and balances amortized on a basis consistent with DAC (value of business acquired (“VOBA”), deferred sales inducements (“DSI”), and unearned revenue liabilities (“URL”)), and market risk benefits (“MRB”) were adjusted to conform to ASU 2018-12 starting as of the FNF acquisition date, June 1, 2020 (the “FNF Acquisition Date”).

The 2022 and 2021 financial information contained herein have been adjusted for our full retrospective adoption of this update.

For more information, refer to Note A - Business and Summary of Significant Accounting Policies, Note F - Intangibles , Note G - Market Risk Benefits, Note H - Income Taxes, Note I - Contractholder Funds , Note J - Future Policy Benefits , Note K - Accounts Payable and Accrued Liabilities , Note P - ASU 2018-12 Transition and Note T - Recent Accounting Pronouncement s in Part II - Item 8 of this Annual Report on Form 10-K.

Business Trends and Conditions

The following factors represent some of the key trends and uncertainties that have influenced the development of the Company and its historical financial performance, and we believe these key trends and uncertainties will continue to influence the business and financial performance of the Company in the future.

COVID-19 Pandemic

The health, economic and business conditions precipitated by the worldwide COVID-19 pandemic that emerged in 2020 increased our mortality experience in 2021 and 2020 in both our single premium immediate annuity (“SPIA”) and IUL business which largely offset each other.

As of December 31, 2022, we have not seen a sustained elevated level of adverse policyholder experience from the impact of COVID-19 on the overall business.

Market Conditions

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To enhance the attractiveness and profitability of our products and services, we continually monitor the behavior of our customers, as evidenced by annuitization rates and lapse rates, which vary in response to changes in market conditions.

See “ Risk Factors ” in this Annual Report for further discussion of risk factors that could affect market conditions.

See “ Part I.

Risk Factors” in this Annual Report on Form 10-K for further discussion of risk factors that could affect market conditions.

Interest Rate Environment

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As of December 31, 2023 and December 31, 2022, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were $6 billion and 4%, respectively, and $6 billion and 3%, respectively.

We are required to pay the guaranteed minimum crediting rates even if earnings on our investment portfolio decline, which would negatively impact earnings.

We are required to pay the

guaranteed minimum crediting rates even if earnings on our investment portfolio decline, which would negatively impact earnings.

In addition, we expect more policyholders to hold policies with comparatively high guaranteed rates for a longer period in a low interest rate environment.

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Similarly, we expect that policyholders would be less likely to hold policies with existing guarantees as interest rates rise and the relative value of other new business offerings are increased, which would negatively impact our earnings and cash flows.

See “ Quantitative and Qualitative Disclosure about Market Risk ” and “ Risk Factors ” in this Annual Report for a more detailed discussion of interest rate risk.

See “ Quantitative and Qualitative Disclosure about Market Risk ” and “ Part I.

Risk Factors ” in this Annual Report on Form 10-K for a more detailed discussion of interest rate risk.

Aging of the U.S.

We believe that the aging of the U.S.

population will increase the demand for our FIA and IUL products.

population will increase the demand for our fixed index annuity (“FIA”) and indexed universal life (“IUL”) products.

As the Baby Boomer generation prepares for retirement, we believe that demand for retirement savings, growth, and income products will grow.

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As a tool for addressing the unmet need for retirement planning, we believe that many middle-income Americans have grown to appreciate the financial certainty that we believe annuities such as our FIA products afford.

Accordingly, the FIA market grew from nearly $12 billion of sales in 2002 to $66 billion of sales in 2021.

For example, the FIA market grew from nearly $12 billion of sales in 2002 to $79 billion of sales in 2022.

Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual premiums in 2002 to $3 billion of annual premiums in 2022.

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Actual amounts could differ from those estimates.

See Note A Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements included in this Annual Report for additional description of the significant accounting policies that have been followed in preparing our Consolidated Financial Statements.

Reserves for Future Policy Benefits and Product Guarantees and Certain Information on Contractholder Funds

The determination of future policy benefit reserves is dependent on actuarial assumptions.

The principal assumptions used to establish liabilities for future policy benefits are based on our experience.

These assumptions are established at issue of the contract and include mortality, morbidity, contract full and partial surrenders, investment returns, annuitization rates and expenses.

See Note A - Business and Summary of Significant Accounting Policies to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report for additional description of the significant accounting policies that have been followed in preparing our Consolidated Financial Statements.

Reserves for Future Policy Benefits and Certain Information on Contractholder Funds

The determination of FPB reserves is dependent on actuarial assumptions.

The principal assumptions used to establish liabilities for FPBs are established at issue of the contract and include discount rates, mortality and cash surrender or policy lapse for our traditional life insurance products.

The assumptions used require considerable judgment.

We review overall policyholder experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available.

For traditional life and immediate annuity products, assumptions used in the reserve calculation can only be changed if the reserve is deemed to be insufficient.

For all other insurance products, changes in assumptions will be used to calculate reserves.

These changes in assumptions will also incorporate changes in risk free rates and option market values.

Changes in, or deviations from, the assumptions previously used can significantly affect our reserve levels and related results of operations.

Mortality is the incidence of death amongst policyholders triggering the payment of underlying insurance coverage by the insurer.

In addition, mortality also refers to the ceasing of payments on life-contingent annuities due to the death of the annuitant.

We utilize a combination of actual and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder.

A lapse rate is the percentage of account value canceled by us due to nonpayment of premiums.

We make estimates of expected full and partial surrenders of our fixed annuity products.

Our surrender rate experience in the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020 on the fixed annuity products averaged 7%, 7%, 4% and 3% respectively, which is within our assumed ranges.

Management’s best estimate of surrender behavior incorporates actual experience over the entire period, as we believe that, over the duration of the policies, we will experience the full range of

policyholder behavior and market conditions.

If actual surrender rates are significantly different from those assumed, such differences could have a significant effect on our reserve levels and related results of operations.

The assumptions used to establish the liabilities for our product guarantees require considerable judgment and are established as management’s best estimate of future outcomes.

We periodically review these assumptions and, if necessary, update them based on additional information that becomes available.

Changes in or deviations from the assumptions used can significantly affect our reserve levels and related results of operations.

At issue, and at each subsequent valuation, we determine the present value of the cost of the GMWB rider benefits and certain GMDB riders in excess of benefits that are funded by the account value.

We also calculate the present value of total expected policy assessments, including investment margins, if applicable.

We accumulate a reserve equal to the portion of these assessments that would be required to fund the future benefits less benefits paid to date.

In making these projections, a number of assumptions are made and we update these assumptions as experience emerges, and determined necessary.

We began issuing our GMWB products in 2008, and future experience could lead to significant changes in our assumptions.

If emerging experience deviates from our assumptions on GMWB utilizations, such deviations could have a significant effect on our reserve levels and related results of operations.

Our aggregate reserves for contractholder funds, future policy benefits and product guarantees on a direct and net basis as of December 31, 2022 and December 31, 2021, are summarized as follows (dollars in millions):

We review policyholder behavior experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available.

Discount rate assumptions are updated at each reporting period and also incorporate changes in risk free rates and option market values.

Changes in, or deviations from, the assumptions previously used can significantly affect our reserve levels and related results of operations in a positive or negative direction.

Mortality refers to the incidence of death on covered lives, which triggers contractual death benefit provisions.

On our deferred annuities and life insurance products, these provisions may allow for lump sum payments, payments over a period of time, or spousal continuation of the contract.

On our life-contingent immediate annuities (which includes life-contingent pension risk transfer (“PRT”) annuities), the death of a named annuitant or certificate holder

may trigger the cessation or reduction of future life-contingent payments due, depending on the presence of a joint annuitant/certificate holder and any remaining guaranteed non-life contingent payment periods.

We utilize a combination of internal and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder in exchange for receipt of a cash surrender value.

A lapse rate is the percentage of account value canceled by us due to nonpayment of premiums required to maintain coverage on our life insurance products.

We make estimates of expected full and partial surrenders of our deferred annuity products based on a combination of internal and industry experience.

Management’s best estimate of surrender behavior generally represents a medium-to-long term perspective, as we expect to experience a range of policyholder behavior and market conditions period to period.

If actual surrender rates are significantly different from those estimated, such differences could have a significant effect on our reserve levels and related results of operations.

Discount rates refer to the interest rates used to discount future cash flows to the current period to determine a present value.

For liability for FPB reserves the discount rate used is based on the yield curve for A-rated corporate bonds as of the valuation date.

Changes in the discount rates from the at-issue or at-purchase discount rates flow through other comprehensive income (“OCI”).

Our aggregate reserves for contractholder funds, FPBs and MRBs on a direct and net basis as of December 31, 2023 and December 31, 2022, are summarized as follows (in millions):

As of December 31, 2023

Direct Reinsurance Recoverable Net

Direct Deposit Asset/

Reinsurance Recoverable Net

Fixed indexed annuities ("FIA") $ 27,809 $ (17) $ 27,792

Fixed rate annuities (“MYGA”) 9,359 (3,719) $ 5,640

Immediate annuities (“IA”) 4,007 (135) $ 3,872

Universal life (“IUL”) 2,127 (947) $ 1,180

Traditional life (“TRAD”) 1,777 (786) $ 991

Fixed rate annuities 13,445 (7,521) 5,924

Single premium immediate annuities ("SPIA") and other 1,814 (115) 1,699

IUL and other life 3,828 (1,307) 2,521

Funding agreements 5,152 — 5,152

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As of December 31, 2022

Direct Reinsurance Recoverable Net

Direct Deposit Asset/

Reinsurance Recoverable Net

FIA $ 24,704 $ (16) $ 24,688

MYGA 6,369 (1,689) 4,680

IA 3,657 (133) 3,524

IUL 1,981 (983) 998

TRAD 1,823 (805) 1,018

Fixed rate annuities 9,360 (3,723) 5,637

SPIA and other 1,829 (118) 1,711

IUL and other life 3,486 (1,560) 1,926

Funding agreements 4,595 — 4,595

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a feature that permits the holder to elect an interest rate return or an equity-index linked component, where interest credited to the contract is linked to the performance of various equity indices.

The FIA/IUL embedded derivatives are valued at fair value and included in the liability for Contractholder funds in our Consolidated Balance Sheets with changes in fair value included as a component of Benefits and other changes in policy reserves in our Consolidated Statements of Earnings.

Valuation of Fixed Maturity, Preferred and Equity Securities, and Derivatives and Reinsurance Recoverable

Our fixed maturity securities have been designated as available-for-sale (“AFS”) and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included in AOCI, net of associated adjustments for VOBA, DAC, DSI, unearned revenue (“UREV”), Statement of Position 03-1, “ Accounting and

Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts ,” (“SOP 03-1”) reserves, and deferred income taxes.

For life-contingent immediate annuity policies, gross premiums received in excess of net premiums are deferred at initial recognition as a deferred profit liability (“DPL”).

Gross premiums are measured using assumptions consistent with those used in the measurement of the related liability for FPBs.

Valuation of Fixed Maturity, Preferred and Equity Securities, and Derivatives

Our investments in fixed maturity securities have been designated as available-for-sale (“AFS”) and are carried at fair value, net of allowance for expected credit losses, with unrealized gains and losses included within accumulated other comprehensive earnings (loss) (“AOCI”), net of deferred income taxes.

Our equity securities are carried at fair value with unrealized gains and losses included in net income (loss).

Realized gains and losses on the sale of investments are determined on the basis of the cost of the specific investments sold and are credited or charged to income on a trade date basis.

Realized gains and losses on the sale of investments are determined on the basis of first-in first-out cost basis and are credited or charged to income on a trade date basis.

Management’s assessment of all available data when determining fair value of the AFS securities is necessary to appropriately apply fair value accounting.

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We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, comparisons to valuations from other independent pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list.

See Note B Fair Value of Financial Instruments and Note C Investments to our Consolidated Financial Statements included in this Annual Report.

The fair value of derivative assets and liabilities is based upon valuation pricing models and represents what we would expect to receive or pay at the balance sheet date if we canceled the options, entered into offsetting positions, or exercised the options.

Fair values for these instruments are determined internally using a conventional model and market observable inputs, including interest rates, yield curve volatilities and other factors.

See Note B - Fair Value of Financial Instruments and Note C - Investments to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K.

The fair value of derivative assets and liabilities is based upon valuation pricing models or independent broker quotes and represents what we would expect to receive or pay at the balance sheet date if we canceled or exercised the derivative or entered into offsetting positions.

Fair values for instruments utilizing valuation pricing models are determined internally using a conventional model and market observable inputs, including interest rates, yield curve volatilities and other factors.

Credit risk related to the counterparty is considered when estimating the fair values of these derivatives.

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The fair value of futures contracts (specifically for FIA contracts) at the balance sheet date represents the cumulative unsettled variation margin (open trade equity net of cash settlements).

The fair values of the embedded derivatives in our FIA and IUL contracts are derived using market value of options, use of current and budgeted option cost, swap rates, mortality rates, surrender rates, partial withdrawals, and non-performance spread and are classified as Level 3.

The fair value of an interest rate swap represents the change in projected interest rates between the reporting date and the date the interest rate swap was executed.

The discount rate used to determine the fair value of our FIA/IUL embedded derivative liabilities includes an adjustment to reflect the risk that these obligations will not be fulfilled (“non-performance risk”).

For the years ended December 31, 2023 and December 31, 2022, our non-performance risk adjustment was based on the expected loss due to default in debt obligations for similarly rated financial companies.

See Note B Fair Value of Financial Instruments and Note D Derivative Financial Instruments to our Consolidated Financial Statements included in this Annual Report.

As discussed in Note J Reinsurance of our Consolidated Financial Statements included in this Annual Report, F&G entered into a reinsurance agreement with Kubera effective December 31, 2018, to cede certain MYGAs and deferred annuity GAAP and statutory reserves on a coinsurance funds withheld basis, net of applicable existing reinsurance.

Effective October 31, 2021, this agreement was novated from Kubera to Somerset.

Additionally, F&G entered into a reinsurance agreement with Aspida Re effective January 1, 2021, and amended in August 2021 and September 2022, to cede a quota share of certain deferred annuity business on a funds withheld basis.

Fair value movements in the funds withheld balances associated with these arrangements create an obligation for F&G to pay Somerset and Aspida Re at a later date, which results in embedded derivatives.

These embedded derivatives are considered total return swaps with contractual returns that are attributable to the assets and liabilities associated with the reinsurance arrangements.

The fair value of the total return swaps are based on the change in fair value of the underlying assets held in the funds withheld portfolio.

Investment results for the assets that support the coinsurance with funds withheld reinsurance arrangement, including gains and losses from sales, are passed directly to the reinsurer pursuant to contractual terms of the reinsurance arrangement.

The reinsurance related embedded

derivatives are reported in Accounts payable and accrued liabilities on the Consolidated Balance Sheets and the related gains or losses are reported in Recognized gains and losses, net on the Consolidated Statements of Earnings.

See Note B - Fair Value of Financial Instruments and Note D - Derivative Financial Instruments to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K.

F&G cedes certain business on a coinsurance funds withheld basis.

Investment results for the assets that support the coinsurance that are segregated within the funds withheld account are passed directly to the reinsurer pursuant to the contractual terms of the reinsurance arrangement, which creates embedded derivatives considered to be total return swaps.

These total return swaps are not clearly and closely related to the underlying insurance contract and thus require bifurcation.

The fair value of the total return swaps is based on the change in fair value of the underlying assets held in the funds withheld account.

These embedded derivatives are reported in Prepaid expenses and other assets if in a net gain position, or Accounts payable and accrued liabilities, if in a net loss position on the Consolidated Balance Sheets.

The related gains or losses are reported in Recognized gains and

(losses), net on the Consolidated Statements of Operations.

See Note E - Reinsurance to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K.

We categorize our fixed maturity securities, preferred securities, equity securities and derivatives into a three-level hierarchy based on the priority of the inputs to the valuation technique.

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If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

The following table presents the fair value of fixed maturity securities and equity securities by pricing source, hierarchy level and net asset value (“NAV”) as of December 31, 2022, December 31, 2021 and December 31, 2020.

As of December 31, 2022

(Dollars in millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) NAV Total

Fixed maturity securities available-for-sale and equity securities:

Prices via third-party pricing services $ 427 $ 23,493 $ 1,234 $ — $ 25,154

Priced via independent broker quotations — — 6,840 — 6,840

Priced via other methods — — — 47 47

Total $ 427 $ 23,493 $ 8,074 $ 47 $ 32,041

% of Total 1 % 74 % 25 % — % 100 %

The following table presents the fair value of fixed maturity securities and equity securities by pricing source, hierarchy level and net asset value (“NAV”) as of December 31, 2023 and 2022.

As of December 31, 2023

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% of Total 1 % 74 % 25 % — % 100 %

Market Risk Benefits

MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk.

MRBs include certain contract features primarily on FIA contracts that provide minimum guarantees to policyholders, such as Guaranteed Minimum Death Benefit (“GMDBs”) and Guaranteed Minimum Withdrawal Benefits (“GMWBs”) and Guaranteed Minimum Accumulation Benefits (“GMAB”) riders.

MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors.

The principal policyholder behavior assumptions used to calculate MRBs are established at issue of the contract and include mortality, contract full and partial surrenders, and utilization of the GMWB rider benefits.

The assumptions used reflect a combination of internal experience, industry experience, and judgment.

We review overall policyholder behavior experience at least annually and update these assumptions when deemed necessary based on additional information that becomes available.

Changes in, or deviations from, the assumptions previously used can significantly affect our MRBs and related results of operations in a positive or negative direction.

In the 4th quarter of 2023 the assumption for future mortality improvement was updated to a change in the industry future mortality improvement table.

This change had an adverse effect on our MRB balances for the period.

See Note G - Market Risk Benefits to our Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on

Form 10-K for further information on the changes in MRB during the years ended December 31, 2023, 2022 and 2021.

Mortality refers to the incidence of death amongst policyholders on covered lives, which triggers contractual death benefit provisions.

These provisions may allow for lump sum payments, payments over a period of time, or spousal continuation of the contract.

We utilize a combination of actual internal and industry experience when setting our mortality assumptions.

A surrender rate is the percentage of account value surrendered by the policyholder in exchange for receipt of a cash surrender value.

We make estimates of expected full and partial surrenders of our deferred annuity products based on a combination of internal and industry experience.

Management’s best estimate of surrender generally represents a medium-to-long term perspective, as we expect to experience a range of policyholder behavior and market conditions period to period.

If actual surrender rates are significantly different from those estimated, such differences could have a significant effect on our MRBs and related results of operations.

We have been issuing GMWB products since 2008.

We make assumptions for policyholder behavior as it relates to GMWB utilization using a higher degree of industry experience and judgment than our other behavioral assumptions because internal experience, which we review annually, is still emerging.

If emerging experience deviates from our assumptions on GMWB utilization, it could have a significant effect on MRBs and related results of operations.

As of December 31, 2023 and December 31, 2022, goodwill was $ 1,749 million.

The goodwill was recorded in connection with the FNF Acquisition.

Refer to Note I Goodwill to our Consolidated Financial Statements included in this Annual Report for a summary of additional information on our goodwill balance.

In evaluating the recoverability of goodwill, we first determined that based on the level at which the operating results are shared with and regularly reviewed by the Company’s Chief Operating Decision Maker, the Company is a single reporting unit.

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We completed annual goodwill impairment analyses in the fourth quarter of each period presented using a September 30 measurement date.

For the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 and for the Predecessor period from January 1, 2020 to May 31, 2020, we determined there were no events or circumstances that indicated that the carrying value exceeded the fair value.

VOBA, DAC and DSI

Our intangible assets include an intangible asset reflecting the value of insurance and reinsurance contracts acquired (hereafter referred to as VOBA, DAC and DSI).

VOBA is an intangible asset that reflects the amount recorded as insurance contract liabilities less the estimated fair value of in-force contracts (“VIF”) in a life insurance company acquisition.

It represents the portion of the purchase price that is allocated to the value of the rights to receive future cash flows from the business in force at the acquisition date.

VOBA is a function of the VIF, current GAAP reserves, GAAP assets, and deferred tax liability.

The VIF is determined by the present value of statutory distributable earnings less opening required capital, and is sensitive to assumptions including the discount rate, surrender rates, partial withdrawals, utilization rates, projected investment spreads, mortality, and expenses.

DAC consists principally of commissions.

Additionally, acquisition costs that are incremental, direct costs of successful contract acquisition are capitalized as DAC.

Indirect or unsuccessful acquisition costs, maintenance, product development and overhead expenses are charged to expense as incurred.

DSI consists of contract enhancements such as premium and interest bonuses credited to policyholder account balances.

VOBA, DAC and DSI are subject to loss recognition testing on a quarterly basis or when an event occurs that may warrant loss recognition.

For annuity and IUL products, VOBA, DAC and DSI are generally being amortized in proportion to estimated gross profits from the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies, surrender charges and other product fees, policy benefits, maintenance expenses, mortality, and recognized gains and losses on investments.

Current and future period gross profits for FIA contracts also include the impact of amounts recorded for the change in fair value of derivatives and the change in fair value of embedded derivatives.

At each valuation date, the most recent quarter’s estimated gross profits are updated with actual gross profits and the assumptions underlying future estimated gross profits are evaluated for continued reasonableness.

If the update of assumptions causes estimated gross profits to increase, VOBA, DAC and DSI amortization will decrease, resulting in lower amortization expense in the period.

opposite result occurs when the assumption update causes estimated gross profits to decrease.

Current period amortization is adjusted retrospectively through an unlocking process when estimates of current or future gross profits (including the impact of recognized investment gains and losses) to be realized from a group of products are revised.

Our estimates of future gross profits are based on actuarial assumptions related to the underlying policies’ terms, lives of the policies, duration of contract, yield on investments supporting the liabilities, cost to fund policy obligations, and level of expenses necessary to maintain the polices over their entire lives.

Changes in assumptions can have a significant impact on VOBA, DAC and DSI, amortization rates and results of operations.

Assumptions are management’s best estimate of future outcomes, and require considerable judgment.

We periodically review assumptions against actual experience, and update our assumptions based on historical results and our best estimates of future experience when additional information becomes available.

Estimated future gross profits are sensitive to changes in interest rates, which are the most significant component of gross profits.

Assumptions related to interest rate spreads and credit losses also impact estimated gross profits for products with credited rates.

These assumptions are based on the current investment portfolio yields and credit quality, estimated future crediting rates, capital markets, and estimates of future interest rates and defaults.

Significant assumptions also include policyholder behavior assumptions, such as surrender, lapse, and annuitization rates.

We use a combination of actual and industry experience when setting and updating our policyholder behavior assumptions.

We perform sensitivity analyses to assess the impact that certain assumptions have on VOBA, DAC and DSI.

The following table presents the estimated instantaneous net impact to income before income taxes of various assumption changes on our VOBA, DAC and DSI.

The effects, increase or (decrease), presented are not representative of the aggregate impacts that could result if a combination of such changes to interest rates and other assumptions occurred.

(Dollars in millions) As of December 31, 2022 As of December 31, 2021

A change to the long-term interest rate assumption of -50 basis points $ (113) $ (91)

A change to the long-term interest rate assumption of +50 basis points 93 75

An assumed 10% increase in surrender rate (6) (4)

Assumptions regarding shifts in market factors may be overly simplistic and not indicative of actual market behavior in stress scenarios.

Lower assumed interest rates or higher assumed annuity surrender rates tend to decrease the balances of VOBA, DAC and DSI, thus decreasing income before income taxes.

Higher assumed interest rates or lower assumed annuity surrender rates tend to increase the balances of VOBA, DAC and DSI, thus increasing income before income taxes.

Refer to Note Q Recent Accounting Pronouncements for further discussion of accounting pronouncements not yet adopted that may have a significant impact on future estimated amortization expense upon adoption.

For the years ended December 31, 2023 and 2022, and we determined there were no events or circumstances that indicated that the carrying value exceeded the fair value.

Accounting for Income Taxes

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Determination of income tax expense requires estimates and can involve complex issues that may require an extended period to resolve.

Further, the estimated level of annual pre-tax income can cause the overall effective income tax rate to vary from period to period.

Further, the estimated level of annual pre-tax income can cause the overall effective income tax rate to vary from

period to period.

We believe that our tax positions comply with applicable tax law and that we adequately provide for any known tax contingencies.

We believe the estimates and assumptions used to support our evaluation of tax benefit realization are reasonable.

Final determination of prior-year tax liabilities, either by settlement with tax

authorities or expiration of statutes of limitations, could be materially different than estimates reflected in assets and liabilities and historical income tax provisions.

Final determination of prior-year tax liabilities, either by settlement with tax authorities or expiration of statutes of limitations, could be materially different than estimates reflected in assets and liabilities and historical income tax provisions.

The outcome of these final determinations could have a material effect on our income tax provision, net income or cash flows in the period that determination is made.

For the year ended December 31, 2022, changes in market conditions, including rising interest rates, resulted in deferred tax assets related to the net unrealized capital losses in the Company’s investment portfolio.

For the year ended December 31, 2023, changes in market conditions, including changing interest rates, resulted in deferred tax assets related to the net unrealized capital losses in the Company’s investment portfolio.

GAAP requires the evaluation of the recoverability of deferred tax assets and the establishment of a valuation allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not to be realized.

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This includes a further significant decline in value of assets incorporated into our tax planning strategies which could lead to an increase of our valuation allowance on deferred tax assets having an adverse effect on current and future results.

Refer to Note N Income Taxes to our Consolidated Financial Statements included in this Annual Report for details.

Refer to Note H - Income Taxes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for details.

Business Overview

We have five distribution channels across retail and institutional markets.

Our three retail channels include agent-based IMOs, banks and broker dealers.

We are in three distinct retail channels and two institutional markets.

Our three retail channels include agent-based Independent Marketing Organizations (“IMOs”), banks and broker dealers.

We have deep, long-tenured relationships with our network of leading IMOs and their agents to serve the needs of the middle-income market and develop competitive annuity and life products to align with their evolving needs.

Upon the FNF Acquisition and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers.

Further, in 2021, we launched two institutional channels to originate FABN and PRT transactions.

Upon FNF’s acquisition of F&G on June 1, 2020 (the “FNF Acquisition), and F&G’s subsequent rating upgrades in mid-2020, we launched into banks and broker dealers.

Further, in 2021, we launched into two institutional markets to originate Funding Agreement Backed Notes (“FABN”) and PRT transactions.

The FABN Program offers funding agreements to institutional clients by means of capital markets transactions through investment banks.

The funding agreements issued under the FABN Program are in addition to those issued to the FHLB.

The funding agreements issued under the FABN Program are in addition to those issued to the Federal Home Loan Bank of Atlanta (“FHLB”).

The PRT solutions business was launched by building an experienced team and then working with brokers and institutional consultants for distribution.

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Through our insurance subsidiaries, we issue a broad portfolio of deferred annuities (FIA and fixed rate annuities), IUL insurance, immediate annuities, funding agreements and PRT solutions.

A deferred annuity is a type of contract that accumulates value on a tax deferred basis and typically begins making specified periodic or lump sum payments a certain number of years after the contract has been issued.

A deferred annuity is a type of contract that accumulates value on a tax deferred basis and typically begins making specified periodic or lump

sum payments a certain number of years after the contract has been issued.

IUL insurance is a complementary type of contract that accumulates value in a cash value account and provides a payment to designated beneficiaries upon the policyholder’s death.

An immediate annuity is a type of contract that begins making specified payments within one annuity period (e.g., one month or one year) and typically makes payments of principal and interest earnings over a period of time.

Under GAAP, premium collections for FIAs, fixed rate annuities, immediate annuities and PRT without life contingency, and deposits received for funding agreements are reported in the financial statements as deposit liabilities (i.e., contractholder funds) instead of as sales or revenues.

As defined by the Iowa Insurance Division (“IID”), a funding agreement is an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies of the person to whom the funding agreement is issued.

In essence, funding agreement providers issue fixed maturity contracts with fixed or floating interest rates in exchange for a single upfront premium.

Our PRT products are comparable to income annuities, as we generally receive a single, upfront premium in exchange for paying a guaranteed stream of future income payments which are typically fixed in nature, but may vary in duration based on participant mortality experience.

Under GAAP, premium collections for deferred annuities (FIAs and fixed rate annuities), immediate annuities and PRT without life contingency, and deposits received for funding agreements are reported in the financial statements as deposit liabilities (i.e., contractholder funds) instead of as sales or revenues.

Similarly, cash payments to customers are reported as decreases in the liability for contractholder funds and not as expenses.

Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender, cost of insurance and other charges deducted from contractholder funds, and net realized gains (losses) on investments.

Components of expenses for products accounted for as deposit liabilities are interest-sensitive and index product benefits (primarily interest credited to account balances or the hedging cost of providing index credits to the policyholder), amortization of VOBA, DAC and DSI, other operating costs and expenses, and income taxes.

Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender charges, cost of insurance and other charges deducted from contractholder funds (i.e., amortization of URL), and net realized gains (losses) on investments.

F&G hedges certain portions of its exposure to product related equity market risk by entering into derivative transactions.

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The change in fair value of the call options and futures contracts includes the gains and losses recognized at the expiration of the instruments’ terms or upon early termination and the changes in fair value of open positions.

In addition, to reduce market risks from interest rate changes on our earnings associated with our floating rate investments, during the year ended December 31, 2023 we have executed pay-float and receive-fixed interest rate swaps.

As noted above, MRBs are contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk (equity, interest and foreign exchange risk) and expose the Company to other-than-nominal capital market risk.

MRBs are measured at fair value using a risk neutral valuation method, which is based on current net amounts at risk, market data, internal and industry experience, and other factors.

The change in fair value of MRBs generally reflects impacts from actual policyholder behavior (including surrenders of the benefit), changes in interest rates, and changes in equity market returns.

Generally higher interest rates and equity returns result in gains whereas lower interest rates and equity returns result in losses.

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on FIA/IUL policies.

With respect to FIAs/IULs, the cost of hedging our risk includes the expenses incurred to fund the index credits.

With respect to FIAs/IULs, which includes the expenses incurred to fund the index credits.

Proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives and are largely offset by an expense for index credits earned on annuity contractholder fund balances.

Our profitability depends in large part upon the amount of AUM (see “— Non-GAAP Financial Measures ”), the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies, earned on our average assets under management (“ AAUM ” — see “— Non-GAAP Financial Measures ”), our ability to manage our operating expenses and the costs of acquiring new business (principally commissions to agents and bonuses credited to policyholders).

Our profitability depends in large part upon the amount of assets under management (“AUM”) (see “— Non-GAAP Financial Measures ”), the excess of net investment income over the sum of interest credited to policyholders and the cost of hedging our risk on indexed product policies, earned on our average assets under management (“ AAUM ” — see “— Non-GAAP Financial Measures ”), our ability to manage our expenses and the costs of

acquiring new business (principally commissions to agents and bonuses credited to policyholders).

As we grow AUM, earnings generally increase.

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It also includes our ability to manage interest rates credited to policyholders and costs of the options and futures purchased to fund the annual index credits on the FIA/IULs.

We analyze returns on AAUM, pre- and post-VOBA, DAC and DSI as well as pre- and post-tax to measure our profitability in terms of growth and improved earnings.

In June 2021, we established a FABN Program, pursuant to which FGL Insurance may issue funding agreements to a special purpose statutory trust (the “Trust”) for spread lending purposes.

The maximum aggregate principal amount permitted to be outstanding at any one time under the FABN Program is currently $5.0 billion.

We also issue funding agreements through the FHLB.

In July 2021, we entered the PRT market, pursuant to which FGL Insurance and FGL NY Insurance may issue group annuity contracts to discharge pension plan liabilities from a pension plan sponsor.

Life contingent PRT premiums are included in life insurance premiums and other fees below.

We analyze returns on AAUM to measure our profitability.

Non-GAAP Financial Measures

In addition to reporting financial results in accordance with GAAP, this document includes non-GAAP financial measures, which the Company believes are useful to help investors better understand its financial performance,

competitive position and prospects for the future.

Management believes these non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods.

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Adjusted net earnings is a non-GAAP economic measure we use to evaluate financial performance each period.

Adjusted net earnings is calculated by adjusting net earnings (loss) from continuing operations to eliminate:

Adjusted net earnings is calculated by adjusting net earnings (loss) to eliminate:

(i) Recognized (gains) and losses, net:

the impact of net investment gains/losses, including changes in allowance for expected credit losses and other than temporary impairment (“OTTI”) losses, recognized in operations;

and the effect of changes in fair value of the reinsurance related embedded derivative;

(ii) Indexed product related derivatives:

and the effects of changes in fair value of the reinsurance related embedded derivative and other derivatives, including interest rate swaps and forwards;

(ii) Market related liability adjustments:

the impacts related to changes in the fair value, including both realized and unrealized gains and losses, of index product related derivatives and embedded derivatives, net of hedging cost;

the impact of initial pension risk transfer deferred profit liability losses, including amortization from previously deferred pension risk transfer deferred profit liability losses;

and the changes in the fair value of market risk benefits by deferring current period changes and amortizing that amount over the life of the market risk benefit;

(iii) Purchase price amortization:

the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset (“VODA”)) recognized as a result of acquisition activities;

the impacts related to the amortization of certain intangibles (internally developed software, trademarks and value of distribution asset recognized as a result of acquisition activities);

(iv) Transaction costs:

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Management excludes certain items determined to be “non-recurring,” “infrequent” or “unusual” from adjusted net earnings when incurred if it is determined these expenses are not a reflection of the core business and when the nature of the item is such that it is not reasonably likely to recur within two years and/or there was not a similar item in the preceding two years;

(vi) Amortization of actuarial intangibles and SOP 03-1 reserve offset:

The intangibles amortization and SOP 03-1 change offsets related to the above mentioned adjustments;

(vii) Income taxes:

(vi) Income taxes:

the income tax impact related to the above-mentioned adjustments is measured using an effective tax rate, as appropriate by tax jurisdiction.

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For example, we could have strong operating results in a given period, yet report net income that is materially less, if during such period the fair value of our derivative assets hedging the FIA and IUL index credit obligations decreased due to general equity market conditions but the embedded derivative liability related to the index credit obligation did not decrease in the same proportion as the derivative assets because of non-equity market factors such as interest rate and non-performance credit spread movements.

Similarly, we could also have poor operating results in a given period yet show net earnings (loss) that is materially greater, if during such period the fair value of the

derivative assets increased but the embedded derivative liability did not increase in the same proportion as the derivative assets.

Similarly, we could also have poor operating results in a given period yet show net earnings (loss) that is materially greater, if during such period the fair value of the derivative assets increased but the embedded derivative liability did not increase in the same proportion as the derivative assets.

We hedge our index credits with a combination of static and dynamic strategies, which can result in earnings volatility, the effects of which are generally likely to reverse over time.

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Accordingly, our management performs a review and analysis of these items, as part of their review of our hedging results each period.

Amounts attributable to the fair value accounting for derivatives hedging the FIA and IUL index credits and the related embedded derivative liability fluctuate from period to period based upon changes in the fair values of call options purchased to fund the annual index credits, changes in the interest rates and non-performance credit spreads used to discount the embedded derivative liability, and the fair value assumptions reflected in the embedded derivative liability.

Amounts attributable to the fair value accounting for derivatives hedging the FIA and IUL index credits and the related embedded derivative liability fluctuate from period to period based upon changes in the derivative’s underlying index, changes in the interest rates and non-performance credit spreads used to discount the embedded derivative liability, and the fair value assumptions reflected in the embedded derivative liability.

The accounting standards for fair value measurement require the discount rates used in the calculation of the embedded derivative liability to be based on risk-free interest rates adjusted for our non-performance as of the reporting date.

The impact of the change in fair values of FIA-related derivatives, embedded derivatives and hedging costs has been removed from net earnings (loss) in calculating adjusted net earnings.

The impact of the change in fair values of these derivatives and hedging costs has been removed from net earnings (loss) in calculating adjusted net earnings.

Adjusted Return on Assets

Adjusted return on assets is calculated by dividing annualized adjusted net earnings by year-to-date AAUM.

Adjusted return on assets is calculated by dividing year-to-date annualized adjusted net earnings by year-to-date AAUM.

Return on assets is comprised of net investment income, less cost of funds, and less expenses (including operating expenses, interest expense and income taxes) consistent with our adjusted net earnings definition and related adjustments.

Cost of funds includes liability costs related to cost of crediting on both deferred annuities and institutional products as well as other liability costs.

Cost of funds includes liability costs related to cost of crediting as well as other liability costs.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing financial performance and profitability earned on AAUM.

Assets Under Management (“AUM”)

AUM is a non-GAAP measure that we use to assess the rate of return on assets available for reinvestment.

AUM uses the following components:

(i) total invested assets at amortized cost, excluding derivatives, net of reinsurance qualifying for risk transfer in accordance with GAAP;

(ii) related party loans and investments;

(iii) accrued investment income;

(iv) the net payable/receivable for the purchase/sale of investments, and

(v) cash and cash equivalents excluding derivative collateral at the end of the period

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.

Average Assets Under Management (“AAUM”)

AUM is comprised of the following components and is reported net of reinsurance qualifying for risk transfer in accordance with GAAP:

(i) total invested assets at amortized cost, excluding investments in unconsolidated affiliates and derivatives;

(ii) investments in unconsolidated affiliates at carrying value;

(iii) related party loans and investments;

(iv) accrued investment income;

(v) the net payable/receivable for the purchase/sale of investments;

(vi) cash and cash equivalents excluding derivative collateral at the end of the period.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the size of our investment portfolio that is retained.

Average Assets Under Management (“AAUM”) YTD

AAUM is calculated as AUM 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 rate of return on assets available for reinvestment.

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on retained assets.

Annuity, IUL, funding agreement and non-life contingent PRT sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP.

Sales from these products are recorded as deposit liabilities (i.e.,

contractholder funds) within our Consolidated Financial Statements in accordance with GAAP.

Sales from these products are recorded as deposit liabilities (i.e., contractholder funds) within the Company's consolidated financial statements in accordance with GAAP.

Life contingent PRT sales are recorded as premiums in revenues within the consolidated financial statements.

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Total equity excluding AOCI is based on total 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 total equity.

Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, changes in instrument-specific credit risk for market risk benefits and discount rate assumption changes for the future policy benefits, 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 total equity.

Yield on AAUM

Yield on AAUM is calculated by dividing annualized net investment income by AAUM.

Yield on AAUM is calculated by dividing annualized net investment income on an adjusted net earnings basis 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.

Results of Operations

The results of operations for the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 (following the June 1, 2020 acquisition by FNF), and the Predecessor results for the period from January 1, 2020 to May 31, 2020 were as follows (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

The results of operations for the years ended December 31, 2023, 2022 and 2021 were as follows (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Life insurance premiums and other fees $ 2,413 $ 1,704 $ 1,407

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Benefits and other changes in policy reserves 3,553 1,126 1,932

Market risk benefit (gains) losses 95 (182) (44)

Depreciation and amortization 412 324 271

Personnel costs 232 157 129

Other operating expenses 146 102 105

Depreciation and amortization 329 484 123 (51)

Interest expense 97 29 29

Total benefits and expenses 4,535 1,556 2,422

Pre-tax earnings (loss) 598 1,077 86 (214)

Income tax expense (benefit) 117 220 (75) (14)

Net earnings (loss) from continuing operations $ 481 $ 857 $ 161 $ (200)

Earnings (loss) before income taxes (35) 793 1,552

Income tax expense 23 158 320

Earnings (loss) from continuing operations $ (58) $ 635 $ 1,232

Earnings from discontinued operations, net of tax — — 8

Net earnings (loss) $ (58) $ 635 $ 1,240

Preferred stock dividend — — — 8

Net earnings (loss) attributable to common shareholders $ 481 $ 865 $ 136 $ (322)

The following table summarizes sales by product type of the Company, which are not affected by the acquisition, (in millions):

The following table summarizes sales by product type (in millions) (see “ Non-GAAP Financial Measures” ):

December 31, 2023 December 31, 2022 December 31, 2021

Fixed indexed annuities ("FIA") $ 4,550 $ 4,310 $ 3,459

FIA $ 4,699 $ 4,550 $ 4,310

Fixed rate annuities ("MYGA") 5,066 3,744 1,738

Total annuity 9,765 8,294 6,048

Indexed universal life ("IUL") 127 87 50

Funding agreements ("FABN/FHLB") 1,443 2,310 200

Pension risk transfer ("PRT") 1,390 1,147 —

IUL 156 127 87

Funding agreements 1,256 1,443 2,310

PRT 1,976 1,390 1,147

Gross Sales $ 13,153 $ 11,254 $ 9,592

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Net Sales $ 9,238 $ 9,006 $ 8,723

• Total annuity sales increased during the years ended December 31, 2022 and December 31, 2021, reflecting F&G's productive and expanding retail distribution through independent agents, banks and broker dealers and pricing actions taken to align to the macro environment.

• Funding agreements during the year ended December 31, 2022 were lower compared to the year ended December 31, 2021, and reflect market opportunity in the current rate environment.

We launched the FABN Program in 2021.

• PRT sales increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, reflecting our first full year in the PRT market, and due to the nature of the transactions are also subject to fluctuation period to period.

• Total annuity sales increased during the years ended December 31, 2023 and 2022, reflecting F&G's productive and expanding retail distribution through independent agents, banks and broker dealers, enhanced product features and pricing actions taken to align to the macro environment.

• Funding agreements, reflecting FABN and FHLB agreements, were lower for the years ended December 31, 2023 and 2022, and are subject to fluctuation period to period based on economic conditions and the timing of entering the new agreements.

• PRT sales increased during the years ended December 31, 2023 and 2022, reflecting the robust PRT market.

During the years ended December 31, 2023, we closed 9 pension risk transfer transactions.

Since entering the pension risk transfer market in 2021 through December 31, 2022, we have closed 20 transactions involving more than 80,000 plan participants and resulting in over $4.5 billion cumulative plan transaction value from inception.

• Sales attributable to flow reinsurance to third parties were higher during the year ended December 31, 2023 compared to the year ended December 31, 2022, reflecting the higher level of MYGA sales, the addition of new reinsurers and changes in the percentages ceded during the periods.

Life insurance premiums and other fees

Life insurance premiums and other fees primarily reflect premiums on life-contingent PRTs and traditional life insurance products, which are recognized as revenue when due from the policyholder, as well as policy rider fees primarily on FIA policies, the cost of insurance on IUL policies and surrender charges assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts (up to 10% of the prior year's value, subject to certain limitations).

The following table summarizes the Life insurance premiums and other fees, on the Consolidated Statements of Earnings for the respective periods (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

The following table summarizes the Life insurance premiums and other fees, on the Consolidated Statements of Operations for the respective periods (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Life-contingent pension risk transfer premiums $ 1,964 $ 1,362 $ 1,147

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Life insurance premiums and other fees $ 2,413 $ 1,704 $ 1,407

• Life-contingent pension risk transfer premiums for the year ended December 31, 2022 increased compared to the year ended December 31, 2021, due to increased PRT premiums, reflecting our first full year in the PRT market.

As noted above, PRT premiums are subject to fluctuation period to period.

• Surrender charges increased for the years ended December 31, 2022 and December 31, 2021, primarily reflecting an increase in market value adjustments (“MVA”) assessed on certain surrendered FIA policies.

A market value adjustment (“MVA”) will apply in most states to any withdrawal that incurs a surrender charge, subject to certain exceptions.

The MVA is based on a formula that takes into account changes in interest rates since contract issuance.

Generally, if interest rates have risen, the MVA will decrease surrender value, whereas if rates have fallen, it will increase surrender value.

In addition, surrender charges increases as a result of increased amounts assessed against policy withdrawals in excess of the policyholder's allowable penalty-free amounts primarily on our FIA policies.

• Policyholder fees and other income increased for the years ended December 31, 2022 and December 31, 2021, primarily due to increased GMWB rider fees, cost of insurance charges on IUL policies and IUL premium loads.

• Life-contingent pension risk transfer premiums increased for the years ended December 31, 2023 and 2022, reflecting higher PRT sales.

• Surrender charges increased for the years ended December 31, 2023 and 2022 primarily reflecting increases in withdrawals from policyholders with surrender changes and market value adjustments (MVAs), primarily on our FIA policies.

See “ Item 1.

Business – The Products We Offer – Withdrawal Option for Deferred Annuities” , in this Annual Report on Form 10-K for additional discussion on surrender charges and MVAs.

• Policyholder fees and other income increased for the years ended December 31, 2023 and 2022, primarily due to increased GMWB rider fees and cost of insurance charges, net of changes in URL on IUL policies from growth in business.

GMWB rider fees are based on the policyholder's benefit base and are collected at the end of the policy year.

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Below is a summary of interest and investment income (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

December 31, 2023 December 31, 2022 December 31, 2021

Fixed maturity securities, available-for-sale $ 1,843 $ 1,431 $ 1,213

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Investment expense (254) (191) (163)

Net investment income $ 1,655 $ 1,852 $ 743 $ 403

Interest and investment income $ 2,211 $ 1,655 $ 1,852

Interest and investment income is shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements.

Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $109 million, $53 million, $21 million and $15 million, for the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 and the period from January 1, 2020 to May 31, 2020, respectively.

Interest and investment income attributable to these agreements, and thus excluded from the totals in the table above, was $339 million, $109 million and $53 million, for the years ended December 31, 2023, 2022 and 2021, respectively.

Our AAUM and yield on AAUM are summarized as follows (annualized) (dollars in millions) (see “ Non-GAAP Financial Measures” ):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

December 31, 2023 December 31, 2022 December 31, 2021

AAUM $ 46,265 $ 40,069 $ 31,938

Yield on AAUM 4.78 % 4.13 % 5.80 %

• The increases in AAUM for all periods reflect new business asset flows, offset by net reinsurance and other activity.

• Interest and investment income was lower for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily driven by $686 million of lower returns on alternative investments due to decreases in fair value of these investments (primarily limited partnerships), partially offset by $472 million from invested asset growth and $17 million of all other rate impacts.

• Interest and investment income was higher for the year ended December 31, 2021, primarily driven by invested asset growth and higher returns on alternative investments due to increases in fair value of these investments (primarily limited partnerships).

• Interest and investment income of $743 million for the seven months period from Jun 1, 2020 to December 31, 2020 was primarily driven by $643 million in fixed maturity securities, $75 million of interest and investment income related to our investments in limited partnerships, and $50 million in mortgage loans, partially offset by $75 million in investment expenses.

• Interest and investment income of $403 million for the 5 month period from January 1, 2020 to May 31, 2020 was primarily driven by $426 million in fixed maturity securities and $36 million in mortgage loans, partially offset by $51 million in investment expenses and $37 million of investment losses on limited partnership.

• AAUM was higher for the years ended December 31, 2023 and 2022, reflecting net new business asset flows, stable inforce retention and net debt proceeds.

• Interest and investment income was higher for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to $258 million from invested asset growth, $192 million from returns on alternative investments and $106 million of all other rate impacts.

• Interest and investment income was lower for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily driven by $686 million of lower returns on alternative investments due to decreases in fair value of these investments (primarily limited partnerships), partially offset by invested asset growth.

Recognized gains and (losses), net

Below is a summary of the major components included in recognized gains and losses, net (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

December 31, 2023 December 31, 2022 December 31, 2021

Net realized and unrealized (losses) gains on fixed maturity available-for-sale securities, equity securities and other invested assets $ (111) $ (461) $ 57

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Recognized gains and losses are shown net of amounts attributable to certain funds withheld reinsurance agreements which is passed along to the reinsurer in accordance with the terms of these agreements.

Recognized gains and losses attributable to these agreements, and thus excluded from the totals in the table above, was $381 million, $15 million, $(58) million and $21 million for the year ended December 31, 2022, the year ended December 31, 2021, the period from June 1 to December 31, 2020 and the period from January 1 to May 31, 2020, respectively.

• For the year ended December 31, 2022, recognized gains and (losses), net include $241 million of realized losses on fixed maturity available-for-sale securities and $207 million of unrealized losses on equity securities (as a result of mark-to-market losses).

• For the year ended December 31, 2021, recognized gains and (losses), net include $102 million of realized gains on fixed maturity available-for-sale securities and $51 million unrealized losses on equity securities (as a result of mark-to-market losses).

• For the period from June 1, 2020 to December 31, 2020, recognized gains and (losses), net include $95 million of realized gains on fixed maturity available-for-sale securities and $84 million of unrealized gains

on equity securities (as a result of mark-to-market gains).

For the predecessor period from January 1, 2020 to May 31, 2020, recognized gains and (losses), net include $49 million of realized losses on fixed maturity available-for-sale securities and $70 million of unrealized losses on equity securities (as a result of mark-to-market losses).

• For all periods, the change in allowance for expected credit losses primarily relates to available for sale securities.

• For all periods, net realized and unrealized gains (losses) on certain derivative instruments primarily relate to the net realized and unrealized gains (losses) on options and futures used to hedge FIA and IUL products, including gains on option and futures expiration.

Recognized gains and losses attributable to these agreements, and thus excluded from the totals in the table above, was $(123) million, $381 million and $15 million for the years ended December 31, 2023, 2022 and 2021, respectively.

• For the year ended December 31, 2023, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized losses on fixed maturity available-for-sale securities, partially offset by mark-to-market gains on our equity securities and realized gains on other invested assets.

• For the year ended December 31, 2022, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized losses on fixed maturity available-for-sale securities and mark-to-market losses on our equity securities.

• For the year ended December 31, 2021, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of realized gains on fixed maturity available-for-sale securities, partially offset by mark-to-market losses on our equity securities.

See the table below for primary drivers of gains (losses) on certain derivatives.

• The fair value of reinsurance related embedded derivative is based on the change in fair value of the underlying assets held in the funds withheld (“FWH”) portfolio.

We utilize a combination of static (call options) and dynamic (long futures contracts) instruments in our hedging strategy.

• The fair value of reinsurance related embedded derivative is based on the change in fair value of the underlying assets held in the funds withheld portfolio.

We utilize a combination of static (call options) and dynamic (long futures contracts) instruments in our product hedging strategy.

A substantial portion of the call options and futures contracts are based upon the S&P 500 Index with the remainder based upon other equity, bond and gold market indices.

The components of the realized and unrealized gains (losses) on certain derivative instruments hedging our indexed annuity and universal life products are summarized in the table below (dollars in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

During the year ended December 31, 2023, we began to utilize interest rate swaps to reduce market risks from interest rate changes on our earnings associated with our floating rate investments.

The components of the realized and unrealized gains (losses) on certain derivative instruments hedging our indexed annuity, universal life products and floating rate investments are summarized in the table below (dollars in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Call options:

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Change in unrealized gains (losses) 2 (1) (1)

Interest rate swaps 48 — —

Foreign currency forward:

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Total net change in fair value $ 147 $ (858) $ 615

Year-to-Date Point-to-Point Change in S&P 500 Index during the periods (19) % 27 % 23 % (6) %

Annual Point-to-Point Change in S&P 500 Index during the periods 24 % (19) % 27 %

Secured Overnight Financing Rates 5.38 % 4.30 % 0.05 %

• Realized gains and losses on certain derivative instruments are directly correlated to the performance of the indices upon which the call options and futures contracts are based and the value of the derivatives at the time of expiration compared to the value at the time of purchase.

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• The net change in fair value of the call options and futures contracts was primarily driven by movements in the S&P 500 Index relative to the policyholder buy dates.

• The net change in fair value of the interest rate swaps was primarily driven by fluctuations in the interest rate index underlying the swap contracts.

The average index credits to policyholders are as follows:

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

December 31, 2023 December 31, 2022 December 31, 2021

Average Crediting Rate 1 % 1 % 5 %

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Below is a summary of the major components included in Benefits and other changes in policy reserves (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

December 31, 2023 December 31, 2022 December 31, 2021

PRT agreements $ 2,016 $ 1,399 $ 1,161

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Index credits, interest credited & bonuses 831 593 1,019

Annuity payments and other 160 343 230 103

Other changes in policy reserves 118 144 129

Total benefits and other changes in policy reserves $ 3,553 $ 1,126 $ 1,932

• PRT agreements for the years ended December 31, 2022 and December 31, 2021 reflect our entrance into the PRT market in the second half of 2021.

PRT agreements are subject to fluctuation period to period.

• The FIA/IUL market related liability movements for all periods are mainly driven by changes in the equity markets, non-performance spreads, and risk-free rates during the respective periods.

Additionally, 2021 includes the system implementation and assumption review process impacts discussed below.

The change in risk free rates and non-performance spreads (decreased)/ increased the FIA market related liability by $(656) million, $(74) million, $268 million and $141 million during the years ended December 31, 2022 and December 31, 2021, the period from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020, respectively.

• PRT agreements increased for the years ended December 31, 2023 and 2022 reflecting higher pension risk transfer group annuity obligations.

• The FIA/IUL market related liability movements for all periods presented are mainly driven by changes in the equity markets, non-performance spreads, and risk-free rates during the respective periods.

The change in risk free rates and non-performance spreads (decreased) increased the FIA market related liability by $106 million, $(656) million and $(74) million during the years ended December 31, 2023, 2022 and 2021, respectively.

The remaining change in market value of the market related liability movements was driven by equity market impacts.

See “ Recognized gains and (losses) ” above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

See “ Revenues - Recognized gains and (losses), net ” above for summary and discussion of net unrealized gains (losses) on certain derivative instruments.

• Annually, typically in the third quarter, we review assumptions associated with reserves for policy benefits and product guarantees.

During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain FIA assumptions used to calculate the fair value of the embedded

derivative component within contractholder funds and certain assumptions used to calculate SOP 03-1 liabilities and intangible balances.

These changes, taken together, resulted in an increase in contractholder funds and future policy benefits of $97 million.

• During the third quarter and for the year ended December 31, 2023, based on increases in interest rates and pricing changes, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and also aligned reserves to actual policyholder behavior.

These changes, taken together, resulted in an increase in total benefits and other changes in policy reserves of approximately $73 million.

• During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and the fair value of market risk benefits.

These changes, taken together, resulted in an increase in contractholder funds and market risk benefits of approximately $99 million.

• During the third quarter of 2021, we implemented a new actuarial valuation system, and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

The system implementation and assumption review process included refinements in the calculation of the fair value of the embedded derivative component of our fixed indexed annuities.

These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of $397 million.

• Index credits, interest credited & bonuses for the year ended December 31, 2022 were lower compared to the year ended December 31, 2021 and primarily reflected lower index credits on FIA policies as a result of market movement during the respective periods.

Index credits, interest credited & bonuses for the year ended December 31, 2021 were higher compared with the combined periods from June 1, 2020 to December 31, 2020 and the Predecessor period from January 1, 2020 to May 31, 2020, and primarily reflected higher index credits on FIA policies as a result of market movement during the respective periods.

These changes, taken together, resulted in a decrease in contractholder funds and future policy reserves of approximately $435 million.

• Index credits, interest credited & bonuses for the year ended December 31, 2023 were higher compared to the year ended December 31, 2022, primarily reflecting higher index credits and interest credited on FIA and other policies as a result of market movement during the respective periods and higher interest credited associated with the growth in PRT agreements.

Index credits, interest credited & bonuses for the year ended December 31, 2022 were lower compared with the year ended December 31, 2021, primarily reflecting lower index credits on FIA policies as a result of market movement during the respective periods.

Refer to average policyholder index discussion above for details on drivers.

Amortization of intangibles

Market risk benefit (gains) losses

Below is a summary of market risk benefit (gains) losses (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Market risk benefit (gains) losses $ 95 $ (182) $ (44)

• Market risk benefits (gains) losses is primarily driven by attributed fees collected, effects of market related movements (including changes in equity markets and risk-free rates), actual policyholder behavior as compared with expected and changes in assumptions during the periods.

▪ Changes in market risk benefit (gains) losses for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily reflect less favorable market related movements, a favorable GMWB utilization assumption change in 2022 (that did not recur in 2023) and higher attributed fees.

These changes were partially offset by actual policyholder behavior for the year ended December 31, 2023 being more in line with expected, as compared to the year ended December 31, 2022, resulting in a favorable change to the market risk benefit (gains) losses.

▪ Market risk benefit gains increased for the year ended December 31, 2022, compared with the year ended December 31, 2021, primarily reflecting favorable market related movements, primarily higher increases in risk free rates.

In addition, the favorable impact of a GMWB utilization assumption change in 2022 was mostly offset by unfavorable impacts of actual policyholder

behavior differing from expected when comparing the year ended December 31, 2022, with the year ended December 31, 2021.

Depreciation and amortization

Below is a summary of the major components included in depreciation and amortization (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

Amortization of DAC, VOBA and DSI $ 353 $ 517 $ 131 $ (46)

Interest (57) (44) (22) (17)

Unlocking 4 (12) 2 11

December 31, 2023 December 31, 2022 December 31, 2021

Amortization of VOBA, DAC and DSI $ 382 $ 300 $ 255

Amortization of other intangible assets and other depreciation 30 24 16

Total depreciation and amortization $ 412 $ 324 $ 271

• Amortization of VOBA, DAC and DSI is based on current and future expected gross margins (pre-tax operating income before amortization) and includes the impacts of the assumption changes and system implementation discussed below.

The amortization for each period presented is the result of AGPs in the respective periods.

• Annually, typically in the third quarter, we review assumptions associated with the amortization of intangibles.

During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds and certain assumptions used to calculate SOP 03-1 liabilities and intangible balances.

These changes, taken together, resulted in an increase to intangible assets of $47 million.

During the third quarter of 2021, we implemented a new actuarial valuation system and as a result, our third quarter 2021 assumption updates include model refinements and assumption updates resulting from the implementation.

The changes, taken together, increased amortization of intangibles by $136 million

• DAC, VOBA and DSI are amortized on a constant level basis for the grouped contracts over the expected term of the related contracts to approximate straight-line amortization.

Depreciation and amortization increased for the years ended December 31, 2023 and 2022, primarily reflecting increased DAC and DSI associated with the growth of the business.

The increase for the year ended December 31, 2023 also reflects a slightly increased amortization rate on some DAC and DSI balances due to updates to the surrender and mortality assumptions for the FIA and fixed-rate annuity blocks.

Personnel costs and other operating expenses

Below is a summary of personnel costs and other operating expenses (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Personnel costs $ 232 $ 157 $ 129

Other operating expenses 146 102 105

Total personnel costs and other operating costs $ 378 $ 259 $ 234

• Personnel costs and other operating expenses increased for the years ended December 31, 2023 and 2022, primarily reflecting headcount growth to support higher sales and assets volumes and strategic growth capabilities.

Interest expense

Below is a summary of interest expense (in millions):

December 31, 2023 December 31, 2022 December 31, 2021

Interest expense $ 97 $ 29 $ 29

Total interest expense $ 97 $ 29 $ 29

• Interest expense increased for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily reflecting a full year of interest on our revolving credit facility and the issuance of the 7.40% F&G Notes in January of 2023.

Other items affecting net earnings

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Below is a summary of the major components included in income tax expense (benefit) (dollars in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

Earnings from continuing operations before taxes $ 598 $ 1,077 $ 86 $ (214)

December 31, 2023 December 31, 2022 December 31, 2021

Earnings (loss) before taxes $ (35) $ 793 $ 1,552

Income tax expense (benefit) before valuation allowance (12) 131 338

Change in valuation allowance 35 27 (18)

Federal income tax expense (benefit) $ 117 $ 220 $ (75) $ (14)

Income tax expense $ 23 $ 158 $ 320

Effective rate (66) % 20 % 21 %

• The income tax expense for the year ended December 31, 2023 was $23 million compared to income tax expense of $158 million for the year ended December 31, 2022.

The effective tax rate was 20% for both years, which differs from the statutory rate of 21% primarily due to favorable permanent tax adjustments.

• Income tax benefit for the period from June 1, 2020 to December 31, 2020 was $75 million.

The income tax benefit was primarily driven by the change in tax status benefit recorded at December 31, 2020 and valuation allowance releases on the current period activity in Front Street Re Cayman Ltd.

(“FSRC”) included in continuing operations and the US non-life companies.

• Income tax benefit for the Predecessor period from January 1, 2020 to May 31, 2020 was $14 million.

The income tax benefit was impacted by the valuation allowance recorded on the ordinary deferred tax assets in FSRC included in continuing operations, as well as the impact of low taxed international losses.

• See Note N Income Taxes to the Consolidated Financial Statements for further information.

The effective tax rate was (66)% and 20%, respectively, for the years ended December 31, 2023 and December 31, 2022.

The effective tax rate for the year ended December 31, 2023 differs from the statutory rate of 21% primarily due to a tax valuation allowance expense recorded on unrealized losses and capital loss carryforwards.

The effective tax rate for the year ended December 31, 2022 differs from the statutory rate of 21% primarily due to favorable permanent tax adjustments.

The income tax expense for the year ended December 31, 2021 was $320 million.

The effective tax rate was 21% for the year ended December 31, 2021.

• See Note H - Income Taxes to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for further information.

Adjusted Net Earnings (See “Non-GAAP Financial Measures”)

The table below shows the adjustments made to reconcile Net earnings from continuing operations to Adjusted net earnings (in millions):

Year ended Period from June 1 to December 31, Period from January 1 to May 31,

December 31, 2022 December 31, 2021 2020 2020

Net earnings from continuing operations $ 481 $ 857 $ 161 $ (200)

Less preferred stock dividend — — — (8)

Net earnings (loss) from continuing operations attributable to common shareholders 481 857 161 (208)

December 31, 2023 December 31, 2022 December 31, 2021

Net earnings (loss) $ (58) $ 635 $ 1,232

Non-GAAP adjustments:

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Recognized (gains) losses, net 214 117 (109)

Indexed product related derivatives (354) (146) 123 195

Market related liability adjustments 258 (534) (233)

Purchase price amortization 22 21 26

Transaction costs and other non-recurring items (a) 3 10 (430)

Amortization of actuarial intangibles and SOP-03-1 reserve offset on non-GAAP adjustments 6 123 24 (97)

Income taxes on non-GAAP adjustments (104) 104 154

Adjusted net earnings $ 335 $ 353 $ 640

(a) For the twelve months ended December 31, 2021, reflects a one-time favorable adjustment to benefits and other changes in policy reserves and depreciation and amortization resulting from an actuarial system conversion which reflects modeling enhancement and other refinements of $284.

(a) For the twelve months ended December 31, 2021, reflects a one-time favorable adjustment to benefits and other changes in policy reserves resulting from an actuarial system conversion which reflects modeling enhancement and other refinements of $435 million.

The commentary below is intended to provide additional information on the significant income and expense items that help explain the trends in our ANE for each time period, as we believe these items provide further clarity to the financial performance of the business.

Those significant income and expense items are reported after actuarial intangibles and SOP 03-1 reserve offsets and taxes.

• Adjusted net earnings of $345 million for the year ended December 31, 2022 includes alternative investments net investment income of $100 million.

Alternative investments net investment income based on management’s long-term expected return of approximately 10% was $265 million.

Actual net investment income was lower due to decreases in fair value of these investments.

Other significant income and expense items included in adjusted net earnings were $49 million income from actuarial assumption and reserve updates, $21 million income of CLO redemption gains and other income, $20 million of net income tax benefits, and $5 million of other expense.

• Adjusted net earnings of $335 million for the year ended December 31, 2023 included $405 million of investment income from alternative investments and $5 million of bond prepay income, partially offset by $37 million tax valuation allowance, $10 million of one-time fixed asset impairment charge and $9 million actuarial industry assumption updates.

Alternative investments investment income based on management’s long-term expected return of approximately 10% was $558 million.

• Adjusted net earnings of $353 million for the year ended December 31, 2022 included $202 million of investment income from alternative investments, $66 million gain from actuarial assumption updates, $20 million net, tax benefits and $13 million net, CLO redemption gains and other income and expense items.

Alternative investments investment income based on management’s long-term expected return of approximately 10% was $419 million.

• Adjusted net earnings of $640 million for the twelve months ended December 31, 2021 includes alternative investments net investment income of $497 million.

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Actual net investment income was higher due to increases in fair value of these investments.

Other significant income and expense items included $46 million of CLO redemption gains and other income, $10 million income from net favorable mortality experience and other reserve changes, and $8 million income from actuarial intangibles unlocking.

• Adjusted net earnings of $233 million for the period from June 1, 2020 to December 31, 2020 includes $14 million income from net favorable mortality experience and other reserve changes and $70 million income of other net favorable items, primarily related to a favorable income tax benefit.

Actual alternative investment income was materially consistent with management’s long-term expectation.

• Adjusted net earnings of $14 million for the Predecessor period from January 1, 2020 to May 31, 2020 includes alternative investments net investment loss of $23 million.

Alternative investments net investment income based on management’s long-term expected return of approximately 11% was $27 million.

Actual net investment income was lower due to decreases in the fair value of these investments.

Other significant income and expense items included $16 million primarily from tax valuation allowance expense.

Other significant income and expense items included $73 million of CLO redemption gains and other income and $10 million of other items

Investment Portfolio

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Collateral loan obligations ("CLO")

5,405 10 % 4,222 10 %

Total fixed maturity available for sale securities $ 40,419 79 % $ 31,218 76 %

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Total investments $ 51,751 100 % $ 40,808 100 %

(a) Includes investment grade non-redeemable preferred stocks ($672 million and $928 million at December 31, 2022 and December 31, 2021, respectively).

(a) Includes investment grade non-redeemable preferred stocks ($428 million and $672 million at December 31, 2023 and 2022, respectively).

Insurance statutes regulate the type of investments that our life insurance subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment.

In light of these statutes and regulations, and our business and investment strategy, we generally seek to invest in (i) corporate securities rated investment grade by established nationally recognized statistical rating organizations (each, an “NRSRO”), (ii) U.S.

Government and government-sponsored agency securities, or (iii) securities of comparable investment quality, if not rated.

As of December 31, 2022 and December 31, 2021, our fixed maturity available-for-sale ("AFS") securities portfolio was approximately $31 billion and $30 billion, respectively.

The following table summarizes the credit quality, by NRSRO rating, of our fixed income portfolio (dollars in millions):

December 31, 2022 December 31, 2021

Rating Fair Value Percent Fair Value Percent

AAA $ 1,358 4 % $ 660 2 %

AA 2,297 7 % 2,181 7 %

A 8,076 26 % 7,667 26 %

BBB 8,158 26 % 10,462 35 %

Not rated (a) 9,529 31 % 6,642 22 %

Total investment grade 29,418 94 % 27,612 92 %

BB 986 3 % 1,372 5 %

B and below (b) 236 1 % 432 1 %

Not rated (a) 578 2 % 546 2 %

Total below investment grade 1,800 6 % 2,350 8 %

Total $ 31,218 100 % $ 29,962 100 %

(a) Securities denoted as not-rated by an NRSRO were classified as investment or non-investment grade according to the securities' respective NAIC designation

(b) Includes $46 million and $68 million at December 31, 2022 and December 31, 2021, respectively, of non-agency RMBS (as defined below) that carry a NAIC 1 designation.

In light of these statutes and regulations, and our business and investment strategy, we generally seek to invest in primarily high-grade fixed-income assets across a wide range of sectors, including Corporate securities, U.S.

Government and government-sponsored agency securities, and Structured securities, among others.

The NAIC’s Securities Valuation Office (“SVO”) is responsible for the day-to-day credit quality assessment and valuation of securities owned by state regulated insurance companies.

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The SVO conducts credit analysis on these securities for the purpose of assigning an NAIC designation or unit price.

Typically, if a security has been rated by an NRSRO, the SVO utilizes that rating and assigns an NAIC designation based upon the following system:

NAIC Designation NRSRO Equivalent Rating

5 CCC and lower

6 In or near default

The NAIC uses designation methodologies for non-agency RMBS, including RMBS backed by subprime mortgage loans and for CMBS.

The NAIC’s objective with the designation methodologies for these structured securities is to increase accuracy in assessing expected losses and to use the improved assessment to determine a more appropriate capital requirement for such structured securities.

The NAIC assigns a NAIC designation based on the loss expectation for each security.

Several of our RMBS securities carry a NAIC 1 designation while the NRSRO rating indicates below investment grade.

The revised methodologies reduce regulatory reliance on rating agencies and allow for greater regulatory input into the assumptions used to estimate expected losses from such structured securities.

In the tables below, we present the rating of structured securities based on ratings from the NAIC rating methodologies described above (which in some cases do not correspond to rating agency designations).

Typically, if a security has been rated by a nationally recognized statistical rating organization (“NRSRO”), the SVO utilizes that rating and assigns an NAIC designation based upon the NAIC published comparison of NRSRO ratings to NAIC designations.

The NAIC determines ratings for non-agency Residential Mortgage-backed Securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) using modeling that estimates security level expected losses under a variety of economic scenarios.

For such assets issued prior to January 1, 2013, an insurer’s amortized cost basis in applicable assets can impact the assigned rating.

In the tables below, we present the rating of structured

securities based on ratings from the NAIC rating methodologies described above (which in some cases do not correspond to rating agency designations).

All NAIC designations (e.g., NAIC 1-6) are based on the NAIC methodologies.

The tables below present our fixed maturity securities by NAIC designation as of December 31, 2022 and December 31, 2021 (dollars in millions):

December 31, 2022

NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value

1 $ 21,917 $ 19,234 62 %

2 11,889 10,250 33 %

3 1,571 1,419 4 %

4 240 220 1 %

Total $ 35,723 $ 31,218 100 %

December 31, 2021

NAIC Designation Amortized Cost Fair Value Percent of Total Fair Value

1 $ 15,636 $ 15,848 54 %

2 10,779 11,441 38 %

3 1,603 1,850 6 %

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our fixed income portfolio (dollars in millions) at December 31, 2023 and 2022:

December 31, 2023 December 31, 2022

NRSRO Rating NAIC Designation Amortized Cost Fair Value Fair Value Percent Amortized Cost Fair Value Fair Value Percent

AAA/AA/A 1 $ 28,052 $ 26,170 65 % $ 21,294 $ 18,681 60 %

BBB 2 13,421 12,302 30 % 12,422 10,737 34 %

BB 3 1,633 1,554 4 % 1,588 1,425 5 %

B 4 268 215 1 % 259 236 1 %

CCC 5 103 72 — % 87 67 — %

CC and lower 6 124 106 — % 73 72 — %

$ 43,601 $ 40,419 100 % $ 35,723 $ 31,218 100 %

Total $ 28,724 $ 29,962 100 %

Investment Industry Concentration

The tables below present the top ten industry categories of our fixed maturity and equity securities and FHLB common stock, including the fair value and percent of total fixed maturity and equity securities and FHLB common stock fair value as of December 31, 2022 and December 31, 2021 (dollars in millions):

Investment Concentrations

The tables below present the top ten structured security and industry categories of our fixed maturity and equity securities including the fair value and percent of total fixed maturity and equity securities fair value as of December 31, 2023 and 2022 (dollars in millions).

Effective January 1, 2023, we updated our industry classifications as a result of a change in our investment accounting software and related service providers.

Our investment strategy has remained consistent and our portfolio mix has not materially changed.

The December 31, 2022 table was updated to reflect a consistent presentation with the December 31, 2023 classifications:

December 31, 2023

Top 10 Industry Concentration Fair Value Percent of Total Fair Value

Top 10 Concentrations Fair Value Percent of Total Fair Value

ABS Other $ 8,929 22 %

CLO securities 5,405 13 %

Whole loan collateralized mortgage obligation (“CMO”)

Commercial mortgage-backed securities 4,410 11 %

Diversified financial services 3,272 8 %

Banking 2,048 5 %

Whole loan collateralized mortgage obligation 2,043 5 %

Municipal 1,600 4 %

Insurance 1,567 4 %

Electric 1,086 3 %

Life insurance 1,376 4 %

Technology 855 3 %

Healthcare 659 2 %

Commercial MBS 571 2 %

Telecommunications 696 2 %

Total $ 31,056 77 %

December 31, 2022

Top 10 Industry Concentration Fair Value Percent of Total Fair Value

Top 10 Concentrations Fair Value Percent of Total Fair Value

ABS Other $ 7,359 23 %

CLO securities 3,856 12 %

Commercial mortgage-backed securities 3,399 11 %

Diversified financial services 2,620 8 %

Banking 1,850 6 %

Whole loan collateralized mortgage obligation (“CMO”) 2,622 8 %

Life insurance 1,795 6 %

Electric 1,701 6 %

Insurance 1,545 5 %

Municipal 1,428 4 %

Healthcare 947 3 %

Technology 932 3 %

Other Financial Institutions 760 2 %

Whole loan collateralized mortgage obligations 1,278 4 %

Electric 1,014 3 %

Telecommunications 547 2 %

Total $ 24,896 78 %

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of December 31, 2022 and December 31, 2021 (dollars in millions), are shown below.

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of December 31, 2023 and 2022 (dollars in millions), are shown below.

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

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Commercial mortgage-backed securities 4,732 4,410 3,309 3,036

Structured hybrids — — 5 5

Residential mortgage-backed securities 2,501 2,424 1,631 1,521

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Our investment in non-agency RMBS securities is predicated on the conservative and adequate cushion between purchase price and NAIC 1 rating, general lack of sensitivity to interest rates, positive convexity to prepayment rates and correlation between the price of the securities and the unfolding recovery of the housing market.

The fair value of our investments in subprime and Alt-A RMBS securities was $40 million and $54 million as of December 31, 2022, respectively, and $52 million and $75 million as of December 31, 2021, respectively.

As of December 31, 2022 and December 31, 2021, approximately 91% and 94%, respectively, of the subprime and Alt-A RMBS exposures were rated NAIC 2 or higher.

The fair value of our investments in subprime securities and Alt-A RMBS securities were $33 million and $49 million as of December 31, 2023, respectively, and $40 million and $54 million as of December 31, 2022, respectively.

As of December 31, 2023 and 2022, approximately 95% and 91%, respectively, of the subprime and Alt-A RMBS exposures were rated NAIC 2 or higher.

ABS and CLO Exposures

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Our CLO exposures are generally senior tranches of CLOs which have leveraged loans as their underlying collateral.

As of December 31, 2023, the CLO and ABS positions were trading at a net unrealized gain position of $65 million and a net unrealized loss of $344 million, respectively.

As of December 31, 2022, the CLO and ABS positions were trading at a net unrealized loss position of $236 million and $499 million, respectively.

As of December 31, 2021, the CLO and ABS positions were trading at a net unrealized gain position of $145 million and $37 million, respectively.

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our AFS ABS portfolio (dollars in millions) at December 31, 2023 and 2022.

December 31, 2023 December 31, 2022

Fair Value Percent Fair Value Percent

NRSRO Rating NAIC Designation

AAA/AA/A 1 $ 7,023 79% $ 5,570 77%

BBB 2 1,375 15% 1,232 17%

BB 3 418 5% 344 5%

B 4 59 1% 72 1%

CCC 5 13 —% 9 —%

CC and lower 6 41 —% 18 —%

Total $ 8,929 100% $ 7,245 100%

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our AFS CLO portfolio (dollars in millions) at December 31, 2023 and 2022.

December 31, 2023 December 31, 2022

Fair Value Percent Fair Value Percent

NRSRO Rating NAIC Designation

AAA/AA/A 1 $ 3,288 61% $ 2,678 64%

BBB 2 1,582 29% 1,225 29%

BB 3 480 9% 256 6%

B 4 17 —% 19 —%

CCC 5 — —% 9 —%

CC and lower 6 38 1% 35 1%

Total $ 5,405 100% $ 4,222 100%

Municipal Bond Exposure

Our municipal bond exposure is a combination of general obligation bonds (fair value of $188 million and $258 million and an amortized cost of $231 million and $247 million as of December 31, 2022 and December 31, 2021, respectively) and special revenue bonds (fair value of $1,017 million and $1,183 and an amortized cost of $1,248 million and $1,138 as of December 31, 2022 and December 31, 2021, respectively).

Across all municipal bonds, the largest issuer represented 6% and 7% of the category as of December 31, 2022 and December 31, 2021, respectively, less than 1% of the entire portfolio and is rated NAIC 1.

Our focus within municipal bonds is on NAIC 1 rated instruments, and 96% of our municipal bond exposure is rated NAIC 1 as of December 31, 2022.

Our municipal bond exposure is a combination of general obligation bonds (fair value of $231 million and $188 million and an amortized cost of $268 million and $231 million as of December 31, 2023 and 2022, respectively) and special revenue bonds (fair value of $1,334 million and $1,017 million and an amortized cost of $1,506 million and $1,248 million as of December 31, 2023 and 2022, respectively).

Across all municipal bonds, the largest issuer represented 5% and 6% of the category as of December 31, 2023 and 2022, respectively, with less than 1% of the entire portfolio and is rated NAIC 1.

Our focus within municipal bonds is on NAIC 1 rated instruments, with 98% and 96% of our municipal bond exposure rated NAIC 1 as of December 31, 2023 and 2022, respectively.

Mortgage Loans

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We continuously evaluate CMLs based on relevant current information to ensure properties are performing at a level to secure the related debt.

LTV and DSC ratios are utilized to assess the risk and quality of CMLs.

As of December 31, 2022 and December 31, 2021, our mortgage loans on real estate portfolio had a weighted average DSC ratio of 2.3 times and 2.4 times, respectively, and a weighted average LTV ratio of 57% and 56%, respectively.

Loan-to-value (“LTV”) and debt service coverage (“DSC”) ratios are utilized to assess the risk and quality of CMLs.

As of December 31, 2023 and 2022, our mortgage loans on real estate portfolio had a weighted average DSC ratio of 2.3 times and 2.3 times, respectively, and a weighted average LTV ratio of 55% and 57%, respectively.

We consider a CML delinquent when a loan payment is greater than 30 days past due.

For mortgage loans that are determined to require foreclosure, the carrying value is reduced to the fair value of the underlying collateral, net of estimated costs to obtain and sell at the point of foreclosure.

At December 31, 2022 we had one CML that was delinquent in principal or interest payments and none in the process of foreclosure.

At December 31, 2021 we had no CMLs that were delinquent in principal or interest payments or in process of foreclosure.

At December 31, 2023 and 2022, we had no CMLs that were delinquent in principal or interest payments and none in the process of foreclosure.

See Note C - Investments to the Consolidated Financial Statements included in this report for additional information on our CMLs, including our distribution by property type, geographic region, LTV and DSC ratios.

Residential Mortgage Loans

Residential Mortgage Loans (“RML”)

Our residential mortgage loans are closed end, amortizing loans and 100% of the properties are in the United States.

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If a loan becomes over 90 days delinquent, it is our general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current can be put in place.

See Note C Investments to the Consolidated Financial Statements included in this Annual Report for additional information on our RMLs.

See Note C - Investments to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information on our RMLs.

Unrealized Losses

The amortized cost and fair value of the fixed maturity securities and the equity securities that were in an unrealized loss position as of December 31, 2022 and December 31, 2021, were as follows (in millions):

The amortized cost and fair value of the fixed maturity securities and the equity securities that were in an unrealized loss position as of December 31, 2023 and 2022, were as follows (dollars in millions):

December 31, 2023

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Total investments 3,785 $ 34,164 $ (21) $ (4,744) $ 29,399

The gross unrealized loss position on the fixed maturity available-for-sale fixed and equity portfolio was $4,744 million and $249 million as of December 31, 2022 and December 31, 2021, respectively.

The gross unrealized loss position on the fixed maturity available-for-sale fixed and equity portfolio was $3,691 million and $4,744 million as of December 31, 2023 and 2022, respectively.

Most components of the portfolio exhibited price depreciation caused by higher treasury rates and wider spreads.

The total amortized cost of all securities in an unrealized loss position was $34,164 million and $11,968 million as of December 31, 2022 and December 31, 2021, respectively.

The total amortized cost of all securities in an unrealized loss position was $29,741 million and $34,164 million as of December 31, 2023 and 2022, respectively.

The average market value/book value of the investment category with the largest unrealized loss position was 88% for finance, insurance and real estate as of December 31, 2023.

In the aggregate, finance, insurance and real estate represented 19% of the total unrealized loss position as of December 31, 2023.

The average market value/book value of the investment category with the largest unrealized loss position was 96% for utilities, energy and related sectors as of December 31, 2021.

In aggregate, utilities, energy and related sectors represented 18% of the total unrealized loss position as of December 31, 2021.

The amortized cost and fair value of fixed maturity available for sale securities under watch list analysis and the number of months in a loss position with investment grade securities (NRSRO rating of BBB/Baa or higher) as of December 31, 2022 and December 31, 2021, were as follows (dollars in millions):

The average market value/book value of the investment category with the largest unrealized loss position was 84% for finance, insurance and real estate as of December 31, 2022.

In aggregate, finance, insurance and real estate represented 18% of the total unrealized loss position as of December 31, 2022.

December 31, 2023

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Factors used in preparing the watch list include fair values relative to amortized cost, ratings and negative ratings actions and other factors.

Detailed analysis is performed for each security on the watch list to further assess the presence of credit impairment

loss indicators and, where present, calculate an allowance for expected credit loss or direct write-down of a security’s amortized cost.

Detailed analysis is performed for each security on the watch list to further assess the presence of credit impairment loss indicators and, where present, calculate an allowance for expected credit loss or direct write-down of a security’s amortized cost.

At December 31, 2023, our watch list included 52 securities in an unrealized loss position with an amortized cost of $722 million, no allowance for expected credit losses, unrealized losses of $205 million and a fair value of $517 million.

At December 31, 2022, our watch list included 146 securities in an unrealized loss position with an amortized cost of $1,435 million, allowance for expected credit losses of $15 million, unrealized losses of $472 million and a fair value of $948 million.

At December 31, 2021, our watch list included seven securities in an unrealized loss position with an amortized cost of $132 million, allowance for expected credit losses of $0 million, unrealized losses of $7 million and a fair value of $125 million.

The watch list excludes structured securities as we have separate processes to evaluate the credit quality on the structured securities.

There were 64 and 36 structured securities with a fair value of $162 million and $45 million to which we had potential credit exposure as of December 31, 2022 and December 31, 2021, respectively.

Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of $16 million and $8 million as of December 31, 2022 and December 31, 2021, respectively.

There were 101 and 64 structured securities with a fair value of $316 million and $162 million to which we had potential credit exposure as of December 31, 2023 and 2022, respectively.

Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of $35 million and $16 million as of December 31, 2023 and 2022, respectively.

Exposure to Sovereign Debt and Certain Other Exposures

Our investment portfolio had an immaterial amount of direct exposure to European sovereign debt as of December 31, 2022 and December 31, 2021, respectively.

Our investment portfolio had an immaterial amount of direct exposure to European sovereign debt as of December 31, 2023 and 2022, respectively.

We have no exposure to investments in Russia or Ukraine and de minimis investments in peripheral countries in the region.

Interest and Investment Income

For discussion regarding our net investment income and net investment gains (losses) refer to Note C Investments to the Consolidated Financial Statements included in this Annual Report.

For discussion regarding our net investment income and net investment gains (losses) refer to Note C - Investments to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

AFS Securities

For additional information regarding our AFS securities, including the amortized cost, gross unrealized gains (losses), and fair value as well as the amortized cost and fair value of fixed maturity AFS securities by contractual maturities, as of December 31, 2022 and December 31, 2021, refer to Note C Investments to the Consolidated Financial Statements included in this Annual Report.

maturities, as of December 31, 2023 and 2022, refer to Note C - Investments to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

Concentrations of Financial Instruments

For certain information regarding our concentrations of financial instruments, refer to Note C Investments to the Consolidated Financial Statements included in this Annual Report.

We are exposed to credit loss in the event of nonperformance by our counterparties on call options.

We attempt to reduce this credit risk by purchasing such options from large, well-established financial institutions.

We also hold cash and cash equivalents received from counterparties for call option collateral, as well as U.S.

Government securities pledged as call option collateral, if our counterparty’s net exposures exceed pre-determined thresholds.

For certain information regarding our concentrations of financial instruments, refer to Note C - Investments to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

We are exposed to credit loss in the event of nonperformance by our counterparties on derivative instruments.

We attempt to reduce this credit risk by purchasing such derivative instruments from large, well-established financial institutions.

We also hold cash and cash equivalents received from counterparties for derivative instrument collateral, as well as U.S.

Government securities pledged as derivative instrument collateral, if our counterparty’s net exposures exceed pre-determined thresholds.

We are required to pay counterparties the effective federal funds rate each day for cash collateral posted to F&G for daily mark-to-market margin changes.

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This program permits collateral cash received to be invested in short term Treasury securities, bank deposits and commercial paper rated A1/P1, which are included in Cash and cash equivalents in the accompanying Consolidated Balance Sheets.

See Note D Derivatives to the Consolidated Financial Statements included in this Annual Report for additional information regarding our derivatives and our exposure to credit loss on call options.

See Note D - Derivatives to the Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K for additional information regarding our derivatives and our exposure to credit loss on derivatives.

Liquidity and Capital Resources

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We also generate cash inflows from investing activities resulting from maturities and sales of invested assets and from financing activities including inflows on our investment-type products and proceeds from borrowing activities.

Our operating activities provided cash of $3,171 million and $1,871 million for the years ended December 31, 2022 and December 31, 2021, respectively.

Our operating activities provided cash of $5,834 million and $3,171 million for the years ended December 31, 2023 and 2022, respectively.

When considering our liquidity and cash flow, it is important to distinguish between the needs of our insurance subsidiaries and the needs of the holding company, F&G Annuities & Life, Inc.

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Likewise, when the value of a derivative liability declines (or increases), the collateral we are required to post to our counterparties would also decline (or increase).

On February 16, 2024, F&G entered into an amendment and extension of its existing senior unsecured revolving credit agreement (the “Credit Agreement”).

The maturity date of the Credit Agreement has been extended by approximately two years from November 22, 2025 to November 22, 2027.

Total commitments will increase from $665 million to $750 million.

Pricing and advance rates remain unchanged.

Financial covenants also remain essentially the same.

On February 21, 2023, we entered into an agreement to increase the available aggregate principal amount of the Credit Agreement by $115 million to $665 million.

As noted below, we used $150 million of net proceeds from our 7.95% F&G Notes to pay down the Credit Agreement to a balance of approximately $365 million as of December 31, 2023.

On January 12, 2024 we completed a $250 million preferred stock investment from FNF.

F&G will use net proceeds from the investment to support the growth of its assets under management.

Under the terms of the agreement, FNF agreed to invest $250 million in exchange for 5,000,000 shares of F&G’s 6.875% Series A Mandatory Convertible Preferred Stock, par value $.001 per share, liquidation preference of $50.00 per share (the “FNF Preferred Stock”).

Unless earlier converted at the option of the holder, each outstanding share of the FNF Preferred Stock will automatically convert into shares of F&G common stock on January 15, 2027.

Generally, no dividends will be declared or paid on F&G common stock and no common stock can be acquired by F&G unless all preferred dividends are declared and paid on the outstanding FNF Preferred Stock.

The offer and the sale of the FNF Preferred Stock were made in a private placement pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act.

The agreement was negotiated pursuant to market terms and pricing by a Special Committee of F&G’s Board of Directors comprised of independent members of the Board, in consultation with an independent financial advisor and independent legal counsel.

Cash Requirements.

Our current cash requirements include personnel costs, operating expenses, benefit payments, funding agreement payments, taxes, payments of interest and principal on our debt, capital expenditures, business acquisitions, stock repurchases and dividends on our common stock.

As of December 31, 2022 and December 31, 2021, we had cash and cash equivalents of $960 million and $1,533 million, respectively, short term investments of $1,556 million and $373 million, respectively, and as of December 31, 2022 available capacity under our revolving credit facility with FNF of $200 million (the “FNF Credit Facility ” ).

No amounts were outstanding under this revolving note agreement as of December 31, 2022 or December 31, 2021.

We continually assess our capital allocation strategy, including decisions relating to the amount of our dividend, if any, reducing debt, investing in growth of our subsidiaries, making acquisitions and/or conserving cash.

We believe that all anticipated cash requirements for current operations will be met from internally generated funds, through cash dividends from subsidiaries, cash generated by investment securities, potential sales of non-strategic assets, potential issuances of additional debt or equity securities, and borrowings on the FNF Credit Facility.

We paid dividends of $0.20 per share of common stock in the first three quarters of 2023 and $0.21 per share in the fourth quarter, approximately $101 million, to our common shareholders.

On February 14, 2024, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on March 29, 2024, to F&G common shareholders of record as of March 15, 2024.

There are no restrictions on our retained earnings regarding our ability to pay dividends to our shareholders, although there are limits on the ability of certain subsidiaries to pay dividends to us, as described below.

As discussed above, there are certain conditions on the declaration and payment of dividends pursuant to our recent preferred stock issuance.

The declaration of any future dividends is at the discretion of our Board of Directors.

On February 14, 2024, our Board of Directors also declared a quarterly cash dividend of $0.8976 per share on the FNF Preferred Stock for the period from January 12, 2024 to and excluding April 15, 2024, to be paid on April 15, 2024, to FNF Preferred Stock record holders as of April 1, 2024.

On March 21, 2023, F&G’s Board of Directors approved a new three-year stock repurchase program, effective March 21, 2023, under which the Company may repurchase up to $25 million of F&G common stock.

On November 7, 2023, the Board of Directors increased the share repurchase authorization to $50 million.

The Company believes the share repurchase program is an efficient means of returning cash to shareholders when we consider the shares to be undervalued.

Purchases may be made from time to time by the Company in the open market at prevailing market prices or through privately negotiated transactions or accelerated share repurchase transactions through November 6, 2026.

All purchases are held as treasury stock.

The timing and extent of share repurchases will depend on a variety of factors, including, market conditions, regulatory requirements, and considerations as determined by management.

During the year ended December 31, 2023, the Company purchased approximately 869,000 shares pursuant to the program, for a total cost of approximately $18 million with an average cost per share of $21.07.

At December 31, 2023, the total remaining authorization of F&G common stock that may be repurchased was approximately $32 million.

As of December 31, 2023 and 2022, we had cash and cash equivalents of $1,563 million and $960 million, respectively, and short term investments of $1,452 million and $1,556 million, respectively.

As of December 31, 2023 we had $300 million of remaining capacity under our revolving credit facility (prior to the commitment increase discussed above) and $200 million of capacity under our revolving credit facility with FNF (the “FNF Credit Facility ” ).

No amounts were outstanding under the FNF Credit Facility as of December 31, 2023 or 2022.

We continually assess our capital allocation strategy, including decisions relating to the amount of our dividend, if any,

reducing debt, investing in growth of our subsidiaries, making acquisitions and/or conserving cash.

Our short-term and long-term liquidity requirements are monitored regularly to ensure that we can meet our cash requirements.

We forecast the needs of all of our subsidiaries and periodically review their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts.

Refer to Financing arrangements below for further information regarding our borrowings.

We forecast the needs of all our subsidiaries and periodically review their short-term and long-term projected sources and uses of funds, as well as the asset, liability, investment and cash flow assumptions underlying such forecasts.

Refer to Financing Arrangements below and Note L - Notes Payable of the Consolidated Financial Statements in Part II - Item 8 of this Annual Report on Form 10-K for further information regarding our borrowings.

Our two significant sources of internally generated funds are dividends and other payments from our subsidiaries.

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Please refer to “Item 1.

Business” and Note L Insurance Subsidiary Financial Information and Regulatory Matters to the Consolidated Financial Statements, included in this Annual Report, for additional details on dividends from insurance subsidiaries, statutory capital and risk-based capital.

Business” and Note O - Insurance Subsidiary Financial Information and Regulatory Matters to the Consolidated Financial Statements included in this Annual Report on Form 10-K, for additional details on dividends from insurance subsidiaries, statutory capital and risk-based capital.

Cash flow from our operations

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Operating Cash Flow .

Our cash flows provided by (used in) operations for the years ended December 31, 2022 and December 31, 2021, for the period from June 1, 2020 to December 31, 2020 (following the June 1, 2020 acquisition by FNF), and for the Predecessor period from January 1, 2020 to May 31, 2020 were $3,171 million, $1,871 million, $287 million, and $(224) million, respectively.

Our cash flows provided by operations for the years ended December 31, 2023, 2022, and 2021 were $5,834 million, $3,171 million and $1,871 million, respectively.

The primary cash inflows from operating activities include net investment income and insurance premiums.

The primary cash outflows from operating activities are comprised of benefit payments and operating expenses.

Cash provided by operations for the years ended December 31, 2022 and December 31, 2021 included approximately $1,300 million and $840 million of cash received for PRT transactions, respectively, included in the change in future policy benefits, reflecting our expansion into the PRT institutional market during 2021.

Cash provided by operations for the years ended December 31, 2023 and 2022 included approximately $1,300 million and $1,300 million of net cash received for PRT transactions, respectively, included in the change in future policy benefits.

Investing Cash Flows.

Our cash used in investing activities for the years ended December 31, 2022 and December 31, 2021, for the period from June 1, 2020 to December 31, 2020, and for the Predecessor period from January 1, 2020 to May 31, 2020 were $9,370 million, $6,862 million, $1,865 million, $724 million, respectively.

Our cash used in investing activities for the years ended December 31, 2023, 2022, and 2021 were $8,918 million, $9,370 million, $6,862 million, respectively.

The primary cash inflows from investing activities are the proceeds from sales, calls, maturities and redemptions of investments, including those resulting from our portfolio repositioning.

The primary cash outflows from investing activities are the purchases of fixed maturity securities and other investments.

Cash used in investing activities for the years ended December 31, 2022 and December 31, 2021 included purchases of fixed maturity securities and other investments associated with investing the cash received from FABN transactions, generating from financing cash flows and PRT transactions, generated from operating activities, reflecting our expansion into institutional markets during 2021, as well as cash received from borrowings generated from financing activities in both periods.

Cash used in investing activities for the years ended December 31, 2023 and 2022 included purchases of fixed maturity securities and other investments associated with investing the net cash received from our investment-type products, generated from financing cash flows and PRT transactions, generated from operating activities, as well as cash received from borrowings generated from financing activities in both periods.

Financing Cash Flows.

Our cash flows provided by financing activities for the years ended December 31, 2022 and December 31, 2021, for the period from June 1, 2020 to December 31, 2020, and for the Predecessor results for the period from January 1, 2020 to May 31, 2020 were $5,626 million, $5,635 million, $1,640 million and $877 million, respectively.

Our cash flows provided by financing activities for the years ended December 31, 2023, 2022, and 2021 were $3,687 million, $5,626 million and $5,635 million, respectively.

The primary cash inflows from financing activities are inflows on our investment-type products and proceeds from borrowing activities.

The primary cash outflows from financing activities are withdrawals on our investment-type products and repayments of outstanding borrowings.

Cash provided by financing activities for the years ended December 31, 2022 and December 31, 2021 also included proceeds from revolving credit borrowings of $550 million in 2022 and from a promissory note with FNF for $400 million used to fund our continued growth.

Cash provided by financing activities for the years ended December 31, 2022 and December 31, 2021 included approximately $700 million and $1,900 million, respectively, of net cash received for FABN transactions, reflecting our expansion into the FABN institutional market during 2021.

The primary cash outflows from financing activities are withdrawals on our investment-type products, repayments of outstanding borrowings, dividend payments and stock repurchases.

Cash provided by financing activities for the year ended December 31, 2023 included $845 million of proceeds from debt issuances, partially offset by net partial revolver pay downs of $185 million, dividend payments of approximately $101 million and common stock repurchases of $18 million.

Cash provided by financing activities for the year ended December 31, 2022 included proceeds from revolving credit borrowings of $550 million and approximately $700 million of net cash received for FABN transactions.

Financing Arrangements.

At December 31, 2022, we had outstanding (i) $550 million of borrowings under an unsecured revolving credit agreement with Bank of America, N.A., as administrative agent, the lenders and guarantors party thereto and the other parties thereto (the “Credit Agreement”) and (ii) $550 million aggregate principal amount of 5.50% senior notes due 2025 (the “5.50% F&G Notes”).

On January 13, 2023, we completed the issuance and sale of $500 million aggregate principal amount of our 7.40% Senior Notes due 2028 (the “7.40% F&G Notes”).

As of December 31, 2022, the revolving credit facility was fully drawn.

A net partial revolver paydown of $35 million was made on January 6, 2023 and, on February 21, 2023, we entered into an amendment with the Lenders to increase the available aggregate principal amount of the Credit Agreement by $115 million to $665 million.

For further description of our financing arrangements see Note E Notes Payable to the Consolidated Financial Statements included in this Annual Report.

The Credit Agreement imposes significant operating and financial restrictions, including financial covenants, and the Credit Agreement and the indenture governing the 5.50% F&G Notes limit, among other things, our and our subsidiaries’ ability to:

At December 31, 2023, we had outstanding (i) $365 million of gross principal balance outstanding under the Credit Agreement and (ii) $550 million aggregate principal amount of 5.50% senior notes due 2025 (the “5.50% F&G Notes”).

In addition, on January 13, 2023, we completed the issuance and sale of $500 million aggregate principal amount of our 7.40% Senior Notes due 2028 (the “7.40% F&G Notes”).

On December 6th, 2023, we completed the issuance and sale of $345 million aggregate principal amount of our 7.95%% Senior Notes due 2053 (“the 7.95% F&G Notes”).

We used $150 million of net proceeds from our 7.95% F&G Notes to pay down the Credit Agreement to a balance of approximately $365 million as of December 31, 2023.

For further description of our financing arrangements see Note L - Notes Payable to the Consolidated Financial Statements in Part II - Item 8 of this Annual Report on Form 10-K.

The Credit Agreement imposes significant operating and financial restrictions, including financial covenants, and the Credit Agreement and the indentures governing the 7.95% F&G Notes, the 7.40% F&G Notes, and the 5.50% F&G Notes limit, among other things, our and our subsidiaries’ ability to:

• incur or assume additional indebtedness, including guarantees;

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As of December 31, 2023, we were in compliance with all covenants.

On December 29, 2020, we entered into a revolving note agreement with FNF for up to $200 million capacity (the "FNF Credit Facility") to be used for working capital and other general corporate purposes.

No amounts were outstanding under this revolving note agreement as of December 31, 2022 or December 31, 2021.

Obligations - Contractual and Other.

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Total $ 6,483 $ 7,996 $ 7,372 $ 6,783 $ 8,557 $ 45,662 $ 82,853

Equity and Preferred Security Investments.

Our equity and preferred security investments may be subject to significant volatility.

Currently prevailing accounting standards require us to record the change in fair value of

equity and preferred security investments held as of any given period end within earnings.

Preferred and Equity Security Investments.

Our preferred and equity security investments may be subject to significant volatility.

Currently prevailing accounting standards require us to record the change in fair value of preferred and equity security investments held as of any given period end within earnings.

Our results of operations in future periods are anticipated to be subject to such volatility.

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We have no reason to believe that future costs to settle claims related to our former operations will have a material impact on our financial position, results of operations or cash flows.

We have unfunded investment commitments as of December 31, 2022 and December 31, 2021, based upon the timing of when investments are executed compared to when the actual investments are funded, as some investments require that funding occur over a period of months or years.

Please refer to Note C Investments and Note F Commitments and Contingencies to the Consolidated Financial Statements included in this Annual Report for additional details on unfunded investment commitments.

We have unfunded commitments as of December 31, 2023 based upon the timing of when investments and agreements are executed or signed compared to when the actual commitments are funded or closed.

Some investments require that funding occur over a period of months or years.

Please refer to Note C - Investments and Note N - Commitments and Contingencies to the Consolidated Financial Statements in Part II - Item 8 of this Annual Report on Form 10-K for additional details on unfunded commitments.

FHLB Collateral.

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Our borrowing capacity under these credit facilities does not have an expiration date as long as we maintain a satisfactory level of creditworthiness based on the FHLB’s credit assessment.

As of December 31, 2022 and December 31, 2021, we had $1,983 million and $1,543 million, respectively, in FHLB non-putable funding agreements included under Contractholder Funds on our Consolidated Balance Sheet.

As of December 31, 2022 and December 31, 2021, we had assets with a fair value of approximately $3,387 million and $2,469 million, respectively, which collateralized the FHLB funding agreements.

As of December 31, 2023 and 2022, we had $2,514 million and $1,983 million, respectively, in FHLB non-putable funding agreements included under Contractholder Funds on our Consolidated Balance Sheet.

As of December 31, 2023 and 2022, we had assets with a fair value of approximately $4,345 million and $3,387 million, respectively, which collateralized the FHLB funding agreements.

Assets pledged to the FHLB are included in fixed maturities, AFS, on our Consolidated Balance Sheets.

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The terms of the CSA call for us to pay interest on any cash received equal to the federal funds rate.

As of December 31, 2022 and December 31, 2021, $219 million and $790 million, respectively, of collateral was posted by our counterparties as they did not meet the net exposure thresholds.

As of December 31, 2023 and 2022, $775 million and $219 million, respectively, of collateral was posted by our counterparties as they did not meet the net exposure thresholds.

Collateral requirements are monitored on a daily basis and incorporate changes in market values of both the derivatives contract as well as the collateral pledged.

Market value fluctuations are due to changes in interest rates, spreads and other risk factors.

Guarantor Financial Information

Our 2023 issuances of the 7.40% F&G Notes and the 7.95% F&G Notes are fully and unconditionally guaranteed on a senior, unsecured, unsubordinated basis, jointly and severally, by each of our existing and future direct and indirect subsidiaries that are guarantors of our obligations under the credit agreement (collectively, the “obligor group”).

Refer to Note L - Notes Payable of the Consolidated Financial Statements in Part II - Item 8 of this Annual Report on Form 10-K for further information regarding these borrowings.

Set forth below is summarized unaudited financial information of the obligor group, as presented on a combined basis (dollars in millions).

Intercompany transactions and balances within the obligor group have been eliminated.

In addition, financial information of any non-guarantor subsidiaries, which would normally be consolidated by either F&G or the guarantors under GAAP, has been excluded from such presentation.

December 31, 2023 December 31, 2022

Summarized Statement of Operations:

Total revenues $ (5) $ (20)

Total expenses (94) (15)

Income tax (expense) benefit (1) 13

Net earnings (loss) $ (100) $ (22)

2023 December 31,

Summarized Balance Sheet:

Investments $ 532 $ 348

Cash and cash equivalents 322 184

Goodwill 1,725 1,725

Due from non-guarantor affiliates 64 40

Other assets 33 37

Total assets $ 2,676 $ 2,334

Notes payable $ 1,754 $ 1,114

Other liabilities 145 127

Total liabilities $ 1,899 $ 1,241

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis